(2007) 70 NSWLR 201
Katter v Melhem [2015] NSWCA 213
Source
Original judgment source is linked above.
Catchwords
(2007) 70 NSWLR 201
Katter v Melhem [2015] NSWCA 213
Judgment (2 paragraphs)
[1]
Judgment
Botany Bay City Council ('the Council') has applied, by notice of motion filed on 22 September 2015, to restore the matter before the Court to seek a further order in these Class 4 proceedings that had been disposed of on 1 July 2008 by the Court making orders by consent. The proceedings had been brought by the Council against the first respondent (the builder), the second respondent (the certifier) and the third respondent (the then owner of the land on which a development had been carried out) claiming that the development had been carried out otherwise than in accordance with a development consent granted in 2004. The then parties settled the proceedings and agreed to the Court disposing of the proceedings in terms of the orders that the Court made in 2008.
Of current relevance are the orders requiring the carrying out, maintenance and rectification of waterproofing of the basement levels of the development. Order 3 required:
To carry out waterproofing of the basement levels, and to maintain and rectify such waterproofing for a period of four (4) years from the date of issue of final occupation certificate, such that the amount of seepage into the basement levels does not exceed 500 litres per day.
Order 6 required the provision of certain bank guarantees prior to the application for the issue of an occupation certificate, including a bank guarantee of $50,000 to secure the performance of the first and third respondents' obligations under Order 3.
Order 12 required the Council to release the bank guarantee after four years:
Upon the expiry of four (4) years after the issue of final occupation certificate the Council, upon request, shall deliver to the first and third respondents the relevant bank guarantee securing performance of the obligation described in order A3.
Order 14 granted the parties "… liberty to restore on two days' notice for the purpose of implementation of these orders".
The final occupation certificate referred to in Order 3 was issued on or about 2 September 2008.
In 2008, waterproofing works were carried out to the basement, which the third respondent asserted were for the purpose of complying with Order 3.
The Council asserted, however, that the waterproofing of the basement levels was not carried out such that the performance standard in Order 3 was achieved, namely, " … that the amount of seepage into the basement levels does not exceed 500 litres per day".
For the purpose of dealing with the third respondent's motion seeking dismissal of the Council's notice of motion on the ground that the Court has no power to make the order sought by the Council in its notice of motion, the parties agreed on certain facts. These facts include:
(3) In breach of Order 3, the waterproofing of the basement levels was not carried out such that the amount of seepage into the basement levels does not exceed 500 litres per day in that:
(a) Since the making of the Orders there has not been any marked decrease in the amount of seepage coming into the basement;
(b) In the period from 1 July 2008 - 5 September 2012 the extent of seepage regularly exceeded, and regularly substantially exceeded, 500 litres per day;
(c) Testing on 12 August 2010 demonstrated seepage in the basement at a rate of approximately 2,000 litres per day. On that day it was not raining and there had not been recent rain;
(d) Testing during the four day period of 20-24 July 2012 demonstrated an average rate of seepage of 1,427 litres per day, with the seepage on 24 July 2012 being 2,436 litres per day. This was a time of moderate weather. The seepage would be greater in times of wet weather.
(4) In breach of Order 3, the waterproofing of the basement levels was not maintained and was not rectified for a period of four years to on or about 2 September 2012 so that the amount of seepage in the basement levels did not exceed 500 litres per day, which is demonstrated by the matters in paragraph 3.
(5) In 2010 and subsequently the Council drew to the attention of the first respondent (Skyton Developments (Aust) Pty Ltd) that the testing carried out on 12 August 2010 demonstrated seepage of 1,885 litres per day and this demonstrated a breach of Order 3.
(6) At no time since 2 September 2012 has the waterproofing been rectified such that the amount of seepage into the basement levels does not exceed 500 litres per day and the basement continues to receive seepage exceeding 500 litres per day.
(7) Evidence of an expert building contractor with particular expertise in waterproofing said the present waterproofing of the basement levels can be rectified so that the amount of seepage into the basement levels does not exceed 500 litres per day if the work described in the Schedule to the council's Notice of Motion filed 22 September 2015 is carried out.
Around September 2015, the Council decided to take action to enforce compliance with the obligation in Order 3 to carry out waterproofing of the basement levels. On 22 September 2015, the Council filed its notice of motion seeking for the Court to make a further order in the proceedings, namely:
(1) An order that within three months the Third Respondent carry out the waterproofing works to the basement levels of the premises known as 149-161 O'Riordan Street, Mascot, NSW, ('the Subject Premises') described in the Schedule.
