Buller Ski Lifts Pty Ltd v Mt Buller Alpine Resort Management Board [2000] VSCA 31

Court of Appeal (Vic)|2000-03-09|Before: PHILLIPS, CHARLES and BATT, JJ.A.

Contract - Lease - Construction - Lessee's covenant to indemnify lessor against liability - Lessee's covenant to insure against lessor's liability - Insurance to be in both names - Meaning and effect.

This is one of two appeals that were heard together. Both were from determinations in the County Court raising similar points of construction of the terms of a lease between a ski tow operator at an alpine resort and the Alpine Resorts Commission, then the body being generally responsible for the administration, control and management of alpine resorts under of the , as it then stood. In both cases the litigation had been commenced by a plaintiff who was injured in an accident while skiing. The plaintiff recovered judgment against the Commission for damages for personal injury and the question to which the appeal gives rise is whether the Commission was entitled to recover an indemnity from the ski tow operator by virtue of a particular clause in the lease. In one case, such recovery was permitted by the trial judge and judgment was given accordingly against the ski tow operator. In the other it was refused and the Commission's claim was rejected. At some time after the proceeding was commenced, the Alpine Resorts Commission was superseded by a local management board which now appears as party to the appeal: but nothing turns on that change and it is convenient therefore largely to ignore it, referring still to the Commission as it was at the relevant time. Although both appeals were argued together, it is also convenient to deliver judgment separately, if only to avoid confusion. Some cross-reference, however, is inevitable. This appeal concerns the alpine resort at Mt Buller, the other the alpine resort at Falls Creek. That other appeal is entitled and I shall refer to it, where necessary, as "the Falls Creek appeal".

On 31 July 1996 the plaintiff in this proceeding, one Daniel Joseph Davies, travelled to Mt Buller on a day trip, to ski. There was not a lot of snow about but the plaintiff purchased a ski lift ticket from Buller Ski Lifts Ltd (the appellant) and took a chairlift to the summit. He skied more than once on the standard run, the bottom section of which was closed, and then made his way to what was called "the Howqua extension". Whilst skiing that run, he lost control of his skis and slid down the snow, unable to stop. At the base of the ski run, there was a cyclone wire fence across the ski trail, apparently for the purpose of preventing skiers from going over an embankment. But there was a gap immediately beneath this fence and it was through that gap that the plaintiff slid. He became airborne and landed at the foot of the embankment, sustaining extensive injuries.

In March 1998 the plaintiff commenced a proceeding in the County Court for damages for personal injuries. He sued both the Alpine Resorts Commission, as first defendant, and as second defendant the operator of the ski lift used by the plaintiff before commencing his downhill run. Trial was before judge alone and when the trial commenced in March 1999 counsel for the plaintiff announced that all the parties had agreed on the quantum of the plaintiff's damages at $200,000, and interest: what remained to be determined was the liability of one or other or both of the defendants in respect of that agreed sum.

In opening the case for the Commission, counsel acknowledged that the Commission had been responsible for the operation and conduct of ski patrols. He accepted that ski patrols inspected each ski run or trail at the start of each day and ought to have observed, but failed to observe, the gap in the fence. He further accepted that the Commission ought to have seen that something was done about the existence of that gap, but failed to do so. For these reasons, he admitted negligence by the Commission. He argued, however, that the second defendant had also been negligent, owing a duty of care to the plaintiff of which it stood in breach. This was denied by the second defendant.

The second defendant operated the ski lift on land leased from the first defendant, although that was not all that it did under the lease. Necessarily there was a measure of co-operation between lessor and lessee. The position of the second defendant as lessee was described thus by the trial judge in his reasons for judgment:

"Under the lease the demised land includes various portions of land on which a number of activities were conducted by the second Defendant. The accident did not take place on demised land, but on land near to it, on which skiers ski. Not only is the main purpose of the lease to enable the second Defendant to conduct a commercial activity associated with recreational skiing at the resort, but the conduct of the ski lifts depends on commercial exploitation of skiers by the second Defendant. The Ski Lift company operated equipment which groomed snow and which manufactured snow. As well, its employees maintained man made structures, including fences, and modified such structures at the request of the first Defendant. The grooming of the snow, the making of artificial snow and the repair of and modification to man made structures, such as fences, are performed substantially if not entirely away from demised land. They are all performed to enhance the commercial viability of the operation of the second Defendant. The focus of attention of the Ski Lift company was the operation of its equipment at the resort to attract, for commercial purposes, skiers to use its ski lifts and other equipment to travel to the apogee of the various ski runs serviced by its ski lifts and then ski down the ski runs."

