Cleary Brothers (Bombo) Pty Ltd v Waste Recycling & Processing Service of NSW

[2007] NSWSC 1389

CITATION:	Cleary Brothers (Bombo) Pty Ltd v Waste Recycling & Processing Service of NSW [2007] NSWSC 1389
HEARING DATE(S):	26 November 2007
JUDGMENT DATE :	30 November 2007
JUDGMENT OF:	Biscoe AJ
DECISION:	1. Judgment for defendant; 2. Plaintiff to pay defendant's costs of proceedings.
CATCHWORDS:	CONTRACT- implication of term - operating agreement for waste transfer station - third party injured when fell over guard rail that was too low - whether owner of waste transfer station under implied contractual obligation to operator to ensure that its design was adequate to ensure its safe operation - whether operator separately agreed to indemnify owner against liability re injured third party.
CASES CITED:	Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Liverpool City Council v Irwin [1977] AC 239 Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276
PARTIES:	Cleary Brothers (Bombo) Pty Limited (Plaintiff) Waste Recycling & Processing Service of NSW (Defendant)
FILE NUMBER(S):	SC 6180/05
COUNSEL:	Mr R R Stitt QC and Mr N J Owens (Plaintiff) Mr P W Taylor SC and Mr A C Scotting (Defendant)
SOLICITORS:	Alvaro Edwards (Plaintiff) General Insurance Law Department (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BISCOE AJ

30 November 2007

6180/05 CLEARY BROTHERS (BOMBO) PTY LTD v WASTE RECYCLING & PROCESSING SERVICE OF NSW

JUDGMENT

1 HIS HONOUR: This is a claim by the plaintiff Cleary Brothers (Bombo) Pty Ltd (Cleary) against the defendant Waste Recycling & Processing Service of NSW (Waste) for damages for breach of contract. The damages claimed are in an amount equivalent to an indemnity in respect of damages, interest on damages and legal costs paid by Cleary pursuant to a judgment against Cleary and Waste in proceedings brought against them by a Mr Meafou.

BACKGROUND

2 Waste owns a waste transfer station (Transfer Station) in Artarmon. Since 1994, the Transfer Station has been operated by Cleary pursuant to a written agreement dated 27 May 1994 (1994 Agreement).

3 On 16 September 2000, Mr Meafou was unloading waste into the waste pit at the Transfer Station when he fell over a guard rail along the edge of the platform and into the waste pit itself. Mr Meafou suffered injury as a result of his fall.

4 On 14 November 2001, Mr Meafou commenced proceedings against Waste.

5 On 29 January 2002, Waste’s solicitors wrote to Cleary as follows:

The Plaintiff, Sonny Meafou alleges that he was injured at Artarmon Waste Recycling and Transfer Station on 16 September 2000 because of negligence by my client.

Pursuant to the Artarmon Waste Recycling and Transfer Station Contract, the Operator, your company, is required to indemnify my client in respect of all actions arising out of personal injury.

My client requests an indemnity pursuant to the contract and requests that you take over the conduct of the defence of this matter. My client will bear its own costs to date if that offer is accepted within 28 days.

I enclose a copy of the Statement of Claim and Statement of Particulars for your information.

I recommend that you refer this letter to your public liability insurer immediately.

Please ensure they get in touch with me within 28 days, or I will have no alternative but to either issue a cross claim joining your company to the proceedings, or tell the Plaintiff about the contractual indemnity.

6 On 20 February 2002, Cleary’s solicitors replied stating:

We are instructed that our client will provide an indemnity to your client, pursuant to the contract. We will shortly be filing a Notice of Change of Solicitor.

We note that your client has agreed to bear its own costs to date.

We would be grateful if you would forward to us all information in your possession which may be of assistance in the defence of this claim.

7 On 20 March 2002 Cleary’s solicitors again wrote to Waste’s solicitors stating:

We refer to the above matter and enclose, by way of service, Notice of Change of Solicitor filed on 1 March 2002.

In order for us to defend this claim, we would be grateful if you could forward your client’s complete file to us.

8 On 29 May 2002 Cleary’s solicitors wrote to Mr Meafou’s solicitors stating:

We confirm that;

1. We are instructed by Cleary Brothers (Bombo) Pty Limited.
2. As at 16 September 2000, our client was contracted by the Defendant to operate the Waste Transfer Station where your client’s accident occurred.
3. Pursuant to the contract, our client has agreed to indemnify the Defendant and we have therefore entered an Appearance on their behalf.

