Deverson v Sherrin & Ors No. DCCIV-96-1662 Judgment No. D23

DEVERSON v M J SHERRIN PTY LTD; M J SHERRIN PTY LTD v DEVERSON & EXECUTOR TRUSTEE AUSTRALIA LTD (Third Party Claim)
[1999] SADC 23

Judge Lunn
Civil

The plaintiff sues under Section 19 of the Wrongs Act 1936 for damages on behalf of herself and her son, Adam, arising out of the death of her late husband, Trevor John Deverson. It is agreed that the plaintiff is to recover 85% of her damages. The defendant has brought third party proceedings against the plaintiff and Executor Trustee Australia Ltd as the joint executors of the estate of the deceased seeking an indemnity from the estate against any damages which it is liable to pay to the plaintiff.

Background facts

The deceased was born on 24 April 1943. In his later teens he completed an apprenticeship as an electrician, but he earned his living as a window cleaner doing sub-contract work for his father who carried on a business under the name of “Window Cleaners Co”. While working as an electrician he had suffered an accident in which he permanently lost the sight in one eye. He was actively involved in a number of sports, and always remained enthusiastic about sport.

The plaintiff was born in 21 March 1947. She married the deceased on 24 June 1967. There were two children of the marriage, being Scott, who was born on 9 November 1970, and Adam, who was born on 24 April 1976. It was a happy and successful marriage. Upon their marriage the plaintiff and the deceased bought a house at Henley Beach and in 1975 bought a better house at Grange. The deceased took an active interest in the education, sporting activities and general upbringing of his sons and was a good father to them.
In 1975 the deceased bought his father’s business of “Window Cleaners Co”, and thereafter remained its sole proprietor until his death. The business prospered and employed various casual labour. From 1975 until July 1993 the business was conducted from an office at the family home at Grange. Thereafter, it was run from an office at Hendon which was rented for $3,640 per annum. The plaintiff did some secretarial and clerical work in the business which, on average, occupied her for about eight to ten hours each week. She was credited with a significant salary in the books of the business, but it was never paid to her. It appears that she was not treated as a debtor of the business for those wages. She also had part time employment as a doctors’ receptionist and she applied her earnings from that source for her clothes and personal expenses. In the latter years of the marriage the deceased paid her $200 per week for housekeeping which was used mainly for purchasing food. The deceased paid out of his own or the business bank accounts all other household and family expenses including substantial fees for his sons to undertake their secondary educations at Immanuel College. The deceased had some personal expenses for his own sporting interests, clothes and the like, but these were not great. The family lived well. They frequently went on holidays both overseas and within Australia which were often quite expensive.
The deceased had known Mr Ken Cunningham, a well known media sports presenter, for many years. In the late 1970s he commenced to assist Mr Cunningham in his radio programme on 5DN as a roving reporter. This work gradually extended and he became a regular participant in Mr Cunningham’s late afternoon radio drive show and weekend sports broadcasts. In 1989 Mr Cunningham changed to 5AA and that station employed the deceased to assist Mr Cunningham in presenting his programme as a roving reporter and the like. The deceased’s involvement in this work, and his earnings from it, continued generally to increase. His nett income from his radio work was $3,404 in 1990, $2,568 in 1991, $2,604 in 1992, $6,594 in 1993 and $5,031 in 1994 until his date of death which would represent $8,624 for the whole financial year.
In order to obtain some tax benefits through negative gearing, and as investments to provide for his ultimate retirement, in 1988 the deceased bought a home unit at Brooklyn Park for $56,500, for which most of the purchase price was borrowed. In 1990 another unit was bought at Woodville for $80,500 in the name of the plaintiff and most of the purchase price was borrowed. As expected, significant losses were made for tax purposes in renting out these units and the deceased met the shortfall from his own resources. In hindsight they did not prove to be particularly good investments.
In early 1988 the deceased had an operation for some problem with his left arm and he was off work from February to July that year. The evidence was vague about the nature of the problem, but, whatever it was, it did not thereafter noticeably affect his working capacity. Otherwise the deceased’s general health was good.
In March 1993 the deceased and the plaintiff bought a partly built large house at West Lakes for $225,000. The deceased then spent a considerable amount of time sub-contracting out and supervising the work necessary to complete it which work apparently cost well over $100,000. The Woodville unit was sold in April 1993 for $85,000 to assist in the purchase of the West Lakes property. The Grange property was sold for $167,000, but it was not disclosed in evidence what was the nett equity in that house which was available to be applied to the West Lakes house. The family moved into the West Lakes house in September 1993 and spent considerable money in furnishing it. At the deceased’s death about $300,000 was owing to the ANZ Bank on a mortgage on this house, which apparently represented what had been spent on it less the equities received on the sales of the Woodville and Grange properties. Fortunately for the plaintiff, this mortgage was discharged after the death of the deceased by a special life insurance policy taken out in conjunction with the mortgage. The plaintiff and the deceased had intended that their substantial investment in this house would provide for their ultimate retirement. However, in December 1995 that house was sold for only $312,000, which suggests that it had been substantially over-capitalised.
