SUPREME COURT OF VICTORIA
COURT OF APPEAL	
	
S EAPCI 2021 0034
S EAPCI 2021 0035	

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SUBSCRIBING TO POLICY NUMBER B1294HSGBGH152448	Applicant	
		
v		
		
DHILLON SCAFFOLDING PTY LTD	Respondent	

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JUDGES:	FERGUSON CJ, BEACH and MACAULAY JJA	
WHERE HELD:	MELBOURNE	
DATE OF HEARING:	15 February 2022 	
DATE OF JUDGMENT:	18 May 2022	
MEDIUM NEUTRAL CITATION:	[2022] VSCA 92	
JUDGMENT APPEALED FROM:	[2021] VSC 63 (Forbes J)	

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INSURANCE LAW – Public liability policy – Proper construction of policy – Insured did not have absolute obligation to comply with statutory requirements, safety regulations and Australian Standards but was required to take ‘reasonable precautions’ to comply – Insured bore burden of establishing that reasonable precautions were taken – Consideration of what is required to discharge burden – Insured recognised the danger but was indifferent to whether any action was taken to prevent the risk – Insured failed to discharge the burden – Fraser v B N Furman (Productions) Ltd [1967] 3 All ER 57 applied, CGU Insurance Ltd v Lawless (2008) 15 ANZ Ins Cas ¶61-755; [2008] VSCA 38 considered – Appeal allowed.
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Counsel	
Applicant:		Mr PG Cawthorn QC with Ms A Storey	
Respondent:		Mr JF Richardson with Mr JJ Angenent	

Solicitors	
Applicant:		Sparke Helmore	
Respondent:		Hymans Solicitors	

  
FERGUSON CJ
BEACH JA
MACAULAY JA:
1	In October 2015, an apprentice plumber was carrying a piece of guttering on a scaffold. The guttering hit the overhead powerlines and the apprentice was electrocuted and suffered injuries. He brought a claim for damages for personal injury. Included as defendants were Dhillon Scaffolding Pty Ltd (‘Dhillon Scaffolding’), a company owned and controlled by Mr Sarbjit Dhillon, and another company, both of which were involved in the erection of the scaffolding. They were also defendants in a claim brought by the Victorian WorkCover Authority to recover compensation and expenses it paid in respect of the apprentice’s WorkCover claim.
2	Dhillon Scaffolding held public liability insurance with underwriters at Lloyd’s of London (the ‘Insurer’). The Insurer denied indemnity. Dhillon Scaffolding joined the Insurer as a third party to both the personal injuries proceeding and the WorkCover proceeding.
3	In addition to the two civil proceedings, Dhillon Scaffolding faced prosecution following a WorkSafe investigation. Dhillon Scaffolding pleaded guilty to the charge that it had failed to ensure that a permit for the scaffold works, which were constructed in a ‘No Go Zone’, had been obtained and that any scaffolding works in that zone were completed in accordance with such a permit.
4	At the heart of the application before the Court is the proper construction of the public liability insurance policy that Dhillon Scaffolding held with the Insurer and whether that policy would respond to the liability of Dhillon Scaffolding in the two civil proceedings. The outcome turns in part on whether, on the proper construction of the policy, Dhillon Scaffolding had an absolute obligation to comply with statutory requirements, safety regulations and Australian Standards or whether it was only required to take reasonable precautions to comply. The trial judge found they were ‘reasonable precautions’ requirements. If the requirement was that Dhillon Scaffolding take reasonable precautions, the question is whether it did. In this regard, her Honour was not satisfied that Dhillon Scaffolding had not taken reasonable precautions. The Insurer seeks leave to appeal. 
5	For the reasons which follow we would grant leave to appeal and would allow the appeal.
The contractual provisions
6	The insurance policy was for the period from 11 September 2015 to 11 September 2016 and was a Combined Liability NAV 15 Policy (the ‘Policy’). It provided cover for public liability, pollution liability and products liability. For present purposes, only the public liability cover is relevant. The part of the Policy specifically dealing with public liability includes an indemnity worded as follows:
	6.	SECTION A – INDEMNITY
	[Dhillon Scaffolding] is indemnified by this Section in accordance with the Operative Clause for liability to pay damages for and/or arising out of Personal Injury and/or Property Damage occurring during the Period of Insurance within the Territorial Limits detailed in the Schedule to the Policy but not against liability arising out of
	6.1	Pollution;
	6.2	or in connection with any Product. 
7	The parties agree that, if made out, the claims against Dhillon Scaffolding by the apprentice and WorkCover give rise to a ‘liability to pay damages for and/or arising out of Personal Injury.’ They also agree that the events giving rise to any such liability fell within the period of the Policy.
8	There are some exclusions in the Policy but none are relevant for present purposes. What is relevant are two conditions precedent – one relating to compliance with statutory requirements and safety regulations and the other relating to compliance with Australian standards.
9	Relevantly, under the heading ‘Conditions’ in the general part of the Policy, the following clauses appear:
	14. 	OBSERVANCE OF TERMS
	The Insured must observe and comply with the terms and conditions of this Policy. Any term and condition of this Policy insofar as it relates to anything to be done or complied with by the Assured shall be a condition precedent to the Underwriter’s liability to make any payment under this Policy.
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	16. 	GENERAL CONDITIONS
	16.1 	REASONABLE PRECAUTIONS
	The insured at its own expense shall:
	16.1.1	take all reasonable precautions to prevent Personal Injury or Property Damage and cease any activity which may give rise to liability under this Policy;
	16.1.2	exercise care in the selection and supervision of employees;
	16.1.3	as soon as possible after discovery cause any defect or danger to be made good or remedied and in the meantime shall cause such additional precautions to be taken as the circumstances require;
	16.1.4 	comply with all statutory requirements and other safety regulations imposed by any authority.
