BERKELEY CHALLENGE PTY LTD v POTBURY and ORS [1997] NSWCA 44 | Case summary

Court of Appeal (NSW)|1997-11-06|Before: Meagher JA, Honour Judge J

MEAGHER, SHELLER and POWELL JJA 6 November 1997, 18 December 1997

Negligence - occupiers liability - evidence - hearsay - third parties - Northern Sandblasting Pty Ltd v Harris (1996-1997) 71 ALJR 1428 - Vial v Housing Commission of New South Wales [1976] 1 NSWLR 388

The first respondent injured her ankle when she slipped on water lying on the common area of Minto Mall. She claimed against the owner and occupier of the Mall, who joined the manager and served a third party notice on the cleaning contractor, the present appellant. The trial judge found in favour of the first respondent and ordered the cleaning

(1) The finding of negligence against the owner and occupier is not made out on his Honour's reasons as against the appellant;

(2) The appellant was a third party to the proceedings below, and lacks sufficient locus to challenge the verdict in favour of the first respondent.

Meagher JA On 10 December 1991 Mrs Potbury, accompanied by a friend Mrs Quinn, slipped on water which was lying on the common area of Minto Mall. She broke her ankle, a painful enough evidence for a lady of her age. The cause of the water lying on the floor was the explosion of water balloons which some schoolgirls threw into the Mall. The owner/occupier of the common areas of the Mall was Permanent Trustee Australia Ltd ("Permanent"). It had a management agreement with the appellant Baillieu Knight Frank Pty Ltd ("the manager') which agreed to manage the Mall on Permanent's behalf. The manager in its turn, had a contract with the appellant Berkeley Challenge Pty Ltd ("the cleaner") which obliged it to perform cleaning services for the common areas.

Mrs Potbury sued the Permanent to recover damages, as the owner and occupier. She sued neither the manager nor the cleaner. The defendant Permanent joined the manager as a third party and the cleaner as a fourth party. The matter came on to trial before his Honour Judge J Phelan. His Honour found that Mrs Potbury was entitled to a verdict and judgment for $32,575 against the defendant Permanent, but that the cleaner was obliged to indemnify the Permanent in full. (At least, as I read his Honour's judgement, that is what I think he found).

The nub of his Honour's findings is that, although there was a safe system of work in place, it was operated negligently on the day in question by the daily cleaner, a Mr Harris. His Honour found that Mr Harris, having become aware that "there was some sort of problem", failed to take prompt action to investigate that problem, and take effective action to render the area safe. It was common ground that the area where the water-balloons exploded and where Mrs Potbury slipped was outside a shop called "Mister Minit". At the time Mrs Potbury slipped, the cleaner (Mr Harris) was coping with another problem involving water on the floor of the common area outside Coles' store.

It was also common ground that when one water-bomb exploded, the proprietor of Mister Minit, a certain Mr McCrohon, gave a signal to Mr Harris, asking him to come to the water-bomb site. Mr Harris gave evidence before his Honour, and he testified that the period which elapsed between Mr McCrohon's signal and Mrs Potbury's fall was very short; in a sense, it does not matter what he said because his Honour disbelieved him. Having regard to the contents of two earlier written versions of the incident by Mr Harris, which were tendered as prior inconsistent statements, it is no wonder his Honour found him to be lacking in credibility. Mr McCrohon gave evidence in the course of which he variously estimated the length of time between signal and fall as being "5 minutes", "a few minutes" and "1 minute"; his Honour found his evidence honest but unreliable. Neither Mrs Potbury, the plaintiff, nor her friend Mrs Quinn saw Mr Harris before Mrs Potbury's fall, and neither saw another person signal to him. (To make matters a little more confusing, his Honour found that Mr McCrohon gave two signals, which is clearly erroneous).

The plaintiff in her evidence said that the cleaner (Mr Harris) "gave her the impression" that he should have cleaned up the water sometime before. In response to a question whether Mr Harris had said anything to her after the accident she replied "it was suppose to mop up an hour ago". Without doubting his Honour's finding of credibility in her favour, and making all allowances for her tenuous grasp of English, that evidence on its own would hardly justify a finding of negligence in her favour. However, his Honour was fortified that it was "corroborated" by the evidence of Mrs Quinn. That evidence is short and should be quoted in full:

"Q. Well, what did you say to the cleaner? Just use the words that you said to the cleaner.

"A. I was talking him. You know, Mr Minit man told me he called for youse half an hour ago to come and clean up the mess from the water bombs that he kids were playing with. And the cleaner turned around and said "well I was coming!".

That evidence of Mrs Quinn was objected to, but admitted subject to objection, his Honour indicating that he would rule on its admissibility later. He never did tule on its admissibility. This is one more example of the dangers of talking the course which commended itself to his Honour. Because the plain fact is that the evidence was not admissible against anybody. It was hearsay, nor was Mr Harris anyone's agent for the purpose of making admissions. Yet his Honour, having admitted it conditionally, and having then forgotten to rule upon it, relied on it in coming to his conclusion.

On the evidence I have summarised it is just possible - but only just possible

to see how his Honour found that Mr Harris was negligent and that therefore his employer, the cleaner, the present appellant, was vicariously negligent. However, Mrs Potbury had sued neither Mr Harris nor his employer, and what is a little puzzling is how his Honour managed to take the leap from the cleaner's liability to the owner's liability. His Honour did not explain the process.

