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[2000] SASC 429
Supreme Court of SA
2000-12-20
Original judgment source is linked above.
08/08/2000, 09/08/2000, 10/08/2000, 11/08/2000, 14/08/2000.
NEGLIGENCE - DUTY OF CARE - OCCUPIER - INDEPENDENT CONTRACTOR CONTRACT - IMPLIED TERM TO TAKE REASONABLE CARE - LIABILITY FOR NEGLIGENCE OF INDEPENDENT CONTRACTOR - EXCLUSION CLAUSES DAMAGES - MEASURE OF DAMAGES Respondent owner of mechanical dinosaur exhibited at 1985 Royal Adelaide Show - dinosaur destroyed by fire during dismantling of surrounding enclosure 18 days after conclusion of Show - respondent successful in claim for damages against the occupier of the premises (the Society) and against an appellant with whom the respondent entered into a contract for the dismantling and removal of an enclosure surrounding the dinosaur and against an independent contractor employed to carry out that task - whether Society owed common law duty of care to the respondent - whether Society in breach of any common law duty of care - whether exclusion clauses in agreement between respondent and Society excluded Society's liability for negligence - whether evidence justified a finding of a breach of duty of care by dismantler - implied term of contract to take reasonable care - liability of dismantler in tort or in contract for negligence of independent contractor - damages awarded of $31.25m. - whether award of damages excessive - apportionment - costs.
Appellant: THE ROYAL AGRICULTURAL & HORTICULTURAL SOCIETY OF SOUTH AUSTRALIA INC.
Counsel: MR CURTAIN QC WITH HIM MR M I BELL - Solicitors: LAWSON DOWNS
Appellant: THE ROYAL AGRICULTURAL & HORTICULTURAL SOCIETY OF SOUTH AUSTRALIA INC. (IN ITS OWN RIGHT)
Counsel: MS B J POWELL QC, WITH HER MR R A CAMERON - Solicitors: LEMPRIERE ABBOTT MCLEOD
Counsel: MS S J MAHARAJ - Solicitors: MARRONE & CO.
Appellants: DAVID ALLAN PARKER AND TERRY PETER EDWARDS
Counsel: MR D A TRIM QC WITH HIM MR R A HARMS - Solicitors: GUN & DAVEY
Counsel: MR A J BESANKO QC WITH HIM MR G HOLLAND - Solicitors: LYNCH & MEYER
Judgment No. [2000] SASC 429
1 DOYLE CJ, NYLAND AND MARTIN JJ. In September 1985 a large mechanical dinosaur was exhibited at the Royal Adelaide Show. It was housed in a purpose-built structure ("the enclosure"). During dismantling of that enclosure on 25 September 1985 after completion of the Show, the dinosaur caught fire and was destroyed. In September 1991 the first respondent, Glenmont Investments Pty Ltd, ("Glenmont") took proceedings in this Court as the owner of the dinosaur alleging that the first appellant, the Royal Agricultural and Horticultural Society of South Australia Inc. ("the Society") and four other defendants were in breach of duties of care owed to Glenmont and seeking damages as a consequence of the destruction of the dinosaur. The trial commenced on 7 April 1999 and concluded on 17 June 1999. In a judgment delivered 25 November 1999, the learned trial Judge awarded damages and interest of $31.25 million and apportioned liability between the defendants. The defendants have appealed against the findings of liability, the amount of damages awarded and the apportionment of liability.
2 In 1979, Mr Allan Limb of Launceston conceived the idea of building a mechanical dinosaur. Commencing in mid-1980, construction took approximately four years. The project became what the Judge described as a "consuming passion" for Mr Limb. During the period of construction, Mr Limb was also operating a bituminising business under the name of Tarmak Pty Ltd ("Tarmak"). The Judge found that as a consequence of Mr Limb's devotion to building the dinosaur, the business of Tarmak "ran down". In 1984 at about the time that construction was being concluded, the Westpac Bank appointed a receiver of the property of Tarmak. The company was in receivership at the relevant times. The receivership ended in December 1985. At the time of the trial, Tarmak still carried on business.
3 Mr Limb prepared the plans for the construction of the dinosaur. Construction was initially undertaken in a large wooden-framed building on the business premises of Tarmak in Launceston. Employees of Tarmak assisted in the construction. In the latter stages of construction, the premises of Tarmak became inadequate and the partially constructed dinosaur was moved to the Launceston Showgrounds. Although construction had not been completed and the dinosaur was unable to move, it was put on display for the period of the Launceston Show.
4 During construction, Mr Limb made a number of inquiries concerning a site at which to exhibit the dinosaur following completion of construction. He experienced difficulties in obtaining approval to place the exhibit near a population centre in Tasmania. In 1981 he arranged a lease of approximately four hectares of land on the Pacific Highway not far from Dreamworld in Queensland. Subsequently Mr Limb moved the dinosaur by boat to Queensland where construction was completed.
5 The Judge described the dinosaur as made up of "thousands of parts, activated by hydraulics and controlled by many mini computers". His Honour said it was a "wonderful representation" of a dinosaur, capable of "breathing, growling and moving". Particular attention had been paid to the skin in order to ensure that it was life-like. The Court has seen video films of the dinosaur during construction and in operation which well demonstrate its capabilities. It stood on a motorised platform which moved slowly and from which the various functions were activated and controlled. The dinosaur was able to make a variety of sounds including breathing sounds, the eyes were capable of moving and the eyelids could close independently or together. Movement could be obtained from the neck, head, jaw and tongue. Walking-like movements were provided through the legs and hips. There was also movement in the tail and arms. All movements were slow. The dinosaur stood approximately 12 metres high and was 30 metres in length.
6 Part of the Queensland property was set up as a "Pre-Historic Park". Using the dinosaur as the major attraction, the park was opened to the public in about September 1984. The Park closed in about October 1984 after approximately six weeks of operation. It will be necessary to return to the evidence concerning the financial circumstances of Mr Limb and Glenmont at that time later in these reasons.
7 During the latter part of 1984, Mr Limb made telephone contact with Mr Paul Anderson, the Manager of Commercial Exhibits for the Society. Mr Limb inquired about exhibiting the dinosaur at the 1985 Show. Eventually an Exhibit Site Agreement dated 31 July 1985 was signed by Mr Limb. The details of the events that led to the signing of that agreement are canvassed later in these reasons.
8 Following the closure in October 1984 of Pre-Historic Park in Queensland, the dinosaur had been dismantled and stored in Queensland. Mr Limb arranged for the dismantled dinosaur to be transported from Queensland to Adelaide. It was reassembled in about one day at the Showground. The Showground was owned and occupied by the Society. The enclosure was then erected around it. The enclosure was a substantial structure of tubular steel. The parts were bolted together. Its purpose was to screen the dinosaur and provide an enclosure, within which paying customers could view the dinosaur. The enclosure included a canopy which was manufactured on the ground and lifted into place on top of the steel enclosure by a crane. The canopy enclosed the highest part of the dinosaur, its head. When the canopy was lifted into place on top of the main part of the enclosure, the four corners of the canopy were welded to the top horizontal rails of the enclosure. Notwithstanding that welding, according to Mr Limb the canopy could have been removed without cutting the welds or rails by unbolting the vertical rails while holding the canopy with a crane, thereby enabling the canopy to come away with the horizontal rails.
9 The Judge found that Mr Limb made himself familiar with the nearest fire points. Mr Limb said he made himself familiar with the position of the fire hydrants and that he pointed out the two closest fire points to Mr Michael Apted, an employee who came from Launceston to act as a caretaker. Mr Apted confirmed that evidence. The Judge rejected a challenge to the evidence of Mr Limb and of Mr Apted in this regard. His Honour's finding is challenged on this appeal.
10 According to Mr Limb, prior to the opening of the Show he was visited by a person who identified himself as the "Fire Watchman" who apparently had the responsibility of inspecting sites before the commencement of the Show. That person suggested that Mr Limb should place some water-type fire extinguishers around the enclosure. Mr Limb said he complied by hiring three extinguishers and placing them within the enclosure. Mr Apted said that he and another employee of Tarmak took three or four extinguishers from Tarmak to the exhibit and two or three came with the dinosaur from Queensland. He said those extinguishers were present during the Show.
11 The Show was open to the public from 31 August to 7 September 1985. The dinosaur was exhibited throughout that period. Adults were charged $2 and children $1. A family ticket was also available. Mr Limb said the dinosaur was restricted in movement because of the small area of the site. The head and the forearms moved, but there was no other movement. In addition, the tail was twenty feet shorter than its full length. Attendance at the Show was in the order of 700 000. During the period of eight days, the exhibit took a total of $48 000, but Mr Limb said no profit was made. Mr Limb regarded the outcome from the Show as good although he had hoped to turn over a larger amount. The banking and use of the proceeds from the Show are discussed later in these reasons.
12 On 19 September 1985, Mr Limb advertised the enclosure for sale. The first defendant, now the second appellant Mr Barry O'Loughlin, responded. Eventually they agreed that Mr O'Loughlin would pay $2 500 to Mr Limb and remove the enclosure. In connection with that task, Mr O'Loughlin reached an arrangement with the second and third defendants, now the appellants Mr David Parker and Mr Terry Edwards ("Mr Parker"). An employee of Mr Parker, the fourth defendant Mr Jonathan Foote, later commenced dismantling the enclosure. While he was using oxy-acetylene cutting equipment to cut the canopy off the main enclosure, the dinosaur caught fire. It was totally destroyed.
13 In addition to seeking to recover damages from Mr Foote by reason of his negligence in carrying out the dismantling, Glenmont claimed that Mr Parker was vicariously liable for the negligence of Mr Foote. Glenmont also claimed damages from Mr O'Loughlin asserting a breach of their contractual arrangements and breaches of the duty of care which Glenmont said Mr O'Loughlin owed to Glenmont. Finally, Glenmont sought and recovered damages against the Society on the basis of a breach of duty owed by the Society to Glenmont, particularly in connection with the capacity to fight a fire.
14 In summary, the Judge found that Mr Foote was negligent in the manner in which he used the oxy-acetylene cutting equipment without taking any precautions against fire, and that Mr Parker was vicariously liable for the negligence of Mr Foote. Notwithstanding a finding that Mr O'Loughlin engaged Mr Parker as an independent contractor to carry out the dismantling of the enclosure, the Judge also found that Mr O'Loughlin was in breach of a duty of care that Mr O'Loughlin owed to Glenmont. As to the Society, his Honour found that it was negligent in failing to call the Fire Service immediately when its employee became aware of the fire and in not using water that was available from a fire hydrant to fight the fire. His Honour rejected the proposition that the plaintiff, through Mr Limb, was guilty of contributory negligence. Contribution notices having been filed between the appellants, his Honour apportioned liability as follows:
15 As mentioned, the Judge found that Mr Foote was negligent. His Honour observed that Mr Foote had been honest enough to admit his negligence. He found that Mr Foote should have realised there was at least the risk of fire and that he took risks using oxy equipment above the dinosaur's head without taking any precautions against fire. Mr Foote has not appealed and has chosen not to take any part in the appeal. There is no appeal by any other defendant against the finding that Mr Foote was in breach of a duty of care he owned to Glenmont.
16 In attacking the various findings of the Judge, the Society contended that the Judge failed to analyse properly the evidence and "weaved" a course through the evidence by ignoring evidence that did not favour the case for Glenmont in order to find in favour of Glenmont. This approach included an inadequate consideration of the evidence adversely impacting upon the credibility of Mr Limb. It is necessary, therefore, for this Court to examine the relevant evidence and to reach its own conclusions in accordance with the well-known principles enunciated by the High Court in Devries v Australian National Railways Commission (1993) 177 CLR 472 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liquidation) [1999] HCA 3; (1999) 73 ALJR 306.
17 The appellants made what the Judge described as a "sustained and strong attack on Limb's credit" in a number of respects. His Honour made the following observations:
"Limb gave evidence-in-chief for four and a half days and was under cross-examination for seven and a half days. His re-examination took another half day. I had ample time to see and hear him, to make an assessment. His demeanour throughout was impeccable. He was patient and courteous, he gave every indication that he was doing his best to answer every question to the best of his ability. I thought him a good witness.
Certainly Mr Trim and other counsel for the defendants, found a few weak spots. It would be surprising if during 12 days in the witness box a witness did not say something which could be attacked. Here are examples."
18 The Judge briefly dealt with three aspects of Mr Limb's evidence concerning his negotiations with Moomba, a note in a message book and correspondence with a witness, Mr Minick. He mentioned an issue linked to an affidavit sworn by Ms Bolzon, an employee of Glenmont's solicitors. (This is dealt with later in our reasons). He then expressed the conclusion that, despite the attacks, "Limb was a reliable witness whose account of events I should and do accept".
19 In what follows, we have endeavoured to summarise the principal features of the various attacks made by the appellants upon the credibility of Mr Limb. At the conclusion of that examination, we have identified those matters which we consider are of particular significance and have considered the effect of the criticisms when viewed in their entirety.
20 We deal later with this topic when discussing the refusal of the Judge to permit evidence to be called from Glenmont's solicitors.
21 After the dinosaur was destroyed, Mr Limb communicated with organisers of the Moomba Festival in Victoria about exhibiting the dinosaur at the Festival. The appellants claim that this was a dishonest attempt by Mr Limb to establish a contrived figure for the purposes of supporting Glenmont's claim for damages. The Judge referred to the evidence of Mr Limb that he engaged in the exercise in an endeavour to help establish the value of the dinosaur and found that, although it was a "silly thing to do", the conduct did not demonstrate dishonesty. Considered in isolation, in our view that finding was open to his Honour.
22 This was an issue of substance involving what the appellants claimed was the concealment by Mr Limb of correspondence unfavourable to Glenmont's case.
23 Mr Minick was involved in the amusement industry in the United States. Mr Limb had approached him prior to the destruction of the dinosaur with a view to taking it to the United States. Mr Minick said he considered that the dinosaur had potential for use on the Fair circuit. He gave evidence of likely attendances at such an exhibit as being "from a low of around 5% to a high, maybe as much as 15% or 20%" of the total attendance of each Fair.
24 During cross-examination, Mr Minick was asked about the range of costs he had provided to Mr Limb. He referred to a "stock letter" in which he had set out his typical fees on an hourly basis. Shortly before the luncheon adjournment, counsel for the Society called for production of the letter. When the trial resumed after the adjournment, counsel for Glenmont indicated that he had assisted Mr Minick in obtaining the documentation and, in the process, he had noticed other documents in Mr Minick's file that counsel had not seen. As a consequence, disclosure was made of a series of letters sent by Mr Minick via facsimile to Mr Limb on 30 April, 1998. Three of the letters were addressed to Mr Limb's solicitors and three to Mr Coultas, an accountant who gave evidence for Glenmont on the aspect of damages. In that correspondence Mr Minick spoke of attendances of around 2 to 3 per cent of total admissions for large attended fairs and no more than 5 per cent for fairs with less attendance.
25 As mentioned, the correspondence was sent by facsimile to Mr Limb on 30 April, 1998. On 25 May 1998, Mr Limb wrote to Mr Minick confirming that his accountant's expert report was based on the Adelaide Show figures as being a basis "for any other Fair and Tours". He wrote that because it was documented that the dinosaur achieved slightly over 5 per cent of total attendance at the Adelaide Show, and because he had first hand experience:
"[I]n Court it will be my job to try and convince the Judge that the 5 per cent of total Show patrons could be conservative in comparison to what we may have achieved with a full show of acts ....".
Later in the letter Mr Limb wrote of what he needed from Mr Minick on this topic:
"After further thought we don't need anything further in writing at this point, when it comes to Court your agreeance that it would be possible for our exhibition to attract a 5 per cent average in U.S.A. fairs as achieved in Adelaide, if we tailored the enclosure to handle Fairs with large attendances as well as small and could run many shows per day, bearing in mind the show the public would see would be far superior to Adelaide and advertise accordingly."
26 Following that correspondence, for the purposes of the claim Mr Limb worked on a percentage of 5 per cent. The failure to disclose correspondence relevant to the issue of damages was potentially damaging to Mr Limb's credit. It was highly suggestive of an attempt by Mr Limb to conceal relevant evidence from the Court and called for an explanation. However, the documents were only discovered after Mr Limb had concluded his evidence and no application was made to recall Mr Limb in order to cross-examine him about this topic.
27 After referring to the correspondence and observing that "apparently" Mr Limb failed to disclose the letters to his solicitors, the Judge found as follows:
"As for the letters from Minick I don't know what the explanation may be. There may be a quite innocent one. Perhaps Limb did not appreciate the importance of handing them to his solicitors. In any case I am not prepared to find him an unreliable witness merely on that one matter when my overall impression is that I can rely on what he said."
28 The Judge was at a disadvantage because Mr Limb had not been cross-examined on this topic. The transcript does not disclose any complaint about the absence of cross-examination. During final submissions, counsel for the Society was highly critical of Mr Limb's conduct in respect of the correspondence and the failure to discover it. Counsel categorised the conduct as "an attempt to deceive". In response, counsel for Glenmont submitted that, in attacking the credit of Mr Limb, the appellants had made some good points, but had detracted from the value of those points by "trying to score too many useless ones". In that context counsel said that "the Minick letters were the good points". It appears that counsel for Glenmont did not address the issue of Mr Limb's conduct in this regard any further.
29 In these circumstances, no complaint having been made before the Judge that Mr Limb was not given an opportunity to provide an explanation for the correspondence and failure to discover it, the Judge was entitled to draw whatever conclusion was appropriate from the evidence before him. As the evidence stood, the most obvious explanation was that Mr Limb set out to conceal unfavourable evidence from the appellants and the Court. Viewed in this way, it could be said that the search by the Judge for an innocent explanation led his Honour to speculate in a manner that was demonstrative of his desire to accept Mr Limb as a reliable witness. We return to this issue later in considering the total effect of the criticisms.
30 In support of Glenmont's case that sufficient funds could have been found to finance the cost of transporting the dinosaur to the United States, Mr Limb said that he owned significant assets, including a Lamborghini motor vehicle, which could have been sold to raise the necessary funds. During cross-examination Mr Limb said that the vehicle was his personal unencumbered property that he could sell to raise money. This evidence was in conflict with a report as to the affairs of Tarmak dated 12 December, 1984 in which the Lamborghini was identified as a leased item in a Schedule of Contingent Assets. Mr Limb had signed that document.
31 In our opinion this issue is not of particular significance in the assessment of Mr Limb's credit. During his examination he referred to the fact that Tarmak originally leased the vehicle and that in those days the financial arrangements were such that eventually he would own the vehicle. Mr Limb's accountant, Mr Slater, and the administration manager of Tarmak, Mr Clayton, both appeared to regard the Lamborghini as Mr Limb's personal vehicle. When Mr Cooke took over as receiver he did not make any lease payments in respect of the Lamborghini. In these circumstances, it is not surprising that Mr Limb would have regarded the vehicle as his personal property.
32 We discuss elsewhere the circumstances in which the proceeds from the Adelaide Show were banked into the account of Mr Limb's then girlfriend. In addition, the appellants submitted that Mr Limb failed to account to Glenmont for the profits. As we observe later in these reasons, Mr Limb appears to have treated the proceeds from the Show as free to be used as he saw fit.
33 The Judge referred to the issue of the banking and Mr Limb's explanation that it was more convenient to bank the funds into the account of his then girlfriend at the Commonwealth Bank. His Honour did not refer to the evidence that Glenmont had an account at the Westpac Bank nor to the existence of a branch of the Westpac next to the branch of the Commonwealth Bank into which the proceeds were deposited. As to the suggestion that the funds were deposited in the account of Mr Limb's girlfriend in order to hide the proceeds, the Judge expressed his opinion that "it was all quite innocent".
34 His Honour referred to Mr Limb as deserving of the title of engineer for having built "so wonderful a machine as Tyrannosaurus-Rex" and took a generous view of Mr Limb's attitude in connection with the funds:
"He was an engineer and a businessman. He was not a lawyer, not even, I think, well versed in business procedures. It is one thing for counsel to criticise witnesses for not crossing every "t" and dotting every "i", even sometimes not acting to the letter of the law: it is another to find that this sloppiness is sinister. I don't think the legal niceties as to which entity was entitled to the money taken at the Show entered Limb's head. I remark too that Jetson, who had an interest to the extent of $100,000 in the dinosaur, was present and, I assume with confidence that he knew what was going on, and had no criticism."
35 There is considerable force in the submissions of the appellant that the Judge misunderstood the significance of this evidence and took too generous a view of Mr Limb's motives. The Westpac account was in the name of Glenmont. It was Glenmont that was exhibiting the dinosaur. A branch of the Westpac Bank was immediately next door to the bank into which the funds were deposited. In evidence Mr Limb initially suggested that it was more convenient to use his girlfriend's account at the Commonwealth Bank. That explanation was exposed as lacking in credibility.
36 As to the "assumption" that the Judge said he made "with confidence" that Mr Jetson knew what was going on, the evidence of Mr Jetson provided no grounds for such an assumption. Mr Jetson gave evidence that he was not concerned as to the banking. He assumed that Mr Limb placed the takings from the Show "where he needed it". He had no particular expectation as to where the monies from the Show would be placed. He left it to Mr Limb and trusted Mr Limb.
37 As we later indicate, in our opinion the use of the funds by Mr Limb does not carry any significance in the context of his belief as to who owned the dinosaur. However, in our view his conduct in this regard cannot be brushed aside as mere "sloppiness" and it is too generous to Mr Limb to say that the "legal niceties" as to which entity was entitled to the money did not enter his head. Mr Limb's entire conduct with respect to the dinosaur and his evidence provides a strong demonstration of his intelligence and understanding of such issues. We are satisfied that while Mr Limb may have felt free to use the proceeds as he saw fit, he is likely to have been aware that he should have banked the proceeds in the account of Glenmont. Importantly, his explanation of convenience lacked credibility and his willingness to be less than frank on this issue was damaging to his credit.
38 Mr Limb gave evidence that he had asked Mr O'Loughlin to inform him in advance of the time when the structure would be dismantled. He said he did not receive a message as to the time of the dismantling. However, in a message book kept at the premises of Tarmak in Launceston, a message was entered on Wednesday, 25 September 1985, two days before the structure was dismantled. The message was received by the receptionist at Tarmak, Ms Angela Walters. It was entered into the book in accordance with the established system for the purpose of enabling Mr Limb to see the message when he attended at the office. The message was as follows:
O'Loughlin $2,500 got cheque in post certified to house.
39 The message had been crossed out. The Judge accepted the deletion as a sign that Mr Limb had read the message. Mr Limb said that at the time the message arrived he was elsewhere in Tasmania working for Tarmak and that he did not see it before the fire. He also said that he did not understand the message to mean that the structure was to be dismantled on the Friday. The Judge accepted Mr Limb's evidence that he did not receive the message prior to the fire but, as to Mr Limb's understanding of the message, his Honour said:
"I do find it more difficult to accept that when he did read it he didn't understand it to mean the enclosure was to come down on the Friday. If he had received the message I think he should have understood it and would have telephoned his uncle asking him to be present during the demolition. That is what he had in mind: his uncle would be present to look after his interests. Having formed the view of the man - that he is careful and sensible - and remembering that the dinosaur was his creation, why wouldn't he have asked his uncle to be there?"
40 The answer to the question posed by the Judge could be that the message was not received before the fire. However, there is force in the proposition put forward by the appellants that it is highly unlikely that Mr Limb would routinely have crossed out the message after he had heard of the fire. The appellants suggested that Mr Limb received the message, but had no intention of supervising the dismantling of the structure.
41 The significance of this evidence to the issue of contributory negligence is discussed later in these reasons. However, for present purposes, it is sufficient to note the air of unreality attaching to Mr Limb's evidence that he would not have understood the message to mean that the structure was to be dismantled on the Friday.
Failure to discover signed agreement and letter cancelling first site allocation
42 Through Mr Limb, Glenmont discovered and produced the original site application which was never forwarded to the Society, together with the Royal Show membership badge and other documentation. It was said to be surprising that the letter from the Society cancelling the first site allocation and the signed exhibit site agreement pursuant to which the dinosaur was exhibited were not discovered or produced.
43 In our opinion, this point is of no significance.
Mr Limb's evidence concerning his financial position
44 Mr Limb gave evidence of his financial position and the way in which he could have raised the funds necessary to finance the travel of the dinosaur to the United States. It is unnecessary to canvass that evidence. The appellants submit that the evidence could not have been true. Tarmak was in receivership from December 1984 until December 1985. Mr Limb swore an affidavit dated 20 October 1992 which was filed in the proceedings to explain his delay in instituting the proceedings. In that affidavit Mr Limb stated that during the appointment of the receivers, and "for a significant period afterwards," neither he, Glenmont nor Tarmak were in a financial position to commence the proceedings.
45 The only asset that had the potential to earn funds was the dinosaur. It is not surprising that, after the destruction of the dinosaur, Mr Limb and the entities to which he referred were in a poor financial position. In our opinion, the statements in the affidavit are not in such conflict with the evidence of Mr Limb that he believed he could have raised the funds to transport the dinosaur to the United States that the court should conclude that his evidence was false. Whether Mr Limb would have had the capacity to raise the necessary funds to transport the dinosaur to the United States if it had not been destroyed is a different issue canvassed later in these reasons.
46 In the context of the possible end to the receivership of Tarmak, a proposed scheme of arrangement was presented to creditors. The explanatory statement which was part of the proposed scheme included the following:
"(e) During August and September 1985, the dinosaur was displayed at the Adelaide Show where it made an as yet undetermined profit which will be defrayed in making payments to the creditors of Tarmak-Jetson Unit Trust." (our emphasis)
47 The appellant submitted that the statement was false as Mr Limb was well aware of the profit because the proceeds had been banked in his girlfriend's bank account. In his evidence Mr Limb maintained that there had not been any profit for distribution. He said "we made $17 000 roughly" and that he retained it and put it toward litigation expenses from the time of the fire onwards. When it was put to him that he did not seek advice about bringing the proceedings until 1991, Mr Limb said he kept the funds under his control until he needed them, spending a little bit on the way consulting solicitors. Although Mr Limb was cross-examined about the explanatory statement, the allegation that the statement under consideration was untrue does not appear to have been put to him.
48 It is somewhat surprising that Mr Limb was unable to determine the profit, if any, that had been made by Glenmont in exhibiting the dinosaur at the Adelaide Show. It may be that, bearing in mind the manner in which Mr Limb had dealt with the proceeds, he was reluctant to embark upon such an exercise. As the suggestion was not put to Mr Limb, in our opinion this particular criticism is of little weight in assessing the credibility of Mr Limb's evidence.
49 In an affidavit sworn in these proceedings on 20 October 1992, Mr Limb stated:
"In or about August 1991 I sought legal advice regarding the Plaintiff's rights in relation to this matter. I then became aware that the limitation period for the Plaintiff to commence proceedings against the Defendants herein, expired on 26 September 1991."
50 During cross-examination about why the institution of the proceedings had been delayed, Mr Limb gave the following evidence:
Q. You were given advice about a six-year time limit.
51 Confronted with the proposition that the statement in his affidavit was in conflict with his evidence, Mr Limb denied that the statement in his affidavit should be read as meaning "I first became aware". He said it was expressed incorrectly. He maintained that when he sought legal advice in August 1991, he was already aware of the limitation period and aware that he had a month within which to institute the proceedings within that period.
52 The affidavit was misleading. It conveyed the incorrect impression that Mr Limb first became aware of the impending expiry of the limitation period when he received legal advice in August, 1991. In our opinion, Mr Limb's bland explanation was unsatisfactory. Removed as we are from the atmosphere of the trial, and in the absence of any finding by the Judge, it is difficult to reach a firm conclusion. However, at the least, in our opinion the Judge should have felt uneasy about the veracity of the explanation given by Mr Limb.
53 The explanatory statement accompanying the proposed scheme of arrangement included a statement that the effective price of $750 000 for which the dinosaur was sold to Glenmont represented approximately the true value of the dinosaur. The statement continued:
"It is anticipated that to substantiate this value Allan Limb would have to prepare detailed plans of the dinosaur from the working drawings he now holds. He is prepared to do this as quickly as possible and at no charge if the scheme proceeds." (our emphasis)
54 Contrary to the statement that Mr Limb held working drawings after the fire from which he could prepare detailed plans, Mr Limb gave evidence that the working drawings had been stolen from his car during the last stage of the construction of the dinosaur:
A. No, I did technical drawing at school along with fitting and turning which is in the same area.
A. They were stolen out of my car in a large bag I carry around all the time so I could work on it at home or -
Q. When were they stolen in relation to the construction.
A. In the later stage when the dinosaur was virtually up in the start of commission and finishing off the smaller components."
55 Mr Limb was confronted with the conflict during cross-examination:
"Q. What is the truth: what you have told us in these proceedings, or what is in that sentence.
A. That is not quite correct. I have got working drawings, yes, but not all of them, and I could actually put the plans together over time from the basis of my knowledge.
Q. There is a specific undertaking in this passage. It goes on "he is prepared to do this as quickly as possible and at no charge if the scheme proceeds." Is that true, or not, that you had the ability.
A. I was trying to help the scheme as much as I could, yes.
Q. But what is the truth: you had sufficiently detailed plans to enable the substantiation of value to be done, or, as you have said in court, you didn't have detailed plans.
A. No, I said that I have only got some plans left which are discovered. The main plans were stolen. I have actually seen a document in discovery somewhere where someone else verified the fact they were stolen way back, I have told the court."
56 We are again in the difficult position of not having a finding by the Judge. In our opinion the Judge should at least have felt uneasy about the explanation given by Mr Limb.
Failure to discover documents concerning Queensland actions
57 During the course of cross-examination about the operation of Pre-Historic Park in Queensland, counsel asked Mr Limb whether he remembered that he or Glenmont was sued by a company called Lakesun toward the end of 1984. The cross-examiner was in possession of a summons issued against Glenmont and Mr Limb with respect to the supply of gravel to Pre-Historic Park. Objection was taken to cross-examination on the document on the basis that it had not been discovered. The cross-examiner maintained that the document and any other documents relating to actions against Glenmont and Mr Limb should have been discovered by Glenmont because they were relevant to the financial position of Glenmont. The Judge permitted cross-examination of Mr Limb about debts in Queensland.
58 The failure to discover documents concerning claims against Glenmont and Mr Limb in Queensland was unfortunate. However, it is in a different category from a failure to disclose the correspondence from Mr Minick. In our opinion, it is not possible for this Court to draw any firm conclusion from this matter viewed in isolation. It may, however, be part of the total picture that emerges when the various criticisms capable of substance are viewed in their entirety.
59 We later discuss this issue, and conclude that, in the absence of cross-examination of Mr Limb, the appellants failed to establish that Mr Limb was dishonest in connection with this transaction.
60 We have not endeavoured to canvass every criticism made of the evidence of Mr Limb. We have taken into account other criticisms identified in the submissions which we consider were of little or no significance. As is apparent from the preceding summary, in our opinion a number of areas should have given the Judge cause for concern about the credibility and reliability of the evidence of Mr Limb.
61 We indicate later that in our opinion his Honour also erred in refusing to hear certain evidence from Glenmont's solicitors and, as the evidence stood, it favoured a conclusion that Mr Limb had made a statement to his solicitors inconsistent with his testimony concerning his knowledge of the lay-flat hose. As to the correspondence with Mr Minick that was not discovered until after Mr Limb had finished giving evidence, the advice by Mr Limb to Mr Minick that nothing further was needed in writing was, in view of what occurred, disturbing. The evidence favoured a conclusion that Mr Limb subsequently concealed unfavourable correspondence from Mr Minick that preceded his advice to Mr Minick that nothing further was needed in writing. Viewed in its entirety, the evidence on this issue strongly suggested that Mr Limb formed an intention to conceal from the appellants and the court the unfavourable views expressed by Mr Minick in the correspondence of 30 April 1998. While it is unfortunate that the appellants did not seek the recall of Mr Limb for further cross-examination on this matter, the evidence favoured a conclusion unfavourable to the credit of Mr Limb.
62 Mr Limb's explanation for the banking of the proceeds from the Show and his evidence as to his understanding of the message in the Tarmak message book both lacked credibility. The conflicts in Mr Limb's evidence concerning both his knowledge of the limitation period and the theft of the working drawings were not satisfactorily explained.
