BBB Constructions Pty Limited v Catherine J Burn & Ors

BBB Constructions Pty Limited - Plaintiff PARTIES : Catherine J Burn - First Defendant John Lee - Second Defendant New South Wales Police Force - Third Defendant

COUNSEL : Mr N Nicholls - Plaintiff Mr J Giles - Defendants

SOLICITORS : Colin Biggers & Paisley - Plaintiff Minter Ellison - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST HOEBEN J

30036/2008 - BBB CONSTRUCTIONS PTY LIMITED v Catherine J BURN & Ors

Nature of Proceedings 1 HIS HONOUR: The plaintiff is a developer. The first defendant is an Assistant Commissioner in the NSW Police Service. The second defendant is the Director General of the NSW Department of Commerce. The plaintiff by summons seeks a declaration that the direction given by the first defendant purportedly pursuant to s 61(1)(c) of the State Emergency and Rescue Management Act 1989 (SERM Act) dated 4 April 2008 (the direction) to the second defendant is invalid. It also seeks a declaration that the direction was outside the scope of the power contained in s61(1)(c) of the SERM Act. It seeks orders restraining the defendants from implementing the direction. 2 By way of notice of motion the plaintiff seeks orders restraining the defendants until 4pm on 10 April 2008 from entering premises at 64-68 McEvoy Street, Alexandria (also known as 222 Botany Road, Alexandria) (the site) and taking any steps or actions towards the carrying out of any of the works described in the direction. The plaintiff seeks an order that the defendants immediately deliver up possession of the site to the plaintiff. 3 The matter came before me as a matter of urgency as Duty Judge in the Common Law Division. I gave leave for the summons, notice of motion and supporting affidavits to be filed in court. 4 The reason for the urgency in the application emerges from the background facts.

Factual background 5 In October 2007 the plaintiff entered into a contract with Baseline Constructions Pty Limited (Baseline) for Baseline to perform certain work in the construction of a project comprising 128 residential units and associated car-parking, commercial and retail space at the site. As part of the project secant walls were constructed along the boundary of the site. Following construction of the perimeter secant walls the site was excavated to a depth of seven metres below ground level. 6 At approximately 4.20am on 6 March 2008 a water main under that part of Botany Road bounding the site ruptured causing the site to flood. Botany Road was closed by the Roads and Traffic Authority of New South Wales and remains closed. 7 The plaintiff retained geotechnical engineers and surveyors to check on the stability of the secant wall along Botany Road. The results of that investigation showed that the secant wall along Botany Road had moved approximately 76mm. 8 On 7 March 2008 the plaintiff through Baseline commenced construction of a safety berm against the secant wall along Botany Road for the purposes of stabilising that wall. Construction of the safety berm was completed on or about 10 March 2008. Construction of the safety berm entailed the excavation and placing of material up against the secant wall along Botany Road. 9 Thereafter the plaintiff sought advice from Jeffrey and Katauskas Pty Limited (J and K) its geotechnical engineers as to what work should be undertaken to stabilise the secant wall along Botany Road so as to prevent any further movement of the wall. J and K provided that advice in a letter dated 25 March 2008. One of the options recommended by J and K was the construction of a berm across the full length of the Botany Road frontage with a factor of safety of at least one metre. It then suggested a program of testing rock anchors positioned in the wall. By letter dated 7 April J and K advised the plaintiff that the berm as constructed exceeded the recommended factor of safety and that the wall had been sufficiently stabilised to allow workmen to safely conduct testing of the anchors in the wall. 10 On 20 March 2008 the first defendant gave a direction purporting to be made under s 61 of the SERM Act directing the plaintiff to carry out the following works:

(a) Stabilising the wall by constructing a sand berm against its face so that testing and construction work could be undertaken safely.

(b) Testing the existing soil anchors to determine the current stability level and additional work needed to regain an adequate factor of safety.

(c) Enlarging the soil berm to form a working platform.

(d) Installing additional soil anchors and/or other work for a permanent stabilisation of the wall.