The problems multiply when one progresses from the trial to the appeal. The appellant is the cleaner, who at the trial was only the third party, not a defendant. The verdict awarded by his Honour was one against Permanent, the owner/occupier and defendant below. That was a verdict against Permanent in favour of Mrs Potbury. Neither Mrs Potbury nor Permanent have sought to challenge that verdict. The only challenge to that verdict which has been mounted is one by the cleaner, the present appellant, which has no locus to do so, not being a party to that verdict. It must follow that the present appeal must fail if it

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 3

intended to deprive Mrs Potbury of her verdict. However, Permanent's verdict against the appellant cannot stand, neither negligence nor breach of contract having been proven.

An application by the cleaner to amend its grounds of appeal, and an application by Permanent to lodge an appeal, have both been dismissed. One of the principle reasons why we took that course is that the litigation looked like getting out of hand, each document sparking off a retaliatory document. Mrs Potbury, an elderly lady with a nasty foot injury, has already endured an arbitration, a District Court trial and an appeal to the Court of Appeal. She received a modest enough verdict, and apparently was prepared to settle for half that. I do not see why her agony should be prolonged for the welfare of insurer and lawyer.

I would make the following (I hope, not unnecessarily prolix) orders:

Set aside: (a) judgement in favour of the second respondent/defendant against the appellant/fourth party; (b) order that the appellant/fourth party pay costs of the second respondent/defendant such costs to include the second respondent's/defendants costs of joining the third respondent/third party; c) order that the appellant/fourth party pay the costs of the third respondent/third party.

In lieu thereof (a) order judgement in favour of the appellant/fourth party against the second respondent/defendant; b) order that the second respondent/defendant pay costs of the third respondent/third party and of the appellant/fourth party;

Order that the second respondent/defendant pay the costs of each of the appellant/fourth party to the first respondent/plaintiff and the third respondent/third party of the appeal it being noted for the benefit of the costs assessor that the third respondent/third party filed a submitting appearance to the appeal.

Notice of Motion filed by the second respondent be dismissed; and that the second respondent pay the first respondent's costs of the Notice of Motion.

Sheller JA I have had the benefit of reading the judgments in draft of Meagher and Powell JJA. I agree for the reasons they have given with the orders proposed by Meagher JA and the additional orders proposed by Powell JA.

Powell JA To say the least, the state in which the proceedings which gave rise to this appeal, and the evidence which was tendered on the hearing at first instance before JB Phelan DCJ, was left, casts little credit upon those members of the legal profession who acted for the various parties in the period leading up to, and during the course of, the hearing at first instance.

The proceedings were commenced on 7 May 1992 when there was filed on behalf of the First Respondent ("Mrs Potbury") a Statement of Claim in which she sought to recover from the Second Respondent, Permanent Trustee Australia Ltd ("Permanent"), which was alleged to be "the owner and/or occupier of... 'The Minto Mall'" damages for injuries which she claimed to have sustained when, as the result of what was alleged to have been Permanent's negligence, she slipped and fell when walking through part of the common areas of the Minto Mall.

At the time of the filing of the Statement of Claim, what might be called "third party procedure" in the District Court was governed by the provisions of Pt21 of the District Court Rules. So far as is relevant, Pt21 of the District Court Rules provided as follows:

"1(1) Where a defendant in an action claims as against any person (in this Part called the third party) that the defendant is entitled to:

(a) contribution towards or indemnity for any verdict recovered against him by the plaintiff in the action

(2) A third party notice shall contain such particulars of the defendant's claim against the third party as the statement of claim would be required to contain if the defendant had separately sued the third party on that claim.

(1) A third party shall, as from the time of service upon him of a third party notice, be a party to the action in which the notice was filed, and subject to the tules, he shall have the same rights, and be subject to the same liabilities, in respect of the action as he would have had and been subject to if he had been sued in a separate action by the defendant.

(2) Without limiting the generality of subr(1) the third party shall plead in his notice of grounds of defence any grounds on which he disputes the plaintiff's claim against the defendant or the defendant's claim against the third party.

(1) The court may direct what part the third party shall take in the trial and generally the extent to which the usual procedures at a trial shall be modified because of the joinder of the third party.

(2) As between the defendant by whom the third party notice has been given and the third party, the Court may grant to either of them any relief or remedy which might properly have been granted if the claim against the third party had been made in a separate action, and may give such judgment for either of them against the other as may be just.

The Court may, if the trial in the one action of the issues between the plaintiff and the defendant and the issues between the defendant and the third party would in its opinion embarrass or delay the trial of the action or be otherwise inconvenient, order separate trials or make such other order as it thinks fit.

(1) Where a third party makes against any person such a claim as is mentioned in rl(1) the third party may join the person as a fourth party in the action, and subsequent parties may be joined in succession in the like circumstances, each by the party previous to him in order of joinder.

Despite the provisions of Pt21 r4 of the District Court Rules, as they then were, third and subsequent parties, while becoming parties to the action, did not become parties to the issues raised between the plaintiff and the defendant. Thus, it was not possible for the plaintiff to obtain a Judgment against the third party unless, after the third party had been joined, the proceedings were amended so as to make the third party a defendant to the action (see, for example, Edison and Swan United Electric Light Co v Holland!). Nor was it open to a third party to defend the action between the plaintiff and the defendant, although it was open to the third party to cross-examine the plaintiff's witnesses on the question whether the defendant was liable to the plaintiff (see In re Salmon, Priest v Uppleby?) and, with the leave of the Court, to call witnesses going to that issue

(1889) LR 41 Ch D 28, 32
(1889) LR 42 Ch D 351, 362

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(see, for example, Barton v London and North Western Railway Co). Further, since a third party although a party to the action was not a party to the issues between the plaintiff and the defendant, if the main action were settled as between the plaintiff and the defendant, the third party proceedings by the defendant against the third party were able to proceed in the same way as if they had been started by a separate action and without the necessity for a new action being brought (see Stott v West Yorkshire Road Car Co Ltd').