By the end of 1993 the son, Scott, had left home and was no longer dependent upon his parents. The son, Adam, had completed his secondary education at Immanuel College at the end of 1993. With considerable assistance from the deceased Adam had obtained a Rotary Scholarship to live in Germany in 1994. He had no plans as to what he would do in 1995 and onwards. The deceased was to meet Adam’s travelling costs to Germany and significant other expenses attached to the trip. Adam left for Germany a week before the deceased died.
In the course of his window cleaning business the deceased often hired elevated platform vehicles, commonly known as cherry pickers, from the defendant for the purpose of cleaning windows on large buildings. How frequently he hired them was not precisely established in the evidence. He was treated by the defendant as a 30 day account customer. His normal practice was to order the hire of a cherry picker from the defendant by telephone. The driver of the vehicle, who was an employee of the defendant, would have with him an invoice book in which each invoice was in quadruplicate. The invoice for the job would have been partly filled out by the defendant’s office staff before the driver collected the book. At the completion of the job the driver would fill in on the invoice the time occupied by the job. The defendant’s requirement was that the customer should then sign the invoice at the job site, and one copy would be given to him there and then by the driver. This did not always occur. The driver would return the invoice book to the defendant’s office. The staff there would soon after calculate the amount to be charged for the job, enter it on the remaining three copies of the invoice in the book, post one copy of the completed invoice to the deceased and place the other two copies into the records of the defendant. It was the usual practice of the defendant to send a statement to the deceased at the end of each month where there had been transactions in that month showing any balance owing.
The deceased had contracted to clean the outside windows on Exhibition Hall in North Terrace, Adelaide, with the work to commence on Sunday, 23 January 1994 at 7am. A few days beforehand he had rung the defendant and had ordered the hire of a 40 metre cherry picker to enable him to carry out this work. The defendant duly supplied such a cherry picker with an operator/driver. The deceased was in the bucket on the cherry picker arm some distance up the windows of the building and cleaning them. For some reason, which was not disclosed in evidence, the arm of the cherry picker became jammed and could not be lowered by the defendant’s driver. Two employees of the defendant in an attempt to lower the arm, and thereby enable the deceased to alight from the bucket, overrode a Waterman valve, which was a safety device in the elevating mechanism of the cherry picker, which thereby caused the bucket to descend in such a way that the deceased was thrown out and killed. The partly completed invoice for the hire of the cherry picker on that day was never given by the defendant to the deceased or to anyone on his behalf.
The plaintiff and the 2nd third party were appointed jointly to be the executors of the estate of the deceased. The plaintiff carried on the business of Window Cleaners Co as best she could, but sold it as from 1 July 1994 for $57,500. It was sold to a company operated by a friend, Mr Ryan. Precisely how the purchase price of $57,500 was arrived at was not disclosed in evidence. About $10,000 of the purchase price was used to discharge the debt owing on a Subaru utility which was used in the business. There was also a Fiori motor car which was a business asset which in effect had been used by the deceased as his personal car while the plaintiff used a Rover car which was the family car. Ultimately the plaintiff traded in both the Rover and the Fiori cars on another car which she still uses. The Brooklyn Park unit was sold and there was a nett realisation for the plaintiff of about $6,000. In 1996 the plaintiff moved to Queensland where she bought a house in which she still resides. Until she went to Queensland she continued her part time employment as a doctors’ receptionist, but since she has been in Queensland she has found it difficult to obtain similar permanent work. Since the death of the deceased she has not had any romantic associations with men and was adamant that she had no intention of ever remarrying. She has had some significant health problems herself in recent times, but it appears as if she is now in good health.
After his father’s death Adam immediately came back from Germany, but he returned there in March. He cut short his stay in Germany in November 1994. Soon after he came back to Adelaide he found employment as a hotel porter and has since forged a successful career for himself in the hotel industry. His career path necessitated him moving interstate and he now has a good position as an assistant manager of a large hotel in Bondi in New South Wales.