10	In addition, the schedule which forms part of the Policy includes the following condition under a heading ‘Conditions of Cover’:
	The Insured must comply with the Australian/New Zealand Guidelines AS/NZ 4576; 1995
11	We will refer to these standards as the ‘Guidelines’ and to the requirement to comply with them as the ‘Schedule Condition’.
Statutory requirements, regulations and Guidelines
12	As noted above, cl 16.1.4 refers to compliance with statutory requirements and regulations. Before the judge, the Insurer relied on:
(a)	sections 23, 26(1) and 31 and Pt 3.5 of the Occupational Health and Safety Act 2004 (the ‘OHS Act’) (Pt 3.5 imposes various duties on classes of people dealing with scaffolding, among other things);
(b)	regulation 3.6.3 of the Occupational Health and Safety Regulations 2007 (the ‘OHS Regulations’) (prohibition on high-risk work without a work licence);
(c)	regulation 313 of the Electricity Safety (Installations) Regulations 2009 (the ‘ESI Regulations’) (prohibits the erection of scaffolding within specified distances of particular powerlines without permission of the power operator and compliance with conditions). 
13	The Insurer also relied on the Schedule Condition and, in particular, cl 5.4.2 of the Guidelines which reads:
	5.4 PROXIMITY TO POWERLINES …
	5.4.2 Australian requirements The clearance between scaffolds and any transmission line, main apparatus or transmission apparatus should not be less than (see Figure 5.4.2):
•	4.0m where any metal member is used. 
•	1.5m where only non-conductive materials such as dry timber or plywood are used. 
	Advice should be sought from the local electricity supply authority for any reduction to the above clearances.
	
	FIGURE 5.4.2 CLEARANCE TO ELECTRICAL CONDUCTOR WIRES
	Do not erect scaffolding until the necessary measures have been taken to minimize risk and a written authorization has been received from the electricity supply authority. 
	High voltage mains (i.e. more than 600 V) near scaffolding be de-energized, short-circuited and erected, or re-routed prior to erection of the scaffolding. 
	Low voltage mains (i.e. not more than 250 V) and medium voltage mains (i.e. in the range of 250V to 600V) should be de-energized, short-circuited and earthed, or re-routed where practicable. Make sure that inadvertent re-energizing of mains cannot occur while work is in progress. 
	Low and medium voltage mains that cannot be de-energized should be insulated by the supply authority for the full length of the scaffolding plus a minimum distance beyond each end of the scaffolding of 5.0 m. Although this insulation (e.g. tiger tails) is a safeguard against contact with live wires under dry conditions, a combination of small gaps in the insulation and wet weather conditions can cause an unsafe situation, which can result in severe shocks.
	The scaffolding may only be erected where no part is allowed to touch or fall across the insulated wires.
The judge’s reasons
14	The judge observed that the Policy was a commercial contract stating that the ‘words are to be given their plain meaning, interpreted to give effect to the objective intentions of the parties within the commercial circumstances that the contract addresses’. 
15	The judge held that the commercial purpose of the Policy was underpinned by the possibility that Dhillon Scaffolding may have exercised a want of care, and said that the commercial purpose of the Policy ‘is to cover allegations of negligence or other legal bases upon which the acts or omissions of [Dhillon Scaffolding] are alleged to create a liability to pay damages.’ Her Honour did not accept that the Insurer had only accepted risk for injuries suffered when Dhillon Scaffolding had acted in accordance with all statutory and regulatory obligations and the obligations imposed by the Guidelines.
16	Her Honour noted the Insurer’s contention that cl 16.1 and the Schedule Condition were conditions precedent in accordance with cl 14 and that the burden of proving compliance lies on Dhillon Scaffolding. The submission made to the judge was that ‘this reflected the intended coverage of the policy – to insure risk that existed only when the action of the insured had not breached the terms of the policy.’ Her Honour was of the view that this construction was somewhat at odds with a contract to insure a liability to pay damages. She noted that in common law negligence and the relevant statutory duties, a necessary element of reasonableness is imported.
17	Her Honour construed the whole of cl 16.1 as a reasonable precautions clause. In reaching this conclusion, the judge noted the heading of the clause and that: cl 16.1.1 is directed to common law circumstances; cl 16.1.4 is directed to statutory liability which only requires compliance that is reasonably practical; and cll 16.1.2 and 16.1.3 talk of care or precautions as circumstances require. 
18	In relation to the Guidelines, the judge noted the introductory remarks that they were intended to be compatible with WorkSafe Australia’s publications and referenced Occupational Health and Safety legislation and regulations. Her Honour noted that much of the content in the Guidelines is informational. She concluded that the Guidelines could not impose obligations on a scaffolder greater than those imposed by statute or regulations which only required action that is reasonably practical. Her Honour concluded that the Schedule condition which incorporated the Guidelines should be construed consistently with other clauses as a reasonable precautions clause.
19	The judge noted the Insurer’s submission that the Guidelines required Dhillon Scaffolding to obtain a permit from the power company. Her Honour found that cl 5.4.2 in the Guidelines reflected the regime in the ESI Regulations with neither specifying who holds the obligation to obtain a permit for the erection of a scaffold within a ‘No Go Zone’. Her Honour did not construe cl 5.4.2 of the Guidelines as imposing an obligation on Dhillon Scaffolding to obtain a permit from the power company, Jemena. 
