Fyson v Leederville Pty Ltd (Real Property) [2013] VCAT 1748

1. The Applicants' claim pursuant to s.15 of the Water Act 1989 is dismissed.
2. Save as aforesaid, the application by the First Respondent for an order pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1998 is dismissed.
3. Under s.60 of the Victorian Civil and Administrative Tribunal Act 1998, upon the application of the First Respondent, I join as a party to these proceedings Breese Pitt Dixon Pty Ltd (ACN 005 950 103) of Init 1, 19 Cato Street, Hawthorn East 3123 ("the Joined Party").
4. By 9 October 2013 the Second Respondent must file and serve Points of Claim against the Joined Party.
5. By 23 October 2013 the Joined Party must file and serve Points of Defence specifying the material facts relied upon.
6. By 11 October 2013 the Second Respondent must file and serve on the Joined Party copies of all documents which have been filed and served in the proceeding, together with details of such parties' addresses for service.
7. Any Amended Points of Claim, confined to any claim under s.15 of the Water Act 1989, must be filed and served by the Applicants by 11 October 2013. Points of Defence to any such Amended Points of Claim must be filed and served by 18 October 2013.
8. Subject to any further order of the Tribunal, the proceeding shall remain listed for hearing at 10am on 11 November 2013.
9. Liberty to all parties to apply for further directions.
10. Costs reserved.

1. The Applicants are the owners of a small rural property of 21acres on Browns Road in South Cranborne ("the Property"). They live in the Property and have used it to graze cattle and cut hay.
2. There is an open waterway ("the Waterway") traversing the Property from Browns Road to a nature reserve. On the other side of Browns Road, which is a main road, there is a large residential subdivision ("the Development") created from land owned or formerly owned by the First Respondent ("Leederville") and developed by its associated company, Botanic Ridge Development Pty Ltd ("Botanic Ridge").
3. The water run-off from the Development, which comprises overall some 1,450 residential allotments, is drained into a drainage system created in about 2007 ("the Drainage System") of which the principal components are a retarding basin and wetlands. After leaving the retarding basin and the wetlands the water passes into an open aqueduct that runs parallel to Browns Road and then goes leftwards through a drain under Browns Road to enter the Waterway. It is then supposed to travel along the Waterway to the nature reserve. I was not told where it runs to from there.
4. The Applicants complain that the Development has caused excessive quantities of water to flood Browns Road, the Waterway and the Property. They have brought these proceedings seeking damages, being:
   • (a) the cost of carrying out works they say are necessary to restore the Property and enable the Waterway to cope with the volumes of water generated, so as to prevent flooding of the Property;
   • (b) the diminution in value of the Property;
   • (c) loss of use of the Property.

1. Leederville now seeks an order pursuant to s.75 of the Victorian Civil and Administrative Tribunal Act 1989 that the Applicants' claim against it be struck out or dismissed as misconceived or lacking in substance and that it cannot succeed as a matter of law.
2. It is well established and acknowledged by Leederville that a claim cannot be struck out or dismissed under that section unless it is manifestly untenable and that, in considering whether it is, I should assume that the evidence that will be led in support of the Applicants' case will be accepted.
3. The application under s.75 came before me for hearing on Friday, 4 October 2013. Dr Sadler of counsel appeared for Leederville, Mr Scheid of counsel appeared for the Applicants and the second Respondent ("the Council") was represented by its solicitor, Mr George.
4. I heard substantial submissions from both Dr Sadler and Mr Scheid but Mr George took no part in the argument. Only two hours had been allocated and the hearing took until after 5 pm. I informed Counsel that I would consider the matter over the weekend and provide written decision with reasons on the following Monday.

1. The latest articulation of the Applicants' claims is their Amended Points of Claim dated 13 September 2013. In that document they base their claim on three grounds and I will consider the submissions in regard to each.
2. Section 16 of the Water Act 1989 ("the Act") provides (where relevant):

(a) there is a flow of water from the land of a person onto any other land; and

(ii) damage to the property (whether real or personal) of any other person; or

the person who caused the flow is liable to pay damages to that other person in respect of that injury, damage or loss.