Deceased’s nett earning capacity

The plaintiff’s accountant, Mr Kennedy, calculated that the maintainable profit from the deceased’s window cleaning business as at the date of his death was $51,675 per annum. The defendants’ accountant, Mr McPharlin, calculated it as only $37,918. The four differences between their calculations were on the following topics:

1...... Whether interest paid on the finance for vehicles should be added back in? I accept Mr McPharlin’s opinion that it should not have been disregarded. If the deceased had lived and continued the business, it is likely from its previous history that similar ongoing interest commitments would have been incurred as equipment was replaced. While it may be usual valuation practice to disregard such interest, I am not valuing the business, but assessing the likely loss to the deceased’s dependents.

How the income generated by the business was to be taxed in the hands of the deceased and the plaintiff? It was not a partnership. The practice of the deceased was to allocate substantial wages to the plaintiff which were tax deductible to him, but were assessable in her hands. As the plaintiff only worked on an average of ten to twelve hours each week the amounts allocated to her for wages were a substantial overpayment for what she actually did and earned. I do not accept her opinion that she was not over paid. In their calculations both accountants assumed that a reasonable salary for the plaintiff for her work in the business was $10,000 per annum. It was not expressly established that $10,000 was a reasonable and proper wage for the work which she did, but on the evidence, sparse as it is, I accept that $10,000 per annum is the maximum which was reasonable in the circumstances for the work which she did. I accept the view of Mr McPharlin that s65(1) of the Income Tax Assessment Act 1936, which empowers the Commissioner to reduce a deduction claimed for wages to a spouse to a reasonable amount, is to be applied to limit the wages allocated to the plaintiff for the purposes of the present exercise, even though the Commissioner had not previously taken any point under s65 concerning the deductions which were claimed for greater wages for the plaintiff.

The tax rate to be applied to the income of the business in the hands of the deceased and the plaintiff? There is no reason to depart from what had always been the practice of treating the income of the deceased from the partnership as his primary income and his income from his radio work as being taxable on the applicable tax scale after the primary earnings had been brought into account and for treating the income of the plaintiff from her employment with the medical practice as her primary income and her wages from the deceased as being on top of that income.

Whether the business income was to be averaged over the previous five years or only over three years? This was the major difference between the accountants. Mr Kennedy worked on an average over the previous five years as that is usual accounting practice. Mr McPharlin said it should only be over the immediate three previous years because a significant permanent decline had started to operate in the last few years and that trend was negated by pushing the period for averaging out to five years. The income and the profit for the window cleaning business for the five financial years up to 30 June 1994 were as follows:

Year  Income  Nett Profit
1990  $117,822  $45,476
1991  $139,941  $47,487
1992  $120,370  $27,674
1993  $ 96,812  $20,649
1994  $105,342  $22,141

The plaintiff attributed the decline in the latter years to a general tightening of economic conditions after 1992 which caused the customers of the business to cut down on their expenses such as window cleaning and not to have their windows cleaned as often as previously. While I accept there is some truth in this, it is not the major explanation for the decline as neither accountant, who would be expected to have been familiar with the general economic conditions, placed reliance upon it.

