Keane v Caravan City Cowra Pty Ltd

[2008] NSWSC 56

CITATION:

Keane v Caravan City Cowra Pty Ltd [2008] NSWSC 56

HEARING DATE(S):

29 May 2006-2 June 2006, 5 June 2006-8 June 2006, 14 August 2006-17 August 2006, 11 September 2006-15 September 2006, 19 September 2006.

 
JUDGMENT DATE : 

8 February 2008

JURISDICTION:

Common Law

JUDGMENT OF:

Rothman J

DECISION:

(i) The defendants are jointly and severally liable in negligence to the plaintiff for the damage suffered by the plaintiff on 21 March 1999 at the premises of Caravan City Cowra Pty Limited.

(ii) The amount of damage is to be reduced by 33 1/3 percent on account of contributory negligence of the plaintiff.

(iii) The defendant shall pay the plaintiff’s costs of and incidental to these proceedings, as agreed or assessed, which costs shall be payable forthwith.

(iv) The parties have liberty to approach the Court for any further or special order and in particular any order or special order relating to the costs of the proceedings.

CATCHWORDS:	NEGLIGENCE – prospective purchaser granted licence to live and work at caravan park – duty of care – instructed to perform work – unreasonable want of care – owner/occupier knew or ought to have known of danger – breach of duty – contributory negligence.
CATEGORY:	Principal judgment
CASES CITED:	Air Great Lakes Pty Ltd v Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 AMP v Chaplin (1978) ALJR 407 (P.C.) Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1; 161 ALR 155; 73 ALJR 403 Australian Hardboards Limited v Hudson Investment Group Limited [2006] NSWCCA 146 Cowell v Rosehill Racecourse Company Limited [1937] HCA 17; (1937) 56 CLR 605 Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; 211 CLR 540; 194 ALR 337; 77 ALJR 183 Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 McPherson's Ltd v Eaton [2005] NSWCA 435 Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7 Pearce v Pearce [1977] 1 NSWLR 170 Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34; 59 ALJR 492; 59 ALR 529 Sakoua v Williams [2005] NSWCA 405; (2005) 64 NSWLR 588 Silovi v Barbaro (1988) 13 NSWLR 466 South Dowling v Cody Outdoor [2005] NSWCA 407 Tramways Advertising Pty Ltd v Luna Park [1938] SR(NSW) 632; 55 WN(NSW) 228 Waltons Stores Interstate Limited v Maher [1988] HCA 7; (1988) 164 CLR 387
PARTIES:	Patrick Keane (Plaintiff) Caravan City Cowra Pty Ltd (First Defendant) Ronald Ernest Horsfall (Second Defendant)
FILE NUMBER(S):	SC 20171/2001
COUNSEL:	D Campbell SC / D Toomey (Plaintiff) S Campbell SC / A Parker (Defendants)
SOLICITORS:	Stacks/Goudkamp Solicitors (Plaintiff) Curwood & Partners Solicitors (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ROTHMAN J

8 FEBRUARY 2007

20171/2001 Patrick Joseph Keane v Caravan City Cowra Pty Ltd & Anor

JUDGMENT

1 HIS HONOUR: On 21 March 1999, Patrick Joseph Keane, was injured when the flue of an antique steam boiler (the engine) fell and struck him, rendering him a paraplegic. The engine is referred to as a portable engine: it had four wheels, but was not a locomotive; while designed to be moved on wheels, the engine was a stationary engine, which, to be moved, required a vehicle capable of pulling, pushing or lifting it; the engine had a very long upright flue. Mr Keane claims damages in negligence against the caravan park (Caravan City Cowra Pty Ltd) on whose premises he claims the engine was located, and also Mr Horsfall, the director of Caravan City, who, he alleges, directed him to move the engine in question, and also directed him as to the method by which to move the engine. No distinction is drawn by the defendants between the liability of Mr Horsfall and of Caravan City and I will draw none.

2 The defendants deny liability. Amongst other matters of a more usual kind, the defendants submit that the caravan park business had been sold to Mr Keane before the accident, as a consequence of which no liability arises.

3 The proceedings involve a number of issues:

(a) Was the caravan park business sold to Mr Keane prior to the accident or at all? This involves an examination of the documents and the evidence that, it is submitted, establishes an oral contract.
(b) Was there a duty of care owed to Mr Keane by either or both defendants? What was the nature and content of the duty? This involves an examination of the relationship between the plaintiff and defendants, and resolving the evidentiary dispute on whether there was a direction to move the steam engine.
(c) If there were a duty, was there a breach of it?
(d) Is either defendant liable for the damage that resulted from the breach of the duty of care?
(e) Did Mr Keane contribute to the damage? If so, to what extent?

Sale of Business

4 As outlined, a central issue in the defendants’ denial of liability for the injury to Mr Keane is a contractual issue that concerns an alleged sale of the caravan park business by Caravan City to a company (Makenshare Pty Ltd) associated with Mr Keane and of which company he was a director.

5 The facts that are said to give rise to the existence of an agreement are as follows. There is, as one would expect, a document described as a contract (hereinafter “the Written Contract”) and correspondence. The correspondence (to which I will come) and the Written Contract are inconsistent with the existence of a contract that binds the parties. The Written Contract was never executed (at least not by Mr or Mrs Keane) nor exchanged. The defendants submit that, notwithstanding the terms of the Written Contract and despite the content of the correspondence, the parties entered into a contract, the terms of which were agreed orally (hereinafter “the Oral Contract”). I shall deal with the conversations and the documentary evidence relating to the sale.