63 The Judge did not undertake an adequate analysis of these issues which impacted adversely upon the credit of Mr Limb. His description of the flaws in Mr Limb's evidence and the inconsistencies as "a few weak spots" does not properly reflect the substance of the flaws. His Honour did not consider the cumulative effect of the various matters to which we have referred. In relying primarily upon his favourable impression of the demeanour of Mr Limb, and in failing properly to consider and analyse the relevant evidence, we conclude that this is one of those relatively rare occasions in which this Court can be satisfied that the Judge "has failed to use or has palpably misused his advantage" (SS Hontestroom v SS Sagaporack [1927] AC 37 at 47 and Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479). The inconsistencies between Mr Limb's versions and his conduct should have led his Honour to treat all of Mr Limb's evidence with great caution, particularly on critical issues.
64 We are satisfied on other grounds that the judgment in favour of Glenmont against the Society must be set aside. In these circumstances, from the perspective of the Society's appeal, it is unnecessary to endeavour to determine the impact of the errors by the Judge. As to the liability of Mr Parker, the errors of the Judge with respect to the credibility of Mr Limb do not have any impact upon the reasoning of the Judge or the basis upon which he found that Mr Parker was liable. The impact of the errors with respect to the liability of Mr O'Loughlin is discussed later in these reasons. On other issues, this Court has treated Mr Limb's evidence with great caution.
65 It is convenient to deal first with a point raised on appeal, but not pleaded or raised at trial.
66 Section 72 of the Development Act 1993 (SA) provides as follows:
(b) the defect or defects arise from the wrongful acts or defaults of two or more persons and
(c) those persons would, apart from this section, be jointly and severally liable for damage or loss resulting from the defective work; and
(d) an action is brought against any one or more of those persons to recover damages for that damage or loss,
the court may only give judgment against a defendant, or each defendant, for such amount as may be just and equitable having regard to the extent to which the act or default of that defendant contributed to the damage or loss.
(2) An act or default for which a person is vicariously liable will be taken to be an act or default of that person for the purposes of this section."
67 Counsel for Mr O'Loughlin submitted that this section is applicable to the claim made by Glenmont, and that any judgment against Mr O'Loughlin should have been only for an amount that was just and equitable having regard to the extent to which his act or default contributed to the damage or loss suffered by Glenmont. Counsel submitted that the Judge erred in entering judgment against Mr O'Loughlin for the full amount of Glenmont's loss, subject only to apportionment orders as between the defendants.
68 The Act defines "building work" in broad terms. It includes the "demolition or removal of a building:" s 4(1). A "building" includes a building or structure and one that is temporary or permanent: s 4(1). We agree that the dismantling of the enclosure is building work for the purposes of s 72. We are also prepared to accept that s 72(1)(a) applies to carelessness in the course of dismantling the enclosure that is tortious or a breach of contract. We accept the submission notwithstanding the awkwardness of describing such carelessness as defective building work. We consider that s 72 must have been intended to embrace what might be called casual acts of negligence and casual breaches of contract, and that the section is not limited only to what might be called inherent defects in a building. We also accept that Mr O'Loughlin and Mr Parker are jointly and severally liable to Glenmont for damage and loss resulting from the defective building work. We put the Society to one side because, as will appear later, we have concluded that the Society is not liable to Glenmont.
69 Accordingly, the requirement that a judgment be entered against Mr O'Loughlin only for an amount that reflects his responsibility is capable of application to the present case. But there are two obstacles to the application of s 72.
70 The first obstacle is the fact that the Development Act 1993 (SA) came into force on 15 January 1994. That is well after the events upon which Glenmont bases its claim, and after the proceedings had been instituted. The second obstacle is that s 72 was neither pleaded by any party nor raised at trial.
71 In our opinion s 72 does not apply to the claim by Glenmont against Mr O'Loughlin.
72 Before s 72 came into force, Glenmont had an entitlement to judgment against any tort feasor jointly and severally liable for the loss it suffered when the enclosure was demolished. That entitlement was to a judgment for the full amount of the loss suffered. The position as between the defendants was to be adjusted by the making of contribution orders under the Wrongs Act 1936 (SA) s 25.
73 In our opinion, to apply s 72 to Glenmont's claim against Mr O'Loughlin would be to alter a right of Glenmont and a liability of Mr O'Loughlin being a right and liability already brought into existence by events that had occurred prior to the coming into force of s 72. To do so would be to give s 72 a retrospective operation: see Coleman v Shell Co. of Australia Ltd [1943] NSWStRp 41; (1943) 45 SR (NSW) 27 at 31. In other words, to apply s 72 to the present case would be contrary to a general principle of construction described by Dixon CJ in Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 at 267 as follows:
"The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events. But, given rights and liabilities fixed by reference to past facts, matters or events, the law appointing or regulating the manner in which they are to be enforced or their enjoyment is to be secured by judicial remedy is not within the application of such a presumption. Changes made in practice and procedure are applied to proceedings to enforce rights and liabilities, or for that matter to vindicate an immunity or privilege, notwithstanding that before the change in the law was made the accrual or establishment of the rights, liabilities, immunity or privilege was complete and rested on the events or transactions that were otherwise past and closed."
74 As Dixon CJ himself said, the distinction that he drew is clear in principle, but difficult in its application. As we have already said, our view is that at the time when s 72 came into force, Glenmont had a right to a judgment, for the full amount of its loss, against any persons jointly and severally liable for that loss. To apply s 72 would be to deny that right and to substitute a lesser right. We do not consider that s 72 can be regarded as merely regulating the manner in which Glenmont's right to damages is to be enforced, although we recognise that in a certain sense that is what it does. Nor would we regard the change effected by s 72 as merely a matter of practice and procedure as those terms are usually understood, although once again there is a procedural aspect to the provision because it affects the manner in which a judgment is entered.
75 Accordingly, we take the view that to apply s 72 to the present case would be to apply the law in a manner in which it is presumed that Parliament does not intend it to apply, unless there is some affirmative indication of such an intention. We can find no such indication of intention. We take the view that in expressing itself as it did, Parliament is to be taken as having intended to alter the law applicable to causes of action arising after the date of the enactment, and not to causes of action that had already arisen.
76 If we are wrong in that, we agree that this would be an appropriate case in which to allow the point to be raised for the first time on appeal. We do not accept that, if the point had been raised below, the course of the case would have been any different. It seems to us that the facts relevant to the application of the section were thoroughly investigated at trial. We do not think that a realisation that the court would have to determine what was just and equitable for the purposes of s 72(1) would have led to any evidence being advanced that was not advanced at trial.
77 Accordingly, we reject the submission advanced by counsel for Mr O'Loughlin.
78 As mentioned, Mr Limb advertised the enclosure for sale. Mr O'Loughlin responded and he and Mr Limb met on site. Mr Limb said he indicated to Mr O'Loughlin how the enclosure was bolted and could come apart and be used as a building. He explained that the canopy could be removed by unbolting the vertical rails while holding the canopy with a crane. Mr O'Loughlin responded that he did not want to buy the enclosure as a building as his main interest was in the metal. They were unable to reach agreement on a price. A few days later Mr Limb rang Mr O'Loughlin and asked Mr O'Loughlin to come up with a price. According to Mr Limb, during that conversation he told Mr O'Loughlin that he had to return to Launceston. He said the conversation continued as follows:
"He [Mr O'Loughlin] said 'you have got a bit of a problem. I have got some people I work with quite often'. Next door neighbour, business neighbours, whatever, and they were in the crane demolition games, into cranes and that kind of thing, and they could do a contract on it, something like a contract, he said, to take the building down for me to save me the bother if it was any help. After describing what they did as their job, I said 'what's say you bring them down and get a firm price on the job in case I rather do it myself if it is too dear or whatever'."
79 Mr Limb said Mr O'Loughlin agreed with that suggestion and said he would get back to Mr Limb. He said that Mr O'Loughlin rang Mr Limb's uncle, Mr George Limb, and suggested a price of $2 500. Mr Limb said he did not understand exactly what Mr O'Loughlin meant, so he telephoned Mr O'Loughlin. Mr Limb's version of that conversation was as follows:
"We discussed what happened after the site meeting. He said they were quite happy with the building, no problem getting it down around the dinosaur still being in it, and had a good look round the building and so on. Minor job to them, he said something to that effect. Then we discussed price. He suggested he would give me $2 500 and he would pay the crane people. Instead of me paying the other $600 difference, I just get the $2 500 and he would fix the crane people up. That was the deal."
80 During cross-examination Mr Limb gave the following evidence of the conversation when a price was agreed:
"A. He told me a price of $2 500, that's what he came up with, and, in that price, he had included a price of taking down the building with a crane company contracting to do it for a price - I think he mentioned the price of, say, $600 - and I wouldn't have to do anything. I had informed him I was going to be busy back in Launceston.
A. Yes. That's the conversation I started telling him about 'okay, if that's the case' - he told me they had looked at the building, they were happy with the way - it was a straightforward job to them, and to meet on site and have a look at it. He recommended doing a better job than I would do, trying to do it myself anyway. I went 'okay, I don't want any oxy-cutting around, up in the air particularly, you have seen the site' and they obviously can unbolt it without any. That was one of my particular worries. I also said 'give me a call the day before, so I can have a representative down on site'. That's about all I said to him."
81 Mr Limb said he specifically asked Mr O'Loughlin to make sure the contractors understood about not using oxy in the air. He said Mr O'Loughlin responded "that is okay, I have told them all that". During cross-examination Mr Limb agreed there was no discussion on site as to the flammability of the dinosaur and Mr Limb appeared to agree that the reference to not using oxy up high occurred in a later conversation. He maintained that when he spoke of not using oxy up high, he said something to the effect of "we don't want it to catch alight".
82 Mr Limb said he rang a couple of days later to find out what was happening and Mr O'Loughlin said the crane company was busy. Mr Limb was not told in advance when the dismantling would commence.
83 Mr O'Loughlin said that the discussion at the site was brief. Mr Limb indicated he wanted a price for the enclosure, but Mr O'Loughlin said the price was too high. There was no talk about the method of removing the enclosure and no discussion about flammability. No mention was made of whether or not oxy-equipment should be used. According to Mr O'Loughlin, after reaching agreement with Mr Parker for the dismantling of the enclosure, he telephoned a local number and spoke with Mr George Limb offering $2 500. He thought Mr George Limb later responded by accepting the offer. He said that his wife wrote out a cheque for $2 500 and wrote on the cheque butt "steel enclosure at the Showgrounds, free of all encumbrances, no responsibility for other items". Mr O'Loughlin wanted to make sure that the steel was free from debt and, in the event of theft, he did not want to take any responsibility for other items left behind with the contractors on site. He met with George Limb and gave him the cheque. According to Mr O'Loughlin, Mr George Limb signed the cheque butt. Mr O'Loughlin explained that he had been involved in an acrimonious separation from his wife and he had been unable to locate the cheque butt.
84 Mr O'Loughlin accepted that Mr Limb may have spoken of taking care with this very special dinosaur. He conveyed that message to Mr Parker, but he was thinking more of knocking the dinosaur with a piece of steel rather than starting a fire. Mr O'Loughlin denied that Mr Limb made a point of telling him that he did not want anybody cutting any metal up in the air.
85 The Judge did not make any specific finding as to the conflict between Mr Limb and Mr O'Loughlin about the use of oxy-cutting equipment above the dinosaur. However, his Honour found that Mr Limb was a reliable witness whose accounts of events he accepted and he took an adverse view of the credit of Mr O'Loughlin in more than one respect. One of the issues upon which Mr O'Loughlin was rejected concerned the signing by Mr George Limb of a receipt on the cheque butt for the payment of $2 500. Mr George Limb recalled Mr O'Loughlin delivering the cheque, but denied that he was asked to sign the cheque butt. The Judge found that Mr O'Loughlin invented the story to cover himself.
86 In rejecting the evidence of Mr O'Loughlin, the Judge appears to have misunderstood that evidence. As mentioned, Mr O'Loughlin said the words "steel enclosure at the Showgrounds, free of all encumbrances, no responsibility for other items" were written on the cheque butt because he wanted to make sure that the steel was free from debt and did not want to take responsibility for items left behind because of theft. His Honour misinterpreted the evidence as being that the receipt "by its terms absolved O'Loughlin from any liability for damage caused by the removal of the enclosure". It was in that context that his Honour found that the "story" was unlikely and that Mr O'Loughlin invented it to cover himself for what subsequently happened. His Honour's error was particularly significant. The motive which he attributed to Mr O'Loughlin for "inventing the story" did not exist. In those circumstances, there was a fatal flaw in the reasoning of the Judge which led him to the view that Mr O'Loughlin had invented a story and was not being honest in his evidence. Such a finding was very damaging to the credit of Mr O'Loughlin in the eyes of his Honour.
87 In the circumstances to which we have referred, the finding of the Judge concerning Mr O'Loughlin cannot stand.
88 The Judge described Mr O'Loughlin as a scrap metal dealer who had no experience of dismantling enclosures nor any knowledge of how to go about it. He accepted that Mr O'Loughlin sought the assistance of Mr Parker with whom he had previously worked. There was a dispute between Mr O'Loughlin and Mr Parker as to the nature of their arrangement. Mr Parker claimed that they reached agreement that Mr O'Loughlin would merely hire the crane and the labour of a crane driver and a rigger for Mr O'Loughlin to use as he wished in demolishing the enclosure. However, the Judge preferred the version given by Mr O'Loughlin that they reached agreement that for $600 Mr Parker would carry out the task of dismantling the enclosure. His Honour found that "Parker and Edwards decided to do an 'el cheapo job'" on the basis that "they would send a crane and a rigger and leave them to do the work as best they could". His Honour reached that conclusion notwithstanding his concern about the reliability of the evidence of Mr O'Loughlin. He found that Messrs Parker and Edwards were even less reliable than Mr O'Loughlin. He found that they were quite dishonest.
89 Mr O'Loughlin said that on his way to the site on the day of the fire he called at the yard of Mr Parker and was asked to take some tools of trade to the job. The equipment included oxy-cutting equipment. When he arrived at the site the crane and Mr Foote were present. Mr Foote asked Mr O'Loughlin what he wanted on Mr O'Loughlin's truck first. He responded that he would take the railway wheels (which had been used for ballast). The loading of the wheels was done with the assistance of Mr Foote and the operation of the crane. Mr O'Loughlin said he told Mr Foote that he wanted the steel as long as possible. He might have told Mr Foote and the crane driver to be careful. After the wheels were loaded he left in his truck. When he returned the fire had already occurred.
90 Mr Foote said that he met Mr O'Loughlin at the site. Asked what discussion occurred as to what was to be done, Mr Foote responded:
"A. What I can remember is that he said it was a - he was quite adamant that we were very, very careful not to harm the dinosaur in any way, and he said 'be very, very careful whatever you do, don't hit, don't knock it' and don't hurt [the] thing basically."
91 Mr Foote also said that Mr O'Loughlin explained that "basically he wanted it dismantled into individual pieces and then sort of bundled and stacked on his truck". Mr O'Loughlin basically told Mr Foote it was just a matter of getting up on the enclosure and unbolting it. Mr Foote asked if Mr O'Loughlin had a ladder and received a negative reply. Using his initiative, Mr Foote rode the hook of the crane up and the crane driver extended the jib enabling Mr Foote to jump off the hook onto the enclosure. By this time Mr O'Loughlin had left the site.
92 The Judge accepted that Mr O'Loughlin told Mr Foote to be very careful not to harm the dinosaur, but that nothing was said about cutting the steel or the use of oxy-cutting equipment. His Honour concluded that when Mr Foote asked Mr O'Loughlin how the job was to be done, Mr O'Loughlin "metaphorically shrugged his shoulders and said he didn't know".
93 Mr Foote said that he observed welds in six or eight places. He shouted down to a person who had been assisting Mr O'Loughlin ("Cowboy") and said "look the top section's welded, you'll have to cut this off". He said Cowboy looked at him blankly and shook his head. Mr Foote took the response as meaning "well I'm not going up there, there's no way you will get me up there". Mr Foote explained the sequence that followed:
"A. Yes, I basically put it to them, or put it to him. I said, 'well, what are you going to do, what do you want us to do' and there was more shaking of heads and mumbling and what have you and discussion down there and he basically yells up, 'you'll have to cut it then'.
Q. You saw him apparently talking to the crane driver about this.
A. And he said, 'well there's no way I'm going up there, you won't get me up there, I'm not going up' and so I yelled back down to him, 'all right, send your torch up and I'll cut it'."
94 The Judge was satisfied that Mr Foote made the decision to use the oxy-cutting equipment. That equipment was sent up on the crane. At that time, there was no equipment available to Mr Foote on the enclosure that could have assisted in preventing or extinguishing a fire. As to whether he had given any thought to the possibility of the skin catching fire, Mr Foote said it may have crossed his mind, but he did not think too much about it because he thought he was far enough away to carry out the small amount of cutting. He believed he was able to direct the spray of molten metal away from the dinosaur.
95 Mr Foote had been cutting for about 25 minutes when he noticed a small fire at the base of the neck on the back of the dinosaur. The fire was about two metres below the position in which Mr Foote was standing on the enclosure. He attracted the attention of the crane driver who brought the hook within reach. Mr Foote climbed on the bottles which were attached to the hook. The driver moved the hook closer to the dinosaur and Mr Foote jumped on to the back of the dinosaur. At that time the fire was about half a metre square and Mr Foote attempted to put it out with his gloves by patting it. However, the fire kept spreading and molten plastic was sticking to his gloves. Noxious smelling smoke was coming off into his face. Mr Foote felt overcome by smoke and jumped back on to the bottles which were on the hook of the crane. After some manoeuvring the driver lowered Mr Foote to the ground. Mr Foote unhooked the gas bottles. There were a number of fire extinguishers lying about, but the crane driver told him none of them worked. He did not see a fire hose. The Fire Service arrived some minutes later.
96 The Judge said he was confident that the account given by Mr Foote was an accurate account of the fire itself and of what Mr Foote had done.
97 On the basis of the findings to which we have referred, the Judge expressed his findings as to Mr O'Loughlin's liability in the following passage:
"I have some hesitation about whether he was liable at all but eventually have come to the conclusion that he was, to a small extent. For this reason: he had seen the dinosaur; anyone who looked at it must have realised that there was a chance it was inflammable. If so, it would be prudent to take some fire precautions, at least to have some fire extinguishers handy and to warn Foote whom he just left there doing the job, to be careful. O'Loughlin said fire didn't even occur to him, even though oxy equipment was there and being used. It should have occurred to him. He owed a duty of care to Limb (or technically Glenmont) to take care in the dismantling of the enclosure and he breached it. His failure to appreciate the risk was negligent."
98 Mr O'Loughlin challenges the finding of liability. Counsel submitted that as Mr O'Loughlin had engaged Mr Parker as an independent contractor, there was no basis in fact or in law to attribute any liability to Mr O'Loughlin for the negligence of Mr Parker or Mr Foote.
99 As to Mr Parker, in the context of a submission concerning "borrowed servants" his Honour expressed his findings as follows:
"Parker and Edwards sent Foote, with the crane and driver, to do the job. It was up to him how he did it. They held Foote out as capable and responsible. Certainly he was told to obey O'Loughlin's directions but I accept the interpretation Mr Anderson put to me, that this was what to do with the steel, how to cut it once it was on the ground, where to stack it - not as to how Foote went about dismantling, the expert work of a rigger. O'Loughlin had no idea how to dismantle the structure. Parker and Edwards from their knowledge of O'Loughlin must have known that. He made that known to Foote. There are no 'quite exceptional circumstances' by which Parker and Edwards can discharge the 'increasingly heavy' burden of establishing that Foote was 'pro hac vice the servant of' O'Loughlin.
Parker and Edwards are vicariously liable for Foote's negligence."
100 Mr Parker challenges the fundamental finding of fact made by the Judge as to the nature of the arrangement between Mr O'Loughlin and Mr Parker. Counsel submitted that the content of the negotiations, instructions given by Mr Parker to Mr Foote, ownership of oxy-cutting equipment on site and the conduct of Mr O'Loughlin on site all pointed in the one direction and combined to provide a strong case to demonstrate that his Honour was in error. He submitted that the arrangement was for the hire of labour and equipment (the crane) to work under Mr O'Loughlin's directions. In particular, while not challenging his Honour's adverse finding as to the credit of Messrs Parker and Edwards, reliance was placed upon the evidence of Mr Foote which it was argued strongly supported the case for Mr Parker. The Judge accepted Mr Foote as a credible witness. Against that background it was argued that his Honour failed to undertake a proper analysis and evaluation of the evidence and that his "incantation" that there was "much evidence and argument as to the true nature of the arrangement" did not satisfy the obligation resting upon his Honour to give adequate reasons for his finding in this regard.
101 As to the negotiations, Mr Parker said that he met Mr O'Loughlin at the Showgrounds where Mr Parker inspected the job. He said that while he was examining the enclosure, and before he had finished a quote, he had come to a figure of over $1 000 and Mr O'Loughlin said "that's too dear". While Mr O'Loughlin agreed that Mr Parker walked around the enclosure, he denied that Mr Parker spoke audibly about potential costings or that any price was mentioned. He also denied that he said words to the effect that it was going to be too expensive.
102 Notwithstanding his finding that Mr Parker was "even less reliable" than Mr O'Loughlin, and without reference to the evidence of Mr O'Loughlin on this topic, the Judge found that on site Mr Parker began making an estimate and reached over $1 000. He also found Mr O'Loughlin said that such an amount was too expensive. It was submitted that such behaviour by Mr Parker "did not point to a likelihood that Parker would subsequently agree to perform the work for $600". Counsel argued that the conduct of Mr Parker on site was consistent with his evidence that there was discussion of another way the job could be done, and with the evidence of Messrs Parker and Edwards that they only agreed to hire the services of a crane, a driver and a rigger for the day.
103 Reliance was also placed on the evidence of Mr O'Loughlin that, following the inspection of the enclosure at the Showground with Mr Parker, during a subsequent conversation Mr Parker said "you'll need a rigger and a crane for a day". It was argued that such a statement is inconsistent with Mr Parker quoting a fixed price for the whole job as the statement refers to Mr O'Loughlin's needs to do the job and not those of Mr Parker. In our opinion, however, the submission attempts to read too much into the precise wording of the statement. The evidence was given many years after the event. Even if that form of expression was used, it is not inconsistent with the view put forward by Mr O'Loughlin. He did not have any experience in demolishing or dismantling such an enclosure. He sought the assistance of persons with whom he had previously worked and who described their business as including the demolition of buildings. They had previously worked with Mr O'Loughlin and the Judge found that they probably knew from their previous business relationship with him that Mr O'Loughlin had no experience of dismantling enclosures nor any knowledge of how to go about it. Against that background, in our opinion the statement by Mr Parker as to what would be needed does not possess the significance attributed to it by Mr Parker.
104 In our opinion, the history of the negotiation considered in isolation is not of particular significance in deciding the true nature of the arrangement between the parties. Mr Parker may have endeavoured to inflate what he knew was a reasonable price for what was then believed to be the relatively straightforward task of unbolting the enclosure and bringing it to the ground. However, Mr Parker submitted that the significance of the negotiations can only properly be understood when considered in the light of subsequent events.
105 Reliance was placed upon statements made by Mr Parker to Mr Foote which it was said were part of the res gestae or could be used as evidence of Mr Parker's state of mind. Mr Foote gave evidence of a discussion the day before the fire with Mr Parker. He said:
"The only few points I can remember was that, one we were going to be doing a job tomorrow on hire for another character and it wasn't a very difficult job, it was very easy, basically there was nothing to really worry about. The fellow we were being hired to was going to look after everything and we just had to basically turn up and supply our labour and the crane".
106 In subsequent evidence Mr Foote said he was "very sure" that Mr Parker said that he and the crane driver "were being hired out as labour to Mr O'Loughlin." It was suggested to him that for the purposes of court proceedings concerning the payment of the $600 fee, Mr Parker or Mr Edwards may have emphasised to him that he was on hire. Mr Foote accepted that they probably "re-emphasised it", but said he was "fairly clear" that the day before the fire he understood "fairly clearly that we were to be on hire to Mr O'Loughlin." Under persistent cross-examination on the topic, Mr Foote agreed it was possible with the passage of time that he had confused in his mind who suggested that he was on hire to Mr O'Loughlin and when that suggestion was made. However, while conceding it was possible, he expressed his belief that he was not confused about that topic.
107 Mr Foote also said that on the day before the job was to be done, Mr Parker told him he was to follow the instructions of Mr O'Loughlin and to do whatever Mr O'Loughlin said.
108 In our opinion, the statements by Mr Parker to Mr Foote were not part of the res gestae. They were, perhaps, admissible as original evidence of Mr Parker's state of mind or belief at that time: Hughes v National Trustees, Executors and Agency Co. of Australasia Limited [1979] HCA 2; (1979) 143 CLR 134 at 149. At that time, there was no occasion for Mr Parker to be concerned about the implications of his statements: cf R v Szach (1980) 23 SASR 504, Wells J at 526 and 527. The existence of a particular belief is capable of supporting an inference as to the facts of the arrangement between Mr Parker and Mr O'Loughlin.
109 While the statements of Mr Parker were capable of supporting the view that he believed the arrangement was only for the hire of a crane and a rigger to work under the supervision of Mr O'Loughlin, statements by Mr O'Loughlin to Mr Limb as to the arrangements he had made with Mr Parker were similarly admissible as original evidence of Mr O'Loughlin's state of mind. Those statements to which we have already referred were capable of supporting an inference that Mr O'Loughlin believed that he had reached agreement with Mr Parker for the latter to dismantle the enclosure.
110 Bearing in mind the time that had elapsed between the conversations and the trial, and in view of his Honour's finding that Mr Foote was persuaded to sign a statement dated 12 November, 1985 which was "slanted" in a way which placed responsibility with Mr O'Loughlin, in our opinion considerable caution should be exercised before placing significant weight upon the statements as evidence tending to support the case for one party or the other.
111 As to the events on site, the written and oral submissions presented on behalf of Mr Parker placed considerable emphasis on the question as to what cutting equipment was brought on site and by whom. The Judge found that, however it got there, "oxy-acetylene and oxy-LPG equipment was on the job: some belonged to Parker and Edwards, some to O'Loughlin." That finding is challenged on the basis that the credible evidence did not support the presence of oxy-acetylene equipment belonging to Mr Parker. It was argued that his Honour should have found that the only cutting equipment on site was equipment that belonged to Mr O'Loughlin. As to the significance of the issue, the written submissions were:
"O'Loughlin's assertion that the oxy bottles came from Parker and Edwards was a transparent attempt to sheet home responsibility to Parker and Edwards. An admission by him that Parker and Edwards had supplied no equipment would be inconsistent with his version as to the basis upon which the job was being undertaken, or at the very least, that would be O'Loughlin's perception."
112 During oral submissions, counsel acknowledged that Mr O'Loughlin was expecting to cut steel after the enclosure had been dismantled. In those circumstances, and notwithstanding Mr O'Loughlin's denial that he brought his own cutting equipment onto the site, an admission by Mr O'Loughlin that he and not Mr Parker had supplied cutting equipment was not inconsistent with Mr O'Loughlin's version. The issue was relevant only to Mr O'Loughlin's credit.
113 Mr Foote said that in his experience on jobs for Mr Parker, only oxy-acetylene cutting equipment was used and not oxy-LPG. The only equipment used on site was oxy-LPG. According to Mr Foote, neither he nor the crane driver brought oxy equipment from the premises of Mr Parker and, when he arrived, Cowboy was already using oxy equipment to cut part of the frame that had been dismantled.
114 Mr O'Loughlin gave a different version. He said that on the day of the job, he went to Mr Parker's yard and was asked to take some tools of trade to the job. He took some oxy bottles, the oxy-cutter and spanners. The LPG bottles were from Mr Parker's yard. According to Mr O'Loughlin, when he arrived at the Showgrounds the crane and the rigger were already present. He said there was "no prospect" that Cowboy had set up the cutting equipment and was cutting steel at the time the rigger and the crane arrived. He said Cowboy did not cut up any steel on the ground while he was present. The Judge accepted, however, that when Mr Foote arrived Cowboy was using oxy equipment to cut steel already on the ground. According to Mr O'Loughlin, it was Mr Parker's task to do whatever cutting was necessary to get the steel to the ground, but once it was on the ground it would be up to Mr O'Loughlin whether he wished to carry out any further cutting. Mr O'Loughlin acknowledged that from his initial inspection it appeared to him that some of the lengths of steel would require cutting on the ground.
115 The basis upon which the Judge found that both oxy-acetylene and oxy-LPG equipment were on the job is not easy to discern. It may be that his Honour accepted the evidence of Mr Foote that when he arrived Cowboy was already cutting steel on the ground and that such cutting could only have been done by equipment belonging to Mr O'Loughlin. His Honour may have also accepted that Mr O'Loughlin took some equipment from the premises of Mr Parker at the latter's request.
116 It would have been preferable if the Judge had analysed the conflict and explained how he reached his conclusion, but in our opinion any deficiency in this regard is not particularly significant. It follows from his Honour's conclusion that some equipment belonging to Mr O'Loughlin was present and that his Honour did not accept Mr O'Loughlin entirely in this regard. It also follows that his Honour did not accept all of Mr Foote's evidence on this topic. There is no basis for concluding that his Honour was not alive to the significance of these matters when determining the nature of the arrangement reached between Mr O'Loughlin and Mr Parker.
117 In attacking the finding of the Judge as to the nature of the arrangement, counsel also placed particular emphasis upon the evidence of Mr Foote as to what occurred at the outset of the work on site. As we have mentioned, Mr Foote gave evidence that when he first arrived he asked Mr O'Loughlin what was to be done and Mr O'Loughlin spoke of dismantling the enclosure into individual pieces. In addition, Mr Parker's employees carried out work for Mr O'Loughlin in loading the wheels onto the truck. In essence it was argued that Mr Foote looked to Mr O'Loughlin for instructions as to how to carry out the task. However, Mr Foote gave the following evidence in cross-examination:
"Q. Do I take it that he [Mr O'Loughlin] simply showed you where it was, indicated that, as far as he was aware, it was to be unbolted, then he left.
Mr Foote was asked whether Mr O'Loughlin left him to his own devices. Mr Foote said:
"He said it would be fairly straightforward and I remember saying something to the effect of 'well, how are we going to go about it' and he said something to the effect of 'I don't really know'."
118 It was also suggested that Mr O'Loughlin confirmed that Mr Foote looked to him for instructions as to what to do in order to dismantle the enclosure. Having read the evidence of Mr O'Loughlin, in our view that is not a fair interpretation of what he said. According to Mr O'Loughlin, when he arrived on site Mr Foote asked him what he wanted put on the truck first. He identified the wheels. Asked specifically whether there was any conversation about directing them how to dismantle the enclosure or anything like that, Mr O'Loughlin said:
"A. They asked me what I wanted first and I said I wanted the wheels and I'd like the steel in as long as possible because it's resaleable that way."
Mr O'Loughlin said they were the only instructions or directions that he gave.
119 We have not endeavoured to canvass all the evidence and submissions that bear upon the challenge to his Honour's finding. However, having considered the submissions and the evidence, in our opinion the evidence considered in its entirety was capable of supporting both the conclusion reached by the Judge and the opposing conclusion for which Mr Parker contended. The occupations of the parties and the background of their involvement in previous business dealings strongly supported the conclusion reached by the Judge. In addition, although his Honour rejected the evidence of Mr O'Loughlin in certain respects, he generally preferred the credibility of Mr O'Loughlin to that of Mr Parker and Mr Edwards. There was an ample basis upon which his Honour was entitled to find that each of Mr Parker and Mr Edwards was "quite dishonest and prepared to say anything which might, he thought, help his own position".
120 In our opinion, notwithstanding the evidence that was capable of supporting the opposite conclusion, there was sufficient evidence to justify the conclusion reached by the Judge as to the arrangement between Mr O'Loughlin and Mr Parker. We are not persuaded that the trial Judge misused the advantage he possessed in seeing and hearing the witnesses or that he misunderstood or failed to analyse the evidence properly. Bearing in mind the well known principles enunciated by the High Court in Devries, we are not persuaded that the finding of the Judge as to the nature of the arrangement between Mr O'Loughlin and Mr Parker should be set aside.