The situation which obtained in the District Court at the time of the commencement of these proceedings is to be contrasted with that which once obtained - and, for that matter, may still obtain - in the High Court in England - a similar situation appears once to have obtained - and, for that matter, may still obtain - in the Supreme Court of Queensland (see Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd5). RSC O16 r4 provided - and may still provide

(inter alia) as follows:

"4(1) If the third party enters an appearance, the defendant who issued the third party notice must, by summons to be served on all the other parties to the action, apply to the Court for directions.

(3) On an application for directions under this rule the Court may:

(a) if the liability of the third party to the defendant who issued the third party notice is established on the hearing, order such judgment as the nature of the case may require to be entered against the third party in favour of the defendant; or

(b) order any claim, question or issue stated in the third party notice to be tried in such manner as the Court may direct; or

(c) dismiss the application and terminate the proceedings on the third party notice; and may do so either before or after any judgment in the action has been signed by the plaintiff against the defendant.

(4) On an application for directions under this rule the court may give the third party leave to defend the action, either alone or jointly with any defendant, upon such terms as may be just, or to appear at the trial and to take such part therein as may be just, and generally may make such orders and give such directions as appear to the court proper for having the rights and liabilities of the parties most conveniently determined and enforced and as to the extent to which the third party is to be bound by any judgment or decision in the action.

Despite the provisions of r4(4) enabling the Court to give a third party leave to defend the action, the practice in England would seem to have been - and may still be - that such leave would not normally be given, and that, on the contrary, leave to defend the action would be granted only where there was reason to believe that the defendant on the record would not defend or was defending the action properly (see, for example, Barton v London & Northwestern Railway Cos) or where the third party admitted liability to indemnify the defendant (see, for example, Benecke v Frost7; Coles v Civil Service Supply Association').

(1888) LR 38 Ch D 144, 151 per Cotton LJ 154 per Bowen LJ. [1971] 2 QB 651

In a case in which a third party was given leave to defend the action, he became a party to the action between the plaintiff and the defendant and was bound by the judgment in the action between the plaintiff and the defendant and, if that judgment were adverse to his interests he could appeal (see In re Salmon, Priest v Uppleby; Helicopter Sales (Australia) Pty Ltd v Rotor Work Pty Ltd!®).

If, however, a third party was not given leave to defend the action between the plaintiff and the defendant, he was not bound by the judgment in that action - and thus could not appeal against that judgment (Asphalt and Public Works Ltd v Indemnity Guarantee Trust Ltd!!) - but remained entitled in the third party action to dispute the liability of the defendant to the plaintiff and, in the third party action, to rely upon any defences including defences which the defendant may have debarred himself from raising against the plaintiff.

Since the District Court Rules as they then were did not - and since the new Rules which came into operation from | January do not - provide for a third party being given leave to defend the action between the plaintiff and the defendant, the position, as I have earlier recorded, is that a third party in the District Court - and, for that matter, in this Court, where the position is the same - did not - and does not - become a party to the action between the plaintiff and the defendant. That being so, a third party cannot appeal against the Judgment in that action even if it is adverse to his interests.

Following service upon it of the Statement of Claim, Permanent caused to be filed a Third Party Notice directed to the Third Respondent, Baillieu Knight Prank (NSW) Pty Ltd ("Bailliew") in which Third Party Notice Permanent alleged, inter alia: "4. In or about December 1990, the Defendant by its agent, Colonial Mutual Property Management (NSW) Pty Ltd agreed with the Third Party to retain the Third Party to manage the Defendant's premises known as the "Minto Mall' ('the premises')... "

and further alleged that any injury, loss or damage which had been occasioned to Mrs Potbury had occurred by reason of the breach by Baillieu of certain terms of the alleged agreement which were assigned in the Third Party Notice by reason whereof Permanent claimed indemnity or contribution from Baillieu.

In addition to filing a Defence to the Third Party Notice, Baillieu caused to be filed what was described as a "Notice of Contribution or Indemnity" directed to the Appellant in which Notice of Contribution or Indemnity Baillieu alleged, inter alia:

In or about September 1991 the Third Party and Fourth Party agreed that for reward the Fourth Party would provide the Third Party with cleaning services in respect of 'Minto Mall', Minto up to and including 30 June 1992."

and further alleged that any obligation to Permanent to which Baillieu might be held liable arose by reason of the breach by the Appellant of certain terms of the agreement alleged, by reason whereof Baillieu claimed indemnity from the Appellant.

In addition to causing to be filed the Third Party Notice directed to Baillieu, Permanent caused to be filed a Fourth Party Notice directed to the Appellant that Fourth Party Notice being amended immediately prior to the commencement of the hearing before JP Phelan DCJ. In that Amended Fourth Party Notice, Permanent alleged, inter alia:

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 7

"Tn or about late 1990, the Defendant through its agent LJ Hooker NSW Pty Ltd (or alternatively, its agent Baillieu Knight Frank (NSW) Pty Ltd) agreed with the Fourth Party to retain the Fourth Party to clean the Defendant's premises known as the 'Minto Mall ' ('the premises ')... "

and further alleged that any injury loss or damage which was caused to Mrs Potbury arose by reason of the breach by the Appellant of the terms of that agreement or, alternatively, of the breach by the Appellant of what was alleged to be the duty of the Appellant to Permanent, by reason whereof Permanent claimed indemnity or contribution from the Appellant. It should be noted that, despite the allegation by Permanent of the existence of the alleged duty on the part of the Appellant, the Fourth Party Notice contained no allegation as to the basis of the existence of that alleged duty unless it were the allegation of the alleged agreement.

