Marr (Contracting) Pty Ltd v White Constructions (ACT) Pty Ltd

[1991] FCA 694

Re: MARR (CONTRACTING) PTY. LIMITED
And: WHITE CONSTRUCTIONS (ACT) PTY. LIMITED
No. ACT G27 of 1990
FED No. 694
Estoppel
(1991) Aust Torts Reports 81-141/104 ALR 181
(1991) 32 FCR 425

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Neaves(1), Beaumont(2) and Burchett(3) JJ.

CATCHWORDS

Estoppel - Issue estoppel - proceedings in respect of property damage - later proceedings between same parties in respect of indemnity as regards liability to pay damages for personal injury of employee - whether certain findings in earlier proceedings operated as estoppel in later proceedings - whether such findings "indispensable" to the decision - application of principle in Mowbray v Merryweather.

Mowbray v Merryweather (1895) 2 QB 640, distinguished;

Blair v Curran (1939) 62 CLR 464, discussed;

O'Donel v The Commissioner for Road Transport and Tramways (New South Wales) (1938) 59 CLR 744, applied.

Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s.5.

Law Reform (Miscellaneous Provisions) Act 1955 (ACT), ss.11 and 12.

HEARING

Canberra

#DATE 15:11:1991

Counsel for the Appellant: Mr J.E. Maconachie QC with

Mr R. Molinari

Solicitors for the Appellant: Messrs Abbott Tout Russell Kennedy

Counsel for the Respondent: Mr G.K. Downes QC with Mr M.B. Williams

Solicitors for the Respondent: Messrs Macphillamy Cummins and Gibson

ORDER

The appeal be allowed with costs.

The orders made at first instance by Kelly J. on 25 May 1990 be set aside and that, in lieu thereof it be declared that the appellant is not estopped from pleading the matters raised in sub-paragraphs (a), (b) and (d) of paragraph 5 of its amended defence to the amended third party claim, and it be ordered that the defendant, White Constructions (ACT) Pty. Limited, pay the costs of the first third party, Marr (Contracting) Pty. Limited, of the hearing at first instance on the question of estoppel reserved by the primary judge, and that the matter be remitted to the Supreme Court accordingly.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

I have had the advantage of reading the judgments to be delivered by Beaumont and Burchett JJ.

1. For the reasons stated by their Honours, the appeal should be allowed with costs. I agree with the further orders proposed by Beaumont J. The matter should be remitted to the Supreme Court of the Australian Capital Territory for the further hearing and determination of the third party claim.

JUDGE2

Marr (Contracting) Pty. Limited ("Marr") appeals from an order made by the Supreme Court of the Australian Capital Territory that there be judgment for White Constructions (ACT) Pty. Limited ("White") against Marr (i) in the sum of $254,055 and (ii) for the amount of costs which White was required to pay to Norman Allan Betts pursuant to a judgment of that Court for Mr Betts against White ordered on 19 December 1989.

1. Before coming to the arguments advanced on this appeal, which is concerned with a question of issue estoppel, it is necessary to refer to the history of the present litigation and to some related litigation.
   The institution of the proceedings in the A.C.T. Supreme Court

2. Mr Betts instituted proceedings against White in the Supreme Court of the Australian Capital Territory. By his statement of claim, Mr Betts alleged that he was employed by White as a crane driver; that it was a term of his contract of employment and/or it was the duty of White (i) to take all reasonable precautions for his safety whilst engaged in his work; (ii) not to expose him to a risk of injury of which it knew or ought to have known; and (iii) to provide a safe place of work, safe equipment and a safe and proper system of work; that Mr Betts, in the course of his employment, was operating a crane ("the crane") which suddenly fell over whereby he was injured; that his injuries were caused by reason of the negligence and/or breach of duty on the part of White, its servants or agents; that, alternatively, his injuries were caused by breach of statutory duty on the part of White, its servants or agents; and Mr Betts claimed damages.

3. By its defence, White admitted the employment of Mr Betts, but denied all other material allegations in the statement of claim.
   The proceedings in the N.S.W. Supreme Court

4. White Industries Limited ("White Industries") and White instituted proceedings in the Supreme Court of New South Wales against Marr and Austwork Pty. Limited ("Austwork"). By their further amended statement of claim, White Industries and White alleged that White Industries was the owner of the crane; that by an agreement ("the agreement") made in February 1986, Marr agreed with White Industries to dismantle and relocate the crane; that it was a term of the agreement that the relocation would be carried out by Marr in accordance with a certain drawing ("the drawing"); that it was a further term that the dismantling and relocation of the crane would be carried out by Marr in a proper and workmanlike manner; that, in attempting to relocate the crane, Marr failed to do so in accordance with the drawing and in a proper and workmanlike manner; that the crane collapsed and was totally destroyed; that by reason of the destruction of the crane, White Industries and White suffered loss; that, alternatively, Marr held itself out as being in the business of, inter alia, dismantling and relocating cranes and thereby owed to White Industries and White a duty of care to exercise reasonable skill and care in those activities; that in breach of its duty, Marr was negligent in relocating the crane; that, in purported performance of the agreement, Marr engaged Austwork to dismantle and relocate the crane; and that Austwork was also negligent in carrying out the dismantling and relocating of the crane; and White Industries and White claimed damages.