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(3) If the person who caused, or interfered with, the flow (as the case requires)-

(a) is the servant of another person and acted in the course of the servant's employment; or

(b) is the agent of another person and acted within the scope of the agent's authority-

that other person is liable to pay damages in respect of the injury, damage or loss.

(4) The existence of a liability under subsection (3) does not extinguish the liability of the servant or agent under subsection (1) or (2), as the case requires.

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1. The Applicants contend that during the construction period and after the completion of the wetlands and the retarding basin, Leederville and its agents allowed and have continued to allow an unreasonable amount of water to escape and pass down the Waterway flooding and causing damage to the Property. They attribute this to inadequate provision by Leederville for on-site water storage and a failure by Leederville to properly maintain the drainage system.

1. Dr Sadler relied upon an affidavit sworn by one Joseph James Cassera sworn 19 September 2013 and filed herein, to the effect that the drainage system was designed by Breese Pitt Dixon Pty Ltd ("Breese"). He submitted that a principal is not responsible for the defective design of an independent contractor.
2. He referred me to the Tribunal's decision in Trycala Importers and Wholesale Pty Ltd v. Growmac Imports Pty Ltd & Ors [2001] VCAT 1445. In that case an unreasonable flow of water was found to have been caused by a sub-contractor creating a dam in an alleyway while carrying out work for a third party. The Tribunal found that, even if it had been the Respondents' sub-contractor, the Respondent would not have been liable for the torts of a sub-contractor. The Tribunal cited in support Colonial Mutual Life Assurance Society Ltd v. Producers' and Citizens' Co-operative Assurance co of Aust. Ltd 919310 16 CLR 41 at 48 per Dixon CJ.
3. Mr Scheid said that the first indication that the Drainage System was designed by Breese was made in Leederville's second Amended Points of Claim dated 30 August 2013. He said that the claim that it is an independent contractor will have to be proven at trial.
4. I accept that, in general, a principal is not vicariously liable for the torts of its independent contractor but that is not what is alleged here. The issue is whether the alleged unreasonable flows of water were caused by Leederville. They would not have been if they were caused by some tort or unauthorized action of Breese. However insofar as Breese simply did what Leederville instructed it to do, the maxim qui facit per alium facit per se applies. If I cause something to be done it is as if I have done it myself and if it causes damage it is no answer for me to say to the person who suffered that damage: "I did it using an independent contractor."
5. In the case of Trycala referred to, the Learned Deputy President (as he then was) said (at paragraph 14):

"I asked Mr Kappadath whether it was alleged that the creation of the pile of earth and filling was something specifically required by Quanstruct's contract or something that it merely did incidentally".

1. Insofar as the alleged defective design was a consequence of its instructions from Leederville then Leederville is responsible. Insofar as it is a result of decisions of its own, whether as to design or otherwise, then Breese is responsible. The extent of the responsibility of each for the allegedly defective design is something that will have to be determined at trial.

1. Dr Sadler submitted that a failure to maintain the drainage system was an omission to act and that that would only be causative for the purposes of s.16 if Leederville were under a duty to act. He referred me to the Tribunal's decision in Cullinane v. Owners' Corporation 1 Plan PS434498R & Anor [2013] VCAT 608. I accept that as a correct statement of law.
2. Dr Sadler said that Leederville was under no duty to act. Although it is registered as the proprietor of an estate in fee simple in the land upon which most of the drainage system is constructed, the entity primarily responsible for its maintenance was, he said, its associated company Botanic Ridge. In support if that contention, he referred to a development agreement it entered into with Botanic Ridge on 15 February 2008 whereby it engaged Botanic Ridge to develop the land. The agreement was for one year and was renewable annually. By Clause 3 Botanic Ridge was to be responsible for day to day management of the Development. That would suggest that Botanic Ridge had contracted with Leederville to assume that responsibility but it would also suggest that, absent that agreement, the responsibility would have remained with Leederville as owner of the land.
3. He also pointed to a letter dated 24 June 2009 from the Council. The letter is headed: "End of Maintenance - Botanic Ridge Estate (Wetlands) and says (inter alia):

"I advise that the maintenance woks have been satisfactorily completed and Council accepts responsibility for the future care and maintenance of road, drainage and other works as shown on the construction plans for this stage of the subdivision."