…
Schedule
The concrete walls and the abutting beams of the basement car park perimeter retaining walls of the Subject Premises be repaired with a combination of cementicious products, injectable chemicals and/or plastic repair products so that the said walls and beams are sealed to a performance standard such that the maximum amount of seepage into the basement car park drainage system shall never exceed 500 litres per day.
The Council also sought "Such further or other order as the Court thinks fit to ensure compliance with the Court's Orders of 1 July 2008".
The Council contended that it was exercising the liberty to restore under Order 14. The third respondent contended that the further order sought by the Council is outside the scope of what can be done by the Court pursuant to the liberty to restore reserved under Order 14. The third respondent filed a notice of motion seeking that the Court determine as a preliminary point the question:
Does the Court have the power to make the orders sought in the Applicant's Notice of Motion filed on 22 September 2015?
The Court ordered that this question be determined separately from the other issues raised by the Council's notice of motion filed on 22 September 2015.
The Council's justification for seeking a further order is that the first respondent and third respondent have not complied with the obligation in Order 3 to carry out waterproofing of the basement levels. The reason is that the waterproofing works that were carried out to the basement in 2008 did not meet the performance standard in Order 3. The Council noted that the amount of seepage into the basement levels exceeded 500 litres per day throughout the four year period referred to in Order 3, from 2 September 2008 to 2 September 2012, and since 2 September 2012. The Council submitted that because the amount of seepage into the basement levels has exceeded the performance standard in Order 3, the waterproofing works that were carried out in 2008 cannot meet the description of the waterproofing that Order 3 required, that is, "… waterproofing of the basement levels … such that the amount of seepage into the basement levels does not exceed 500 litres per day". Hence, the Council argued, the obligation under Order 3 to carry out waterproofing of the basement levels that answered that description remains unfulfilled.
The Council submitted that the reservation of liberty to restore allowed the Council to make application "… for the purpose of dealing with a matter involved in, or arising in the course of, working out that order; for example, by making more specific provision for its implementation or by modifying its operation to take account of some subsequent change of circumstance or by enforcing it": Phillips v Walsh (1990) 20 NSWLR 206 at 209 - 210; Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 at [35].
The Council submitted that the details as to the means of waterproofing provided in the Council's further order in its notice of motion made more specific provision for the implementation of the unfulfilled obligation in Order 3 to carry out waterproofing of the basement levels to achieve the performance standard, and also enforced that obligation. By the carrying out of the further order sought by the Council, the obligation in Order 3 would be performed.
The third respondent contested that Order 3 continues to impose an obligation on the first respondent and third respondent that could be performed by the carrying out of the further order sought by the Council in its notice of motion.
The third respondent's argument was that, on a proper construction of Order 3, the further order sought by the Council in its notice of motion, or any other like order, could not implement or enforce the obligation under Order 3 and would therefore be outside the power of the Court under the reservation of the liberty to restore in Order 14.
Order 3 obliged the actions of carrying out, maintenance and rectification of waterproofing of the basement levels to all be performed within a period of four years from the date of the final occupation certificate, ie from 2 September 2008 to 2 September 2012. This is clear from the text of Order 3. Necessarily, waterproofing must be carried out before there can be maintenance or rectification of "such waterproofing". If the maintenance and rectification of "such waterproofing" is to be performed for a period of four years from the date of issue of the final occupation certificate, the carrying out of the waterproofing must necessarily be within that four year period, as it must precede the maintenance and rectification of the waterproofing.
Performance of the obligation under Order 3 to carry out, maintain and rectify waterproofing was secured by a bank guarantee (Order 6(c)). The Council was required upon request to deliver this bank guarantee securing performance of the obligation under Order 3 upon the expiry of four years after the issue of the final occupation certificate (ie by 2 September 2012).
The obligation under Order 3 to carry out, maintain and rectify waterproofing did not continue past this date (2 September 2012).
The Council's further order would require the third respondent to carry out the waterproofing specified within three months of the Court making the further order. Such waterproofing would not be an implementation of the obligation in Order 3. The obligation in Order 3 to carry out waterproofing was required to be performed within the four year period of 2 September 2008 to 2 September 2012. The carrying out of whatever waterproofing might be required in 2016 cannot satisfy the obligation in Order 3 to carry out waterproofing in 2008. Similarly, requiring the carrying out of waterproofing in 2016 does not enforce compliance with the obligation in Order 3 to carry out waterproofing in 2008.