Although no Defence to the Amended Fourth Party Notice appears to have been filed on behalf of the Appellant, the hearing before JB Phelan DCJ appears to have proceeded upon the basis that all relevant allegations were in issue, that course, no doubt, having been adopted since the only amendment made by the Amended Fourth Party Notice to the allegations in the original Fourth Party Notice was to para4 which had previously alleged:

"4. In or about September 1990, the Defendant agreed with the Fourth Party to retain the Fourth Party to clean the Defendant's premises known as the 'Minto Mall' ('the premises')... "

In addition to filing the Defence to the original Fourth Party Notice, the Appellant filed a Notice of Grounds of Defence to the Third Party Notice of Contribution or Indemnity, in which Notice of Grounds of Defence the Appellant put in issue all relevant allegations and, in particular, the agreement alleged to have been made between Baillieu and the Appellant.

Thereafter, in January 1994 (see AB 384) the solicitors for Mrs Potbury served upon the solicitors for Permanent an offer to compromise the proceedings for the sum of $15,000.00 plus costs. That offer not having been accepted, the proceedings were then referred to arbitration pursuant to the provisions of the Arbitration (Civil Actions) Act 1983. After the hearing occupying 4 days the arbitrator made an award in favour of Mrs Potbury in the sum of $25,000.00, and made an award in favour of Permanent against the Appellant for the latter to contribute one half of the award in favour of Mrs Potbury.

Being dissatisfied with that award, Permanent applied for an order that there be a rehearing of the action, that hearing taking place before JB Phelan DCJ on 8-9 May 1995.

In the light of the pleadings the issues which fell to be determined on the hearing before JB Phelan DCJ were as follows:

(a) was Permanent at the relevant time the owner and/or occupier of the Minto Mall;

(b) did Mrs Potbury sustain injury as the remit of her slipping when passing through the common areas in part of the Minto Mall;

(c) if so, were the circumstances in which Mrs Potbury came to slip such as to render Permanent liable to Mrs Potbury in negligence (see, for example, Brady v Girvan Bros Pty Ltd!2);

(d) if so, what was the appropriate amount of damages to be awarded to Mrs Potbury.

(a) did Colonial Mutual Property Management (NSW) Pty Ltd ("Colonial"), as agent for Permanent, in about December 1990 retain Baillieu to manage the "Minto Mall";

(b) if so, were the terms of the agreement said to have then been made such as were alleged in the Third Party Notice;

(d) were the breaches of the agreement causative of the injuries sustained by Mrs Potbury;

(e) if so, to what extent, if at all, was Permanent entitled to recover from Baillieu indemnity against, or contribution towards, any verdict in favour of Mrs Potbury found against it;

as between Baillieu and the Appellant: (a) did Baillieu, in September 1991, retain the Appellant to provide to Baillieu cleaning services in respect of the "Minto Mall";

(b) if so, did the Appellant fail, in the respects alleged in the Notice of Contribution or Indemnity, to comply with the terms of that agreement;

(d) if so, to what extent, if at all, was Baillieu entitled to receive from the Appellant indemnity against, or contribution towards, any verdict which might be found in favour of Permanent against Baillieu.

(a) did LJ Hooker NSW Pty Ltd ("LJ. Hooker') or, alternatively, Baillieu, as agent for Permanent, in or about late 1990, retain the Appellant to clean the "Minto Mall";

(b) if so, did that agreement contain the terms alleged in the Fourth Party Notice;

(c) whether, and, if so, upon what basis, the Appellant became subject to a duty owned to Permanent in the terms alleged in the Fourth Party Notice;

(d) did the Appellant fail, in the respects alleged in the Fourth Party Notice, to comply with the terms of the alleged agreement or fail, in the respects alleged, to observe its duty to Permanent;

(e) if so, was the failure of the Appellant causative of the injuries sustained by Mrs Potbury;

(f) if so, to what extent, if at all, was Permanent entitled to claim from the Appellant indemnity against, or contribution toward, any verdict which might be found in favour of Mrs Potbury against Permanent.

Despite the fact that one would have thought that it was clear that those issues fell to be determined on the hearing at first instance, the "evidence", if such it can be called, which was tendered in respect of some of those issues fell lamentably short of establishing them.

Even if - which I am disposed to think is not the case - the recent decision of the High Court in Northern Sandblasting Pty Ltd v Harris!3 is to be regarded as enlarging, for all purposes, the class of persons liable for dangerous premises so as to include not only occupiers but also owners of the relevant property, it is

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 9

clear that, if Mrs Potbury were to be entitled to succeed in her claim against Permanent, it was incumbent upon her, at the outset, to establish that, at the relevant time, Permanent was the owner and/or the occupier of at least the common areas of the "Minto Mall" and, in particular, that part of the common areas where she slipped. Despite that being so, no evidence as to Permanent's ownership or occupation of the "Minto Mall" or any part of it was tendered in Mrs Potbury's case. Nor was the position made any better in the course of Permanent's case, "such evidence" as was led in chief on that subject, as best as I can ascertain it, being limited to the following evidence given by a Mr DA Jones, previously the State Property Manager, New South Wales, for Colonial and, at the time of the hearing before JB Phelan DCJ, Senior Property Manager of Colonial, which evidence was as follows: "ASHHURST: Q. How long have you been with that employer? A. Since 1987.

