Pavlis v Wetherill Park Market Town Pty Ltd

[2014] NSWCA 292

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Pavlis v Wetherill Park Market Town Pty Ltd [2014] NSWCA 292

Hearing dates:

15 July 2014

Decision date:

28 August 2014

Before:

Basten JA at [1];
Meagher JA at [49];
Leeming JA at [50]

Decision:

In matter 2012/396652:

(1) Dismiss the summons.

(2) Order that the costs in this matter be costs in the appeal.

In matter 2013/165726:

(1) Dismiss the appeal.

(2) Dismiss the motion seeking to rely on further evidence.

(3) Order that the appellant pay the respondents' costs of the appeal, including the motion, and the summons.

In matter 2013/222589:

(1) Grant the applicant (Market Town) leave to appeal against the order as to indemnification.

(2) Dismiss the appeal.

(3) Order that the applicant pay the respondent's costs of the proceeding in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

TORT - negligence - breach - plaintiff slipped on wet pavement outside shopping centre - pavement had been recently painted with non-slip paint six months before accident - pavement remained prone to being slippery when wet despite non-slip paint - expert report from plaintiff suggested slip occurred in area not treated with non-slip paint - no evidence or complaint of slipping in the area where plaintiff injured - trial judge held application of non-slip paint a reasonable precaution to foreseeable risk of harm - trial judge did not accept that plaintiff had slipped in area not treated with non-slip paint - whether trial judge erred in not finding the slip occurred in area where non-slip paint had not been applied - whether trial judge erred in finding reasonable precautions had been taken despite pavement remaining prone to being slippery when wet - Civil Liability Act 2002 (NSW), s 5B

CONTRACT - principal and agent - obligation to indemnify agent - claim for costs arising out of proceedings relating to the proper performance of any of the powers, duties or authorities of the agent - principal refused to indemnify on the basis that claim against agent was one of non-performance - interpretation of indemnity clause - whether indemnity extended to the non-negligent performance of the agent's duties

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5B, 5D

Cases Cited:

Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; 162 CLR 549
Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588
Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235
Laresu Pty Ltd v Clarke [2010] NSWCA 180
Thacker v Hardy (1878) 4 QBD 685

Texts Cited:

S Chistensen and W Duncan, The Construction and Performance of Commercial Contracts (Federation Press 2014), pp 481-484

T Prince, "Guarantees and Indemnities", in P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources - The Laws of Australia (Thomson Reuters, 2013) at [25.3.760]

Category:

Principal judgment

Parties:

Matter Nos 2012/3976652; 2013/165726

Fotini Pavlis (Applicant/Appellant)
Wetherill Park Market Town Pty Ltd (First Respondent)
Pretti Real Estate Pty Ltd (Second Respondent)

Matter No 2013/222589

Wetherill Park Market Town Pty Ltd (Applicant)
Pretti Real Estate Pty Ltd (Respondent)

Representation:

Counsel:
Mr P Menzies QC/Mr J E Rowe (Pavlis)
Mr J Sexton/Mr A Oag (Wetherill Park Market Town Pty Ltd)
Mr J Sheller (Pretti Real Estate Pty Ltd)
Solicitors:
Gajic Lawyers (Pavlis)
McCabes (Wetherill Park Market Town Pty Ltd)
Gilchrist Connell (Pretti Real Estate Pty Ltd)

File Number(s):

2012/3976652; 2013/165726; 2013/222589

 Decision under appeal 

Jurisdiction:

9101

Before:

Gibb DCJ - 2012/3976652; 2011/64894
Olsson DCJ - 2013/165726; 2011/64894
Olsson DCJ - 2013/222589; 2011/64894

File Number(s):

DC 2011/64894; DC 2011/64894; DC 2011/64894

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 4 October 2009, Ms Fotini Pavlis ("the plaintiff") was approaching an ATM at a shopping centre, Wetherill Park Market Town ("Market Town"), when she slipped over and fractured her right arm. The pavement was wet from rain. Both Market Town and its managing agent, Pretti Real Estate Pty Ltd ("Pretti"), accepted they owed a duty of care to the plaintiff; the trial turned on whether there had been breach for failure to take reasonable precautions against the foreseeable risk of someone slipping (see Civil Liability Act 2002 (NSW), s 5B).

