The Court of Appeal held that the lessee's act of storing plastic-wrapped pallets outdoors, which created an 'aqua lens' igniting a fire, was both a material and proximate cause of the resulting damage for the purposes of a broad indemnity clause (cl 10.3), even though the chain of causation was extraordinary. The Court confirmed that the principle of resolving doubt in favour of an indemnifier applies only after ordinary contractual construction principles have been exhausted, and does not operate merely because a party can construct a narrower reading. The Court further held that a lease obligation to 'reinstate' a warehouse to its 'original form' encompasses complete reconstruction and not merely repair, and that such an express reinstatement obligation is inconsistent with and therefore excludes the implied covenant under s 84(1)(b) of the Conveyancing Act 1919 (NSW); separately, a 'keep and maintain' obligation does not extend to reconstruction of the whole premises.
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