6 Mr Keane, who was born in 1954, had worked in various occupations and had been trained as a motor mechanic. He had worked with his father on a farm. He worked, amongst other places, at a cement factory maintaining machinery; at a paper mill performing similar work; and on heavy metal construction in the Loy Yang power station project in Victoria. Mr Keane obtained, at some stage, a crane driver’s certificate and worked with metal as a tradesman and on construction prior to the date of the accident.

7 Mr Horsfall, apart from his role as the principal in Caravan City, also owned and operated, through the company, a railway museum adjacent to the caravan park. The museum had some other engines (generally in better condition) and Mr Horsfall was familiar with these antique engines or, at least, some aspects of them. One of the features of the caravan park was the railway carriages and the antique engine. The property on which both the caravan park and the museum were situated were owned and occupied by the defendants or interests associated with Mr Horsfall. I do not here deal with whether, if there were a contract for the sale of the business, the terms of that contract altered the occupancy.

8 After some discussion between Mr and Mrs Keane, they decided that they would be interested in purchasing a caravan park and managing it. After some inquiries, contact was made with Ken Buckley, a caravan park broker and the agent handling the sale of this caravan park. Mr and Mrs Keane visited the caravan park (they had family in the area) in November 1998.

9 On 11 January 1999, Mr Buckley wrote to Mr and Mrs Horsfall advising that Mr and Mrs Keane wished to proceed to purchase the business known as Cowra Holiday Park (Ex 43). The purchase price for the business was $215,000 and there was a requirement for a lease over the land for “20 years” with an option to purchase the freehold at $320,000 (price fixed for 5 years). The rent would be $30,000 per annum (payable monthly in advance at $2,500 per calendar month). The anticipated takeover date would be “say early March 1999”, all of which was subject to agreement on suitable lease terms and to be reflected in a written contract.

10 I will deal with the documentation first and other objective evidence before dealing with the conversations said to give rise to the Oral Contract.

11 On 20 January 1999, the accountant for Mr and Mrs Keane wrote to Rigby Cooke Lawyers instructing them on behalf of Mr and Mrs Keane in relation to the purchase of the business and a “21 year lease” of the premises (Exhibit B). That correspondence involved the purchase of Makenshare (a company incorporated on 14 January 1999), which would act as a trustee to a trust, the beneficiaries of which would be Mr and Mrs Keane. The trust (or more accurately the trustee in that capacity) would conduct the business to be purchased. The instructions required the drawing of trust deeds. The trust would be a “standard” discretionary trust and the “appointor” would be Mr Keane. The company elected for a traditional Sealing Clause and to use a Common Seal. The work was to be completed within the week. The next day the trust deed had been drawn and returned for execution.

12 On 25 January 1999, Ken Buckley, who is consistently described as the agent of the vendor (Caravan City Cowra Pty Limited), compiled and provided a Memorandum of Sale for the caravan park together with an inventory. This was given to Mr Keane at the caravan park while he was inspecting it. It was not the submission of any party that the Memorandum reflected an agreement (other than a non-binding agreement to agree) or that the sale had been perfected at this point. However, a 10% deposit of $21,500 was paid by Mr and Mrs Keane.

13 By letters dated 1 February 1999, Rigby Cooke, on behalf of Mr and Mrs Keane, engaged Sydney agents to perform the necessary searches and confirmed that a condition of the purchase of the business was the execution of a lease on the premises (or, as expressed, its preparation) (Ex F). The parties still anticipated settlement on 1 March 1999.

14 By 24 February 1999 (also part of Ex F), Rigby Cooke on behalf of Mr and Mrs Keane specified a number of conditions and notified Garden Montgomerie, for Mr and Mrs Horsfall and Caravan City, that finance was not yet finalised and settlement could not occur as originally anticipated on 1 March 1999. A deferral of 10-14 days was sought and, ultimately, obtained.

15 By 1 March 1999, it was clear that there were problems with planning approval from Council. These problems related to the location and existence of certain “train carriages”. There were issues with water access, plumbing and septic tanks. On 10 March 1999, Mr Horsfall agreed to relocate one of the railway carriages (at the rear of the premises known as “Bunkhouse One”) onto an agreed site suitable to the Council. He had also agreed in that memorandum to install and supply a 5,000 gallon water tank; remove a water wagon and other equipment; and “remove all railway trikes, S trucks, any railway equipment, scrap rail and sleepers.” This was confirmed by letter from Mr Horsfall’s solicitors to Mr Keane’s solicitors of that date.

16 On 11 March 1999 the solicitors for Mr and Mrs Keane confirmed the general agreement to the above and required those provisions be included in the Written Contract and proposed further details and alterations to other contractual provisions. On 12 March 1999, Garden Montgomerie, solicitors for the defendants, confirmed by letter the thrust of the proposals by Rigby Cooke on behalf of Mr Keane. The letter of that date stated that the “counterpart Agreement for Sale of Business will be forwarded … by mail” on that day. The letter dealt with certain specific conditions and stated:

“Your client has taken possession of the premises from today. The agent has been advised and will be contacting the parties to make specific arrangement in relation to any necessary adjustments.”

17 Later on the same day, 12 March 1999, Garden Montgomerie forwarded the Contract for the Sale of Business (the Written Contract). The covering letter bears repeating:

“We refer to the above matter and previous correspondence and enclose Agreement for Sale of Business for approval, and if approved, for execution by the purchaser in anticipation of the exchange.


The Agreement is submitted on the basis that no contractual rights shall arise until formal exchange of Agreements. If effected by post or through the document exchange, exchange of Agreements will be deemed to have taken place at the time of posting or sending to you the original Agreement signed by the vendor, and we shall date both copies at that time, unless alternative arrangements for exchange have been agreed to beforehand.