We confirm our request that you amend the Statement of Claim to join our client as a Defendant with our consent. We confirm that we will accept service of this on behalf of our client.

9 On 1 July 2002, Mr Meafou joined Cleary as an additional defendant to the action. His Amended Statement of Claim pleaded virtually identical particulars of negligence against each defendant as follows:

(1) Failing to have an adequate guard rail to prevent persons using the Waste Transfer Station from falling over the top of the rail whilst throwing rubbish into the pit.

(2) Having a guard rail that was too low to the ground.

(3) Having in place a guard rail which contained gaps.

(4) Allowing a damaged rail to remain in place exposing persons using the Waste Transfer Station to danger.

(5) Failing to replace a damaged rail.

(6) Failing to replace the rail after earlier accidents and/or incidents.

(7) Failing to warn persons using the Waste Transfer Station of the dangers posed by the inadequate and damaged rail.

(8) Failing to place a sign warning of the danger.

(9) Failing to ensure that any persons or corporations that it contracted the operation of the Waste Transfer Station to provided for the safety and welfare of persons, including the Plaintiff, using the Waste Transfer Station.

10 On 13 August 2002, Cleary and Waste commenced a cross-claim against Mr Meafou's employer, Better Home Removals Pty Ltd.

11 Following a trial, Puckeridge DCJ found Waste and Cleary liable for Mr Meafou's injuries and dismissed the cross-claim. His Honour relevantly held:

I find that the plaintiff, whilst unloading material from the back of the truck, lost his grip on the material, fell backwards and over the railing and into the pit. That, I consider, was the sole cause for him falling into the pit, namely the height of the railing, which was insufficient to prevent him from falling into the pit.

There was a clear duty on the first and second defendants to persons unloading vehicles at the pit to take reasonable steps to prevent persons falling into the pit during such unloading operations. The very presence of railing is evidence that the first and second defendants were aware of the duty of care owed to persons coming into the waste station. On the evidence before me, the railing was not at such a height which would prevent persons, including the plaintiff, from falling into the pit whilst unloading waste material from vehicles…

I find that the first and second defendants breached the duty of care, which they owed to the plaintiff, in failing to have the railing at a sufficient height to prevent him from falling into the waste pit in the course of unloading operations.

12 His Honour also found that he was not satisfied that the railing was damaged or bent and that Mr Meafou’s earlier head injury did not contribute to his fall.

13 Thus, Mr Meafou succeeded solely on the basis of paragraph (2) of his pleaded particulars of negligence: having a guard rail that was too low to the ground. The evidence before me establishes that the railing was not altered between the time of construction (prior to the 1994 agreement) and the time of Mr Meafou’s accident. Waste concedes that there is an issue estoppel arising from the District Court judgment that the insufficient height of the rail was a reason for the fall. In my opinion, it has been established that the insufficient height of the rail as designed was the reason for the fall.

14 Immediately following Puckeridge DCJ’s judgment on quantum on 23 February 2004, the transcript records counsel for the defendants raising a potential problem of conflict which he prefaced with the words “Your Honour will remember the plaintiff’s case has always been damaged rail”. That was incorrect, as was common ground before me, in that the pleaded particulars of negligence also went to a number of other matters, including the one on which the plaintiff succeeded, namely, that the rail was too low. Counsel shortly thereafter continued: “…there is now a potential problem. Because the contractual indemnity that exists between both defendants operates it appears as to only in circumstances where the rail is damaged not if the premises are in an undamaged state…Having made that finding it appears that the contractual indemnity may not then have operated, therefore, the situation is that there may now and probably is now, a potential conflict between the first and the second defendants…”

15 Cleary and Waste were ordered to pay $313,532.00 in damages to Mr Meafou plus interest and to pay Mr Meafou's costs. The Court of Appeal affirmed the order as to damages and increased the order as to costs by including some indemnity costs.

16 The liability of Cleary and Waste just described was paid by Cleary alone. In particular, Cleary paid Mr Meafou the sum of $320,532.00 as damages (including $7,000 as interest on damages) and the sum of $265,000.00 on account of costs.