The third respondent submitted that this conclusion that the obligation to carry out the waterproofing required by Order 3 was time limited can be reached by another route. Looking just at the first and last clauses of Order 3, the obligation is to carry out waterproofing of the basement levels such that the amount of seepage into the basement levels "does not exceed 500 litres per day". The third respondent submitted that this imposes a time requirement for meeting the performance standard: the performance standard must be met upon the carrying out of the waterproofing. However, the performance standard need not be met afterwards. The requirement to meet the performance standard afterwards derives from the second clause of Order 3 concerning the maintenance and rectification of the waterproofing. On this construction, the Council's further order still would not implement or enforce Order 3. Carrying out waterproofing in 2016 cannot implement or enforce an obligation to carry out waterproofing that met the performance standard at the time of carrying out the waterproofing in 2008.
The third respondent also submitted that the Council's further order fell outside the scope of what can be done under the reservation of liberty to restore because it would substantially vary Order 3. It would specify and require the particular means by which the waterproofing was required to be carried out, where Order 3 had left the means to the discretion of the first and third respondents to choose. Order 3 only fixed a performance standard, it was silent as to the means by which that performance standard was to be met. The Council's further order, however, would change the effect of Order 3 so as to now specify and require the means of performing the obligation of carrying out waterproofing to meet the performance standard.
The Council's further order would also impose a continuing obligation to carry out waterproofing that would continue to meet the performance standard. Order 3, on a proper construction, did not impose this continuing obligation.
The Council's further order would impose a new obligation to carry out waterproofing that was independent of the obligation in Order 3 to maintain and rectify the waterproofing that had been carried out. The obligation in Order 3 to maintain and rectify only related to "such waterproofing" as was carried out in 2008. The waterproofing to be carried out under the Council's further order in 2016 could never be waterproofing that was required to be maintained and rectified under Order 3 for four years from the date of issue of the final occupation certificate on 2 September 2008.
The third respondent submitted, therefore, that the Council's further order fell outside the scope of what can be done pursuant to liberty to restore. The reservation of liberty to restore provides no foothold for imposing a new order or to vary substantially an existing order: Katter v Melhem [2015] NSWCA 213; (2015) 325 ALR 351 at [81].
I agree with the third respondent's submissions, for the reasons they have given. Order 3 is to be construed as imposing a time limit on the obligation to carry out the waterproofing of the basement levels. That time limit is four years from the date of issue of the final occupation certificate. The first respondent and third respondents may or may not have complied with their obligation to carry out waterproofing that achieves the performance standard under Order 3 within that time limit. But regardless, the Court cannot now make a new order requiring the carrying out of waterproofing to achieve that performance standard. The making of a further order today will not implement or enforce Order 3.
I do not agree with the Council's construction of Order 3 that it imposes two obligations, one restricted in time (maintenance and rectification of waterproofing for a period of four years from the date of issue of the final occupation certificate) but the other one not restricted in time (the carrying out of waterproofing). The two obligations under Order 3 are linked, as the third respondent has submitted. This is evident in the structure and language of Order 3 and in the requirements concerning the giving and delivering of the bank guarantee securing performance of all of the obligations under Order 3 within the four year period.
I also agree with the third respondent that the making of the Council's further order would impose a new order or substantially vary Order 3. It could never have been intended by Order 3 that there would be the carrying out of waterproofing, but not maintenance or rectification of such waterproofing. Yet that would be the effect of the Council's further order. Waterproofing would be required to be carried out in 2016 pursuant to the further order, but the obligation in Order 3 to maintain and rectify would not apply to such waterproofing.
In these circumstances, I agree that the Council's further order is outside the scope of what can be done pursuant to the reservation of liberty to restore in Order 14. I would therefore answer the preliminary question "No". This answer disposes of the Council's notice of motion. It should therefore be dismissed. Costs should follow the event. I therefore make the following orders:
1. The answer to the question: 'Does the Court have the power to make the orders sought in the applicant's notice of motion filed on 22 September 2015?' is no.
2. The applicant's notice of motion filed on 22 September 2015 is dismissed.
3. The applicant is to pay the third respondent's costs of the applicant's notice of motion and the third respondent's notice of motion.
[2]
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Decision last updated: 17 March 2016