121 Counsel for Mr Parker submitted that if the arrangement between Mr O'Loughlin and Mr Parker was one for the hire of a rigger and a crane with its driver for the day, liability for the negligence of Mr Foote rested with Mr O'Loughlin. It is not necessary for us to deal with this submission, because we have concluded that the Judge's approach was correct. Nevertheless, it is convenient to do so.
122 The submission advanced by Mr Parker on this footing must confront the fact that even if the arrangement was one for the hire of labour, Mr Foote remained the employee of Mr Parker, and some basis must be identified for imposing liability for Mr Foote's negligence on Mr O'Loughlin. Before the Judge, and on appeal, counsel for Mr Parker submitted that the present case is one in which the effect of the arrangement was to transfer responsibility for the negligence of Mr Foote from Mr Parker to Mr O'Loughlin. As the Judge said, the effect of the authorities is that it is difficult for an employer to show that a person to whom the services of an employee are made available is liable for the negligence of the employee in the course of performing those services. There are a number of sound reasons for the approach that the courts have taken to this issue, and it is not necessary to canvass them here.
123 The Judge found that the arrangement was one under which Mr Foote was to accept Mr O'Loughlin's directions about what to do with the steel once it was on the ground, but not about the process of dismantling. As the Judge said, dismantling was within the province of Mr Foote, who was a rigger. It was something on which Mr O'Loughlin had no particular knowledge.
124 If the test to be applied in deciding whether Mr O'Loughlin became liable for Mr Foote's negligence is expressed by asking who had the authority to tell the worker how to do the job, the Judge's conclusion is fatal to the contention advanced for Mr Parker. However, one must acknowledge that had Mr O'Loughlin been present when Mr Foote unexpectedly found that some of the steel was welded, it is not easy to say how a decision would have been reached about what should be done. Counsel for Mr Parker submitted that when the unexpected arose, the decision to be made was the responsibility of Mr O'Loughlin. It suffices to say that we do not accept that submission. That is not to say that we consider that Mr O'Loughlin's views would have been disregarded by Mr Foote. However, Mr Foote was the rigger on the job with the responsibility of working with the crane driver to demolish the enclosure. We are inclined to think that if a decision had to be made, it was in the end one to be made by Mr Foote, if necessary by consulting further with his employers. It suffices to say that we are not satisfied that the Judge was wrong in concluding that even if the arrangement was a labour hire arrangement, Mr Parker had failed to discharge the onus of proving that responsibility for the negligence of Mr Foote was transferred to Mr O'Loughlin.
125 Accordingly, even if the arrangement was a labour hire arrangement, as distinct from a contract to produce a result, we would not reverse the Judge's conclusion that Mr Parker remains liable for the negligence of Mr Foote.
126 The liability of the parties must be determined, therefore, on the basis that Mr O'Loughlin retained the services of Mr Parker to dismantle the enclosure. He said he asked them to be careful and to do whatever was necessary to carry out the job. He said he asked them to be careful because there was a lot of other equipment present that did not belong to Mr O'Loughlin or to Mr Parker. Liability must also be determined on the basis of the finding by the Judge that Mr O'Loughlin did not give any instructions as to how the task was to be carried out and that it was Mr Foote, in the absence of Mr O'Loughlin, who made the relevant decisions, including the decision to use the oxy-cutting equipment.
127 On the basis of those findings, in our opinion the Judge was correct in finding that Mr Parker was vicariously liable for the negligence of Mr Foote. In the absence of any instruction by Mr O'Loughlin which was followed by Mr Foote and caused the loss, as Mr Parker was engaged by Mr O'Loughlin as a contractor there is no basis for attributing to Mr O'Loughlin the negligence of Mr Parker's employee in carrying out the work.
128 However, the basis upon which the Judge found that liability attached to Mr O'Loughlin is not as readily apparent. His Honour appears to have found that, because anyone who looked at the dinosaur must have realised there was a chance it was inflammable, it would have been prudent for Mr O'Loughlin to take fire precautions and to warn Mr Foote to be careful. The Judge found that the risk of fire should have occurred to Mr O'Loughlin and that "his failure to appreciate the risk was negligent". That finding apparently led his Honour to conclude that Mr O'Loughlin was in breach of his duty to take care in the dismantling of the enclosure.
129 The conclusion drawn by the Judge faces a number of difficulties in view of his finding as to the nature of the arrangement with Mr Parker. His Honour found that Mr O'Loughlin hired Mr Parker as an independent contractor to carry out the dismantling and that Mr Foote was the employee of Mr Parker. In addition, it was not part of the arrangement that Mr O'Loughlin would supervise the work of Mr Foote and he did not do so. Mr O'Loughlin did not undertake any responsibility in that regard.
130 In support of the finding of the Judge, counsel for Glenmont submitted that there was ample evidence to support findings that Mr O'Loughlin owed a duty of care to Glenmont and was in breach of that duty. In particular, knowing that there was a risk of damage being caused to the dinosaur and that Mr Parker would be supplying a rigger and a crane, Mr O'Loughlin left the site without taking any steps to ensure that either oxy-cutting was not carried out or that if it was, appropriate safety precautions were taken. In the alternative, the written submissions contended that it would have been open to the Judge to have "visited liability" upon Mr O'Loughlin as a result of the negligence of Mr Parker because the relationship and circumstances gave rise to a non-delegable duty.
131 On the assumption that the duty owed by Mr O'Loughlin was not a non-delegable duty, counsel for Glenmont argued that Mr O'Loughlin could not escape liability through the employment of the independent contractor. He said that Mr O'Loughlin was present at the site overseeing the performance of the contractor and was in breach of his duty to Glenmont in leaving the scene and not remaining to supervise the work and give appropriate instructions. In answer to the proposition that, usually, if a person in the position of Mr O'Loughlin retained a competent and independent contractor that person could leave the scene and leave the job in the hands of the contractor, counsel submitted that the contract was for the one operation involving the sale and dismantling of the enclosure and Mr O'Loughlin was required to be present. As instructions had been given that an oxy torch was not to be used, Mr O'Loughlin had a duty to be present and to supervise the whole operation.
132 There can be no doubt that Mr O'Loughlin owed to Glenmont a duty to exercise reasonable care not to damage the dinosaur when removing the enclosure that he had purchased. The enclosure was in close proximity to the dinosaur. It was obvious that if care was not taken when removing the enclosure, damage might be caused to the dinosaur. That is a sufficient basis to impose a duty of care.
133 We put aside for one moment the question of whether the duty of care arose as an express or implied term of the contract between Mr O'Loughlin and Glenmont for the sale and purchase of the steel and for its removal, or whether the duty of care is one imposed by the law of tort.
134 The Judge found that when Mr Foote was removing the enclosure in the course of carrying out the contract between Mr O'Loughlin and Mr Parker, the dinosaur was damaged by Mr Foote's negligence. Mr Foote was an employee of Mr Parker who, in relation to Mr O'Loughlin, was an independent contractor. Mr Parker was not an employee of Mr O'Loughlin; nor was Mr Foote, either generally or for the purposes of the particular task at hand.
135 On this analysis of the situation, Mr O'Loughlin is not liable for the damage done to the dinosaur. On the Judge's findings, Mr O'Loughlin did not directly or indirectly authorise the negligent act which caused the damage to the dinosaur. The work being done when the damage was caused was being done for Mr O'Loughlin's benefit, but because it was being done by an independent contractor, Mr O'Loughlin is not vicariously liable for the negligence of the independent contractor. As Dixon J said in Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41 at 48:
"In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorised the doing of the act which amounts to a tort. The work, although done at his request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representative standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal."
Nevertheless, the Judge found that Mr O'Loughlin was liable. As we have already said, the basis of his finding, found in one short paragraph in his reasons, is that the failure to appreciate the risk of fire, to ensure that precautions were taken and to warn Mr Foote against the risk, amounted to negligence.
136 We agree that Mr O'Loughlin should have realised that there was a risk of the dinosaur catching fire if oxy equipment was used close to the dinosaur for the purpose of cutting the steel enclosure. As to the Judge's finding that Mr O'Loughlin should have warned Mr Foote to have some fire extinguishers handy, the point can be made that on his Honour's own findings there were fire extinguishers close at hand. It can hardly be said that Mr O'Loughlin should have warned Mr Foote to have a fire extinguisher with him if he were to cut steel high up on the enclosure, because Mr O'Loughlin had no reason to anticipate that this would occur. Nor, in our view, can it be said that Mr O'Loughlin was under a duty to remain at the site to be ready to deal with any eventuality that might arise. To so hold would, in effect, be to deny him the opportunity to leave the task to be carried out by an independent contractor. As well, unless the obligation suggested by the Judge is an obligation to warn Mr Foote to take a fire extinguisher up on to the scaffolding with him, in an eventuality that Mr O'Loughlin could not have foreseen, other findings by his Honour suggest that a failure to warn to have fire extinguishers handy was not causative of any loss. Fire extinguishers that were available at ground level were of no use in the events that occurred.
137 Nor, as it seems to us, is it right to hold that Mr O'Loughlin was negligent in failing to warn Mr Foote that the dinosaur was inflammable. It should have been obvious to anyone that it might be inflammable, and that care should be taken if oxy cutting equipment was to be used close to the dinosaur. In these circumstances, we do not think that the failure to point out this self-evident fact to Mr Foote is negligent. In any event, it seems not to have been causative of any loss, because on our understanding of the evidence Mr Foote himself realised that the dinosaur was or might be inflammable.
138 Our view is that unless the Judge meant to find, or unless a finding is made, that Mr Limb specifically warned Mr O'Loughlin against the use of oxy cutting equipment in the air above the dinosaur, and unless that gave rise to a duty to take reasonable steps to ensure that such use did not occur, the Judge's finding against Mr O'Loughlin lacks a sound basis. We repeat that, for the moment, we are putting to one side the issue of contractual liability.
139 We say this because the breach of duty identified by the Judge, namely, the failure to warn that the dinosaur was inflammable and that precautions against fire should be taken, including having extinguishers handy, are matters that were self evident and appear to have been understood by Mr Foote. It is necessary to emphasise that when Mr O'Loughlin left the site he had no reason to think that oxy cutting equipment would be used other than on the ground to cut up lengths of steel for his own purposes. There was no reason to anticipate the need to give a warning against the use of oxy cutting equipment in the air and above the dinosaur.
140 The difficulty that we have with the Judge's finding is that the breach of duty that he found against Mr O'Loughlin is nothing more than the failure to appreciate the risk of fire and the failure to instruct Mr Foote to take precautions against fire occurring. But that breach of duty is essentially the breach of duty of care found against the independent contractor. And, as we have already mentioned, the Judge found specifically that anyone who looked at the dinosaur should have realised that there was a risk that it was inflammable. It seems to us that the approach that the Judge took is tantamount to making Mr O'Loughlin liable for the negligence of the independent contractor. A person who employs an independent contractor is not vicariously liable for the negligence of that independent contractor merely because, had the employer of the independent contractor been present, the employer would have appreciated the danger of the course of conduct being followed by the independent contractor and would have warned against it. Nor is an employer of an independent contractor ordinarily under a duty to warn the independent contractor to take precautions that self-evidently are required.
141 The relevant principle is conveniently summarised by Brennan CJ in Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 333:
"Cases of special relationships aside, the duty of care that arises when a task to be performed does not carry an inherent risk of damage to the person or property of another may be discharged by the engaging of a competent independent contractor to perform it. Whether a task does or does not carry an inherent risk of damage to another's person or property is a question of fact to be determined in the light of common experience."
In other words, unless there was what Brennan CJ called a special relationship between Mr O'Loughlin and Glenmont, or unless the task that Mr O'Loughlin arranged for Mr Parker to perform carried an inherent risk of damage, the duty of care that Mr O'Loughlin owed to Glenmont was discharged by the employment of an apparently competent independent contractor. Mr O'Loughlin is liable to Glenmont only if some basis exists for finding that Mr O'Loughlin owed to Glenmont a duty to ensure that reasonable care was taken, or as it is called in the cases, a non-delegable duty of care.
142 As to the contention that the duty owed by Mr O'Loughlin to Glenmont was a non-delegable duty, Glenmont founded its submission on two basic propositions. First, that by reason of the contractual relationship with Glenmont, Mr O'Loughlin had undertaken the care and control of the dinosaur so as to assume a particular responsibility for its safety. In turn, Glenmont reasonably expected that due care would be exercised in the dismantling of the enclosure. Secondly, the task of dismantling involved an "inherent risk of damage" to the dinosaur.
143 As to the proposition that Mr O'Loughlin had undertaken the care and control of the dinosaur so as to assume a particular responsibility for its safety, there is no doubt that Mr O'Loughlin was under a duty to exercise reasonable care not to damage the dinosaur during the course of dismantling the enclosure and removing the steel from the site. However, there was nothing in the agreement between Mr O'Loughlin and Mr Limb that authorised Mr O'Loughlin to touch or do anything with the dinosaur. At the time the agreement was reached, both parties anticipated that a representative of Mr Limb would be present at the time of the dismantling. It cannot be said, therefore, that while dismantling the enclosure and removing the steel, Mr O'Loughlin had control of the dinosaur as the word "control" would ordinarily be understood.
144 In Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672, Mason J discussed the circumstances in which a special responsibility or duty may be found. The Court was concerned with the liability of an employer who had retained an independent contractor. The contractor was manually extending the jib of a crane and deliberately dropped a part which struck an employee of the employer. His Honour referred to a number of circumstances in which a non-delegable duty has been found to exist such as the duties owed by a hospital to a patient, a school authority to pupils and invitors to invitees. His Honour observed that it appeared in the classes of cases in which the existence of such a duty has been recognised that there is "some element in the relationship between the parties that makes it appropriate to impose on the defendant a duty to ensure that reasonable care and skill is taken for the safety of the persons to whom the duty is owed". (p 687) His Honour said (p 687):
"The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patients who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v Easton the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised." (our emphasis).
145 The examples given by his Honour of care, supervision or control which gives rise to the special duty are readily distinguished from the circumstances under consideration. As we have mentioned, Mr O'Loughlin was not undertaking supervision or control of the dinosaur. He was carrying out an activity in the vicinity of an object that he had no authority to touch or deal with. He did not have exclusive responsibility for the safety of the dinosaur. Mr Limb was in a position to exercise control and supervision whenever he chose to do so.
146 In Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520, the majority referred to the passage in the judgment of Mason J in Kondis which we have cited and said (p 551):
"It will be convenient to refer to that common element as "the central element of control". Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person [The Commonwealth v Introvigne [1982] HCA 40; (1982) 150 CLR 258 at 271]."
147 In Burnie the Court considered the relationship between a person who is in control of premises and who has taken advantage of that control to introduce a dangerous substance or to undertake a dangerous activity, and the person outside the premises with no control over what occurs on the premises who is thereby exposed to foreseeable risk of danger. The Court observed that the person outside the premises was obviously in a position of special vulnerability or dependence. In our opinion, while Glenmont through Mr Limb expected those performing the work to exercise reasonable care, it was not in a position of special vulnerability or dependence as that concept is properly understood.
148 The theme of the central element of control was also considered in Northern Sandblasting Pty Limited v Harris (1997) 188 CLR 313. Toohey J emphasised the assumption of responsibility as identifying a duty of care which cannot be discharged simply by the engagement of an independent contractor to do the work (p 353). In the context of mentioning special relationships where it is accepted that non-delegable duties exist, Gaudron J also referred to the central feature of control (p 361). Similarly, Mc Hugh J cited the approach of Mason J in Kondis (p 368).
149 In our opinion, the central element of control was missing in the relationship between Glenmont and Mr O'Loughlin and there was no assumption of responsibility in the relevant sense by Mr O'Loughlin. The existence of the duty to take reasonable care not to harm the dinosaur while dismantling the enclosure and removing the steel was simply a duty that arose because Mr O'Loughlin was working in the proximity of an object which could be damaged if reasonable care was not taken. However, as we have mentioned, Mr O'Loughlin did not in the relevant sense have control of the dinosaur and Glenmont was at liberty to exercise control over it either personally or through a representative at any time of his choosing.
150 Counsel also submitted that the task of dismantling the enclosure involved an "inherent risk of damage" to the dinosaur. As was pointed out by the Chief Justice during the course of submissions, the task of dismantling was not inherently dangerous unless oxy-cutting equipment was introduced into the operation without appropriate precautions. Many tasks are not inherently dangerous, but can be made dangerous by incompetent or careless work by those carrying out the tasks. In Burnie, the work carried out by an independent contractor on behalf of the owner of a building involved welding activities in close proximity to cardboard cartons containing Isolite, an insulating material which burnt fiercely if brought into sustained contact with flame. Extensive welding was required, the Isolite caught fire, and once ignited, dissolved into a liquid fire which burnt with a great ferocity. In that context, the Court considered the issue of "inherently dangerous". After stating that in the context of the ordinary law of negligence the character of "dangerous" is not confined to those classes of things such as poison, a loaded gun or explosives, which are "inherently dangerous" or "dangerous in themselves", the majority said (pp 558-559):
"The fact that a particular substance or a particular activity can be seen to be "inherently" or "of itself" likely to do serious injury or cause serious damage will, of course, ordinarily make characterization as "dangerous" more readily apparent. That fact does not, however, provide a criterion of what is and what is not dangerous for the purpose of determining whether the duty of a person in occupation or control of premises to take care to avoid injury or damage outside the premises is or is not a delegable one. It suffices for that purpose that the combined effect of the magnitude of the foreseeable risk of an accident happening and the magnitude of the foreseeable potential injury or damage if an accident does occur is such that an ordinary person acting reasonably would consider it necessary to exercise special care or to take special precautions in relation to it.
Similarly, a substance or activity entrusted to an independent contractor or other agent may be relevantly dangerous notwithstanding that foreseeable injury or danger will arise only in the event of what is commonly described as "collateral" negligence. If X engages an independent contractor to separately move two chemicals, which will cause a major explosion if they come into contact with one another, into separate storage areas, there may be no real risk of injury or damage at all if the independent contractor does what he or she is engaged to do. The activity is, however, obviously fraught with danger unless special precautions are taken to ensure that the independent contractor does not, through "collateral" negligence, transport the two chemicals together and in a way which causes contact between them. As Professor Thayer correctly pointed out [op. cit., at p.810], "collateral" is used in this context as a "most conveniently question-begging adjective" which, so far as it points to a definite conception, does no more than "indicate a distinction according to the definiteness of the danger inherent and visible in the nature of the undertaking".
In the present case, the particular qualities of E.P.S. made the stacked cardboard containers of Isolite in the roof area of the Authority's premises a dangerous substance in the sense that, if one of the cardboard containers were accidentally set alight, an uncontrollable conflagration would almost inevitably result [cf. Lord Sumner's description, in Rainham Chemical Works Ltd. v. Belvedere Fish Guana Co., [1921] 2 A.C., at p.479, of dinitrophenol as a "dangerous explosive" notwithstanding that "a hot flame is needed to explode it".]. Clearly, the introduction of more than twenty of those cardboard containers called for special precautions to be taken to avoid any risk of that happening. A fortiori, the carrying out of welding activities in the premises within which the cardboard containers of Isolite were stacked was itself a dangerous activity in that it was reasonably foreseeable that, unless special precautions were taken, sparks or molten metal might fall upon one of the containers and set the cardboard alight." (our emphasis)
151 In our opinion, the combined effect of the magnitude of the foreseeable risk of an accident happening and the magnitude of the foreseeable potential injury or damage to the dinosaur from the task of dismantling the enclosure and removing the steel from the site was not such as to qualify the activity as "inherently dangerous". At the time that Mr O'Loughlin and Mr Limb reached agreement, both parties were under the impression that the canopy could be removed and the enclosure dismantled without the use of oxy-cutting equipment. Even if the use of oxy-cutting equipment was envisaged, the nearby presence of the dinosaur was not in the category of the presence of the Isolite in Burnie. The dinosaur was known to be constructed of flammable material, but it was not material that if accidentally set alight would result in an "uncontrollable conflagration". In our opinion, the task which was the subject of the contract between Glenmont and Mr O'Loughlin was not "inherently dangerous".
152 For these reasons, in our opinion the duty of care owed by Mr O'Loughlin to Glenmont was not a non-delegable duty.
153 Accordingly, the question of whether Mr Limb told Mr O'Loughlin not to use oxy cutting equipment in the air above the dinosaur, in terms that would have indicated a concern about the risk of the dinosaur catching fire, becomes a critical issue. This is something on which the Judge made no finding. It is a critical issue because, unless something like this was said, in our view the Judge's conclusion that Mr O'Loughlin was negligent cannot stand. On the other hand, if Mr Limb gave such a warning to Mr O'Loughlin, we consider that the finding can stand. If the evidence of Mr Limb on this point is accepted, Mr O'Loughlin agreed to ensure that oxy cutting equipment would not be used in the air near the dinosaur and gave an assurance to Mr Limb to that effect. In our opinion that would be sufficient to impose an obligation on Mr O'Loughlin to take precautions to ensure that the independent contractor did not use oxy cutting equipment in the air near the dinosaur.
154 Not only did the Judge not make a finding on the point, but his reasoning in relation to the liability of Mr O'Loughlin rather implies that he was not proceeding on the basis that the conversation to which Mr Limb had deposed in fact took place. We say this because in finding Mr O'Loughlin liable, the Judge makes no reference to a specific warning having been given to Mr O'Loughlin that oxy cutting equipment should not be used in the air near the dinosaur.
155 It is not desirable for an appeal court to endeavour to make a finding on a crucial issue like this. On one view, it would not be surprising if Mr Limb had given the warning that he said he gave. He was aware of the inflammability of the dinosaur and might well have realised that for one reason or another oxy-cutting equipment would be used in the vicinity of the dinosaur. Mr Limb would have realised that the use of such equipment above the dinosaur would have created a dangerous situation. However, the opposing view is not without merit. According to Mr Limb, he told Mr O'Loughlin that the enclosure was bolted and explained that the canopy could be removed by unbolting the vertical rails while holding the canopy with a crane. In those circumstances, it was equally arguable that Mr Limb did not anticipate the use of oxy-cutting equipment above the dinosaur and would not have made a point of issuing a warning about not using oxy-cutting equipment in the air near the dinosaur.
156 In these circumstances, this Court could only make a finding if there was a proper basis for accepting the evidence of one witness in preference to the other. However, for the reasons already explained, this Court cannot rely upon the findings of the Judge that Mr Limb was a credible witness and that Mr O'Loughlin was not a satisfactory witness because he had invented a story concerning the cheque butt.
157 In our opinion, we cannot safely make a finding on the critical issue of whether Mr Limb told Mr O'Loughlin not to use oxy-cutting equipment in the air above the dinosaur. In the absence of such a finding, the decision of the Judge that Mr O'Loughlin owed a duty to Glenmont and was in breach of that duty cannot stand. If the existence of a common law duty was the only basis upon which Mr O'Loughlin could be liable to Glenmont, it would probably have been necessary to order a re-trial. However, it is not necessary for us to decide this difficult issue because there is another basis upon which Glenmont is entitled to succeed against Mr O'Loughlin. We now turn to that alternative basis.
158 As we said earlier, Glenmont and Mr O'Loughlin entered into a contract for the sale and purchase of the steel enclosure. It was a term of the contract that Mr O'Loughlin would dismantle the enclosure and remove it. That gives rise to the question of whether it was an express term of the contract that Mr O'Loughlin would do so without using oxy cutting equipment other than on the ground for the purpose of cutting the steel into appropriate lengths. There is also the question of whether, in any event, an implied term of the contract imposed on Mr O'Loughlin the obligation to exercise reasonable care in the dismantling of the enclosure, and whether it is any answer to an allegation of a breach of that term to point to the fact that the failure to exercise reasonable care was the act of an independent contractor. None of these matters were addressed by the Judge in his reasons although, as will appear, Glenmont pleaded a case in contract against Mr O'Loughlin.
159 On the third day of the appeal, Glenmont filed a Notice of Alternative Contention and sought leave to support the judgment against Mr O'Loughlin on the following ground:
"That the First Defendant [Mr O'Loughlin] was in breach of the contractual obligations to the Plaintiff not to use oxy-acetylene equipment above the dinosaur and to take reasonable care and skill when dismantling and removing the enclosure."
160 In support of the application counsel for Glenmont submitted that the existence of the contract and the breaches of it were pleaded and the issues were agitated before the Judge. Glenmont's Statement of Claim pleaded an oral agreement between Glenmont, by its agent Mr Limb, and Mr O'Loughlin in which it was agreed that Mr O'Loughlin would dismantle and remove the enclosure and retain the materials from the enclosure for his own use and benefit. Particulars of the agreement were pleaded. The pleadings also alleged that it was an express term of the agreement that Mr O'Loughlin or any person or persons employed or engaged by or acting on his behalf would exercise all reasonable care and skill when dismantling and removing the enclosure and would not use oxy-acetylene equipment when doing so. The particulars referred to conversations in which it was alleged that Mr Limb advised Mr O'Loughlin not to use oxy-acetylene equipment above the dinosaur due to the risk of fire to the dinosaur and in which Mr Limb requested Mr O'Loughlin to ensure that Parker did not use oxy-acetylene equipment above the dinosaur. The issues as to the terms of the arrangement between Mr O'Loughlin and Glenmont, including the specific issue as to whether Mr Limb spoke to Mr O'Loughlin of not using oxy-cutting equipment above the dinosaur, were the subject of evidence and submissions before the Judge.
161 Glenmont having pleaded an oral agreement that Mr O'Loughlin would dismantle and remove the enclosure and retain the materials from it, by his plea Mr O'Loughlin specifically admitted the existence of that agreement. Mr O'Loughlin denied, however, that it was an express term of the agreement that he or anyone employed by him or acting on his behalf would exercise all reasonable care and skill when dismantling and removing the enclosure and would not use oxy-cutting equipment when doing so. Mr O'Loughlin pleaded that he told Mr Limb that he would obtain the services of other people to dismantle the enclosure for him. In the passage from the evidence of Mr Limb to which we have already referred, Mr Limb said that he was told by Mr O'Loughlin that Mr O'Loughlin would do a contract or something like a contract with business neighbours for those persons to take the building down for Mr Limb. In the conversation in which the price of $2 500 was agreed, according to Mr Limb the price of $2 500 was to be paid on the basis that it included the price of "taking the building down with a crane company contracting to do it". Mr O'Loughlin was to pay the $600 to the "crane people".
162 Counsel for Mr O'Loughlin did not specifically oppose the application by Glenmont to rely upon the Notice of Alternative Contention. The notice was filed and served on 10 August, 2000. On 14 August, 2000 counsel for Mr O'Loughlin was able to respond in full. In these circumstances, in our opinion there is no prejudice to Mr O'Loughlin in permitting Glenmont to seek to support the judgment on the ground put forward in the Notice of Alternative Contention.
163 Glenmont argued that, on the assumption that the duty owed by Mr O'Loughlin to Glenmont was not a non-delegable duty, nevertheless Mr O'Loughlin was liable for a breach of a contractual duty to take reasonable care not to damage the dinosaur because that contractual duty could not be delegated to an independent contractor.
164 For the reasons previously discussed, it is not possible for this Court to make a finding as to whether it was an express term of the contract that Mr O'Loughlin would not use oxy-cutting equipment above the dinosaur or that Mr O'Loughlin take reasonable care and skill when dismantling and removing the enclosure. Such a finding could only be made if the evidence of Mr Limb was accepted. However, we are satisfied that it was an implied term of the contract that Mr O'Loughlin would exercise reasonable care and skill when dismantling and removing the enclosure. We so find although such an implied term was not specifically pleaded by Glenmont in its Statement of Claim. To that extent, the Notice of Alternative Contention appears to go beyond the Statement of Claim. However, and even if Mr Limb did not warn Mr O'Loughlin against the use of oxy cutting equipment above the dinosaur, we consider that all the tests for an implication of a term to this effect are met.
165 If it was a contractual obligation of Mr O'Loughlin to take reasonable care, when dismantling the enclosure, not to cause damage to the dinosaur, it is no answer to an alleged breach of that contractual term to say that the negligence that constituted the breach was the negligence of an independent contractor. While Mr O'Loughlin was entitled to perform his contractual obligation to remove the enclosure through a third party, Mr O'Loughlin remains liable on the contract and liable to be sued if the performance by Mr Parker was not in accordance with the contractual terms: Halsbury's Laws of England (4th Edition reissue) Volume 9 (1) par 926. On that basis, Mr O'Loughlin is liable for breach of the implied contractual term to exercise reasonable care and skill in the dismantling of the steel enclosure. It is no answer to that claim that he employed an independent contractor. On that basis Mr O'Loughlin is liable to Glenmont.
166 Notwithstanding Mr O'Loughlin's admission of Glenmont's plea that it was agreed that Mr O'Loughlin would dismantle and remove the enclosure and retain the materials, and notwithstanding that the entire trial was conducted on the basis that such an agreement existed between Mr O'Loughlin and Glenmont, in response to the Notice of Alternative Contention, counsel for Mr O'Loughlin contended that a different agreement had been made. She submitted that Mr O'Loughlin agreed to purchase the enclosure for $2 500 and to arrange for an independent contractor to dismantle the enclosure for Mr Limb, under Mr Limb's supervision. Mr O'Loughlin simply purchased the steel. Counsel argued that, pursuant to the agreement, Mr Limb was to supervise dismantling and that Mr Limb did not delegate the control or supervision of the dismantling to Mr O'Loughlin. It was a contract to retain independent contractors to do the dismantling for Mr Limb. Counsel acknowledged that Mr Parker had sued Mr O'Loughlin for payment of the amount of $600 and successfully obtained a judgment. Counsel also acknowledged that this new submission was not argued or hinted at before the Judge.
167 In our opinion, the admission in Mr O'Loughlin's pleading was in accordance with the evidence. Although Mr Limb was aware that Mr O'Loughlin would retain the services of independent contractors to dismantle the enclosure, the agreement between Mr Limb and Mr O'Loughlin was that Mr O'Loughlin would dismantle and remove the enclosure and retain the materials from it. This new submission must be rejected.
168 Glenmont presented its case against the Society on the basis that the Society was in breach of a duty of care that it owed to Glenmont. Contractual issues were also the subject of evidence and findings by the Judge. In addition, although Glenmont did not plead that the Society was liable for damages by reason of a breach of a contractual obligation, Glenmont has filed a Notice of Alternative Contention and sought to argue that the Society was in breach of a contractual obligation and that the judgment should be upheld on that basis. It is necessary, therefore, to examine in some detail the evidence relevant to the relationship between Glenmont and the Society.
169 Memories of events were understandably vague in a number of respects. The first relevant document was a completed but unsigned Application For Exhibit Site dated 23 January 1985. The Judge erroneously referred to this document as sourced from the records of the Society. It was discovered by Mr Limb. He said he located it in mid 1995. The application was a standard form used by the Society at that time. Mr Limb said the details were typed on the form at the office of Tarmak in Launceston and it was posted to the Society from Launceston. The evidence of Mr Limb was supported in this regard by Mr Michael Clayton, who was an Administration Manager with Tarmak. He recognised the content as having been typed on the office typewriter and said he "would have had almost everything to do with the preparation" of the application. He said that he posted the application to the Society.
170 The application included a notation that water was required for fire protection. Mr Anderson did not recall having seen the form and said that if he had received it he would have refused the application because of the request for water for fire protection. He said the Society did not provide water for fire fighting. The Society would not have been able to supply it and would not have accepted the risk.
171 The Judge found that the application was received by the Society. He rejected the evidence of Mr Anderson that Mr Anderson would have refused the application. His Honour regarded the application as a "significant factor in deciding the liability" of the Society and found that the Society acted on the application in allocating the site. His Honour found that the application "was the basis of the agreement" between Glenmont and the Society. That finding is challenged by the Society.
172 The application dated 23 January, 1985 was addressed to Mr Anderson. The relevant parts were as follows:
I/We hereby apply for an exhibit site at the forthcoming Royal Adelaide Show and submit the following information in respect of this application.
1. Size of site required. Frontage. 135ft. metres. Depth.50 ft. metres.
(Measurements should allow for awnings, guy ropes, platform, signs, towbar, verandah or any other extensions.)