Q. What position did you hold with, was it then Colonial Mutual in 1990? A. That's correct. The State property manager, New South Wales.

Q. Did you also hold that position in December 1991? A. That's correct, yes.

Q. What was Colonial Mutual's relationship to the Minto Shopping Mall as at mid-1990 and December 1991. A. We had bought a trust from Hookers known as the Hooker Property Trust and Minto Mall was one of the assets within that trust.

Q. Is it correct that the present defendant in these proceedings, Permanent Trustee Australia Ltd, was the trustee of the trust that you had purchased which owned the asset Minto Shopping Mall? A. They currently are, yes."

Nor was the position made any clearer by the "evidence" which was tendered in Permanent's case insofar as it related to its claim against Baillieu. That "evidence" commenced with the following oral evidence given by Mr Jones:

"Q. When Colonial Mutual purchased the Minto Shopping Centre, who was the Managing Agent for that shopping centre at that time? A. LJ Hooker's.

Q. Approximately when did that purchase take place? A. Approximately early 1989.

Q. Who was the Centre manager employed by LJ Hooker's for the Minto Shopping Mall? A. Andrew McClure.

Q. Following the purchase by Colonial Mutual of the Minto Shopping Mall was that Mall an area of your responsibility? A. Yes.

Q. Were you involved in negotiations of a contract with a new managing agent for the Minto Mall in or about mid-1990? A. Yes.

Q. What was the name of the individual or company with whom you conducted those negotiations? A. Baillieu Knight Frank.

ASHHURST: I tender the Managing Agency Agreement from Baillieu Knight Frank for the Minto Mall Shopping Centre.

The document so described which became Exhibit | in Permanent's case, was a document which not only is undated but which has not be" executed by those described in it as the Principal and the Agent, "the Principal" being identified in the First Schedule to the Agreement as Colonial and "the Agent" being identified as Baillieu. After identifying the parties to it, the Agreement continued:

A. The Principal is the owner of certain property (more particularly that described in Item 2 of the First Schedule and hereinafter called 'the premises') and wishes to appoint the Agent to lease and manage the premises on its behalf.

B. The Agent, being duly licensed pursuant to s22 of the Auctioneers and Agents Act 1941 (as amended) agrees to accept appointment as the Principal's Agent on the terms and conditions hereinafter appearing.

(a) The Principal hereby appoints the Agent to lease and manage all or any part of the premises for the term specified in Item 3 of the First Schedule and commencing Ist December 1990 provided that the Agent shall at all times act in accordance with the directions of the Principal.

Leasing (a) the Agent is authorised to lease all or any part of the premises upon such terms and conditions approved by the Principal from time to time (sic)."

Since, in this Agreement - if it were executed by the parties to it - Colonial contracted as principal, and, claiming to be the owner of the "Minto Mall", authorised Baillieu to lease the various shops in the "Minto Mall" on its behalf; one would have thought that the Agreement - the tender of which was not objected to - tended to establish:

that it was Colonial, and not Permanent, which was the owner or, at least, the entity which, at the relevant time, occupied, and was entitled to lease, or sub-lease, the various shops within, the "Minto Mall"; and

that it was in the capacity of owner, or, at the least, the entity then entitled to occupy, and to lease, or to sub-lease, the various shops within, the "Minto Mall", and not as the agent of Permanent, in which Colonial entered into the Agency Agreement.

That this was in fact the position would seem to have been demonstrated by the monthly reports which were prepared by Baillieu and which were forwarded to Colonial on a regular basis after December 1990, in which monthly reports, Baillieu accounted to Colonial for all rents collected by it from lessees within the "Minto Mall" and for the disbursements made by it from its Trust Account in respect of (inter alia) charges for the electricity used in lighting the common areas, cleaning and maintenance, caretakers, security and the like.

Those reports appear to have been provided to Mr Jones by Mr McClure who, as it would seem, in about December 1990 was engaged by Baillieu to act in the role of "Centre Manager".

Nor was the "evidence" which was tendered on behalf of Permanent in respect of its claim against the Appellant left in any better state.

The evidence in chief led on behalf of Permanent on this subject was that of Mr Jones together with a number of documents which were identified by him and became Exhibits 3 and 4. The oral evidence of Mr Jones was so far as was relevant to this issue, as follows:

"ASHHURST. Q. From the date that you were provided with a copy of exhibit 1 Mr Jones, did you conduct any negotiations with any cleaning contractors in respect of the Minto Mall? A. No I did not.

Q. Are you aware of anyone else from Colonial Mutual conducting any negotiations with cleaning contractors from the Minto Mall? A. No I am not.

Q. Did you instruct anyone to negotiations cleaning services in respect of the Minto Mall? A. Other than the agent, no.

Q. Who from the managing agent did you instruct to conduct negotiations regarding cleaning services with the Minto Mall? A. I requested that from the centre manager, Mr Andrew McClure.

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 11

Q. Did you have a regular meeting with the centre manager? A. Yes I did on a monthly basis.

Q. Were those meetings taking place as at December 1991? A. Yes they were.

Q. Was one of the topics that you discussed with Mr McClure the cleaning services that were provided at the Minto Mall? A. Yes.