20	The judge stated:
	The ESI Regulations and [the Guidelines] contemplate that scaffold may be erected within the minimum clearances for powerlines with a written authorisation. Guideline 5.4.2 set out above indicates that during erection of the scaffold the power is turned off but that once erected, while the scaffold is in place the powerlines may be live. It does not deal with how the scaffold should be constructed or speak to measures to protect users of the scaffold once it is [in] place when power is or may be restored. 
	At present there is no evidence whether this would be addressed by conditions on a permit from the power company or whether there are some other rules that apply.
21	The judge found that Dhillon Scaffolding did not make itself aware whether a permit existed nor, if it did, the conditions attached to it. The offence to which Mr Dhillon pleaded guilty in the WorkSafe prosecution was that breach.
22	Having construed cl 16.1 and the Schedule Condition as reasonable precautions clauses, her Honour went on to consider whether the Insurer was entitled to refuse indemnity under the Policy. She observed that this would require more than negligence on the part of Dhillon Scaffolding. The test is subjective and would require Dhillon Scaffolding to have ‘actual recognition that a danger exists and be at least reckless as to averting the danger’. Her Honour found that Dhillon Scaffolding had not breached the reasonable precautions conditions as she was not satisfied ‘that [Mr Dhillon’s] actions or inactions were a course of action deliberately adopted by him subjectively realising the danger it posed.
Proposed Grounds of Appeal
23	There are two proposed grounds of appeal:
(1)	The learned trial judge erred in finding that:
(a)	the Schedule Condition
(b)	clause 16.1.4
of the Policy of Insurance were “reasonable precautions” provisions, breached only if Dhillon Scaffolding’s conduct was reckless. The trial judge should have found that they were conditions precedent to the liability of the Applicant/Third Party to indemnify, and that Dhillon Scaffolding had the onus to prove they were met, an onus it did not meet. The trial judge should have found that failure to meet the conditions precedent was not excused or saved by s 54 of the Insurance Contracts Act 1984 as the relevant acts or omissions could reasonably be regarded as being capable of causing or contributing to the loss claimed: Insurance Contracts Act s 54(2).
(2)	The learned judge erred in finding that Dhillon Scaffolding had taken reasonable precautions (in light of the Schedule Condition and clauses 16.1.1 and 16.1.4 of the Policy of Insurance) to prevent personal injury.
Ground 1 – Are cl 16.4.1 and the Schedule Condition reasonable precautions provisions?
(a)	The Insurer’s submissions
24	The Insurer submitted that cl 16.1.4 and the Schedule Condition were conditions precedent and that the onus of proof to establish that they had been fulfilled fell on Dhillon Scaffolding. The Insurer contended that both of those conditions were not reasonable precautions conditions. The Insurer submitted that although under a heading of ‘Reasonable Precautions’, no element of reasonableness was imported into cl 16.1.4 with each sub-clause distinct and marked off with its own punctuation. Senior counsel for the Insurer contended that it was not necessary to import any reasonable precautions element to cl 16.1.2 because it uses the language of exercising care. Nor was it necessary to import the reasonable precautions concept into cl 16.1.3 because it is not expressed in absolute terms. The contrast was said to be with cl 16.1.4 which is in absolute terms.
25	Moreover, the Insurer submitted, the heading does not preface the Schedule Condition. Further, that condition provides that the insured ‘must’ comply with the Guidelines. According to the Insurer, this is a mandatory requirement.
26	By reference to various parts of the Guidelines, senior counsel for the Insurer described them as in some respects no more than information and in other respects prescriptive. The Insurer contended that although cl 5.4.2 of the Guidelines uses the word ‘should’ rather than ‘must’ that clause is prescriptive and is couched in the language of obligation when it says in relation to clearance ‘should be not less than 4.0m’. In support of this argument, counsel submitted that cl 5.4 mirrors reg 313 of the ESI Regulations with the consequence that compliance is mandatory. Counsel also referred to the words beneath the picture in cl 5.4.2: ‘Do not erect scaffolding until the necessary measures have been taken to minimize risk and a written authorization has been received from the electricity supply authority.’ 
27	Senior counsel for the Insurer contrasted this part of the Guidelines with other parts which were said not to be prescriptive and were open-ended. For example, counsel referred to the Guidelines for when there are adverse weather conditions; while the Guidelines state that special precautions should be taken, there is no reference to what those special precautions should be. 
28	The consequence, counsel submitted, is that there are a number of examples where the insured might be liable in negligence and to which the insurance policy would respond. Moreover, as a matter of context for the purposes of construction of the insurance policy and as known to the parties, s 54 of the Insurance Contracts Act 1984 (Cth), gives protection in certain circumstances to prevent an insurer from denying indemnity. Section 54 provides:
(1)	Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer’s liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of that act.
(2)	Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim.
(3)	Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act.
(4)	Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act.
(5)	Where:
(a)	the act was necessary to protect the safety of a person or to preserve property; or
(b)	it was not reasonably possible for the insured or other person not to do the act;
the insurer may not refuse to pay the claim by reason only of the act.
(6)	A reference in this section to an act includes a reference to:
(a)	an omission; and
(b)	an act or omission that has the effect of altering the state or condition of the subject‑matter of the contract or of allowing the state or condition of that subject‑matter to alter.
29	Senior counsel contended that some aspects of the Guidelines (including cl 5.4.2) imposed specific requirements or obligations. This was not affected by the fact that other aspects of the Guidelines were not of this character and were less onerous in nature.
30	The Insurer contended that the consequence of the judge’s characterisation of cl 16.1.4 and the Schedule Condition as reasonable precautions provisions is that her Honour applied the wrong test and effectively reversed the onus of proof in saying that she was not satisfied that Dhillon Scaffolding adopted a course of action knowing of the risk.