The Commission put its claim against the second defendant in more than one way. First, it claimed that both defendants were joint tortfeasors and so liable to contribution inter se. Secondly, it claimed that under certain terms of the lease the second defendant was liable to it in respect of the Commission's liability to the plaintiff for its own negligence.

The first claim failed. After hearing the evidence led, not only from the plaintiff, but also on behalf of the two defendants, the trial judge held that the second defendant was duty bound to exercise reasonable care for the safety of skiers who skied the runs but that the scope and extent of that duty of care was to be measured against the duty of care which the Commission itself owed to skiers; and his Honour found himself satisfied that there was no negligence on the part of the second defendant. In this regard he said:

"The accident occurred when the Plaintiff, having lost control of his skis on the icy surface of the Howqua extension run, slid uncontrollably down the incline, and through the gap under the fence. The first Defendant has admitted that the ski run should have remained closed whilst the gap was exposed, and that responsibility for instructing the second Defendant to modify the fence by covering the gap rested with it. I am satisfied that these admitted omissions on the part of the first Defendant constituted a cause of the accident and the Plaintiff's injuries. I am satisfied that there was no act or omission by the second Defendant amounting to a breach of its duty of care to the Plaintiff. There is no basis for a finding that the second Defendant was in breach of the duty of care which it owed to the Plaintiff."

Thus the claim made by the Commission for contribution as between joint tortfeasors failed; for the second defendant was held not to be a tortfeasor. There is no appeal from that; nor is it otherwise challenged.

As for the claims made under the lease, the Commission relied upon clauses 7.1, 8.2.3 and 8.2.4. Both the claims under clause 8.2 failed at trial, and there is no challenge in that regard. But the judge upheld the claim under clause 7.1. That clause obliged the second defendant as lessee to take out and maintain a separate and distinct policy of public liability insurance affording cover for "the Lessor, its employees, servants and agents" in certain circumstances. No such policy was taken out. The judge found that there had been a breach of clause 7.1 and held that, in the circumstances of this case, the measure of damages was the full extent of the first defendant's liability to the plaintiff in negligence. Judgment was therefore given for the plaintiff against the Commission for $200,000 plus interest and costs, and judgment was given also for the Commission against the second defendant for such sum (for damages, interest and costs) as was awarded against the Commission in favour of the plaintiff. It is from the latter judgment that the ski tow operator now appeals, disputing the construction which the trial judge placed upon clause 7.1 of the lease. The Commission (or more strictly speaking its successor, the Management Board) is the sole respondent and it seeks to uphold the judge's view of clause 7.1. The appeal does not concern the plaintiff at all.

Because it has some bearing upon the meaning and operation of clause 7.1 it is convenient first to describe in more detail the claims made by the Commission, unsuccessfully, in reliance upon clauses 8.2.3 and 8.2.4 of the lease. In extenso clause 8.2 reads as follows:

"8.2 The Lessee shall indemnify and keep indemnified the Lessor, its agents, servants, contractors and employees from and against all actions, claims, demands, proceedings, losses, damages, compensation, costs (including solicitor and client costs), charges and expenses whatsoever to which the Lessor its agents, servants, contractors and employees shall or may be or become liable in respect of or arising from: 8.2.1 the negligent use misuse waste or abuse by the Lessee or any member, servant, agent, sub-tenant of or any other person claiming through or under the Lessee of the water, gas, electricity, oil, lighting and other services and facilities of the demised land or the services, facilities and appurtenances of the Lessor within the Alpine Resort; 8.2.2 overflow or leakage of water (including rain water) in or from the demised land but having origin within the demised land or caused or contributed to by any act or omission on the part of the Lessee its members, servants, agents, sub-tenants or other persons as aforesaid; 8.2.3 loss, damage or injury from any cause whatsoever to property or person caused or contributed to by the use of the demised land by the Lessee or any member, servant, agent, sub-tenant or other person as aforesaid; 8.2.4 loss damage or injury from any cause whatsoever to property or person within or without the demised land occasioned or contributed to by any act, omission, neglect, breach or default of the Lessee or any member, employee, agent, sub-tenant or other person as aforesaid; 8.2.5 loss damage or injury from any cause whatsoever to property or person on any easement upon which structures associated with the ski lifts have been constructed by the Lessee which is occasioned or contributed to by any act, omission, neglect or default of the Lessee or any member, servant, agent, sub-tenant or other person as aforesaid; PROVIDED ALWAYS AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED that it shall be immaterial that any of such actions, suits, claims, demands, proceedings, losses, damages, compensation, costs, charges and expenses as are hereinbefore referred to shall have resulted from any act or thing which the Lessee may be authorised or obliged to do under these presents and that any time waiver or other indulgence has been given to the Lessee in respect of any obligation of the Lessee under this Lease AND IT IS FURTHER AGREED AND DECLARED that the obligations of the Lessee under this Clause shall continue after the expiration or other determination of this Lease in respect of any act, deed, matter or thing happening before such expiration or determination."

As for the claim under clause 8.2.4, the critical question was taken to be whether the liability incurred by the Commission, the lessor, to the plaintiff was "loss, damage or injury" which was "occasioned or contributed to by any act, omission, neglect, breach or default of the Lessee [the appellant]...". As to this the judge said:

"Consistent with the conclusion which I have reached on the contribution claim by the first Defendant, and because I have found that there was no negligence of the second Defendant, the claim for indemnity under this clause must therefore fail."

In relation to clause 8.2.3, the critical question was whether the liability of the Commission to the plaintiff constituted "loss, damage or injury" which was "caused or contributed to by the use of the demised land by the Lessee ... ". As the judge found, the gap under the fence was not on the demised land. In his Honour's view, clause 8.2.3 required "some inculpatory use of the demised land which caused or contributed to the loss, damage or injury and not merely some coincidental use of the demised land". As found below, all that the appellant did was to carry the plaintiff on the ski lift to a point from which he began to ski the Howqua extension run, something which his Honour did not accept "caused or contributed to" the plaintiff's injuries. The claim under clause 8.2.3 therefore failed too.

Thus, the claims based on both clause 8.2.3 and clause 8.2.4 failed for want of any relevant use (in one case) or (in the other case) act or omission on the part of the appellant which was causally linked to the loss, damage or injury which founded the Commission's own liability to the plaintiff.

I turn now to clause 7.1. Although it appears in the lease as a continuing sentence without break or interruption, in what follows I divide it into four, to assist understanding. I separate out after the first break a number of lines which appear between brackets. I shall refer to that as "the parenthetical statement". I separate out the five or six lines at the end, commencing "PROVIDED ALWAYS" (and so I call that "the proviso"). With that said, clause 7.1 reads as follows:

"7.1 Without in any way limiting the liability of the Lessee under Subclause 8.2 of Clause 8 of this Lease the Lessee shall forthwith take out a separate and distinct policy of public liability insurance and thereafter during the continuance of this Lease keep such policy on foot in the name of the Lessor its employees, servants and agents and the Lessee (in the amount of not less twenty million dollars $20,000,000) for any one accident which minimum amount may be reviewed by the Lessor from time to time during the continuance of this Lease and may be increased as shall be determined by the Lessor having regard to all facts, matters and things relevant in the opinion of the Lessor to the sufficiency of the amount) whereby the Lessor its employees, servants and agents shall during the continuance of this Lease be indemnified against all actions, suits, claims, demands, proceedings, losses, damages, compensation, costs, charges and expenses mentioned or referred to in Subclause 8.2 of the Clause 8 of this Lease to which the Lessor its employees, servants and agents shall or may be liable PROVIDED ALWAYS that any amount specified by the Lessor shall be the amount considered by the Lessor to be the minimum amount of public liability insurance that should be held by the Lessee and nothing in this Lease contained or implied will be taken as to restrict the Lessee from taking out a greater amount of public liability insurance should the Lessee consider such desirable."

