Meadows and Meadows v Vanderloos

[1992] QCA 211

IN THE COURT OF APPEAL

[1992] QCA 211

SUPREME COURT OF QUEENSLAND	Appeal No.17 of 1992
BETWEEN:

LAWRENCE WESLEY MEADOWS and DOROTHY MAY MEADOWS

(Plaintiffs)

AND:

BOB WILLY VANDERLOOS, LAURINA ANTHONINA
VANDERLOOS, IRENE HELEN VANDERLOOS, PETER
PARKINSON, KAI BORGE WILHELMSEN and VERNON

JOHN ALEWOOD

(First Defendants)

Respondents

AND:

ALBERT SHIRE COUNCIL

(Second Defendant)

Appellant

JUDGMENT OF THE COURT

Delivered the 14th day of July, 1992

The appellant, Albert Shire Council, was the second defendant and the respondents were the first defendants in an action in the District Court at Southport in which judgment was given in favour of the plaintiffs on 17 January 1992. All defendants were ordered to "take such steps as are necessary to carry out the remedial work described as `Option B' in the report of Messrs. Cardno and Davies Pty. Ltd. dated the thirteen day of August 1990, and as detailed in the annexure to that report entitled `Option B Replace Culvert', to pay the plaintiffs $28,000.00 damages including $20,000.00 exemplary damages, and to pay the plaintiffs' costs.

The appellant has appealed to this court seeking a variation of the judgment to include a declaration that the appellant is entitled to be indemnified by the respondents in respect of all costs (if any) incurred by the appellant in complying with the remedial work ordered and in respect of the damages awarded to the plaintiffs. The respondents accept that the appellant is entitled to be indemnified in respect of the damages other than the exemplary damages.

The appellant's claim is based upon a deed of indemnity dated 27 October 1983 between the appellant and the respondents. The deed recites that the respondents made an application to the appellant for approval to subdivide land owned by the respondents, that such approval had been granted subject to identified conditions, that as part of the development works necessary to enable the proposed subdivision to proceed the respondents had constructed road and drainage works involving the construction of a drainage culvert, and that the owners of land located upstream and downstream from the construction of the culvert alleged that they had sustained or were likely to sustain damage from increased and altered water flow by reason of the construction of the culvert and the location and manner in which it had been constructed. Its operative provisions were as follows:

"1. In consideration of the Council accepting the said drainage works as constructed the owners hereby jointly and severally indemnify and agree to keep indemnified
the Council against all loss or damage to the property

(both real and personal) of any other person whatsoever

which may arise as a result of the diversion or

concentration of water due to the location and manner
of construction of the said drainage culvert.

2.    The indemnity hereby given shall extend to and

cover all claims, demands, proceedings, costs, charges respondents to demonstrate that the matters in respect of which the appellant now seeks indemnity do not fall within the description of "loss or damage to the property ... of any other person" within the meaning of clause 1 of the Deed. However, that is really noth at issue, since it is plain that clause 2 is intended to "extend" the indemnity provided by clause 1.
and expenses whatsoever in respect of or having
relation to the aforementioned loss or damages."

The phrase "the aforementioned loss or damages" in clause 2 refers back to and incorporates the latter portion of clause 1, and it is convenient to set out clause 2 again with the relevant portion of clause 1 included. On that footing, clause 2 provides the appellant with an indemnity to "cover"

"all claims, demands, proceedings, costs, charges and
expenses whatsoever in respect of or having relation to
all loss or damage to the property ... of any other
person whatsoever which may arise as a result of the
diversion or concentration of water due to the location
and manner of construction of the ... drainage
culvert'."

The trial judge found that the diversion and concentration of water due to the location and manner of construction of the drainage culvert had caused scouring and erosion of the plaintiffs' land and that, unless the remedial work ordered was carried out, the erosion would continue and the damage would be increased. He also found that, in consequence of the erosion and damage, the plaintiffs' use of the affected area has been restricted. The diminution in value of the plaintiffs' land was assessed at $10,000.00, but it was held that the remedial work "would have the effect of restoring the plaintiffs' land to the position that ought to have prevailed in the first place and of mitigating the diminution of its value. However the plaintiffs have suffered the loss of fences and the loss of use of land by deposition of foreign soil rendering it less suitable for cultivation and have endured a loss of five macadamia trees and in addition have shown ... that the defendants' conduct has caused them some economic loss in the form of the loss of macadamia nut crops although as I found that loss cannot be calculated with any precision. Doing the best I can on a global basis I assess their damages in relation to those heads in the sum of $8,000.00."

The respondents contended before this Court that, on these findings, the cost of the remedial work was not in respect of loss or damage to the plaintiffs' property but was to prevent future loss or damage to that property arising. The premise used as a basis for this attempted dichotomy seems flawed since the remedial work is not only to prevent future damage but to restore the value of the plaintiffs' property which has already been lost. However that may be, it is beyond serious argument that the remedial work is "in respect of" loss or damage "which may arise ..." to the plaintiffs' property. Subject to a point referred to below, it is unnecessary to consider this aspect of the case on any wider basis in order to conclude that the appellant is entitled to the indemnity which it seeks in relation to the costs of remedial work.

The respondents argued that the exemplary damages awarded to the plaintiffs were not included in the indemnity because such damages are not compensatory but punitive and, therefore, are not properly described as "in respect of or having relation to" loss or damage to the plaintiffs' property.