Some six months before the slip, the pavement outside Market Town had been painted with a paint containing a non-slip additive. Relying on an expert's report, the plaintiff argued that was insufficient: despite the non-slip paint the pavement remained prone to being slippery when wet and further preventive measures could have been taken to reduce that risk. The plaintiff's expert also adverted to the area where the slip occurred as not having been recently treated with non-slip paint. While finding the surface remained prone to being slippery when wet, the trial judge found the application of the non-slip paint a reasonable precaution, especially as there was no evidence that anyone else had slipped in the area. The possibility that non-slip paint had not been recently applied to where the slip occurred was dismissed as merely a suggestion.

Pretti had defended the proceedings and sought to be indemnified by Market Town for the costs. The management agreement appointing Pretti as Market Town's agent contained an indemnity clause which provided that Market Town was obligated to indemnify where proceedings were taken against Pretti "in the course of or arising out of the proper performance of any of [its] powers, duties or authorities". Market Town resisted the claim for indemnity as to Pretti's costs in defending Ms Pavlis' claim on the basis that the clause did not extend to proceedings which were concerned with a claim of non-performance. The trial judge rejected that argument and ordered that Market Town indemnify Pretti for the costs of the proceeding.

On appeal the plaintiff challenged the conclusion that the precautions taken were reasonable on the basis that a finding should have been made that the plaintiff slipped in an area not treated by the non-slip paint and that, in any event, further precautions should have been taken as the pavement remained prone to being slippery when wet. Market Town sought leave to appeal from the finding that it was liable to indemnify Pretti.

The Court (Basten JA, Meagher JA and Leeming JA) held, dismissing the appeal on liability, and granting leave but dismissing the appeal on indemnity:

Liability

1. There was no error in the trial judge's conclusion that reasonable precautions had been taken against the risk of someone slipping. The trial judge was entitled to treat as a mere "suggestion" that the area where the slip occurred had not been treated with the non-slip paint. Furthermore, as the trial judge correctly noted, the fact the pavement remained prone to being slippery when wet did not mean that a duty of care required further precautions - a conclusion reinforced by the lack of evidence that anyone else had slipped in the area: [26]-[33], [38]

Indemnity

2. There is no reason to read the indemnity clause as restricting the general law right of an agent to be indemnified by its principal for all liabilities reasonably incurred or discharged in the execution of the agent's authority. Nor is there any reason to read the clause as excluding a claim for the non-negligent performance of its duties: [45]

Thacker v Hardy (1878) 4 QBD 685 followed

Ankar Pty Ltd v National Westminster Finance (Australia) Pty Ltd [1987] HCA 15; 162 CLR 549 considered

Laresu Pty Ltd v Clark [2010] NSWCA 180 distinguished

Judgment

1. BASTEN JA: On the morning of 4 October 2009 Ms Fotini Pavlis ("the plaintiff") drove to a shopping centre, Wetherill Park Market Town, in order to obtain cash from an ATM. The ATM was located on the external wall of the shopping centre, facing the car park where the plaintiff parked. There was an arcade approximately two metres wide, along which the plaintiff walked in order to approach the ATM. The pavement of the arcade sloped gently towards the car park. As the arcade was open to the weather, that design allowed rain to run off the pavement into the gutter.

1. It had been raining (or was raining) when the plaintiff approached the ATM. The pavement was wet. The plaintiff lost her footing and fell, fracturing her right arm, near the wrist.

1. In 2011, the plaintiff commenced proceedings in the District Court against a number of parties, seeking damages for negligence. On 27 May 2013 Judge Olsson dismissed the proceedings on the basis that no breach of duty had been established. Against the possibility that her judgment on liability might be reversed, she assessed damages in an amount of approximately $100,000.

1. The plaintiff appealed from that judgment, alleging that the trial judge was in error in failing to find liability on the part of the occupier of the shopping centre, Wetherill Park Market Town Pty Ltd ("Market Town") and the managing agent for the shopping centre, Pretti Real Estate Pty Ltd ("Pretti"). The plaintiff also challenged the amount of damages assessed by the trial judge.