5. In the Supreme Court of New South Wales, Yeldham J. held that White was entitled to succeed against Marr for damages for breach of contract and in tort; that White was not guilty of contributory negligence; and that neither White Industries nor White was entitled to succeed against Austwork. Yeldham J. dealt only with the issue of liability at this stage. He was not then asked to, and did not, deal with the separate issue of damages.
   The making of the third party claim in the A.C.T. proceedings

6. By its amended third party claim in the Australian Capital Territory proceedings, White claimed against Marr that Mr Betts' injuries were caused by the collapse of the crane "which in turn was caused by the breach of contract and/or negligence of (Marr)." White claimed against Marr damages and/or contribution or complete indemnity in respect of any sum which Mr Betts might recover. By its amended defence to the third party claim, Marr admitted that Mr Betts was injured when the crane collapsed, but denied the other material allegations in the claim. Marr alleged that any injury loss or damage suffered by Mr Betts was caused by the failure of White to take reasonable care for the crane or for the safety of Mr Betts in that (a) White caused or permitted Mr Betts to be upon the crane when it was in the course of erection; (b) White permitted Mr Betts to be upon the crane when it knew or ought to have known that the crane was not properly secured; (c) White permitted Mr Betts to be upon the crane when it knew or ought to have known that the crane failed to comply with the regulations made under the Scaffolding and Lifts Act 1912-1948 (NSW) in their application to the Australian Capital Territory; and (d) White failed to ensure that the tower of the crane then being erected was properly and adequately affixed to the structure beside which it was being erected before causing or permitting Mr Betts to ascend the crane and be upon it.

7. White filed a reply to this defence claiming an estoppel by record by reason of the judgment of Yeldham J. White alleged that certain issues between it and Marr were decided by Yeldham J. in its favour with the consequence that Marr was estopped as regards all such issues and could lead no evidence thereupon.
   The hearing of Mr Betts' claim in the A.C.T. proceedings

8. The hearing of the Supreme Court action commenced in December 1989. In the course of cross-examination of Mr Betts by counsel for Marr, an objection was taken by counsel for White that Marr was estopped from eliciting evidence of certain matters by virtue of the findings and judgment of Yeldham J. On the application of counsel for Mr Betts, the primary judge then adjourned the further hearing of the third party claim and reserved the question of estoppel raised in the reply to the defence to that claim.

9. The hearing of Mr Betts' claim continued in December 1989. On 19 December, the judge dealt with Mr Betts' claim summarily as follows:
   

"It seems to me to be perfectly plain that (White) was negligent. He has not denied that the tower crane fell. I am satisfied that the reason why it fell was that it was not properly fixed to the building in respect of which it was being used. Had this been done, the tower would not have fallen. (White) is responsible for the safety of the crane in these circumstances, and even though it claims against three other parties that they had responsibility to it - to indemnify it - that does...not relieve (White) of his duty of care to (Mr Betts).

I have no doubt that (White) was negligent and that there ought to be a verdict (for Mr Betts)."

1. Having considered the question of the amount of the damages claimed, the judge then entered judgment for Mr Betts in the sum of $254,055.
   The decision on the estoppel point in the A.C.T. proceedings (i.e. at first instance)

2. In March 1990, the judge heard argument on the separate question of the estoppel alleged as between White and Marr. In May 1990, the judge held, for reasons which will be summarised below, that the findings made by Yeldham J., which were, in the opinion of the primary judge, indispensable to the judgment of Yeldham J., established that White had a right of complete indemnity from Marr in respect of any damages which it might be required to pay to Mr Betts and therefore Marr was estopped as pleaded by White's reply. Accordingly, the judge entered judgment for White against Marr in the sum of $254,055 and for the amount of the costs which White was required to pay to Mr Betts. As has been noted, Marr now appeals from this order.
   The decision and reasoning in the New South Wales Supreme Court

3. In order to understand the question which arose for determination at first instance, it is necessary to refer first to the decision and reasoning of Yeldham J.

4. Yeldham J. held that the crane fell because no part of a tie collar had been connected and hence the crane had not been tied into the building structure. He further held that the contract between White and Marr included terms that Marr would carry out the dismantling and relocating of the crane (i) in accordance with the drawing previously mentioned and (ii) in a proper and workmanlike manner; and that Marr clearly failed to do this. He went on to say:
   

"The fact that (White) did assist with some of the work, which technically was the obligation of (Marr), does not affect this conclusion. The job was urgent; both companies had men on the spot; but the ultimate obligation to properly re-erect the tower crane lay upon (Marr), which was an expert in the field and which was to be paid a substantial sum for the work. Although Mr Mahar (a crane foreman employed by White) had a duty in relation to the co-ordination of the various tasks being performed, it was Mr Watson (a leading hand rigger employed by Marr) who was in charge of the actual operation of the dismantling of the crane and its re-erection by (Marr) or, more accurately by its sub-contractor..."

Yeldham J. went on to say:

"I consider that the breach of contract...was causatively connected with the collapse of the crane and the damage suffered by (White). Even if, as (Marr) (has) asserted,

(White) was to some extent guilty of negligence, that would not preclude it from recovering in full its damages..."

1. His Honour then stated that these findings were sufficient to render Marr liable to White in negligence as well as in contract. Yeldham J. next turned to consider whether or not White was negligent in a sense which was causatively related to the damage which it suffered, having regard at least to the claim in tort. He said he was not satisfied that White had been proved to be guilty of negligence. He rejected Marr's submissions based upon contributory negligence including those which argued that, in any event, negligence by White broke the chain of causation between any breach of contract by Marr and the damage suffered by White.
   The reasoning in the decision now under appeal

2. The primary judge noted that it was common ground that if the estoppel contended for were established, there should be judgment for White against Marr in respect of the monies White had been ordered to pay Mr Betts.