Please note the amended lease is yet to be approved for annexure to the Agreement.”

18 The Written Contract is based on “Agreement for Sale of Business – 1989 Version” published by the Law Society of NSW and the Real Estate Institute of NSW. It uses that form with some deletions and some additional clauses described as “Special Conditions”. In accordance with the covering letter, the draft agreement was not dated; it otherwise had the usual details; and a number of particularly relevant clauses. It recites a completion date of “on or about 30 March 1999” and a term of 5 years with three 5 year options. The other most relevant provisions are:

Clause 4 “The balance of the price as set out in H(a)(iii) of the Particulars together with the sum to be paid for the stock-in-trade shall be paid in cash or by bank cheque on completion to the Vendors’ solicitor named in E of the Particulars or, if there is no solicitor named, as the Vendors may direct in writing.”


Clause 5 “The Vendors shall give possession of the business and the premises to the Purchasers on completion which shall take place as set out in K of the Particulars or on such other date as may be mutually agreed.”


Clause 8 “(a) On completion the Vendors will cancel the existing telephone service mentioned in L of the Particulars to enable the Purchasers to apply for such service from completion.
(b) All other existing services to the premises shall, subject to the consent of the suppliers, be made available for the Purchasers on completion. The Vendors shall be at liberty to have any deposits paid for such services refunded to them.”


Clause 9 “On completion the Vendors will sign and deliver to the Purchasers all necessary forms to notify under the Business Names Act, 1962 the change of ownership of any business name at the date hereof being used by them in connection with the business. The Purchasers will take any necessary steps to register such forms.”


Clause 10 “The Vendors will remain in possession of the business and premises and will manage the same as a going concern in a proper manner until completion and shall sign and execute all documents and do all things reasonably required for putting the Purchasers in possession and enjoyment of the business and premises and for performing this agreement. The Vendors further agree that pending completion the stock-in-trade of the business shall not be offered for sale at prices less than prevailing retail prices for such goods or otherwise than in the normal course of business without the prior consent of the Purchasers.”


Clause 11 “The Vendors shall be entitled to the takings and profits and shall pay or bear all charges and amounts due for rent, gas, electricity, telephone service and all other outgoings in respect of the business up to the date of completion, on and from which date the Purchasers shall be entitled to or shall pay or bear the same respectively and any necessary apportionment shall be made on completion.”


Clause 12 “This agreement is conditional upon the grant of a new lease or the transfer of the existing lease of the premises as stipulated in M of the Particulars and if nothing is stipulated, then this agreement is conditional upon the transfer of the existing lease of the premises.”


Clause 12A “If the grant of a new lease is so stipulated, this agreement is conditional upon:
(a) the lessor of the premises granting to the Purchasers at the expense of the Purchasers a lease of the premises containing such reasonable covenants and conditions as the lessor shall require, and in particular, such lease shall provide for the matters set out in N of the Particulars;
(b) the consent to the lease of any mortgagee of the premises to be leased; and
(c) an undertaking by the lessor of the premises to register the lease in the Land Titles Office except where the Purchasers consent in writing to the lease not being registered.
If the Purchasers shall be unable to obtain such a lease or evidence that such consent will be given or such an undertaking, the Purchasers may by notice in writing to the Vendors rescind this agreement.”


Clause 17 “It is a condition of this agreement that:-
(a) subject to clause 24, at the date of completion, all goodwill, plant fittings, chattels, fixtures and stock-in-trade agreed to be sold shall be the sole and unencumbered property of the Vendors and no other person shall have any claim adverse to the Vendors, and
(b) prior to completion the Vendors will comply with all statutory requirements existing at the date of this agreement relating to the business.” (Clause 24 is deleted)


Clause 41 “This Agreement is subject to and conditional upon Ronald Ernest Horsfall granting a Lease to the Purchaser upon the terms and conditions referred to in the Lease annexed hereto.”


Clause 42 “Settlement of this transaction is subject to and conditional upon items 3, 4 and 5 of the conditions of consent to development application no. 84/99 being attended to by the Vendor prior to settlement.”

19 In light of the foregoing, it is timely to remark that by the time the Oral Contract is formed and completed (at least on the submission of the defendants), none of the following conditions required for completion had been satisfied:

(a) the balance of the purchase price had not been paid (Clause 4, above);
(b) there was no lease of the premises to Mr and Mrs Keane (Clause 12, 12A and 41 above);
(c) there seems to have been no transfer of all of the property (Clause 17);
(d) Council consent had not been obtained (Clause 42).

20 On the other hand, relevant business forms had been signed (Clause 9), (but not, it seems, the business name); telephone and other services (or at least some of them) had been transferred (Clause 8); and, at least arguably, Mr and Mrs Keane had gone into possession, were retaining the profits and were “conducting the business” (Clauses 5, 10 and 11).

21 In my view, Clause 5 requires “possession” of both the business and the premises and, it is unclear whether possession of the premises, at least absent a lease, had occurred. A licence to use the premises would not have had that effect.

22 Further, the submission of the defendants requires not only the formulation of a contract of sale on 10 or 11 March 1999, but its completion in the sense that ownership of the business must have passed to Mr and Mrs Keane (or Makenshare).

