G L Nederland (Asia) Pty Ltd v Expertise Events Pty Ltd

COUNSEL : Appellant - P M Donohoe QC Respondent - Dr C J Birch & J J Loofs SOLICITORS : Appellant - Mooney & Kennedy, Sydney Respondent - Williams Woolfe & Zuur, Dee Why CATCHWORDS : Contract - exclusion clause - construction - Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 applied. DECISION : Appeal dismissed with costs.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

SPIGELMAN CJ BEAZLEY JA GILES JA

G J NEDERLAND (ASIA) PTY LIMITED v EXPERTISE EVENTS PTY LIMITED

1 SPIGELMAN CJ: I will ask Giles JA to deliver the first judgment.

2 GILES JA: The appellant, a wholesale distributor of jewellery, was an exhibitor at the Australian Jewellery Fair organised by the respondent at Darling Harbour at Sydney in September 1995. A suitcase containing jewellery was stolen from its stand at the fair. The appellant sued the respondent, and another company which provided security services for the fair, claiming the value of the stolen jewellery.

3 It was held that the respondent had been in breach of a duty of care owed to the appellant, in that it failed to limit entrance to members of the jewellery trade and to provide additional security, and that the negligence materially contributed to the loss; further, that there was contributory negligence on the part of the appellant, in that it left the suitcase in a position easily accessible and did not secure it by a chain or at least a locked cabinet, which also contributed to the loss. The respondent was held entitled, however, to the benefit of an exclusion clause in the contract under which the appellant had become an exhibitor. The alternative claim against the provider of security services succeeded, and the appellant obtained judgment against it for $234,396.29, but we were told that the company had gone into liquidation.

4 This appeal is concerned only with the position as between the appellant and the respondent. The appellant contends that the respondent was not entitled to the benefit of the exclusion clause. The respondent seeks to uphold its entitlement to the benefit of the exclusion clause, but if that be decided against it contends that it was not negligent and contests the finding as to the value of the stolen jewellery.

5 For the reasons now given, in my opinion the respondent was entitled to the benefit of the exclusion clause, and it is unnecessary to address the other issues in the appeal.

6 The exclusion clause is cl 17(a) of the contract, part of the entire cl 17 reading as follows -

"(a) The Organiser shall not be under any responsibility or liability whatsoever for damages to exhibits by loss, damage, theft, fire, flood, water, storms, strikes, riots or any other cause whatever and it shall be a pre-condition of this Agreement that the Exhibitor arrange its own insurance of the exhibit to cover loss or damage by any of the abovementioned means and the Organiser shall be entitled but not obliged to inspect such policy prior to the Exhibitor entering the Exhibition. (b) The Exhibitor shall take out a Third Party Policy with a reputable insurer containing public liability cover for an amount not less than $5,000,000.00 and the Organisers shall be entitled but not obliged to inspect such Policy prior to the Exhibitor obtaining access to the venue. In the event of a claim against the Organiser, the Exhibitor shall indemnify the Organiser.

(c) The Exhibitor shall take out a workers compensation insurance policy in respect of the Exhibition with a reputable insurer in accordance with the appropriate State Workers Compensation Act and the Organiser shall be entitled but not obliged to inspect such Policy prior to the Exhibitor obtaining access to the venue. In the event of a claim against the Organiser, the Exhibitor shall indemnify the Organiser.

(d) The Exhibitor shall indemnify the Organiser in respect of all loss and damage, claims, demands and actions made or taken against the Organiser as a result of any accident, damage, death or injury suffered by any person or property occasioned by any act, default or omission by or on the part of the Exhibitor, its servants agents, invitees, licensees, patrons, contractors or sub-contractors." 7 According to the outline of submissions filed by the appellant, there were two issues over the application of cl 17(a): first, whether it excluded loss from negligence on the part of the respondent; and secondly, whether the stolen jewellery was an exhibit within the meaning of the clause. The appellant's submissions on the two issues in the outline were not abandoned, but were not developed, and a third submission was put orally to the effect that the theft of the jewellery was not within the phrase "damages to exhibits" in the clause.

8 I go first to whether the stolen jewellery was an exhibit.

9 In the particulars on the front of the contract the appellant was named as the "Exhibiting Company" and referred to as "The Exhibitor". The charge to it, and what it received in return for payment of the charge, were recorded in the terms -

"STAND NUMBER: K23 DIMENSIONS: 3.0 METRES = 9.00 square metres TOTAL STAND AND FLOOR SPACE COSTS These charges are for FLOOR SPACE and MODULAR DISPLAY STAND including supply of carpet and erection of stand and basic stand lighting. Charges DO NOT include additional lighting, power points, electricity used or labour for exhibits TOTAL CONTRACT VALUE $ 2,898.00 " 10 On the back of the page which contained these particulars were a number of "Conditions, Rules and Regulations". The definitions included definitions of "Exhibitor" and "Organiser", in their effect to mean the appellant and the respondent respectively, and a definition of "Stand" to mean -

"… floor space allotted to the Exhibitor by the Organiser in the position agreed between the Exhibitor and Organiser and described on the front page hereof and includes any walls, partitions or other structures agreed to be provided by the Organisers [sic] to the Exhibitor."