1. The plaintiff commenced separate proceedings in this Court by summons seeking leave to appeal from a District Court judgment as to costs relating to an early stage of the trial which was aborted when the plaintiff collapsed in the witness box. The summons was abandoned on the hearing of the appeal and requires only an order that it be dismissed and that any costs associated with that proceeding be costs in the appeal.

1. There was a third proceeding before the Court, namely a summons brought by Market Town against Pretti. Although both Market Town and Pretti were exonerated by the judgment at trial, Market Town was ordered, pursuant to a contractual indemnity, to pay Pretti's costs of defending the proceedings brought against it. Market Town sought to challenge that finding. For reasons given below, the summons should be dismissed with costs.

1. With respect to the primary appeal, brought by the plaintiff, the judgment of the trial judge was not shown to be erroneous and the judgment dismissing the proceedings against both Market Town and Pretti should be upheld. In the circumstances, there is no need to address the contingent assessment of damages. The appeal must be dismissed with costs.

Factual background

1. Although there was no pleading as to the nature and content of the duty of care, it was common ground that both Market Town and Pretti owed the plaintiff, as a member of the public having access to the shopping centre, a duty to take reasonable care for her safety. Most of the pleaded particulars of negligence were inappropriate or too generally expressed to be helpful. However, the factual issues identified in the course of the trial fell within a narrow compass. Both defendants accepted that the arcade was exposed to the elements and likely to become wet in rain. It was also accepted that the paving was liable to be slippery when wet.

1. The judge accepted that, in April 2009, less than six months before the plaintiff's accident, "Pretti arranged and paid for the tiled surface at the exterior of the shopping centre to be painted with a paint that contained a non-slip additive and compound": judgment, p 14. The judge accepted that the exterior tiled area was "painted with a paint which included anti-skid assistant powder and a non-slip additive". (Whether the surface was "tiled" is doubtful, given Mr Pretti's evidence noted below; why Mr Adams described it as such was not revealed in his report.)

1. The plaintiff did not contend that the steps thus taken were inappropriate: rather, she raised questions as to whether -

(a) the use of non-slip products was an adequate precaution;

(b) the whole of the relevant area was painted, and

(c) the paint had deteriorated over the period of six months, so as to require a further coat or replacement.

1. Pretti was able to produce the invoices for the work done in April 2009, so that the actual products used were known. There was no criticism of the use of those products, assuming that painting was an adequate response to the known risk.

1. The plaintiff's case turned upon an expert report prepared by Neil Adams and Associates, who described themselves as "safety management and ergonomics consultants". Mr Neil D Adams visited the premises on 17 December 2009, with the plaintiff and her solicitor, took photographs and made measurements of the slip resistance of the floor in the area where the incident occurred. Mr Adams described his findings in the following passages:

"The walkway surface immediately adjacent to the ATM, and extending further to the east, is lightly textured - consistent with having been painted relatively recently with a product that incorporated a non-slip additive. However, the adjoining area where Ms Pavlis slipped was significantly smoother, particularly hear the heavily trafficked centre of the walkway and close to the edges - consistent with having been painted some time ago with a product that incorporated a non-slip additive that has since been significantly worn away ....

...

I measured coefficients of friction on the walkway after wetting it with clean water. ... I made measurements in five different locations, and with the pendulum swinging in different directions. As those measurements were made within only about two months of the incident, it is not necessary to consider the issue of potential surface wear. The measurements that I made (see Table 1) reveal a high level of uniformity between the different measurement sites."