The main issue that divided the parties below and on appeal was whether, as the Commission contended, clause 7.1 obliged the lessee to procure and maintain insurance to cover the lessor (in an extended sense) for liability to the public altogether independently of clause 8.2 (of which the liability referred to in clause 8.2 was part or to which it was additional); or whether, as the appellant contended, it required a policy only in respect of liability arising in the lessor (in an extended sense) as mentioned or referred to in clause 8.2. The trial judge opted for the former and on this appeal the appellant submits that that was error, while the respondent seeks to uphold the construction adopted below. In my opinion it is the appellant's submission which should be upheld.

It is plain that the purpose of clause 8.2 is to provide the lessor (in an extended sense) with an indemnity from the lessee for liability flowing from the various things mentioned in the five paragraphs of the clause. All of them appear to involve some conduct on the part of the lessee (again in an extended sense) under the lease. Perhaps (and I do not decide this) such conduct need not give rise to liability in the lessee itself otherwise than to the lessor - or at all events not in every case described in clause 8.2. (Paragraph 8.2.2 might provide an example of that, and perhaps paragraph 8.2.3 is another.) But some conduct on the part of the lessee (in an extended sense) is required. Thus paragraph 8.2.1 refers expressly to "negligent use, misuse, waste or abuse" of services; while the following paragraphs turn on overflow or leakage of water or, in three cases, "loss damage or injury" which has actually been "caused [or occasioned] or contributed to by" something done or not done on the part of the lessee (in the extended sense). In respect of all the cases described in these five paragraphs within clause 8.2, the lessee is required by the clause to indemnify the lessor against "all actions, claims, demands, proceedings, losses, damages, compensation, costs ..., charges and expenses whatsoever" for which the lessor (in the extended sense) is liable or to liability for which the lessor (in that sense) is being exposed by the lessee.

It is in that context that one must approach clause 7.1 which requires the lessee to insure in the names of both lessor and lessee. The word "whereby" does in my opinion introduce a description of the cover which that insurance is to provide and it reflects the wording of clause 8.2. Thus, the policy must provide an indemnity against "all actions, suits, claims, demands, proceedings, losses, damages, compensation, costs, charges and expenses mentioned or referred to in Subclause 8.2 of the Clause 8 of this lease to which the Lessor its employees, servants and agents shall or may be liable". (The inclusion here of "suits" and the omission of "contractors" and the expression "become liable" are of no consequence for present purposes). It seems to me plain, simply on the wording of clause 7.1, that the insurance which is to be obtained by the lessee and maintained in the name of both lessor and lessee will guarantee the very indemnity which the lessee undertakes to provide in clause 8.2. The trial judge expressed the opinion that if that was so there could be no point in the insurance because the lessee was already obliged to indemnify the lessor to the same extent as mentioned in clause 7.1; but the need for insurance cover recognizes, I think, the commercial possibility of insolvency or some other obstacle standing in the way of the lessee meeting the call for an indemnity, when made. With all due respect to those who take a different view, the words of clause 7.1 seem to me too clear, really, to admit of any other argument.

As I have said, it seems to me that the word "whereby" in clause 7.1 serves to introduce a description of the cover to be obtained. The parenthetical statement, dealing only with the limit on any one claim, cannot serve to expand - or indeed detract from - the more general provisions of clause 7.1 which, for convenience at least, are best read, if only in the first instance, without reference to the parenthetical statement and the proviso. Further, the introductory words "Without in any way limiting the liability of the Lessee under Subclause 8.2 of Clause 8 of this Lease" ensure that clause 8.2 is to be read altogether independently of the obligation to insure which is cast on the lessee by clause 7.1. In other words, the lessee must provide the indemnity promised under clause 8.2 without regard to the extent or the nature of the insurance also required of the lessee by clause 7.1. It was said in the reasons for judgment below that the introductory words of clause 7.1 were intended to ensure that clause 7.1 should be read without regard to clause 8.2: but with great respect I think that that is to reverse their meaning. It is clause 8.2 that must be read without regard to clause 7.1.

