Gaitanis & Anor v Nicholas Moss

5. The claim made by the owners against the agent arose out of an accident at the premises on 22 December 1995 when the brick fascia of the garage collapsed upon the plaintiff, a youth, who was playing basketball in the yard. The plaintiff apparently jumped up to attempt a shot but his hands came in contact with the basketball hoop which was affixed to the fascia and it collapsed upon him causing injury. The plaintiff sued the owners and his claim against them was settled for $350,000 and costs, which sum is now agreed to have been fair and reasonable. When sued, the owners had joined Ms Green and the managing agent as third parties, claiming contribution or indemnity. The plaintiff had later joined the agent as thirdnamed defendant and, once the owners settled the plaintiff's claim, they pursued their claim against the agent. They did not pursue their claim against Ms Green.

8. The trial was thus between owners and managing agent. It was relatively short and the parties proceeded upon a number of agreed facts. At trial the dispute appears to have turned largely upon a complaint allegedly made by or on behalf of the tenant to the agent about the wall in August 1995. Earlier, in April 1995, the tenant had complained of a number of defects needing attention: that the garage door was not working and about a back light, a leaking water pipe and damage to the linoleum. On that occasion the agent had made a note of the complaints and had passed them on to the owners who had instructed the agent to obtain a quotation for the garage door and to arrange for the other items to be fixed. The agent contacted one Joe Finnegan, a handyman, to attend the premises and inter alia to supply (or, perhaps more accurately as it turned out, to obtain) a quotation for repairing the garage door. By August, however, nothing had yet been done although it was expected, apparently, that the handyman would be attending shortly.

11. Evidence was led from Ms Green that in July or August 1995 she had actually seen the wall of the garage move on "a very windy day". Evidence was led also from the tenant's boyfriend, one Failla, who said that in August 1995 he too had seen the wall move "in very strong winds". Mr Failla said that he had promptly contacted the agent to tell them that "you could see the wall waving in the wind". He had spoken, he said, with one "Andrea" (an employee of the agent having responsibility for day to day management) and Andrea had told him to speak with the workman when he attended to see to the garage door. As it happened two contractors attended in succession to see to the door and, according to Ms Green, she spoke to the first and, according to Mr. Failla, he spoke to the second. Both spoke of the movement of the wall. In due course the garage door was replaced but nothing, it seems, was done to the wall.

14. One of the contractors apparently supplied to the agent a quotation/invoice for fixing the garage door and a note was endorsed on that document upon which some reliance was placed. The quotation/invoice, which was from Steel-Line Garage Doors and dated 25 September 1995, was endorsed in handwritten capitals thus:-

* EXISTING ROLLER DOOR TRACKS AND JAMBS (MOUNTING) BEYOND REPAIR.

It was upon the last nine words that the agent relied in argument, for this document was not only delivered to the agent; it was passed on, it seems, by the agent to the owners.

25. By the time of the trial Andrea was not available as a witness; she was by then an air hostess living in the middle east. Evidence was given instead by the principal of the managing agent, one Moschoyaannis. It soon became evident, however, that he knew nothing of any conversation between Andrea and the tenant or Mr. Failla: he could say only that the agent's records contained no mention of any complaint about the wall and he knew nothing of anyone attending to see to the wall. It was his belief, based upon the records that he said were kept of complaints made by tenants, that no complaint had been made about the wall as distinct from the garage door.

28. Not surprisingly, then, the trial was conducted as a dispute over the making of a complaint. At its highest the agent denied liability simply because no complaint had been made to it. The owners contended that complaint had indeed been made to the agent (as described by Mr. Failla in his evidence) and that the agent was in breach of duty for not having passed the complaint on to the owners for attention. Counsel for the agent contended that what Mr. Failla said to the agent was no separate complaint but merely part and parcel of the complaint that had earlier been made and had been communicated to the owner, that is to say, that the garage door was not working and needed rectification.

31. The judge made this finding in relation to the communication by Mr. Failla to the agent:-

"Ms Green and Mr Failla advised the thirdnamed defendant [the agent] in August 1995 of the swaying wall in the context of their continuing concerns about the inoperative garage door."