1. Mr Adams was of the view that, although the current Australian and New Zealand Standards do not specify certain coefficients of friction as being "safe" or "unsafe", the table of "wet pendulum results" contained in AS4663:2004 indicated that, on the readings he obtained, the surface would be classified as providing a "high" notional contribution to the risk of slipping when wet with water. (In fact, the average reading of 33BPN was close to the margin between "moderate" and "high", although it was common ground that the slope of 5 degrees increased the risk of a slip.) Mr Adams acknowledged that:

"While it is not appropriate to infer that a surface is 'safe' or 'unsafe' solely on the basis of measured coefficients of friction, because the likelihood of pedestrians experiencing slips on a surface is only partly dependant [sic] on the surface characteristics, it is possible, usually by undertaking objective measurements, to determine the relative contribution that a given surface might be expected to make to the overall risk that a slip might occur. The total risk that a slip might occur on any given surface is dependant [sic] both on the frictional characteristics of that particular surface, as well as on a range of contributing factors, including: the presence of potential lubricants (eg water), footwear ...; pedestrian awareness of the level of available friction; whether the pedestrian is turning or exerting other forces on the surface; other aspects of gait; lighting; differentials between adjacent surfaces; and others."

1. That Mr Adams declined to make any allowance for the period of nine weeks wear between the time of the accident and when he conducted his measurements provided a dilemma for the plaintiff. If the relevant surface had been painted some 25 weeks before the accident, it is not clear whether Mr Adams would have made any allowance for deterioration in the surface over that period. Thus if the painting was an adequate response to the perceived risk when undertaken, the lapse of time was immaterial. (There was other evidence to that effect.)

1. The defendants obtained a report from Dr John Cooke, a consultant architect. Mr Cooke did not carry out his investigations until 23 November 2011 (proceedings not having been commenced until 2011). He relied upon further tests carried out by Mr Strautins in June 2011 which reported a reading of 35BPN under wet conditions. Dr Cooke accepted that Mr Adams' results would have more accurately reflected the level of slip resistance at the time of the incident than his own, but there was no evidence as to the likely margin of error.

1. Dr Cooke agreed that the surface should have been treated with a material resulting in a "low" notional contribution to the risk of slipping, and that the surface should have been regularly checked. Dr Cooke had access to information about the products used when the surface was painted in April 2009, which he described as "a reasonable preventative measure." He was also of the view that the adequacy of the surface should have been checked "at regular intervals of about six months."

1. The trial judge considered this material with some care. She accepted that the defendants would have appreciated the risk of slipping on the "tiles" when wet, and for that reason had arranged to have the tiles painted with non-slip additives in the paint. She did not, however, accept that the defendants knew or should have known that, having been painted, the area remained dangerously slippery when wet. She noted that there was "no evidence that anyone had slipped in that area, either before the plaintiff's accident or since": judgment, p 15.

1. The possibility that the whole of the area had not been painted in April 2009 was also addressed. The trial judge noted the somewhat vague suggestion of Mr Adams that part of the area had been painted "relatively recently" and that the area where the plaintiff slipped had been painted "some time ago". However, she accepted the evidence of Mr Pretti who had supervised the painting that the whole area had been painted in April 2009. Although the experts were not cross-examined, Mr Pretti was. He was asked about the area near the ATM machine. Mr Pretti's evidence-in-chief included the following, at Tcpt, p 106(35):

"Q. Do you recall in 2009 speaking to a company about doing some work on an area of floor outside the entrance to the shopping centre?

A. The whole pathway area.

Q. When you say the whole pathway area is that an area that goes - that includes the front of the shopping centre?

A. It does.

Q. And can you recall at the time before the work was done ... was it a tiled area or some other substance?

A. No, not tiles, concrete - concrete pattern."

1. In cross-examination the following exchange occurred, at Tcpt, p 111(46):

"Q. When you think about that ATM machine that was there and the work which was done on it in April 2009, can you remember -

A. The pathway.

Q. The pathway. Can you remember the work that was done? Did you watch it being done.

A. Not a certain area. The whole area. It was gurneyed and cleaned one night.

Q. Gurneyed and cleaned?

A. They gurneyed the whole area.

...

Q. And then what was done after that?

A. The next day they put a coat on the paint [sic].

Q. So they painted the surface after it had been cleaned?

A. With a roller. Yes.

Q. And you saw them applying that with a roller?

A. Yes I did."

1. It was not expressly put to Mr Pretti that any area of the arcade or pathway was not painted, but it was in any event clear from his evidence that the whole area was painted. It also appeared from Mr Pretti's evidence that the area had not previously been painted with non-slip paint. Nor was it correct to say that there were tiles underneath the paint: Mr Pretti was clear that it was patterned concrete.