3. His Honour indicated that he was concerned with establishing what were the states of fact or law which were legally indispensable to the judgment of Yeldham J. and said:
   

"The question is whether the damage caused (to Mr Betts) may be said to have been caused wholly by (Marr's) breach of its duty of care to (White) and its breach of its contract with (White). As to the alleged breach of the duty of care - only if the states of fact and law which were legally indispensable to the judgment of Yeldham J on the claim in tort in respect of the property damage are also legally indispensable to and co-extensive with the states of fact and law which (White) must establish in order to found its claim for total indemnity (nothing less will serve) in respect of the injuries and damage suffered by (Mr Betts) can (Marr) be estopped as (White) claims."

1. His Honour later went on to say that Mr Betts would have succeeded against Marr if he had joined it as a defendant or sued it alone; but that the negligence alleged by Marr against White was of a different kind from that alleged by Mr Betts against White; that is, there would be differences in the issues of fact to be litigated between White and Marr because "what would be in question would be the conduct of (White) vis-a-vis (Mr Betts), a question not litigated...before Yeldham J."; therefore, Marr was not in respect of White's claim against it "in negligence" (sc. by way of contribution as another tort-feasor pursuant to ss.11 and 12 of the Law Reform (Miscellaneous Provisions) Act 1955), estopped from alleging that Mr Betts' injury was due to the negligence of White or that White was guilty of contributory negligence.

2. However, the judge said, Marr accepted that it had to make a case against White in both contract and tort and it would be enough to allow White to succeed if it established that Marr was estopped, as White asserted, in respect of the claim in either tort or contract, and, in the proceedings before Yeldham J., White's case against Marr was primarily based on breach of contract. The judge stated that, in his view, the following facts were indispensable to the judgment of Yeldham J: (a) The contract between White and Marr included terms that Marr would carry out the work in accordance with the identified drawing and in a proper and workmanlike manner; (b) Marr failed to comply with these terms; (c) the ultimate obligation properly to re-erect the crane lay upon Marr, an expert in the field who was to be paid a substantial sum for the work; (d) the dismantling of the crane and its re-erection (with an immaterial exception) were entirely matters for Mr Watson, Marr's leading hand rigger, effectively the agent of Marr; (e) Marr was liable to White in damages for breach of the term of the contract referred to in (a) above; (f) the breaches of contract were causatively connected with the collapse of the crane and the damage suffered by White; (g) even if White was to some extent guilty of negligence, that would not preclude it from recovering in full its damages; (h) there was no obligation on White to instruct the men actually working on the site of the need to install the tie, it being entitled to assume that the plan which had been given initially to Mr Davis, an employee of Marr, would be followed, as would the instructions given by Mr McClanachan (an employee of White) to Mr Davis; (i) White was entitled to assume that Marr's men on the job would be properly instructed, competent and experienced, and would be well aware of the function of the tie and the need for it to be installed to ensure stability and safety; (j) White was not guilty of negligence vis-a-vis Marr; (k) White was not proved to be guilty of contributory negligence vis-a-vis Marr; (l) in summary, the judge said, Marr was both in breach of its contract and in breach of its duty of care to White so that it was liable both in contract and in tort to White in respect of damage caused to the crane and other property as a result of the crane's collapse without any reduction for the contributory negligence alleged.

3. The primary judge stated that the question for decision was whether these "indispensable" findings amounted in law to a finding that Marr was liable in contract to indemnify White in respect of any damage caused to Mr Betts. Applying the principle in Mowbray v Merryweather (1895) 2 QB 640, as explained by Sugerman J. in Mayo v Florida Hotels Pty. Limited (1964) 65 SR (N.S.W.) 41 at 51, his Honour held that -
   

"there must have been implied in the contract between

(White) and (Marr) a term whereby (Marr) warranted that it would so carry out the work which it had contracted to do that there would not be, as a result of its negligence, any damage to persons or property which might reasonably be expected if the crane were to fall as a result of that negligence. Such an implied term entitled White to recover damages from Marr under the rule in Hadley v Baxendale."

1. He further held that an implied term that work is to be performed in a good and workmanlike manner -
   

"necessarily incorporates a promise that the work will be so carried out as to not cause damage (whether to persons or property) which might reasonably be expected to flow from any breach of that term...(and accordingly) the promisee is entitled to recover damages which he might be required to pay to a third party for injuries sustained by that third party as a result of the negligent performance of the contract."

1. His Honour then concluded that the findings made by Yeldham J. which were "indispensable" to his judgment established that White had a right to complete indemnity from Marr in respect of any damages which it might be required to pay Mr Betts and therefore Marr was estopped as pleaded by White's reply.
   Marr's grounds of appeal

2. Marr does not, but White does, challenge the primary judge's finding that Marr was not estopped from alleging (i) that Mr Bett's injury was due to the negligence of White or (ii) that White was guilty of contributory negligence.