23 The terms of the letter of 12 March 1999 and the absence of a lease are inconsistent with the passing of the business. If the alleged Oral Contract was formed (and, to the extent explained, completed), it would be inconsistent with the express statements in both the correspondence and the Written Contract. I should add that the defendants have not submitted that the Oral Contract gave rise to a right of possession, nor any equitable interest or equity that could have been enforced by the plaintiff, his wife or Makenshare: see Waltons Stores Interstate Limited v Maher [1988] HCA 7; (1988) 164 CLR 387 at 403-4; Pearce v Pearce [1977] 1 NSWLR 170 at 178-179; Silovi v Barbaro (1988) 13 NSWLR 466; Cowell v Rosehill Racecourse Company Limited [1937] HCA 17; (1937) 56 CLR 605; South Dowling v Cody Outdoor [2005] NSWCA 407.

24 Further, utilising the traditional tests, at least Council approval and the existence of a lease were conditions to the proposed contract, not mere warranties: see Tramways Advertising Pty Ltd v Luna Park [1938] SR(NSW) 632; 55 WN(NSW) 228. The intention of the parties, objectively determined from the Written Contract, was that, without these promises (and possibly others), they would not have entered into the contract. Certainly that was the case with Mr and Mrs Keane and therefore Makenshare. It is in the context of that independent and objective evidence that the conflict in evidence (and the competing legal positions) must be assessed.

The Oral Contract

25 I should first note that the alleged Oral Contract does have some written elements. The defendants rely on the existence of the Written Contract, the Memorandum of 25 January 1999 and the written (and signed) Memorandum of 10 March 1999. They submit, it seems, that any clauses or terms inconsistent with the Oral Contract are impliedly agreed not to apply. Further, it is submitted that the high point of objective material supporting the Oral Contract is the conduct of Mr and Mrs Keane (and Mr and Mrs Horsfall).

26 The existence of the Oral Contract depends, necessarily, on the terms of conversations. The evidence in relation to any conversation that would give rise to a contract is, to say the least, unsatisfactory. Mr Horsfall gave evidence of relevant conversations. However, it was plain that Mr Horsfall’s recollection was, at best, unreliable. Occasionally he gave the impression that the answer was rehearsed. At other times he was both argumentative and evasive. At different times he, seemingly deliberately, avoided answering questions of significance.

27 The one area on which I could rely upon his evidence was that he had a conversation with Mr Keane in which Mr Keane said words to the effect that he did not want a carriage at the front of the site and Mr Horsfall responded that he would take it. Having denied at some length any conversation about carriages, he gave that evidence in an unguarded moment.

28 To be fair to Mr Horsfall, he conceded, in my view accurately, that he was a busy person running three businesses and that his memory suffered as a result. His self-assessment was that, given the stresses and responsibilities under which he worked, he remembered only that which was important to him. The conversations with Mr Keane and/or Mrs Keane did not seem to be of importance, at least at the time that they occurred. On any matter of controversy I do not accept Mr Horsfall’s evidence.

29 Similarly, some, at least, of the evidence of Mrs Horsfall was exaggeratedly deliberate, except in relation to matters that were not in dispute. She gave exaggerated reactions either facially or with her body and proffered answers as if she were asking whether that was the answer that was wanted. She gave the impression that the answers, on matters of dispute, were rehearsed and to some extent memorised. Mrs Horsfall’s evidence seemed largely to be reconstructed on the basis of that which, she considered, assisted her case. An extreme, although not particularly relevant, example was the terms of the conversation with Mrs Keane at the hospital after Mr Keane’s accident. The subject matter of money, collected by Mrs Keane, and what was to be done with it, is the subject of totally inconsistent evidence based, it seems, on nothing more than a changed view as to what assisted the defendants’ case.

30 The high point of the conversation that is said to give rise to a contract for the purchase of the business is a conversation between Mrs Horsfall and Mrs Keane. Mrs Horsfall attests to a conversation between her and Mrs Keane on 11 March 1999 on the veranda to the amenities building. The relevant effect of that conversation, as stated by Mrs Horsfall was:

“I said to Mr and Mrs Keane:


‘Are you going to move into the park soon because our holidays are coming up, we are going on Sunday, are you going to move in today, tomorrow, next week?’”

All Mrs Horsfall wanted to know “was just the arrangements so while we were away I would have to put someone into the office and takeover my duties.”

Mrs Horsfall suggests that Mrs Keane responded to this positively i.e. with the answer “how about we go and finalise the books now?”

Mrs Horsfall: “I was excited; I said ‘yeah, that would be great’.”

31 Mrs Horsfall attests to the fact that at that stage cabin 18 was available and suggested to Mr and Mrs Keane “that they had the option but it would be better to move into cabin 18, so we gave them the key, they had a look and they accepted it.”

32 There was then a conversation in which Mrs Horsfall said she enquired as to whether the finance was available to Mr and Mrs Keane; to which they responded positively. This, Mrs Horsfall states, is the reason that she asked them if they wanted to move in “now, tomorrow, next week?”

33 Thereafter Mrs Horsfall made arrangements to transfer the telephone account and to rule off past books and open up new books which were completed by Mrs Keane (in relation to receipts) and the inside cover of which receipt books bore the seal of Makenshare.

34 During the course of cross-examination of Mrs Keane, Counsel put to Mrs Keane that Mrs Horsfall had said to her, on 11 March 1999, words to the effect:

“Why do you not take over the business now and we will make adjustments later?”

To which Mrs Keane replied:

“No she didn’t say that at all.”


Q: “I suggest to you that you agreed to do that?”
A: “No I didn’t, she didn’t say it.”

Q: “I suggest to you that she said words to the effect of: you can have the money that you receive?”
A: “She had said I could have the money a long time before that.”