1. The photographs certainly supported the view that the paint had worn or been chipped in some areas to a greater extent than in others. However, the evidence was silent as to when that had occurred.

Assessment of evidence

1. The trial judge was conscious of the test to be applied under s 5B of the Civil Liability Act 2002 (NSW). The plaintiff bore the onus of demonstrating that the defendants had failed to take precautions against a risk that was foreseeable and not insignificant, being precautions that a reasonable person in their position would have taken: s 5B(1). Amongst other factors, she was required to take into account "the probability that the harm would occur if care were not taken": s 5B(2)(a). This should be understood as a reference to the likelihood that the risk would materialise if the identified precautions were not taken.

1. In assessing the evidence, the trial judge took into account the following factors:

(a) it was a reasonable precaution to apply paint with non-slip additives to the pathway;

(b) the whole of the pathway had been painted less than six months before the accident;

(c) the evidence of Dr Cooke accepted that the area should be inspected every six months, being a period extending beyond the period for which the paint had been applied prior to the accident;

(d) although Mr Adams had identified various measures which could reasonably have been taken to reduce any risk of harm, he did not say that any particular measure should have been taken, and

(e) there was no evidence that any person had slipped in the area since it had been painted.

1. Taking these factors into account the judge was not satisfied that either of the defendants was required to take any steps other than those which had been taken, prior to the accident.

Grounds of appeal

1. Ground 1 identified three factual errors (as relied upon at the hearing) in rejecting the claim of negligence.

1. The first error was in finding that the plaintiff had slipped on the surface of the pathway which had been painted within six months. Based on Mr Adams' description of the area, the judge should have found, it was submitted, that the plaintiff slipped on "an adjoining area" where the surface was worn and smoother, consistent with it having been painted "some time before" the April application of non-slip paint.

1. Mr Adams' evidence was vague as to timing. Further, the readings which he took at the time of his inspection did not demonstrate that one area was more slip resistant than another. Mr Pretti's evidence was inconsistent with two applications of paint at different times; nor was it suggested to Mr Pretti that there had been two separate administrations of non-slip paint. There was no error in the judge's finding in this respect.

1. The second alleged error was in failing to find that the plaintiff slipped on a surface which "would have been very likely to be experienced as slippery when wet."

1. The judge did not make a contrary finding: she accepted that the testing of the area suggested that the surface did make a high notional contribution to the risk of slipping when wet. Correctly, the judge also noted that such a finding did not of itself demonstrate that other precautions ought reasonably to have been taken. Further, she placed some weight upon the fact that there was no evidence of anyone else having slipped in that area, nor of any previous complaint. It was not suggested to Mr Pretti that there had been any complaint since the painting was undertaken. The fact that there had been a complaint of slipping in another part of the area, before the painting was undertaken, was said to contradict the finding of the trial judge in this respect. However, that was so only if the area where the plaintiff slipped had not be painted: for reasons already explained, the judge was satisfied that the whole of the pathway had been painted and there was no reason to overturn that conclusion. That was described as the judge's "cardinal error".

1. The third factual error was again based upon Mr Adams' evidence that there was a difference in the smoothness of the surface where the plaintiff slipped and the area immediately adjacent to it.

1. The judge said that there was "a suggestion" in Dr Adams' report that there was such a difference: the plaintiff contended that it was wrong to dismiss this evidence as less than a statement of fact.

1. On first blush, the criticism of the judge's language was legitimate. Mr Adams made a statement as to his observations, which was supported by photographs showing that one section of the painted concrete appeared to be more worn than another section. However, when he prepared his report, Mr Adams was not apprised of the information available from Mr Pretti as to the work done in April 2009, nor that no other work had been done between that date and the date of the incident. No further opinion was obtained from Mr Adams after that information became available.

