Canturi Corporation Pty Ltd v Gagner Pty Limited trading as Indochine Cafe

District Court of NSW|2008-09-10|Before: Giles CJ, McDougall J

Introduction

The plaintiff brings proceedings for damages in negligence and alternatively in nuisance arising from damage to its premises (a jewellery store in a Sydney arcade) following the flooding of its premises by water escaping from the defendant's kitchen, on the floor above on 29 October 2005.

It is not in dispute that a degree of damage occurred to the plaintiff's premises as a result. A report prepared by the defendant's expert Mr Makin, the accuracy of which is accepted by the plaintiff, puts the "repair" figure at $44,113, this being the theoretical repair cost as at 29 October 2005.

The matter was originally listed before me as a three-day hearing. Due to a substantial change in the plaintiff's case to call evidence from the plaintiff's principal, Mr Canturi, it was necessary for the hearing to be adjourned part heard so that the defendant could meet this additional evidence and call further evidence, including expert evidence, in reply.

The adjournment of these proceedings from 27 August to 8 September, although not lengthy, caused disruption to the hearing, as did the subsequent adjournment on 10 September to 2 October. Following my reserving judgment, on 2 October, the defendant sent a further 24 pages of submissions together with further authorities. The combative way in which this litigation had been fought has affected not only costs issues (some of which have been determined in my judgment of 27 August 2008: Canturi Corporation Pty Limited v Gagner Pty Limited [2008] NSWDC 151) but also the evidence. I have dealt with these issues later in this judgment.

The issues in these proceedings were defined by the defendant at the commencement of the litigation as follows: As to the claim in negligence

Whether (as is pleaded) a tortious duty of care is "imposed by law" to oblige a defendant "to prevent the escape of water from its taps, pipe and sink"?

This issue is not addressed in the defendant's written submissions and appears to have been conceded.

Whether (as is pleaded) the defendant "failed to take measures to ensure the neighbouring property was not damaged by flood", and if so, what those failures were and whether they amounted in the circumstances to a breach of any tortious duty of care?

This was not a matter about which the plaintiff led evidence, nor was it the basis on which the defendant defended the action. The plaintiff's "simple" (written submissions page 8) case on liability relies on the uncontradicted evidence of the landlord's plumber and security guard that the defendant's employees left the two kitchen taps on and running. The defendant's response to the plaintiff's claim that its case is "simple" is to assert that the plaintiff has failed to identify what "the alleged causative act or acts of negligence were" (defendant's submissions page 2). It is asserted that the failure to turn off the taps is only one of several causative factors and that the failure of the pump out box for unknown reasons (asserted to be the fault of the supplier) and the absence of a floor drain (the fault of the landlord) were the substantial causes of the flood.

If a plea of negligence is made out, the extent to which the defendant should be fixed with a proportion of liability by reference to ss 34 and 35 of the Civil Liability Act 2002 having regard, inter alia, to the acts and omissions of the landlord (Tanert Pty Ltd) and/or the cooktop supplier and installer (J&P Catering Equipment Pty Ltd)?

This was the issue upon which liability was principally challenged, namely that the "but for" test applies "equally" to the landlord's and supplier's alleged negligence (defendant's written submissions, paragraphs 4, 9-22).

Neither the plaintiff nor the defendant called any evidence about the condition of the pump out box system. It was removed and disposed of by the landlord's plumber in March 2006 when a new drain system was installed at the landlord's expense. Mr Chan, a director of the defendant, threw away both the tap washers (T-479). Neither party called evidence from the landlord, although some correspondence was tendered and Mr Chan gave evidence of conversations. However, the only expert evidence concerning whether the pump out system in place was insufficient or faulty was the plumber's evidence that the pump out system was adequate (T-29 and 30).

As to the claim in nuisance 7. The defendant submitted the following were the relevant issues:

Whether there was any fault on the part of the defendant that of itself, or in combination, that resulted in there being unreasonably interference in the plaintiff's use and enjoyment of its tenancy (by reason of water ingress)?

If so what that fault, or lack of reasonable care, was?

If the plea in nuisance is made out, the extent to which the defendant should be fixed with a proportion of liability by reference to ss 34 and 35 Civil Liability Act 2002 having regard, inter alia, to the acts and omissions of the landlord (Tanert Pty Ltd) and/or the cooktop supplier and installer (J&P Catering Equipment Pty Ltd)?

The parties relied on the same evidence for the nuisance claim.

What was the extent of physical damage occasioned to the plaintiff's tenancy by the water ingress?

What actual repair works were undertaken, and repair costs, if any, were incurred by reason of the water ingress?

What theoretical repair works became necessary (and associated repair costs "arose") by reason of the water ingress?

Whether in the circumstances, and having regard inter alia to the terms of the Canturi lease, it is appropriate to determine a figure for compensation for physical damage by reference to actual repair costs expended, or theoretical repair costs?

Whether all (or some) of the theoretical repair works/costs were subsumed and rendered redundant by the essential term of the Canturi lease (clause 18 thereof) to undertake at its own cost refurbishment of its leasehold tenancy?

Whether there was any business interruption, or loss of profits, at all on 29 October 2005, and if so, in what amount?

Whether there was any business interruption, or loss of profits, at all that was referable only to works during June and July 2006, to repair water damage (from October 2005) and if so, for what periods and in what amounts?

Whether the amounts claimed as damages for repair was wholly, or partly, on account of betterment works?

Whether the amounts claimed for loss of profits are referable in whole or in part to closures on account of betterment works, as opposed to repair works?

I have dealt with these and other disputed issues in the section on damages.

I shall first consider the evidence concerning liability of the defendant, and the evidence of the landlord's plumber (Mr Fotheringham) and security guard (Mr Rigney) who attended the premises on the day the flood was discovered.

Mr Brad Fotheringham, a licensed plumber who (through his company Brad's On Tap Plumbing Pty Ltd) is retained by the landlord, came to the St James Centre on Saturday 29 October 2005 after receiving a telephone call from a representative of the landlord, who informed him that there was water leaking from Shop 14 (Indochine Café) to Canturi Jewellers, the shop below. According to his affidavit, he arrived at approximately 20 minutes later and met the security guard, Robert Rigney, at the Centre.