3. On behalf of Marr, it is submitted that findings (c), (d), (h) and (i) above made by Yeldham J. should not be characterised as "indispensable": it is said that they are evidentiary facts only and do not make the title to the cause of action. (Fact (e) is an "indispensable" fact to the extent that Yeldham J. found specific breaches of contract.) For Marr, it is argued that there was no relevant estoppel here: an estoppel must be clear, unambiguous and certain in terms of intent; the basis of liability for which White was held liable to Mr Betts, that is, breach of the common law duty of care to an employee, was not the very thing or the very precaution that Marr warranted White need not take; alternatively, Marr says, the identity of the terms of the estoppel claimed was not demonstrated with sufficient certainty. Yeldham J., the argument runs, made no finding of an implied term of the kind found by the primary judge: in the proceedings before Yeldham J., there was no case sought to be made by White to support a warranty of the kind found by the primary judge for the purposes of the principle in Mowbray v Merryweather, and this was an essential prerequisite if that principle were to be invoked here.

1. In my opinion, there is considerable force in these submissions.

2. In order to consider the legal questions which arise on the appeal, it will be convenient first to state the principle of issue estoppel, and then to refer to the principle in Mowbray v Merryweather, before considering whether a relevant estoppel arose here.
   The principle of issue estoppel

3. As Dixon J. pointed out in Blair v Curran (1939) 62 CLR 464 (at 531), an estoppel by record or issue estoppel covers only those matters which the prior judgment or order
   

"necessarily established as the legal foundation or justification of its conclusion."

Dixon J. went on to say (at 532-3):

"Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established...

...But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation."

1. See also Ramsay v Pigram (1967) 118 CLR 271 at 276; Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 at 597-8; Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507.

2. In Jackson v Goldsmith (1950) 81 CLR 446, White (not, of course, the present party) brought an action in the Supreme Court against Jackson for damages for personal injury arising out of a collision between Jackson's motor cycle, on which he was a passenger and a car driven by Goldsmith. Prior to this action, Goldsmith had recovered a verdict against Jackson in the District Court for damage to his car. In the Supreme Court, Jackson joined Goldsmith as a third party, alleging that Goldsmith, by negligence, had materially contributed to the collision and claimed under the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) to be entitled to recover either contribution or a complete indemnity from him in respect of any verdict which White might recover. It was held, by a majority, that the proceedings in the District Court did not determine whether there was any breach by Goldsmith of a duty which he owed to White. It followed that the decision in the District Court did not estop Jackson from alleging that Goldsmith was guilty of a breach of duty which he owed to White.

3. Latham C.J. said (at 455-6):
   

"Goldsmith contends that in the District Court the issue was raised whether he had been guilty of contributory negligence, that that issue was found in his favour and that Jackson cannot now assert the contrary.

But an estoppel must be clear and unambiguous...It must be 'certain to every intent': 'if a thing be not directly and precisely alleged, it shall be no estoppel'; Co. lit. 352b. In the District Court the issue was whether Goldsmith had been guilty of contributory negligence, that is, had he contributed to the injury to Jackson by either - (1) carelessness with respect to his own safety; or (2) breach of a duty which he owed to Jackson to take care? What was decided was that Goldsmith was not guilty of contributory negligence. This decision therefore negated the following propositions: - (1) that Goldsmith contributed to his own injury by carelessness for his own safety; (2) that he contributed thereto by negligence consisting in a breach of a duty owed by him to Jackson to take care. In the third party proceedings in the Supreme Court the question is whether Goldsmith is liable in respect of the injury done to White by reason of a breach of a duty to take care which he owed to White.

The proceedings in the District Court did not determine whether there was any breach by Goldsmith of a duty which he owed to White. Neither proposition (1) nor proposition (2) is a determination of the issue in the third party proceedings. Therefore the decision in the District Court does not estop Jackson from alleging that Goldsmith was guilty of a breach of a duty which he owed to White."

Williams J. said (at 461):

"As a result of the proceedings in the District Court it is now res judicata between Jackson and Goldsmith that the damage to Goldsmith's vehicle was caused by the negligence of Jackson and that Goldsmith was not guilty of contributory negligence, but the issue of fact whether any damage which the passenger White may have suffered in the accident was caused by the negligence of Jackson or Goldsmith or both has never been taken and found in any court. White is therefore free to sue either Jackson or Goldsmith severally, or to sue them jointly."

Williams J. went on to say (at 463):

"The liability of Goldsmith to White for any damage that White may have suffered was not in any sense the groundwork of the decision in the District Court. It was not the same but a different damage which was then in issue...No doubt the facts which will be litigated between Jackson and Goldsmith in the Supreme Court will be substantially the same facts as those litigated in the District Court but they will be litigated for a different purpose, and to prove or disprove a different issue."

1. It will be recalled that, in concluding that an estoppel arose here, the primary judge was of the view that the reasoning in Mowbray v Merryweather was of decisive significance, so that it is necessary to consider what the case establishes.
   The principle in Mowbray v Merryweather

2. In Mowbray v Merryweather, the plaintiffs agreed to discharge a cargo from the defendant's ship, the defendant promising to supply all necessary gear for that purpose. In breach of this promise, the defendant supplied a defective chain, which broke in use and, as a result, one of the plaintiffs' employees was injured. The employee claimed compensation against the plaintiffs, who settled the claim for an amount which they sought to recover from the defendant for breach of his contract. It was held that the plaintiffs' liability to pay compensation to their employee was the natural consequence of the defendant's breach of contract and such as might reasonably be supposed to have been within the contemplation of the parties when the contract was entered into. It followed that the damages claimed were not too remote. Lord Esher M.R. said (at 643-4):
   

"...if the defendant, having contracted to supply a sufficient chain, supplies a rotten chain for the purposes of the work which he knows will be done by the plaintiffs' workmen, it may reasonably be supposed to have been in his contemplation that injury might result to a workman in respect of which the plaintiffs would be liable to pay damages. The plaintiffs owed no duty to the defendant to examine the chain before allowing it to be used by their workmen. The only duty they owed in that respect was to the workman."