In the result, I am clear in my opinion that the obligation to insure, which is cast upon the lessee by clause 7.1, will avail the lessor only where the liability of the lessor is a liability encompassed by clause 8.2. Liability within clause 8.2 depends upon one or other of the five paragraphs of that clause being called into play. The respondent relied in this case upon more than one of those paragraphs, but each of them was denied operation by a finding made below to which there is no challenge. It follows therefore that the liability of the lessor here in question was not a liability falling within the ambit of clause 8.2 and on that account it was not a liability against which insurance cover had to exist, according to clause 7.1. If there was a breach of clause 7.1 in that the appellant failed to obtain the requisite policy, the breach would sound only in nominal damages. At the outset of this appeal counsel for the respondent disavowed any intention to claim nominal damages only.

Counsel for the respondent, however, relied upon a number of things in both the context and the wording of clause 7.1 which, he submitted, should lead us to prefer the other construction of clause 7.1, being that which was adopted below and which, he contended, allowed the respondent to retain judgment for substantial damages. Thus, Mr Uren submitted that clause 7.1 should be regarded as requiring insurance cover which had two aspects, not one: the first described in that part of the clause which preceded the word "whereby" and the second in that part of the clause which commenced with it. The second part was not an exhaustive description, he submitted, of the cover to be procured and maintained by the lessee; it was but part of that cover, a different part from the first and perhaps additional to it, although there would doubtless be some overlap.

The first aspect of the insurance was to be discovered, said Mr Uren, from the description of the policy as one of "public liability insurance" and from the fact that the policy was to be in the names of both lessor and lessee, not just in the name of the lessor. For a broad description of what is involved in public liability insurance he referred us to Sutton on Insurance Law in Australia (3rd ed.) p.17. His submission was that the policy required under clause 7.1 had to cover both lessor and lessee severally against the liability of either to members of the public for personal injury or property damage. The cover was to exist in respect of "accident", he added, because of the use of that word in the parenthetical statement. When asked if the insurance had any further definition, he said that because of the context of the lease itself, a relevant "accident" would be one arising in the course of activities which were carried on by the lessor "in connection with" (he suggested) activities of the lessee.

I must say that I find this last qualification very difficult to discern. As will be seen when the Court comes to deal with the Falls Creek appeal, the lease in that case was a little different in that the words of clause 7.1 included immediately after the statement of the pecuniary limit "for any one accident" a qualifying expression which began "arising out of or in any way connected with the uses carried out on the demised land ...". By speaking of an accident occurring in the course of activities which were carried on by the lessor "in connection with" activities of the lessee, Mr Uren was seeking, I think, to bring the two leases into line notwithstanding the absence from the lease in this instance of the qualifying words which appear in the other. Be that as it may, I cannot see the basis for any such qualification as was suggested being supplied here where the words do not appear and the words must be implied, if at all, only by reason of the context of the lease as a whole. It would be difficult, if not impossible, to settle satisfactorily upon any particular phrase of the type suggested for implication into the parenthetical statement, a consideration which in itself indicates that the implication is not justified.

But I pass that point by, because it is scarcely at the centre of the argument. The essential point of the submission was that clause 7.1 described a policy of insurance that would wear two aspects, not one, and I am simply not prepared to accept that submission. It depends, I think, upon ignoring the two brackets which appear at either end of the parenthetical statement and treating the word "whereby" as if it were "and whereby" or perhaps "whereby in addition", and I see no justification for so reading clause 7.1. Such a construction does not, I think, give effect to the language of clause 7.1; rather it violates it. As I have said, the parenthetical statement seems to me to be just that - and thus to be secondary, dealing only with the pecuniary limit attaching to any one accident and not in itself aiding in the view that there is another aspect of the insurance which is separately described before we reach the word "whereby". What commences with the word "whereby" is to my mind the essential description of the cover which is required of the lessee under clause 7.1 and, despite Mr Uren's interesting submission to the contrary, I see nothing untoward or inconsistent in describing such a policy as one of public liability insurance. It is to provide indemnity for the lessor against liability arising as described in clause 8.2 and, as Mr Uren did, I think, concede in the end, clause 8.2 deals with matters of public liability.