As he walked past Shops 11, 12 and 12A Mr Fotheringham looked through the window of Canturi and observed water stains on the back sandstone wall. He then went into Indochine Café where he was shown into the kitchen area. According to the affidavit he sworn on 2 February 2007, after careful inspection of the kitchen he observed that there were two taps (a wok tap and a sink tap) which were both on and running (affidavit paragraph 4). The water from the wok tap was flowing through a pipe into a holding tank located on the floor which contained a pump out box. There was a build up of grease contained within the pump out box and the holding tank of the pump out box was overflowing. The float switch (which is the mechanism that turns the pump out box off and on) was activated by the rising float, but the pump out box is not pumping out any water. There was a large puddle of water on the floor due to the overflowing of the holding tank and the pump out box was not pumping any water.

Mr Fotheringham turned off the wok tap by firmly turning the tap handle off. Either he or the security guard did the same to the sink tap. After both taps were turned off, he observed that water was overflowing from the pump out box and the holding tank onto the floor. There was no method of drainage of water from the wok tap other than the pump out box and there was no method of drainage at all from the floor of the kitchen.

Mr Fotheringham prepared an invoice on which he wrote: "Called to a [sic] after hours water leak from the restaurant to the shop below the water was leaking on the floor from a pump out box and the water was filling that from the tap in the sink not turned off the water leaked through the floor into the shop below flooding the floors and ceiling" (Exhibit 5 - reproduced without alteration)

Mr Fotheringham sworn a further affidavit on 26 June 2008 in which he confirmed (at paragraph 2) that he observed both the sink tap and wok tap (also known as the cook top tap) were "left on and running". He also turned off the lever tap, which controls the supply of water to the wok tap. He said "I do this as a matter of cause to ensure that no further water runs through the tap and all possible sources of water are contained" (paragraph 2.2). He went on to clarify that the reference in the tax invoice to "the tap in the sink not turned off" referred to the sink area containing both the cook top (or wok) tap and the actual sink tap. He went on to say in relation to the washers: "The washers in the taps I observed to be on and running were not in great condition, but were sufficient that myself and Robert Rigney were able to turn the taps off upon attending the premises. If there had been a failure in the washers, we would not have been able to do so;

In my experience, washers will break in the act of turning a tap on or off and not while the tap is either on or off. If the washers had broken when the tap was turned off on the night before I attended the Indochine Café, there would have been a noticeable leak as soon as the tap was turned off the night before. To try to turn it off with a broken washer when I arrived the next day would have taken the use of additional force." (paragraphs 3.3 and 3.4)

It a further affidavit sworn on 14 August 2008, in paragraphs 3 to 8, Mr Fotheringham reiterated that there were two taps and that "both of those taps were on and running". He went on to say in paragraph 3: "The reason I know they were on is because when I turned the wok tap clockwise, the water flow stopped, and when either Robert or I did the same to the sink tap, the water ceased flowing out of it as well."

He went on to confirm that if the washers had failed, he would not had been able to turn off the taps in this fashion because "when washers fail, they split" and "will not seal properly". If the washer had broken in the act of turning a tap off, it would run straight away and would be noticeable to the person turning off the tap because the water would not stop (paragraph 6). The reason why washers break in the act of turning a tap on or off, and not while the tap is either on or off, is because the act of turning the tap on or off breaks the washer. Washers do not break without movement or action of this kind.

In the witness box Mr Fotheringham was an impressive witness who was able to answer all questions promptly and clearly and had a good recollection of the events in question. He confirmed in cross-examination (T-18) that he and Mr Rigney "actually turned the taps off" and said that "it was the tap on the wok that stopped the water flow". He confirmed that he turned off the yellow insolation tap "just as a precaution". He described the taps as "leaking" (at T-28) saying "I can't recall whether it was a stream but I know that there was enough water to flood the entire floor". He confirmed (at T-29) his affidavit evidence that washers rarely just fail or fall off and said they failed "straight", which I suspect maybe a transcript error and should read "straight away".

Mr Fotheringham was not cross-examined about his observations of a build up of grease in the pump out box. That means I can assume that his observation of a build up of grease in the pump out box is correct. He was not asked whether this had any relationship to the flood.

The defendant asserts that Mr Fotheringham said that the tap was only dripping, or slowly flowing (e.g. T-28 line 34). However, when Mr Fotheringham referred to water droplets or water that is a "stream" (T-28 line 34) or the taps as being "on and running" (paragraph 3.3 of his affidavit), he was not saying that this was just a dripping tap. This was a steady steam of water, according to his consistent description of the taps in the invoice written on the day in question, according to his affidavit and also according to his evidence in cross-examination. It was a substantial amount of water. As Mr Fotheringham himself noted, there was enough water to flood the entire floor over a period of 10 to 12 hours (T-28).

In cross-examination Mr Fotheringham agreed that when he prepared an invoice he did not go to "any particular trouble or effort to record precisely" the work that was done. It was a general statement, not a statement prepared for litigation purposes, and it is asserted that Mr Fotheringham was confused, and that this is why it took him four affidavits to attempt to fully explain the limited events of 29 October 2005 and to clarify the discrepancies in his invoice of November 2005.

I do not accept this description of asserted inconsistencies or inaccuracies. Mr Fotheringham's invoice is clear and his evidence never wavered. The defendant's counsel in written submissions (p 28) criticises Mr Fotheringham for taking four affidavits to "attempt to fully explain" and to "clarify the discrepancies in his invoice" but I do not accept there are discrepancies in his invoice. It is a general but accurate description by a busy tradesman who is preparing an invoice in the usual way that he would do; he prepared these on a daily basis. To assert that an invoice is a general statement which because it is not prepared for litigation purposes cannot "accurate record what he saw or did" (defendant's submissions p 28) is to place too little emphasis upon the only contemporaneous written document in circumstances where it has been written by a skilled tradesman who is doing his best to describe what he saw and what he did.

Mr Fotheringham was accompanied to the premises by Mr Rigney, a security guard. Mr Rigney has sworn two affidavits (on 19 October 2007 and 14 August 2008). He describes (affidavit sworn 19 October 2007, paragraph 4) seeing "a tap located near the stove was left on, and was running at a steady rate. I further observed a large pool of water on the floor of the kitchen, to the approximate depth of between 1cm to 2cm. I then observed Mr Fotheringham turn off the tap".

In his affidavit of 14 August 2008, which appears, like subsequent affidavits of Mr Fotheringham, to have been generated as affidavits in reply to Mr Chan, he identifies the tap which was left on noting that it was a "small flow" and not just an occasional drip. He was unable to recall whether Mr Fotheringham also turned a lever tap which isolated the pipe which fed the tap. He said "the water on the floor was coming from the wok tap and not from any other tap. The water from the other tap went down the waste drain, but the water from the wok tap went to the pump out box on the floor, which I saw was not operating" (paragraph 3).