Kay L.J. said (at 645):

"I cannot see that the fact that the plaintiffs would not have been liable without negligence towards the workman relieves the defendant from the consequences of his breach of contract. The plaintiffs were guilty of no negligence as between themselves and the defendant, and they are entitled, I think, to say as between themselves and the defendant that he gave them a warranty on which they had a right to rely."

Rigby L.J. said (at 647):

"The defendant sets up in answer to the plaintiffs' claim that there was an absence of due diligence on the part of the plaintiffs. But there was no want of due diligence as between the plaintiffs and the defendant, because, as I have said, the warranty means that, as between him and the plaintiffs, they may rely on the warranty."

1. In Hadley v Droitwich Construction Co. Ltd. (1968) 1 WLR 37, at 43, Winn L.J. said (in a passage approved by Lord Diplock in Lexmead (Basingstoke) Ltd. v Lewis (1982) AC 225 at 276):
   

"The principle (of Mowbray v Merryweather),...is this: that in a case where A has been held liable to X, a stranger, for negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not - there is no necessity - take the very precaution for the failure to take which he has been held liable in law to the plaintiff."

1. In Mayo v Florida Hotels Pty. Ltd., above, Sugerman J. (at 51) relied on Mowbray in finding a supervising architect liable to a building owner for damages paid by the owner to an injured person notwithstanding that an employee of the owner was negligent: the duty of supervision was held to apply to all consequences of the employee's negligence, including the added cost to the owner of setting right the consequences of default. On appeal to the High Court (see Florida Hotels Pty. Ltd. v Mayo (1965) 113 CLR 588) Windeyer J. said (at 601):
   

"I agree generally in the analysis by Sugerman J. of the facts and the law. The case of Mowbray v Merryweather..., on which counsel for the building owner relied and to which his Honour referred, is apposite in the context in which he used it; but of course an obligation to use reasonable care is not the equivalent of a warranty that a thing is reasonably fit for a purpose."

1. In Buckley v Pre-stressed Concrete (Australia) Pty. Limited, Supreme Court of New South Wales, Court of Appeal, 20 September 1977, unreported, Glass J.A. discussed Mowbray and the limitation expressed by Winn L.J. in Hadley as follows:
   

"I can understand that in discussing the reasonableness of the employer's behaviour it could be said that he was entitled to rely upon the warranty being performed. But I have great difficulty in finding any basis for the statement that the supplier warranted to the employer that he need not take the precaution of subjecting the chain to examination...does no more than affirm that damages may be recovered for a breach of contract which causes the innocent party to incur a liability in tort notwithstanding that his own default contributed to that liability and that the recovery amounts to a full indemnity in respect of that liability."

Did a relevant estoppel arise here?

1. It will be recalled that, in its defence to White's third party claim, Marr alleged that any injury loss or damage suffered by Mr Betts was caused by the failure of White to take reasonable care for the crane or for the safety of Mr Betts in that (a) White caused or permitted Mr Betts to be upon the crane when it was in the course of erection; (b) White permitted Mr Betts to be upon a crane when it knew or ought to have known that the crane was not properly secured; (c) White permitted Mr Betts to be upon the crane when it knew or ought to have known that the crane failed to comply with the regulations made under the Scaffolding and Lifts Act 1912-1948 (NSW) in their application to the Australian Capital Territory; and (d) White failed to ensure that the tower of the crane then being erected was properly and adequately affixed to the structure beside which it was being erected before causing or permitting Mr Betts to ascend the crane and be upon it.

2. It is now common ground that the allegation of breach of statutory duty in para.(c) above is no longer significant: it is accepted that, in finding for Mr Betts, the primary judge based his decision upon breach of a common law duty of care only. The question is whether Marr was estopped from raising the matters alleged in paras.(a), (b) and (d) above.

3. In my opinion, no estoppel arose in respect of these matters.

4. As has been noted, Yeldham J. found that Marr was liable to White for breach of the two specific terms of their contract, that is that Marr would carry out the dismantling and relocating of the crane (i) in accordance with the drawing and (ii) in a proper and workmanlike manner. Yeldham J. did not find any warranty of the kind implied in Mowbray. Yeldham J. did find that, for the same reasons that Marr was liable for breach of the two terms of the contract, Marr was liable to White for negligence. But, as the primary judge in these proceedings pointed out, the negligence alleged by Marr against White was different from that alleged by Mr Betts against White. As the judge put it, in the third party claim, "what would be in question would be the conduct of (White) vis-a-vis (Mr Betts), a question not litigated before Yeldham J." For this reason, he held that, in the third party claim, Marr was not estopped from alleging that Mr Betts' injury was due to the negligence of White or that White was, in that context, guilty of contributory negligence.

5. To this extent, I agree with the judge. His conclusion was consistent with the decision in Jackson v Goldsmith. It is in the next steps in the process of his Honour's reasoning that I think that difficulties arise.