In the course of his argument, counsel returned more than once to the contrast, as he would have it, between the liability described in clause 7.1 by the words commencing "whereby" by reference to clause 8.2 - which was liability in the lessor only - and the requirement that the insurance should be procured and maintained in the name of both lessor and lessee. What reason could there be for that, he asked, if there was but one aspect of the insurance and that described by the words commencing "whereby"? Similarly, why should clause 7.1 be concerned with obtaining insurance cover for the lessor in relation only to liability which was already the subject of a promised indemnity from the lessee under clause 8.2? Both these considerations weighed, I think, with the trial judge and both were emphasized before us. I have dealt already with the latter: the insurance is required to meet the possibility that insolvency, or some other obstacle, precludes the lessee's providing the promised indemnity under clause 8.2 when the lessee is called upon to act. And the insurance is to be in both names because both have an interest in seeing that it is so: the lessor to cover any liability of its to the public and the lessee to cover any liability of its to the lessor. If the insurance is in both names, I suppose that the insurer, having indemnified the lessor, could scarcely then seek to recoup itself, whether by subrogation or otherwise, from the lessee.

It is for these reasons that I remain unpersuaded on the main issue by the submissions of the respondent that clause 7.1 requires a policy of insurance going beyond the description contained within the words commencing "whereby". What is required is insurance to cover the lessor in respect of liability which is the subject of the lessee's promise of indemnity in clause 8.2 and the words in the parenthetical statement are no more than they purport to be: a limit on the amount that can be claimed "for any one accident". That word "accident" is apt enough not only because it is common in public liability insurance (as Mr Uren said) but because under clause 8.2 there might obviously be some overlap between the different paragraphs. Thus the loss, damage or injury in question might be contributed to by "the use of the demised land by the Lessee" (within the meaning of paragraph 8.2.3) and at the same time it could be contributed to by some "act, omission, neglect, breach or default of the Lessee" (within the meaning of paragraph 8.2.4) - and whether additionally or not. Hence the reference, very sensibly, in clause 7.1 to the amount to be allowed "for any one accident", thus making irrelevant the number of paragraphs in clause 8.2 which might be called into play in any given case.

I pass then to an alternative submission put by Mr Uren, based upon the rejection of his principal submission. If the insurance required under clause 8.2 was properly regarded as described by the words commencing "whereby" in clause 7.1 and thus as linked to the liability of the lessor described in clause 8.2, nevertheless, said counsel, the reference to clause 8.2 fell short of incorporating all that was found in that clause. As expressed in the respondent's Outline of Argument, the submission was that the words in clause 7.1 beginning "actions, suits, claims, demands" referred to those which were in respect of or arising from "the types or descriptions of matters referred to in clause 8.2, without requiring that they be caused, occasioned or contributed to by the lessee or its members, servants, agents etc.". Put another way, the reference in clause 7.1 was to "the types of actions, suits ... expenses described [in clause 8.2] without reference to whether [the lessee] was or was not responsible for what gave rise to them".

It must be said that the distinction underlying this submission is a subtle one and the difficulty with it became exposed when counsel sought to elaborate upon the submission by reference to examples. When asked what part of clause 8.2 was encompassed by the words in clause 7.1 "mentioned or referred to in Subclause 8.2", Mr Uren said that while, for example, clause 8.2.3 was included in the reference, what was included stopped at the words "caused or contributed to by the use of the demised land". When it was pointed out from the Bench that that would appear to mean that clause 8.2.3 was referring to "the use of the demised land" by anyone at all, which was probably too broad, Mr Uren submitted that instead of "by the Lessee or any member, servant, agent, subtenant or other person as aforesaid" there should be read instead the expression "by the Lessor".

I hope that the foregoing does not do injustice to the submission made, but I must say that once it was explained with a concrete example, I cannot see how the construction for which Mr Uren contended can be accepted. To my mind, clause 7.1 is clear: it refers expressly to actions, claims, demands (and so on) "mentioned or referred to in Subclause 8.2 of Clause 8" and it seems to me clear that this is a reference to those actions, claims, demands (and so on) as described in clause 8.2. The reference cannot, I think, be taken to be something less than that. There is no warrant, in my opinion, for including in the reference clause 8.2.3, for example, but stopping short at the expression "by the use of the demised land". There is even less justification for adding the words "by the Lessor".