1. As best one can tell from Mr Adams' report (he did not give oral evidence) no testing was done of the adjacent area. His opinion as to the cause of the visual appearance in December 2009 was not based on information or expertise. There was no error in the trial judge rejecting it in the light of the other evidence, as she did. In these circumstances, the description of his opinion as "a suggestion" was understandable and did not reveal error. To give some greater weight to a casual observation of that kind is to accord an expert's report a degree of significance not warranted by the application of any identifiable expertise, and would be contrary to the approach adopted in Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588. None of these matters identified relevant error.

1. A fourth error was said to be the finding that the plaintiff could not "point to something that the owner or agent should have done that would have had the necessary effect of preventing her from falling": judgment, p 20. This finding of the trial judge was directed to causation and involved an application of s 5D of the Civil Liability Act.

1. On one view, the judge's finding on causation was consequential upon finding that negligence had not been established. In other words, a plaintiff who has failed to establish that a particular precaution would have been taken by a reasonable person in the position of the defendant cannot, logically, establish that the failure to take that specific precaution caused the injury. Even if, as the plaintiff submitted, what was required was painting so as to achieve a degree of friction consistent with the relevant Australian Standard, as a result of which the accident probably would not have occurred, nevertheless the judge, for reasons already given, was entitled to conclude that a failure to satisfy that Standard did not involve negligence. Accordingly, the conclusion with respect to causation was immaterial.

1. Further grounds, described as "legal errors", were little more than a repetition of the alleged factual errors in different guise. The submissions in support of the grounds recognised, in part, that that was so. One additional complaint was raised as a supposed legal error, namely the statement by the trial judge that "[t]he notion that the plaintiff slipped and, therefore, it must have been slippery is an example of hindsight reasoning and not appropriate": judgment, p 21. The plaintiff says that that was never part of her case.

1. The statement of the trial judge is elliptical. Coming at the end of the section of her judgment dealing with liability, after reaching conclusions that the defendants did all that was reasonably required of them, and in circumstances where there was no evidence that others had slipped in the area either before or after the plaintiff's accident, she may have intended all that remained as accurately described by the proposition. To suggest that in some way she misunderstood the plaintiff's case would be to disregard the manner in which she had dealt with the plaintiff's case over the preceding pages of the judgment.

1. In broad terms, the plaintiff's case did depend upon two propositions. The first (not in dispute) was that the plaintiff slipped and fell; the second was that the experts agreed that the slip resistance of the area where she fell, at least when the surface was wet, was significantly lower than the coefficient recommended by the Australian Standard for such walkways. Each factor was significant and was accepted by the trial judge. The countervailing factors relevant to liability relied on by the defendants were (a) that a risk had been identified and precautions taken less than six months prior to the accident; (b) that the precautions taken were reasonable and appropriate in the circumstances, and (c) that the relevant precautions could reasonably be expected to have effect for a period of not less than six months. In weighing those competing considerations, no error has been demonstrated on the part of the trial judge in failing to be satisfied that either or both of the defendants had failed to take reasonable precautions against the risk of harm which materialised. Although no doubt the risk was foreseeable, the absence of evidence that it had materialised in any other case in a busy shopping centre suggested that, if not insignificant, the risk was not high. That was a factor properly taken into account in deciding on what precautions were reasonably necessary.

1. In these circumstances, no error having been identified, the appeal must be dismissed. The appellant must pay the respondent's costs of the appeal.

Pretti's claim for indemnity

1. Having held that neither Market Town nor Pretti were liable to the plaintiff, the trial judge upheld Pretti's cross-claim for indemnity against Market Town for the cost of defending the proceedings. The claim was based on a clause in a common form used to appoint managing agents of property. Clause 15 of the contract provided:

"15. The Principal will hold and keep indemnified the Agent against all actions, suits, proceedings, claims, costs and expenses whatsoever which may be taken or made against the Agent in the course of or arising out of the proper performance of any of the powers, duties or authorities of the Agent hereunder."

1. The basis on which Market Town resisted the claim for indemnity was not that the amounts incurred were unreasonable or unrelated to the proper defence of the plaintiff's action; rather, it relied upon the proposition that the plaintiff's claim did not allege that Pretti acted negligently in the performance of its functions as managing agent, but that it failed to take steps which it ought reasonably to have taken in fulfilment of its duty to persons using the shopping centre. This, Market Town asserted, was a claim of non-performance, which did not fall within the terms of cl 15.