Q: “I suggest that she said it again on this occasion. Do you agree that she raised the question of money with you?”
A: “I don’t think she said it that day, but I can’t remember. But she said it previous days.”

Q: “I am suggesting at this point in time she did raise the question of money and suggested you could keep the money?
A: “I don’t remember her saying it that day.”

Q: “I am suggesting to you that you agreed.”
A: “I didn’t.”

Q: “I am suggesting to you she used words to the effect of: ‘Apart from legal formalities everything seems to be agreed; you come in and take over’. Do you remember her saying that?”
A: “No I don’t remember her saying that at all.”

35 There are some problems with the proposition of a contract being formed from the conversations outlined. Apart from the obvious inconsistencies with the documents, there is insufficient certainty in the arrangements that are being made to form a contract of this kind, even if one accepted (which I do not) the evidence of Mrs Horsfall. See generally Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353; Air Great Lakes Pty Ltd v Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 330-331; AustralianHardboards Limited v Hudson Investment Group Limited [2006] NSWCCA 146. Firstly, it is suggested that there was agreement that they come now and take over the business. This is at a point where there has not been payment for the business, there is no lease and no Council approval. Further it is suggested that Mrs Keane, on behalf of herself, Mr Keane and Makenshare, agreed to that arrangement. If that were the conversation which is said to give rise to a contract for the sale of the business, why was it necessary (or even appropriate) for Mrs Horsfall to recommend the residence to be utilised by Mr and Mrs Keane? More importantly, if the business had been sold why was it necessary for Mrs Horsfall to suggest that Mr and Mrs Keane would keep the receipts during the time that Mr and Mrs Horsfall were away? The notion that Mr and Mrs Horsfall needed to offer (or agree) to Mr and Mrs Keane keeping the money is consistent only with the proposition that the business continued to be owned by Mr and Mrs Horsfall.

36 In any event, as earlier made clear, I do not accept the evidence of either Mr or Mrs Horsfall on these matters of controversy.

37 I ought not leave this topic without reference to the evidence on it from Mrs Keane and an extract from Mrs Horsfall. The evidence was:

Mrs Keane Examination in Chief:

Q: “And again do the best you can to tell us what was said in that conversation?”
A: “‘We are going away on holidays and we would like you to please move into the park.’ She was very nice about it. ‘Please move into the park and just look after it for us while we are away’ and she said, ‘Look, don’t worry about the legalities. That is not a problem. It doesn’t worry me’, she said, ‘you can move into the park. Keep the money if you want to’ and of course I said, ‘No, I don’t want the money’ but at the time when she said we could move in there I thought, well, that is not a bad idea.’”

(This related to a date before 11 March 1999 to which the earlier questions and answers related.)

Mrs Horsfall Cross-Examination:

Q: “And you said to Mrs Keane, didn’t you, words to the effect, ‘look, don’t worry about the legalities,’ that didn’t worry you, ‘you could move into the park’?”
A: “No, I didn’t say that.”

Q: “You're saying you don’t recall whether you said that or are you denying that you said that?”
A: “I wouldn’t have used the word ‘legalities’.”

Q: “Can I say you may have said something to that general effect about that topic?”
A: “Yes.”

Q: “There was a discussion about the money that would be taken by the business whilst you were away as a general topic, wasn’t there?”
A: “Yes.”

Q: “And that you said to Mrs Keane words to the effect that she could keep the money. And she said, ‘No, I don’t want the money’.”
A: “I beg your pardon?”

Q: “She said to you in response to your invitation that she could keep the money that she didn’t want the money?”
A: “What money?”

Q: “The takings during the period that you were on holidays?”
A: “I didn’t have a conversation with her regarding any takings while we were away.”

(The last response and the fourth last response are, in context, directly inconsistent. The third question and answer is, albeit a little less obviously, inconsistent with that given in response to the two questions before it.)

38 In the circumstances I prefer the evidence that is objectively established in the correspondence between the solicitors, which correspondence occurred at or about the same time as (or one day after) the alleged sale of the business by Oral Contract. That objective evidence establishes that no sale was to occur until the exchange of the contracts. The sale of the business was conditional on the existence of a lease over a specified period and completion was conditional on the payment of all outstanding moneys and Council approval for the accommodation.

Nature of the Relationship

39 Counsel for the defendants suggest that, in the absence of the sale of a business, the only possible relationship is that Mr Keane and/or Mrs Keane were the employees of one or more of the defendants. Since employment was not pleaded (and the conditions precedent to a cause of action based on employment have not been taken) that finding is unavailable to the Court. I do not understand how it can be said that employment is the only possible relationship. Indeed, if, as the defendants allege, Makenshare was interposed in the arrangement, it could not have been employment (AMP v Chaplin (1978) ALJR 407 (P.C.)).

40 While the most likely scenario is that there was no intention by either side to create a legally binding relationship, there are a number of elements in this relationship that takes it outside an employment situation. Firstly, the method of payment was not wages per hour but rather the amount of receipts, if any, in the business. Secondly, there is no arrangement in relation to the deduction of taxation. Thirdly, there are no set or defined hours of work. Apart from the tuition in relation to the method of booking accommodation and the direction in relation to matters that were otherwise to be the subject of terms in the Written Contract, there are no directions, or ability to direct, as to the performance of work. There are no provisions for leave or for any of the general emoluments of employment or the indicia generally associated with an employment relationship.