The trial judge awarded the exemplary damages because he found "that the first defendant ... determined the location of the five pipe culvert exclusively for their financial benefit and in so doing showed a contumelious disregard for the interests of the plaintiffs. Their subsequent conduct and that of the second defendant ... in purporting to consider the plaintiffs' wishes only to proceed in the manner originally determined demonstrates high-handed and oppressive conduct and an unreasonable and arrogant displacement of the plaintiffs' interests in favour of their own. ...

I find both defendants were equal partners in their dealings concerning the design and placement of the culvert and in their action in disregard of the plaintiffs' interests."

In this context, the respondents' argument that the exemplary damages awarded to the plaintiffs are not included in the indemnity possesses two flaws. Firstly, it tends to assimilate the phrase "in respect of" to "having relation to", whereas the latter phrase has, in the deed, an additional connotation. Secondly, the argument concentrates substantially upon "costs, charges and expenses" and gives little, if any, effect to "claims, demands, proceedings ...".

The plaintiffs' claim for exemplary damages and the proceedings brought by the plaintiffs to enforce that claim had "relation to the" loss or damage to the plaintiffs' property which has arisen as a result of the diversion or concentration of water due to the location and manner of construction of the drainage culvert. That being so, the deed is literally applicable.

The final point for the respondent concerns the ground upon which the primary judge refused the appellant the indemnification which it seeks; namely, that the deed should be construed so as not to protect the appellant from the consequences of its own negligence because there is no express provision to that effect and such an implication is unnecessary to give the deed effective operation: Canada Steam Ship Lines Limited v. R. (1952) AC 192 and Smith v. South Wales Switch Gear Co. Limited (1978) 1 WLR 165. In the latter case, it was held that the principles of construction recognised in the former case as applicable to exclusion clauses also apply to a clause by which a party agrees to indemnify another against liabilities which would ordinarily fall on the latter.

Since that time, the High Court has emphasised that
such a clause should be accorded "its natural and ordinary
meaning, read in the light of the contract as a whole,
thereby giving due weight to the context in which the clause
appears including the nature and object of the contract, ...
": Darlington Futures Ltd. v. Delco Australia Pty. Ltd.
(1986) 160 1 CLR 500, 510. See also Schenker and Co.
(Australia) Pty. Ltd. v. Maplas Equipment and Services Pty.
Ltd. (1990) VR834.

It is a sufficient answer to this aspect of the respondents' argument that to restrict the deliberately broad language of the deed in the way sought would be to deny the deed its manifest purpose as disclosed by its recitals.

It follows that the appellant is entitled to the declaration which it seeks. The appeal should be allowed with costs and the judgment below should be varied by adding a declaration that the appellant is entitled to be indemnified by the respondents in respect of all costs (if any) incurred by the appellant in carrying out the remedial work ordered and in respect of the damages awarded to the plaintiffs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No.17 of 1992
Before the Court of Appeal
The President Mr Justice McPherson Mr Justice Demack
BETWEEN:

LAWRENCE WESLEY MEADOWS and DOROTHY MAY MEADOWS

(Plaintiffs)

AND:

BOB WILLY VANDERLOOS, LAURINA ANTHONINA
VANDERLOOS, IRENE HELEN VANDERLOOS, PETER
PARKINSON, KAI BORGE WILHELMSEN and VERNON

JOHN ALEWOOD

(First Defendants)

Respondents

AND:

ALBERT SHIRE COUNCIL

(Second Defendant)

Appellant

JUDGMENT OF THE COURT

Delivered the 14th day of July, 1992

MINUTE OF ORDER:	Appeal allowed with costs. Judgment below varied by adding a declaration that the appellant is entitled to be indemnified by the respondents in respect of all costs (if any) incurred by the appellant in carrying out the remedial work ordered and in respect of the damages awarded to the plaintiffs.
CATCHWORDS:	Guarantee and Indemnity. Construction and Effect. Applicant seeks declaration in respect of costs incurred in complying with remedial work ordered whether such work is "in respect of" loss or damage "which may arise" to the plaintiff's property - whether deed of indemnity applicable.
Counsel:	Mr D. Gore Q.C. with him Mr R. Lynch for the appellant Mr P. Dutney Q.C. with him Mr N. Samios for the respondents
Solicitors:	Messrs. King and Co. for the appellant Messrs. Anderssen and Co. for the respondents

Hearing Date: 24th June, 1992

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No.17 of 1992
BETWEEN:

LAWRENCE WESLEY MEADOWS and DOROTHY MAY MEADOWS

(Plaintiffs)

AND:

BOB WILLY VANDERLOOS, LAURINA ANTHONINA
VANDERLOOS, IRENE HELEN VANDERLOOS, PETER
PARKINSON, KAI BORGE WILHELMSEN and VERNON

JOHN ALEWOOD

(First Defendants)

Respondents

AND:

ALBERT SHIRE COUNCIL

(Second Defendant)

Appellant

The President
Mr Justice McPherson

Mr Justice Demack

Judgment of the Court delivered the 14th

day of July, 1992

Appeal allowed with costs.
Judgment below varied by adding a declaration
that the appellant is entitled to be
indemnified by the respondents in respect of
all costs (if any) incurred by the appellant
in carrying out the remedial work ordered and
in respect of the damages awarded to the
plaintiffs.