THE ISSUES

17 Cleary claims that it was an implied term of the 1994 Agreement that Waste would ensure that the design of the Transfer Station was adequate to ensure its safe operation, and that Waste breached the term. Waste denies the alleged implied term and breach. Alternatively, Waste contends that, regardless of the terms of the 1994 Agreement, in early 2002 Cleary agreed to indemnify Waste against Mr Meafou’s claim in correspondence between the parties’ solicitors set out above (2002 Indemnity Agreement).

18 The following provisions of the 1994 Agreement are relevant:

G-1 FACILITIES PROVIDED BY THE WASTE SERVICE
G-1.1 For the purposes of this Agreement the Waste Service shall provide to the Operator the waste recycling and transfer station situated at Lancely Place, Artarmon…

G-2 OPERATOR’S OBLIGATIONS
Subject to any explanation, limitation or expression hereinafter contained, the Operator shall:
G-2.1 Staff the transfer station with sufficient competent personnel to conduct the operation as specified herein.
…
G-2.7 Perform its duties which are necessary and proper for the efficient operation of the transfer station as specified hereunder.
…
G-6 PROTECTION OF PEOPLE AND PROPERTY
G-6.1 Insofar as compliance with the requirements of the Agreement permit, the Operator shall –
(a) provide all things and take all measures necessary to protect people and property;
(b) avoid unnecessary interference with the passage of people and vehicles;
(c) Prevent nuisance and unreasonable noise and disturbance.

G-7 CARE OF THE TRANSFER STATION AND REINSTATEMENT OF DAMAGE
G-7.1 Care of the Facilities under the Contract
From and including the date of commencement of the obligations under the contract to the date of the conclusion of the contract as stated herein or as extended by agreement between the parties, the Operator shall be responsible for the care and maintenance of the transfer station including all equipment, machinery, buildings, offices and all facilities and shall keep all items in good order and condition, and operational where applicable, throughout the currency of the contract. In respect of any machinery or equipment or movable item the Operator shall be responsible for the safe storage and custody thereof.
G-7.2 Refurbishment/Replacement
The Waste Service shall be responsible for the refurbishment and/or replacement from time to time as necessary of major items of compaction equipment; and the said refurbishment and/or replacement shall be carried out by the Waste Service at mutually agreeable times with the Operator. The Waste Service undertakes that it will use all reasonable efforts to minimise any disruption to the operation of the transfer station consequent upon any such refurbishment and/or replacement but the Waste Service shall not be liable for any loss expense or damage suffered by the Operator consequent upon any such refurbishment and/or replacement and the Waste Service shall not be liable for any loss expense or damage which may be suffered by the Operator consequent upon any break-down by any of the items or compaction equipment or components thereof which may lead to the requirement for such refurbishment or replacement.
G-7.3 Reinstatement
If loss or damage (except loss or damage which is the direct consequence, without fault or omission on the part of the Operator, of an Excepted Risk defined in the subsequent clause) occurs to anything while the Operator is responsible for its care pursuant to the terms and conditions hereof, the Operator shall at the Operator’s own cost promptly make good the loss or damage to the satisfaction of the Waste Service.
G-7.4 Excepted Risks
…
(f) Defects in the design of the transfer station and materials and equipment as specified herein other than a design in any materials and equipment provided by the Operator.

G-8 DAMAGE TO PERSONS AND PROPERTY OTHER THAN THE TRANSFER STATION

G-8.1 Indemnity by Operator
The Operator shall indemnify and keep indemnified the Waste Service and the Government of the State of New South Wales from and against all suits, actions, claims, demands, damages, proceedings, losses, compensation, costs (including solicitor and client costs), charges and any expenses whatsoever which the Waste Service or the said Government may become liable to pay, suffer or bear on account of loss, damage, accident or injury suffered or sustained (whether in body or property or otherwise) by any person, firm, corporation or statutory body whosoever or whatsoever arising out of or as a consequence of any act or omission of the Operator PROVIDED that such indemnity shall not extend to any claim for loss, damage, accident or injury or to any liability for costs, charges and expenses in respect of any such claim arising wholly from any wilful or negligent act or omission on the part of the Waste Service or its servants, agents, employees or contractors.

…

G-22 STATUTORY REQUIREMENTS
G-22.1 The Operator shall comply with all requirements of
(i) Acts of the Commonwealth,
(ii) Acts and ordinances of New South Wales,
(iii) Ordinances, regulations, by-laws, orders and proclamations under the acts and ordinances,
(iv) Licences issued by the Environment Protection Authority, the Water Board and any other authorised body
(v) persons acting in the exercise of statutory powers enabling them to give directions affecting the operation of the transfer station.