(e) All other necessary shoring, support or strengthening work to land within the Danger Area including Botany Road, the Botany Road footpath, Retreat Lane and the Iron Duke Hotel.

The plaintiff was given 28 days within which to carry out that work. 11 By facsimile dated 25 March 2008 Messrs Colin Biggers and Paisley, the solicitors for the plaintiff, wrote to Messrs Minter Ellison, the solicitors for the defendants, disputing the validity of the direction purportedly made under s 61 of the SERM Act. In that letter the plaintiff's solicitors disputed that "a danger area" existed. They submitted that because of the stabilisation work performed in relation to the wall, there no longer existed any danger to persons or animals as specified by the Act. They disputed that reasonable grounds existed for issuing the direction and they asserted that the works required to be performed by the plaintiff pursuant to the direction were not authorised by the Act. 12 On 26 March 2008 Messrs Minter Ellison responded on behalf of the defendants and disputed the matters raised by the plaintiff's solicitors. 13 The plaintiff's solicitors responded to that letter on the same day and said: "[Our client] 1. Considers that the methodology for the works proposed by the purported direction may not now be possible. Our client has already constructed a berm against the face of the wall to stabilise the same with a view to allowing the commencement of testing of the anchors. However, due to water continuing to ingress through the damaged wall, the bottom of the berm is water charged such that the integrity of the berm is being considerably compromised. As our client understands, the objective of paragraph (a) and (c) of the works proposed by the purported direction is not only to stabilise the wall, but to provide a safe working platform from which the testing of the anchors, the installation of any additional anchors, and the performance of any other work for a permanent stabilisation of the wall can be undertaken. Given the current ongoing problem with water ingress and its effect upon the integrity of the berm, it would now appear that the construction of a berm will not allow for a safe working platform and accordingly, the safe performance of the aforementioned activities; 2. Considers that the works proposed by the purported direction (assuming (which is not now conceded) such works can be performed safely - see above) are substantial and reiterates that the period by which the works proposed by the purported direction are required to be carried out (28 days) is most unrealistic. To this end, our client points to the fact that there are some three rows of anchors that need to be tested, and accordingly there are possibly three rows of additional anchors that may be required. Each row of anchors is located at different heights in the wall. It is not possible to test all three rows at the same time. Testing can only occur consecutively. In summary, the top (first) row of anchors must first be tested, the results of the same analysed, and additional anchors designed and installed and then one must "dig out" the berm down to the next row of anchors (being the middle (second) row of anchors). The same goes before one can move from the middle (second) row of anchors down to the bottom (third) row of anchors. Accordingly, having regard to the above, the works proposed by the purported direction will be very time consuming. 3. Request that you clarify what is precisely meant by the words "the New South Wales Police Force would pay so that the work could commence". Does this mean that your client would pay for all the costs of the works (likely to run into several millions of dollars but then seek to recover the same from our client) and if not, which costs and how much? Please clarify and 4. Reiterates, for the avoidance of any doubt, that it is ready and willing to co-operate and do all reasonable things to resolve the situation which has arisen following the water main burst on Botany Road. Our client is not intending to be obstructive by the aforementioned paragraphs, but simply wishes to convey that further thought needs to be given to the resolution of the situation. We note your client is prepared to discuss with our client how to expedite the work. Please advise when your client's representatives are available to meet in this regard." 14 The defendants' solicitors responded on 27 March 2008 as follows: "In view of the emergency situation that remains at Botany Road and the issues raised by your client, NSWPF has agreed to the following in order to expedite the starting of the work: 1. The work and time limit in the direction may need to be revised from time to time. If considered necessary by Assistant Commissioner Byrne (AC), a revised Direction will be issued. 