Mr Rigney made a note in the daily incident book. This is annexure B to his affidavit of 14 August and reads: "08:50: [not transcribable] R. Rigney on site. Had already been notified re water leaking from Indochine Restaurant. Located leak and stopped water. Tap had not been turned off properly and pump did not activate as float was stuck. Contacted BOM and asked for electrician to come in as well as the plumber. Cleaning contractor arrived to remove water from Indochine and Canturi. Contacted tenant (Indochine) to also be on site after checking areas affected by water both electrician and plumber said everything was both safe and secure. Cleaning contractors will be back at 16:00 for carpet drying in Canturi. Contractors off site approx 10:50. Otherwise all good at this time (11:20)."

There are other notes about what Mr Rigney did on that day, but they are not relevant to these proceedings.

In his evidence in the witness box, Mr Rigney candidly admitted that his recollection of the events of 29 October 2004 was poor. It is asserted that therefore his evidence adds little to the liability issues in that he is not able to confirm the matters in his file note were matters that were correct and he could recall. He could no longer recall for example how Mr Fotheringham shut off the flow of water (T-38 line 40), the extent of damage to the Canturi jewellery shop (although he recall seeing customers going into the shop later that day and seeing it trade - T-40 line 16) and in fact he said that he was not concerned with how observing how much damage had been occasioned to the plaintiff's shop by the water ingress (T-40), presumably because this falls outside his duties as a security guard.

Although Mr Rigney's recollection has faded, he made observations on the day and sworn an affidavit while events were fresh in his mind. While his evidence in relation to what he saw would be of limited use at best, it is nevertheless consistent with Mr Fotheringham's account.

I do not accept the defendant's submission that the flooding occurred in circumstances where taps had been turned off but the mere dripping of the taps was sufficient to cause such a flood. The contemporaneous documentation, the affidavit material and Mr Fotheringham's cross-examination (support to a very limited degree by Mr Rigney - see in particular T-38) confirm that taps were left running.

What then is the evidence of the defendant? Mr Chan stated quite candidly in his evidence in chief that he had no particular recollection of the day in question (T-468).

In Mr Chan's affidavit it is clear that he thought that the washers were the cause of the water filling the pump out box, and not the tap being left on, because he had noticed after 29 October 2005 that the cook top tap leaked even when turned off (Mr Chan's affidavit, paragraph 61). However, Mr Fotheringham, who is a plumber, had no difficulty turning off the tap and said in cross-examination that while the washers "were not in great condition", their condition was "sufficient" that they could be turned off. If the washers had broken, this would not have been possible. More importantly, however, it was the obligation of the defendant to keep the taps, including the washers, in good working order, pursuant to clauses 5.1 and 5.3(b)(3) of exhibit RC1 to Mr Chan's affidavit. In addition, as the plaintiff in submissions points out, while one broken washer might explain why one tap was running, this would not explain why two taps were left running.

The precise volume of water that escaped is unknown. It was enough to do substantial damage to the premises below. The precise amount of what which had escaped may have been ascertainable from the defendant's or the landlord's water board records. However these documents are not in evidence, so I have no information beyond the evidence of the damage and the observations of these witnesses, who saw the extent of flooding.

Given that Mr Fotheringham had no difficulty in turning the taps off, notwithstanding the fact that the washers had a degree of wear, the inference that I must draw is that both taps were left on carelessly by an employee of the defendant. The wok tap in particular was probably difficult to turn off if the washer was in the condition described by Mr Fotheringham. Mr Chan was aware the cooktop tap leaked even when turned off (Mr Chan's affidavit, paragraph 61). It was the defendant's obligation under the lease to keep the taps in good working order and the defendant failed to do so.

The reason for the water collecting in the kitchen sinks and pump was that a careless employee of the defendant failed to turn the taps off before leaving the kitchen for the night.

Having made this finding of fact, I now consider the claims in negligence and nuisance as formulated by the defendant in its outline of issues (see paragraphs 6 of this judgment).

The defendant as the occupier of premises has a duty to prevent injury which is reasonably foreseeable, and the duty of care is to exercise a standard of care reasonable in the circumstances. Whether or not there was any contribution to the flooding by reason of the pump being inadequate or faulty, the fact remains that the escape of water by reason of the taps having been left on, whether by careless oversight or deliberate act, particularly in circumstance where the problem in turning the taps off properly appears to have related to the poor condition of the washers, is the conduct satisfying the "but for" test in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506. This is not a case where in the course of ordinary use the pump failed, or where notwithstanding proper care being taken by the defendant's employees, the washers in the taps suddenly came on, or water already stored in the pump in some way escaped to flood the plaintiff's premises.

Leaving a tap on such an obviously dangerous act that damage is foreseeable and the standard of care which is reasonable in the circumstances cannot be met.

When a defendant is responsible for an act which indirectly causes physical injury to land or substantially interference with the use or enjoyment of that land where the injury or interference is held to be unreasonable, the tort of nuisance is committed. The plaintiff draws to my attention the different onus of proof in nuisance, in that once the nuisance is proved and the defendant is shown to have caused it, the legal burden shifts to the defendant to justify or excuse the act, whereas in negligence the onus remains throughout on the plaintiff: see Marcic v Thames Water Utilities Ltd [2002] QB 929 at 994; Balkin & Davis, The Law of Torts, 3rd ed at 14.2.

The plaintiff submits that the defendant is liable for failing to take necessary reasonable steps to remedy a dangerous state of affairs (Balkin & Davis at 14.40). As to liability for escape of water, see Goldman v Hargrave (1966) 115 CLR 458 and Leakey v National Trust for Places of Historic Interest or Natural Beauty [1980] QB 485, as well as Marcic v Thames Water Utilities Ltd, supra. The danger caused by flooding and water damage is well known and the danger of leaving both taps on (whether because of problems turning off the taps with both washers in poor condition, or for any other reason), is both obvious and foreseeable.

The plaintiff also submits that the defendant was well aware that there was no floor drain in the defendant's kitchen. This meant that the defendant's employee were on notice that there was nowhere for the water to go if it was not dealt with by the pump out box and holding tank arrangement that had been selected in lieu of the more expensive option of a floor drain upon the kitchen fit out. Whatever the strengths and weaknesses of the pump system that was installed, it was, as Mr Fotheringham pointed out in his evidence, never designed to be operating 24 hours a day. By leaving the taps on, which meant that the pump has to function continuously over many hours, perhaps days, the defendant's employees were, by their own deliberate actions, creating a nuisance.

The defendant submits that the tort of nuisance involves fault of some kind or another, which generally involves foreseeability, and submits that the escape of water was not foreseeable. I reject that submission. A reasonable person in the position of the defendant or its employees would have been aware of the dangers of leaving a tap on.