2. Section/pavilion preferred. (Inside/Outside, Agricultural/Trade, Sideshow.) (If a site occupied previously, state details.)
3. Purpose of proposed exhibit. (Include full details of any products or services to be offered for sale or promoted.)
The purpose of our exhibit is to show a fully working robot of a Tyrannosaurus Rex. It is made up of a steel frame work and is covered in a thick layer of furniture form and then coated in fabric, silastic, etc. This gives a lifelike appearance and movement. The public will pay to enter, they will see T-REX go through a performance directed by an actor dressed in appropriate clothing. See attached page showing technical details of T-REX.
N.B. Licences to operate at the Royal Adelaide Show will be granted on the basis of this application only and products or services omitted from this application will not be permitted.
4. Description of proposed stand. (For new applications attach a sketch or photograph if available or draw diagram on the reverse side of this form.)
From the outside you will just see a large building covered in plastic Tarps supplied by us, T-REX will be in one end and the patrons at the other. T-REX is the only robot of his size in world. See attached photo lady shows his huge size.
(a) Electricity ..For lighting and welding (c) Drainage ..........
(b) Water ..For fire protection (d) Other................."
(the parts italicised represent the parts completed by the applicant for the exhibit site)
173 On 21 June 1985, the Society wrote to Mr Limb confirming that the application had been successful. The letter was accompanied by an Exhibit Site Agreement identifying "Tarmak Pty Ltd" as the Exhibitor, an Information and Conditions Booklet ("Information Booklet"), an invoice addressed to Tarmak and other documents. The letter stated:
Enclosed please find our Exhibit Site Agreement, Invoice/Statement, Exhibitor Passes form, Electrical Installation Hire Application and general Information and Conditions which you are requested to read carefully and complete as indicated. In particular please note that
1. The Exhibit Site Agreement - both copies of which are to be signed must be returned to the Society within 10 days of the date of this letter.
2. The Electrical Installation Hire Application - to be completed in duplicate and returned to the Society by the due date, or be subject to late application penalties.
3. The Invoice/Statement - now due and payable by 1st July.
When the Society receives your signed Agreement and payment the above site/s will be considered confirmed. A countersigned copy of the Agreement will be made available for your files. This will be issued to you when collecting your Exhibitors' Passes and Vehicle Pass.
* INFORMATION AND CONDITIONS BOOKLET: Please read this booklet and note that all conditions and requirements as set down by the Society must be strictly adhered to. Non compliance will jeopardise your participation in future Shows."
174 Mr Limb acknowledged receiving the letter of 21 June 1985 and the accompanying documents. He said he overlooked signing and returning the original documents as required by the letter. He later received a telephone call from Mr Anderson indicating the deadline was the following day.
175 On 8 July 1985 Mr Anderson wrote to Mr Limb referring to a previous telephone conversation in which he had advised Mr Limb that time was "running short". The letter stated that as there had been no response by the returning of the signed Licence Agreement and the payment of rentals and all fees by 1 July 1985, the letter was to formally advise that the allocation of an exhibit site had been cancelled.
176 Subsequently another site was allocated. Mr Limb was unable to recall whether he had completed a further application. He said that following receipt of the letter cancelling the site, he arranged through his uncle, Mr George Limb, for payment to be made. The records of the Society indicated that payment for the site was banked on 16 July, 1985. Although Mr Limb had no memory of doing so, on 31 July 1985 Mr Limb and Mr Anderson signed an Exhibit Site Agreement. Travel records indicated that Mr Limb was in Adelaide on that date. The Exhibit Site Agreement of 31 July 1985 identified "Allan Limb" as the Exhibitor. According to Mr Anderson, it was the practice of the Society to retain the original of the Agreement while the exhibitor retained the duplicate. Mr Limb agreed that he might have been handed a duplicate copy.
177 The Exhibit Site Agreement of 31 July 1985 stated that Mr Limb, as the Exhibitor, was licensed to occupy the nominated site during the currency of the Royal Adelaide Show from 30 August to 7 September 1985. The Agreement was in the same terms as the document sent to Mr Limb with the letter of 21 June 1985. Thirty-six paragraphs appeared under the heading "Terms and Conditions".
178 As mentioned, the Information Booklet was sent to Mr Limb with the letter of 21 June 1985. The first page of the Information Booklet stated that the information and conditions within the Information Booklet should be read in conjunction with the conditions printed on the Licence to Occupy an Exhibit Site and that the conditions in the Information Booklet "shall be deemed to become part of the Agreement between the Society and each Exhibitor". Mr Limb acknowledged receiving the Information Booklet and said he took it on site. He was unable to say if he had read all of the Information Booklet, but accepted that he probably glanced through it and that he would have obtained a reasonable comprehension of the contents.
179 In arriving at his findings as to the liability of the Society, the Judge did not refer to the Exhibit Site Agreement or the Information Booklet. Having found the application of 23 January, 1985 was the "basis of the agreement" between Glenmont and the Society, his Honour found:
"Before the Show began, someone had told Limb to have more fire extinguishers (he had brought some of his own). He had seen the hydrant and was entitled to assume that it was to provide water for fire protection, that a hose would be long enough to reach. The [Society] by accepting his money, not having demurred to his request for water for fire protection, had a duty to provide it: provision of water had become a term of contract."
180 The Judge rejected a proposition that exemption clauses contained in the Exhibit Site Agreement and Information Booklet operated to relieve the Society of any responsibility for damages caused by its negligence. He also rejected the proposition that once the Show was over the Society did not owe a duty of care to Glenmont. His Honour's final conclusion was expressed in the following terms:
"145. I conclude that the fifth defendant was liable to the plaintiff for its negligence. That negligence consisted of the failure immediately to call the Fire Brigade - as soon as Anderson saw there was a fire - and not having, at least not using, the water available from the fire hydrant on the Angas Building to fight the fire. The equipment was there: what was missing was the capacity to use it, through lack of training and lack of will.
146. Of course, neither calling the Brigade immediately or using the fire hydrant would have avoided the fire but either could have greatly reduced the damage to T-Rex: it need not have been left a total loss."
181 As mentioned, the Judge rejected the proposition that the duty of care owed by the Society ended at the conclusion of the Show. His Honour observed that the deadline for removal was 20 September, 1985, but found that the dinosaur was lawfully on the site at the time of the fire on 27 September, 1985. While his Honour found that the duty of care existed on 27 September, 1985, he did not make a finding as to what agreement was in operation at that time.
182 The Exhibit Site Agreement provided that the exhibitor was licensed to occupy the site for the period 30 August to 7 September, 1985. As to removal of the enclosure and exhibit, cl 14 provided as follows:
"14. The Exhibitor shall after the close of the abovementioned Royal Adelaide Show on the direction of the Society immediately remove all buildings, structures, foundations, fixtures or fittings from the Exhibit Site/s, unless permission in writing to remain has been given by the Society. All Exhibitors are required to remove all goods and chattels, the property of the Exhibitor to the satisfaction of the Director of the Society within the notified period following the close of the Royal Adelaide Show. In addition to the aforementioned, all signs are to be removed within the aforesaid notified period and any Society premises occupied by the Exhibitor are to be reinstated to the satisfaction of the Director who reserves the right to demand any necessary works (at the Exhibitor's cost) to achieve such reinstatement including repainting of buildings and the painting out of signs."
183 The paragraphs of the Information Booklet were set out under various headings arranged in alphabetical order. The paragraph under the heading "Moving Out" is set out later in these reasons. Sub-par(e) provided that removal of all exhibit stands and outside exhibits, materials and displays was to be completed by Friday 20 September, 1985.
184 According to Mr Limb, a couple of days after the Show had finished he approached Mr Anderson to see if he could leave the dinosaur in place for a month or so. He said Mr Anderson agreed. Mr Anderson said it was possible that Mr Limb spoke to him, but he did not have any recollection of such a conversation. He said that if he had been asked for approval for an extension, the answer would have been a "categoric no". If there had been an extension, Mr Limb would have had written approval as it was general policy to confirm an extension in writing.
185 The Judge did not refer to the topic of any conversation between Mr Limb and Mr Anderson concerning an extension of time within which to remove the dinosaur. Counsel urged that as his Honour accepted that Mr Limb was a witness of truth and had rejected significant aspects of the evidence of Mr Anderson, this Court should accept the evidence of Mr Limb and find that an oral agreement was reached that the dinosaur could remain in place for a month or so after the completion of the Show.
186 On the assumption that the evidence of Mr Limb concerning the extension of time was accepted, counsel were asked to identify the agreement that was in place on 27 September, 1985. After opportunity for reflection, counsel for Glenmont submitted that the effect of the oral agreement was to extend the existing contract between Glenmont and the Society for a month or so. As there was no discussion about terms and conditions, the existing Agreement continued with the variation as to the date. In the alternative, counsel submitted that if the original Agreement was no longer in place, a new agreement had been reached pursuant to which Glenmont was permitted to keep the dinosaur on site, without payment, for a period of about one month. In that event, in view of the previous dealings between the parties, counsel submitted a duty of care would still exist which included the duty to have available the water and fire fighting precautions and measures that Glenmont argued were part of the duty of care that arose in the context of the original Agreement. It was not clear from the submissions whether counsel was also suggesting that the new oral agreement would include an implied term that the Society would provide water and fire-fighting precautions and measures.
187 Counsel for the Society submitted that it was reasonable for the Court to conclude that the original Agreement was still in place. However, the content of any duty owed by the Society to Glenmont either in tort or in contract changed at the time the Show ended. The duty of the Society should a fire occur during the currency of the Show was different from any duty that might be owed to exhibitors during the period of removal of exhibits following the conclusion of the Show.
188 In our opinion, on the assumption that the evidence of Mr Limb is accepted, the oral agreement reached between Mr Limb and Mr Anderson represented a variation of the original Agreement as to the date by which the dinosaur was to be removed. All other terms and conditions of the Agreement remained in force. It is also our view that the same result would ensue if the evidence of Mr Limb was rejected. Although the Agreement required the removal of the exhibit by 20 September 1985, the Society had not given any form of notice to quit or made any demand that the dinosaur be removed. It is reasonable to conclude that the original agreement remained in force.
189 His Honour's reasons appear to proceed on the basis that the agreement was in force. By implication he treated the provisions of the Exhibit Site Agreement as still applying. Our view is that there is no need to resolve the issues left unresolved by his Honour. However the matter is approached, the dinosaur was present on the land of the Society on the same terms and conditions as before.
190 Against the background of the arrangements with the Society, it is convenient first to deal with a preliminary point taken by the Society and other defendants. It was submitted that Glenmont was not entitled to sue for damages because it was not the owner of the dinosaur nor the exhibitor. The defendants pleaded and argued before the Judge that Tarmak owned the dinosaur. The Judge rejected that plea. He found that Glenmont owned the dinosaur. That finding is challenged by Mr Parker and by the Society. It is, therefore, necessary to examine the sequence of events relevant to that question.
191 There is no dispute that until mid-1984, Tarmak owned the dinosaur. In 1983 Tarmak leased from Australian Guarantee Corporation Limited ("AGC") a quantity of hydraulic valves and equipment used in the construction of the dinosaur. More than one lease was involved and they were current at the time of the fire. Clause 6 of the leases provided that nothing in the lease conferred on Tarmak any right or property or interest in or to the goods and that Tarmak was the bailee only.
192 During 1984 Mr and Mrs Jetson agreed to invest a total of $250 000 in the project. At the time of the Queensland operation they had invested $100 000. According to Mr Limb, ownership of the dinosaur was transferred from Tarmak to Glenmont in mid-1984 in order to protect the interests of Mr and Mrs Jetson. Mr Limb said it was his understanding that Glenmont was established as a trustee company for the Jetson Unit Trust and that the Trust was entitled to one third of any income from the dinosaur. Tarmak would be entitled to two thirds of the income. Mr Limb agreed that the effect of the arrangement was that Mr and Mrs Jetson, through the Trust, owned one third of the dinosaur.
193 It is not in dispute that the purported effect of the transaction was as follows:-
(a) Tarmak sold the dinosaur and its interest in Pre-Historic Park to Glenmont for the sum of $750 000.
(b) Tarmak did not receive that sum. In respect of $500 000 of that consideration, Tarmak received two units in the Tarmak Jetson Unit Trust (each of which was issued at a premium of $250 000).
(c) Mr and Mrs Jetson would receive one unit in the Tarmak Jetson Unit Trust issued at a premium of $250 000, but would have to pay only $100 000 of that sum, which in turn, would go to Tarmak. Mr and Mrs Jetson would only be obliged to pay the balance of $150 000 once they became entitled to a 26 per cent profit on their investment in the business.
194 Glenmont received $100 000 from Mr and Mrs Jetson. Pursuant to the arrangement, that amount was paid to Tarmak. However, Tarmak had agreed to spend that amount on Pre-Historic Park in connection with an access road, car park and toilet facilities. Mr Limb was asked about the expenditure and said that initially he transferred a "bit of money" back to Tasmania, namely, approximately $40 000. He said Tarmak had a few bills and matters that needed clearing up straight away. He maintained, however, that over a period the $40 000 was returned for expenditure in Queensland.
195 Against that background, Mr Limb maintained that he always regarded Glenmont as the entity entitled to claim the losses that occurred as a consequence of the fire as it was the true owner of the dinosaur. The appellants pointed to a number of matters which they say demonstrated that the purported transfer was illegal and that Glenmont was not the exhibitor of the dinosaur at the Show.
196 First, in March 1985, the receiver of Tarmak, Mr Cooke, prepared a feasibility study concerning the possibility of exhibiting the dinosaur at the Brisbane and Adelaide Shows. His notes indicate the client to be Tarmak.
197 In our view, this document does not assist the appellants. Mr Cooke's appointment was at the instigation of the Westpac Bank which was seeking to have its outstanding debts repaid as quickly as possible. He sought and received advice from a solicitor in February 1985. On the basis of that advice, Mr Cooke drew the conclusion that Tarmak had disposed of its right in the dinosaur itself and had substituted in its place an interest in the form of units in the Tarmak Jetson Unit Trust. Mr Cooke explained that he was seeking to clarify whether the way in which the transaction was handled was legally effective such that the company had units in a trust as distinct from ownership of the dinosaur.
198 Mr Cooke's memory was refreshed by an explanatory statement prepared after the fire in which the transfer of the dinosaur was explained, but it was also stated that the leases of the hydraulic equipment incorporated in the dinosaur were not transferred and that Tarmak remained liable pursuant to the leases. Mr Cooke explained his practice as a receiver that leases are not adopted by him as receiver and a decision is made as to whether the lease assets will be required as part of the ongoing operations of the business. If the asset is required, a decision is then made as to whether the lease rental will be paid or otherwise. In this matter there were no lease payments made with respect to the hydraulics and, he thought, a Lamborghini leased by Tarmak and used by Mr Limb was in the same category.
199 Mr Cooke said he understood it was one of his options to take control of Glenmont, wind up the unit trust, dispose of the dinosaur and retrieve Tarmak's money from the trust. In view of the effort and cost involved and the attitude of the Bank which wanted to see whether the company could trade to the extent of repaying the Bank, taking such a course of action was not a primary objective. The Bank wanted to take the least difficult line to obtain the desired result. Eventually the sale of assets and the trading profit was sufficient to repay the Bank and the Bank had no further interest in continuing the receivership.
200 Mr Cooke was not specifically asked about why his notes referred to the client as Tarmak. His evidence is plain, however, that in March 1985 he had accepted the advice that Tarmak did not own the dinosaur.
201 Reference was made to the failure to advise AGC of the transaction. In addition, the consent of AGC was not obtained. Tarmak did not have title in the hydraulics. It was a bailee only. Any attempt to pass title in the hydraulics to Glenmont without the consent of AGC would have been contrary to the terms of the leases. This issue is canvassed later in these reasons as an integral part of the next point concerning the Queensland Criminal Code.
202 It was submitted that the transaction amounted to a breach of s 408C of the Criminal Code of Queensland. That section creates an offence of fraud in connection with the dishonest disposal of property. In the alternative it was submitted that the transaction involved an agreement to commit a tort, namely, the tort of conversion of the property of AGC. These issues are canvassed in detail later in these reasons.
203 The appellants suggested that although the application of 23 January 1985 identified the exhibitor's business name as "Glenmont Investments Pty Ltd", subsequent events established that Glenmont was not the exhibitor, including the feasibility study conducted by Mr Cooke in March, 1985. Reliance was placed on the description of the exhibitor in a number of documents. The letter of 21 June 1985 from Mr Anderson confirming the application for space to exhibit the dinosaur had been successful was addressed to Mr A. Limb, Tarmak Pty Ltd. Accompanying that letter was an Exhibit Site Agreement prepared by the Society identifying Tarmak as the exhibitor. The invoice was in the name of Tarmak. The letter of cancellation dated 8 July 1985 was also addressed to Mr Limb at Tarmak. The letter stated that the "allocation of an exhibit site to Tarmak Pty Ltd" was cancelled. The Exhibit Site Agreement dated 31 July 1985 and signed by Mr Limb specifically stated that "Allan Limb" was the exhibitor. The exhibitor's name printed in the Show programme was "Allan Limb". Mr O'Loughlin's cheque in payment for the enclosure was paid to Mr Limb, not Glenmont.
204 The appellants also emphasised the conduct of Mr Limb with respect to the proceeds from the Show which they suggested was inconsistent with his evidence that the dinosaur was being exhibited by Glenmont. The proceeds were banked into an account of Mr Limb's girlfriend (now his wife). Mr Limb did not at any time account to Glenmont for the profit made at the Show.
205 In essence, Mr Limb said that it was more convenient to use Mrs Limb's account at the Commonwealth Bank. That bank had a branch at the Showgrounds and it was easier to operate in that way than to open a fresh account. Mr Limb said it was a "bit untidy", but they did not have proper bank accounts set up at the Show. He agreed that the funds did not find their way to an account in the name of Glenmont, but maintained they found their way to a solicitor's account to fund the litigation. Mr Limb used $5 000 of the proceeds to pay AGC who were demanding payment of arrears of rent in respect of the leased hydraulic equipment. That payment was on account of a Tarmak debt.
206 The appellants maintained that the evidence of Mr Limb explaining why he did not bank the proceeds into an account in the name of Glenmont should be rejected. Glenmont had an account at the Westpac Bank and there was a branch of the bank at the Showground next door to the Commonwealth branch.
207 The attention of the Court was also drawn to Mr Limb's behaviour following the fire. He communicated with the organisers of the Moomba Festival in Victoria about exhibiting the dinosaur at the Festival. He said he did so because he was doing a feasibility study on the possibility of the profit that could have been made from a venue such as that Festival. Mr Limb acknowledged, in hindsight, that it was a "silly little exercise". The correspondence included a letter of 1 November 1985 in the name of Tarmak.
208 In 1991, Mr Limb consulted the legal firm of Lynch and Meyer concerning the claim for damages. By letter of 27 August 1991 signed by Mr Blewett of that firm, the solicitors wrote to the Society giving notice of the claim in the following terms:
We act for Tarmak Pty Ltd and Mr Allan Limb in relation to a claim arising from the destruction of a robotic dinosaur exhibited by our client at the 1985 Royal Adelaide Show.
We are in the course of investigating our client's claim ..."
209 The impression was conveyed in the letter of 27 August 1991 that Tarmak was the client seeking damages. This impression was confirmed in a further letter of 18 September 1991. Mr Limb denied seeing the letters.
210 The starting point in considering the entitlement of the plaintiff to sue is a consideration of the transaction by which Tarmak disposed of its interest to Glenmont. If that transaction was effective in law, then subject to one or two matters dealt with later, Glenmont is the appropriate plaintiff.
211 In deciding that issue we take the view that Mr Limb's evidence has to be treated with caution. We have already explained why. Mr Limb evidently paid little attention to, and had little regard for, the legal implications of what he did in relation to the ownership of the dinosaur. He appears to have dealt with funds arising from the use of the dinosaur, or relating to it, in a rather cavalier fashion. He used the names of different entities interchangeably, as if it did not matter. We get the clear impression that his conduct in connection with the dinosaur was adjusted according to his own convenience and interests. But it does not follow that his evidence about what happened is to be disregarded.
212 The fact is that there was a transfer of the ownership of the dinosaur by Tarmak to Glenmont. Tarmak has not challenged the validity of the transfer. Subject to issues arising from the fact that the dinosaur included hydraulic equipment leased by AGC to Tarmak, we find no reason to reject the evidence that Tarmak purported to transfer ownership of the dinosaur to Glenmont.
213 We now turn to the question of whether that transaction is void for illegality.
214 A contravention of s 408C was not pleaded and no allegation of dishonesty was put to Mr Limb or Mr Jetson. However, counsel for Mr Parker opened on the issue and it was the subject of submissions. His Honour rejected the proposition that the transaction was void for illegality because it amounted to a breach of s 408C, but did not deal with the issue of whether the contract was void because it was a contract to commit a tort.
215 In addition to submitting that the evidence clearly established a breach of s 408C and an agreement to commit a tort, the defendants submitted that the Judge erred in two identifiable respects when considering the issue of s 408C. First, his Honour posed the incorrect test of dishonesty. Secondly, he applied the incorrect burden of proof.
"(1) A person who dishonestly - (a) applies to his or her own use or to the use of any person - (i) property belonging to another; ... (b) obtains property from any other person; or (c) induces any person to deliver property to another person; or (d) gains benefit or advantage, pecuniary or otherwise, to any person; or (e) causes detriment, pecuniary or otherwise, to any person; or (f) induces any person to do any act which the person is lawfully entitled to abstain from doing; or (g) induces any person to abstain from doing any act which that person is lawfully entitled to do; or (h) makes off, knowing that payment on the spot is required or expected for any property lawfully supplied or returned or for any service lawfully provided, without having paid and with intent to avoid payment; commits the crime of fraud. ... (3) For the purposes of this section - (a) ... (b) A person's act or omission in relation to property may be dishonest even though -
(i) he or she is willing to pay for the property; or
(ii) he or she intends to afterwards restore the property or to make restitution for the property or to afterwards fulfil his or her obligations or to make good any detriment; or
(iii) an owner or other person consents to doing any act or to making any omission; or
... (d) persons to whom property belongs include the owner, any joint or part owner or owner in common, any person having a legal or equitable interest in or claim to the property and any person who, immediately before the offender's application of the property, had control of it; ... (f) if a person obtains property from any person or induces any person to deliver property to any person it is immaterial in either case whether the owner passes or intends to pass ownership in the property or whether he or she intends to pass ownership in the property to any other person."
217 "Dishonestly" was not defined in the Code. The Judge referred to two authorities of the Queensland Court of Criminal Appeal which applied the test enunciated by the Court of Appeal of England in R v Ghosh [1982] EWCA Crim 2; [1982] QB 1053. The Queensland Courts held that it was for the jury to determine whether what was done was dishonest by the standards of ordinary honest people and, if it was, whether the person accused must have realised that the conduct was dishonest by those standards. In essence, therefore, the test approved by the Queensland decisions involved both objective and subjective elements. The Judge applied that test and concluded:
"I could not possibly find proved beyond reasonable doubt that what Limb and Jetson did would be regarded as "dishonest according to the objective standards of the community" or that they "knew that this conduct was dishonest".
I note that neither Limb nor Jetson was cross-examined about their states of mind regarding the transfer. There is no evidence at all what they thought. The chances of either Limb or Jetson being convicted of an offence under s 408C are, I suggest, nil. No offence under the section could be proved against them."
218 The Queensland decisions upon which the Judge relied were delivered in 1987 and 1988. His Honour was not referred to the High Court decision in Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493. In that case, the appellant had been charged with conspiracy to defraud the Commonwealth contrary to the provisions of the Commonwealth Crimes Act. In a joint judgment, Toohey and Gaudron JJ discussed the difficulties involved in the Ghosh test and rejected the proposition that, where it is necessary to determine whether an act is dishonest, the prosecution must prove that the accused realised that the conduct was dishonest by the standards of ordinary honest people. McHugh J, with whom Gummow J agreed, also rejected the subjective element enunciated in Ghosh. However, their Honours all agreed that the knowledge or belief of an accused at the time the act was done is critical in determining whether the conduct in question was dishonest. As Toohey and Gaudron JJ pointed out, "ordinary, honest persons determine whether a person's act is dishonest by reference to that person's knowledge or belief as to some fact relevant to the act in question or the intention with which the act was done". (p 503)
219 We are not aware of any Queensland decisions concerning s 408C decided since Peters. Strictly speaking Peters does not overrule the Queensland decisions to which we have referred and their Honours in Peters recognised that the statutory context in which the element of dishonesty is involved may affect the interpretation of that requirement. Nevertheless, it appears likely that a future Queensland Court would reject the application of the Ghosh test to s 408C at least to the extent of rejecting the requirement that the prosecution prove that an accused person realised that the conduct was dishonest by the standards of ordinary honest people.
220 In our opinion, therefore, it is probable that his Honour was in error in asking whether the evidence was capable of proving that Mr Limb knew that the purported transfer of the dinosaur involved conduct that was dishonest according to the standards of ordinary honest people. However, the failure to cross-examine Mr Limb about his state of mind concerning the transfer remains pertinent. As mentioned, that state of mind was critical to a determination as to whether the conduct was dishonest for the purposes of s 408C. As his Honour observed, there was no evidence as to what Mr Limb thought.
221 The Judge was also in error as to the burden of proof. He incorrectly applied the standard applicable in the criminal law of proof beyond reasonable doubt. In order for the defendants to succeed, it was not necessary for them to prove beyond reasonable doubt that the transaction involved a breach of s 408C. Bearing in mind the seriousness of the allegation, proof on the balance of probabilities was sufficient.
222 Significant errors in the approach of the Judge having been demonstrated, this Court is required to consider the evidence and reach its own conclusion. In doing so, it is necessary to bear in mind the alternative proposition that the transaction involved an agreement to commit a tort and was, for that reason, void. The evidence favours the view that AGC was unaware of the transfer of the dinosaur and we proceed on that assumption.
223 Section 408C of the Queensland Criminal Code is concerned with the misuse of the property of another. The defendants submit that a breach was established because of a misuse of the hydraulics which were the property of AGC. However, a transfer of the dinosaur itself did not necessarily involve a misuse of the hydraulics.
224 At trial, a large number of documents were tendered in connection with the transfer of ownership of the dinosaur. In the context of a suggestion that two new partners wished to enter the business, included in those documents was a letter of 24 January 1985 from solicitors to Mr Limb concerning the means by which the transaction could be effected. It included reference to a transfer of the lease of the hydraulics to the new business and to Glenmont taking over both the arrears and current lease payments. An unsigned copy of a business contract between Tarmak and Mr Jetson included a special condition that Mr Jetson would assume one third liability for the lease of the hydraulic equipment. After the fire, when a scheme of arrangement was proposed for Tarmak, the explanatory statement noted that the leases of the hydraulic equipment were not transferred to Glenmont and that Tarmak remained liable for payments due pursuant to the lease.
225 In our opinion, the evidence was left in an unsatisfactory state. While the documents do not specifically exclude the hydraulics from the transaction, there was no questioning of Mr Limb about the issue and the documentation after the event plainly states that the hydraulics were not the subject of a transfer from Tarmak to Glenmont. In the absence of the critical matters being raised with Mr Limb, in our opinion the evidence was insufficient to establish a breach of s 408C in respect of the hydraulics. Similarly, the evidence was insufficient to justify a conclusion that the transfer involved the commission of a tort with respect to the hydraulics. It was incumbent upon the appellants to produce evidence that would justify such a conclusion. The knowledge and intention of Mr Limb was critical. It was only if Mr Limb, as the will and mind of Tarmak, sought to deal with the hydraulics in a manner inconsistent with the rights of AGC that any question of s 408C or the commission of a tort could arise. In our opinion the appellants failed to discharge the onus resting upon them to establish a contravention of s 408C or the commission of a tort with respect to the hydraulics.
226 In connection with the purported transfer of the dinosaur from Tarmak to Glenmont, the following was also submitted by the Society:
"At trial counsel for Glenmont conceded that Tarmak had never transferred the hydraulics and submitted that that part of the transaction was severable and the property in the dinosaur without the hydraulics still passed to Glenmont. It is submitted that the transaction is not severable and no property in the dinosaur passed at all. The hydraulics of the dinosaur were not capable of being removed without totally altering the character of the chattel from being a robot to a large shell. It is not known from the evidence whether if the hydraulics were removed the skeleton would remain intact in the sense of remaining upright."
227 In our opinion the answer to that submission is as follows. Tarmak did not purport to deal with the hydraulic equipment leased by AGC to Tarmak. That hydraulic equipment was fitted to the dinosaur. Assuming that no property in the hydraulic equipment passed to Glenmont, it does not follow in our opinion that the purported transfer from Tarmak to Glenmont became wholly ineffective. In our view there is no difficulty in concluding that title to the dinosaur passed to the extent that it was capable of passing, leaving Glenmont in the position that at any time AGC, and perhaps Tarmak, were at liberty to remove the hydraulic equipment from the dinosaur.
228 In our opinion the evidence satisfactorily establishes that the dinosaur was in the possession of Glenmont when it was brought to the premises of the Society. We so conclude despite the unsatisfactory aspects of Mr Limb's evidence. As Glenmont was in possession of the dinosaur, Glenmont had sufficient title to bring proceedings claiming damages for damage caused negligently to the dinosaur. This conclusion is supported by the following passage in Halsbury's Laws of England (4th Edition reissue) Vol 35 par 1222:
"Thus, as against a stranger or wrongdoer, a person in actual or apparent possession, but without the right to possession, has all the rights and remedies of a person entitled to and able to prove a present right to possession."
229 This approach is consistent with the law applicable to the entitlement of a bailee to sue for damaged goods: see Halsbury's Laws of England (4th Edition reissue) Vol 2 par 1889. In our view both authority and common sense support the approach that the possession of the dinosaur is a sufficient basis for an action for damages for harm negligently caused to it. Other persons claiming to have an interest in it may, if they have notice of the proceedings, join in the proceedings. Alternatively, they might make a claim to the proceeds of the proceedings. But it seems to us that there is no need to look beyond the possession of Glenmont when considering its entitlement to sue.
230 The Society put forward an alternative basis upon which it argued that Glenmont was not entitled to sue for damages. It contended that if Glenmont had been in possession of the dinosaur at the time of the Show, it was not in possession at the time of the fire. In essence, the Society submitted that AGC had taken possession of the dinosaur and subsequently relinquished possession to Tarmak.
231 At the time of the Show, Tarmak was in arrears with the lease payments due to AGC by approximately $25 000. AGC retained a company offering bailiff services to endeavour to collect the arrears. Mr Anthony Sobey attended at the Showgrounds with a view to collecting money. Mr Sobey spoke with Mr Limb who in turn arranged with the Credit Supervisor from AGC who was in charge of the account, Mr John Overand, to be given 24 hours within which to find approximately $10 000. In the meantime, on 9 September, 1985 AGC served an "embargo notice" on the Society in relation to the dinosaur. The notice was in the following terms:
The above goods have been repossessed. You are authorised to hold the goods for us and to refuse delivery to any person who makes application for delivery without our written order.
232 Mr Sobey said he kept watch on the dinosaur throughout the evening in order to ensure that nothing was being removed. The following day he advised Mr Limb of the embargo notice. Mr Limb denied being told that the Society had been served with a notice. Mr Overand said the embargo notice had been served on his instructions and the purpose of it was to ensure that the goods were not removed. It was the case for the appellants that when the embargo notice was served upon the Society, or at the latest when Mr Sobey told Mr Limb of the embargo notice, AGC took possession of not only the hydraulics, but the entire dinosaur.
233 On 10 September, 1985 Mr Limb reached agreement with Mr Overand that he would pay $5 000 toward the arrears. Although Mr Overand was unable to recall any further arrangement in connection with paying the balance of the arrears, he said the amount of $5 000 would have been a "goodwill gesture" with more to follow. Mr Limb provided Mr Sobey with a bank cheque for $5 000. He said he had received instructions that Mr Limb had arranged to attend at the offices of AGC in Melbourne to make further arrangements with respect to the balance of the arrears. According to Mr Sobey, after he received the cheque he reiterated to Mr Limb that Mr Limb was required to keep his appointment with AGC in Melbourne. Mr Limb confirmed the payment, but was unable to recall whether Mr Sobey reminded him of the importance of keeping an appointment in Melbourne. According to Mr Limb, he had reached an arrangement with Mr Overand that when passing through Melbourne he would call and see him and "have a good old talk about the whole thing and get down to a personal level and sort something out".