2. BBB Constructions (BBB) will do the work as directed from time to time by the AC. In formulating directions, the AC may consult with but not be bound to accept in whole or in part the views of BBB. BBB will provide its views within any time limit set by the AC. 3. The Commissioner of Police will pay the reasonable costs of third parties retained by BBB to do the work, such costs to be approved in writing by the AC. The Commissioner of Police will do so on the clear understanding, and with BBB's acknowledgment of the facts, that the Commissioner of Police will recover such costs, and any NSWPF costs, under s 61 of the SERM Act on the basis that they are costs which should be borne by BBB as the owner and can be recovered from the owner under that section. The Department of Commerce will act as the agent of NSWPF to assist in directing and supervising the work. Please note that while the emergency remains, and in view of your client's delay in complying with the Direction and starting the work required to be undertaken to render the danger area safe, NSWPF is considering other options including issuing a Direction to an independent third party to undertake the work." 15 The plaintiff's solicitors responded on 27 March. While once again challenging the defendants' right to issue the direction, they agreed that the plaintiff was ready and willing to co-operate with the NSWPF and denied that it was being obstructive. They pointed out that even before the issue of the purported direction the plaintiff had already undertaken at its own cost the work referred to in paragraph (a) of the purported direction. 16 Thereafter attempts were made in correspondence between the two firms of solicitors to achieve an agreement whereby the plaintiff would perform work as required by the first defendant. Those negotiations did not achieve agreement. The final position reached is summarised in a report from David Wilkins, the Engineering Services Functional Area Co-ordinator for the Department of Commerce to the Department of Premier and Cabinet dated 4 April 2008. "The position at the conclusion of negotiations is as follows: 1. The Developer has agreed at a high level to the proposed broad scope of work covered by the order in my letter, dated 3.4.08. However the Developer was interpreting the scope as covering some damage rectification works and indirect costs such as legal fees and prolongation costs. Our position was that the reimbursement of costs is more narrowly defined to that required only to the direct costs needed to stabilise the wall to make safe and not to fully rectify the damage to the wall or any consequential matters. The Developer was also concerned at how the fair and reasonable test would be applied to costs reimbursement. This was not considered a major sticking point to an agreement. 2. The Developer was mobilised at present to start work however would be de-establishing this week as there was no more building construction work. 3. The Developer stated that they do not know at this stage whether either of its two insurers will cover any costs in relation to this incident. They claim that the Section 61 Order has complicated their insurance recovery ie which insurer's cover applies to compliance with a Section 61 Order, which of their two insurers is liable, and whether undertaking the Order work will prejudice their cover. They are trying to get a resolution but the insurers were not being co-operative. 4. The Developer is not prepared to commence work without either (a) agreement from its own insurers to cover costs that Police may seek to recover from them at a later date; or (b) Police agreeing to recover costs from it only to the extent of their insurance cover. They state that otherwise they would be in a position to be made bankrupt. The time to get their insurers' agreement is indeterminate. The Developer maintains that Police should agree to recover costs from the party found liable for causing the incident. However the incident may be settled out of court on agreement with no party liable. The Developer has also offered to give Police subrogation rights to recover costs directly from its insurers. The Developer concluded by stating they still believe the use of s 61 is not valid in this case; and were still strongly of the opinion that Sydney Water's pipeline break was the cause of the incident and that they were being expected to carry the financial implications for both parties while the cause of liability takes years to be determined through the courts. Sydney Water is disputing this as the cause of the incident. The alternate argument is if the wall