The defendant owed a duty of care to prevent the escape of water from its kitchen premises into the neighbouring property. The defendant failed to take measures to ensure that the neighbouring property was not damaged by flood. The measures the defendant failed to take included not simply failure to turn off the taps, but failure to ensure that the washers in the taps were in good working order so that the taps were able to be turned on and off easily by staff members. The same findings apply to the claim in nuisance as in negligence, in that the fault or lack of reasonable care was the failure to turn off the taps and the failure to ensure the washers were in good working order. These were deliberate faults. I note the concession by Mr Chan in his evidence that he knew it was not the landlord's responsibility to maintain the washers in good repairs and it was his responsibilities. He said the following in cross-examination: "Q. Did you understand it was your job to keep the taps and the washers in good repair? A. Yes.

Q. So if it leaked because the washer was worn out that wouldn't be the landlord's problem? A. Yes." (T-487, lines 25-45)

Mr Chan in fact replaced the washers and disposed of the original washers shortly afterwards: "Q. I think you said in your affidavit that you didn't replace the washer immediately in the tap? A. Yes.

Q. Because you wanted to keep it to show that it leaked? A. Yes.

Q. Who did you show? A. The assessor, the assessor from the insurance company.

Q. You knew the landlord had made a demand on you and you knew that the Canturi solicitors had made a demand but you didn't keep the washer? A. Mm.

Q. But you didn't keep the washer to show that it was damaged? A. No because I got no experience, you know, in this case so that's why I pass it to my insurance company, you know, for the assessors to handle the case.

Q. So your assessor looked at the washer? A. Yeah.

Q. Okay. So he'd be the one who could tell us what the state of the washer was? A. Not the washer because at the time when he came nothing has been fixed yet. I just show him, you know, how it happened.

Q. So that person, he would be the one that could tell us if the washer was damaged or not?

MILLER: I object. That wasn't the answer that was just given.

Q. So you're saying that someone from the insurance company came and you shoed them how the washer was gauged?

Q. You tell us what you did when the insurance man came. What did you do, what did you show him? A. I just show him how this, you can do when you turn off, as the water's still leaking, I think most likely because of the washer, the damage of the washer.

Q. That's the only person you showed? A. I can't remember any other person.

Q. Then at some point you got the washer replaced? A. Yes.

Q. You knew that there was a claim being made by Canturi about the flood? MILLER: I object. At what time, what time period.

Q. At the time you threw the washer away, you knew there was a claim? A. No.

Q. Well you knew that the landlord had written to you and told you that you were liable for all the damages?

MILLER: I object. Can we have that identified, that letter.

HER HONOUR: I think, in all fairness, you will show him the letter.

Q. You are going to be shown a letter that the landlord sent you saying that the landlord expected you to pay for this damage. Do you remember receiving that letter? A. Yes.

Q. So did you throw away the washer before or after you got this letter? A. After, it's before because when I read the date that should be before.

Q. You threw away the washer before you got that letter? A. Yeah.

Q. That can't be right, sir. The flood was on 29 October? A. After, after. It's November, yeah, sorry.

HER HONOUR: He's already answered that several times. How about you ask him why he threw it away if he knew that they were making a demand.

Q. Why did you throw it away if you knew that there was a demand? A. To my understanding, you know, because when after I showed to the insurance assessor, I think they know the cause and I don't think that there's any importance of keeping that damaged washer."

While the washers were still in workable condition, Mr Chan's evidence about their poor condition is significant, given this was a busy commercial kitchen in a restaurant.

There is no evidence concerning whether the build up of fat and grease observed by the plumber in the tanks caused flooding to occur. Using the common sense test (set out in March v E & MH Stramare Pty Ltd) would dictate that the build-up of fat and grease may have played a contributory role. However, I do not need to make any finding about this issue. The basic failure to turn off the taps and to leave them running in circumstances where a very substantial amount of water was released is evidence which satisfies the test for both the claim in negligence and the claim in nuisance.

Finally, I should note a concession by the defendant in paragraph 4(c) of the Defence that there was an escape of water. The precise terms of the pleading are as follows: "4(c) the defendant admits that the escape of water was caused by a combination of:

(i) a failure of a washer on the cooktop tap so as to permit the discharge of water from that tap some time after 5:00pm Friday 28 October 2005;

(ii) the failure of a pump in a holding tank in the defendant's premises attached to that cooktop that would otherwise have caused that water to be disposed of to the sewer; and

(iii) the failure of the landlord of the premises to have a drain located in the kitchen floor; but,

otherwise does not admit the allegations therein and denies the breach by it of any duty of care."

The assertion that any other person was responsible for the state of repair of the washers on the cook top tap must fall away when having regarding to the provisions of the contract and also the concession by Mr Chan in cross-examination that the state of the washers was known to be the plaintiff's own responsibility (T-487). If I have erred in the findings set out above, on this basis alone, if the washers are defective, the claims in negligence and nuisance must succeed.

This brings me to a consideration of the extent to which the defendant should be fixed with a proportion of liability by reference to ss 34 and 35 Civil Liability Act 2002 in relation to asserted acts and omissions of the landlord (Tanert Pty Limited) and/or the cooktop supplier and installer (J&P Catering Equipment Pty Limited).

Apportionment of liability under ss 34 and 35 Civil Liability Act

The question of whether or not the flooding occurred not simply because of the escaping of the water from the tank but also the failure of the pump in the holding tank and the absence of a drain in the kitchen floor are the next issues which I will consider.

I shall first set out the pleading of the claim pursuant to s 34 Civil Liability Act 2002 (NSW) concerning the liability of the landlord and of J&P Catering Equipment Pty Limited: "In further answer to the claim, the defendant says that if it is liable for any loss or damage suffered by the plaintiff (which is denied):

(a) the plaintiff's claim is an "apportionable claim" within the meaning of s 34 Civil Liability Act 2002 (NSW).

(b) that other persons are "concurrent wrongdoer/s" within the meaning of s 34 Civil Liability Act 2002 (NSW) who [sic] acts or omissions caused the plaintiff's alleged damage and loss;

(c) says that the liability to the plaintiff (if any) is limited to an amount reflecting that proportion of the damage or loss claimed that the Court considers just having regard to the extent of its responsibility for the plaintiff's damage or loss under s 35 Civil Liability Act 2002 (NSW);

(d) says that the plaintiff has failed to join other concurrent wrongdoer/s who [sic] acts or omissions caused the plaintiff's alleged loss and damage."