Q. I will show you a document, have you ever seen that document before Mr Jones? A. Yes, I have.

Q. Who provided you with that document Mr Jones? A. The centre manager, Mr Andrew McClure.

Q. When did he provide you with a copy of that document? A. During the tender process.

Q. Chronologically can you put a date on it if possible? A. Mid 1990, September.

Q. Following receipt of that document did Mr McClure tell you whether that tender was accepted? A. He recommended that it be accepted, yes.

Q. Were the cleaning services provided by the party named in that tender document provided to the Minto Mall after that date? A. Yes they were.

Q. As far as you are aware was that same cleaning services (sic) being provided as at December 1991? A. As far as I am aware, yes.

ASHHURST: The tender is only in respect of the Fourth Party for reasons that will no doubt become obvious upon the date of the document being sighted."

The "document" was then tendered and marked Exhibit 3. In fact, Exhibit 3 contains at least two documents, the first of which in point of time, "a submission for cleaning services at Minto Mall", commences with a letter dated 6 March 1990 addressed to "The Centre Manager, Minto Mall" for the attention of Mr McClure, the body of the letter commencing:

Thank you for giving Berkeley Challenge the opportunity to quote for the cleaning of Minto Mall."

and the second of which was a letter dated 11 September 1990 addressed to LJ Hooker NSW Pty Ltd, for the attention of AA McClure, the body of which letter commences:

"Further to our earlier discussion regarding full-time cleaning coverage at your Minto Shopping Centre, we have pleasure in submitted the following submission for your approval."

"Hoping this submission meets with your approval and look forward to continuing our service with your company. "

The documents which became Exhibit 4 include a letter dated 24 September 1991 from the Appellant addressed to "Centre Manager Minto Mall Shopping Centre" for the attention of Mr McClure, which letter commenced:

"We write to you at this time as you have requested us to apply a fixed price contract to 30 June 1992. "

and after some comments, submitted monthly prices for maintenance cleaning and Sunday cleaning. That letter producing a reply dated 26 September 1991 on the letterhead of Baillieu which letter was signed by Mr McClure as "Centre Manager Minto Mall Shopping Centre" and in which letter Baillieu's acceptance of the prices submitted by the Appellant is recorded.

After the tender of Exhibit 4 Mr Jones' oral evidence continued:

Q. Have you ever seen that correspondence before? A. I cannot recall the correspondence between Berkeley Challenge and Baillieu Knight Frank.

Q. To your knowledge was Colonial Mutual ever sent any correspondence directly from Berkeley Challenge Pty Ltd regarding the cleaning services carried out at Minto Mall.

Q. Did Mr McClure ever discuss with you the cleaning services that were carried out by Berkeley Challenge at the Minto Mall. A. Yes.

Q. Did those discussions take place during your monthly conversations with Mr McClure. A. That is correct.

Q. Did Colonial Mutual pay directly to Berkeley Challenge any moneys for the cleaning services carried out at Minto Mall? A. No. They did not.

Q. To your knowledge who did pay Berkeley Challenge for the services carried out at Minto Mall? A. BKF as the Managing Agent. Sorry, prior to BKF Hookers, that's the Managing Agent.

Q. Are those payments recorded in any written document provided to you by BKF? A. Yes, they are provided both in a budget form and in a monthly report such as you have in front of you."

The monthly report to which Mr Jones referred was Exhibit 2, which Exhibit, as I have earlier recorded, contained a statement addressed to Colonial for the attention of Mr Jones, part of which statement provided for an accounting of all the rents received from lessees of the Minto Mall and for all payments made by Baillieu from its trust account for (inter alia) services such as cleaning provided at the Minto Mall.

Nor was the situation made any clearer by the oral evidence of Mr McClure, who, by the time the matter came on for hearing before JB Phelan DCJ, had become a Senior Property Manager with Colonial. So far as is relevant that evidence was as follows:

"Q. In 1989 you were appointed the Centre Manager of the Minto Mall Shopping Centre is that correct? A. Yes.

Q. At that time you were working for an organisation LJ Hooker Ltd who were the Managing Agent for the Centre at that time is that correct? A. Yes.

Q. In your capacity as Centre Manager in 1989 when you worked for LJ Hooker you dealt with Mr Jones from Colonial Mutual is that correct? He was the agent or the representative of the agent for the owner of the Mall? A. Yes.

Q. In 1990 Baillieu Knight Frank took over as the Managing Agent of the Shopping Centre is that right? A. Yes.

Q. You continued on as the Centre Manager employed by Baillieu Knight Frank? A. Yes.

Q. When Baillieu Knight Frank commenced as the managers of the Centre were there sub-contractors engaged at the Centre? A. Yes.

Later, in the course of cross-examination, Mr McClure gave the following further evidence:

"Q. Sir, the tender that was submitted by Berkeley Challenge for the cleaning in 1991/1992 is something that your company agreed to? A. That Hookers agreed to, yes.

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 13

Q. After Baillieu Knight Frank took over, Baillieu Knight Frank elected to continue with it? A. Yes Q. Had Baillieu Knight Frank wanted more coverage or more staff to be provided by Berkeley Challenge all Baillieu Knight Frank had to do was to ask for it that's correct isn't it? A. With the approval of Colonial yes.

Q. In fact that is what happened on 26 September 1991, Baillieu Knight Frank determined that it was appropriate that there be 24 hour cleaning? A. Yes.