had not been constructed there and in that manner, there would be no issue with a water main break. Way Forward 1. Engineering. With the Developer unwilling or incapable of undertaking stabilising work, the only engineering option to "make safe" in a timely manner appears to be utilising a third party contractor to undertake works necessary to temporarily stabilise the wall, reopen the surrounding area to normal use. This would probably be initially limited to berm construction and some anchor restressing and replacement, and not the complete scope formerly offered to the Developer. By this time the Developer's insurance issues may be resolved. For this we would need: · Access to all the plans, calculations and other technical information from the Developer and subcontractors and consultants. · Access to the whole of the site and cessation of the Developer's work. This solution will take longer than if the Developer commenced now and undertakes the work, probably cost more, and also exposes government to other potential risks and liabilities …" 17 On 4 April the first defendant issued a notice to the plaintiff purporting to be made pursuant to s 61 of the SERM Act. That notice terminated the direction previously given to the plaintiff. On the same day the first defendant issued a further direction to the second defendant purporting to be made pursuant to s 61 of the SERM Act directing the second defendant to carry out specified works on the site. The direction designated the site as a danger area and stated that the first defendant was satisfied that "for the purpose of protecting persons or animals from injury or death or protecting property threatened by an actual or imminent emergency there are reasonable grounds for making a direction under section 61(1)(c) of the Act". 18 By email dated 7 April 2008 the solicitors for the plaintiff objected to the notice and direction of 4 April. As before they asserted that the notice and direction were beyond power. The substance of the factual position of the plaintiff is conveniently set out in paragraph 2 of that email as follows: "2. Our client has continued to engage its insurer and their assessor to commence the necessary rectification works as soon as practical and then proceed with those works in a timeframe and sequence that our client and the insurer will agree on. Your client must appreciate that, given that it has not been established that our client was in any way responsible for the movement of the secant retaining wall, and the parties that were circumstantially responsible have refused to accept responsibility for the problem, it falls upon our client to look to its insurers to help it to restore the work with the minimum of cost to our client. The re-opening of Botany Road is only one consideration of this timing and sequencing. Our client remains most concerned that NSWPF, and its agent, Department of Commerce, continue to underestimate the complex series of issues that need addressing. More importantly, the proposal to date for NSWPF to offer to fund certain work under the auspices of the SERM Act has its own problems, eg: (i) The Act does not appear to respond to the circumstances as they now exist (see above). (ii) The work directed was beyond that which was appropriate to direct under section 61(1)(c) of the SERM Act (as above). (iii) The NSWPF's continued insistence that it maintained the "right" to recover from our client any costs that it might incur in the restoration work raises a serious question as to whether, if our client were to later receive such a demand, its insurance would respond to that claim? As we had informed you, our client was attempting to work through those issues with its insurers at the time that NSWPF has purported to issue the further directions on Friday afternoon." 19 Notice was given by the solicitors for the defendants that the contractors retained by the second defendant would attend the site at 3pm on 7 April. The solicitors for the plaintiff responded to the effect that the plaintiff would not oppose entry by the Police Service but would not agree to the second defendant or its contractors entering the site. Entry to those contractors was in fact refused by the plaintiff on the afternoon of 7 April. 20 On the morning of 8 April in purported reliance upon s 60D of the SERM Act, Police officers using bolt cutters gained access to the site and allowed representatives of the second defendant and its contractors onto the site and directed that the plaintiff and its contractors depart from the site. The plaintiff and its contractors complied with those directions. 21 That was the situation as it existed when the matter came before the court at 11.15am on 8 April.