Sections 34, 35 and 35A Civil Liability Act provides: " 34 Application of Part

(1) This Part applies to the following claims ("apportionable claims"):

(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,

(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act.

(1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

(2) In this Part, a "concurrent wrongdoer", in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

(3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).

(4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.

35 Proportionate liability for apportionable claims

(1) In any proceedings involving an apportionable claim:

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and

(b) the court may give judgment against the defendant for not more than that amount.

(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings:

(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and

(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.

35A Duty of defendant to inform plaintiff about concurrent wrongdoers

(a) a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the "other person") may be a concurrent wrongdoer in relation to the claim, and

(b) the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about:

(ii) the circumstances that may make the other person a concurrent wrongdoer in relation to the claim, and

(c) the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim,

the court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff.

(2) The court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise."

Part IV of the Civil Liability Act was designed to prevent an injustice whereby a plaintiff could chose to sue only one of several wrongdoers and enforce the judgment against only that defendant, leaving that defendant to pursue other wrongdoers for indemnity or contribution. The aim was to was alleviate this injustice by ensuring that each concurrent wrongdoer should bear only that proportion of liability which the court considered just, having regard to the comparative responsibilities of all wrongdoers for the plaintiff's loss.

However, as Palmer J notes in Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463 at [94]: "[94] Part IV is designed to alleviate this perceived injustice. It is intended to visit on each concurrent wrongdoer only that amount of liability which the Court considers " just ", having regard to the comparative responsibilities of all wrongdoers for the plaintiff's loss. How the Court is to assess what is "just" is not explained. The Court must exercise a large discretionary judgment founded upon the facts proved in each particular case. The principles upon which the Court will exercise this discretionary judgment will come to be developed on a case-by-case basis. However, it seems clear enough that the policy of Pt IV is that a wrongdoer who is, in a real and pragmatic sense, more to blame for the loss than another wrongdoer should bear more of the liability. This calls for the exercise of the same kind of judgment as the Court exercises in apportioning responsibility as between a defendant sued in tort for negligence and a plaintiff who, by his or her own negligence, has been partly responsible for the injury."

A careful analysis of the language of Palmer J when considering the comparative responsibilities of all wrongdoers for the plaintiff's loss is very helpful. His Honour refers to a wrongdoer who is "in a real and pragmatic sense, more to blame" and for the Court to exercise the same kind of judgment that the Court would do where there has been contributory negligence by a plaintiff.

The exercise of judgment a Court makes when apportioning responsibility between a defendant and a plaintiff who has been contributorily negligent is embarked upon in circumstances where the onus lies on the party asserting contributory negligence, namely the defendant. The bare assertion by a defendant that a plaintiff involved in a motor vehicle or workplace accident must had been negligent or the accident would not have occurred in the first place will not be sufficient to establish contributory negligence, particulars of the contributory negligence need to be given and evidence led.

The defendant has drawn my attention to an article by McDougall J "Proportionate Liability In Construction Litigation" (2006) 22(6) BCL 394 (http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/ll_sc.nsf/pages/SCO_mcdougall100706) in which McDougall J notes that s 35(3)(b) gives rise to the problem that the Court is required to assess the non party's contribution to the overall damage by applying the formula set out in s 35(1)(a) without hearing from the non party and in circumstances where the defendants have a very real interest in fixing that non party with as much of the responsibility as possible. The plaintiff however may lack the information or resources available to the defendants. Whether or not this is the case, the court is unlikely to have the benefit of hearing from the non party. McDougall J goes on to note: "There are at least two immediately obvious consequences. The first is that the court's orders may tend to understate the responsibility of the concurrent wrongdoers who are defendants, compared to the responsibility that might have been allocated had all concurrent wrongdoers been defendants. This will diminish the amount of damages recoverable by the plaintiff in the action. The second is that the non party will not be bound by the assessment, in proceedings to which it was not a party, of its responsibility. If, therefore, the plaintiff sues that non party in subsequent proceedings, the plaintiff will be required to run the entirety of its case (involving duplication, which might be thought to be substantial, of the case already run) but with the risk that the defendant against whom that case is run will be able to minimise the extent of its responsibility. The consequence might be that the plaintiff, although it has sued all concurrent wrongdoers, does not recover the full amount of its loss, even though there can be no doubt that, between them, those wrongdoers caused the whole of that loss.

The answer appears to be that the plaintiff should seek to identify all concurrent wrongdoers and to join them all in the one action, so that they can fight out among themselves the amounts of their several liabilities to the plaintiff. Undoubtedly, that is what Parliament intended should happen. But the plaintiff may not always be aware of the identity of all concurrent wrongdoers.

Section 35A seeks to mitigate this situation. It imposes on a defendant a duty to inform the plaintiff of the identity of other persons that the defendant on reasonable grounds believes may be a concurrent wrongdoer in relation to the plaintiff's claim, and to inform the plaintiff of the circumstances that give rise to that belief. However, the only sanction for breach of this duty is that of costs. Particularly where circumstances of common insurance arise, it may well be in the interests of a defendant (or its insurer) to hold back for as long as possible information concerning the identity of concurrent wrongdoers, so as to put the plaintiff in the position where it must elect either to abandon a trial date so as to join the non party or take its chances on the apportionment, at trial, of responsibility to that non party.

It may be that this situation could be dealt with by rules of court or a practice note aimed at preventing a defendant from relying on the comparative responsibility of a concurrent wrongdoer who is not a party where the defendant has breached its duty under s 35A(1)(b) to notify the plaintiff "as soon as practicable" of the relevant matters in relation to that non party. There would remain a question, whether the express terms of s 35A could be, as it were, reinforced (and, more relevantly, perhaps restricted) in this way; and, in any event, the efficacy of any such rule of court or practice note in relation to a defendant's right under Commonwealth legislation may be questionable. However, the discretionary nature of the power have regard to the comparative responsibility of non-parties (in New South Wales, s 35(3)(b): "may have regard to") may solve this problem."

That is what has occurred in this case. Notification has been given by the defendant pursuant to s 35A. It was then open to the plaintiff to join those additional parties, on the understanding that in the event that the action against them failed, the defendant would pay all or any of the costs of the plaintiff. However, the Civil Liability Act is not the only relevant statute for a legal practitioner to take into account when advising a client. The obligations solicitors have under the Legal Professional Act 2004 (NSW) as well as the obligations incumbent upon practitioners (which may in some circumstances include personal liability for costs) under the Civil Procedure Act 2005 (NSW) are both matters to which the Court ought to have regard.