234 The appellants submitted that when AGC accepted the payment of $5 000, it relinquished possession of the dinosaur. However, as AGC did not know anything about a purported transfer of the dinosaur from Tarmak to Glenmont, they contended that AGC handed over possession of the dinosaur to Tarmak and not Glenmont. It followed, therefore, that at the time of the fire Tarmak was in possession and not Glenmont.
235 During the course of submissions, counsel for Glenmont submitted that AGC were aware of the transfer from Tarmak to Glenmont. However, in our opinion the preponderance of the evidence favoured the view that AGC were not aware of the transfer at the time of the payment of $5 000.
236 The Judge did not deal with the question of possession. He did not refer to the evidence of Mr Overand nor to the conflict between Mr Sobey and Mr Limb as to whether Mr Sobey advised Mr Limb of the embargo notice. In those circumstances this Court must endeavour to form its own view. Notwithstanding that the Judge found Mr Limb to be a witness of truth, we see no reason to reject the evidence of Mr Sobey that he told Mr Limb of the embargo notice. During his evidence, Mr Sobey referred to a statement given soon after the fire which enabled him to refresh his memory as to events that occurred. In the ordinary course of human affairs, in our view it is highly unlikely that Mr Sobey would not have told Mr Limb of the embargo notice. We are satisfied that we should proceed on the basis that Mr Sobey informed Mr Limb of the embargo notice that had been served on the Society.
237 Glenmont submitted that the issue can be determined on the facts because AGC did not exercise any purported power to take possession of the hydraulics. It was said that in order to take possession, AGC had to exercise its rights against the lessee which involved giving notice to the lessee. It was argued that AGC may have intended to take possession of the hydraulics if certain events occurred and it may have taken a step toward taking possession, but it did not take possession of the hydraulics or the dinosaur.
238 The evidence is in an unsatisfactory state. We are not satisfied that AGC had taken possession of the hydraulics, let alone of the dinosaur. It seems clear that, at this stage at least, AGC realised that the hydraulics had been incorporated into the dinosaur. The notice that AGC gave was given to the Society, and we do not accept that giving that notice to the Society amounted to the taking of possession of the dinosaur. For relevant purposes, we do not consider that the dinosaur was in the possession of the Society. It was simply an item located on the land of the Society. Nor do we consider that the dealings between Mr Sobey and Mr Limb amounted to a taking of possession of the dinosaur or of the hydraulics. A taking of possession would have required some action to exclude Mr Limb or other representatives of Glenmont from control of the dinosaur. There is no suggestion that Mr Sobey did that.
239 An issue also existed as to the extent of the power of AGC to take possession of the dinosaur. The embargo notice referred to taking possession of a "Mechanical Dinosaur". Reference was made to three account numbers which related to the leases of the hydraulic equipment. The appellants submitted that AGC was entitled to take possession of the dinosaur by virtue of par 5 of the leases. That paragraph provided that in the event of failure to pay the rent AGC was "entitled to take the goods into custody". "Goods" was a reference to the hydraulics. The appellants argued that the authority to take possession of those goods extended to taking possession of any item to which the goods were attached or into which the lessee had incorporated the leased goods. It was said that to interpret the clause in any other manner lacked commercial sense as goods of the nature of hydraulics were obviously intended for incorporation into some form of machinery. In addition, it was argued that cl 4 of the lease contemplated the dismantling of machinery in order to recover leased goods. Clause 4 required the lessee to pay any expenses incurred by the lessor by reason of retaking or attempting to retake possession of the leased goods, including any expenses incurred in dismantling and removing the goods from any premises and in any repair or renovation to any such premises.
240 In our view AGC did not have the right to take possession of the dinosaur. AGC was the owner of the hydraulic equipment. It had contractual rights against Tarmak. It had no contractual rights against Glenmont. Its rights against Glenmont were its rights as the owner of goods incorporated into property belonging to Glenmont. We accept that AGC had the right to remove the hydraulics from the dinosaur, but in our opinion there is no basis for a conclusion that AGC was entitled to take possession of the property of Glenmont. The right to do so could only arise from a contract between AGC and Glenmont.
241 It may well be, had the situation arisen, that AGC would have been entitled to require Glenmont to permit it to have access to the dinosaur to remove the hydraulic equipment, and might have been entitled to detain the dinosaur for that limited purpose. But, in our opinion, AGC did not have what one might call a right to general possession.
242 Finally in connection with the transfer of the dinosaur, the defendants submitted that as no title in the hydraulics could pass, Glenmont acquired only the shell of the dinosaur which had no earning capacity because the hydraulics were essential to the functioning of the dinosaur. In those circumstances, it was argued that Glenmont could not sue for any loss of earning capacity. At this stage it suffices to say that, as we have already indicated, we are satisfied that Glenmont acquired title to the dinosaur from Tarmak. That gave it a sufficient interest to entitle it to sue for damages.
243 On the assumption that the original agreement as evidenced by the Exhibit Site Agreement of 31 July 1985 and the Information Booklet was in force at the time of the fire, the Society submitted that exclusion clauses found in those documents excluded any liability either in tort or in contract for damage caused to the dinosaur by reason of the Society's negligence. In the alternative, the Society submitted that any common law duty owed by the Society to Glenmont was so modified by the terms of the contract as to exclude any liability for a breach of the duty.
244 The relevant clauses of the Exhibit Site Agreement of 31 July, 1985 were as follows:
"5 i). The Society will under no circumstances be responsible for any accident damage or liability which may be caused through or by any Exhibitor or such Exhibitor's exhibit whether to the public or to another Exhibitor or to the employees of any Exhibitor or to their and any of their goods and chattels whatsoever and it shall be an express condition of the Licence hereby applied for that the Exhibitor shall hold the Society harmless and indemnify the Society from and against all legal proceedings and claims whatsoever arising out of such accident or damage or any breach by the Exhibitor of any statute or any By-law, Rule or Regulation thereunder for the time being in force and which may impose any liability on the Society.
ii). All Exhibitors shall ensure that their stands are covered by insurance against Public Risk for an amount and with a Company approved by the Society and such Public Liability Insurance Policy shall be in the names of the Society as Principal and the Exhibitor as Insured. The exhibitor when requested to by an authorised officer of the Society shall lodge a Certificate of Currency of their Public Risk Insurance with the Society for their ride, game or exhibit, prior to the commencement of the Royal Adelaide Show.
6. The Society will not under any circumstances be liable or responsible for any loss or misdelivery of exhibits or for any damage or loss occasioned thereto.
14. The Exhibitor shall after the close of the abovementioned Royal Adelaide Show on the direction of the Society immediately remove all buildings, structures, foundations, fixtures or fittings from the exhibit site/s, unless permission in writing to remain has been given by the Society. All Exhibitors are required to remove all goods and chattels, the property of the Exhibitor to the satisfaction of the Director of the Society within the notified period following the close of the Royal Adelaide Show. In addition to the aforementioned, all signs are to be removed within the aforesaid notified period and any Society premises occupied by the Exhibitor are to be reinstated to the satisfaction of the Director who reserves the right to demand any necessary works (at the Exhibitor's cost) to achieve such reinstatement including repainting of buildings and the painting out of signs.
21. The Exhibitor shall at the direction of the Society's Fire Watchmen have available on each of his or her exhibit site/s one or more chemical fire extinguisher/s of a type to be approved by the Director.
35. The granting of this application which may be in writing signed on behalf of the Society and by acceptance of the payment referred to as consideration hereof shall not constitute any tenancy or letting of any portion of the Society's Showgrounds but shall constitute a Licence only to occupy such portion of the Society's Showgrounds for such time and for such purpose only and subject to such conditions as are herein expressed or are deemed to be incorporated herein. In addition to any other right or remedy which the Society may have on breach of any of the conditions herein expressed or deemed to be incorporated herein the Society may revoke the Licence hereby applied for and such revocation shall not give rise to any claim against the Society for damages, costs, expenses or otherwise howsoever.
36. Notwithstanding any of the preceding it shall be agreed that where the terms and conditions of this Licence conflict with any of the terms rules and regulations incorporated into the Licence by agreement the express terms of the Licence will have precedence."
245 The Information Booklet (which states that conditions in it are part of the agreement with the Society) contained the following paragraphs of relevance to the question of exclusion clauses:
(a) Each exhibitor must, if directed by the Society's Firewatchman, erect in a prominent position at each of his sites an approved type fire extinguisher, complete with full instructions as to the working thereof.
(b) All extinguishers are to be correctly signposted, and bracket mounted 1.2m. above the ground and located in conspicuous, readily accessible positions. They must also be installed and maintained in accordance with Building Fire Safety Committee Regulations AS1851 - "Installation and Maintenance of Portable Fire Extinguishers or Fire Hose Reels".
(c) Fire Points (reels, hydrants, etc.) must not be covered over and fire buckets must not be used for other than their intended purpose.
(d) Exhibitors are responsible for ensuring that at least two persons on their stand are conversant with the use of any extinguisher and are aqainted (sic) with the position of the nearest Fire Points.
(e) All decorative materials used on exhibit stands must be flame-proofed. The use of paper for exhibit purposes must be kept to an absolute minimum.
(f) Any stand which contains a deep fry unit must be equipped with one 9L foam type extinguisher, and if the stand is located within a building, it must also have one 4.5 kg. Carbon Dioxide type extinguisher.
(a) The Society accepts no responsibility for the safety of any exhibitor's staff or any other person in any circumstances whatsoever.
(b) Amusement proprietors, catering and food outlet operators are advised that they shall ensure that their ride, game, food outlet or exhibit is covered by insurance against Public Risk (catering and food outlets to be covered for 'goods sold'), with a company approved by the Society and for an amount approved by the Society and that an original Certificate of Currency of the Insurance must be lodged with the Society during the week prior to the show.
Amusement proprietors and catering and food outlet operators failing to produce a current Certificate of their insurance will not be permitted to operate.
(c) All other exhibitors are strongly recommended to ensure that a current Public Risk Insurance Policy covering preparation for, during and after the Show is in force.
(a) Pavilions will be open at 8 a.m. on Monday, 9th September, for the removal of goods and display stands.
(i) Exhibitors are advised that it is their responsibility to see that their stand is manned immediately doors are opened as the Society accepts no responsibility for any losses or damages to exhibits.
(ii) The Showground will not be open for the removal of trade or commercial exhibits on the Sunday immediatly (sic) after the Show.
(b) Removal of exhibits or parts thereof from the Showground on the final day of the Show is expressly prohibited.
(c) WIDE MACHINERY/DISPLAY HOMES: To facilitate the movement of traffic off the Showground on the Monday following the Show, owners of these exhibits are requested not to remove them before 1 p.m.
(d) Removal of all exhibits, stands and goods from pavilions must be completed by Friday, 13th September; except for Hamilton Hall.
(e) Removal of all exhibit stands from Hamilton Hall, all outside exhibits, material and displays, must be completed by Friday, 20th September, 1985.
(a) The Society's normal security will be in operation during the period of the Show. However, the Society accepts no liability for damage to exhibits by loss, fire, water, theft, storm, strike, riots or any other cause whatsoever.
(b) Exhibitors are solely responsible for the security of their stands and their equipment and property. Exhibitors are warned against the possibility of pilferage or loss of goods during stocking, exhibition and departure periods and are strongly recommended to effect insurance to cover such risks and to ensure that all valuable items on their stands are adequately safeguarded at all times.
The Society has arranged to store exhibitor's stands between Shows in one of the stock pavilions, following the 1985 Show. This storage will be available from the second week after the Show, the week commencing the 16th of September.
Any storage arranged will be entirely at the exhibitors own risk. Storage rates to be charged will be determined by the size of the exhibitors stand.
Enquiries should be directed to Mr. Paul Anderson, telephone (08) 51 4951."
246 Mr Limb acknowledged receiving the Information Booklet and said he took it on site. He was unable to say if he had read all of the Information Booklet, but accepted that he probably glanced through it and that he would have obtained a reasonable comprehension of the contents.
247 The Judge dealt with the exclusion clauses quite briefly. He referred to par 5(i) of the Exhibit Site Agreement and to the heading "Security" in the Information Booklet which had been relied on as excluding liability. The Judge thought the law was against that proposition. He said:
"I was referred to Carter & Harland (Third Edition) (at 260-261, paragraph 763):-
' Negligence . Whether an exclusion clause applies to protect a party from liability for negligence is, of course, a question of construction. However, because negligence frequently results in personal injury or property damage rather than mere economic loss, it is usually said that the intention to exclude liability for negligence must be clearly expressed. An express reference to negligence is sufficient. However, a clause does not expressly exclude negligence unless it actually uses that word or a synonym.'
The learned authors go on to make the point that courts are likely to allow a defendant to avoid liability if negligence be the only basis for liability. Each clause must be considered. They continue:-
'However, as Scrutton LJ explained in Rutter v Palmer, the rule is not invariable: the position is simply that the exclusion clause will "more readily" exclude liability for negligence where that is the only basis of the defendant's liability'."
"Reading paragraph 5(i) of the Site Agreement it is quite clear that negligence is not the only basis on which there could be liability: the paragraph itself lists other bases."
The Judge thereafter turned to a discussion of other matters.
249 The Society submitted that the Judge adopted an incorrect approach to the construction of the exclusion clauses in that he failed to construe the terms of the contract as set out in the entirety of the documents, namely, the Exhibit Site Agreement and the Information Booklet. The Society relied on the decision of the High Court in Darlington Futures Limited v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 as authority for the proposition that the Judge should have made reference to all of the clauses bearing upon liability contained in the relevant documents, rather than simply par5(i) of the Exhibit Site Agreement and the paragraph headed "Security" in the Information Booklet. Both Glenmont and the Society agreed that Darlington was the principal authority with respect to the construction of exclusion clauses. There was, however, significant disagreement as to how the case affected other decisions on construction, particularly what has become known as the Canada SS Rules (Canada SS Lines Ltd v The King [1952] AC 192).
250 The proposition for which Darlington stands is relatively straightforward. The court held that exclusion clauses are to be read in their context and given their ordinary meaning without resorting to strained interpretations or abstract rules. After reviewing earlier decisions, the Court said (at 510):
"These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause 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."
251 In the present case the Society argued that the exclusion clauses when read as a whole should have been construed to exclude liability for negligence. Glenmont argued that Darlington did not lay down a new approach to the interpretation of exclusion clauses. The contra proferentem rule still applied in the case of ambiguity. More particularly, the High Court in Darlington did not overrule the traditional approach when negligence is alleged against the person seeking to take the benefit of an exemption clause. In other words, the Canada SS Rules still applied.
252 It should first be noted that Darlington did not specifically refer to the Canada SS Rules. As submitted by counsel for Glenmont this can be attributed to the fact that liability for negligence was clearly excluded by the clauses there under consideration (see Darlington at 505-6). It falls, then, to consider what is the content of the so-called Canada SS Rules and whether they are inconsistent with the Darlington approach. Counsel primarily referred to two cases which have addressed this issue; Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VicRp 74; [1990] VR 834, and Valkonen & Valkonen v Jennings Constructions Ltd (1995) 184 LSJS 87.
253 In Schenker, McGarvie J of the Supreme Court of Victoria, conveniently summarised the Canada SS Rules as follows (at 845):
"1. If the clause expressly provides indemnity for the person in whose favour it is made for the consequence of negligence of that person's own employees effect must be given to it.
2. If there is no express reference to negligence the court must consider whether the words used are wide enough to cover negligence of the person's employees: if there is any doubt, it must be resolved against the person.
3. If the words are wide enough to cover the negligence of the person's employees, the court must consider whether the words also comprehend some other liability against which the person may have desired indemnity: if there is such a liability, the words are to be confined to it and not extended to negligence."
254 Counsel for the Society emphasised the sentence which followed, wherein McGarvie J said: "[i]n my opinion, that approach is inconsistent with the principle of the Australian cases culminating in Darlington Futures." Counsel for Glenmont did not agree that the rules were no longer of any use, submitting rather that they could be used as a useful guide to the construction of negligence exclusion clauses. In addition, Glenmont pointed out that McGarvie J's conclusion was qualified with the following observation:
"Of course, a court in construing a commercial contract does take into account the normal allocation of liabilities in such a contract. Other things being equal the parties might be expected to be contracting on the basis that the normal allocation of liabilities is adopted."
255 In our opinion, an approach such as this needs to be treated with some caution as often it will be difficult for a court to identify the relevant commercial practice in a given field. If one takes the present case as an example, it is not immediately clear whether liability for negligence would normally be allocated to the proprietor of the showgrounds or the exhibitor. It seems that on this occasion such an approach is not particularly helpful and should not, therefore, override the usual manner of construction of exclusion clauses based on their natural and ordinary meaning.
256 In Valkonen the Full Court of the Supreme Court of South Australia (Cox, Matheson and Perry JJ) agreed with the decision in Schenker in relation to the effect of Darlington Futures on the Canada SS Rules. Cox J (with whom Matheson and Perry JJ agreed) stated (at 98):
"In my respectful opinion the Full Court of Victoria was right. The first and second of the Canada Steamship Lines tests provide acceptable working rules but the third imposes an artificial and inflexible rule of interpretation that is as likely as not to frustrate the intention of the parties. The solicitude for the indemnifying party which explains the rule's creation will often be inappropriate in modern commercial conditions."
257 Glenmont submitted that both the Schenker and Valkonen decisions were made in the context of contracts involving indemnity and insurance clauses rather than third party liabilities. The thrust of the submissions was that the state of the law with respect to the interpretation of exclusion clauses dealing with liability in negligence is still, to an extent, unresolved. We do not agree. In our view the reasoning of the Court in Valkonen is clear and is appropriate to all cases where exclusion clauses are being interpreted to determine whether they exclude negligence liability. Insofar as the Canada SS Rules lay down strict rules of construction, such rules are no longer appropriate following the High Court's decision in Darlington. Such rules are to be eschewed in favour of construction of the clause according to its natural and ordinary meaning, viewed in context of the contract as a whole. This is not to say that the Canada SS Rules are entirely without value for they may, in certain circumstances, act as a useful guide to interpretation. However they can go no further than that.
258 It may be worthwhile to add some words of caution. The rejection of rigid rules that limit the ambit of exclusion clauses should not give birth to other rigid rules that encourage reading exclusion clauses as referring to negligence whenever the words are sufficiently broad. The policy behind the recent approach to interpretation of exclusion clauses is based on the concept that the court should not impose a strained construction upon an exclusion clause, but should give effect to the intentions of the contracting parties who are capable of protecting their interests and deciding how to allocate risks. Simply because a contract excludes liability on a number of grounds, it does not follow that negligence liability should automatically be excluded. Once again, we emphasise that it is for the court to examine the contract as a whole.
259 We are of the opinion the Judge erred in his interpretation of the exclusion clauses. He did not refer to the contract as a whole, but limited his consideration to par 5(i) of the Exhibit Site Agreement and the clause headed "Security" in the Information Booklet. The Judge's reasoning appears to be squarely based upon the third limb of the Canada SS Rules which, as we have already held, is an artificial rule of interpretation which should not be applied in this State. It is necessary, therefore, to re-examine the relevant exclusion clauses in their context in order to determine whether liability for negligence is excluded.
260 None of the relevant clauses refers to negligence on the part of the Society. Indeed, the term "negligence" is not mentioned at all. At first blush it may appear that the clauses are generally directed towards excluding liability for the actions of others (such as other exhibitors and the members of the public who will see an exhibit) or natural occurrences (such as storms etc), rather than the actions of the Society itself. On this basis, some of the clauses may be considered less relevant to the issue of liability for negligence and can be dealt with relatively briefly. For example, it was conceded by the Society that cl 5(i) of the Exhibit Site Agreement, which was examined by the Judge, in fact relates to liability for damage caused by an exhibitor and to indemnity for third party claims, rather than damage to an exhibit itself caused by any negligent act on the part of the Society. Hence that provision is not particularly helpful, other than perhaps contextually in the sense that it is an example of the Society's allocation of risk to the exhibitor.
261 In relation to the Information Booklet, the clause headed "Fire Precautions" is also of little assistance in this exercise as it does not address issues of liability and, as was submitted by the Society, all of the requirements therein were satisfied by it.
262 The Society regarded the clauses titled "Insurance", "Moving Out" and "Storage" as more relevant to the issue of construction. Although these clauses were said not to have direct application in this case, it was submitted that they help to show the tenor of the whole contract, namely, that the Society intended to exclude all types of liability including liability for its negligence. Under part (a) of the "Insurance" clause, the Society "accepts no responsibility for the safety of any exhibitor's staff or any other person in any circumstances whatsoever". Furthermore, parties "are advised that they shall ensure that their ... exhibit is covered by insurance against Public Risk". In relation to the "Moving Out" clause, the Society referred to par(a)(i) which stated that:
"[e]xhibitors are advised that it is their responsibility to see that their stand is manned immediately doors are opened as the Society accepts no responsibility for any losses or damages to exhibits." (our emphasis)
263 Finally, the "Storage" clause stated that "[a]ny storage arranged will be entirely at the exhibitors (sic) own risk".
264 These clauses do represent a significant exclusion of liability by the Society in a variety of circumstances. The wording of the "Moving Out" and "Security" clauses is potentially wide enough to encompass liability in negligence although, in our opinion, these clauses alone are not determinative of the issue. The context in which the words of exclusion arise once again tends to indicate that they were directed towards the acts of (and potential damage to) third parties rather than acts of the Society itself. The "Insurance" clause is expressly concerned with "Public Risk", ie potential injury to staff or other persons. The "Moving Out" clause encourages exhibitors to have staff present when the pavilions are opened for the removal of goods and displays. Hence the Society there appears concerned with third parties entering the display areas and damaging or pilfering goods. That is also the flavour of the "Storage" clause.
265 The final two clauses which are left to be construed are the most relevant to the present case. The Society submitted that the "Security" clause clearly excludes liability in negligence and, in support of this argument, it sought to compare the terms of par (a) to one of the clauses under consideration in G L Nederlands (Asia) Pty Ltd v Expertise Events Pty Ltd [1999] NSWCA 62. The facts of that case are summarised briefly by Giles JA as follows (at par 2):
"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."
266 At trial, the respondent was held entitled to the benefit of an exclusion clause in the contract under which the appellant had become an exhibitor. The appeal centred around this finding.
267 The relevant clause in Nederlands (cl 17(a)) stated:
"(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."
268 On appeal, Giles JA (with whom Spiegelman CJ and Beazley JA agreed) held (at par 20ff):
"Concentrating then on cl 17(a), it seems to me 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'.
The next question is whether loss from negligence on the part of the respondent was outside the scope of cl 17(a).
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] HCA 82; (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).
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."
269 The Society submitted that the wording of cl 17(a) was materially the same as par (a) of the clause headed "Security" in the Information Booklet and that the same reasoning should therefore apply, namely, that the security clause extended to cover negligence. Glenmont, however, sought to distinguish the case on the basis that the insurance requirements of the two clauses are different.
270 First, Glenmont pointed out that cl 17(a) in Nederlands made it a precondition to the agreement that the exhibitor "arrange its own insurance of the exhibit to cover loss or damage", whereas par (b) of the "Security" clause only stated that exhibitors are "strongly recommended to effect insurance". In our opinion, little turns on this distinction when determining whether the clause extended to negligence.
271 Glenmont's second submission was somewhat stronger. It argued that the recommendation to effect insurance contained in par (b) only related to the "possibility of pilferage or loss of goods during stocking, exhibition and departure periods". However, Cl 17(a) in Nederlands required insurance in order "to cover loss or damage by any of the abovementioned means" namely "loss, damage, theft, fire, flood, water, storms, strikes, riots or any other cause whatever". This difference in wording is potentially significant. The insurance requirement of cl 17(a) in Nederlands was itself broad enough to encompass all types of loss, including negligence. However, the insurance provision in the "Security" clause in the present case again tends to indicate that it is restricted to acts or events not related to the conduct of the Society. Notwithstanding this observation, it must be conceded that the wording of par (a) of the "Security" clause is very broad and does seek to place the risk for many and varied losses upon the exhibitor. It is possible then that to exclude loss caused by negligence would be an unduly restrictive construction and might frustrate the intention of the contracting parties. The interpretation accorded to the clause by the NSW Court of Appeal in Nederlands must also be considered persuasive in this regard.
272 We do not think it necessary to come to a firm conclusion as to the scope of the "Security" clause, however, because we find that the final clause to be considered, namely, cl 6 of the Exhibit Site Agreement, acted so as to exclude liability for negligence. That clause stated:
"6. The Society will not under any circumstances be liable or responsible for any loss or misdelivery of exhibits or for any damage or loss occasioned thereto."
273 Glenmont submitted that the first reference to "loss" means "misplacement" of the exhibit rather than "destruction". Since the word "loss" is coupled with "misdelivery", we would agree with that interpretation. Glenmont further submitted that the second part of the clause only referred to "damage" or "loss" caused through the process of losing or misdelivery of the exhibit. We do not agree. That is an unduly restrictive interpretation which in our view does not accord with the way in which ordinary business people would construe the clause. The clause is worded quite simply and it clearly seeks to exclude all liability on behalf of the Society, including its own acts, negligent or otherwise. On the basis that the words of cl 6 are universal, the question might arise as to the role of cl 5 which also dealt with damage or loss. We believe that the answer is that cl 5 sought to exclude liability on behalf of the Society for damage to third parties caused by the exhibitor or their exhibit (ie generally public liability), whereas cl 6 acted to exclude liability for damage to the exhibits themselves whether such damage be caused by the Society or others. We are supported in this conclusion by the fact that all of the clauses in the Information Booklet, which form part of the agreement, consistently sought to place risk upon the exhibitor. It is indeed the general tenor of the Exhibit Site Agreement and Information Booklet that the Society was not to be liable in any way for damage to exhibits. It is unfortunate that the contract provided to exhibitors by the Society was a rather untidy document. Nevertheless, we do find that the coupling of cls 5 and 6 in the Exhibit Site Agreement covered a wide range of liabilities and that cl 6 in particular acted to exclude liability for negligence.
274 Finally, we should deal with two alternative submissions put forward in relation to the exclusion clauses. In its written submissions, Glenmont argued:
"72. An exclusion clause will not be read literally if to do so will defeat the main object of the contract (H. & E. Van Der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157 at 158). This principle is important in this case because it was a term of the contract that the Show would provide water for fire protection to Glenmont."
275 We agree with the Society's submission that "providing water for fire protection" was not a "main object" of the contract between the parties. In any event, on the Judge's own findings, water was provided for fire protection.
276 In view of our conclusion that the terms of the agreement between Glenmont and the Society excluded liability on the part of the Society for any damage caused by the negligence of the Society, strictly speaking it is unnecessary to deal with the issues of what duty of care the Society owed to Glenmont in relation to the dinosaur, whether the Society was in breach of that duty and whether that breach was causative of any loss to Glenmont. However, as the matter was argued at length it is appropriate that we examine these issues and express our views. We do so later in these reasons. But first we deal with two aspects of the Judge's reasons.
Duty To Provide Water For Fire Protection -The Contract
277 One of the central findings of the Judge was that the Society was negligent in not using the water that was available from a fire hydrant at the Angas Building to fight the fire. That view was reached against the background of his Honour's findings that provision of water for fire protection was a term of the contract between the Society and Glenmont; that Mr Limb had seen the hydrant in question and the attached lay-flat hose; and that Mr Limb had relied upon the presence of the system and the hose for fire protection. Although the Judge did not expressly refer to the issues of assumption of responsibility and reliance by Mr Limb in connection with determining what relationship and duty existed, those elements are necessarily involved in the findings to which we have referred. The evidence of knowledge and reliance was led in examination-in-chief as relevant to Glenmont's case. It was also relevant to the issue of contributory negligence.
278 The Society submitted that the Judge erred in finding that the Society acted upon the application form of 23 January, 1985. That application was in the name of Glenmont, but the Exhibit Site Agreement was in the name of Mr Limb. In addition, as previously mentioned the allocation of a site following the application of 23 January 1985 was subsequently cancelled by the Society by letter of 8 July 1985. There was no basis, therefore, so it was argued, for a finding that the Exhibit Site Agreement signed on 31 July 1985 by Mr Limb and the Society was based upon the application of 23 January 1985.
279 The Judge appears to have reasoned that the Society must have acted on an application and, as no other application was discovered, it must have been the application dated 23 January 1985. His Honour acknowledged that he did not know what other paperwork occurred between the cancellation of the first site and the allocation of a new site, but he rejected the evidence of Mr Anderson that another application form would have been completed. He expressed the view that even if another form was completed, there was no reason why Mr Limb would not have completed the application in the same way as the first. A finding that Mr Limb would have completed a second application in the same way involves a rejection of the evidence of Mr Anderson that had he received the first application he would have rejected it because of the inclusion of the reference to water for fire protection.
280 The Society submitted that the Judge erred in relying upon the inability of the Society to produce another application form: that evidence was given that application forms were discarded shortly after each Show, and that his Honour's error was exacerbated by his erroneous finding that the application form dated 23 January, 1985 was sourced from the Society's records. Mr Limb was unable to say whether any further application was completed and agreed that further written communications may have occurred which were not retained. In addition, the Judge did not refer to the fact that the application of 23 January 1985 was in the name of Glenmont, but the Exhibit Site Agreement signed in July 1985 was in the name of Mr Limb.
281 Counsel for Glenmont submitted that it cannot be said that the other probability so outweighs the view taken of the primary facts by the Judge that this Court is justified in finding that his Honour's conclusion was wrong. Payment was made direct to the Society's account eight days after the letter of cancellation and the Exhibit Site Agreement was signed two weeks after payment. It was possible that the parties did not bother with the formality of a second written application.
282 In our opinion it was open to the Judge to conclude that only one written application form was completed. However, it does not automatically follow that the contents of the application form dated 23 January 1985 became part of the agreement between the parties. That application was in the name of Glenmont and ceased to be operative in any form when the allocation of a site was subsequently cancelled. The Exhibit Site Agreement was in the name of Mr Limb whereas the application of 23 January 1985 was in the name of Glenmont. The Exhibit Site Agreement was provided with the Information Booklet and the Information Booklet specifically stated that the conditions within it were deemed to become part of the agreement between the Society and each exhibitor. The content of the Exhibit Site Agreement and the Information Booklet support the view that the parties intended that those documents should represent the full extent of their agreement. None of the documents referred to the application and, in particular, it was not stated in any document that the application was deemed or should be read as part of the agreement between the Society and each exhibitor.
283 In our opinion, the Judge's analysis of these issues was inadequate and his approach to this issue was erroneous.
284 The agreement between the Society and Glenmont is contained in the Exhibit Site Agreement and in the Information Booklet. There is no agreement in those documents by the Society to provide water for fire protection. In our opinion the Application for Exhibit Site is not to be treated as a contractual document, but as information on the basis of which the Society decided whether to enter into a contract.
285 But, in our opinion, nothing in particular turns on this. Even if the Society is to be taken as having agreed that water would be available "for fire protection", a breach of that agreement was not proved. On the Judge's own findings water was available for fire protection. There was a fire hydrant at the nearby Angas Building. The Judge also found that the hose that was available at that fire hydrant was sufficiently long for the jet from the hose to have reached the seat of the fire. For those reasons, the judgment in favour of Glenmont cannot be supported on the basis that the Society was in breach of a contractual obligation to provide water for fire protection.
Reliance By Mr Limb on Provision of Fire Fighting Equipment
286 As mentioned, in addition to finding that the provision of water for fire protection was a term of the agreement, the Judge also found that Mr Limb inspected the fire points. In particular, his Honour found that Mr Limb saw the fire hydrant and lay-flat hose at the Angas Building and relied upon the presence of that hydrant and hose for fire protection. Mr Limb gave evidence that he saw the hydrant and lay-flat hose while the Show was in progress. He said he was relying upon the hydrant system for water to put out any fire. He assumed the hose would reach the dinosaur and was satisfied that the hydrant and lay-flat hose would provide water to the dinosaur in the case of an emergency. During cross-examination Mr Limb was vague about whether he relied upon any hose other than the hose he observed at the Angas Hall.