This, said Mr. Dixon for the agent, bore out his submission that the later complaint about the wall was found to be but part and parcel of the earlier one about the garage door. But Mr. Beach, for the owners, submitted that the words "in the context of" did not mean that the tenant's complaint that the wall was waving in the wind was to be equated with the complaint that the garage door needed fixing. I agree: the two are quite different. It is apparent from what has just been quoted that the judge accepted the evidence that complaint was made to the agent about "the swaying wall" and although his Honour described that complaint as made "in the context of [the complainants'] continuing concerns about the inoperative door", that was indeed no more than context; it may have meant no more than timing. Certainly it did not in some way convert the complaint about the moving wall into a complaint about the door, or vice versa.

36. If, then, complaint was made to the agent about the wall moving, that complaint was not, it seems, communicated by the agent to the owner. Mr. Dixon sought in argument to construct such a communication out of the endorsement on the quotation/invoice for the garage door (the endorsement quoted above in paragraph [5]) but, however it be read, that endorsement falls a long way short of communicating any complaint that the wall was moving in the wind. Even if it were a report of some sort (however brief) on the state of the wall, it was not about the wall moving. It did not convey to anyone the complaint which the judge found had been made by the tenant and Mr. Failla in August.

39. That being so, Mr. Beach contended that his Honour was driven to conclude that the agent was in breach of its obligations to the owners and further that but for the breach the accident would not have occurred. As to the latter, he called in aid this finding by the trial judge:-

"It is clear that the wall above the garage door was defective and was the cause upon collapse of the injuries to the plaintiff when he was slamdunking at the basketball hoop".

I take this to be a finding that the wall collapsed on the plaintiff because it was defective. In conjunction with this, counsel relied upon two of the agreed facts upon which the trial proceeded:-

"(v) If complaints had been made by the tenant to the agent about the wall, those complaints should have been referred to the owner with a recommendation that a builder/handyman inspect and report. (vi) A builder/handyman report would have indicated that the brick structure was not tied to piers properly and required repairs and/or rectification".

I agree that once it was established that complaint had in fact been made to the agent about the wall and not passed on by the agent to the owners, it should have been held that the owners had established a breach of duty by the agent in view, especially, of the agreed facts (v) and (vi). But it is another matter whether but for the breach of duty the accident would not have happened.

46. On the issue of the agent's breach of duty, I was troubled during argument by the possibility that agreed fact (v) had, perhaps unintentionally, withdrawn from the trial judge consideration of the question whether the agent's response to Mr. Failla (that is, in telling him to speak to the workman about the wall) was a reasonable response, given the expectation in August 1995 that a workman would shortly be on site attending to the garage door. In argument before the trial judge the reasonableness of the agent's response was in fact canvassed, the judge indicating at times a leaning towards the agent on that issue. But that was without reference to the agreed facts and on reflection I am persuaded by Mr. Beach's argument that, as agreed fact (v) represents a position deliberately taken up by the parties, it would not be right to countenance any departure from it even if, as I suspect, it was so drawn because the attention of the parties was focussed at the time on whether complaint was made to the agent and not at all upon the response of the agent if and when complaint was shown to have been made.

49. Moreover, given that the workman, to whom the tenant (through Mr. Failla) was directed by the agent (through Andrea) to speak about the wall moving, was engaged either to do other and relatively minor repairs or alternatively to quote for rectifying the garage door, and given also that the workman (whatever his allotted task) seems to have made no adequate response to the complaint about the wall as such, it is surely not open to the agent now to rely upon the response made by Andrea to Mr. Failla as a sufficient substitute for referring the complaint to the owners with a recommendation for inspection and report. Of course, one cannot tell what actually passed between either of the two contractors and the tenant or her boyfriend, nor can one tell what either workman actually did by way of response; and in the circumstances there seems to me no answer to the submission made by Mr. Beach that, if complaint was made to the agent as the judge found, that complaint should have been referred to the owners as stipulated for by agreed fact (v). Putting it shortly, the agent did not do what he should have done according to the agreed fact; at its own risk it chose another course and as that other course proved to be an inadequate alternative it cannot thereby escape the consequent finding that it stood in breach of the duty it owed to the owners according to the agreed fact.

52. So much for breach. In my opinion, given the findings of the judge it should have been held below that the owners had succeeded in establishing that the agent was liable to it for breach of its obligations - and whether under the agreement establishing it as managing agent or in tort does not matter for the moment. During the argument on appeal the question emerged whether, if we found the agent liable to the owners, we should remit the matter for further hearing and determination on quantum or, in lieu of the orders made below, give judgment for the owners against the agent for the full indemnity which the owners were seeking in respect of the plaintiff's claim against them. Mr. Beach contended that if the agent was in breach of its duty to the owners it necessarily followed that the owners were entitled to a full indemnity, given the agreed facts to which I have already referred. But in my opinion that is not the necessary result of agreed facts (v) and (vi), even in light of the finding that the wall collapsed upon the plaintiff because it was defective.