Where a defendant has given notification that a concurrent wrongdoer should be joined, the plaintiff is not absolved from the responsibility of investigating such a claim to see if it is meritorious. The dangers of proliferation of parties and the need for costs to bear a proportionate relationship with the sum claimed (which in the present circumstances is comparatively modest) are enshrined in ss 56-62 Civil Procedure Act.

The question remains, however, whether a defendant who identifies another person as a concurrent wrongdoer has the onus of establishing the concurrent wrongdoing. In a practical sense if a plaintiff joins the concurrent wrongdoer, this is not a problem as the onus lies on the plaintiff. Where, however, does the onus lie if the plaintiff does not do so? This topic is dealt with in some detail by McDougall J (at pages 399-401) and I gratefully borrow his Honour's careful analysis of the legislation. His Honour concludes that an obligation is imposed on defendants to identify those whom the defendant believes on reasonable grounds may be concurrent wrongdoers (s 35A(1)) but does not impose on them any obligation to plead or prove the contribution of those concurrent wrongdoers to the overall loss and damage. However, McDougall J goes on to note the decision of Einstein J in Ferdinand Nemeth v Prynew Pty Ltd [2005] NSWSC 1296 at [19] where his Honour said that the question of onus was made quite clear by ss 35 and 35A Civil Liability Act. McDougall J concludes that this means a defendant can raise a proportionate liability defence, but that the onus of proof lies upon it if it did. This would mean that the onus of proof would lie in the present circumstances on the defendant.

At page 405, McDougall J notes refers to the pleading in Ferdinand Nemeth v Prynew Pty Ltd and says that a defence in those terms (and I note there is a defence in similar terms in these proceedings) should not be permitted. This is even having regard to the more liberal rules that are available in the Technology and Construction List. McDougall J considers that a defendant should be obliged not merely to identify the other persons who are thought to be the concurrent wrongdoers but set out the material facts showing they are the concurrent wrongdoers. His Honour concludes by saying "[i]n substance, the defendant should plead with the same degree of precision and particularity as it would do under the old regime if it were bringing a cross-claim against that alleged concurrent wrongdoer."

All that the defendant in these proceedings has done is to assert that there must had been a failure in the pump for there to had been a flood. There are many reasons why a pump might fail, including negligence in its maintenance and repair by the defendant or, for the reason Mr Fotheringham gave, namely that the pump was not designed to pump water 24 hours a day. This is an even greater problem in relation to the alleged liability of the landlord because in circumstances where the unchallenged evidence of Mr Fotheringham that pumps of this kind are adequate to deal with the non-excessive water flowing from the plaintiff's kitchen, it is hard to see on what basis the failure of the landlord to agree to the installation of the floor drain would have in some way contributed to the flooding.

The extreme vagueness with which these claims are pleaded and the lack of evidence concerning the issues in dispute can best be appreciated when considering the defendant's submission that if liability is found the defendant should be found to be only 25% liable. The supplier of the pump should be 50% liable and the landlord should be found to be 25% liable (written submissions paragraph 81). How were those percentages arrived at? The defendant's written submissions, although very lengthy, fail to expose the reasoning behind these estimates.

Having noted the difficulties of the lack of evidentiary material, I now consider the question of the liability of the landlord and of J&P Catering Equipment Pty Limited.

The plaintiff submits that Mr Fotheringham was not cross-examined as to the role of the build up of grease in the pump out box arrangement. Mr Chan did not contradict that evidence in his affidavit when he had the opportunity to do so (T-473-474) although he contradicted other matters in Mr Fotheringham's affidavit (which resulted in Mr Fotheringham filing a further three affidavits). Nor did he contradict it in the witness box. The plaintiff submits that the defendant deliberately chose not to cross-examine on this fact (T-481) and also that vital evidence has been destroyed in that the pump out box and the washer had never been produced for inspection and indeed appear to have been destroyed.

The defendant submits (written submissions page 1) that it was not responsible for the destruction of the pump box. The defendant points to evidence that Mr Fotheringham, the plumber retained by the landlord, removed and disposed of this item (T-30; T-481 line 42).

However, the defendant owned and paid for the original pump box. The replacement system was paid for by the landlord. The landlord arranged for the installation by Mr Fotheringham because the installation involved access to other parts of the building.

At the time the new system was put in place the defendant was well aware that the plaintiff considered the defendant was liable for the damage caused by the flood and should have been alert to potential contributors to the cause of the damage. The plaintiff had already paid invoices totalling $1,243 for drying the carpet, checking the air-conditioning and the plumber's visit. The defendant knew the extent of flooding meant there could be a substantial claim for damages, and that its own insurance company had rejected the claim. If the flood had been caused or contributed to by inadequacies or defects in the pump, that would have been vital evidence for the defendant to investigate and this could only have been done if the pump was seen in situ or retained after removal.

Mr Fotheringham's evidence does not support any claim that the pump was faulty or inappropriate for the job. He took the pump out, but not because it was faulty: "Q. You didn't have any regard to what condition it was or anything at that time, you just took it out and moved it? A. That's right. The reason why we took it out was because we connected the sinks to the floor drainage." (T-30, lines 18-21)

The only cross-examination related to whether the pump was an appropriate or reasonable way to pump water, which Mr Fotheringham said it was. Mr Fotheringham was not cross-examined about whether the pump was working on either occasion, nor was he cross-examined about his observation of a build-up of grease in the system.

Evidence about defects or inadequacies in the pump system could be given by Mr Chan and the defendant's kitchen staff. Mr Chan gave affidavit evidence that he cleaned out the pump box on a daily basis (paragraphs 40-50) and, crucially, that prior to the night there were no other incidents of the pump failing to operate (paragraph 51 of his affidavit). He was not cross-examined on this material.

All of the evidence points to the pump being in good working order, albeit with a build-up of grease on the night in question.

The defendant asks me to accept that if the pump was in good condition, and working properly, the kitchen could not have been flooded. This is put to me on a res ipsa loquitur basis.

However, I have accepted the evidence of the plumber that a stream of water (not a "dripping tap" as the defendant calls it in written submissions - see for example page 4) and I have accepted Mr Fotheringham's evidence that the amount of water which escaped would have been over a long period and considerable in circumstances where the pump was not intended to work for 24 hours a day (T-29). There is no expert evidence to explain to me how it is that the pump should have been able to cope with this substantial amount of water and its failure to do so means that some unspecified fault lay in the pump.

Mr Rigney in his note of 14 August noted "pump did not activate as float was stuck" (annexure B to his affidavit). Mr Rigney said: "Q. He said to you from your memory that the float switch wasn't working. Is that right? A. That's correct." (T-39 lines 32-34)

Mr Rigney also described the pump out system as not working.