Mr Kennedy sought support for his position from the price paid by the purchaser of the business in June 1994. On a three year average the price paid represented a price earnings multiple of about 23 whereas on a five year average it was about 7. The usual ratio on the sales of such businesses is about 5. However, I do not place much weight on this. It is not clear that the sale was an entirely arms’ length transaction and other factors may have influenced the price. Neither the purchaser’s controller Mr Ryan nor Mr Orchard, the accountant who negotiated the sale for the plaintiff, were called. It may well be, as was suggested by Mr McPharlin, that Mr Ryan paid a premium to get a business in which he could be his own boss, or that he did not do his sums properly or he was acting on figures other than those which were before the accountants here.
Mr Kennedy also suggested that the business may have been cyclical with downturns every five years or so, but there is no evidence of it and I reject it. Likewise he raised the possibility of “cash sales”, but there is no evidence of it. The matter is to be judged on what was disclosed in the income tax returns: Giorginis v Kastrati (1988) 49 SASR 371.
The opinions of the accountants were confined to the deceased’s income from the window cleaning business. They did not consider his other activities, but there are two factors from those other activities which are of considerable significance. The first is that the deceased’s income from his radio work increased substantially in the 1993 and 1994 financial years, as set out above. In 1993 it was over twice what it had been in each of 1991 and 1992 and in 1994 it would have been over three times what it had been in each of 1991 and 1992. As there is no suggestion that there was any significant increase in the rate at which he was being paid for this radio work, it must mean that in the 1993 and 1994 years he spent much more time in his radio work than he had in earlier years. As he was always a busy person I find that as the radio work increased he spent less time in the window cleaning business which resulted in the income of that business being less than it was in the earlier years when he was not devoting so much time and effort to his radio work.
The second factor was the time and effort which the deceased spent in the completion of the West Lakes house between March and September 1993, and probably somewhat beyond that date. If he had not spent this time on the new house, it would to some significant degree have increased the time which he could have spent in the window cleaning business. It is unknown whether if the deceased had not increased his radio work, and had not worked on the house in 1993 and 1994 years, he would have been able to have used that extra time to increase the turnover in the window cleaning business. I accept that it would have increased that business to some extent, but not necessarily to its previous levels of turnover. These factors take much of the sting out of the points which led Mr McPharlin to conclude that there was a permanent and irreversible decline in the window cleaning business between the 1992 and 1994 years. I do not wholly accept either accountant on this point.
The deceased’s earning capacity at his date of death is to be assessed as a totality of his earning capacities in the window cleaning business and in the radio work without separating them. I find that as at the date of his death he had a nett earning capacity from these sources of about $36,000 per annum, which is over and above a proper allowance for the plaintiff’s contribution to the window cleaning business. This is about $692 per week. It is also necessary to have regard to the financial benefits of his services as a handyman around the home and his ability to do his own electrical work. There was no evidence about what it would have cost to have had such work done by other people and I make a general allowance for it in the award.

Proportion of income available for the dependents

Although there was no direct evidence about it, from late 1993 there was a mortgage of about $300,000 over the West Lakes house which would have had to be serviced wholly out of the deceased’s income if he had survived. However, his significant liability for the college fees for his children had ceased at the end of 1993. Adam would have continued to be financially dependent upon him until after his anticipated return from Germany early in 1995, and then for whatever period it took him to obtain employment and become self-sufficient. As events transpired he became self-supporting early in 1995. It is likely that the plaintiff would have continued her part time employment as a receptionist. Thus she would have had some income of her own and would not have been wholly dependent upon what she received from the deceased. He had no expensive hobbies or other major financial commitments which would have precluded him from applying a major part of his income for the benefit of his family. It is impossible to be precise, but it is likely that he would have applied something between 65% and 70% of his available nett income for the benefit of the plaintiff and Adam while they both remained dependent upon him and then for the plaintiff after Adam became independent.

Past loss

It is now just over five years since the death of the deceased. His radio work would probably have continued while Mr Cunningham continued to be the main presenter of the sports programmes on 5AA and that has continued to trial. There is also some possibility that there would have been an escalation of the deceased’s participation in the radio programmes and his earnings from that source. Some allowance must be made for the contingency of illness or injury of the deceased in this period which would have interfered with his earning capacity, but it appears that he would have been insured against at least some of such loss. As he only had only one good eye he always ran a greater than normal risk of blindness if something happened to that good eye. I assess damages for the past loss at $110,000.