55. Mr. Beach submitted that the agent's breach of duty was the cause of the plaintiff's injuries because, had the tenant's complaint about the wall moving been passed on to the owners as required by agreed fact (v) and the resultant report had been as described in agreed fact (vi), the wall must have been fixed, and fixed before the accident happened, because the complaint was found to have been made in August and the accident occurred months later, in December. But as I read them the agreed facts (v) and (vi) leave unanswered any question about timing; they do not address the owners' response, first, had the complaint been referred to them by the agent and, secondly, had a report been made to them indicating the need for repairs or rectification. They therefore do not mean that the accident must have been averted but for the agent's breach of duty.

58. In this regard Mr. Dixon relied upon the findings made by the trial judge that the owners were "indifferent" to the state of the premises and indeed, according to the final paragraph of his Honour's reasons for judgment, "negligent in [their] appraisal of a house which was quite old", the owners failing to make "regular inspections" and being "content to collect [their] income". None of that suggests that the owners would have acted promptly, said Mr. Dixon, had the complaint been referred to them or a report made that repairs or rectification were needed. Moreover, the premises, said the tenant, were generally run down (as witness the state of the garage itself) and both Ms Green and Mr. Failla were of opinion that tenant's complaints were taking too long to be remedied. (The agent involved in this proceeding was, however, the second agent since Ms. Green had gone into occupation. The thirdnamed defendant had become the managing agent only in March 1995.)

61. For his part, Mr. Beach submitted that any finding that the owners would have been tardy in responding was not only contrary to such evidence as was led orally from both the owners and the managing agent, it appeared contrary, too, to the documentary evidence that the complaints made in April, when passed on, gained an immediate response from the owners_._ (If the authority that they then gave to the agent to effect repairs and obtain a quotation took some time to produce a result, that was scarcely their doing.) Nor was it consistent, said Mr. Beach, with the obligations which the judge found had been cast upon the agent by its contract with the owners, to "conduct regular inspections of the premises so as to ensure that the premises were in a fit and proper state for habitation", "to identify any defect in the premises reasonably observable on visual inspection which required rectification", and "to identify any defect in the premises reasonably observable on visual inspection which might expose the owner to liability". That the owners should have expressly cast such obligations on the agent did not sit well, the submission ran, with the judge's finding that the owners were "indifferent" to the state of the premises.

64. It seems to me that it is not possible now, on this appeal, to resolve the apparent conflict just mentioned. Plainly the judge was not impressed by the owners, but it is difficult to see the ground for his criticism in the evidence save for the impression that Ms Green and Mr. Failla had gained. On the other hand, it would be difficult for us to make a contrary finding to that of the judge, and it is a contrary finding that is necessary if we are to conclude that, had complaint been referred to the owners with a recommendation for inspection and report, or had a report been made indicating the need for repairs or rectification, the owners would, on the balance of probabilities, have acted promptly. It would be one thing to set aside the finding of the judge: it is another to substitute a contrary finding without very clear justification, especially as we have neither seen nor heard the witnesses.

67. Nor is the judge's finding that the owners were less than interested in the premises (even if that finding is open to attack) the only problem affecting the remedy available to the owners. In submitting that once breach was established the owners were entitled to a full indemnity in respect of the plaintiff's claim against them, Mr. Beach sought to establish that that was the basis on which the trial had been conducted. He pointed out that the case was opened on behalf of the owners as a claim for indemnity, qualified only by the possibility that the judge might find the owners subject to a non-delegable duty - and in the event there was no further mention of the latter. In final address, however, counsel for the owners simply referred to the obligation, which he said lay upon the agent, to "contribute" and nothing more was said about the extent of the contribution. No point appears to have been made of this difference by counsel for the agent, so that perhaps it is correct to say that the trial proceeded quite simply upon the footing that the agent was either liable or not for the amount claimed by the owners (an amount which, said Mr. Beach, was a full indemnity).