Mr Rigney was only a security guard, with no knowledge of plumbing. Why was the float switch not working? What did this mean? Mr Fotheringham was not asked about Mr Rigney's observations that the float was stuck. There are no expert's reports available to help me. In the absence of expert evidence I should not make assumptions: Blacktown City Council v Hocking (2008) Aust Torts Reports ¶81-956; [2008] NSWCA 144. I note that the parties' submissions are silent on this point in any event.

How important is Mr Fotheringham's evidence that these pumps are "not designed for the pumps to be running 24 hours a day" (T-29)? Is the reason the flood occurred that the pump had been running during daytime restaurant hours and when the taps were not turned off by the staff it continued to run until the following morning? If so, the pump was doing what Mr Fotheringham said it was not designed to, namely to be running 24 hours a day.

The defendant has asked be to take a number of matters into account. I have been asked to draw a Jones v Dunkel inference (Jones v Dunkel (1959) 101 CLR 298) from the plaintiff's failure to call Mr Tran (written submissions page 8) and to make a number of assumptions about why it is the pump failed. The defendant submits it is the landlord and not the defendant who was responsible for the removal and subsequent destruction of the pump in question and its replacement with a drain system.

McDougall J proposes, in his helpful article, that parties should have to plead and prove a claim for proportionment under Part IV in the same way that they would prove a case against any potential concurrent wrongdoer. It would have been a simple matter for the defendant to identify, with some degree of precision, why it was that the pump failed. The failure of the defendant to identify why the pump failed is exacerbated by the fact that the pump cannot be inspected by the plaintiff for the purpose of preparation of an expert report because the pump has been disposed of. In the absence of expert evidence (and indeed when what expert evidence I have heard from Mr Fotheringham is to the contrary) I decline to surmise as to potential flaws or defects either in the operation of the pump or its suitability for the task. It is my view that the defendant's claim under Part IV fails in limine in that it fails to identify with the precision recommended by McDougall J the facts and matters relied upon to assert that J&P Catering is a concurrent wrongdoer. Alternatively, the claim against J&P Catering must fail because, on the very slander evidence in these proceedings, there is no evidence that the pump was not fit for the purpose, was inadequately serviced and maintained and/or negligently repaired.

Having made these findings in relation to J&P Catering, I now consider the issue of liability of the landlord.

Prior to September 2004 when the defendant moved into the premises it occupied at the time of the flood, the defendant had operated from other leased premises in the same building for a number of years. Mr Chan was approached in May 2004 to see if he was interested in relocating to the larger premises on the first floor, a restaurant previously known as Rigoletto (Mr Chan's affidavit, paragraph 6). Mr Chan said in his affidavit that he did not observe at that time whether or not the kitchen contained a floor drain. His company entered into a lease on 16 August 2004.

Between August and November 2004 work undertaken during the new tenancy included the installation of kitchen equipments such as exhaust fans. At some stage after the lease was signed, Mr Chan was told by a Mr Tran of J&P Catering that he did not know whether there would be enough room to install a floor drain on the plans as set out by the defendant. For example, the kitchen's exhaust fans were located at the centre of the kitchen and this meant it was necessary for the cooktop to be in that position. Mr Tran advised as an alternative that Mr Chan could have a pump out box which would operate by a float mechanism and pump water to the trade waste at the back wall of the kitchen. He said it would probably be a cheaper and easier option anyway and should work just as well (Mr Chan's affidavit, paragraph 15). I note that a similar statement was made by Mr Fotheringham.

Although Mr Chan did not say so in his affidavit, he conceded in his evidence that he could have put in a floor drain but he could not afford it. He did so because he took advice from a friend who was a plumber who said it was quite complicated and "it would really cost you a lot of money" (T-485).

Mr Chan did ask the building manager whether it was possible to have a drain installed. He did so between February and September 2005. He said in his affidavit (at paragraphs 31 and 32) that this was because it was difficult to remove water from the floor after mopping. What those mopping problems were was never explained.

The first issue is whether or not the installation of the pump out box in the defendant's kitchen was acceptable or appropriate for a restaurant of this size.

Mr Fotheringham's evidence was that while a floor drain was now a requirement in modern buildings (T-21), a pump out box of the kind installed in the defendant's kitchen was what he called "an acceptable solution". He asserted (at T-29): "Q. If the holding tank and pump system in this kitchen that you've previously stated was an acceptable solution-- A. Yeah.

Q. --had operated in the way that it had been intended to operate, it would have dealt with a dripping tap, correct? A. Definitely would have. Dealt with a tap that was split as well. They're designed that the flow from the pumps can discharge a certain amount of litreage per second and it would have well covered that.

Q. In fact, what they're designed to do is to deal with constant running water as you'd agree? A. They're not designed to pump out - for the pumps to be running 24 hours a day but they are designed to pump out water as its needed. The pump box fills, the pump turns on, goes down, turns off, pumps up, same thing."

It was for this reason that Mr Fotheringham said that it was a reasonable and fair alternative to the absence of a floor drain to have a pump out system of this kind (T-23).

Mr Fotheringham made it quite clear that while it is a mandatory requirements since about 1997 for floor drains to be installed in new kitchen installation (T-21) that would not have required to the defendant's premises, which had previously been used as Rigolettos restaurant for several decades (T-20).

Mr Chan agreed in cross-examination that he understood that his company was responsible for the fitout of the kitchen (T-463) and that he had made a mistake, in his view, in renting a kitchen without a drain because he had failed to look on the floor to see if there was a drain there before he rented it (T-484). He knew that when he came to do the fit out there was no drain (T-484). There was correspondence with the landlord about putting in a drain but the landlord never replied. He said in evidence that he chose not to ask the landlord to put in a drain (T-484-485): "Q. But when you went in afterwards and you knew there was no drain, you could have put in a drain? A. Yeah that is why I consult with Mr Tran you know, was the other alternative way, you know, because the drainage happened in this restaurant is different because these are old buildings, the pipes is above the ground level.

Q. You could have put a floor drain in after talking with Mr Tran, that was one option you had wasn't it? A. Yeah

Q. Well why is that the landlord's fault that Mr Tran suggested another thing which you agreed with? Its not the landlord's fault what has happened? A. I think they had dished out the responsibility because it is the basic, like when you are driving a car, you know, suppose you should have four wheel, instead only three wheels, there is one wheel missing, because when you look at this side you didn't realise there is one wheel missing, the car still can go you know.