31	The Insurer’s written case went on to consider what would have happened had her Honour applied what it argued was the correct test. In this regard, the Insurer submitted that her Honour would have considered s 54 of the Insurance Contracts Act and found that s 54(2) was engaged such that Dhillon Scaffolding could not have gained the protection that s 54(1) would otherwise have offered.
(b)	Dhillon Scaffolding’s submissions
32	Dhillon Scaffolding accepted that the Schedule Condition and cl 16.1.4 are conditions precedent and that the onus of proof of fulfillment of those conditions lay with it. Dhillon Scaffolding submitted that it had met that burden and the judge was satisfied that the evidence demonstrated that there had been no breach or failure to meet the conditions precedent.
33	In respect of the proper construction of cl 16.1.4, Dhillon Scaffolding relied on the ‘Reasonable Precautions’ heading to the clause. It observed that three of the four sub-clauses did not use the language of ‘reasonable precautions’ and submitted that her Honour’s conclusion that each was a reasonable precautions clause was consonant with the commercial purpose of the Policy as well as being in accordance with authorities on analogous construction points. Dhillon Scaffolding contended that where the obligations created by the legislation and regulations themselves required only reasonably practical compliance, reasonable precautions were implicit. Any other construction would be repugnant to the commercial purpose of the Policy.
34	In relation to the Schedule Condition, Dhillon Scaffolding submitted that use of the word ‘must’ and the absence of the words ‘reasonable precautions’ did not advance the Insurer’s position but merely framed the enquiry into the effect of the clause and whether compliance would be repugnant to the commercial purpose of the contract. Dhillon Scaffolding contended that the Guidelines without the force of law, and based on the regulations and legislation (the subject of cl 16.1.4), could not give rise to an obligation above the reasonable care obligation founded in the regulations and legislation.
35	It was submitted that if cl 16.1.4 was not a reasonable precautions clause, then there was no need for Dhillon Scaffolding to rely upon the Schedule Condition. If the judge was correct and cl 16.1.4 was a reasonable precautions clause, then on the Insurer’s contention, the Schedule Condition should be construed in a way that was inconsistent with cl 16.1.4 and would lead to anomalous results. By way of illustration, Dhillon Scaffolding noted that on the Insurer’s construction, the insured could meet the cl 16.1.4 condition precedent for cover by not recklessly breaching the 4 m requirement contained in the ESI Regulations yet for precisely the same conduct fall foul of the Schedule Condition for breach of the Guidelines which purports to embody the regulations.
36	Dhillon Scaffolding submitted that the purported effect of the Schedule Condition would be repugnant to the commercial purpose of the Policy because the breaches would be coincident with liability the Policy is intended to cover.
37	Dhillon Scaffolding noted that s 54(2) of the Insurance Contracts Act did not relate to matters at the core of ground 1, being the condition precedent contentions and the construction contentions. Nevertheless it submitted that there was no proper basis to assert that the failure to meet the conditions precedent by failing to comply with the regulations caused or contributed to the loss. 
Consideration
38	The Insurer and Dhillon Scaffolding accept that both cl 16.1.4 and the Schedule Condition are conditions precedent. That is the effect of cl 14. The consequence is that if either of those conditions was breached, then the Policy was not binding on the Insurer and the Insurer incurred no liability to pay. The onus of proving there was no breach rests with Dhillon Scaffolding.
39	The critical question then is whether those conditions required Dhillon Scaffolding to take reasonable precautions to comply with all statutory requirements, other safety regulations and the Guidelines or alternatively, whether strict compliance was necessary. The task is one of the proper construction of the Policy. The parties relied on a number of cases that concerned other insurance policies with some similarities to the Policy the subject of this case. A summary of many of those cases is included in the reasons of Martin CJ in WFI Insurance Ltd v Manitowoq Platinum Pty Ltd. Essentially though, the task is one of construing this Policy. Authorities dealing with different language in different policies are of no great assistance in this case.
40	The Policy being a commercial contract, its meaning must be ascertained by considering what a reasonable businessperson would have understood the terms to mean. This requires consideration of the words used, the surrounding circumstances known to them and the commercial purpose of the contract. Ordinarily, the commercial purpose and surrounding circumstances are able to be identified from the contract itself. It has long been established that an insurance policy will not be construed in a way that deprives the insured of meaningful cover. To do so would be repugnant to the commercial purpose of the contract. 
41	Here, the commercial purpose is to provide various types of insurance. Relevantly, Section A of the Policy concerns cover for public liability, including liability for personal injury arising out of the conduct of the scaffolding business conducted by Dhillon Scaffolding. Reading the Policy as a whole then, a construction that accords with that purpose is to be preferred.
42	Starting with cl 16.1, the heading forms part of the text of the Policy. There is no provision that excludes reference to it for the purposes of construction of the contract. In our view, the heading is a general guide to the whole clause; not just to part of it. It is a pointer to a requirement that the insured is required to take reasonable precautions, not only in respect of preventing personal injury (cl 16.1.1) but also reasonable precautions to comply with all statutory requirements and other safety regulations (cl 16.1.4). While each sub-clause is in some senses distinct and marked off by punctuation, the clause must be read as a whole. 
43	It may be thought that the use of the phrase ‘take all reasonable precautions’ at the commencement of cl 16.1.1 and its absence from the other sub-clauses is of some moment. However, we do not think that it is in the context of the Policy and its purpose. Clauses 16.1.2 and 16.1.3 import elements of the exercise of care. The statutory requirements and safety regulations invoked in cl 16.1.4 also contain elements of reasonableness. In those circumstances, it is perhaps unsurprising that cl 16.1.1 uses the phrase as an introduction to make it clear that it is not an absolute requirement to prevent personal injury.