1. This narrow reading of cl 15 was said to gain support from the decision of this Court in Laresu Pty Ltd v Clark [2010] NSWCA 180. Mr Clark fell and injured himself whilst using a stairwell (on common property) in a commercial building. The stairwell had an automatic light switch which turned off at 6.30pm. As Mr Clark was using the common property after that time, the light was off. Noting that the clause only applied where there was a relevant "performance" of the agreement, the Court held that "the indemnity would still not apply to a failure to perform such as occurred here": at [90].

1. Laresu is distinguishable on a combination of three considerations. First, although the Court, for reasons which were not fully articulated, placed no weight upon this matter, the indemnity applied to "performance" of the agreement and did not refer to costs incurred in "proper performance". Secondly, the indemnity was sought not merely in respect of a claim which had been successfully resisted, but in respect of conduct which was found to be negligent. Thirdly, the negligence was not merely negligent performance of a duty, but a total failure or non-performance of the duty to light the stairwell.

1. Market Town acknowledged that Laresu did not resolve the issue for present purposes. However, it sought to rely upon the principle applied in Laresu, namely that "the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety": see Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; 162 CLR 549 at 561.

1. It may be assumed, favourably to Market Town, that the principle applied. That is supported, on one view, by what was held in Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424, but the general approach is not free from controversy: see Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 at [14]-[21] and see T Prince, "Guarantees and Indemnities", in P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources - The Laws of Australia (Thomson Reuters, 2013) at [25.3.760]; S Chistensen and W Duncan, The Construction and Performance of Commercial Contracts (Federation Press 2014), pp 481-484. It is not necessary to say anything further about that controversy, which was not the subject of argument in this Court. It is sufficient to note that Ankar was concerned with a guarantee by a surety for the performance of a commercial leasing agreement where the owner was a finance company. The question was whether the breach by the owner of a contractual obligation discharged the surety. The contract did not specify the effect of breach. Those circumstances are materially different from those involving the appointment of an agent to manage commercial premises for the owner. Under the general law, an agent is indemnified by its principal against all liabilities reasonably incurred or discharged by the agent in the execution of its authority: Thacker v Hardy (1878) 4 QBD 685. That general law indemnity did not extend to liability incurred in the breach of the agent's duties, but would have extended to the circumstances of the present case. There is no reason to read cl 15 of the written agreement as restricting the general right of indemnity. Nor is there any reason to read the language of the clause referring to "the proper performance of any of the powers, duties or authorities of the Agent" under the agreement, as excluding the non-negligent performance of its duties. The claim was for the costs incurred in defending the proceedings brought by the plaintiff: although the grammatical structure of the first limb of cl 15 leaves much to be desired, it clearly extends to the costs incurred by the agent with respect to proceedings brought against it arising out of such non-negligent conduct. If the liability of the principal under the indemnity was to be judged by the nature of the claim in the proceedings, the more extreme the claim, the less the likelihood that the indemnity would apply. There is no sensible reason for adopting such a construction of cl 15.

1. Market Town should have leave to appeal against the order that it indemnify Pretti, but the appeal must be dismissed with costs.

Orders

1. The appellant filed a notice of motion seeking to rely on further evidence. That application was abandoned and the motion should be dismissed.

1. The Court should make the following orders:

In matter 2012/396652:

(1) Dismiss the summons.

(2) Order that the costs in this matter be costs in the appeal.

In matter 2013/165726:

(1) Dismiss the appeal.

(2) Dismiss the motion seeking to rely on further evidence.

(3) Order that the appellant pay the respondents' costs of the appeal, including the motion, and the summons.

In matter 2013/222589:

(1) Grant the applicant (Market Town) leave to appeal against the order as to indemnification.

(2) Dismiss the appeal.

(3) Order that the applicant pay the respondent's costs of the proceeding in this Court.

1. MEAGHER JA: I agree with Basten JA.

1. LEEMING JA: I agree with Basten JA.

**********

Amendments

28 August 2014 - Amending matter number in orders

Amended paragraphs: Coversheet, [48]

Decision last updated: 28 August 2014