41 The most obvious rationale of the defendants was that, rather than engage a manager, as had been the practice in the past, Mr and Mrs Horsfall engaged Mr and Mrs Keane (and/or Makenshare) to look after the receipts and accommodation bookings at the caravan park during their absence. Such an arrangement could be made either by way of employment (but not with Makenshare) or through an independent contract arrangement or on an informal arrangement not intended to create a legal relationship. While the arrangements for that work were, at best, informal, it seems there was no need for a great deal of formality because of the expectation of all sides that ultimately Mr and Mrs Keane would be purchasing the business. That which was formalised was that Mr and Mrs Keane, either themselves or through Makenshare, would do the following:

(a) they would receive all moneys paid by tenants;
(b) they would pay bills as and when they arose, on some occasions on the account of Mr Horsfall;
(c) they would take advance bookings (remembering that it was anticipated that most, if not all, of those advance bookings would be for a time when it was anticipated Mr and Mrs Keane, through Makenshare, would be the owners of the business);
(d) they would receive the moneys as compensation for the duties they performed;
(e) they would be able to reside, rent free, in cabin 18 on the premises;
(f) Mr Keane would (as I will shortly explain) move the steam engine with the little tractor so that the arrangements that were or would be made by Mr Horsfall for the removal of the carriage could be effected on his return.

42 I need to deal with the demeanour and impression of both Mr and Mrs Keane. Mr Keane was, it seemed, an honest witness who did his best to recall that which occurred prior to his accident. He gave the impression, at least since the accident, that he is generally an uncomplicated person whose function was trade and manual work and not the operation of a business. His recollection was not perfect, but he did not seek to reconstruct evidence and was open and forthcoming about his inability to remember all that had occurred. The major area in which his recollection was poor was in the finer details of events and the date upon which they occurred. It seems, in the division of labour between Mrs Keane and him, Mrs Keane was the person who paid attention to that detail and the accounting aspects of any undertaking by them. Mr Keane gave evidence of a conversation that he had heard between Mrs Horsfall and his wife in the following terms:

Mrs Horsfall: “Come to the Park, run it and keep the takings.”

Mrs Keane: “No, we don’t want to keep the takings.”

Mrs Horsfall: “You can stay at the park free of charge.”

43 He gave evidence that, after discussion with his wife, they considered that the option of staying at the park free of charge was a better alternative than their current living arrangements, of which there is no doubt. After an initial expression by Mrs Keane that such an arrangement was not to their liking, they changed their mind, in Mr Keane’s words, sometime between 10-15 March 1999. Mr Keane recalls a conversation at the caravan park near or in the office. Present at the conversation were Mr and Mrs Keane and Mrs Horsfall. During that conversation Mrs Keane said:

“We won’t take the takings, but we’ll stay here and otherwise take up your offer.”

44 There are a number of aspects of Mr Keane’s evidence which gave one confidence of his honesty and truthfulness in the evidence that he gave: one example is the question and negative answer as to his understanding of the Council’s attitude to septic tanks (the objective circumstances of which, if understood by Mr Keane, would have assisted his case). He gave evidence about walking through the caravan park and enquiring as to what was to happen to all of the carriages. He gave evidence of a conversation with Mr Horsfall in or to the following effect:

Q: “Did you have a conversation with him, or your wife, or did you both have a conversation with him?”
A: “We were both talking about what was still - on several occasions we spoke about what was going to happen with all the carriages and trying to push when the crane was going to come or what was going to happen. Every conversation that we had revolved around that. To the best of my knowledge we went for a walk from the museum down through the park. We walked past the rail carriage. We walked down towards the amenities block.”

Q: “Which is where you said the word office appears on that plan?”
A: “That’s correct. If you are standing in front of the office looking at the main highway, just to the right of the office there is an old telephone box. We walked past that. He mentioned: What do you want to do with that old telephone box? I can use that in the museum. I said to him: I certainly do not want it. I would be happy for you to take it. I said: While we are on the subject, what do you want to do with that eyesore at the gate, at the front entrance, meaning the railway carriage.”

45 This conversation is alleged to have occurred on 10 March 1999, two days before Mr and Mrs Keane moved into cabin 18 and before it is said there was agreement as to the sale of the business.

Direction to Move Engine

46 I have already recited the conflict about conversations relating to the carriage and the conclusion I have drawn that Mr Horsfall instructed Mr Keane to move the steam engine and the method by which it should be moved. After Mr and Mrs Keane took up residence at the park, but before Mr and Mrs Horsfall went on vacation, a further conversation occurred in relation to the carriage and the steam engine. The evidence of Mr Keane is:

Q: “You mentioned that there was some conversation concerning the steam engine?”
A: “Correct.”

Q: “Can you do your best to tell us the words that were used in respect to it?”
A: “Yes. When I said about setting the crane up here, where the steam engine was. I said to Mr Horsfall: What are we going to do with the steam engine? He said, his exact words I remember: Just take them around the corner with a little Fergie. That is how we got it here.”

Q: “Did he indicate to any position in the park?”
A: “Yes, he did. Where I indicated that disused barbecue was in Avenue One.”

Q: “The approximate area where the dotted line was in the plan that you marked before?”
A: “That's correct.”

Q: “Did he say anything else about the little Fergie?”
A: “He just said: Use the little Fergie, the keys are always in it, just use the Fergie. There is a trailer in there. You can use that to clean-up the debris and stuff from the carriage.”

Q: “You said there was mention here about cleaning up debris around the carriage, had there been discussion about debris early in the conversation?”
A “Yes.”

Q: “What was your recollection now about what was said about that?”
A: “He mentioned that the Fergie was there. It has a trailer on the back. You can clean up all the old sleepers and rubbish from around the carriage, to the best of my knowledge that is what I remember about that conversation.”