Future loss

It is unlikely that the plaintiff would have voluntarily retired from active employment before reaching 65 years of age. He had made no major financial provision to fund his retirement. The investment strategies which he had pursued in the purchases of the Brooklyn Park and Woodville units and the West Lakes house, which in part were meant to provide for his retirement, had not been particularly successful. The deceased and the plaintiff had planned to retire to Queensland. It is unlikely that they would have so retired if they did not have sufficient income and assets to be able to maintain their reasonably lavish prior lifestyle. Thus the deceased is likely to have worked until about aged 65, and possibly even after this age, although probably then only on a reduced basis.
The deceased’s radio work was likely to have continued while Mr Cunningham ran his sports programme and possibly the deceased’s level of participation and earnings would have increased. If Mr Cunningham retired, or if his contract with the radio station was not renewed, the deceased’s subsequent involvement in radio work was uncertain and unknown. His experience and ability in such work may have stood him in good stead, but he may have been at risk of being superseded by younger people. If his income from radio work ceased or diminished in the future, it is uncertain whether he could have made up for it by increased participation in his window cleaning business.
In relation to the future there are also adverse contingencies about the deceased’s health which are similar to those set out above in respect of the past loss. There are also some positive contingencies which to an extent counterbalance the negative contingencies.
The defendant suggested the contingency that the plaintiff might replace her financial loss from the deceased through support from a new husband or partner. That has not yet occurred and there is no present prospect of it. It is a possibility in the future, but it is remote. Even if the plaintiff does obtain a new husband or partner, there is no guarantee that such person would be able to support her financially to the extent that the deceased would have, or even at all.

Accelerated benefits

The plaintiff was the sole beneficiary in the estate of the deceased. From the estate she received the nett proceeds of the sale of the business of $47,500, about $6,000 from the sale of the Brooklyn Park unit, money in the bank of $1,100, a blastmaster which she sold for $1,600, the Fiori car, which had a depreciated value at the date of death of $6,721, and some other minor items which made her total benefit from the estate about $64,000. It was not suggested that the family home or the Rover car should be taken into account for this purpose. I find that the accelerated benefit to the plaintiff is $39,000. (The case was argued on the basis that this was to be set off against the future loss. I am content to do likewise, although it is also arguable that it should be wholly or partly brought into account against the past loss. In any event it makes no difference as the amount on which interest is to be awarded is not to be reduced because of any collateral benefit to the plaintiff from this source.) The future loss is assessed at $100,000.

Adam’s loss for care and guidance from his father

The cases on this head of damage are conveniently summarised by O’Loughlin J in Bahr v ETSA (1985) 39 SASR 254 at 269-270. However, I do not consider that the allowance on this head can extend beyond the time at which the child would cease to be dependent upon the deceased parent for care and guidance. Just as financial support which may be given by a parent to a child after they cease to be financially dependent upon the parent does not attract an award under s19 of the Wrongs Act, so care and guidance which may be given after the time at which the child ceases to be dependent for it upon the parent does not attract an award. Thus Scott does not have such a claim, although he apparently had a greater current need of paternal care and guidance than did Adam. Certainly Adam could have expected considerable care and guidance from his father during his year in Germany and in establishing a career for himself upon his return. As the loss on this head has all been incurred between the dates of death and trial, I act upon what actually occurred. Adam successfully established a career path for himself and became independent of his parents early in 1995. While he may have found that course easier if he had had the benefit of care and guidance from his father it was not a loss of a long duration. The plaintiff’s counsel suggested that if the deceased had been available to advise Adam after his return from Germany it is possible that he might have undertaken further studies which might ultimately have benefited him, but that was a very remote possibility. The awards made on this head in the reported cases have all involved children much younger than Adam. Damages are assessed on this head at $1,000.

Other heads of damage

It was not disputed that the plaintiff should receive the maximum award for consortium of $4,200. The funeral expenses were agreed at $2,832. A lump sum of $23,130 is assessed in lieu of pre-judgment interest on the past economic loss and the funeral expenses at a commercial rate from the date of death until trial.

Summary of assessment
Past loss  $      110,000
Future loss  100,000
Loss of consortium   4,200
Loss of care and guidance for Adam   1,000
Funeral expenses   2,832
Interest    23,130
Sub total  241,162
less 15% for contributory negligence    36,174
Judgment for  $      204,988

Apart from the assessment for the loss of care and guidance I was not asked to apportion the damages for loss of dependency between the plaintiff and Adam.