For these reasons, I think that the trial judge did err in the construction he placed upon clause 7.1. In my opinion, that clause requires only that the lessee procure and maintain a policy of personal liability insurance to indemnify the lessor (in the extended sense) against those actions, claims, demands (and so on) mentioned or referred to in clause 8.2 and against which the lessee is promising in that very clause to indemnify the lessor. In this case the findings of the trial judge are such that none of the paragraphs of clause 8.2 relied upon by the Commission is applicable; there is a reason why each of those relied upon is not relevant. It follows that the existence of a policy as required of the lessee by clause 7.1 could not have availed the lessor: the cover which clause 7.1 requires would not have extended to the liability of the lessor to the plaintiff in this proceeding. On that account an award of substantial damages for breach of clause 7.1 could not be justified and, as I have said, there is no claim for nominal damages.

Accordingly I would allow the appeal, set aside the award of substantial damages and the order for costs made below in favour of the Commission and in lieu I would dismiss the claim of the Commission against the appellant, with costs.

(Speaking for the Court) The Court has given some thought to the application now made by Mr Jens which is in substance that he should have a further order for costs against the respondent, being an order for those costs which he says he could not have obtained below and could not have properly sought until this appeal succeeded, being the costs of the plaintiff's proceeding against him, a proceeding which he points out the plaintiff persisted in pursuing notwithstanding the admissions made by the first defendant at trial and the agreement of all parties on quantum. Mr Jens argues that because he has succeeded on appeal and so is no longer indebted to the first defendant for whatever it must pay the plaintiff, he should now have his costs of the plaintiff's suit against him. In all the circumstances, he says, that should be by way of a Sanderson order, thereby enabling those costs to be recovered by the appellant directly from the first defendant, the respondent to the appeal.

The first point we would make is that the notice of appeal is defective in that it does not contain any statement of the orders which the appellant proposes to seek if successful on the appeal. We refer to s.74(2B) of the County Court Act 1958 which requires that the notice of appeal "state specifically and concisely the grounds of complaint and the judgment or order sought in place of that from which the appeal is brought".

All too frequently notices of appeal are defective in that respect and the time must be coming when this Court makes an example of a case in which the defect becomes material. It is material here. Mr Jens' application has taken the respondent altogether by surprise and we feel that we could not fairly dispose of the application today without allowing the respondent time for consideration and for making any submissions as it might then wish to make.

One matter that occurs to us is whether this is a case in which, if the second defendant had sought an order for costs against the plaintiff, it is as obvious as

Mr Jens suggests that the plaintiff would have obtained an order redistributing the burden to the first defendant, given the concessions that were made and the agreement that was reached on quantum. That is but one aspect which obviously requires some consideration. The immediate question is what to do.

First, after consideration we have decided not simply to reject the application out of hand for want of any notice of it in the notice of appeal. It follows, we think, that we must give time to the respondent to prepare submissions and in the circumstances, in order to save costs so far as may be, we think that those submissions should be in writing. If the respondent desires it, we would be prepared to order that the appellant put its submissions in writing first so that the respondent is fully alive to what case it has to meet - though that is, I suppose, only a matter of mechanics.

That is not to say, however, that if and when submissions are received this Court will feel itself obliged to resolve the issue that has been raised. It may well be that on further reflection and in the light of the submissions made we will not feel in any position to make an order which will finally resolve the issue. It may in the end turn out to be better if this issue were remitted to the trial judge for his consideration, he being in a better position to appreciate the way in which the proceeding flowed.

What we propose, therefore, is first to make the orders that otherwise would have been made, allowing the appeal, setting aside paragraphs 4 and 5 of the judgment given in the County Court, and substituting an order dismissing the contribution proceedings against the second defendant and ordering costs as between defendants in relation to those contribution proceedings.