70. Although the argument is an attractive one, I think that too little was said at trial about the amount claimed for the argument to carry the day now. If the agent is liable for breach of the duty it owed to the owners, then the proper award of damages for that breach of duty will surely be seen to turn upon whether the owners would have reacted promptly, had the complaint about the garage wall been referred to them with a recommendation for inspection and report, or if the subsequent report had recommended repairs or rectification. To put that in another way, the agreed facts do not establish the timing (probable or other) of the owners' responses and, without that established, the issue of indemnity or contribution itself remains unresolved. Indeed it seems to me likely that on analysis what the owners suffered by reason of the agent's breach of duty (in failing to refer to the owners the complaint that was made by the tenant) was not liability to the plaintiff per se but the loss of a chance to make good the defect in the wall (and thus to avoid the accident that happened in December). In opening the case for the owners at trial, counsel had put the case no higher than this: that "had those repairs [to the wall] been carried out, it is arguable that the accident would never have occurred" (my emphasis); while in closing address he spoke of the agent's breach as depriving the owners "of the opportunity of making safe the premises". Whether the owners would have seized that opportunity and whether the accident would thereby have been avoided are of course matters of assessment which have not yet been determined in their favour. I express no opinion about them; as I see it, we are in no position to do so. Obviously, there is a difference between the owners losing a chance to avoid the accident as a result of the agent's breach of duty and, as a result of that breach, simply incurring liability to the plaintiff for the injuries he sustained.

73. Finally, I mention agreed fact (iii). It was as follows:-

"The first and second defendants were and are either directly liable as owner and deemed occupier under the Wrongs Act or, if the third defendant was negligent, vicariously liable for its negligence as their agent."

It is noteworthy that the basis for the owners' liability to the plaintiff is put here in the alternative. Certainly if the owners were vicariously liable for the negligence of the managing agent and if by that is meant a breach by the agent of a duty which the agent itself owed to the plaintiff, there would seem to be no reason for denying a full indemnity to the owners in this proceeding against the agent. In opening, counsel for the owners accepted that "if the third defendant [the agent] was negligent, they [the owners] are vicariously liable for the third defendant's negligence as their agent vis a vis the plaintiff"; and on that basis, he added, "the claim by the owners as against the agent is more in line with the Lister v. Romford Ice ... style of indemnity for that liability". But the basis for such "vicarious liability" for the agent's own negligence vis a vis the plaintiff is difficult to identify, if, as I suppose, the agent was an independent contractor; and as I read the pleadings the owners were asserting liability in the agent for breach of duty owed by the agent, not to the plaintiff but to the owners (either in contract or in tort). I take leave to doubt therefore the significance of "vicarious liability" to the owners' claim against the agent.

78. On the other hand, if the first and secondnamed defendants were liable to the plaintiff as owner and deemed occupier under the Wrongs Act (which seems more likely), that supposes some failure by the owners to meet their own obligations to take reasonable care for the safety of those using the premises. Perhaps the owners would want to make answer that they had put in place a proper agreement with the managing agent to see to such defects as were the subject of complaints, but the relevance of that might have to be explored. Suffice it to say for present purposes that the difference between the one head of liability (being vicarious) and the other (being personal) might well prove to be significant to the assessment of damages and, even if it be more clearly the latter than the former, there may well be factors still to be determined.

81. In the result, I think that we should allow the appeal, set aside the orders made below dismissing the claim by the owners against the agent and substitute instead judgment against the agent to reflect the conclusion that a breach of duty on the part of the agent (in failing to pass on to the owners the complaint made to the agent about the wall in August 1995) was established on the findings made by the trial judge and the agreed facts. Such breach of duty probably caused loss or damage to the owners in one shape or another but the extent of that loss or damage has yet to be determined. For the reasons given I do not think we can accede to the

submission made by the owners that they should have judgment for a full indemnity at this stage and the proper alternative, it seems to me, is to remit the matter for the assessment of damages. The questions that have been left unanswered so far can then be addressed and a proper assessment made.

86. I agree with Phillips, J.A. I have considered whether the recent decision of the High Court in Fox v. Percy[1] permits or requires this Court in discharging its appellate function to substitute a money judgment in favour of the appellants amounting to a full indemnity. But I have concluded that, in the circumstances of this case, which Phillips, J.A. elucidates, it does not do so.

91. I also agree that the appeal should be allowed for the reasons given by Phillips, J.A. I also agree with the orders proposed by his Honour.

[1] [2003] HCA 22, especially at paras.[44] and [46].