6. It will be remembered that, having said that the main claim before Yeldham J. was based on contract rather than tort, the judge was of the opinion that a warranty of the kind implied in Mowbray should also be implied in the contract between White and Marr with the consequence that Marr was now estopped in the sense already explained. There are, in my view, several difficulties in accepting this analysis. First, it is not easy to reconcile with the judge's earlier finding, consistent with Jackson v Goldsmith, that Marr was not estopped from alleging that Mr Betts' injury was due to the negligence of White or that White was guilty of contributory negligence. Secondly, Yeldham J. did not find, and was not asked to find, an implied warranty of the kind discussed in Mowbray.

7. The present question can be well tested by reference to the matter pleaded in para.(a) of Marr's defence to the third party claim, that is, that Mr Betts' injury was caused by the failure of White to take reasonable care for the safety of Mr Betts by White's causing or permitting Mr Betts to be upon the crane when it was in the course of erection. To borrow the language of Williams J. in Jackson v Goldsmith, this issue has not been taken and found in any court (cf. Florida Hotels v Mayo (1965) 113 CLR 588 per Barwick C.J. at 598). As Walsh J. said in Co-ownership Land Development Pty. Ltd. v Queensland Estates Pty. Ltd. (1973) 47 ALJR 519 (at 522):
   

"In order that the principle of issue-estoppel may apply it is not enough that an issue in a second action is very similar to an issue in a first action. It must be possible to assert without doubt that the issues are identical. In New Brunswick Railway Co. v British and French Trust Corportation, Ltd...., Lord Maugham L.C. stated the opinion that 'the doctrine cannot be made to extend to presumptions or probabilities as to issues in a second action which may be, and yet cannot be asserted beyond all possible doubt to be, identical with those raised in the previous action.'"

1. It follows, in my view, that there was no estoppel in respect of the matter pleaded in para.(a). The matters pleaded in paras.(b) and (d) are, in my opinion, in the same position.
   Orders proposed

2. I propose that the appeal be allowed with costs; that the orders made at first instance be set aside and that, in lieu thereof, it be declared that Marr is not estopped from pleading the matters raised in sub-para.(a), (b) and (d) of para.5 of its amended defence to the amended third party claim; and that White pay Marr's costs of the hearing at first instance on the question of estoppel reserved by the primary judge.

JUDGE3

When Lord Coke stated his famous aphorism, "estoppels are odious" (in Coke upon Littleton sec. 365b), the context shows he meant to emphasize that an estoppel should be strictly confined to its proper scope, and not applied outside it. This appeal, in my opinion, illustrates that ancient point.

1. The facts have been set out in some detail by Beaumont J., and it is sufficient for the purposes of these reasons to give only a bare outline. The respondent (which I shall call White) is a building construction company, and the appellant (which I shall call Marr) is a company with expertise in the erection of tower cranes. They entered into a contract under which Marr was to carry out the erection of a tower crane at a building site at which White was engaged upon the construction of a partly completed building. At a time when the crane was still in the course of erection, at a height of about 100 feet, one of White's workmen, a man named Betts, having ascended the crane, it collapsed carrying him with it and causing personal injuries to him, as well as very extensive property damage to White.

2. Two court proceedings followed. In the earlier, which was heard by Yeldham J. sitting as a judge of the Supreme Court of New South Wales, White sued Marr, in contract and in negligence, claiming damages in respect of the destruction of its property, the crane. This action succeeded, Yeldham J. finding that Marr had contracted to carry out the work in accordance with a particular engineering drawing and in a proper and workmanlike manner, which it clearly had failed to do. The drawing provided for the tower to be tied into the structure of the partly erected building before the upper portion of the tower crane (weighing over 60 tons) was set in place, and this vital precaution had been neglected. Defences of contributory negligence and negligence breaking the chain of causation (cf. Sherman v Nymboida Collieries Pty Limited (1963) 109 CLR 580), raised by Marr against White, were rejected.

3. The second action was Mr Betts's action for damages for personal injuries (and I shall hereafter refer to Mr Betts as the Plaintiff), which he brought in the Supreme Court of the Australian Capital Territory against his employer, White. In that action, White joined Marr as a Third Party. By its amended third party claim, White alleged that the Plaintiff's injuries "were caused by the collapse of the ... crane which in turn was caused by the breach of contract and/or negligence of (Marr)". White claimed damages, and also claimed contribution or complete indemnity in accordance with ss. 11(4) and 12 of the Law Reform (Miscellaneous Provisions) Ordinance 1955 (as it then was) of the Australian Capital Territory, which reflect ss. 5(1)(c) and 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 of New South Wales. It should be noted that s. 11(4) contains the qualification: "but no person is entitled to recover contribution under this section from a person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought". In what was obviously a carefully drafted pleading, intended to mirror specific findings of fact made by Yeldham J. in the earlier action, the amended third party claim alleged that White "was guilty of no negligence which was in any way causative of the collapse of the said crane", that Marr was guilty in various ways of breach of its contract, that Marr's breach of contract "was causatively connected with the collapse of the crane", that White was not supervising the work, that White
   

"was entitled to assume unless it was or should have been aware to the contrary that the men on the job of dismantling and re-erecting the said crane would be properly instructed, competent and experienced and would be well aware of the function of the (tie which should have held the crane tower to the structure of the building) and the need for it to be installed to ensure stability and safety",

and that the tower crane "fell because no part of the aforementioned tie had been connected".

1. Marr's amended defence to the amended third party claim alleged that the plaintiff's injury
   

"was caused by a failure on the part of (White) to take reasonable care for the tower crane or for the safety of the plaintiff particulars whereof are:-

a) It caused or permitted the plaintiff to be upon a crane when it was in the course of erection. b) It permitted the plaintiff to be upon a crane when it knew or ought to have known that the crane was not properly secured.