Q: “In the course of this conversation did Mr Horsfall say anything to you with respect to the flue on the steam engine?”
A: “None whatsoever.”

Q: “In the course of any conversation that you had with Mr Horsfall, was there ever any discussion about the flue on the steam engine?”
A: “No.”

47 Mr Horsfall, after denying that there was any relevant conversation with Mr Keane in relation to the carriage, ultimately conceded that he had expressed the view that he would take the carriage. He denied having instructed Mr Keane to move the steam engine. He also denied that he had instructed Mr Keane to move it with the “little Fergie” being the small tractor held on the caravan park. I accept the evidence, in this regard, of Mr Keane to whom such conversation was significant, at the time that it occurred. Likewise, I accept the evidence of Mrs Keane who corroborates the conversation. She said:

Q: “Now, having had your breakfast, what did you then do?”
A: “Pat and I went to the front of the park to start cleaning up around the train carriage and the steam engine.”

Q: “Why did you start to clean up around that area?”
A: “Because Mr Horsfall had told us a week or 10 days before to do it.”

Q: “What, if anything, do you remember Mr Horsfall saying about cleaning up around that area?”
A: “He said to Pat to - he said: ‘If you want me to move this train carriage, you’ll have to move the steam engine’ and Pat said: ‘With what?’ And he said: ‘The little Fergie’ and Pat said: ‘Where do you want it moved to?’ And he said: ‘Around the corner’, I think it was Avenue One. It was an old car park that nobody used and there was a disused barbecue and he indicated that he wanted it towed around there with his own tractor.”

Q: “Specifically about cleaning up, did he say anything?”
A: “There were several railway sleepers lying around on the road and he said to Pat: ‘You can get one of the blokes at the park to help you lift them because it is obviously too heavy for me to help you with’. There were rocks, rubbish et cetera.”

(Pat is a reference to Mr Keane.)

48 As earlier stated, Mrs Keane was an extremely impressive witness. She conceded a number of matters that, on one view, were unhelpful to her case. She had a clear recollection of detail, answered questions directly and without prevaricating. I accept her evidence completely.

49 On the basis of the evidence I accept, I find that Mr Horsfall instructed Mr Keane in or to the effect recalled by Mrs Keane. It is unnecessary to rely on the evidence of either Mr Slattery or Mr Rigby, but Mr Slattery corroborates, at least, that Mr Keane was, prior to the accident, operating on the understanding that he was moving the steam engine on the instruction of Mr Horsfall or to facilitate his work in a manner consistent with the evidence of Mr and Mrs Keane and inconsistent with Mr Horsfall. Mr Rigby was a wholly unbelievable and unreliable witness who was aggressive in his manner and inconsistent in his answers. Some aspects of his demeanour were similar to those of persons affected by alcohol, at least during some of his testimony.

Was There a Duty of Care

50 The defendants concede, if the Court finds that the direction was given in relation to the movement of the steam engine and the method of its movement, that there was a duty of care owed to Mr Keane by the defendants. The Court has so found. While a relationship of employment creates problems associated with the capacity to commence proceedings without other steps being taken, any of the relationships between the plaintiff and the defendants involve, whether or not they are relationships which are intended to be legally binding, a licence by the defendants for Mr Keane to be on the premises. Either that licence is the product of a contract, or it is a licence, without any ancillary legal relationship, for the mutual benefit of the plaintiff and defendants. The nature and content of such a duty has been discussed and is dealt with by the High Court in Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7. Before dealing with Papatonakis I repeat the statement of the High Court in Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; 211 CLR 540; 194 ALR 337; 77 ALJR 183. The High Court there stated two general observations which ought to be borne in mind in any negligence proceeding:

“However, the co-existence of knowledge of a risk of harm and power to avert or to minimise that harm does not, without more, give rise to a duty of care at common law. The totality of the relationship between the parties, not merely the foresight and capacity to act on the part of one of them, is the proper basis upon which a duty of care may be recognised.” (Per Gummow and Hayne JJ at [145].)

51 While the above comments were made in the context of the duty of care alleged for a statutory authority, it is an important reminder of the qualifications on liability at common law more generally.

52 Nevertheless in Papatonakis, above, the High Court made clear that a duty of an occupier to an invitee is the ordinary duty of reasonable care.

53 In some respects the issue associated with the relationship between Mr and Mrs Keane and the defendants is only peripheral. It is relevant to determine that relationship to ensure that no special or different liability arises. Whether, as argued by the defendants, the relationship was one of purchaser in possession or it was a legal relationship of management contract or informal arrangement with no binding legal effect, the duties on the defendants would be the same. There is no suggestion in this case by any party that the plaintiff was a tenant: Sakoua v Williams [2005] NSWCA 405; (2005) 64 NSWLR 588. Nor is there a suggestion that the plaintiff had exclusive occupancy.

54 The defendants, in relation to the possibility that the relationship was purchaser in possession, submitted that the duty imposed was the same or similar to the duty imposed on a vendor of goods. I doubt that. Apart from anything else, a purchaser in possession of property is entitled to expect under the licence that the owner and occupier of the premises would have a duty to take reasonable care to ensure that the premises and those goods on them were not defective if used as expected. There is not always a duty between vendor and purchaser or vendor and a consumer: McPherson’s Ltd v Eaton [2005] NSWCA 435. Even if the duty were the same as for vendor and purchaser of goods, there is, in these circumstances, the “something more” that would be needed in such circumstances.