44	Moreover, the alternative construction would defeat the commercial purpose of providing the insured with meaningful cover for liability for personal injury arising out of the conduct of the scaffolding business conducted by Dhillon Scaffolding, such that it would be repugnant. 
45	The vast majority, if not all, of the circumstances which might give rise to such a liability would most likely constitute breaches of the OHS Regulations which were in force at the relevant time. Those regulations are within the scope of cl 16.1.4. The Insurer only relies on a breach of one of those regulations which prohibits high-risk work without a work licence. Nevertheless, the Policy must be construed on the basis that it captures other OHS Regulations by virtue of cl 16.1.4. What the Insurer chooses to rely upon in any given case brought under the Policy is not relevant for the purposes of construction. Section 54 of the Insurance Contracts Act is no answer to this point. Section 54 prevents insurers from relying on post-contractual acts by an insured that are in breach of the policy but which are not reasonably regarded as causative of nor do they contribute to a loss in respect of which insurance cover is provided. At the time that the Policy was entered into, it could not be known what the precise factual basis for the liability of the insured may be. Nor could it be known what the Insurer might rely upon as the statutory or regulatory breach by the insured to deny indemnity. What was known was that almost every circumstance giving rise to liability in the insured would be coincident with a breach of the OHS Regulations, with that breach being reasonably regarded as being capable of causing or contributing to the insured loss.
46	In this regard, Pt 3.5 of the OHS Regulations applied to plant, which was defined to include scaffolding. The regulations were broad-ranging. For example, reg 3.5.23 required an employer, “so far as is reasonably practicable”, to identify all hazards to health and safety associated with, among other things, the installation, and use of plant and the systems of work associated with that plant. Regulation 3.5.24 required an employer to ensure that any risk associated with plant was eliminated so far as is reasonably practicable. If the proper construction of the Policy was that absolute compliance with the regulations was required then the effect would be that Dhillon Scaffolding would be deprived of any meaningful cover. On the other hand, a construction of cl 16.1.4 that only imposes an obligation on the scaffolder to take reasonable precautions (as between it and the Insurer) to identify the hazard and ensure that any risk was eliminated so far as is reasonably practicable would leave scope for the Policy to operate. 
47	We would note in passing that the same analysis does not apply in respect of s 23 (duty of employers to non-employees) or s 26 (duties of persons who manage or control workplaces) of the OHS Act. Like the regulations, most instances of liability for personal injury would constitute a breach of those provisions. But those provisions are not concerned with private rights of action or defence. Rather, their operation is limited to the commission of offences. The Insurer cannot rely on a breach of those provisions because of the effect of s 34 of that Act. Sections 23, 26 and 34 are in Pt 3 of that Act. Section 34 provides:
	Nothing in this Part is to be construed as—
(a)	conferring a right of action in civil proceedings in respect of a contravention of a provision of this Part; or
(b)	conferring a defence to an action in civil proceedings or otherwise affecting a right of action in civil proceedings; or
(c)	affecting the extent (if any) to which a right of action arises, or civil proceedings may be taken, with respect to breaches of duties or obligations imposed by the regulations.
48	In Booksan Pty Ltd v Wehbe, the New South Wales Court of Appeal considered an insurance policy which excluded cover where the insured had failed ‘to comply with any relevant statutory obligations, by-laws, regulations, public authority requirements or safety requirements.’ The insurer alleged there had been a breach of s 16(1) of the Occupational Health and Safety Act 1983 (NSW), which is the equivalent of s 23 in the Victorian legislation. Ipp JA accepted the submission that s 16 was ‘in very broad terms and created an offence without importing any concept of duty of care, foreseeability, reasonable conduct or, indeed, damage.’ Ipp JA also accepted that this explained why s 22 of the NSW Act (in similar terms to s 34 of the Victorian Act) excluded ‘the application of s 16, with its wide ambit of application, to civil claims.’ Ipp JA (with whom Giles and Tobias JJA agreed) went on to hold that the insurer was prevented from relying on the exclusion from the policy stating:
	[The insurer], by relying on a breach of s 16(1), seeks to use that section as an essential element of its defence to [the insured’s] action. Moreover, if [the insurer] were to be allowed to rely on a breach of s 16(1), that section would affect a right of action in the proceedings (namely, [the insured’s] claim for an indemnity). Accordingly, in my opinion, s 22(1) precludes [the insurer] from relying on a breach of s 16(1) and Truss DCJ erred in holding that, because it had contravened s 16(1), [the insured] was in breach of General Exclusion 2.
49	It might be said that the Insurer is not relying on a breach of the OHS Act as its defence but rather relies on a breach of the express agreement between the parties in cl 16.1.4 that in turn confers a defence by reference to compliance with statutory standards. However, that does not sit comfortably with the reality that the failure to comply with the statute gives rise to a defence, albeit indirectly. In a sense, and if permitted, it would be a defence derived from the statute. 
50	In any event, unless we are persuaded that Booksan is clearly wrong (which we are not), we would be bound to follow it. While the language in s 22 of the NSW legislation and s 34(a) and (b) of the Victorian legislation is not identical, there are too many similarities between the two provisions to justify departure in their interpretation.
51	Section 34 of the Victorian Act does not prevent a defence based on a breach of the OHS Regulations. In that context, for the reasons above, it would be repugnant to the commercial purpose of the Policy to construe cl 16.1.4 as requiring absolute compliance with the regulations. 
52	It is next necessary to consider whether any element of reasonable precautions applies to the Schedule Condition. There is no reference to reasonable precautions in that condition either in a heading or in the words used in the provision. Rather the compulsory language of ‘must’ is used: the insured must comply with the Guidelines. 