Third Party proceedings

Each invoice of the defendant to the deceased which was tendered in evidence had on its face the words: “The client acknowledges that he has read the terms & conditions as set forth overleaf and agrees to accept and be bound by them.”
Clause 2 of the terms overleaf provided:
“2.The Hirer indemnifies M J Sherrin Pty Ltd in respect of any loss, damage, death or injury caused by or in the course of or arising out of the use of the Plant whilst the Plant is on hire to or in the custody of the Hirer, his servants or his agents or other person acting on behalf of the Hirer.”

The only cause of action pursued at the trial by the defendant against the third parties was a declaration that the third parties were obliged to indemnify it out of the estate of the deceased for the damages payable to the plaintiff.

Mr Martino, who had been the general manager of the defendant for many years prior to May 1995, and Miss Wright, who had been employed by the defendant in its office, both said that the deceased had regularly hired equipment from the defendant, although understandably in the absence of any reference to records neither of them could say how many such hiring transactions there had been or when they had occurred. The nineteen invoices given by the defendant to the deceased which were in evidence, and which had all been produced from the records of the deceased, related to hirings between April 1989 and October 1993. The five monthly statements sent by the defendant to the deceased which were tendered in evidence, and which all came from the records of the deceased, related to seven hirings, one of which did not correspond to any of the nineteen invoices. Mr Martino said, and I accept, that when he left the defendant’s employment in May 1995 there were files and records of the defendant either in Adelaide or in Sydney which contained copies of all of the invoices and other documents relating to all of the hirings of equipment by the deceased from the defendant. No such records or files of the defendant were produced by it in evidence and no explanation was offered for its failure to do so. I find that there were more hiring transactions between the deceased and the defendant in the years before his death than were disclosed by the records of the deceased tendered in evidence and that the defendant has records of these other hiring transactions which it has not put before the Court. (Neither party tendered in evidence at the trial any document of discovery which may have been on the Court file which might have related to these records.)
As an account customer of the defendant it is likely that the deceased had many years ago completed an application form to the defendant for credit which the defendant had accepted. Mr Martino said that such an application form from the deceased would have had the same conditions on its reverse side as were on the defendant’s forms of invoice. I reject the contrary evidence of Miss Wright. Mr Martino also said that when he left the defendant in May 1995 that application form from the deceased was in a file kept by the defendant for such application forms. The failure of the defendant to produce that form was not explained. The defendant’s counsel only relied on the oral evidence about this application form as evidence of a consistent incorporation of such terms into documents passing between the defendant and the deceased. However, if such a document existed in the terms alleged, it would have been evidence of a contract to provide credit on those terms, but that was not pleaded or suggested.
The sole ground pursued by the defendant to establish the contractual indemnity was that Clause 2 on the back of the invoices was incorporated into the contract of hire for 23 January 1994 “by reason of the pre-existing relationship between the defendant and Window Cleaners Co and the history of prior dealings between the defendant and Window Cleaners Co such dealings being subject to the conditions of hire identical to those contained in the invoice.” (Para 9 of the Third Party Statement of Claim.)
The contract of hire between the defendant and the deceased for 23 January 1994 was formed a few days beforehand by a telephone order from the deceased and its oral acceptance by Miss Wright on behalf of the defendant. There was no express term in that contract of hire in the terms of Clause 2 or an incorporation the terms of the invoice into the contract. No invoice was delivered for that contract. The indemnity can only be a term of that contract if the defendant shows on the balance of probabilities that it was incorporated as a term of that contract by reason of the prior dealings between the parties.
If the deceased had not died, he presumably would have given material evidence about the terms of the hirings. However, regrettably he is not available and his unavailability is of some prejudice to the third parties in defending the claim. While the absence of his evidence is not a complete bar to the third party claim the evidence of the defendant to establish it is to be treated with caution and it must be carefully scrutinised before it is accepted: see “Cross on Evidence”, Australian edition, loose leaf service para [15,150] and the cases cited there.