G-22.2 If a requirement is at variance with a provision of the Contract, as soon as the Operator discovers the variance the Operator shall notify the Waste Service in writing specifying the difference. If a requirement necessitates a change to the operation of the transfer station or method of operation of the transfer station as may be specified in the Contract, the Waste Service shall order a variation to the terms of operation and to the terms of payment. Any dispute relating to a variation shall be dealt with in accordance with Clause G-28 of this Agreement.
…

S-7.13 Safety
At all times during the operation of the transfer station, the safety of members of the public and employees and the protection of their health shall be paramount.
The Operator shall ensure that small vehicles tip only where barricades are in place.
The Operator shall also ensure that the requirements of the Occupational Health and Safety Act are met and shall prepare and have in place at all times a documented Occupational Health and Safety plan, setting safety targets and plans as to how these are to be achieved.

…

S-7.13.3 Operating Procedures
The Operator shall ensure that all operating procedures and work practices used or developed for use in the operation of the transfer station are safe and do not constitute a risk to persons disposing of waste, or vehicles used to transport waste, or to his employees or to any other person.

…

S-8.4 Maintenance by the Waste Service
S-8.4.1 Signs & Notices
Signs shall not be altered in any way by the Operator. However, recommendations regarding signage should be forwarded to the Waste Service. Signs will be manufactured, installed and maintained by the Waste Service.

19 The sole basis on which Cleary presses its claim against Waste is as pleaded in paragraphs 17 and 21 of its Statement of Claim, as follows:

17. It was a term of the Agreement that Waste Services would ensure that the design of the Transfer Station and its materials and equipment were adequate to ensure the safe operation of the Transfer Station.

Particulars
This terms is implied from the agreement as a whole and is necessary to give business efficacy to the Agreement.

21. Waste Services breached the term of the agreement set out in paragraph 17 above.
Particulars
The railing surrounding the waste pit was defective in its design.

20 Cleary does not press its pleaded claim for indemnity or contribution pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), conceding that it adds nothing to its contractual claim.

21 In summary, Cleary submits that:

(a) the proposed term should be implied because the 1994 Agreement draws a clear distinction between the static condition of the premises, including its design, for which Waste was responsible (cll G-1.1, G-7.2, G-7.4(f), proviso to cl G-8.1), and the dynamic operation of the premises for which Cleary was responsible (cll G-2.1, G-2.7, G-7.1, G-7.3);
(b) there was a breach of the proposed implied term because the height of the rail was a design defect and Waste thereby failed to ensure that the design of the transfer station was adequate to ensure its safe operation;
(c) it is not liable to indemnify Waste under cl G-8.1. Mr Meafou’s claim and Cleary’s liability for that claim did not arise out of or as a consequence of any act or omission of Cleary but arose wholly from a negligent act or omission on the part of Waste because:
(i) the defendants were found to be negligent because the rail was too low;
(ii) the rail was too low because of the negligent act or omission of Waste in designing it that way;
(iii) Cleary’s liability to Mr Meafou arose solely because it was the occupier of the premises and not because of any act or omission on its part.

22 There is no express provision in the 1994 Agreement for any indemnity by Waste in favour of Cleary, in contrast to cl G-8.1 which provides for an indemnity by Cleary in favour of Waste. There is no claim by Cleary that any indemnity by Waste in favour of Cleary should be implied. Rather, Cleary seeks to achieve the same result by contending that the pleaded design safety term is implied because of the asserted static/dynamic dichotomy in the 1994 Agreement.

23 The implied term pleaded in paragraph 17 of the Statement of Claim is particularised as one implied “from the agreement as a whole and is necessary to give business efficacy to the agreement”. There are five conditions for satisfaction of an implied term necessary to give business efficacy to a particular contract: (1) the implication must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; (3) it must be so obvious that it goes without saying; (4) it must be capable of clear expression; and (5) it must not contradict any express term: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422, 441, 451. As to condition (3), “Unless it can be said that both parties would have consented to its inclusion, a term cannot be implied”: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 241.