53	In some senses the Guidelines are informational. Among other things, the Guidelines give practical guidance for the safe erection and use of scaffolding. Clause 5.4.2 deals with the proximity of scaffolds to powerlines. When that clause is read in the context of how dangerous it might be if not complied with, it is clear that the statement that there should be at least a 4 m clearance unless the local supply authority permits a reduction in clearance is more than a mere recommendation. The fact that the minimum clearance is specified as something that is measurable in metres (as opposed to more general language such as ‘sufficient clearance’) supports the view that this is not something that the scaffolder can take or leave to comply with or not as they see fit. Even in circumstances where a reduction has been permitted, there is a strongly worded prohibition – ‘Do not erect scaffolding until the necessary measures have been taken to minimize risk and a written authorization has been received from the electricity supply authority.’ That is all perfectly understandable in the context of prevention of accidents caused by scaffolders. It must be remembered though that the task here is one of construing the contract between an insured and their insurer with the purpose of the policy being to provide cover for liability arising out of personal injury and property damage caused by the conduct of the insured – Dhillon Scaffolding.
54	The preface to the Guidelines states that every attempt has been made to ensure that information in them is compatible with WorkSafe Australia’s publications and the statutory requirements relating to scaffolding. Senior counsel for the Insurer noted that cl 5.4.2 essentially mirrors reg 313 of the ESI Regulations. That regulation specifies, among other things, minimum distances between scaffolding and aerial electrical lines. For the reasons given above, on a proper construction of cl 16.1.4, Dhillon Scaffolding only had to take reasonable precautions to comply with reg 313. A construction of the Schedule Condition that would place an absolute obligation on Dhillon Scaffolding to comply with cl 5.4.2 (which deals with the same subject matter as the regulation) would lead to some incongruity. This is because it would see the insured required to strictly comply with the minimum clearance provided for by cl 5.4.2 but only have to take reasonable precautions to comply with reg 313 which also sets the minimum clearance distance. In short, by its terms the Schedule Condition appears to mandate compliance with a document styled only as ‘Guidelines’ whose content, for the most part, is informational rather than directive and which occasionally (eg cl 5.4.2) concerns matter that covers the same territory as is covered by the statutory and regulatory requirements which are the subject of cl 16.1.4 of the Policy. Reading the Policy as a whole and in considering its purpose, the construction urged by the Insurer ought not be preferred. Properly construed, the obligation on Dhillon Scaffolding was to take reasonable precautions to comply with the Guidelines.
55	Having reached that conclusion, it is unnecessary to deal with that aspect of ground 1 concerning the effect of s 54 of the Insurance Contracts Act in the event that cl 16.1.4 and the Schedule Condition were not reasonable precautions conditions.
56	We would grant leave to appeal in respect of ground 1 and would dismiss the appeal on that ground.
Ground 2: Did Dhillon Scaffolding take reasonable precautions?
57	Ground 2 proceeds on the basis that Dhillon Scaffolding was only required to take reasonable precautions to comply with statutory requirements, safety regulations and the Guidelines. 
58	To recap, the claim for damages for personal injury was brought by an apprentice plumber who alleged he was injured when he was working at a site in Coburg on 28 October 2015. He claimed that he was injured when he was carrying a length of guttering on a scaffold and the guttering made contact with overhead electrical powerlines. He sued his employer, the builder and two companies involved in the erection of scaffold at the site – Western Scaffold Pty Ltd and Dhillon Scaffolding.
59	The judge summarised the evidence that Mr Dhillon gave before her. Mr Dhillon obtained a Basic Scaffolder licence having completed a five day course for scaffolding. He held a WorkSafe licence to perform high risk work. He established Dhillon Scaffolding for the purpose of conducting scaffolding work. In 2015, he sourced work from Western Scaffold. Mr Dhillon built scaffolding at the Coburg site on 20 October 2015 and finished work with the assistance of two others on 21 and 22 October. Dhillon Scaffolding built scaffolding on three sides of the building with the scaffolding for the fourth side already being in place.
60	On 21 October, Mr Dhillon saw that the powerlines were in the vicinity of where he was building the scaffold and was concerned about the scaffold being close to the overhead powerlines. He said that he spoke to a supervisor on site, whose name he did not know, and told him that the scaffold was close to the powerlines and that the supervisor needed to talk to Western Scaffold. The supervisor told him ‘leave it to me.’ Mr Dhillon did not contact the power authority to obtain a permit because ‘it was meant to be done by Western or the builder.’ He continued to erect the scaffold even though he knew it was a ‘No Go Zone’ because he was working to the plan that he was told to follow by Martin Elliott from Western Scaffold.
61	Her Honour held:
	Undoubtedly Mr Dhillon was aware of the close proximity to powerlines as he said in evidence. He was one of the persons who erected the scaffold in close proximity and without knowing whether there was a permit to turn off the electricity current during construction and thereby placed himself at risk of serious injury or death. It was unclear what his comprehension was of the risk that he himself faced. His evidence was that he played no part in the manner in which the scaffold was to be constructed but constructed it in accordance with the information provided to him by Western Scaffold. On that basis of his evidence, in particular his evidence that in practice he was not the contractor to manage obtaining permits or design the manner of scaffold construction, I am not satisfied that his actions or inactions were a course of action deliberately adopted by him subjectively realising the danger it posed. 
