Glenmont Investments Pty Ltd v O'Loughlin (No 2)

GLENMONT INVESTMENTS v O’LOUGHLIN & ORS
[2000] SASC 429

Full Court: Doyle CJ, Nyland and Martin JJ

Introduction

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.

Facts - Overview

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.

Bases of Glenmont’s Claims and Judge’s Findings

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.
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:
Mr Foote -  10 per cent
Mr O’Loughlin -                  10 per cent
Mr Parker -  50 per cent
The Society -  30 per cent.

Liability - Foote

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.

Limb’s Credit

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) 73 ALJR 306.
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.”
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”.
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.

Knowledge of lay-flat hose

We deal later with this topic when discussing the refusal of the Judge to permit evidence to be called from Glenmont’s solicitors.

Correspondence with Moomba

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.

Correspondence with Mr Minick

This was an issue of substance involving what the appellants claimed was the concealment by Mr Limb of correspondence unfavourable to Glenmont’s case.
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.
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.
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.”

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.
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.”
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.
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.

The Lamborghini as an asset

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.

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.

Banking of Show proceeds

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.
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”.
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.”
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.
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.
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.

Tarmak Message Book

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:
“George Limb
Went to airport found Ford 5.00 per day
got keys in possession
everything O.K. at showgrounds
O’Loughlin $2,500 got cheque in post certified to house.
Going to start Friday.”
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?”
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.
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

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.
In our opinion, this point is of no significance.

Mr Limb’s evidence concerning his financial position

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.
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.

Professed lack of knowledge of profit

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)
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.
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.

Mr Limb’s knowledge of limitation period

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.”
During cross-examination about why the institution of the proceedings had been delayed, Mr Limb gave the following evidence:
......... “Q.    You didn’t go to Lynch and Meyer until 1991.
A.Yes, I did, close to the six year limit, yes.
......... Q.     You were given advice about a six-year time limit.
A.Yes, I knew that all the time.
......... Q.     You knew that all the time.
A.Yes.”
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.
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.

Theft of working drawings

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)
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:
“Q.... Do you have any design qualifications.
A.No, I did technical drawing at school along with fitting and turning which is in the same area.
Q...... Did you draw up some plans.
A.Yes.
Q...... Do you still have those plans.
A.No.
Q...... What happened to them.
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.”
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...... Did you ever do this.
A.No, it was never required at any stage.
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.”
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

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.
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.

Transfer of dinosaur from Tarmak to Glenmont

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.

Conclusions on credit of Mr Limb

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.
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.
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.
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.
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.

Liability - O’Loughlin and Parker

Section 72 Development Act

It is convenient to deal first with a point raised on appeal, but not pleaded or raised at trial.
Section 72 of the Development Act 1993 (SA) provides as follows:
“(1) If -
(a) building work is defective; and
(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.”
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.
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.
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.
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.
In our opinion s 72 does not apply to the claim by Glenmont against Mr O’Loughlin.
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.
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) 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) 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.”
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.
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.
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.
Accordingly, we reject the submission advanced by counsel for Mr O’Loughlin.

Agreement -Glenmont/O’Loughlin

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’.”
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.”
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.
Q.Anything else said in that conversation.
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.”
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”.
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.
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.
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.
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.
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.
In the circumstances to which we have referred, the finding of the Judge concerning Mr O’Loughlin cannot stand.

Agreement - O’Loughlin/Parker

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.

Events Immediately Preceding Fire

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.
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.”
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.
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”.
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...... Yes.
Q.What happened then.
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’.”
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.
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.

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.

Liability Findings and Challenges

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.”
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.
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.”
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.
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.
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.
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.
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.
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”.
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.
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.
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) 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.
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.
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.
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.”
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.
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.
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.
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.
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.
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.
A.Essentially that would be fairly accurate.”

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’.”

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.

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”.
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.
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.
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.
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.
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.

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.
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) 161 CLR 653 at 659-660, Gibbs CJ and at 677, Brennan J (dissenting).
The claim for loss of profits presents further complications.
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.
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.
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) 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.”
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.

Replacement Cost

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.
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.
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.
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.

Loss of Profits

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.
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) 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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
We are satisfied that his Honour’s figure of $100 million was an unrealistic and erroneous starting point.
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.
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.

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.

Damages - Conclusions

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.

Apportionment

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.

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.
We turn now to the issue of contribution as between Mr O’Loughlin and Mr Parker.
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.
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.
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) 121 CLR 342; Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588 and Hanave Pty Ltd v Lfot Pty Ltd (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.

Costs

451 The Judge awarded costs in favour of Glenmont against each defendant. That order must be set aside as against the Society.

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.
We consider that no error has been shown in the Judge’s approach.
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.
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.
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.
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.
We would not disturb the basis upon which the Judge ordered that costs be paid.

Orders

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.

We will need to hear from the parties on the question of their costs of the appeal.

[2000] SASC 429

20 December 2000