24 Cleary suggested in oral submissions that the pleaded implied term may be of a different species, namely, a term implied from the nature of the contract. No authority was cited. Such a species of implied term is imposed by law as a legal incident of a particular type of contract of which Liverpool City Council v Irwin [1977] AC 239 is an example: Byrne (above) at 451; Con-Stan above at 237. The nature of a contract may be such that it is necessary to imply a term which imposes an obligation on one party where, without it, it is not possible for the other party to exercise or enjoy its rights under the contract. I can see no basis for an implication of that type in the present case. On analysis, I consider that Cleary’s pleaded implied term must satisfy the five conditions for satisfaction of the pleaded business efficacy implied term. Cleary’s submissions did not directly address the conditions.

25 One of those conditions is that the term must be so obvious that it goes without saying. In my view, the pleaded term does not satisfy that requirement. It is not so obvious that both parties would clearly have agreed to its inclusion in the 1994 Agreement had they directed their minds to it at the time they concluded their bargain. The term said to be implied is adverse to the interests of Waste. An implication which may be regarded as obvious by a party having the benefit of it, may not be so regarded by the party adversely affected. Unless it can be said that both parties would have consented to its inclusion, the term cannot be implied. Negotiations might have yielded any one of a number of alternative provisions, or none. The 1994 Agreement is a detailed, comprehensive and apparently complete commercial contract. It is difficult to accept an inference that both parties intended to include such a rigorous and uncompromising term adverse to Waste.

26 The dynamic/static dichotomy for which Cleary contends does not, in my opinion, lead to the conclusion that the said condition is satisfied, even if the dichotomy (contrary to my view) is not blurred or confounded. It is fair to say that several terms of the 1994 Agreement provide some support for that dichotomy. As to the static role of Waste, cl G-1.1 provides that Waste shall “provide to [Cleary]" the Transfer Station. As to the dynamic (operating) role of Cleary, cl G-2.1 provides that Cleary is required to “staff the transfer station with sufficient competent personnel to conduct the operation as specified herein", cl G-2.7 requires Cleary to “perform its duties which are necessary and proper for the efficient operation of the transfer station as specified hereunder”; and cl G-7.1 provides that Cleary is responsible for the “care and maintenance” of the Transfer Station. Although cl G-7.3 provides that should the Transfer Station be damaged in any way while Cleary is responsible for it, Cleary must make good the loss or damage suffered, that is subject to an exclusion in cl G-7.4 for damage to the Transfer Station caused by “defects in the design of the transfer station and materials and equipment as specified herein”.

27 However, the static/dynamic dichotomy is blurred, indeed confounded, by other considerations. First, there are provisions which impose large safety obligations on Cleary which appear to cut across such a dichotomy. Clause G-6.1 requires Cleary to “provide all things and take all measures necessary to protect people and property”. Clause G-22.1 requires Cleary to comply with all statutory requirements. Clause S-7.13 provides that Cleary shall ensure that the requirements of the Occupational Health and Safety Act 2000 are met and shall prepare and have in place a documented Health and Safety Plan. Secondly, there are differing and detailed regimes governing physical damage to the premises (cl G-7) and public liability risks (cl G-8) which are inconsistent with the generality of the unqualified proposition that Waste was responsible for the static conduction and Cleary was responsible only for dynamic or operational matters.

28 The proposed implied term must also be necessary to make the contract work. I am unable to accept that it satisfies that condition. The 1994 Agreement is capable of sensible operation in the absence of the proposed implied term. The work that Cleary seeks to make the term do is to indemnify Cleary against liability to a third party, but that is not necessary to make the contract work.

29 The proposed implied term must also not contradict any express term of the contract. The amplitude of the design safety obligation under the proposed term seems to me to be such as to make it contradict express safety terms. In particular, cl G-6.1 which obliged Cleary to “provide all things and take all measures necessary to protect people and property”; and cll G-22 and S-7.13 which obliged Cleary to ensure that the requirements of the Occupational Health and Safety Act 2000 were met and to have in place a documented Occupational Health and Safety plan.