(a)	Insurer’s submissions
62	The Insurer submitted that on the facts as found by the judge, Dhillon Scaffolding did not establish compliance with the requirement that it take reasonable precautions. In particular, Dhillon Scaffolding did not make itself aware of whether a permit existed for the erection of the scaffolding within 4 m of the powerlines or of the conditions of any such permit. In the Insurer’s submission, Dhillon Scaffolding did not show there was no recognition of the danger or the extent of the danger. The Insurer contended that Mr Dhillon accepted recognition of the danger and could have taken precautions that were reasonable in the circumstances by erecting the scaffolding more than 4 m from the powerlines or by having a permit with conditions that would make it safe to erect the scaffolding within that distance. However, in the Insurer’s submission, Dhillon Scaffolding was indifferent to the danger that existed. It was not enough, the Insurer contended, for Mr Dhillon to raise the issue with the supervisor and leave it with him. This was particularly so when Dhillon Scaffolding bore the onus.
(b)	Dhillon Scaffolding’s submissions
63	Dhillon Scaffolding submitted that the judge had found that it had not been reckless. It contended that there was nothing in the language used by the judge that she was not satisfied that Mr Dhillon’s actions were a course of action deliberately adopted by him. Senior counsel for Dhillon Scaffolding submitted it was just a matter of expression and nothing more. Essentially, he contended, her Honour had found a want of recklessness. Dhillon Scaffolding contended that there was no incontrovertible evidence which called for a different conclusion, nor were the judge’s findings glaringly improbable or contrary to compelling inference. In any event, senior counsel submitted that the case Dhillon Scaffolding had to meet was an alleged breach of a failure to obtain a permit in breach of the ESI Regulations and cl 5.4.2 of the Guidelines. 
64	Next, it was submitted, one had to consider the risk insured against. Senior counsel submitted that in this case, the risk was the risk of injury to a future user of the scaffold; that is the injury to the apprentice which took place seven days after the scaffolding was erected. However, the evidence was all about what happened when the scaffold was erected and the risk to Mr Dhillon and others on that day, not about what happened seven days later. In counsel’s submission, there was a disconnect between a risk in relation to what happened on the day the scaffold was erected and what occurred seven days later in respect of which there was no evidence. 
65	Moreover, senior counsel submitted, the judge had not made a finding that there was a breach of either reg 313 of the ESI Regulations or cl 5.4.2 of the Guidelines. Consequently, there was no issue as to whether there had been recklessness on the part of Dhillon Scaffolding.
66	Alternatively, senior counsel submitted, if there were a breach of the regulations or Guidelines by failing to obtain a permit and that breach was causative of the injury to the apprentice, then the evidence did not support a finding that Dhillon Scaffolding did not take reasonable precautions to comply with those requirements. Counsel stressed that the test is subjective and noted Mr Dhillon’s evidence that he was unaware of any obligation to obtain a permit. He brought the proximity of the powerline to the scaffold to the attention of the person in charge and then left the site. Senior counsel submitted that there was nothing more that he could have done. Accordingly, it was submitted, whatever was to be done to address the risk, was going to be done by whoever was conducting the site putting in place whatever safety provisions were needed when the scaffold was being used. It was not going to be addressed by a permit at that stage.
Consideration
67	The matters raised on the appeal by senior counsel for Dhillon Scaffolding about causation and breach (which we have summarised in [64] and [65] above) were not points that were raised before the judge. In this regard, the context in which the dispute as to the Insurer’s liability under the Policy (if any) came before the judge is important. It will be recalled that there were two main proceedings – one brought by the injured apprentice plumber against the builder and scaffolders and the other a recovery proceeding brought by WorkCover. The Insurer was joined as a third party to both proceedings. 
68	The main proceeding brought by the apprentice plumber was listed for trial on an estimate of 20 days. The parties agreed that it would be of assistance for the prospects of settlement of the overall proceedings if the judge first determined as a preliminary issue in the third party proceedings whether Dhillon Scaffolding would be entitled to indemnity under the Policy. In the principal claim brought by the injured apprentice against Dhillon Scaffolding, there are more than 20 particulars of negligence. Included among them are particulars of Dhillon Scaffolding failing to adhere to the ESI Regulations, failing to comply with the Guidelines and failing to comply with the OHS Regulations.
69	On 15 February 2021, the judge informed the parties of her finding that Dhillon Scaffolding was entitled to indemnity. The trial of the apprentice’s claim began that day. That proceeding and the WorkCover recovery proceeding were settled during the course of the trial with orders essentially dismissing both proceedings being made by consent. 
70	It is unsurprising in the circumstances described above that before her Honour the matter proceeded on the basis that the claim by the apprentice would be made out. There was no issue raised about causation; it was assumed for the purposes of the preliminary point. 
71	The judge observed that neither the ESI Regulations nor the Guidelines specified who holds the obligation to obtain a necessary permit for the erection of a scaffold when there are powerlines within a specified distance. The judge expressly stated that she was not satisfied that there was an obligation on Dhillon Scaffolding under cl 5.4.2 of the Guidelines to obtain a permit. It is implicit that she formed the same view in respect of reg 313 of the ESI Regulations. 
72	The Insurer’s pleaded case included that Dhillon Scaffolding had failed to comply with:
(a)	the Guidelines by failing to ensure the requirements of cl 5.4.2 were complied with (breach of the Schedule Condition); and
(b)	the requirements of reg 313 of the ESI Regulations (breach of cl 16.1.4).
73	Both the Guidelines and reg 313 are concerned with not erecting scaffolding within a minimum distance of powerlines without a permit. The focus is not on who has to obtain the permit as much as it is on not erecting scaffolding without a permit in place. Her Honour noted that there had not been evidence as to what steps were taken or by whom to obtain any permit but what was clear was that Dhillon Scaffolding did not know whether there was a permit or, if there was, what the conditions of the permit were. 