287 Mr Limb also said that he saw the hydrant and lay-flat hose during an inspection on the day after the fire. He did not examine the hose prior to the fire to see how long it was.
288 During cross-examination Mr Limb said he did not go onto the ramp of Angas Hall, but was able to see the hydrant with a hose beside it. He was not sure how close he was to that hydrant and hose and said that standing around the area of his enclosure he could look across and see it. He could not recall any occasion before, during or after the Show when he went onto the ramp and inspected the hydrant and hose. As to his evidence-in-chief that he saw the hydrant and lay-flat hose during an inspection the day after the fire, in cross-examination Mr Limb said he did not go up onto the ramp and inspect them, but just looked up and could see where they were while he was walking around the remains of the dinosaur.
289 According to Mr Limb, in addition to making his own observations he pointed out to his employee, Mr Apted, the position of two hydrants. He recalled that he walked around the Showground with Mr Apted to show him the facilities. Mr Apted used a toilet facility near a hydrant which Mr Limb pointed out and he indicated the hydrant at the Angas Hall by pointing it out from a distance. That evidence was supported by Mr Apted who said that when he first arrived Mr Limb pointed out the fire hydrants. He said they did not walk around and inspect the hydrants. He was just shown the areas in which the hydrants were located. He was only shown two. It was never put to Mr Apted that he was not shown the hydrants by Mr Limb. The nearest the cross-examiner came to questioning that evidence was when he asked whether Mr Apted was quite sure that he was shown the fire hydrants.
290 At trial, the defendants attacked the credibility of Mr Limb on a number of fronts. In connection with his evidence that he knew of the existence of the hydrant and lay-flat hose and relied upon their existence during the course of the Show, an attempt was made to lead evidence from solicitors who had acted for Mr Limb. The Judge declined to permit the evidence to be called. The Society submitted that his Honour's ruling resulted in a miscarriage of the trial and that his Honour's finding in connection with the attack on Mr Limb's credit in this regard was clearly erroneous.
291 Prior to May 1985, Glenmont had filed five Statements of Claim. There was no reference in any of those Statements of Claim to the existence of lay-flat hoses and hydrants nor was there any allegation that the Society was negligent in relation to those matters. On 9 January 1995 Ms Sonia Bolzon, a solicitor of the firm then acting for Glenmont, wrote to the solicitors for the Society seeking provision of any document which detailed the location of the fire extinguishers at the Showgrounds. The letter did not make any reference to fire hydrants or lay-flat hoses. By letter of 22 February 1995 the solicitors for the Society provided a list compiled in about 1985 which identified the location of fire extinguishers. The list included a reference to the presence at the Stirling and Angas Halls of "canvas hose + hydrant top of ramp". That list having been provided in February 1995, in May 1995 Glenmont sought to amend the Statement of Claim to plead for the first time negligence in connection with the fire hydrant and hose. In support of that application, Ms Bolzon swore an affidavit dated 25 May 1995. In the affidavit she identified the correspondence to which we have referred and swore as follows:
"4. As a result of these enquiries the Plaintiff has ascertained further material facts.
5. As a result of the information in Exhibit "SB1" [letter 22 February 1995] the plaintiff has, for the first time, become aware that three water-type extinguishers were available next to the CO2 that was attempted to be used at the time of the incident.
6. In addition, the document "SB1" has also made the plaintiff aware for the first time that one canvas lay-flat hose existed adjacent to the hydrant at the Angus Building at the time of the fire." (our emphasis)
292 Not surprisingly, Mr Limb was cross-examined about the apparent inconsistency between his evidence and the affidavit of Ms Bolzon. In connection with amendments to the Statements of Claim, Mr Limb said that he was questioned on the subjects of amendments and sometimes he would see a final draft. He said on occasions he would receive the amended Statement of Claim. He was unable to recall whether he saw the letter of 9 January 1995 from his solicitors to the Society's solicitors, but acknowledged seeing a list of fire extinguishers such as that contained in the list which included reference to the fire hydrant and lay-flat hose. When shown the affidavit of Ms Bolzon, Mr Limb was unable to say whether he had seen it. He confirmed that from the time the proceedings were commenced he was the only person who had given instructions to his solicitors. After Mr Limb's attention had been drawn to par 6 of the affidavit of Ms Bolzon, he gave the following evidence:
"Q. Do you say that for the first time shortly after 22 February 1995 you became aware that one canvas lay-flat hose existed adjacent to the hydrant at the Angas Building at the time of the fire?
A. I was aware right from the first time I started talking to solicitors. If I had seen this written like that I would never have allowed it to go through. I think Sonia might have, the first time she saw it in print in that document she might have thought it was the first time -
Q. [By his Honour] You were aware of the hose there from the time of the fire.
A. Yes, I've been talking to solicitors about it for years.
Q. Who was the first solicitor you told about the fact that there was one canvas lay-flat hose, to your knowledge, adjacent to the hydrant at the Angas Building at the time of the fire.
A. The first solicitor I talked to were Baker McEwen & Co.
Mr Anderson [counsel for Glenmont]. That's, I think, in the realms of privilege."
293 A discussion followed concerning privilege and whether it had been waived. After some discussion counsel was only permitted to ask who Mr Limb spoke to in relation to this issue. The following evidence was given:
"Q. Can you tell the Court if you spoke to somebody at Baker McEwen about the fact that you were aware at the time of the fire that one canvas lay-flat hose adjacent -
A. I didn't state one conversation. I was referring to hoses in general, but obviously the Angas one was one of them.
A. Look, I imagine it was in discussion with Paul Blewett, who was there before Sonia at Lynch and Meyer, and another solicitor, I'm not sure about Lempriere Macleod. I dealt with it at a later date. How far I got with them I'm not clear on now, because I didn't take proceedings then, either. But the first solicitor I did discuss most things. It was around that time that I'm aware of.
294 The Judge subsequently refused to permit the Society to call Ms Bolzon or Mr Blewett and to ask them questions relevant to the topic of what Mr Limb said to them concerning his knowledge of the existence of the fire hydrant and lay-flat hose at the Angas Building. His Honour found that privilege had not been waived.
295 Against that background, when faced with the submission that, in view of the affidavit of Ms Bolzon, Mr Limb should not be believed when he said that he saw the hydrant and lay-flat hose during the Show, the Judge referred to par 6 of Ms Bolzon's affidavit and said:
"The defendants applied to have Ms Bolzon called so that they could cross-examine her as to her instructions. I refused to allow the application: it would have risked a breach of professional privilege and the point went only to Limb's credit. Having practised the law for a long time and having both in practice and on the bench, watched others practise it, I know that misunderstandings between solicitor and client can occur: there can be a breakdown of communication, and sometimes people make mistakes. Just what happened here I do not know but I have come to the confident conclusion (rather more than on the balance of probabilities) that Limb was aware of the hydrant and the adjacent lay flat hose before the Show. There are three reasons; first, the hydrant was so obvious from the site on which he was working, for several weeks, before the Show began; second, I believe Limb when he told me he knew of it (more on his credit later); third, I have no reason to doubt that Apted was telling the truth when he said Limb pointed it out to him."
296 The evidence of Mr Limb's knowledge of the presence of the hydrant and hose at the Angas Hall, and of his reliance upon its availability was relevant to the issues of the content of the agreement between Glenmont and the Society, and to the content of the duty of care owed by the Society to Glenmont. The evidence of Ms Bolzon and, possibly, Mr Blewett would have been directly relevant to the issue of Mr Limb's knowledge and reliance. Unless the evidence was inadmissible by reason of some rule of exclusion such as legal professional privilege, there was no basis upon which his Honour could properly refuse to allow the defendants to call evidence as to what was said on this topic by Mr Limb to Ms Bolzon or Mr Blewett. There was material before the Judge from Ms Bolzon to suggest that Mr Limb may have told Ms Bolzon that the first time he was aware of the presence of the hydrant and lay-flat hose was when the information came from the solicitors for the Society well after the fire. Such a statement was capable of leading to an inference as to Mr Limb's state of mind during the course of the Show, namely, that he was unaware of the presence of the hydrant and lay-flat hose at the Angas Hall and was not relying upon the presence of that source of water and equipment should an emergency arise. The evidence of Ms Bolzon also had the potential to reflect adversely upon the credit of Mr Limb.
297 There is no dispute that the conversations were originally the subject of legal professional privilege. The defendants submitted that privilege was waived by the filing of the affidavit and, in addition, by reason of the evidence given by Mr Limb. The Judge did not give any reasons indicating how he approached the question of waiver or what principles he applied.
298 In Mann v Carnell [1999] HCA 66; (1999) 168 ALR 86, the High Court had occasion to consider the question of waiver of legal professional privilege by disclosure of a privileged document to a third party on a confidential basis. Legal advice given to the executive government of the Australian Capital Territory was disclosed to an independent Member of the Legislative Assembly of the Territory in response to that Member's inquiry about previous proceedings between a constituent and the Territory. The disclosure of the legal advice to the independent Member was made on the express basis that they were disclosed on a confidential basis. The constituent sought discovery of the advice with a view to subsequent defamation proceedings. In upholding the claim for privilege, the majority of the High Court held that the issue was to be determined by the application of the common law. As to the basis of the claim for privilege, their Honours observed (at 94):
"Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege [footnote omitted].
Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus in Benecke v National Australia Bank [(1993) 35 NSWLR 110], the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large." (our emphasis)
299 In upholding the claim for privilege notwithstanding disclosure to the independent Member, the majority observed that the privilege was that of the "body politic", the Australian Capital Territory. They observed that to treat disclosure to an independent Member of the Territory as disclosure to a third party was, at least, an over-simplification of the circumstances of the present case. In the view of the majority, if the independent Member had been given copies of the legal advice given to the Territory on the basis that he was at liberty to show them to the constituent, even if to nobody else, such conduct would have waived the privilege "because it would have been inconsistent with the confidentiality protected by the privilege". Their Honours held that disclosure on a confidential basis to a Member of the Territory was not inconsistent with the confidentiality which the privilege serves to protect.
300 McHugh J dissented. In essence, his Honour was of the view that voluntary disclosure had the effect of waiving privilege and the fact that the material disclosed may be received under an obligation of confidence should not be relevant to the issue as to whether privilege is waived. This view was not supported by the majority who observed that in Goldberg v Ng [1995] HCA 39; (1995) 185 CLR 83, although the Court was divided as to whether in the circumstances of that case privilege was waived, the reasoning of all members of the Court was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waives privilege (at 94-95).
301 In a separate judgment Kirby J upheld the claim for privilege. His Honour observed that it was "unthinkable" that the common law would effectively forbid a Member of the Executive Government of the Territory from disclosing, in confidence, to a member of the legislature, "communications relevant to the discharge of the governmental functions of the Territory except at the price of the loss of the legal professional privilege belonging to the Territory." His Honour said that while he agreed with much of the opinion of McHugh J, he was unable to regard the independent Member as a third party or stranger for these purposes.
302 The privileged communication that the defendants sought to elicit in evidence was a communication by Mr Limb to his solicitor that, as a result of information supplied by solicitors for the Society in February 1995, Mr Limb became aware for the first time that a lay-flat hose existed adjacent to the hydrant at the Angas Building at the time of the fire. The content of that communication was disclosed in an affidavit filed in these proceedings in the Supreme Court for the purposes of an application to amend Glenmont's Statement of Claim. There was no attempt to maintain the confidentiality of the communication or to limit the persons to whom knowledge of the communication should be made available. Through his solicitor, the conduct of Mr Limb in this regard was inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. In our opinion, applying the principles enunciated by the majority in Mann v Carnell, and irrespective of any issue of fairness, privilege was waived.
303 The majority in Mann v Carnell also observed that "considerations of fairness" may be relevant to a determination as to whether the conduct is inconsistent with the confidentiality. Those considerations arise in the context of the evidence given by Mr Limb concerning his communications with his solicitors to which we have referred. In our opinion, those considerations also strongly favour a conclusion that privilege was waived by reason of the relevant inconsistency. In addition, if the Court was to be guided by the approach taken to the question of fairness in the numerous authorities that followed Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 and delivered prior to Mann v Carnell, in our opinion considerations of fairness would have led to a conclusion that privilege was waived.
304 In our view, therefore, the Judge erred in rejecting the evidence of Ms Bolzon and Mr Blewett on the particular topic of statements by Mr Limb relevant to his knowledge at the time of the Show of the presence of the fire hydrant and lay-flat hose at the Angas Building. The defendants were deprived of leading evidence relevant to an important issue concerned with Mr Limb's knowledge of the existence of the hydrants and reliance upon their presence.
305 The precise content of the evidence that the defendants should have been permitted to lead is not known. However, it is a reasonable inference from the content of pars 4, 5 and 6 of Ms Bolzon's affidavit of 25 May 1995 that she was likely to give evidence that Mr Limb told her that, prior to the information in the letter of 22 February 1995, he was unaware that a canvas lay-flat hose was in position adjacent to the hydrant at the Angas Building at the time of the fire. Bearing in mind that instructions to that effect were the basis of the application to amend the Statement of Claim, a reasonably competent solicitor was unlikely to have made a mistake as to the instructions concerning that issue. In this regard, in our opinion the Judge erred in speculating that Ms Bolzon may have misunderstood the instructions.
306 Further errors occurred in connection with the reasoning of the Judge. In finding that Mr Limb was aware of the hydrant and hose before the period of the Show, his Honour identified three reasons for making that finding. The first of those reasons was that "the hydrant was so obvious from the site on which he was working, for several weeks, before the Show began". That finding was made against the background of his Honour's observation earlier in the same paragraph, when describing the position of the hydrant at the Angas Building, that:
"I noticed that the spot was easily seen from the exhibit site."
307 Two difficulties arise in connection with the personal observation made by the Judge on a view of the site in 1999 and his Honour's reliance upon that observation in arriving at his finding. First, there was evidence that at the relevant time in 1985 a building to the south of the dinosaur exhibit site interfered with the line of sight from the exhibit site to the position of the fire hydrant at the Angas Hall. That building had been removed before the view by the Judge. In addition, a site adjacent to the dinosaur involving a display of agricultural machinery would also have interfered with the line of sight.
308 The second difficulty concerns the use made by his Honour of his observations at the view. In effect, his Honour relied upon his own observations and treated those observations as evidence in the trial. In doing so, in our opinion his Honour erred. As the High Court pointed out in Scott v The President, Councillors and Ratepayers of the Shire of Numurkah [1954] HCA 14; (1954) 91 CLR 300 at 313, the purpose of a view is to enable the Tribunal to understand the issues raised, to follow the evidence and to apply the evidence, "but not to put the result of the view in place of evidence." In effect, his Honour impermissibly used extraneous evidence in the form of his own observations in the determination of an issue without providing the parties with an opportunity to comment upon that extraneous evidence. The dangers and unfairness are obvious and well demonstrated by the fact that the Judge appears to have overlooked that impediments existed to the line of sight in 1985.
309 In our opinion, therefore, the Judge has made a number of significant errors in connection with the determination of the issue as to whether Mr Limb saw the hydrant and lay-flat hose at the Angas Hall prior to the fire and relied upon their presence. In many trials, errors of such significance would require an appellate court to set aside the judgment and to order a re-trial. In this matter, however, in our opinion it is not appropriate to follow that course. The trial was lengthy and involved a large volume of documents. It would be unfortunate if the only appropriate resolution of the appeal was to order a re-trial. The cost involved to the parties would be substantial**.** For reasons which will become apparent, in our opinion it is not necessary to order a re-trial in order to dispose of the appeal by the Society. In particular, even if the finding stands, it leads nowhere, As to finding that the Society was obliged to provide water for fire protection, the finding about Mr Limb's evidence merely establishes that the Society did so. As to the finding that the Society was liable for failing to fight the fire, the finding merely establishes the presence of the means to do so.
310 The Judge found that the Society was in breach of its duty of care to Glenmont in two respects. First, that through Mr Anderson it did not immediately call the Fire Service. Secondly, in failing to use the lay-flat hose attached to the fire hydrant by reason of both lack of training of personnel in the use of the hose and lack of will. The Society submitted that it did not owe a duty of care to Glenmont or, in the alternative, that if it did owe a duty that duty did not encompass a duty to call the Fire Service or to fight the fire. Further, the Society submitted that if the duty encompassed those responsibilities, the evidence did not establish a breach of either duty.
311 Before we deal with these issues, there is one other matter that requires consideration. In the course of his reasons the Judge found that in the early stages of the fire there was a "general scramble" to find fire extinguishers and that, when they were found, none of them worked. He referred to the fact that the Fire Service had checked all extinguishers before the Show, but was critical of the fact that they had not been checked since then, even though the fire occurred only a short time after the Show. He said that if Mr Foote had taken an extinguisher with him up on the enclosure "he might have been able to use it effectively". But when the Judge came to make his findings of liability on the part of the Society, he made no reference to this topic.
312 There was evidence, apparently unchallenged, that the Fire Service had checked the Society's fire extinguishers shortly before the Show. There was no evidence to suggest that they needed another check so soon after the Show. In our opinion a finding that the Show was in breach of a contractual or tortious duty of care in this respect cannot be sustained, at least on the evidence before the Judge. It is true that Mr Foote did not have a fire extinguisher with him when he was working on the enclosure. But the evidence points to the reason for this being a simple failure on the part of Mr Foote to think that it was necessary to do so. Even if the fire extinguishers had been in working order (assuming, for some unexplained reason, that they were not), Mr Foote would not have taken a fire extinguisher with him. In this respect, any breach of duty by the Society is not causative of any loss. Once the dinosaur caught fire, there is no reason to think that Mr Foote had time to return to the ground, to obtain a fire extinguisher and then return to the site of the fire. On the evidence it was already too late. Mr Foote said his first reaction was to try to extinguish the fire by patting it. This was not a choice forced on him by the unavailability of fire extinguishers or by the fact that they were not in working order. The evidence establishes that the fire could not have been extinguished by using a fire extinguisher held by a person standing on the ground. If the Judge intended to find the Society liable for failing to provide working fire extinguishers, in our view liability is not made out on that basis. On the assumption that there were no working fire extinguishers, the lack of such extinguishers played no part in the destruction of the dinosaur.
313 It is not easy to establish the extent of the delay in calling the Fire Service which his Honour found was in breach of the Society's duty to Glenmont, or why that delay was so unreasonable as to amount to a breach of that duty. Having referred to the evidence-in-chief of Mr Anderson as to his observations of the fire, the Judge rejected Mr Anderson's evidence that he immediately went to the Angas Hall and asked someone to call the Fire Service. He appears to have done so on the basis of the time at which the call was made to the Fire Service in conjunction with an assessment as to what was done by Mr Foote during the time of the fire and prior to the arrival of the Fire Service. His Honour found as follows:
"I am afraid that Anderson has not told the whole story. I am satisfied on the balance of probabilities that some minutes passed between Anderson seeing the fire start and the call to the Fire Brigade. One only has to remember what Foote did in that time. Mr Tim Anderson in his final address suggested that as much as fifteen minutes passed before the Fire Brigade arrived. I think that is at the upper end of the time scale but even if it were significantly less, say seven or eight minutes, that was still too long a time. The Fire Brigade took only four minutes to get to the fire. The call was received at 1542 hours: they were there at 1546."
314 Mr Anderson first became aware of activity at the dinosaur site through information passed to him by a Society employee. Neither Mr Limb nor Mr O'Loughlin had given advance notice to the Society of an intention to commence work dismantling the enclosure or the dinosaur. His office was approximately 250 to 300 metres from the site. He decided to have a look at what was happening and he walked in the direction of the dinosaur site. He was able to see the activity from some distance and he could see a person on the enclosure cutting it with oxy equipment. He also observed that molten debris was falling from the cutting onto the top of the dinosaur's head. As he was walking the head appeared to catch alight. Mr Anderson saw flames coming out of the dinosaur's head. He was asked what he did after he saw the flames and he answered:
"I immediately went up to the Angas Hall, which is on top of the ramp area, and asked someone to call the Fire Brigade."
315 Mr Anderson explained that there was a telephone in the Angas Hall. However, in order to call the Fire Service, it was necessary to call the Society switchboard from the Angas Hall and have the switchboard operator call the Fire Service or obtain a line to make the call.
316 During cross-examination Mr Anderson said that when the dinosaur came into sight, there may have been a small flame which he did not notice, but the flames seemed to come as the dinosaur came into his line of sight. The flame was on the back of the head and could have been about a metre from the top of the head. He was quite certain that when the dinosaur came into his line of sight, he could see the oxy-cutting occurring and molten debris falling from that work. He accepted that the fire may well have started prior to him seeing the flames, but as he saw the oxy-cutting occurring he presumed it was at a very early stage of the fire. He said that from the initial flames he saw the fire appeared to spread rapidly.
317 As mentioned, the Judge did not accept the evidence of Mr Anderson that, after seeing the fire, he immediately went to the Angas Hall and asked someone to call the Fire Service. Unfortunately, it was never put to Mr Anderson in cross-examination that his evidence in this respect was inaccurate. He was never given an opportunity to respond to a suggestion that some minutes passed between him seeing the fire start and the call to the Fire Service (which is the finding made by his Honour).
318 Mr Foote gave evidence that while he was cutting the enclosure he noticed a small fire on the back of the dinosaur at the base of the neck. He turned off his torch and yelled to the crane driver, but found it difficult to attract the attention of the driver. He carefully worked his way along the enclosure to get closer to the crane. The distance was too great to jump on to the dinosaur. After considerable manoeuvring, the crane driver was able to get the hook within reach and Mr Foote was able to jump onto the bottles attached to the hook. The driver moved the hook closer to the dinosaur and Mr Foote jumped onto the back of the dinosaur. At that time the area of the fire was about half a metre square. Mr Foote attempted to put the fire out with his gloves by patting it, but as he smothered the flames in one area the flames would be springing up next to him. He jumped back onto the bottles and was lowered to the ground. In order for Mr Foote to be lowered to the ground, the crane had to be manoeuvred away from the enclosure. Once on the ground, Mr Foote unhooked the gas bottles and dragged them away from the area of danger. He dragged them approximately 30 metres. Other persons assisted him. That operation took "some time".
319 As to the time that elapsed from the moment Mr Foote first observed the fire and his arrival on the ground, Mr Foote said it took approximately 45 seconds to attract the attention of the crane driver. He estimated that it then took the crane driver a minute or two to manoeuvre the crane and the hook into a position where Mr Foote could jump onto the bottles attached to the hook. The next lot of manoeuvring to enable Mr Foote to jump onto the dinosaur took about "fifteen seconds or so". Mr Foote was not asked to give an estimate as to how long he was on the back of the dinosaur attempting to fight the fire. As to the manoeuvre to get off the dinosaur and to the ground, Mr Foote said it took a little time because the crane was on the wrong lock and, although he did not know how long it took, it may have been a minute or two from the time he got onto the hook before he reached the ground.
320 Mr Foote said that he first heard the sirens when he was on the ground and standing some distance from the dinosaur. He was unable to recall how long he had been on the ground when he heard the sirens. He was asked whether he agreed that the Service arrived about two minutes after he heard the sirens, and he said "yes, probably yes, they were very quick". He thought the Service arrived "some minutes" after he got to the ground, but he was not able to say "exactly" what period elapsed.
321 The Judge accepted that the evidence of Mr Foote was an accurate account of the fire itself and what he did. Although his Honour rejected the evidence of Mr Anderson about calling the Fire Service immediately on the basis that "one only has to remember what Foote did in that time", his Honour did not analyse the evidence of Mr Foote and the times taken at various stages.
322 Mr Foote was in a situation of emergency. His evidence concerning times must, therefore, be treated with caution. From the evidence to which we have referred, it took Mr Foote between two and three minutes to get onto the back of the dinosaur after he observed the small fire at the base of the neck of the dinosaur. In the absence of evidence from Mr Foote, it is probably reasonable to allow a period of one to two minutes during which he attempted to put out the fire with his gloves. From the time he got back onto the hook of the crane after his unsuccessful attempts to put out the fire, a further one to two minutes was consumed while the crane manoeuvred and lowered him to the ground. In total, therefore, according to the estimates given by Mr Foote a period of approximately four to seven minutes elapsed from the time that he first noticed a small fire at the base of the neck of the dinosaur until he reached the ground.
323 Counsel for the Society also relied upon a statement made by Mr Foote less than half an hour after the fire. With one minor exception, the Judge accepted that the statement was accurate. In that statement Mr Foote commenced by saying that "at about 3.40 pm" he was working on removing the enclosure. Counsel suggested that this was Mr Foote's estimate as to the time at which the fire started. He said that bearing in mind that the Fire Service was called at 3.42 pm, it could not, therefore, be said that the Society delayed unreasonably in calling the Fire Service. We doubt that the time given by Mr Foote was intended as a precise time at which the fire commenced. However, it is some guide of the approximate time at which the fire commenced.
324 The Judge found that "some minutes passed between Anderson seeing the fire start and the call to the Fire Brigade". His Honour relied upon what Mr Foote did in the time before the Fire Service arrived. As we have mentioned, on the estimates of Mr Foote between four and seven minutes passed between the commencement of the fire and his arrival on the ground. If between two and four minutes is allowed between his arrival on the ground and the arrival of the Fire Service, a total of six to eleven minutes elapsed between the commencement of the fire and the arrival of the Fire Service. The Service took four minutes to arrive after the call was made. That allows, therefore, for a period of between two and seven minutes from the time the fire commenced until the call was made to the Service. In that period, Mr Anderson saw the fire start and moved some distance to where he spoke with an unidentified person and asked that person to call the Service. It was necessary for that person to either obtain an outside line or arrange for the switchboard operator to ring the Service. If Mr Anderson moved immediately, it is quite feasible that two minutes would have elapsed before the Service was called. It is quite possible that Mr Anderson called the Service with all reasonable speed. The evidence does not provide a secure basis for a finding that he did not do so.
325 In the circumstances we have discussed, in our opinion the evidence did not provide an adequate basis upon which the Judge could properly rely in rejecting the evidence of Mr Anderson. In arriving at this conclusion, we have borne in mind the absence of any cross-examination of Mr Anderson to suggest that his evidence was incorrect or that he delayed to any significant extent. In our opinion, therefore, his Honour has erred in making a finding which was fundamental to his finding that the Society was in breach of the duty it owed to Glenmont by reason of the delay in calling the Fire Service. If a duty to call the Service immediately existed, it follows that his Honour was in error in finding that the Society was in breach of that duty.
326 As mentioned, the Judge found that the Society was negligent in not using the water available from the fire hydrant at the Angas Building to fight the fire. He observed that the equipment was available, but missing "was the capacity to use it, through lack of training and lack of will." His Honour referred to the evidence of witnesses for the Society from which he concluded that there was "no system for fighting fires" and that employees of the Society "had hardly any, if any at all, training in fire-fighting...". After quoting some pages of the evidence of Mr Thorp, a groundsman and caretaker employed by the Society, his Honour expressed his conclusions adverse to the Society as follows:
"Every witness for the Show Society said it was too dangerous: an untrained person might be injured. Not only had the show staff not been trained in the use of lay flat hoses but they had been forbidden to use them! This was, I think, just an excuse for inaction. In all fairness Templer said that in 1985 fire hydrants and lay flat hoses were primarily - he did not say exclusively - for the use of Fire Brigade officers. He also said that they were no problem for trained people. They could be used by one person but it was better if there were two. There were more than two Show employees there.
The Show Society witnesses asserted that they were not to use the hydrants and lay flat hoses. To the contrary, they should have been trained to use them - as happened in other big organisations like General Motors Holden and the Port Stanvac Refinery. Although untrained for an emergency like this, with such obvious fire fighting equipment at hand, they should at least have made an attempt to put the fire out. The assertion of prohibition to use the hydrant and lay flat hose is just an excuse by the Show witnesses for their inactivity.
The implication of the Society's own literature was that hydrants were there to be used. I have already quoted from the paragraphs under the heading "Fire Precautions" in the "Information and Conditions" for the 1985 Show:-
"(c) Fire Points (reels, hydrants, etc.) must not be covered over and fire buckets must not be used for other than their intended purpose.
(d) Exhibitors are responsible for ensuring that at least two persons on their stand are conversant with the use of any extinguisher and are acquainted with the position of the nearest Fire Points."
What would be the good of knowing where the fire points were if they were not to be used? The reason given by the Show witnesses - so they could direct the Fire Brigade to them - is so lame as to be unbelievable."
327 Mr Kingsley Cammiss was the Ground Manager for the Society. He was in charge of approximately 15 Society employees, including Mr Thorp. He said that two or three employees, including Mr Thorp, had been trained in the use of fire extinguishers and fire reels, but none of the employees had been trained in the use of hydrants. As to why no-one was trained in the use of the hydrants, Mr Cammiss gave the following evidence:
A. Well, if anybody knew the power of what comes out of those hoses, they would have to be used by experienced men, otherwise people could get hurt.
Q. Did you ever tell any of your groundsmen before 1985 whether they were able to use the hoses or not.
A. They all knew they weren't allowed to use those, not the hydrant hoses."
328 Mr Cammiss said that during the 1985 Show there was always one Fire Service unit situated within the grounds. Sometimes there were two.
329 During cross-examination Mr Cammiss said he had been told by the Fire Service that Society employees were not allowed to use lay-flat hoses. He said he had never discussed the topic with anyone from the "hierarchy" of the Society. Mr Cammiss said he would not have used a lay-flat hose under any circumstances. Having observed the Fire Service using one of the hoses, he said he would "hate to try and hold one of those hoses". Mr Cammiss was cross-examined about whether he would use a hose in situations of dire emergency. He maintained his position while sensibly recognising the remote possibility of an attempt to use the hose in company with another person if the emergency was sufficiently serious. The cross-examiner did not suggest to Mr Cammiss that his evidence was false or that the reason he advanced for not using the lay-flat hoses was merely "an excuse for inaction".
330 Mr Thorp said that he and most of the ground staff had been trained for half a day at the headquarters of the Fire Service. He thought the training occurred approximately 12 months before the dinosaur was destroyed. He described the training as follows:
"A. We went to a session there, it was films and small talk on how to use fire extinguishers, which ones to use, what colours they were, and about 12.30 to 1 o'clock that was it, we had to go back.
A. Of different fires they had in different places, some fires in England where several people got killed, fires that happened in nursing homes where people were killed by smoke, and another one, part of a film that was believed at that time that people self-ignited and burned, which is not right any more, but they are the films I can think of.
Q. Were you taught anything about fire hydrants and hoses attached to fire hydrants.
A. The only thing we were taught of fire hydrants was we were not to touch them, because it was too dangerous to use, for one person to use, so we were told not to use them, because they were the property of the Fire Department and we were not to use the hoses. That is all I know."
331 According to Mr Thorp, in 1985 the Society staff had not been given any instruction as to what to do if there was a fire. He said that during the half-day course at the Fire Service he had been told what fire extinguisher to use and what to do, "but the main thing was not to put ourselves in danger when there is a fire.". Mr Thorp said that he did not give any consideration to operating the lay-flat hose and hydrant when the dinosaur caught fire because:
"We were led to believe that the fire hose was the Fire Department's responsibility to handle those hoses because they are too heavy and too dangerous to use when they are full of water and the pressure is too great."
332 During cross-examination, Mr Thorp clarified that he had been told by Mr Cammiss that the lay-flat hoses were the property of the Society, but were in place for use by the Fire Department and the staff of the Society were not to use them. Mr Thorp was also cross-examined as to whether there was any circumstance in which he might use the lay-flat hose. He acknowledged that if there was a danger to the public, "maybe yes". He agreed that, as a last resort, he would try and use a hose if a pavilion or shed caught fire. He said he would not use it as a first resort because of the danger associated with using such a high-pressure hose. He would rather let a building burn than place himself or others in danger.
333 It was not suggested to Mr Thorp during cross-examination that his evidence was false in any respect or that the reason he advanced for not using the lay-flat hoses was merely "an excuse for inaction".
334 As to preparations for the Show, approximately a fortnight before the commencement of the Show Mr Thorp collected all the fire extinguishers and placed them at a central location for servicing by the Fire Department. After servicing he returned them to their various positions throughout the Showgrounds.
335 Mr Anderson said he was not trained to use the fire hydrants and had not been given any instructions as to their use. Mr Anderson said he had no experience in the handling of a fire extinguisher.