. . .

d) It failed to ensure that the tower of the said crane then being erected was properly and adequately fixed to the structure beside which it was being erected before causing or permitting the plaintiff to ascend the crane and be upon it."

1. In reply, White pleaded that the relevant allegations in its amended third party claim were all issues joined between White and Marr in the Supreme Court of New South Wales, in the proceedings heard by Yeldham J., and "all such issues were decided in favour of (White) against (Marr) whereby the latter is estopped as regards all such issues and may lead no evidence thereupon."

2. The action brought by the Plaintiff against White resulted in a verdict in favour of the Plaintiff for $254,055 plus costs. The dispute between White and Marr was stood over for separate determination at a later date. When the learned primary judge came to deal with it, he referred to Blair v Curran (1939) 62 CLR 464 at 531-532; Ramsay v Pigram (1967) 118 CLR 271 at 276; and Jackson v Goldsmith (1950) 81 CLR 446. Applying the last case, he held that Yeldham J. had not considered the duty of care owed by Marr to the Plaintiff. Accordingly, he held that Marr was not "in respect of (White's) claim against it in negligence, estopped from alleging that the plaintiff's injury was due to the negligence of (White) or that (White) was guilty of contributory negligence." Presumably the reference to contributory negligence in this context was intended to include a reference to the extent of the responsibility of White for the plaintiff's damage relevant to a finding of what contribution would be "just and equitable" within s. 12 of the Law Reform (Miscellaneous Provisions) Ordinance.

3. However, his Honour pointed out that there was also a claim for an indemnity in contract. He referred to the findings of Yeldham J. that Marr had contracted to carry out the work in accordance with a particular drawing and in a proper and workmanlike manner, and that it had failed to do so. He also referred to findings by Yeldham J. that White had not been guilty of negligence, either in the sense of contributory negligence in relation to its claim for damages against Marr or in the sense of negligence breaking the chain of causation between Marr's breach and the damage for which White had sued Marr (ie the property damage caused by the collapse of the crane). His Honour spelled out the elements of the cause of action in contract which Yeldham J. had decided. It is, of course, clear from the passage in Blair v Curran, to which he referred, that "those ultimate facts which form the ingredients in the cause of action" are the proper subject of an issue estoppel. But it is equally clear that, as Dixon J. also said in the same passage: "Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded"; Lord Lowry, in Arnold v National Westminster Bank Plc (1991) 2 AC 93 at 111-112 stated what he called "(t)he accepted principle of finality", when he said: "the decision of an issue which was essential to the decision of the action (is) treated in the same way as the decision of the action itself." In my respectful opinion, his Honour strayed beyond that closely fenced area into the wide field of evidentiary facts. He referred to a finding that "the ultimate obligation properly to re-erect the tower crane lay upon (Marr), an expert in the field which was to be paid a substantial sum for the work". This is not legally indispensable to the conclusion that Marr had contracted to carry out the work in a particular way and was in breach of that contract, nor was it indispensable to the conclusion that the damages claimed had been sustained as a result. Similarly, that "the dismantling of the crane and its re-erection (with the exception of the first crane section) were entirely matters for Mr Watson, a leading hand rigger, effectively the agent of (Marr)" cannot be described as a finding legally indispensable to the conclusion reached by Yeldham J. The same may be said of a finding that
   

"there was no obligation on (White) to instruct the men actually working on the site of the need to install the tie, it being entitled to assume that the plan which had been given initially to Mr Davis of (Marr) would be followed, as would the instructions given by (White's deputy construction manager) to Davis during a conversation in early February."

The same may be said, too, of the finding:

"(White) was entitled to assume, unless it was or should have been aware to the contrary, that (Marr's) men on the job would be properly instructed, competent and experienced, and would be well aware of the function of the tie and the need for it to be installed to ensure stability and safety."

However, having referred to these findings, the learned primary judge concluded that Marr was estopped from disputing White's claim against it in contract. Hence this appeal by Marr.

1. Even if the doctrine of estoppel could be correctly given the expansive interpretation which would enable it to embrace findings as detailed as those to which I have referred, the estoppel pleaded would still fall short of covering the very ground taken by Marr's amended defence to the amended third party claim. It is one thing to say that Marr, as between it and White, had "the ultimate obligation properly to re-erect the tower crane", that the work was the responsibility of Marr's agent, that White was "entitled to assume that the plan ... would be followed" and that Marr's men would, in effect, know how to do the job. It is quite another to say that, in the particular circumstances which then obtained, White could, as the amended defence alleges, cause "the plaintiff to be upon a crane when it was in the course of erection", at a time "when it knew or ought to have known that the crane was not properly secured"; and could afterwards claim against Marr, as damages for breach of contract, indemnity in respect of the liability White had incurred for its own failure to take reasonable care "for the safety of the plaintiff", its employee. The findings made by Yeldham J. simply did not go to these allegations in the amended defence, which raise questions of wider scope than the causation of the fall of the crane. That was not necessarily, in the eye of the law, the sole cause of the injuries to the plaintiff. Marr's allegations require an examination of the facts to see whether the liability incurred by White was or was not in reality caused by Marr's breach of contract, so as to produce the consequence that Marr is liable to indemnify White in respect of it. Questions of causation, novus actus interveniens and remoteness are all involved.