74	In essence, for the purposes of the preliminary point, it was assumed that there was no permit and that there had been a breach of reg 313 and cl 5.4.2 of the Guidelines. The question her Honour was answering was whether Dhillon Scaffolding had taken reasonable precautions to comply with the regulation and Guidelines. Her Honour was concerned with what Dhillon Scaffolding had done (or not done) in circumstances where it had erected scaffolding not knowing whether a permit was in place. She noted that in practice, Mr Dhillon was not the person who managed the obtaining of permits and nor did he design the manner of scaffold construction. 
75	It would perhaps have been preferable for a statement of agreed facts about causation and breach to have been relied upon for the purposes of the preliminary point. That was not done. Nevertheless, given the manner in which the matter proceeded below, this Court should proceed on the basis that causation and breach were not in issue, other than in respect of whether the obligation on Dhillon Scaffolding was absolute compliance with the ESI Regulations and Guidelines or rather whether it was only required to take reasonable precautions to comply. If the point had been taken below, it is clear that the Insurer could have led evidence about both breach and causation. 
76	Turning then to the main question as to whether Dhillon Scaffolding took reasonable precautions to comply with the Regulations and Guidelines it is useful to recall what is required. In Furman, the court considered a condition precedent in a policy of insurance which required the insured to ‘take reasonable precautions to prevent accidents and disease.’ The commercial purpose of the policy was to provide cover for liability for personal injuries caused by a breach of statutory duty and common law negligence. Bearing that in mind, Lord Diplock observed that ‘reasonable precautions’ were those that were reasonable as between the insured and the insurer. It was a subjective test and not one based on what the hypothetical reasonably careful person would do. His Lordship went on to state that what was reasonable was that ‘the insured should not deliberately court a danger, the existence of which he recognised, by refraining from taking any measures to avert it.’ It was not enough that the insured’s omission to take precautions was negligent. In Lord Diplock’s opinion ‘it must be at least reckless, i.e., made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted.’ This would avoid an insured wantonly taking no action, because they had a policy to cover a claim against them. 
77	Furman was followed by the Full Court of this Court in Albion Insurance Company Ltd v Body Corporate Strata Plan No. 4303 and again by this Court in CGU Insurance Ltd v Lawless. In the latter case, Redlich JA (with whom Maxwell P and Neave JA agreed) set out a list of some things that insureds might show to establish that they had complied with a requirement to take reasonable precautions. Ultimately though, what is required to establish whether reasonable precautions have been taken will depend upon the facts in each individual case. This must be the focus rather than endeavouring to fit within one of the items in the list included in Redlich JA’s reasons in Lawless. Remembering that the test is a subjective one, rather than what a reasonable person in the same position would have known or done, if the insured did not appreciate the danger or its extent, then that is the end of the matter. Once the danger is recognised, and where the onus rests on the insured, it is a matter for them to establish what precautions they did take and that in the circumstances they were reasonable (as between them and the insurer). This may involve establishing why measures the insurer may contend were reasonable were not. Again, the test is subjective. In considering reasonableness in this context, the words of Lord Diplock should be borne in mind. The insured must not ignore the danger once it is known to them and proceed in the face of it because they do not care whether or not the risk eventuates.
78	It should be recalled that as cl 16.1.4 and the Schedule Condition were conditions precedent, the onus fell on Dhillon Scaffolding to establish that it had taken reasonable precautions. Her Honour does not appear to have approached it in that way. Rather than positively stating that she was satisfied that Dhillon Scaffolding had taken reasonable precautions, the judge said that she was not persuaded that Mr Dhillon had not taken reasonable precautions. There is a substantive difference between the two approaches. We do not accept that it is just a matter of semantics. Her Honour was in error to take the approach to onus that she did.
79	As a consequence, it falls to this Court to determine whether Dhillon Scaffolding established that it did take reasonable precautions. In our opinion it did not. Mr Dhillon knew that there was a risk with the scaffolding being built within close proximity to the powerlines. When asked if he thought it was safe for Dhillon Scaffolding to be erecting the scaffold within a ‘No Go Zone’ he said that he was ‘just following the plan of … Martin [Elliott of Western Scaffolding]’). When it was put to him that he continued to erect the scaffold within the ‘No Go Zone’ despite knowing that it was unsafe to do so, he again said he was just following the instructions of Martin. That evidence, in the context of Mr Dhillon’s other evidence, including having noticed that the scaffold was in close proximity to the powerlines and telling the site supervisor, leads us to the conclusion that it is probable that he did know how dangerous it might be not only to people building the scaffolding on the day it was erected but also to those using it afterwards if the minimum clearance was not observed or unless other safety precautions were taken. One such precaution may have been the obtaining of a permit with conditions attached to it that would address the risk of electrocution provided the conditions were observed. Accepting for the purposes of this case that Dhillon Scaffolding was not obliged to obtain the permit, the taking of reasonable precautions required Mr Dhillon (if he took no other step which would have averted the risk of subsequent injury or death) not only to raise the danger with the site supervisor but also to make sure that someone had obtained a permit and that any safety conditions attached to it were adhered to before he continued with work. He raised the issue on 21 October and was told to leave it to the supervisor. He did nothing to check with the supervisor when he returned to the site the following day to complete the scaffolding as to whether anything had been done by the supervisor or Western Scaffolding. In a sense, his attitude was one of ‘not my problem’. He recognised the danger, raised the alarm but was indifferent to whether any action was taken to prevent the risk.
80	Dhillon Scaffolding has not discharged its burden of establishing that it took reasonable precautions to comply with the ESI Regulations and the Guidelines.
81	We would grant leave to appeal in respect of ground 2 and would allow the appeal on that ground.
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