Secondly, and subject to anything counsel may say, we propose to reserve expressly for further consideration the questions whether this Court should make any and what further order (in substitution for the orders below) in respect of additional costs incurred by the second defendant in consequence of its being sued by the plaintiff for damages for personal injury; or whether this Court should remit the matter of such additional costs to the trial judge for further consideration. That should make it plain that this Court will not feel itself obliged simply by the making of submissions to resolve the issue if it feels that it ought not in all the circumstances.

Another problem presents itself as I am stating these reasons. It occurs to me that it might be necessary, if we were to deal with the costs as proposed by Mr Jens, to set aside paragraph 3 of the judgment given below, that is the order that the first defendant pay the plaintiff's costs. The meaning of that order may be debatable, but Mr Jens says that it means that the first defendant must pay the plaintiff's costs of proceeding against both the first defendant and the second defendant. It may be that there is no inconsistency in leaving that order stand and at the same time making an order for the second defendant's costs of the proceeding brought by the plaintiff against it, but as I attempted this morning to explain, for the moment I for one see some possible difficulty in following that course. I may be wrong, but it needs further consideration. If there were any inhibition of the sort I mention, one solution for Mr Jens might be to persuade the Court to limit the order made by paragraph 3 to the plaintiff's costs of proceeding against the first defendant only, leaving the field open then in relation to the proceeding brought by the plaintiff against the second defendant for an order to be made for the second defendant's costs without regard to paragraph 3. That might require notice to the plaintiff - a further complication to what is already a complicated matter.

All of this points up the wisdom of the provision in the County Court Act requiring that the notice of appeal set out the orders to be sought should the appeal be successful. While we are allowing the matter to be further explored, notwithstanding non-compliance with the statute, we should make it plain that the applicant for this further consideration, that is the appellant, may well be at risk as to the costs of our proceeding further, whatever the outcome. We think it fair to say that now, because it may be that the "additional costs" in question (which are additional to the costs otherwise incurred by reason of the contribution proceedings and so on) are not in the end very great. If so, the appellant must consider whether this game is worth the candle, lest it find at the end of the day that it obtains the order it wants, but only at the expense of the costs of the further proceeding. We hope the warning is plain. We do not in any way prejudge the decision on costs; for it is something to be determined at the end of the day. Suffice it to say that the appellant should regard itself as at risk.

The court will make these orders in relation to the Mt Buller appeal. Order -

1. That in the notice of appeal the title to this proceeding be amended by substituting for the name "Alpine Resorts Commission" the name "Mt Buller Alpine Resort Management Board";

3. That paragraphs 4 and 5 of the judgment given in the County Court on 10 March 1999 be set aside and in lieu it be ordered as follows:

(4) that in the contribution proceedings, the claim by the first defendant against the second defendant, be dismissed;

(5) that the first defendant pay the second defendant's costs of the contribution proceedings to be taxed in default of agreement, on scale D of the County Court scale with certificates for two counsel, senior counsel's fee to be fixed at $4500 with one refresher and junior counsel's fee to be fixed at $2250 with one refresher.

4. That the following questions are reserved for further consideration, namely whether this Court should make any and what further order (by way of substitution below) in respect of additional costs incurred by the second defendant in consequence of its being sued by the plaintiff for damages for personal injury (costs additional, that is, to those already dealt with in paragraphs 4 and 5 by way of substitution), or whether this court should remit the matter of those additional costs to the trial judge for further consideration.

This Court has said more than once that disputes over costs must not be allowed to develop into a sort of satellite litigation that occupies argument disproportionate to either the main issue or the costs themselves, and that is something which this court will not overlook. I do not think that there is any need for us to give directions as to the filing of written submissions at this stage. We can do that at 2.30 if the matter is to proceed.

We will now adjourn until 2.30 to allow Mr Jens to obtain further instructions and perhaps consult with you, Mr Uren, over the course to he followed.

Mr Jens having now abandoned his further application in respect of costs, the fourth paragraph of our orders - reserving certain questions for further consideration - will not be made.

The Court makes the orders which I announced in paragraphs 1, 2 and 3, which includes the substituted paragraphs (4) and (5) in the judgment below. The Court also confirms that a certificate is given to the respondent under s.13 of the Appeal Costs Act.

At a glance

Court

Decision date

Before

Source

Judgment (58 paragraphs)

Parties