11 The definition of "Stand" was apt to include the floor space and the modular display stand referred to on the front of the contract, the modular display stand being a structure agreed to be provided by the respondent to the appellant. The conditions referred to the Stand in a number of places. The appellant could not assign or sublet any part of the Stand without the respondent's written consent (cl 5). If the appellant did not fulfil its obligations under the contract the respondent could sell the Stand, and if the appellant did not occupy the Stand the respondent could occupy it or cause it to be occupied by someone else (cl 3(d)). In unforeseen circumstances the respondent could "amend, alter or reallocate the Stand or the location of an Exhibitor's Stand" (cl 7). The appellant was responsible for the cleanliness and tidiness of the "Space and Stand" (cl 12). The respondent agreed to provide services to the Stand as required by the appellant on a pro rata cost basis (cl 16).

12 It will be apparent that the use of the defined term was not precise, in that there was also reference to the Space although that was not a defined term and to the Exhibitor's Stand. This is one example of the unsatisfactory drafting from which the conditions suffered, and the unsatisfactory drafting is not irrelevant to the decision in this case.

13 Although not as defined terms, the conditions also referred to "displays", "demonstrations", "exhibits", and "the exhibit". As has been seen, cl 17(a) referred to "exhibits" and "the exhibit".

14 By cl 8, the respondent was to determine the hours during which the Exhibitor should have access to the venue "for the purpose of setting up and dismantling their displays".

"All exhibits are to be subject to the approval of the Organiser. Displays and demonstrations are to be in keeping with the character dignity and atmosphere of the Exhibition and the Organiser reserves the right to reject any display or demonstration and to take any necessary steps to stop any disturbance or nuisance during the Exhibition. The height of the dividing walls and back walls of the exhibit shall be to the exact height of 2.4 metres from the pavilion floor and all walls shall be lined both sides unless backed onto another stand or wall, The Exhibitor shall at his own cost erect a partition around his Stand of not more than 2.4 metres in height to separate his stand from adjoining Exhibitions. An exhibit may only occupy the area of space described in this Agreement. All personnel involved in display and construction work should be financial members of the appropriate Trade Union."

"Exhibitors will be given entry cards for themselves and their assistants to enter the Exhibition for the duration of the Exhibition. No goods or displays may be removed during the Exhibition without permission in writing of the Organiser. Only the official photographers appointed by the Organiser are permitted to take photographs in the Exhibition, without prior permission in writing of the Organiser. It shall be the responsibility of the Exhibitor to remove all exhibits, tools and all other materials and shall leave the Stand allocated to him at the Exhibition in the same condition as it was prior to the Exhibitor erecting or installing any displays. The Exhibitor will be liable for any damages to walls or floors of the building in which his exhibit is housed and shall not paint or otherwise alter the floor or walls." 17 Again the use of these terms was not precise, and given the unsatisfactory drafting of the conditions the search for one clear and consistent meaning of "exhibits", or "the exhibit", can properly be regarded as a vain endeavour. The important question is the meaning of those words in cl 17(a).

18 It is clear enough, in my view, that "exhibits" was intended to mean something different from the Stand, that is, the part of the Stand being the modular display stand provided by the appellant, and to mean whatever the Exhibitor brought into the floor space. The appellant brought into the floor space some shelving, a table, stools, some cylindrical display cases and, of course, the jewellery it was to exhibit. Subject to any significance in the references to "displays" and "demonstrations", it seems to me that "exhibits" and "the exhibits" would include the stolen jewellery, it being brought into the floor space and being par excellence what was to be exhibited.

19 Is this conclusion affected by the references to "displays" and a similar reference to "demonstrations"? "Displays" was apt to refer to jewellery on display, although it could refer also to the whole collection of the jewellery on display and the cabinets or other means of displaying it or even to items such as the table and stools. Remembering that the search for consistent use may be illusory, it is not necessary to ascribe a precise means to "displays". It may have been co-extensive with "exhibits" or "the exhibit", and possibly that is the way it was intended to be used in cl 8(a) or cl 14. Or it may have been a subset or part of "exhibits" or "the exhibit", as I am inclined to think was the use in cl 10 and cl 13. On any view, however, I do not think the use of the word "displays" indicated that the jewellery brought into the floor space and displayed or kept awaiting display was outside the scope of the reference to "exhibits" or "the exhibit". It seems to me, at best, that "displays" was, as I have indicated, a subset or part of "exhibits" or "the exhibit".

20 Concentrating then on cl 17(a), it seems to me that that it was intended that the jewellery brought into the floor space and displayed or kept awaiting display be within the references in that clause to "exhibits" and "the exhibit". The purpose of cl 17 was, quite clearly, to place the risk of loss or liability on the appellant rather than the respondent and, importantly, to require that the appellant take out insurance against the risk of loss or liability. It would not make much sense if a limited meaning were ascribed to "exhibits" and "the exhibit" in clause 17(a). The intention, in my view, was to place the risk of what for the present I will loosely call loss in relation to whatever was brought into the floor space on the appellant, and to require that it take out insurance against that loss. In my view, the reference to "exhibits" and "the exhibit" in cl 17(a) encompassed the jewellery in the suitcase, and the stolen jewellery was within cl 17(a) in the sense that it was part of what was referred to as "exhibits" and "the exhibit".