1. The stage referred to would seem to be the "Wetlands" although that is not certain. Further, a large pipeline was added afterwards by Leederville to the drainage system to carry water to a golf course so it would seem that the letter was not referring to the whole of the drainage system.
2. In any case, the fact that the Council is assuming responsibility will not necessarily extinguish any responsibility that Leederville may have to others. It has on its land a drainage and storage system containing a very large amount of water. Any time it rained it would receive runoff from a large area. If that system were not maintained or properly managed, large quantities of water could be released which could cause substantial damage downstream. That might arguably create a duty of care in the negligence sense and although this is a Water Act claim not based upon negligence it is at least arguable that to breach a duty of care to maintain such a facility which results in the escape of water and consequential loss amounts to causing the flow of water that results within the meaning of s.16.
3. Mr Scheid pointed to a s.173 agreement appearing on the Certificate of Title to the land upon which the drainage system is constructed. That provides in Clause 3.6 that Leederville:

"... must procure from Melbourne Water its agreement in writing to undertake ongoing management of any proposed wetland and water body areas located o public land and in the event that it is unable to obtain such agreement, it will itself undertake the ongoing management of the said wetland and water body areas for a period of 10 years from the practical completion of the wetlands."

1. Other documents produced indicate that, due to its design and size, Melbourne Water will not assume responsibility for the drainage system and so, insofar as the drainage system is on public land, Leederville is responsible under the s. 173 agreement for ongoing management for 10 years. Although the wetlands and retarding basin are on private land owned by Leederville, the system appears to extend into the road reserve. To that extent it would seem that Leederville is under a duty to "manage it" but the extent of that duty would need to be assessed at trial.
2. For these reasons, I do not think that the claim under s.16 is so manifestly untenable that it should be struck out or dismissed under s.75.

The pollution claim - s.15

1. The Applicants claim that Leederville has polluted the water and by that act, caused injury to the Applicants' farm, notably by polluting the water in their dam, depositing large amounts of sediment and spreading of weeds and the death of fresh water crayfish.
2. The real complaint here appears to be that the water that comes down the Waterway is turbid and carries a lot of silt that has silted up the Applicants' dam.
3. Dr Sadler referred me to the definition of "pollute" in s, 3 of the Act, which is:

"pollute, in relation to any water, means to alter (directly or indirectly) the physical, thermal, chemical, biological or radioactive properties of the water so as to make the water-

(a) less fit for any beneficial purpose for which it is, or may reasonably be expected to be, used; or

(i) the health, welfare or safety of human beings; or

(ii) animals, birds, wildlife, fish or other aquatic life; or

1. It does not seem to me that allowing dirty water to enter a drainage system is polluting that very water. Dirty water is nonetheless water (Pumpa v. Goulburn-Murray Rural Water Corporation [2010] VSC 169). The pollution may be to the ground where the silt is deposited but not to the water that carries that silt.
2. However there is also a complaint that the high sediment run-off has resulted in the Applicants' farm dam being polluted with turbid nutrient rich water.
3. Dr Sadler submitted that the sediment in the water was an integral part of the water. It is certainly an integral part of water containing sediment but chemically, water is simply two parts of hydrogen to one part of oxygen, Anything other than that is an additive, whether it is dissolved in the water or simply held in suspension. Such an additive will be a pollutant within the meaning of the Act if it fits the definition in s.3.
4. Insofar as it is a complaint that the water in the Applicants' farm dam has been polluted, the question then is whether causing large quantities of turbid nutrient rich water to enter the dam has caused the water in the dam to be less fit for any beneficial purpose for which it is, or may reasonably be expected to be, used. One use suggested in argument was swimming. It was said that the dam was once eight feet deep and suitable for swimming. It is now, it will be said, only a couple of feet deep. That complaint is as to the quantity of water in the dam rather than its quality and relates to the other complaint as to the deposition of sediment on the Property. That is part of the claim under s.16
5. I agree with Dr Sadler that this part of the claim is not maintainable insofar as it relates to the deposition of sediment on the Property and insofar as it relates to the effect that the turbid water has on the water in the dam it does not appear that the evidence to be led will demonstrate that the water in the dam has been polluted within the meaning of the section..