Q. Then negotiated that increase in the cleaning coverage with Berkeley Challenge? A. Yes.."

The nett result of all this, one would have thought, was that, far from it having been established that Permanent was, at the relevant time, the owner and/or or occupier of the "Minto Mall", the evidence which was tendered established that it was Colonial which, at that time, had an estate sufficient to entitle it to occupy all the common areas within the "Minto Mall", to lease, or sub-lease, all the shops within the "Minto Mall" and to receive the rents payable by all the merchants who occupied shops within the "Minto Mall".

Although there appears to have been little dispute but that Mrs Potbuty slipped and sustained her injuries in circumstances which, at least in broad general terms, were as she described, such "evidence" as there was which was directed to the question whether any of Permanent, Baillieu or the Appellant, and, if so, which, was liable in law to compensate Mrs Potbury for the injuries which she sustained, or to indemnify any of those parties against, or to contribute towards, any verdict which might be found in favour of Mrs Potbury, was left in a thoroughly unsatisfactory state. The "evidence" such as it was, is summarised in the Judgment which has been prepared by Meagher JA, which Judgment I have had the opportunity of reading in draft.

What seem to be the critical parts of the Judgment which JB Phelan DCJ was to deliver were as follows:

"The case against the defendant and in turn the Third Party essentially depended upon the propositions that there was only one cleaner at the time, the back-up system involved delay, as did the location of the cleaning materials and the system of placing an object particularly a moveable trolley, was unsatisfactory. Additionally, it was put that each was responsible vicariously for any neglect by the Fourth Party 's cleaner.

The case against the Fourth Party depended upon the cleaner's delay in attending.

I believe that the Plaintiff's evidence of what the cleaner is said to have said is based on a conversation between Mrs Quinn and Mr McCrohon and with the cleaner himself It tends, in its turn to confirm that the cleaner did not dispute what Mrs Quinn was putting to him both in the context of what she was relaying about Mister Minit's assertion and what she had said herself

Iam satisfied that Mrs Quinn's evidence is on the probabilities more accurate. I am thus satisfied that Mr Harris at the time of the accident, from the conversation he had with Mrs Quinn, was aware of the existence of some sort of problem near Mr Minit but he chose to remain with the Coles spillage, that he gave no thought to investigating and thus securing any danger, nor notifying management in accordance with what I find the general policy to have been and to have instead he chose to chat over a cigarette. Prompt action on his part to investigate and secure the spillage with an object such as a pot plant or to clean it up over a significant period, substantially added to the risk of foreseeable

injury. His manner of doing his job was thus unreasonable in the circumstances where he himself described his running to get the cleaning materials on other occasions.

I am satisfied that these acts of neglect caused this accident I am not satisfied that any of the alleged deficiencies in the system (and it seems to me that it was less than a perfect one) that might have attracted liability to the defendant and Third Party, such as the presence of only one cleaner, the back-up system in the manager's office and the location of the cleaning materials and method of securing an area of danger were not causal of this accident. Thus there win be a verdict for the Plaintiff against the Defendant, who in turn is to have indemnity against the Fourth Party and thus judgment.

There will be a verdict in favour of the Third Party against the Defendant. The Third Party's claim to indemnity contribution against the Fourth Party is dismissed and there will be a verdict in favour of the Fourth Party.

In the Notice of Appeal which was later to be filed on behalf of the Appellant, a number of grounds were taken. Of those grounds it is sufficient, for present purposes, to note the following:

That His Honour erred in finding the Fourth Party negligent in the circumstances where His Honour had found that the Plaintiff slipped and fell within five (5) minutes and perhaps ane (1) minute of the spillage occurring

In the alternative to Ground 3 that His Honour erred in finding that the conversation said to have passed between Ms Quinn and the Fourth Party/Appellant's employee was capable of constituting an admission of delay by the Fourth Party/Appellant's employee and that such delay in the circumstances constituted negligence.

That His Honour erred in finding that the Fourth Party/Appellant's employee hod been negligent in circumstances where the evidence established that he attended upon the scene within one (1) to five (5) minutes of the spillage occurring.

The Orders sought by the Appellant in its Notice of Appeal were:

Set aside the Judgment of Phelan DCJ and in lieu thereof enter the following Orders:

2.2 Judgment for the Third Party on the Third Party Notice.

2.3 Judgment for the Fourth Party on the Fourth Party Notice.

2.5 Defendant to pay the Third and Fourth Parties (sic) costs.

In the alternative, such contribution from the Defendant and Third Party toward the Plaintiff's verdict as the Court thinks fit. "

Despite the fact that, in its Notice of Appeal, the Appellant sought to have set aside the Judgment in favour of Permanent which had been entered against it (the Appellant) which Order, if made, would leave Permanent subject to a Judgment against it in favour of Mrs Potbury, with no right of recourse against either Baillieu or the Appellant, no defensive Notice of Appeal seeking to have that

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 15

Judgment set aside, was filed on behalf of Permanent, although an application to stay execution on that Judgment was made to, and dismissed by, JB Phelan DCJ on 4 August 1995, following which the amount of that Judgment was paid to Mrs Potbury.

Despite the fact that Permanent did not file a defensive Notice of Appeal, there was filed on behalf of Mrs Potbury a Notice of Contention in which Mrs Potbury contended that the decision of JB Phelan DCJ should be affirmed on the following additional or alternative grounds:

"1. That the Defendant/Second Respondent failed to implement and maintain a proper and safe system for the cleaning of the Defendant's/Second Respondent "s premises.