336 Mr Robert Teague was employed by the Society as a maintenance carpenter. Prior to the fire, he had not attended any course in connection with the fighting of fires. Similarly, there had been no fire drills at the Showgrounds. Mr Teague was not asked about instructions in connection with the use of the lay-flat hoses.
337 Two officers employed by the South Australian Metropolitan Fire Service were called by the appellants. Mr Barry Dye attended the fire. He was not asked about untrained persons using lay-flat hoses. Mr Edwin Templer was, at the time of the trial, attached to the Fire Safety Department of the Metropolitan Fire Service. He came to that position well after the dinosaur was destroyed. He was asked what fire hydrants were for in 1985 and responded:
"Fire hydrants are primarily for the use of the Fire Service to access water from the fire mains, from the water mains."
338 Mr Templer gave the following evidence about the operation of lay-flat hoses:
"Q. Assuming that members of the Fire Brigade who had been trained to use a hydrant and lay-flat hose were involved, is that a one person operation, or more than one.
A. We do have a standard rule where one man can be used, but for safety reasons it's always done with two.
A. Because, to lay the hose out, when you turn the water on, air in the hose and water travels down the hose, and when it reaches the branch or the nozzle end, there is a jet reaction fan that, and if it is not held on properly it can whip around and cause injury.
Q. You talked about a jet reaction. Is there any pressure involved.
A. The pressure in the main street is transferred down the hose line, and when the water comes to the branch at the end of the hose it narrows down to the nozzle, and that causes a jet reaction and the pressure can be quite substantial for one man to hold.
Q. And are you are able to say, again, when we are talking about Fire Brigade personnel trained in the use of these hoses and hydrants, what the two men do.
A. In a two-man drill, the first person would run the hose out to where it was required to go, the second man waits at the end and would couple the hose to the hydrant, turns the hose on, and then runs as fast as he can down to where the branch man is, to back him up, to help him hold the hose."
339 Mr Templer was asked about the policy of the Fire Service as to the use of lay-flat hoses by untrained people. He said it was the recommendation of the Training Department of the Fire Safety Department that lay-flat hoses be withdrawn unless there are "highly trained people" available to use them. As to the training, Mr Templer said there were a number of points. Safety was an issue and training was required as to how to hold and use the hose properly. He pointed out that a hose in a cradle such as that which existed at the Angas Building can be pulled from the cradle and unfolded reasonably safely, but twists occur a lot of the time. He explained that most of the time the branch, which is at the nozzle end, is not "hardened" to the hose which has the consequence that the hose twists with the arrival of water and becomes very difficult to hold. The hose then starts to leak. He said that untrained people usually have to turn the water off, tighten everything up and start again.
340 Mr Templer was also asked about large organisations. He said he was aware that General Motors at Woodville had lay-flat hoses. He said it was not uncommon for large organisations to have lay-flat hoses, but in order for them to be of use it was necessary to have someone capable of using such hoses.
341 Notwithstanding the absence of any cross-examination of the witnesses for the Society to suggest that their evidence concerning the instruction not to use the lay-flat hoses was a convenient excuse for their inaction at the time of the fire, counsel for Glenmont urged the Judge to find that the suggestion of danger associated with lay-flat hoses was "really a very late convenient excuse". Counsel also suggested there had been "some form of cover-up". During the course of his reply, counsel for the Society did not complain about those suggestions by reason of the absence of cross-examination of the relevant witnesses.
342 In the circumstances which we have outlined, it was open to the Judge to draw appropriate conclusions from the evidence before him. This Court is at a disadvantage because it did not see and hear the relevant witnesses, particularly Mr Cammiss and Mr Thorp. However, it is a significant step to make a finding against those witnesses that, in effect, they both participated in an attempt to mislead the Court when they said that the use of the lay-flat hoses was dangerous and that the Fire Service had advised against Society employees using those hoses. In addition, although it is unclear from the evidence when the Fire Service formulated the formal policy to which we have referred, it is apparent from the evidence that there are difficulties associated with the use of lay-flat hoses by untrained persons and the Fire Service does not favour untrained persons using the hoses. There is no reason to doubt that the Fire Service would have had a similar attitude in 1985. It would not be surprising if the Fire Service had advised Society employees accordingly.
343 The Judge obviously formed a strong view that the Society should have trained its employees in the use of lay-flat hoses. In addition, notwithstanding the lack of training, his Honour was of the view that an attempt should have been made to use the lay-flat hoses in order to extinguish the fire. In our opinion, it appears that his Honour allowed these concerns to unduly influence his assessment of the evidence and his consideration of whether there was a sound basis for rejecting the evidence that the Fire Service had advised the Society against its employees using the lay-flat hoses.
344 We consider that his Honour erred. In the light of what we have said, the evidence before his Honour did not provide an acceptable basis for the finding that the reasons for not using the lay-flat hose were manufactured. There was unchallenged evidence that the lay-flat hose should be used only by trained people. As well, we consider that the unchallenged evidence makes sense and provides a strong basis for the conclusion that the employees of the Society cannot be criticised for failing to use the lay-flat hose.
345 There are two other matters, pointing the same way, to which his Honour does not refer. The first is the fact that, if the hose was used, it would have been necessary to take care not to cause injury to Mr Foote. Even assuming that the Society's staff had some training in the use of the lay-flat hose, one might think that they would have been well advised not to use the hose until Mr Foote was safely clear of the dinosaur. In addition, the evidence leads us to the view that it would have been necessary to use the hose with some care to avoid shredding the skin and damaging the workings of the dinosaur. It is one thing to be trained in a rudimentary fashion to use a high pressure hose, but another to use it in a difficult situation like that which presented itself.
346 In short, our view is that in the circumstances of the case, the employees of the Society were not negligent in failing to use the high pressure hose to fight the fire.
347 We will return shortly to the issue of whether the Society owed a duty of care that required it to provide staff who were adequately trained to use the lay-flat hose, should a fire occur. The Society might be found liable on that basis, even if the staff were not negligent, because it would then be the Society's fault that the staff were not adequately trained in the use of the hose.
348 An additional issue arises from the conclusions reached by the Judge upon consideration of the "Society's own literature". His Honour referred to the condition in the Information Booklet that required exhibitors to be responsible for ensuring that at least two persons on their stand were conversant with the use of extinguishers and acquainted with the position of the nearest Fire Points. His Honour posed the question as to what would be the good of knowing where the Fire Points were if they were not to be used. He rejected the reason advanced by the Society that such knowledge on the part of exhibitors was necessary in order to direct the Fire Service to the Fire Points.
349 In our opinion, there is a flaw in his Honour's reasoning. The Information Booklet was not concerned with the knowledge by Society employees of the Fire Points. It was directed to the knowledge of the exhibitors. There was no suggestion that exhibitors were required or encouraged to use the lay-flat hoses. There is no suggestion that their knowledge of the position of the Fire Points was required in order to direct Society employees to those points. There is nothing illogical in the Society insisting that exhibitors be aware of the nearest Fire Points in order to assist the Fire Service should the need arise. We are left with the strong impression that his Honour allowed the views to which we have earlier referred to influence unduly his approach to the evidence and that he failed to analyse the evidence properly and the conclusions that were reasonably open from it.
350 The Judge assumed the existence of a duty of care owed by the Society to Glenmont without analysing the basis upon which such a duty could be said to exist. The existence and content of any duty said to be owed by the Society to Glenmont must be considered in the context of the contractual arrangements between the parties and the circumstances that existed at the time of the fire. The Show was over and the period during which exhibits were to be removed had expired. Mr Limb had not asked the Society to provide any security or special provisions in connection with the dinosaur while it remained on site. He had not sought the assistance of the Society in connection with the removal of the enclosure. Mr Limb had not advised the Society of his intention to remove the enclosure. He had not requested the provision of fire-fighting equipment in connection with that removal.
351 His Honour's finding that the Society was in breach of a duty of care owed to Glenmont was briefly expressed. He said:
"The negligence consisted of the failure immediately to call the Fire Service - as soon as Anderson saw there was a fire - and not having, at least not using, the water available from the fire hydrant on the Angas Building to fight the fire. The equipment was there: what was missing was the capacity to use it, through lack of training and lack of will."
352 This finding of negligence must be premised on a duty that imposed on the Society an obligation to take measures to prevent the spread of a fire, by calling the Fire Service when a fire was observed, and by providing staff who were available and trained in the use of a high pressure hose. Presumably, the duty that his Honour had in mind was either a duty of care in tort, or an implied term of the contract. As to the former possibility, a duty of care in tort, we make the point that the common law does not usually impose a duty of care to take affirmative action to protect a person against damage caused by a third party, when the person said to owe the duty of care is not responsible for the conduct of the third party and is not responsible for the danger that the suggested duty would require the person to take reasonable care to avert.
353 In this respect, the common law may well depart from a widespread community expectation. But the line that we identify has been long drawn by the common law and is a fundamental one when considering the imposition of a duty of care: see Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330 at 368 McHugh J; [1998] HCA 3 at [101].
354 A person who observes a fire on or near the property of another person, ordinarily owes no duty of care to call the Fire Service to deal with the fire, assuming always that the fire itself was not caused by a person for whom the suggested defendant is responsible, or caused in circumstances for which the suggested defendant is responsible. In the present case, the fire and the property that it endangered were both on the Society's premises. That could make a material difference.
355 It is helpful to begin by identifying the circumstances in which the duty of care is said to arise, or in relation to which the implied obligation operates.
356 The fire occurred on the premises of the Society. The fire endangered the property of Glenmont. Glenmont had brought its property on to the Society's premises pursuant to a contract with the Society. Glenmont paid the Society for the right to bring its property on to the Society's premises and to exhibit the property there. The contract between Glenmont and the Society contained detailed provisions which, in our view, exclude liability on the part of the Society for the loss suffered. But even if we are wrong in that, the general tenor of the contract is to limit the liability of the Society for damage to the property of Glenmont. Even if the contract is not to be read as we have read it, it is by no means easy to imply a contractual term as to the safety of the Society's premises. The tenor of the contract is otherwise. The Society did not carry on business as a storer of property. Glenmont's property was there for a particular purpose and for a limited time. They are what might be called background features of the situation.
357 We now turn to the particular circumstances. The fire occurred at a time when the Society was not conducting or supervising any activity or event on its premises of a type that might give rise to a duty to actively supervise the general safety of the premises or the activity for people visiting them and for property on them. The fire did not occur at a time when the Society had excluded all others from the premises and was exercising exclusive control over them. It was at a time when Glenmont and others dealing with Glenmont had access to the Society's premises. The fire was caused by persons for whom the Society was not responsible. The fire was not attributable to any danger or defect in the Society's premises. The fire was caused in the course of an activity carried out in Glenmont's interest, except to the extent that the Society wanted Glenmont to remove its property in due course. The Society had no prior knowledge of the activity. The Society had no right to control how the dismantling of the enclosure was carried out and had not attempted to exercise any control over the dismantling. The dismantling of the enclosure was not in a looser sense under the general control of the Society. By this we draw a contrast between the positions of the Society and Glenmont respectively and, for example, those of the proprietor of a theatre and patrons in the theatre, or the proprietor of a department store in which the proprietor permits a third party to display and sell goods. On the other hand, the Society did have staff on the site. They could have been trained to use high pressure hoses, and they had in fact received limited training in relation to the fighting of fires. As to that, the Society did not conduct on its premises any activity that carried with it such a risk of fire that prudence would suggest that it should have staff trained to fight a fire, or at least trained in the use of high pressure hoses.
358 It is also relevant to note that the Society had done nothing to hold out to Glenmont that it undertook any such responsibility at a time when the Royal Show was not in progress. Even if the Society had agreed to provide water for fire protection, such agreement did not imply that it accepted a responsibility to keep watch for the occurrence of a fire at a time when the Show was not in progress or to deal with a fire should one occur through no fault of the Society. In fact, as we have already pointed out, the contractual arrangements between the Society and Glenmont tend to negative any responsibility in this area. But even if those arrangements had not been entered into, we consider that there was nothing in the circumstances to amount to a holding out by the Society to Glenmont or an assumption of responsibility.
359 We turn now to the law. We begin by putting to one side s 17C of the Wrongs Act 1936 (SA). That section deals with the liability of an occupier "for injury, damage or loss attributable to the dangerous state or condition of the premises". Glenmont's loss was not attributable to any of those things. The Judge's finding relates to an obligation on the part of employees of the Society to respond to the occurrence of a fire, not an obligation in relation to the state or condition of the Society's premises.
360 We have already explained that, on our construction of the contract between Glenmont and the Society, liability on the part of the Society for the damage done to Glenmont's property is excluded. Even if we are wrong in that, it does not follow that the Society is liable to Glenmont. It remains to find a basis for imposing that liability.
361 Can a term be implied into the contract between Glenmont and the Society, the effect of which is to require the Society to take action to prevent a fire spreading by calling the Fire Service or by providing staff trained in the use of high pressure hoses? We do not think that such a term can be implied. Presumably, if it was to be implied, it would be a term that imposed on the Society an obligation to make reasonable efforts to prevent a fire spreading should one occur; and then there would have to be a finding that the failure to telephone the Fire Service or the failure to use the high pressure hose was a breach of that term. We have explained why we consider that, in any event, there was no breach in the former sense. Nor are we satisfied that there is a breach in the latter sense. But, in any event, we do not think that the suggested term can be implied. It suffices to say that we can find no basis for implying such a term, consistently with the law as stated by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347. Such a term is not necessary to give business efficacy to the contract. It is not something so obvious that it goes without saying and, while it cannot be said that the implied term would contradict an express term of the contract, it appears to us that the implication of the suggested term would be contrary to the general tenor of the contract between Glenmont and the Society.
362 That is not the end of the matter from a contractual point of view. In Calin v Greater Union Organisation Pty Ltd [1991] HCA 23; (1991) 173 CLR 33 at 38, Mason CJ, Deane, Toohey and McHugh JJ were prepared to accept that:
"... if an occupier of premises agrees for reward to allow a person to enter the premises for some purpose, the occupier impliedly warrants that the premises are as safe for the purpose as the exercise of reasonable skill and care can make them."
363 This statement of the law is drawn from the decision of the High Court in Watson v George [1953] HCA 41; (1953) 89 CLR 409. It may be that in the present case such a term can be implied into the contract, notwithstanding the express provisions of the contract. The term could only operate subject to those express terms, and could not override an exclusion of liability to be found in an express term. But, in any event, an implied term to that effect would not assist Glenmont. The breach of duty upon which the Judge founded has nothing to do with the safety of the premises. Perhaps the implied term can be extended to include a requirement to provide a fire hydrant and hoses, but they were provided. We do not consider that the implied term can extend to the matters upon which the Judge based his finding.
364 In short, our view is that there is no contractual basis upon which one can support the finding made by the Judge.
365 We turn to the question of whether a duty of care can be imposed, being a duty of care that would carry with it the obligations which underlie the breach of duty found by the Judge.
366 There are a number of obstacles to the imposition of such a duty of care.
367 A duty of care, or a claim based on such a duty, cannot evade or escape an exclusion of, or a limitation on, liability contained in the contract between the parties: Bryan v Maloney (1995) 182 CLR 608 at 622 Mason CJ, Deane and Gaudron JJ. The existence of a duty of care must be considered on that basis. If our construction of the contract is correct, the suggested duty of care does not arise.
368 But if the liability of the Society to Glenmont is not excluded by the terms of their contract, there may be room for the suggested duty of care.
369 We have already summarised the circumstances surrounding the occurrence of the fire. Those circumstances indicate that neither in a general nor a specific sense was the Society exercising control over the activity taking place, or over the part of the premises on which it was taking place. The activity itself was not the responsibility of the Society and the Society was making no attempt to exercise control over the activity. The danger that loomed at the moment the dinosaur caught fire was not of the Society's making. The fire did not occur through any breach of a duty of care owed by the Society to Glenmont. The fire was caused by the conduct of those engaged in dismantling the enclosure surrounding the dinosaur.
370 We have referred already to the reluctance of the common law to impose a duty to take affirmative action to prevent harm to another, in particular when the source of that harm is the conduct of a person for whom the person sought to be made liable has no responsibility. The present case falls squarely within that category. If a duty of care existed, it was a duty to take affirmative action to avoid harm being caused to Glenmont by the conduct of those engaged in the dismantling of the enclosure. There can be no suggestion that any conduct by the Society, or any omission by it, or any breach of duty by the Society itself, contributed to the threat to Glenmont's property.
371 It is worth making the point that, in our opinion, it could not be suggested that in the circumstances the Society was under a duty to Glenmont to take reasonable care to prevent a fire as a result of the dismantling of the structure, nor to detect a fire should one be caused by those engaged in the dismantling. The suggested duty must arise out of the fact that the Society became aware that a fire had begun. It cannot be said to have arisen out of any duty to prevent the fire, or to take active measures to detect the occurrence of a fire.
372 There are particular relationships in which will arise a duty of care owed by one person to protect another person against harm for which the former is not responsible, and to detect a risk of such harm. The relationship of employer and employee is one such relationship well established by authority. The issue is whether the relationship between the Society and Glenmont is another such relationship.
373 The duty of care owed by an occupier of land to a person lawfully on the land can, in certain circumstances, extend to a duty to take affirmative action to prevent or remove a risk of harm caused by the activities of other persons whom the occupier permits on the land. The decision of the High Court in Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 is a sufficient illustration of that point. What was in issue there was whether an occupier of a supermarket owed a duty of care to a person visiting the premises that included a duty to take precautions to prevent the floor of the supermarket becoming wet, and thus dangerously slippery, as a result of other customers walking across it on a wet day. There have been numerous cases in which courts have held that the proprietor of a supermarket must take reasonable care to detect and to remove things dropped on the floor by customers, which might make the floor slippery and dangerous for other customers.
374 Cases in which an obligation to take affirmative action to deal with a risk of harm caused by other persons on the property are generally cases in which the risk of harm results from an activity which is under the control of the occupier, for which the occupier is responsible, or in which the occupier has an interest, or cases in which the other persons whose activity is or might be a source of danger are persons for whom the occupier is responsible, or persons on the premises for a purpose in or connected with the occupier's interests. When the occupier of premises is responsible for or has an interest in an activity conducted on the occupier's premises, or the presence of other persons there, the law relatively readily imposes a duty to take reasonable care to prevent foreseeable harm to others on the premises resulting from the activity or presence of the relevant persons. That duty will readily include a duty to deal with or eliminate a source of danger of which the occupier becomes aware. Such a duty may also include a duty to control access to the property and to control what is allowed to occur on the property.
375 But the harm, or the risk of harm to Glenmont, did not arise in any way from the state of the premises, or from activities conducted by persons for whom the Society was responsible or conducted in the Society's interests. The activity was conducted at the request of Glenmont, and entirely in its own interests, except to the extent that the Society had an interest in Glenmont removing its property from the Society's land. The fire did not occur at a time when the Society had excluded all others from its property and might be said, because of the control it exercised, to have accepted a responsibility for events however occurring on its property.
376 It is also relevant to bear in mind that, so far as we are aware, Australian law does not impose on a person who observes a fire endangering the property of another, that fire not being attributable to any breach of duty by the person in question, to call the Fire Service let alone to take active steps to fight the fire, with a view to protecting property of another person threatened by the fire. Of course, in the present case it may be material that the fire occurred on the Society's premises. But that is the only factor that we have been able to identify which, in our opinion, is capable of supporting the conclusion that the relevant duty of care was owed. Perhaps one could add to that the fact that, in relation to calling the Fire Service, the obligation is a minimal one. One could also add the fact that the Society was better placed than Glenmont to fight the fire because the Society was in a better position to provide staff trained in the use of the available high pressure hoses. One would hardly expect Glenmont to train its staff in the use of the high pressure hoses found on the premises of the Society.
377 Thus, the question is whether the fact that the Society was the occupier of the premises and became aware of the fire, coupled with the matters just referred to (if relevant), is sufficient to impose a duty of care on the Society.
378 The decision of the High Court in Hargrave v Goldman [1963] HCA 56; (1963) 110 CLR 40 is relevant. In that case the respondent was the owner and occupier of a grazing property. A lightning strike set fire to a fork in a tree, some 80 feet from the ground. At that height, it was impossible to extinguish the fire. The next day the respondent had the tree felled. Some steps were taken to prevent fire spreading from the felled tree, but the trial Judge found that with the exercise of reasonable care the respondent could have put out the fire, but did not. The fire spread to a neighbouring property and caused damage.
379 The case concerns the escape of fire from the property of one person to that of another. The common law, and to some extent statute, has long concerned itself with liability in this situation. The history is summarised by Windeyer J in Goldman at 56-58 and by Mason CJ, Deane, Dawson, Toohey and Gaudron JJ in Burnie Port Authority v General Jones Pty Limited [1994] HCA 13; (1994) 179 CLR 520 at 529-534. In the present case, the fire did not escape from the Society's property, but it is helpful to consider the principles applied in Goldman and in Burnie Port Authority.
380 The majority in Goldman, Taylor and Owen JJ, held that the respondent was liable in nuisance: at 51. Nuisance is, broadly, a cause of action which protects interests in the use and enjoyment of land, although it may provide derivative protection to other interests. However, it is worth noting that the basis of liability was (at 51) that:
"An occupier, with knowledge or presumed knowledge of the existence of a state of affairs on his land which is a potential nuisance which has been created by a trespasser, is, nevertheless, liable in the event of damage resulting therefrom to the lands of his neighbours if by the exercise of reasonable care the damage would have been avoided."
381 Taylor and Owen JJ said that this proposition applied to potential nuisances created by trespassers and nuisances coming into existence "without the act, authority or permission of the occupier". If a person bringing goods onto the land of the Society is to be treated in the same way as an adjoining landowner, this statement could be a sufficient basis for the imposition of a duty of care in a case like the present. They also found the respondent liable in negligence, but that finding appears to have been based on a conclusion that, having felled the burning tree, he came under a duty of care to deal with the new hazard that he had, in a sense, created: at 53.
382 Windeyer J disagreed in relation to nuisance. He took the view that liability in nuisance depended upon a finding that the respondent had continued the nuisance. His view was that such a finding could not be made because it was artificial to speak of a person who tried ineffectually to eliminate a danger as having continued it or having approved of it: at 61. He founded liability in negligence. He stated the relevant principles in terms that would cover the present case. He said (at 66-67):
"The trend of judicial development of the law of negligence has been, I think, to found a duty of care either in some task undertaken, or in the ownership, occupation, or use of land or chattels. The occupier of land has long been liable at common law, in one form of action or another, for consequences flowing from the state of his land and of (sic) happenings there, not only to neighbouring occupiers, but also to those persons who come upon his land and those who pass by. And, as I have remarked elsewhere, the tendency of the law in recent times has been to lessen the immunities and privileges of landowners and occupiers and to increase their responsibilities to others for what happens upon their land. To hold that the respondent had a duty to his neighbours to take reasonable care to prevent the fire on his land spreading would be in accordance with modern concepts of a land occupier's obligations."
"In my opinion a man has a duty to exercise reasonable care when there is a fire upon his land (although not started or continued by him or for him), of which he knows or ought to know, if by the exercise of reasonable care it can be rendered harmless or its danger to his neighbours diminished."
383 In the light of what he said in the first of the two passages cited, it seems that this principle would apply to a person whose goods were on the land where fire began, as much as it would to a person whose goods were on adjacent land to which the fire escaped.
384 Liability for damage caused by fire was also considered by the High Court in Burnie Port Authority. In that case the owner of a building retained an independent contractor to carry out extensions to the building. The plaintiff stored goods in the owner's building. The work carried out involved welding. The welding was performed close to cardboard cartons containing Isolite, an insulating material which burned fiercely if brought into sustained contact with flame. The owner used an independent contractor to carry out the welding work. It was found that employees of the independent contractor carried out the welding activity negligently, causing sparks and molten metal to fall on the cartons containing the Isolite. The cardboard was set alight and the Isolite burned fiercely, causing damage to the area of the building in which the plaintiff's goods were stored.
385 The case is notable for the decision by the majority that the rule in Rylands v Fletcher should be "absorbed by the principles of ordinary negligence": at 556. As mentioned earlier in these reasons, the decision also deals with the circumstances in which a so-called "non-delegable duty of care" will arise, having regard to the magnitude of the risk involved.
386 Burnie Port Authority is similar to the present case in that it deals with the liability of an owner of premises for damage caused by fire to goods of another person, those goods being on the owner's premises. On the other hand, it differs in that the damage was caused by an independent contractor employed by the owner, to carry out an activity in the owner's interests, and the activity was one which the majority found was a dangerous activity.
387 The first point to note is that the majority held that there was no longer any reason of principle or policy to maintain special rules relating to the escape of fire: at 534. As we have said, they went on to hold that the rule in Rylands v Fletcher should be absorbed into the ordinary law of negligence: at 556. In the course of doing so, they considered the relationship between a plaintiff and a defendant which would prima facie have attracted the rule in Rylands v Fletcher. Although the point under consideration there was whether a form of strict liability should be preserved, it is helpful to examine the factors identified by the majority as aspects of the relationship of proximity, because of the contrast between those factors and the present case. The majority said (at 551-552):
"The relationship of proximity which exists, for the purposes of ordinary negligence, between a plaintiff and a defendant in circumstances which would prima facie attract the rule in Rylands v Fletcher is characterized by such a central element of control and by such special dependence and vulnerability. One party to that relationship is a person who is in control of premises and who has taken advantage of that control to introduce thereon or to retain therein a dangerous substance or to undertake thereon a dangerous activity or to allow another person to do one of those things. The other party to that relationship is a person, outside the premises and without control over what occurs therein, whose person or property is thereby exposed to a foreseeable risk of danger 'which he knows to be mischievous if it gets on this neighbour's [property]' Fletcher v Rylands (1866) LR 1 Ex, at 280, see Benning v Wong (1969) 122 CLR at 320; see also Salmond and Heuston on the Law of Torts op cit 324-325; Todd et al, The Law of Torts in New Zealand (1991) at 471; but cf Clerk & Lindsell on Torts 15th ed (1982) at 1205. In such a case, the person outside the premises is obviously in a position of special vulnerability and dependence. He or she is specially vulnerable to danger if reasonable precautions are not taken in relation to what is done on the premises. He or she is specially dependent upon the person in control of the premises to ensure that such reasonable precautions are in fact taken. Commonly, he or she will have neither the right nor the opportunity to exercise control over, or even to have foreknowledge of, what is done or allowed by the other party within the premises. Conversely, the person who introduces (or allows another to introduce) the dangerous substance or undertakes (or allows another to undertake) the dangerous activity on premises which he or she controls is 'so placed in relation to [the other] person or his property as to assume a particular responsibility for his or its safety'."
388 There are a number of contrasts between the present case and the factors there identified. First, the Society did not undertake a dangerous activity, or allow another person to do so. Glenmont was not in a position of particular vulnerability. It could have been present if it wished (subject to being notified when the work was to be done). The activity that gave rise to the fire was one carried out in its interests and in relation to which it had as good an opportunity as the Society to take precautions. Although, in the particular circumstances, Glenmont was unaware that the work of dismantling the enclosure was about to begin, it was better placed to know that that was going to happen than was the Society. Glenmont was not in a position of vulnerability as regards any conduct by the Society in relation to the enclosure.
389 We also refer to the final statement of principle by the majority at 556-557:
"Under those principles, a person who takes advantage of his or her control of premises to introduce a dangerous substance, to carry on a dangerous activity, or to allow another to do one of those things, owes a duty of reasonable care to avoid a reasonably foreseeable risk of injury or damage to the person or property of another. In a case where the person or property of the other person is lawfully in a place outside the premises that duty of care both varies in degree according to the magnitude of the risk involved and extends to ensuring that such care is taken. It is unnecessary for the purposes of the present case to express a concluded view on the question whether the duty of care owed, in such circumstances, to a lawful visitor on the premises is likewise a non-delegable one."
390 We note in particular that in the final part of that passage the majority appear to extend the principle to a person on the occupier's premises. Presumably that principle would apply to the person's property as well as to the person.
391 The duty of care stated by the majority in Burnie Port Authority is narrower than that stated by Windeyer J in Goldman. It applies only to a person who introduces a dangerous substance or carries on a dangerous activity. Windeyer J appears to contemplate a duty extending to a person who becomes aware of fire on his land, no matter how it occurred.
392 It seems to us that the present state of the law is uncertain. Our view is that, under the circumstances, the Society did not owe a duty of care which imposed an obligation to take measures to extinguish the fire. Granted, the fire occurred on its property, and the Society became aware of the fire. But, and we consider this is the critical difference, the fire did not occur in a place in which or in circumstances under which the Society was in control as against Glenmont; the fire was caused by a person for whom the Society had no responsibility and the fire was caused in the course of an activity in which the Society had no interest, but Glenmont did have an interest. Although the fire occurred on the Society's land, in the circumstances it cannot be said that the Society was exercising the sort of control that might give rise to a duty of care, nor was the position of Glenmont one of dependence or vulnerability that might give rise to a duty of care. The fire occurred in the course of an activity in relation to which Glenmont was better placed than the Society to exercise control, and in relation to which Glenmont was better placed to take precautions had it seen fit to do so. That is why we conclude that, in the circumstances, there was no duty of care to take precautions to prevent the spread of the fire.
393 If we are wrong in that, we have already explained why we do not accept the Judge's finding that the Society was in breach of that duty of care, through Mr Anderson's failure to call the Fire Service sooner than he did, and through the failure of its staff to use the lay-flat hose provided.
394 We are also of the view that the failure to provide staff trained in the use of high pressure hoses was not a breach of any duty of care owed by the Society to Glenmont. In brief, we take the view that, on the evidence, there was no basis for a finding that the precautions taken by the Society should have extended this far. Our view of the evidence is that, to the extent it supports a finding, the finding is rather the other way. That is, that the handling of these hoses should be left to the Fire Service. They required a level of learning and skill not reasonably to be expected in the circumstances. We can see no analogy between the Society and occupiers of oil refineries or of large factories for vehicle building to which the Judge referred. In the case of an oil refinery, the activity conducted by the owner is one that carries with it a self evident risk of fire, and of fire of a type that is likely to require specialised knowledge and equipment to fight it. In the case of a vehicle builder, the duty to provide trained fire fighting personnel is likely to be an aspect of the duty to take reasonable care for the safety of people working on the premises. Even if the Society owed a duty to Glenmont to take reasonable care to prevent the fire spreading, that duty did not require it to provide staff trained to use a lay-flat hose.
395 For these reasons also the verdict must be set aside as against the Society.
396 If, contrary to our view, the duty to call the Fire Service existed and the Society was in breach of that duty, a difficult issue existed as to whether the breach was causative of any damage. The Judge did not analyse the evidence in this respect. He moved from his finding that some minutes passed between Mr Anderson seeing the fire start and the call to the Fire Service to a finding that:
"Had the Brigade been called immediately, as Anderson implies it was, there was a good chance T-Rex, although damaged, could have been substantially saved."
"Of course neither calling the Brigade immediately or using the fire hydrant would have avoided the fire but either could have greatly reduced the damage to T-Rex: it need not have been left a total loss."
398 The appellants challenged those findings. They pointed out that, on the estimates given by Mr Foote, between three and five minutes elapsed from the commencement of the fire until he jumped off the back of the dinosaur after unsuccessfully attempting to put the fire out. At that time the fire was about half a metre square and spreading. As previously discussed, if Mr Anderson had moved immediately to arrange a call to the Fire Service, approximately two minutes at least is likely to have elapsed before the call. An additional four minutes was required for the Fire Service to arrive. At the very minimum, therefore, six minutes would have elapsed before the Service arrived and Mr Foote would still have been on the hook of the crane which was manoeuvring and lowering him to the ground. Of significance was Mr Foote's observation as he dragged bottles away from the area of the dinosaur that a fire had started internally which, at that time, in his view would have required a fair amount of water to extinguish it. At that time two or three square metres of skin had burnt off the back of the dinosaur.
399 We would not disturb this finding. If the Judge's conclusion that the Society was in breach of a duty of care stands, then it follows that either the employees of the Society should have begun to fight the fire some minutes earlier than the Fire Service arrived, or that the Fire Service should have been called some minutes earlier and would have arrived some minutes earlier.