55 As was made clear in the evidence and was uncontroversial, Mr Horsfall, the principal of the corporate defendant, had a particular knowledge of steam engines of this kind and this particular steam engine. Firstly, Mr Horsfall was aware that steam engines ought not be moved without the flue being reclined and bracketed along the body of the steam engine. Secondly, Mr Horsfall was aware that this steam engine had been placed some 10 years earlier in its then location and had not been maintained. Mr Horsfall himself made clear that moving a steam engine of this kind on its own wheels without lowering or removing the flue would be a risky exercise. In those circumstances, having directed Mr Keane to move the steam engine in order to allow the carriage to be removed, a reasonable response to the risk of harm that existed was to warn Mr Keane that the engine should not be moved without the lowering or removal of the flue or instructing him to lower or remove it.

56 Further, because of the state of disrepair of the steam engine, a bracket (which would have originally been on the steam engine and is on other steam engines of a similar kind) was missing. That bracket would identify to a reasonable observer that the flue could be lowered and placed in the bracket for safety purposes. The absence of that bracket, which was known to Mr Horsfall, and if not, ought to have been known to Mr Horsfall, was a factor which Mr Horsfall ought to have taken into account in making more obvious the need for a warning and/or instruction as to the method of moving the steam engine. In the absence of the bracket on the steam engine, a reasonable observer would not realise that the steam engine could not be moved (or that it was dangerous to move the steam engine) without lowering the flue.

57 In the circumstances of these proceedings and the relationship between the parties, there was a duty of care owed by the defendants to Mr Keane, the nature and content of which was to take reasonable care for his safety while performing the function requested of him. That duty existed either because of the relationship between Mr Keane and the defendants, or because of the relationship together with the circumstance that the defendants ought to have known of the danger posed by moving the steam engine.

58 As made clear earlier, once liability is assessed, in the context of the instruction to move the steam engine in the manner adumbrated above, the liability of the defendants is not seriously in issue and is obvious.

59 The difficulty however arises in determining whether there was contributory negligence and the extent to which, if so found, the damages ought be reduced on that account.

60 It is now trite to observe that a person may be contributorily negligent even though the lack of care did not contribute to the accident which caused the damage: Astley v Austrust Ltd [1999] HCA 6; 197 CLR 1; 161 ALR 155; 73 ALJR 403. As confirmed by the High Court in Astley, contributory negligence depends not on a duty of care owed by the plaintiff or breach of such a duty but on the failure of the plaintiff to protect himself or herself against damage.

61 Ultimately, the issue of contributory negligence involves an apportionment between plaintiff and defendant of their respective shares in the responsibility for the damage and involves a comparison both of culpability (the degree of departure from the standard of care of reasonable persons) and of the relative importance of those acts in causing the damage: Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34; 59 ALJR 492; 59 ALR 529.

62 As earlier outlined the plaintiff was a tradesperson who had been trained as a motor mechanic. He had worked on metal construction and the maintenance of machinery both in the factory and in a construction context. However, the plaintiff had not before worked with a steam engine of this kind and was unaware of the fact that the flue was either supposed to be lowered into a bracket (which bracket was not in existence on this machine) or was supposed to be removed. Further, he was unaware of the instability inherent in a long flue of this kind and the brittleness of the material of which the steam engine was constructed.

63 Expert evidence was adduced as to the brittleness and the capacity of the flue to collapse once a force was applied to the steam engine sufficient to overcome the inertia necessary to move the steam engine. The fact, however, is, in these circumstances, less relevant than what would be reasonably appreciated.

64 While it seems to me the principles require me to approach the culpability and relative responsibility of Mr Keane on the basis of that which would be taken by reasonable persons, I take the view that I am entitled to take account of the attitude that would be taken by a reasonable person in the circumstances of Mr Keane. Those circumstances include a knowledge of metal. In this case, Mr Keane did not undertake a thorough inspection of the steam engine and, in failing to undertake such a thorough inspection, failed to take account of his own safety in a manner, which he ought reasonably have done. While Mr Keane acknowledges, in hindsight, that a more thorough inspection ought to have been undertaken, reasonable care for his own safety required him to do so even without the benefit of hindsight.

65 In all of the circumstances and particularly bearing in mind the expertise of Mr Keane, if such an inspection occurred it may have revealed the existence of the hinge on the flue and enlivened a view, hitherto unknown, that the flue could be lowered for travel. However, without the particular knowledge of the normal practice of lowering the flue, and given the obscure nature of the hinge, even a close inspection may not have resulted in any different practice being undertaken. Mr Keane was, after all, following the instructions on the movement of the steam engine given to him by Mr Horsfall who had experience with these machines.

66 In all of the circumstances, a proper apportionment as between plaintiff and defendant of their responsibility for the damage, taking into account both the degree of departure from the standard of care of reasonable people in their situation and the relative importance of the acts of the parties causing the damage, results in a conclusion that the defendants are twice as responsible as the plaintiff is for the damage. In those circumstances I fix contributory negligence at 33 1/3 percent.

Conclusion

67 The parties have agreed on the amount of damage and it is unnecessary for the Court to determine the quantum.

68 For the above reasons the Court makes the following orders:

(i) The defendants are jointly and severally liable in negligence to the plaintiff for the damage suffered by the plaintiff on 21 March 1999 at the premises of Caravan City Cowra Pty Limited.

(ii) The amount of damage is to be reduced by 33 1/3 percent on account of contributory negligence of the plaintiff.

(iii) The defendant shall pay the plaintiff’s costs of and incidental to these proceedings, as agreed or assessed, which costs shall be payable forthwith.

(iv) The parties have liberty to approach the Court for any further or special order and in particular any order or special order relating to the costs of the proceedings.

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