2. His Honour appreciated that the mere establishment, by estoppel, of the breach of contract found by Yeldham J. would not, without more, entitle White to the indemnity it claimed against Marr. However, he applied a line of cases which commenced with Mowbray v Merryweather (1895) 2 QB 640 to reach the conclusion that
   

"there must have been implied in the contract between (White) and

(Marr) a term whereby (Marr) warranted that it would so carry out the work which it had contracted to do that there would not be, as a result of its negligence, any damage to persons or property which might reasonably be expected if the crane were to fall as a result of that negligence."

He added: "(I)t seems to me that the promisee is entitled to recover damages which he might be required to pay to a third party for injuries sustained by that third party as a result of the negligent performance of the contract." There are, in my respectful opinion, at least two difficulties about this reasoning.

1. One difficulty is that it is not permissible to extend an estoppel to include what is its logical consequence when it is combined with some additional, even undoubted, fact. The estoppel itself must reach the target. It will not be eked out by inferences from further facts. This was established by the High Court in O'Donel v The Commissioner for Road Transport and Tramways (New South Wales) (1938) 59 CLR 744. In that case Latham C.J. said (at 758-759):
   

"That judgment did create an estoppel as to one proposition - but that estoppel cannot operate to establish by estoppel another proposition which follows from the former proposition only when that proposition is combined with others the establishment of which depends upon evidence or assumption."

He denied "any principle to the effect that an estoppel can be created by means of a logical argument depending upon premises some of which are not established by any estoppel." Evatt J. (at 763) said:

"Estoppel by judgment estops not only as to the res determined but also as to the fundamental issues necessarily involved in the determination, but it does not authorize the use of each issue originally determined merely as the first but unbreakable link in establishing a separate and independent issue. In other words, as against a successful party the unsuccessful party is bound by the authoritative determination of every fundamental issue but when a distinct and separate issue arises subsequently, he is not bound to submit to the second issue being established by the combination of a former issue with additional evidence, no matter how strong such evidence may be."

See also Adams v Bank of New South Wales (1984) 1 NSWLR 285 at 288, per Moffitt P., with whom Hutley and Samuels JJ.A. agreed (at 302). What the learned primary Judge has done here is to add to Yeldham J's finding of particular terms of the contract both his own conclusion, based on the line of authorities to which he referred, that such a contract would involve as well the relevant warranty of indemnity, and also evidence bringing the injury to the plaintiff within the sphere of the indemnity. I do not think such an extended estoppel was available.

1. Secondly, the line of authorities which goes by the name of Mowbray v Merryweather applies only in quite restricted circumstances. In Lexmead (Basingstoke) Ltd v Lewis (1982) AC 225 at 276 Lord Diplock approved an earlier statement made by Winn L.J. in Hadley v Droitwich Construction Co Ltd (1968) 1 WLR 37 at 43. Lord Diplock said Winn L.J's statement was:
   

"correct and does no more than state a limitation that is plainly implicit in the ratio decidendi of Mowbray v Merryweather:

... in a case where A has been held liable to X, a stranger, for negligent failure to take a certain precaution, he may recover over from someone with whom he has a contract only if by that contract the other contracting party has warranted that he need not - there is no necessity - take the very precaution for the failure to take which he has been held liable in law to (X)."

This passage makes it clear that the rule requires, for its application, a contract containing a very stringent warranty, and a third party whose injury is the result of a default which was the precise subject matter of that warranty. Here, the pleading which it is claimed Marr is estopped from relying on asserts that the Third Party's injuries were caused by quite different defaults, namely, the breach of White's duty as employer to provide a safe place of employment (a duty which has been held to be non-delegable and the employer's "exclusive responsibility": Kondis v State Transport Authority (1984) 154 CLR 672 at 687-688, per Mason J.; cf. Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16) and White's negligence in causing or permitting its employee to ascend a tower crane whilst it was in the course of erection and before it was secured. In those circumstances, the comment of Windeyer J. in Florida Hotels Pty Limited v Mayo (1965) 113 CLR 588 at 601 is peculiarly apposite: "(A)n obligation to use reasonable care is not the equivalent of a warranty that a thing is reasonably fit for a purpose". The obligation to erect the crane with care did not involve a warranty that it was reasonably fit for a workman to mount whilst it was still in the course of erection. (Cf. the remarks of Lord Diplock in Lexmead at 277.)

1. The learned primary judge, in the end, reached his decision by applying to the facts of this case what was said by Sugerman J. in Mayo v Florida Hotels Pty Ltd (1964) 65 SR (NSW) 41 at 51, a dissenting judgment with which Windeyer J. agreed "generally" when the case went on appeal (113 CLR at 601). But Mayo was concerned with the contractual obligations of a supervising architect whose employment was for the very purpose of guarding against the negligence of his client's employees in the performance of the construction. It is easy to understand that such a supervising architect may be liable to indemnify his client against a liability to a third party for the negligent work of the client's employees. The same consequence does not follow where a subcontractor's negligence is a cause of injury to a head contractor's employee whose injury is also attributable to the co-existing negligence of his own employer. In this situation, Lord Diplock's restrictive interpretation of the principle should hold sway.

2. Counsel for the respondent attempted to retain the decision in his favour on the simple basis that the damages payable to the Plaintiff are but part of the damages for the very breach of contract found by Yeldham J. Aside from the difficulty that they were not claimed as damages in the earlier action, I do not think Marr can be shut out, on any such basis, from litigating the issues of causation it seeks to raise.

3. The appeal should be allowed, and the orders proposed by Beaumont J. should be made.