I do not find that the invoices were part of the contractual documents in any of the previous hirings of equipment by the deceased from the defendant. The contracts of hire were all concluded orally a day or more before the hiring was to occur. There was never any express reference in the negotiations leading up to any hiring, or otherwise, between the deceased and the defendant to the terms which appeared on the backs of the invoice forms. One or more copies of the invoices were delivered to the deceased after the job was completed. Some, but not all, such invoices were signed by the deceased or his employee, but those signatures were only for the purpose of verifying the hours occupied by the hiring which had been entered by the driver on the face of the invoice and were not intended as an acceptance of the terms on its reverse side.
There was no attempt by the defendant to put forward the contractual conditions which appeared on the backs of the invoices, and which were very much in its favour, when any of the contracts of hire were formed or subsequently to seek to vary those contracts by incorporating those terms into them. The express terms of a contract must be incorporated into it at the time of its formation or beforehand. If the terms had been contained in an order form, or in an application for credit, which had been accepted by the deceased before any hirings were arranged, the legal position would be different, but that did not occur. The defendant’s proffering of the relevant document was always too late. There was no evidence that there was any reference to the terms on the backs of the invoices in any of the dealings between the parties. There was no evidence of any objection taken by the deceased to any such terms, although he was not here to tell us of any. There is nothing to suggest that in any prior dealings between the defendant and the deceased the terms on the backs of the invoices were ever treated as a part of the contractual terms of any contract between them. Thus such terms have neither been part of their previous contracts nor of the contract for the hire on 23 January 1994: Hill v Walter Wright Pty Ltd [1971] VR 749.
Furthermore, the defendant has not proved that any use of the invoices incorporating such a term of indemnity into the earlier contracts was a consistent course of dealing between the defendant and the deceased, which is necessary if such a term is to be incorporated into the last contract from such a course of dealing: McCutcheon v Macbrayne [1964] 1 WLR 125. While all of the invoices produced from the deceased’s records for previous dealings contained the indemnity term, I find, as stated above that there were invoices for other similar transactions for which the defendant had documents which it could have produced but did not do so. I infer that such documents would not have supported the inference of a consistent incorporation of such a term of indemnity: Spence v Dimasi (1988) 48 SASR 526 at 547-8; Sims v Selcast (1998) 71 SASR 142. Thus the incorporation of the indemnity clause into the contract for 23 January 1994 is also defeated on this ground.
Even if as a result of the prior hirings the indemnity term in the invoices otherwise became a part of the contract for hire on 23 January that condition is not part of the contract in law unless the defendant shows that the deceased knew of the actual contents of the terms and not merely of the existence of some terms upon the backs of the invoices: Eggleston v Marley Engineers Pty Ltd (1979) 21 SASR 51; Rinaldi v Precision Mouldings Pty Ltd [1986] WAR 131. As the invoices were only supplied after the hirings were completed, and as there were no disputes about anything related to the subject matter of the terms on the backs of the invoices, there is no reason to believe that the deceased would have paid any particular attention to the small print and legal jargon in the terms. The deceased was not available to deny such knowledge, but on the whole of the evidence the defendant has not proved it on the balance of probabilities. At the best for the defendant it is only as likely as not that he would have ever actually read any such terms.
These findings are sufficient to dispose of the Third Party Notice without dealing with a number of other arguments raised about possible interpretations of the indemnity clause. I need briefly to refer to one such argument, in case it becomes relevant on any appeal, as it involves questions of fact.
The third parties submitted that liability under the indemnity could only arise under clause 2 “whilst the Plant is on hire to or in the custody of the hirer”, and that this condition was not satisfied. “Whilst the Plant is on hire to” the hirer, in the context of the invoice as a whole, only means the period in which the hirer has the control of the use of the cherry picker and that for which there was a liability to pay hire charges. This does not include any period in which the defendant’s employees have resumed control of the vehicle for the purpose of repairing it and making it again fit for the hirer’s use. The period for which the hirer is impliedly liable to pay the hire charges does not include any period in which the vehicle is broken down and not able to perform its proper functions as a cherry picker. As the events which led to the death of the deceased occurred while the cherry picker was broken down and while employees of the defendant were attempting to repair it, they did not occur whilst the plant was on hire to the deceased for the purposes of clause 2. Likewise the cherry picker was not in the custody of the deceased at the time of the events leading to his death, but in that of the servants of the defendant. As Mr Martino conceded it was then under the control of its driver. The Third Party claim also fails on this ground.
There will be judgment for the third parties on the Third Party Notice.

[1999] SADC 23

11 March 1999