21 The next question is whether loss from negligence on the part of the respondent was outside the scope of cl 17(a).

22 The outline of submissions made the point that there was no reference to negligence in cl 17(a), and referred in particular to the decision in Canada Steamship Lines Ltd v The King (1952) AC 192. However, the construction of an exclusion clause such as cl 17(a) is to be approached in the manner laid down in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510. The scope of the clause is to be determined by construing it according to its natural and ordinary meaning read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears, including the nature and object of the contract and, where appropriate, construing the clause contra proferentem in case of ambiguity. Whether there is some inconsistency between this approach to the construction of an exclusion clause and what was said in the Canada Steamship Lines case does not need to be determined, although a comprehensive discussion of the point may be found in an article by Professor J W Carter, "Commercial Construction and the Canada SS Rules", in 9 Journal of Contract Law 69. The approach in the Darlington Futures case is quite sufficient to provide a result in relation to cl 17(a).

23 I have already referred to the purpose of the clause. Clause 17 as a whole had a wide scope, and cl 17(a) had the words following the list of causes of loss, "or any other cause whatsoever". It required that insurance be taken out by the appellant. It seems to me that it can not be reasonably argued that cl 17(a) did not extend to cover loss caused by negligence of the respondent. That was within the purpose of the clause, and its wording was appropriate to catch such a loss.

24 The remaining matter the subject of the oral submission concentrated on the word "damages", part of the phrase "damages to exhibits" in cl 17(a). It was submitted that "damages" should be read as connoting diminution in value, for example if there were damage to an item of jewellery by the prising out of a stone, as distinct from loss caused by theft or in some other way whereby the item of jewellery was entirely destroyed or lost to the appellant. It was said that "damages" could not mean the legal remedy of damages, because that meaning was not consistent with the entire phrase "damages to exhibits". Either it was wrongly used as a plural, which was unlikely because of the reference to "damage" a few words later, or it had to be given some other meaning, and the meaning put forward was that of diminution in value.

25 There are at least two difficulties with this, over and above the unnatural use of "damages" it requires. One is that diminution in value was something far less than the purpose of cl 17(a) would suggest. It is difficult to see a rational basis for reading cl 17(a) down in the way the submission requires. The second is that the obligation to arrange insurance was an obligation to arrange cover much wider than cover concerned with diminution in value, an obligation to arrange cover for what might be called entire loss. There is readily enough available a different reading of the word "damages" as part of the phrase, as meaning damages in relation to exhibits - that is, the legal remedy of damages in relation to exhibits caused by one or more of the then enumerated causes of loss. One of the enumerated causes was damage, but others involved total loss to the appellant including, specifically, theft. Remembering the unsatisfactory drafting of the conditions, it seems to me that this is the preferable construction of cl 17(a), one which gives effect to its purpose and does no more damage to its wording than the alternatives. Hence I do not consider that the submission should be accepted.

26 In support of the submission it was said that if there was ambiguity, cl 17(a) should be construed against the respondent as the party which put it forward, that is, that the rule known as the contra proferentem rule should be applied. Clause 1(e) stated that in the interpretation of the contract "no rules of construction shall apply to the disadvantage of one party on the basis that that party put forward this Agreement". It was submitted that effect could not be given to cl 1(e) because the contra proferentem rule was a rule of construction laid down, or at least adopted, as a matter of law, and it would be excluding the jurisdiction of the Court to deprive it of that rule of construction. I do not think that the reference to Carter and Harland, Contract Law in Australia, 3rd ed, para 1626, and in particular the passage the subject of footnote 110, comes anywhere near supporting the submission. I see no reason why the parties should not have agreed, as they did in cl 1(e), upon appropriate rules for construction of their contract, including negating the contra proferentem rule.

27 Even if, however, it were open to apply the contra proferentem rule, in my view the task of finding the meaning of cl 17(a) is not one which involves an ambiguity in the sense which would call for the application of the rule. The rule applies only when, having applied all other aids to construction, ambiguity remains. The scope of cl 17(a) indicated above is sufficiently arrived at in the manner I have explained, and when it has been arrived at in that manner there is no ambiguity left for the operation of the contra proferentem rule.

28 Neither the submissions in the outline of submissions nor the additional matter put orally to my mind brings success to the appellant, and I propose that the appeal be dismissed with costs.

31 SPIGELMAN CJ: The order of the court is that the appeal is dismissed with costs.

32 BIRCH: There was an order made and the appellant gave security for costs of this appeal. I need an order from your Honours that the costs as agreed or taxed be released to the respondent. This order was made by the Court of Appeal in regard to the costs of this appeal.

33 SPIGELMAN CJ: Do you have anything to say about that?

35 SPIGELMAN CJ: The order is made in accordance with your formulation.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.