Q. You could have put in the floor drain? A. If I can afford, yes, but I can't afford.

Q. Is that the explanation, that you couldn't afford one? A. Yes. Can I put - add more?

Q. What would you like to add? A. Because not to - what I call recall, you know, I got a friend who is a plumber too and he - this quite complicated, you know, and it will really cost you a lot of money because just couldn't find any pipe you know underneath you know. And downstairs all like this famous jewellery shop you know probably they will you know stop you know - cause inconvenience to them."

The central reason why Mr Chan did not put in a drain was, as he admitted in his cross-examination, the cost. He obtained advice from a friend who was a plumber, and acted on it. I note Mr Fotheringham also commented on the cost and expressed the view that in terms of value for money the pump out system the defendant had was just as good.

Although there is an assertion that Mr Chan was advised by Mr Tran that there might not have been enough room to install a floor drain (affidavit at paragraph 15) in fact the landlord installed one following the flood (page 33 paragraph (L) submissions). Mr Fotheringham was not cross-examined on this issue; he installed the new system without difficulty. It was never clear to me if this was a particular of alleged negligence of J&P Catering, the landlord, or both. This is one of several examples of the problems caused by the defendant's failure to identify with the required precision what his claim under s 35 was: Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135.

A significant part of the defendant's argument was that the defendant could not install the more expensive drainage system because the prior concurrence and approval of the landlord were required (clause 23 of the defendant's lease). It is submitted that it was entirely dependant upon the landlord acting if a floor drain is to be installed.

However, it is clear from Mr Chan's evidence that he made a deliberate decision not to install a floor drain. It may had been a factor that the landlord did not answer or act on his correspondence, but what ultimately convinced Mr Chan was the advice of the plumber friend that he consulted who said that the installation of a drain was complicated and expensive.

The defendant asks me to note from the Court file that an affidavit was obtained in relation to the issue of liability from a representative of the landlord and that it was neither read nor relied upon. The degree to which judges should have regard to evidence that parties file but do not rely upon is limited. It can be done: Elias v Pascoe [2006] NSWCA 110. However, the pleading of the claim against the landlord is as vague as the pleading against J&P Catering. It is my view that the claim should fail in limine for the same reasons. Alternatively the claim should fail because there is no evidence that the flood was caused because the pump was inadequate. To the contrary, Mr Fotheringham's affidavit (not to mention the evidence of the unknown plumber friend of Mr Chan) was that the pump was adequate. While the landlord was on notice of some mopping problem, there was simply to causal link between the landlord's failure to answer correspondence concerning the installation of a floor drain system and the circumstances of the flood. The landlord did not refuse permission; what they appear not to have accepted was the apparent suggestion that the cost of the installation of a drain should be met by the landlord rather than the defendant, in circumstances where the defendant's obligations under the lease should have extended to the installation of the new drain.

The defendant makes much of the fact that the landlord paid for the installation of the new drain system. However, in the absence of some kind of causative link, this evidence is of little assistance. The landlord could have had many reasons for doing this, including keeping the peace between the tenants, keeping regular tenants in the centre and the like. It would be inappropriate for me to speculate. I can, however, refer to some relevant correspondence.

In Exhibit 23 the landlord's building manager, Mr Hodges, discusses Mr Fotheringham's quote for a floor waste drain (obtained after the flood) noting that floor waste installation may not resolve the issues as water may run directly past the floor waste "and cause similar damage to that which is currently the subject of an insurance claim".

The building manager goes on to note: "I think that we need to be careful that if we proceed with this work, and a similar situation arises, that we are not seen to have provided a poor and inappropriate solution, and therefore become liable."

However, these are concerns expressed about the new drain floor waste system, not the pump out box, in circumstances where the landlord is concerned about insurance claims.

Adam Morris of Tanert Pty Limited replied to these emails on 20 January noting the need to find the "right solution" and saying the installation is "a tenant cost", adding "they took it as is with no warranties as to its suitability for use. Have they had a plumber through and offer solutions?" (Exhibit 23).

Further correspondence in exhibit 23 refers to drafting indemnity letters relating to any future claims of water leakage stemming from the subject premises (see the email of 6 March 2006). The explanation given to Mr Chan (for the defendant) by the landlord on 10 March 2006 is as follows: "Dear Roy,

SHOP 14, 80 CASTLEREAGH STREET, SYDNEY - UPGRADE OF DRAINAGE SYSTEM

The Lessor has organised for the drainage system in shop 14 to be upgraded as per Council guidelines. The relevant works are scheduled to occur on Sunday, 12 March 2006.

Please note that the above works should not be seen as a guarantee or total solution against water leaks or expulsion of water from your tenancy, with the ultimate responsibility falling back on the Tenant, Gagner Pty Ltd. The appropriate precautions will have to be taken by you in making sure that water is expelled from your tenancy in a correct and safe way.

Having read and understood the above, would you kindly execute the bottom section of this letter and return back to our office via facsimile on (02) 9036 6670 by Friday, 10 March 2006.

Should you have any questions, please do not hesitate to contact Tom Skotadis on (02) 9036 6674.

Yours sincerely, TOM SKOTADIS Property Manager

cc - Tanert Pty Ltd P. Zagaras - Canturi Jewels Anthony Hodges - Knight Frank"

Attached to this is a signed indemnity dated 10 March 2006. The identity of Sophie Ton as the signatory is a matter about which I have no evidence.

These documents illustrate the risks described by McDougall J inherent in making findings pursuant to s 35, 35A and 36 of the Civil Liability Act in circumstances where the full facts may not be before the Court. The reason the defendant paid for the new drain is not something within the knowledge of the plaintiff; the Court is reliant on the defendant, and the defendant can tell the Court as much (or as little) as it wishes.

I reject the Part IV claim in relation to the claim made against the landlord.

The plaintiff has succeeded on all issues as to liability. This brings me to the question of damages.

The defendant submits (written submissions, paragraph 23) that the important point to remember when assessing the plaintiff's damages is that "not a single dollar that is claimed (be it for alleged physical rectification work, or for business interruption) relates to actual repair work that was undertaken on actually damaged items so as to return the premises to its former state and layout and that the damages claim is for "theoretical amounts", namely the estimates of the cost of replacement made by Mr Makin. This is because, to use the defendant's words, the fitout "was earmarked for replacement shortly after the time of the water ingress" and these plans were being developed as early as June 2005 (written submissions, paragraph 25).

The basic measure of damages is the cost of a replacement. The purpose of damages awards is to compensate the plaintiff for the loss by awarding a sum of money which, insofar as a sum of money can do, puts the plaintiff in the same position as if the tort had not been committed.

At a glance

Court

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Judgment (424 paragraphs)

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Legislation Cited (4)

Cases Cited (22)