1. The remaining complaint is under s. 18. That section reads:

"18. Liability for damage caused by escape of water from private dam

Nothing in section 17 extinguishes the liability at common law of the owner of a private dam for any damage caused by the escape of water from that dam"

1. The complaint in Clause 3 of the Amended Points of Claim is that, as part of the design of the wetlands drainage system, there is a series of interlinked dams that eventually lead into the drainage channel running into the waterway. These dams are on land owned by Leederville. It is claimed that Leederville has "in breach of a duty of care" allowed an unreasonable flow of water to escape from these dams and into the Waterway.
2. Insofar as the complaint is that Leederville ha caused an unreasonable flow of water, the claim is already made under s.16. However what is said here is that there as insufficient provision in the design process for on-site water storage.
3. The term Private Dam" is defined in s, 3 as meaning:.

"...anything in which by means of an excavation, a bank, a barrier or other works water is collected, stored or concentrated but does not include-

(a) anything owned or operated by a public statutory body; or

1. Dr Sadler submitted that the dams were not private dams. However since they are on land owned by Leederville they are owned by Leederville. They were not constructed by an "Authority" and it does not appear that they were owned or operated by a public statutory body. If they were, that will need to be established by evidence. He said that they were not designed to hold water but the evidence the Applicants propose to lead is that they are always full. It would seem to be at least arguable that they private dams.
2. Dr Sadler also submitted that an intentional release of water is not an "escape" and I accept that submission. However if the floods complained of were intentional, that will have to be demonstrated by evidence and if they were, the case may fall more appropriately under s.16. The video recordings of flooding the Applicants will rely upon certainly showed flows that did not have the appearance of being controlled.
3. I think this part of the claim should remain as the alternative to s.16. Insofar as the flow was intentional the case may be one under s.16, insofar as it was accidental it may be the result of an escape and fall under s.18. I cannot say that the case under s.18 is manifestly hopeless.

1. There is a claim for loss of use of the Property. Dr Sadler referred me to the Tribunal's decision in Kopitschinski v. Song [2007] VCAT 1958 in which the Tribunal refused a successful applicant damages for personal injury and said that the damages that can be awarded by this Tribunal (as distinct from a Court) are confined to property damage and economic loss. Dr Sadler said that the claim for Loss of Use was not put as a claim for economic loss but that is how I interpret it.

1. The complaint under s.15 will be dismissed. The real complaint of sedimentation appears to fall within the s.16 claim. Otherwise, the application under s.75 is dismissed insofar as it concerns the claims under s.16 and s.18.

1. Leederville seeks to join Breese as a party to the proceeding in order to seek contribution or indemnity against it in regard to the claim. The application is supported by the affidavit of Joseph James Casera already referred to.
2. The application was served upon Breese but it did not appear to resist the application for joinder.
3. Mr Scheid opposed the joinder. He said that it was made too late and well after Leederville was aware of the complaints about the design of the Drainage System.
4. His real concern was the potential loss of the trial date which is 11 November 2013. I was informed by Dr Sadler that his instructions were that the officers of Breese anticipated that they could be ready in time and that the trial date may not be lost.
5. It would be surprising if a party joined to such a substantial claim so close to the hearing date could be ready in time. Nevertheless, the appropriateness of joining Breese as a party is obvious and an order for joinder will be made. I will give the usual directions and give liberty to apply in case Breese requires any further directions.
6. Costs will be reserved.