That the Defendant/Second Respondent was vicariously liable to the Plaintiff/First Respondent as a result of the negligent act of the employee (cleaner) of the Fourth Party/Appellant."

Although it did not form part of the material contained in the Appeal Book, material which has since been provided to the Court in the circumstances to which I will refer, indicates that, on 23 December 1996, Permanent's solicitors wrote to Mrs Potbury's solicitors a letter which was, in part, as follows:

We note that you will immediately take steps to join the Fourth Party, Berkeley Challenge Pty Ltd as a Defendant to these proceedings.

The fact that the Court of Appeal has the power to make Orders for joinder is demonstrated by Mulcahy v Curramore Pty Ltd (1974) 2 NSW Law Reports 464.

Our counsel has advised that if the Plaintiff fails to join the Fourth Party as a Defendant to these proceedings, then it will need to establish that the particular circumstances establish an exception to the general rule that 'a party is not vicariously liable for the actions of its independent contractor' Kondis Transport v State Transport Authority (1984) 154 CLR 672 and Stevens v Broadribee (sic) Sawmilling Co Pty Ltd (1986) 150 CLR 16.

Our counsel has advised that the Plaintiff stands a much greater chance of resisting the appeal if it joins the Fourth Party as a Defendant to the proceedings than if it relies only on the vicarious liability argument.

Thereafter, on 1 August 1997, there were filed on behalf of Mrs Potbury two Notices of Motion, in which Notices of Motion were sought Orders:

amending the proceedings so as to join the Appellant as a Second Defendant; and

pursuant to the provisions of s60C of the Limitation Act 1969 extending the time within which Mrs Potbury might commence proceedings against the Appellant seeking to recover damages for the injury which had been sustained by her.

When the appeal was called on for hearing, Mr JE Maconachie QC appeared for the Appellant, Mr GL Raffell appeared for Mrs Potbury, while Mr MA Ashhurst appeared for Permanent. There was no appearance on behalf of Baillieu which, as it would seem, had filed a submitting appearance and had filed a short written submission to the effect (inter alia) that its costs of the arbitration, the hearing before JB Phelan DCJ and the appeal, be paid by either the Appellant or Permanent.

At the commencement of the hearing of the appeal, the Court raised with Mr Maconachie the question of the Appellant's locus stand) to seek to have the Judgment in favour of Mrs Potbury against Permanent set aside, at which time Mr Maconachie appeared to concede - in the light of what I have earlier written, in my view correctly - that it was not open to the Appellant to seek to challenge that Judgment.

Mr Maconachie then, very properly, drew the Court's attention to the decision of this Court in Vial v Housing Commission of New South Wales!4 in which case the Court was concerned to deal with the question of the liability of the Housing Commission to the wife of the tenant of one of its flats who had slipped on a Bight of stairs, which flight of stairs had become slippery as the result of the negligence of the Housing Commission's cleaning contractor. In particular, Mr Maconachie drew the Court's attention to the Judgment of Glass JA in which the following passage!5 appears:

"The first defendant's last submission was that there was no evidence that the defendant ought to have known of the unusual danger, and thereupon failed to take care to prevent injury. I do not think that this submission should succeed. It fails on an evidentiary and also on a legal ground. There was evidence to support an inference that it was the regular practice of the contractor to leave the stairs covered with water containing detergent instead of hosing them down immediately. This could have been regarded as an unusual danger which by the exercise of care on the part of the defendant landlord could have been discovered and by appropriate instructions remedied. The second answer is to be found in a line of authority which makes an occupier liable to an invitee for the defaults of his independent contractor in circumstances where the work performed by the latter involves no technical knowledge or experience. This was the precise basis of the decisions in Woodward v Mayor of Hastings ({1945] KB 174) and Bloomstein v Railway Executive ([1952] 2 All ER 418). The principle was further explained in Green v Fibre Glass Ltd ([1958] 2 QB 245, 250) where the following passage appears: "Those were cases - as with Pickard v Smith ((1861) 10 CBNS 470; 142 ER 535) and Wilkinson v Rea Ltd ({1941] 1 KB 688) - where the safety of the invitee depended upon the careful performance of some act which called for no technical knowledge or experience but upon acts which the courts held that the invitor could and should have done himself and which he neglected to do. In such cases, the invitor is liable for his neglect to do the act. It is no excuse for his failure to do that act that, for purposes of his awn, he chooses to employ an independent contractor who has neglected to perform the act or to perform it carefully.'" Mr Maconachie's submissions then concentrated on what I might call the principal grounds of appeal, that is, those contained in para4, para6 and para9 to which I have earlier referred. In the course of those submissions Mr Maconachie, rightly in my view, submitted that the learned trial Judge erred in finding that the conversation said to have passed between Ms Quinn and the Appellant's employee was capable of constituting an admission of delay and that such delay in the circumstances constituted negligence. It is, in my view clear that that the Appellant's employee had no authority to make admissions binding the Appellant (see, for example, Fraser Henleins Pty Ltd v Cody!®;, Ex parte Gerard & Co Pty Ltd!7, Port Augusta Hotel Ltd v Samuels!8;

[1976] 1 NSWLR 388
supra at 394
(1944) 70 CLR 100

URJ BERKELEY CHALLENGE PTY LTD v POTBURY and ORS (Powell JA) 17

BERKELEY CHALLENGE PTY LTD v POTBURY and ORS

At a glance

Court

Decision date

Before

Source

Judgment (216 paragraphs)

Parties

Cases Cited (6)

Cited By (2)