Consideration 22 In relation to the application of the SERM Act, the plaintiff submits that the construction of the berm had sufficiently stabilised the secant wall along Botany Road so that it cannot be said that there is any need to protect persons or animals from injury or death, nor was there any need to protect property threatened by an actual or imminent emergency. The plaintiff submits that the first defendant could not be so satisfied as required by the Act and notes that despite requests, the first defendant has not identified the "reasonable grounds" upon which she relies for issuing her directions. In other words it accepts that initially the SERM Act was engaged when the water main burst and the flooding occurred but that after stabilisation works had been carried out by the plaintiff, the Act no longer applied because the emergency situation had ceased. 23 The defendants submit that the plaintiff's interpretation of the Act is unduly literal. They submit that once the Act is engaged it extends not just to the initial stabilisation of the emergency but to subsequent conduct which might be required to prevent recurrence or to further strengthen those actions taken as part of the initial stabilisation process. 24 The defendants also disagree with the factual basis for the plaintiff's challenge to the operation of the Act. They submit that until the additional steps identified in correspondence, such as the testing of existing rock anchors and the affixing of further rock anchors take place, there remains a risk to persons working on the site if any part of the secant wall collapses. They also identify the risk to pedestrians using Botany Road should there be a further undermining and collapse of the road and they point to adjoining buildings and businesses, such as the Iron Duke Hotel, which remain at risk of being undermined until the rock anchor testing and attachment is completed. 25 The Court is not in a position to decide that factual issue on the very limited material available to it. It does seem to me, however, from the plaintiff's own correspondence, part of which I have set out above, that there are important stabilisation steps yet to be taken, such as the testing of rock anchors and the attachment of further anchors. I have not been satisfied by the plaintiff that "the emergency" is over. Although the plaintiff has an arguable case that the SERM Act may no longer apply. I am not persuaded on the material currently before me that this is so and that argument of the plaintiff fails. 26 That conclusion is sufficient to dispose of the urgent injunctive relief which is sought. In deference to the other arguments which were placed before the Court, I propose to say something further. 27 It was submitted on behalf of the plaintiff that it had at all times behaved reasonably. It did not wait for a direction from the first defendant but at its own expense constructed the berm and stabilised the secant wall. It submits that thereafter the defendants have behaved in an unreasonable fashion. They have not allowed the plaintiff to reach an appropriate arrangement with its insurers but have imposed unreasonable requirements on the plaintiff. Having regard to the provisions of s 61(2) of the Act which can require the owner of the wall or premises to pay for stabilisation works, the plaintiff faces a very large financial loss in circumstances where it was in no way responsible for what has occurred. 28 It seems to me that those arguments are more appropriate to a final hearing of the matter and to a possible claim for damages by the plaintiff against other parties. In making that observation I should make it clear that I accept the submission by the plaintiff that it did act promptly, reasonably and appropriately when the emergency arose in constructing the berm. 29 In the application before me a matter which is of considerable importance is the balance of convenience. In the circumstances of this case the convenience to which I have to have regard is not restricted to a consideration of the plaintiff's position and that of the defendants. I have to keep in mind that the defendants are an emanation of the executive government. Their interest in the matter is not a commercial one. They represent the people of Sydney, and in particular the residents and business owners in the Botany area. There is a real public interest in having Botany Road reopened and in enabling neighbouring businesses such as the Iron Duke Hotel to resume operation. It seems to me to be an intolerable situation that Botany Road has been closed since 6 March and will remain closed into the foreseeable future until sufficient remedial work has been completed to enable it to be reopened. 30 What is clear from the correspondence, particularly that from the plaintiff, is that having constructed the berm and prevented the immediate collapse of the secant wall, little if any further remedial work has been carried out by the plaintiff since the date of the first direction on 20 March. While one has to be sympathetic to the difficult commercial position which the plaintiff finds itself in through no fault of its own, a matter of greater concern for the people of Sydney is the need to reopen Botany Road and for immediate safety concerns, both to persons and property, to be addressed. 31 In my opinion the balance of convenience favours the status quo, that is representatives of the second defendant and its contractors being on site and actively carrying out remedial work. 32 Another matter which has influenced me in reaching my conclusion is that ultimately damages will be an adequate remedy for the plaintiff. If contrary to my preliminary view the defendants did not have power under the SERM Act to do what they have done, then the plaintiff is entitled to be reimbursed for its losses by them. It is also not without significance that an analysis of the correspondence makes it clear that at the heart of the dispute between the parties is the question of costs and who is going to ultimately pay for the remedial work. Again that is a question which can ultimately be decided by the courts at a late point in time. 33 The immediate problem is to address the significant inconvenience to the people of Sydney, and in particular the people of Botany, so as to ensure that Botany Road is opened as soon as possible. 34 The defendants submitted that a company search of the plaintiff indicated that there were charges against its assets so that any undertaking as to damages by the plaintiff may not have any real substance. In view of the decision which I have reached in relation to other matters, it is not necessary for me to decide that question.

Conclusion 35 For the above reasons, the plaintiff has not satisfied me that it is entitled to the orders sought in its notice of motion filed in court on 8 April. Accordingly the motion is dismissed. I reserve the question of costs until the parties have the opportunity of making submissions on it. My preliminary view is that costs should follow the event and that the plaintiff should pay the defendants' costs of the application. 36 I note that the matter has been fixed for final hearing before another judge of this court on Thursday, 10 April 2008 at 10am. 37 The orders which I make are as follows:

(1) The plaintiff's motion of 8 April 2008 is dismissed. (2) Costs are reserved. (3) The matter is stood over for final hearing to 10am on Thursday, 10 April 2008.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.