400 Although the Judge's reasons for his conclusion are not provided, it was open to him to find that in either of these events the dinosaur would have been saved, although saved in a damaged state. It was open to him to find that a proper attempt to extinguish the fire would have succeeded, with relatively minor damage, had it commenced several minutes earlier than it did. In the light of the evidence it does appear that the fire probably took proper hold only after Mr Foote gave up trying to extinguish it with his hands, and some time between then and the stage at which he was on the ground and waiting for the Fire Service. It is not possible to be more precise than this, but nor can we say that it is not open to reach the conclusion that the Judge reached, assuming that there was a breach of duty. If there was no breach of duty, then the question of causation does not arise.
401 His Honour rejected the suggestion that Glenmont was guilty of contributory negligence:
"I have wondered whether the plaintiff was guilty of any contributory negligence. On the face of it Limb seems to have been fool-hardy to have left T-Rex at the Showground, trusting others to look after it. Yet, if arrangements had been as he intended, his Uncle George would have been there to supervise and, I suppose, he was entitled to assume O'Loughlin and those he engaged were competent. On reflection I have concluded that the plaintiff, through Limb, was not guilty of negligence."
402 We agree with the Judge's conclusion. The only criticism that can be made of Glenmont is its failure to be present to supervise the work. We do not think that a proper consideration for its own interests required it to be present for what should have been a straightforward procedure.
403 The Judge accepted the evidence led by Glenmont on the question of damages. The defendants called only one witness, Mr Tozer, who gave evidence about the cost of rebuilding the dinosaur. On that point the Judge preferred the evidence of Mr Bullock, the witness called by Glenmont. The Judge awarded damages under two heads.
404 The first head is the cost of rebuilding the dinosaur. He decided that the cost should be assessed at the date of trial, although the cost had increased substantially over the years. The Judge did this because Glenmont, he found, could not afford to rebuild the dinosaur until it recovered damages and because its financial difficulties were caused by the defendants. He preferred the evidence of Mr Bullock as to the likely cost. He was influenced by the fact that Mr Bullock had been involved in the building of the dinosaur. He said:
"Both plaintiff and defendants pointed to reasons why their experts should be preferred to the other but for me Mr Bullock's knowledge and experience of the building of T-Rex leads me to prefer his figures to those of Mr Tozer. I shall use them as the basis for assessing the cost of rebuilding. I say 'basis' because with such a long and complicated job as this, precision is not possible".
405 Taking this approach, and rounding Mr Bullock's estimate down somewhat, the Judge awarded an amount of $3 250 000.00.
406 The next head of damages is a claim for profits that Glenmont might have made from the dinosaur. The Judge began his consideration of this topic by saying:
"I come now to the second head, the loss of a chance to make millions out of exhibiting T-Rex. This is far more speculative than the cost of replacement. Limb's plans were vague and none had yet come to fruition. There are so many imponderables."
407 Glenmont called evidence from Mr Minick, whom the Judge accepted as having expert knowledge about the provision of entertainment at what are called "State Fairs" in the United States of America. There was no evidence to contradict that of Mr Minick. The Judge accepted his evidence. The Judge found that the dinosaur would have been a success, if exhibited in America. The Judge said:
"Mr Minick's opinion was that T-Rex would be a success on the State Fair circuit, probably best if it travelled only to six to eight Fairs each year. Besides the Fairs there would be opportunities for exhibiting at such places as shopping centres ...
I suggest that T-Rex would have been a success on the State Fair circuit in the United States: it had the potential to make millions for its owner."
408 Mr Minick gave evidence about the likely earnings if the dinosaur were exhibited by Glenmont in the United States. Mr Coultas, a chartered accountant, provided a number of detailed schedules as to the likely earnings and likely costs. The evidence before the Judge related to the period from 1986 to 1992, and then to the period from 1993 to 2002, allowing a period of about two years from trial for the rebuilding of the dinosaur. The Judge accepted the evidence of Mr Minick about the likely level of earnings, and the calculations made by Mr Coultas. Rounding those figures down, the Judge awarded an amount of $7 735 000.00.
409 At the trial the defendants launched a vigorous attack on this approach. They argued that, at the time of the fire, Glenmont lacked the financial resources to take the dinosaur on tour in America and would not have overcome various other obstacles. They argued that the likelihood was that the dinosaur would have been seized by AGC or that Glenmont would have collapsed under its debts. Their submission was that, at the very least, the Judge should have found that Glenmont lacked the funds to get the dinosaur to America, and to exhibit it there, because of the on-going costs involved. The Judge rejected this argument. He said:
"All that may be plausible if one looks at the trees and misses the wood. There would have been formidable hurdles for Limb to jump. That is why I must discount heavily the chances of a profit in the United States. But I do not accept the argument entirely. It ignores several things. T-Rex was a marvellous contraption and had plenty of public appeal. The creditors stood a much better chance of a return if the dinosaur continued to be displayed. Limb had in the past negotiated deals with his creditors to avoid repossession. He was so determined to succeed that I believe the money would have been found. All Limb needed to do was to get a financial backer. I believe he would have done that. So I shall work on the dinosaur having a chance of going to the United States and being a success."
410 The Judge then dealt with the possibility of a film being made that featured the dinosaur. Glenmont called Mr Saunders, who had considerable experience in film production in Australia. Mr Saunders had been negotiating with Mr Limb in the period preceding the fire with a view to producing a film using the dinosaur. The negotiations were well advanced. Mr Saunders was working on a budget of between $2 and $3 million. There is no reason why the Judge should have rejected his evidence about the general feasibility of producing the film. Mr Saunders had a story outline, which was tendered at trial, and a verbal agreement from another person to finance the first draft of the script. He had talked to an experienced script writer and had made the assessment that in a film featuring the dinosaur he did not need to use highly paid actors. In his latest dealings with Mr Limb he was talking of a fee of about $100 000 to Glenmont, plus 7 1/2 per cent of the profits. His evidence was that, all being well, the film would be released to the public in cinemas between two and three years after the fire. The Judge appears to have accepted all of this evidence.
411 Glenmont also called Mr Gerlach, an employee of a company described by the Judge as "a feature film and television production and distributor company". The general expertise of Mr Gerlach was not challenged, although his opinions were. He expressed considerable enthusiasm for the prospects of the proposed film. He said that the storyline was good and the dinosaur would be a good centre piece. He agreed that the film could be produced fairly inexpensively. The prospects of success were very good. He expressed an opinion about the likely profitability of the film, based on published records within the film industry and on the performance of other films featuring dinosaurs that had been released in cinemas. Mr Gerlach said that his final view was significantly influenced by his finding that, since 1985, every dinosaur film that had been released in a cinema had made a profit. He thought the film would be so successful that there would be a sequel. There was likely to be significant income from the sale of videos and the sale of television rights. On the basis of Glenmont receiving 7 1/2 per cent of the profits made on the film, Mr Gerlach estimated the total receipts to Glenmont from the film, the sequel, videos and television rights at $40 million. He adhered to that view even though he accepted that, overall, only a tiny percentage of films make a substantial profit, and even though he accepted that very few Australian films make large profits. It is worth mentioning that, on his figures, Mr Gerlach must have been expecting a total profit from the film, the sequel, videos and television rights of about $520 million. As a point of comparison, his evidence was that "Crocodile Dundee" and its sequel, the most profitable Australian film of which he was aware, had together grossed about $570 million at the box office (which we take to mean entrance fees paid at cinemas). The evidence is not completely clear, but our impression is that the figure of $570 million does not include income from the sale of video or television rights. On the other hand, the figure appears to be a reference to gross takings and not profit.
412 The Judge accepted Mr Gerlach's evidence. As we have already said, it is clear from his evidence that Mr Gerlach had considerable experience in the industry and there was no contrary evidence. The Judge nevertheless said that Mr Gerlach was "over enthusiastic". He considered there was an amount of exaggeration in his evidence. He said:
"I accept the general thrust of Mr Gerlach's evidence but discount to an extent his great optimism."
413 The Judge also accepted evidence from Mr Gerlach that, in the case of a film like this, considerable income would be earned from the merchandising of products associated with the film. Mr Gerlach gave evidence that a licence fee would be obtainable by Glenmont for the grant of merchandising licences and that the return to Glenmont could be between 6 per cent and 20 per cent of retail sales. Mr Gerlach said that the return on merchandise could be about four times the gross box office takings. As far as we can tell, Mr Gerlach did not refer to any statistics or records that supported this opinion, but on the other hand there was no answering evidence. Clearly enough, this evidence was very general and imprecise and amounts to no more than a statement that the sale of merchandise could generate an amount equal to four times the gross box office proceeds. But Mr Gerlach did not even hint at any basis upon which one could arrive at a relationship between box office takings and merchandising revenue.
414 The Judge then drew things together by making a single award in respect of State Fairs, films, merchandising and other appearances. He said:
"There was potential, which I readily accept from what I have heard about T-Rex, what I have seen in photographs and on video, for the dinosaur to make many millions, maybe hundreds of millions, of dollars. I shall work on it being quite possible for T-Rex to have earned at least $100,000,000 from films, merchandising, fair circuits and other appearances. On the other hand there's many a slip twixt cup and lip. The whole thing may have come to nothing. For that reason I shall discount by eighty percent the figure of $100,000,000 which is a conservative estimate of what T-Rex could have earned up to now. T-Rex was said to have at least a twenty-year life span so it would still have been going strongly today if all had gone right. That brings me to a figure of $20,000,000 for the loss of the chance to have been a successful earner on the United States Fair Circuit and in film and on exhibition, either here or in America."
415 The dinosaur was the property of Glenmont, a chattel, used by Glenmont with a view to making a profit. When goods used with a view to making a profit are destroyed, whether the destruction is a breach of contract or a tort, the basic measure of compensation to the owner is the value of the goods to the owner "as a going concern": Owners of Dredger Liesbosch v Owners of Steamship Edison [1933] UKHL 2; [1933] AC 449 at 464 Lord Wright. How that principle is applied in a particular case must depend upon all the circumstances. We have found that Mr Foote, Mr Parker and Mr O'Loughlin are liable in tort. Had we found the Society liable, it would have been necessary to consider whether damages were to be assessed in tort or in contract. We doubt whether that would give rise to any difference in the present case, because the Society was aware of the fact that the dinosaur was exhibited or displayed with a view to profit and should reasonably have contemplated that the destruction of the dinosaur might result in loss of the general sort claimed by Glenmont. But in view of our findings it is not necessary to consider that issue.
416 As to the dinosaur, there was no market in which a replacement could be purchased. The starting point thus becomes the cost of making a replacement and the profits that could or would have been made but for the destruction of the original: Liesbosch at 464 Lord Wright; Halsbury's Laws of England (4th Ed Reissue), Vol 12(1) par 862 and par 863.
417 The cost of a replacement would usually be assessed at the date of trial even if the cost of replacement later increases. But if the plaintiff cannot afford a replacement until compensated for the loss, and the defendant's wrong is a substantial cause of that situation, our view is that the plaintiff can recover the higher measure of loss. English authorities supports this view: see Dodds Properties (Kent) Ltd v Canterbury City Council [1981] All ER 928 at 935, Megaw LJ. The same view has been expressed in Burns v M.A.N. Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653 at 659-660, Gibbs CJ and at 677, Brennan J (dissenting).
418 The claim for loss of profits presents further complications.
419 Glenmont claims damages for profits that it would have made by exhibiting the dinosaur in the United States of America together with profits that it would have made from the production and release of a film featuring the dinosaur and from associated commercial opportunities. In a nut shell, the defendants argued at trial that Glenmont would not have made any worthwhile profits from the dinosaur. They argued that that dinosaur would have been seized by AGC and sold, or that Glenmont would have collapsed under the weight of its debts, and the dinosaur would have been sold by a liquidator. They argued that Glenmont lacked the resources to take the dinosaur to America for display. They submitted that the claim that profits would have been made from a film featuring the dinosaur were unrealistic, and that the estimates of profit that the Judge accepted were wildly unrealistic.
420 The issue on loss of profits was a complex one factually and, in addition, the Judge had to assess damages by reference to hotly contested hypotheses about the likely use of the dinosaur.
421 We consider that the guiding principle to be applied in the present case is that stated by Mason CJ, Dawson, Toohey and Gaudron JJ in Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 355-356, where their Honours said:
"Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.
The conclusion which we have reached on this question finds support in other considerations. The approach results in fair compensation whereas the all or nothing outcome produced by the civil standard of proof would result in the vast majority of cases in over-compensation or under-compensation to an applicant who has been deprived of a commercial opportunity. Furthermore, it is an approach which conforms to the long-standing practice of taking into account contingencies in the assessment of damages."
422 We now propose to deal with the issues that arise in relation to damages. Our approach to the issue of damages is not affected by our conclusion that the Judge did not consider adequately the criticisms of Mr Limb's credibility. Our conclusions on damages rest largely on the evidence of other witnesses. We have no reason to interfere with the finding of the Judge to the effect that somehow or other Mr Limb would have kept possession of the dinosaur and would have found the money required to pursue his dream in one form or another.
423 As to the assessment of replacement cost, his Honour had evidence from an expert on each side. His Honour recognised that precision was impossible. He preferred the evidence of Mr Bullock, called by Glenmont, because of his knowledge and experience of the process of constructing the dinosaur. That was a legitimate basis for preferring Mr Bullock. The Judge treated Mr Bullock's figure as an estimate only. In our view, no valid criticism can be made of his reasoning on this point. It was open to his Honour to take a relatively broad brush approach, and that is what he did. We do not accept the criticisms made of the amount awarded by his Honour as the cost of building a replacement dinosaur.
424 We add that Mr Limb gave evidence that he intended to rebuild the dinosaur, once he had access to the required funds. The prospect of making a film had gone, but money could still be made by exhibiting the dinosaur.
425 The damages awarded by the trial Judge included a substantial allowance for sales tax payable on the amount payable by Glenmont for the construction of a replacement dinosaur. Subject to one point, no error in the Judge's approach in that respect was suggested on appeal.
426 The Society argued in its written submissions that the Judge erred in that the Judge should have approached the matter on the basis that by the time the replacement dinosaur was constructed, the law imposing sales tax would have been repealed and replaced by a law imposing a goods and services tax. The Judge proceeded on the basis of the law as it was at the time when he fixed the damages. As things now stand, sales tax would no longer be payable on the amount payable for the construction of a replacement dinosaur, and the goods and services tax would be payable on all or some of that amount. The point was not elaborated in oral submissions. Because of the amount involved, we will give the appellants the opportunity to put supplementary written submissions on this point, and we will give Glenmont an opportunity to reply. As we see things, if an allowance for sales tax is not to be made, an appropriate allowance for the goods and services tax must be made.
427 In our opinion it was open to his Honour to find that the destruction of the dinosaur caused Glenmont to lose a commercial opportunity of value. The opportunity lost was the opportunity to pursue the display of the dinosaur in America, the film proposed by Mr Saunders, possible sequels, the sale of video and television rights, and the opportunity to earn fees for appearances by the dinosaur. There is an interrelationship between these matters. Obviously enough, if the first film was successful, the prospect of income from other sources would be enhanced, and the more successful the film the better those prospects would be. Conversely, if the first film was not successful, it is doubtful whether there would have been any follow-on sources of income. In saying this we make it clear that, in our opinion, the exhibiting of the dinosaur at State Fairs in America was an independent exercise, and a prospect of commercial value, whether or not a film was made.
428 The defendants, and the Society in particular, submitted on appeal that the Judge should have determined first the most probable course of events but for the fire. He should then have determined the likely earnings from that course of events and then made an allowance for the possibility of greater earnings. We disagree. The trial Judge had to assess damages by reference to events which might or might not have occurred. He was dealing with the hypothetical or conjectured course of events in the past. As was said by Deane, Gaudron and McHugh JJ in Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 643:
"Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. ... The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place."
429 These propositions were approved by the majority in Sellars (at 350). In our view, the submissions for the defendants amount to ignoring a predicted or hypothetical event, the making of profits but for the fire, because it cannot be established on the balance of probabilities that such predicted or hypothetical event would have occurred. In effect, the defendants submit that because it is more probable than not that profit would not have been made, no award should be made for loss of profits. Our view is that this submission is inconsistent with the approach established by the High Court in Sellars. Nor would it do justice. We consider that in principle the trial Judge took the correct approach. His approach was to assess the profits that might have been made, to assess the degree of likelihood that those profits would in fact have been realised, and then to adjust the award of damages accordingly. That, in our view, is an approach that was open to him in the light of authority.
430 In our view, the answer to the submission advanced on appeal is that given by the majority in Malec in the passage we have cited. In essence, the submission by the defendants invites the Court "to ignore altogether a prediction which has a 49 per cent [or less] probability of occurring". The passages to which we have referred from Malec and from Sellars establish that the Court's assessment of the probabilities of the profit being realised, and of the probabilities of it being at one end or the other of the likely range, is to be used to adjust the amount of the award, subject of course to the Court ignoring opportunities which have negligible prospects of occurring or would be of negligible value should they occur. For these reasons, the challenge of principle mounted to the approach of the Judge fails.
431 Nevertheless, there were substantial problems confronting Glenmont when the fire occurred. Glenmont and Limb were very short of money. The projected American venture faced practical and financial obstacles. There was a real risk that Glenmont would have been unable to carry on. But the approach that the Judge took was, we consider, open to him. It is set out in the passage from his reasons set out above when he referred to missing the wood for the trees.
432 The Judge discounted his estimate of possible earnings by 80 per cent on account of the difficulties in Glenmont's path. If he is taken at his word, the discount was greater than that. We say that because he said that Glenmont might have earned "at least $100 million" from the sources identified by him. Our view is that, in broad terms, the Judge was entitled to take the approach that he took. It was open to him to find that there was a better than negligible chance that Glenmont would have kept going and that, as it began to earn income, its prospects would have improved. On that basis we turn to the elements of the Judge's award.
433 The evidence about the prospects of successfully exhibiting the dinosaur on the State Fair circuit, and about the likely level of earnings, was challenged in cross examination. No answering witness was called. It is true that the results of exhibiting the dinosaur prior to the fire had not been encouraging. The profits made were modest, and there is reason to doubt whether a true profit had been made at all, once appropriate allowance is made for all expenses. Other commercial opportunities identified by Mr Limb had, for one reason or another, come to nothing. But many successful ventures emerge from an unpromising start. Our impression is that the entertainment industry, in particular, offers many instances of individuals and projects that have suddenly become great financial successes after a period when success seemed a dream. The Judge was prepared to accept the evidence from the plaintiff's witnesses. That evidence put forward a persuasive case that the dinosaur would have been a commercial success, despite its disappointing history. We consider that it was open to his Honour to conclude, as he did, that Glenmont might have made a profit of as much as $7 735 000.00 by exhibiting the dinosaur in America. It was open to him to act on the evidence of Mr Minick, despite the limitations of that evidence. The figures put forward by Mr Coultas provided an acceptable basis for his Honour's estimate. We would not disturb his Honour's findings in that respect.
434 However, we are unable to accept his Honour's conclusion about the possible profit from other sources, which his Honour identified as films, videos, television rights, other appearances together with the merchandising of articles linked to the films. His Honour must have estimated profit to Glenmont from these sources of about $92 million, because his approach was that Glenmont would have earned at least $100 million.
435 Mr Gerlach gave evidence, that the Judge must have accepted, that Glenmont might have received $40 million from a film featuring the dinosaur, a sequel to the film and from the sale of rights to reproduce the film on videos and on television. Mr Gerlach's evidence indicates that he made that estimate on the basis of Glenmont receiving 7 1/2 per cent of the profits of the film, that in turn being the figure that Mr Saunders was discussing with Mr Limb shortly prior to the fire. The relevant exhibits indicate that this is 7 1/2 per cent of the net profit of the film: see exhibits P22A and P22C. Assuming, which is a significant assumption, that this percentage applies across the board, Mr Gerlach's evidence assumes a net profit from films, video rights and television rights of the order of $530 million. That is a particularly large amount. The only point of reference that we can find in the evidence is Mr Gerlach's own evidence that "Crocodile Dundee", which he seems to have identified as the most profitable film produced in Australia, together with its sequel, grossed about $570 million at the box office. The evidence before his Honour was as general as that. The evidence gave no basis for relating gross takings at the box office to net profit.
436 It is clear that the Judge accepted Mr Gerlach's expertise and knowledge, and accepted his evidence generally. Allowance must also be made for the fact that his evidence was not answered, although it was of course tested in cross examination. Nevertheless, in light of the point of reference that Mr Gerlach himself offered, we conclude that Mr Gerlach's unsupported estimate of $40 million was not a sound basis on which to proceed.
437 Granted, the Judge himself said that Mr Gerlach was "over enthusiastic" and said that he had to allow for exaggeration. But we cannot understand how his Honour arrived at a figure of $100 million without accepting the evidence to which we have referred. In our opinion, it is not an answer to this objection to point to the process of discounting in which his Honour engaged. In arriving at an award for damages, his Honour had to make due allowance for the prospect of the relevant commercial opportunities not materialising for one reason or another. He also had to make allowance for the fact that the estimates of the value of those commercial opportunities were rough and ready, and that the actual value might range from modest to the highest suggested value. Importantly, his Honour had to work by reference to an acceptable figure. Otherwise, matters of impression become pure guesswork.
438 We appreciate that his Honour's figure of about $93 million also included profits from merchandising and from other appearances. Mr Gerlach said that revenue from merchandising could be four times the amount of box office receipts. He said that Glenmont, as licensor, might receive between 6 per cent and 20 per cent of the gross sales generated by the sale of licensed products. This evidence provides a very limited basis for an estimate of earnings of this type. Mr Gerlach gave no evidence about actual experience in Australia or elsewhere. He gave no evidence of detailed consideration of the prospects of merchandising in this particular case. There is really no basis for arriving at a figure for profits from merchandising. In our view, Mr Gerlach's evidence provided a basis for adding something to the estimated profit from films, videos and television, but no more than that. In fairness to the defendants, in the light of the generality of the evidence, one must be cautious. The defendants can hardly be criticised for not answering evidence as general as this.
439 A similar comment applies to the allowance apparently made by his Honour for income or profits from other appearances. In light of the evidence about earnings from the State Fair circuit, our view is that this source could add only a few million dollars at most.
440 We are satisfied that his Honour's figure of $100 million was an unrealistic and erroneous starting point.
441 On the basis of Mr Gerlach's evidence, our view is that the share of profits from films, videos, television, merchandising and other appearances passing to Glenmont is unlikely to have exceeded $40 million. We take the view that total profits to Glenmont from the use of the dinosaur over the relevant period would not have exceeded about $50 million. That is the highest figure that the evidence could support. In light of the broad brush nature of the evidence, which we accept may have reflected the difficulty of providing reliable estimates, even that figure is a generous one.
442 One must then allow for a number of matters. First, the risk of Glenmont never overcoming its financial problems. Next, the impact of all the practical obstacles to the various proposals. One must allow in particular for the fact, that emerges from the evidence of Mr Gerlach and Mr Saunders, that only a small percentage of films ever make a profit, let alone large profits like "Crocodile Dundee". One must bear in mind that there are two general factors to be allowed for. First, the possibility that for one reason or another some or all of the suggested sources of profit would not eventuate. Secondly, one must allow for the fact that the amount of the profits might be at the very bottom end of the scale, somewhere along the scale or towards the top of the scale. It is not appropriate simply to take a figure of $100 million as his Honour did, or even the figure of $50 million suggested by us, and then to apply a certain percentage to that figure. The process is necessarily subjective, but it requires appropriate allowance to be made for all the relevant factors.
443 We take the view that there were many obstacles to Glenmont realising the commercial opportunities upon which it relied at trial. We take the view that the estimate of the value of those opportunities was speculative. They might have been worth a good deal less than $50 million. In our opinion his Honour's figure of at least $100 million was an unduly high starting point. For what it is worth, we take the view that a figure of $50 million is a reasonable starting point. But then one must allow for broad contingencies to which we have referred. We take the view that an award of damages of $5 million would, on the evidence before the Judge, have been an adequate award for the loss of commercial opportunities.
444 On that basis we consider that the award of damages should be set aside. We would award damages of $3 250 000.00 for the cost of rebuilding the dinosaur and damages of $5 million for the loss of commercial opportunities. We emphasise that in taking this approach we have proceeded on the basis that the findings of fact made by his Honour, or which must have been made by his Honour, should stand. But we have taken a different view on the possible value of the commercial opportunities to which his Honour referred, and on the likelihood of them being realised. We would award a lump sum on account of interest of $2 million, being one quarter of the amount that his Honour awarded as is the amount that we have awarded for the loss of commercial opportunities. Accordingly, as against the defendants other than the Society, we would order that judgment should be set aside, and that a judgment for $10 250 000.00 should be substituted.
445 Contribution notices were issued as between the defendants. The Judge made an order as to contribution. He ordered that the amount of contribution as between the defendants should be as to Mr O'Loughlin 10 per cent, as to Mr Parker 50 per cent, as to Mr Foote 10 per cent, and as to the Society 30 per cent.
446 As the Society is, in our view, not liable to Glenmont, the issue of contribution as between the defendants must be reconsidered as a whole. The contribution orders made by the Judge must be set aside. Mr Foote has not appealed, and has taken no part in the appeal itself, although he did appear before the Chief Justice when directions were made by the Chief Justice as to the listing and hearing of the appeal. Mr Foote is entitled to an indemnity from Mr Parker in respect of his liability to Glenmont: see s 27C of the Wrongs Act 1936 (SA). Nevertheless, it may be that Mr Parker will lack the means to satisfy that right of indemnity. Accordingly, the question of contribution as between defendants is one in which Mr Foote has an interest. We take the view that he should be given an opportunity to make submissions on the question of contribution. However, for reasons which will appear, it may be that Mr Foote cannot obtain an order for contribution from Mr O'Loughlin.
447 We turn now to the issue of contribution as between Mr O'Loughlin and Mr Parker.
448 Our conclusion is that Mr O'Loughlin is liable to Glenmont for breach of contract. We have not upheld the Judge's finding that Mr O'Loughlin was negligent. We have not been able to resolve factual issues, not satisfactorily resolved by the Judge, that are crucial to the question of whether Mr O'Loughlin was negligent.
449 It follows that we are tentatively of the opinion that we cannot make an order for contribution as between Mr O'Loughlin and Mr Parker in exercise of the power conferred by s 25(1)(c) of the Wrongs Act 1936 (SA). We cannot do so because, on our conclusions, Mr O'Loughlin is not liable to Glenmont as a tort-feasor. As the defendants did not deal with this issue in their submissions, we will give them an opportunity to do so. If we had the power to make an order under that provision, we would have apportioned a lesser proportion of the liability to Mr O'Loughlin than to Mr Parker. In our opinion it is just and equitable, if the section applies, that Mr Parker should bear a greater proportion of the liability. Mr O'Loughlin's only fault was in not remaining to supervise the dismantling of the enclosure, and in not warning Mr Foote not to use cutting equipment near the dinosaur. Mr Parker, on the other hand, is vicariously liable for the negligence of Mr Foote. In our opinion Mr Foote departed substantially from the degree of care to be expected from him, in failing to take any precautions against fire when using cutting equipment close to the dinosaur. We would have been inclined to apportion liability as to 40 per cent to Mr O'Loughlin, and as to 60 per cent to Mr Parker, but we recognise that a final decision on the amounts may require a consideration of the separate position of Mr Foote.
450 It may be that Mr O'Loughlin and Mr Parker can claim contribution in equity from each other in respect of any amount paid by either one of them in satisfaction of the judgment: see Albion Insurance Co Ltd v Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342; Street v Retravision (NSW) Pty Ltd [1995] FCA 1197; (1995) 56 FCR 588 and Hanave Pty Ltd v Lfot Pty Ltd [1999] FCA 1568; (1999) 168 ALR 318. It may be that Mr Foote can make such a claim against Mr O'Loughlin. However, such an order would be made on a different basis from that on which an order would be made under the Wrongs Act. No submissions having been made on the point, we will give the parties the opportunity to provide written submissions if so advised.
451 The Judge awarded costs in favour of Glenmont against each defendant. That order must be set aside as against the Society.
452 The appellants complained of the part of the Judge's order that ordered that costs be payable on a solicitor client basis as from 20 April 1999. The date chosen by the Judge was 7 days after Glenmont's solicitors had written to the defendants offering to accept payment of the sum of $4.75 million plus costs in settlement of the claim. The letter came one week into the trial. The trial continued for some time after the letter was received, finishing in early June 1999.
453 We consider that no error has been shown in the Judge's approach.
454 The letter was not an offer of settlement that attracted the operation of Rule 40 or Rule 41 of the Supreme Court Rules. Rule 41 in particular, dealing with offers by a plaintiff to accept a stated sum, does not apply to offers made later than 21 days before the commencement of a trial.
455 However, the Court's discretion in relation to costs is a wide one. There is nothing to prevent the Judge taking into account, in the exercise of that wide discretion, the fact that the plaintiff offered to accept a sum, less than that which it ultimately recovered, after the commencement of the trial. Nor, in our opinion, can it be said that the making of such an offer could not be a proper basis for the exercise of the discretion as to costs in the manner in which the Judge exercised it.
456 Counsel for Mr Parker made the point that the offer made by Glenmont was not an offer to accept a judgment for $4.75 million plus costs, but an offer to accept payment of that amount. Counsel submitted that Mr Parker simply could not pay that amount, lacking the resources to do so. Accordingly it was an offer that Mr Parker was incapable of accepting. Counsel also submitted that even if Mr Parker had accepted the offer, contribution notices issued by the other defendants would have kept Mr Parker in the case, and so from a practical point of view there was no point in Mr Parker accepting the offer.
457 Once again, we are of the view that none of those matters meant that the Judge was not entitled to exercise the discretion as to costs as he did. The fact is that Glenmont offered to settle for an amount less than it ultimately received at trial, and less than the amount which we propose to allow on appeal. We do not consider that the reasons for the defendants, or a particular defendant, not accepting the offer are decisive as to the exercise of the discretion. In fact, there is no evidence proving that Mr Parker would have accepted the offer if his resources had been sufficient to enable him to do so. But quite apart from that, we do not accept that the mere fact that Mr Parker lacked the resources to settle on the terms offered meant that the Judge was not entitled to make the order that he did.
458 We would not disturb the basis upon which the Judge ordered that costs be paid.
459 We would make the following orders, subject to our decision on the question of whether the award of damages should include an amount for sales tax or for goods and services tax. Our decision on that point may change the amount of the varied award of damages.
1. That the appeal be allowed in part, and that the Judgment and Orders dated 2 December 1999 be varied as follows.
2. That the judgment and order for costs against the Society be set aside, and that an order be substituted that Glenmont's claim against the Society be dismissed, and that judgment be entered for the Society against Glenmont with costs.
3. That the judgment against Mr O'Loughlin and Mr Parker be varied by substituting for the amount of $31 250 000 awarded by the trial Judge the amount of $10 250 000.
4. That the orders as to contribution between the defendants be set aside.
5. That the appeal against the order for costs as against Mr O'Loughlin and Mr Parker be dismissed.
6. That the question of contribution as between Mr Foote, Mr O'Loughlin and Mr Parker be adjourned for further consideration.
460 We will need to hear from the parties on the question of their costs of the appeal.
GLENMONT INVESTMENTS PTY LTD
O'LOUGHLIN & ORS No. SCGRG-91-2240 [2000] SASC 429
(1993) 177 CLR 472
(1957) 96 CLR 261
(1979) 143 CLR 134
(1980) 23 SASR 504
(1931) 46 CLR 41
(1997) 188 CLR 313
(1998) 192 CLR 493
(1986) 161 CLR 500
(1999) 168 ALR 86
(1954) 91 CLR 300
(1998) 192 CLR 330
(1982) 149 CLR 337
(1995) 182 CLR 608
(1986) 161 CLR 653
(1994) 179 CLR 332
(1990) 169 CLR 638
(1984) 154 CLR 672
(1994) 179 CLR 520
(1963) 110 CLR 40
(1999) 73 ALJR 306
(1986) 161 CLR 475
(1991) 173 CLR 33
(1953) 89 CLR 409
(1987) 162 CLR 479
(1982) 150 CLR 258
(1970) 44 ALJR 157
(1995) 185 CLR 83
(1969) 121 CLR 342
(1995) 56 FCR 588
(1999) 168 ALR 318