30 Further, if Cleary would be liable to indemnify Waste under cl G-8.1 in relation to any liability of Waste for Mr Meafou’s claim, then the proposed implied term would also effectively contradict that express term. In my opinion, Cleary would be liable to indemnify Waste under cl G-8.1 in relation to any such liability, for the following reasons. The words in the main part of cl G-8.1, “arising out of or as a consequence of” any act or omission of Cleary, indicate a lenient causal connection. Cleary pleads in its Statement of Claim paragraphs 9 and 10 that it (as well as Waste) breached its duty of care to Mr Meafou and that Mr Meafou’s loss and damage was caused by its negligence (and the negligence of Waste). Puckeridge DCJ found that there was a duty on Cleary, as well as on Waste, to persons unloading vehicles at the pit to take reasonable steps to prevent persons falling into the pit, and that they breached their duty of care. Those circumstances are sufficient, in my view, to permit the conclusion that Mr Meafou’s claim, in the language of cl G-8.1, is one “arising out of or as a consequence” of an act or omission of Cleary and was not in respect of a claim “arising wholly from any wilful or negligent act or omission on the part of” Waste. It is submitted for Cleary that cl G-8.1 is not concerned with liability of the parties as between them and a third party claimant, but only with the contractual arrangements between the parties. I am unable to accept that construction. Clause G-8.1 is, I think, concerned with the former.

31 Even if Cleary’s contention is correct that it has no obligation to indemnify Waste under cl G-8.1, it is difficult to see how that assists Cleary in the circumstances of the present case. Waste is not seeking to enforce Cleary’s cl G-8.1 indemnity. The proviso to Cleary’s indemnity does not automatically translate to an implied contractual indemnity by Waste in favour of Cleary where the circumstances of the proviso apply. Nor does Cleary contend for any such implied indemnity. The circumstances of the proviso are not congruent with, and do not appear to support the implication of, Cleary’s pleaded implied term, which is an absolute warranty by Waste concerning design safety.

32 For these reasons, I do not accept Cleary’s claim.

SECOND ISSUE: 2002 INDEMNITY AGREEMENT

33 In case I am in error in that conclusion, I will consider Waste’s alternative contention that, in any event, it is not liable because in 2002 Cleary agreed to indemnify Waste against Mr Meafou’s claim under the 2002 Indemnity Agreement, which is evidenced by the letters that passed between the solicitors for Cleary and Waste, set out above at [5] – [6].

34 The only issue is one of construction. Cleary submits that, on the proper construction of the 2002 Indemnity Agreement, it did no more than confirm that Cleary would provide an indemnity if Cleary was obliged to do so under the 1994 Agreement and that as Cleary is not obliged to provide an indemnity under the 1994 Agreement, the 2002 Indemnity Agreement does not assist Waste.

35 The terms of the 2002 Indemnity Agreement are to be determined by what a reasonable person in the position of the parties would have understood them to mean, which requires consideration, not only of the text of the document, but also the surrounding circumstances known to both parties at the time the contract was entered into and the purpose and object of the transaction: Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276 at [38] – [39], [215].

36 Mr Meafou’s Statement of Claim and Statement of Particulars enclosed with Waste’s letter of offer of 29 January 2002 put Cleary on notice of the details of Mr Meafou’s claim. Under the 2002 Indemnity Agreement, Waste surrendered the conduct of its defence to Mr Meafou’s claim and agreed to bear its costs to date. Under the 1994 Agreement, Cleary had no right to conduct Waste’s defence to Mr Meafou’s claim. As Waste submits without contest, Waste and Cleary would have had no interest in ventilating in Mr Meafou’s proceedings the factual matters under the indemnity in the 1994 Agreement for that could only assist Mr Meafou’s case. In those surrounding circumstances, Cleary purchased the right to conduct Waste’s defence.

37 Waste’s solicitors’ letter of 29 January 2002 asserted that pursuant to the agreement Cleary is “required” to indemnify Waste. The request in the next paragraph for “an indemnity pursuant to the contract” should be interpreted, in my view, as a request for agreement that Cleary’s indemnity obligation had been triggered under the 1994 Agreement. That acknowledgement was provided in Cleary’s solicitors’ reply of 20 February 2002 that Cleary “will provide an indemnity to your client, pursuant to the contract”. The phrase “pursuant to the contract” did not mean, in my opinion, that Cleary would provide an indemnity if the 1994 Agreement required it in light of the facts as finally determined. It would take much clearer language to persuade me that that was intended. Cleary could not in conscience have undertaken the conduct of Waste’s defence without making that clear. In my opinion, a reasonable person in the position of the parties would interpret these communications as meaning that they agreed that Cleary’s indemnity obligation under the 1994 Agreement had been triggered.

38 Consequently, I uphold Waste’s alternative contention based on the 2002 Indemnity Agreement.

39 For these reasons, there will be judgment for the defendant. The plaintiff is to pay the defendant’s costs of the proceedings. The exhibits may be returned.