Hanson v Tamworth Regional Council [2011] NSWDC 72 | Case summary

Introduction 1These are proceedings for damages for negligence, commenced by way of statement of claim filed on 2 October 2009, which are set down for hearing for 4 days on 1 August 2011. The plaintiffs bring an application to vacate the hearing date, for a second time, in proceedings where the factual background goes back to the 1970s, when the plaintiffs purchased a block of vacant land ("the plaintiffs' land") in 1976. Background 2The plaintiffs were unaware, when they made their purchase, that this land overlay a natural gully that had been filled with uncontrolled and uncompacted fill, as a result of civil works carried out in 1975, when the subdivision of which the plaintiffs' land was a part was approved by Cockburn Shire Council. As a result, the rear part of the house for which building approval was given in 1976, and which was then built in 1977, began to subside. 3In 1980 - 1981 the Builders Licensing Board investigated the cause of the damage and determined that the subsidence was due to the construction of the house on uncontrolled fill, with inappropriate footings. Rectification works were carried out in February 1981 and inspected by a council building inspector. 4Problems continued in 1990, when the council had to inspect and unblock the storm water pipe. In 1998 there was further settlement of the soil, this time at the front of the house. 5In 2001 the plaintiffs had a meeting with council to discuss this long-standing problem, but it does not appear that anything was resolved. Problems continued until March 2007, when the plaintiffs became aware that leaking water from the storm water pipe was accelerating the settlement of the house. In November 2008 the storm water pipe again became blocked and in 2009 the plaintiffs commenced these proceedings.

The pleadings and the issue before me today 6The plaintiffs' pleadings assert that the defendant owed the duty to take all reasonable care as follows: a. The council failed to periodically inspect the storm water pipe and its joints, particularly up hill and in front of the plaintiff's land, with the use of CCTV camera or by other appropriate means, to determine whether the pipe joints were broken or open or otherwise allowed the escape of water into the surrounding fill; b. The council failed to remove any debris or other objects in the storm water pipes, which might cause a blockage or reduce its capacity or otherwise allow water to pool in the pipe in the vicinity of the broken or open joints; and/or c. The council failed to maintain and repair the storm water pipe or replace the leaking pipe, so as to prevent water escaping into the surrounding fill, particularly above and in front of the plaintiff's land. 7The breach of its duty of care from about 1990 is asserted to be: a. The council failed to inspect the storm water pipe on a periodic basis or at all; b. The council failed to take any reasonable steps to remove debris and/or other objects in the storm water pipe or any steps at all; and c. The council failed to take any reasonable steps to maintain and/or repair and/or replace the storm water pipe, so as to prevent water escaping into the surrounding fill above and in front of the plaintiff's land, or any steps at all. 8In addition, it is asserted that the defendant, in breach of its duty of care, has failed to take any reasonable steps or any steps at all of removing debris and/or other objects in the storm water pipe and/or repair the storm water pipe, so as to prevent water escaping into the surrounding fill above and in front of the plaintiffs' land. 9The defendant's Amended Defence of 27 July 2010 raises the following issues: (a) Arguments that s 14 Limitations Act 1969 (NSW) operate as a bar to all causes of action and damage pleaded that occurred prior to 2 October 2003; (b) General denials of breach of duty of care and negligence; (c) A claim that this is a "building action" within the meaning of s 4C Environmental Planning and Assessment Act 1979; (b) Reliance upon ss 42 and 43A Civil Liability Act 2002 (NSW) and reliance upon the proportionate liability provisions of Part 4 of the Act; and (e) Alternatively, should the Court find that the claim is not a building action, pursuant to regulation 5(1) Civil Liability Regulations 2009, the proportionate liability provisions of Part 4 apply to any liability arising after 26 July 2004. The concurrent wrongdoers identified for the purposes of the act are MC and YF Benning Builders, CG Civil and Structural Engineers and DT Cohen & Associates. 10The basis upon which it is asserted that the defendant should have the benefit of s 35 Civil Liability Act are as follows: (a) The liability of the defendant should be 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 of loss; (b) Judgment against the defendant should not be for more than that amount whether or not all concurrent wrongdoers are parties to the proceedings; (c) The Court should have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. 11The representatives for both parties, who seek the vacating of the hearing date, both told me that this is complex construction litigation, and that the proceedings were originally set down for hearing on 11 April for 4 days. That hearing was vacated because no judge was available. A second hearing date of 1 August 2011 (again, for 4 days) was accordingly given. 12The difficulty that the parties say they now have with this date is that problems with the plaintiffs' expert evidence mean that the matter will not be ready to proceed by August. The affidavit of Susan Gai Moran of 6 May 2011 attaches a letter from the plaintiff's expert, saying that the sheer volume of work involved to come to conclusions about this long-running matter make compliance with the timetable impossible. Although the plaintiffs are the moving party on the application, both parties therefore ask me to vacate the hearing date and to reserve the issue of costs. 13The undesirability of multiple adjournments of any trial have been the subject of recent concern by the NSW Court of Appeal in Lee v Keddie [2011] NSWCA 2 at [7], [10] and [14]. In Lee v Keddie , the defendants (a firm of solicitors) sent a letter about their former employees to the firm's Chinese clients in 2006 claiming they had had to cease employing the plaintiffs for their unethical conduct. A hearing in September 2010 had to be vacated, and a second hearing date was set. The plaintiffs then sought leave to amend their pleading in reply, acknowledging that to do so would lead to an adjournment of the trial. 14The plaintiffs' application for leave to amend was refused at first instance, and this was affirmed on appeal. The Court of Appeal (at [7]) was particularly drawn to the argument that the matter had been considered to be ready on the two occasions when it was set down for hearing, a factual circumstance identical with the application before me today. The degree of delay by the plaintiffs in Lee which the Court of Appeal considered unacceptable was shorter than the degree of delay in these proceedings, and the factual matrix in Lee , which related to events during and after 2006, was in a much smaller compass than facts in this case, which go back to 1975. In addition, as the court noted, the plaintiffs in Lee had commenced the proceedings promptly, and the defendants would thereby have been on notice from that time as to the factual matrix likely to be covered, whereas the plaintiff did not commence these proceedings until 2009. 15Lee is one of a series of recent decisions where courts have refused leave to amend (see also Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd (2010) 173 ACTR 33) or adjourn a hearing, by reason of the principles discussed by the High Court in AON Risk Service Australia Ltd v Australian National University (2009) 239 CLR 175. However, each case must turn on its own facts. Lee was not a construction case, and was case-managed in a specialist list, and there would no doubt have been other factors which the court took into account in refusing leave to amend and adduce further evidence where the result would be loss of the hearing date. 16What is important, in terms of doing justice between the parties in accordance with ss 56 - 62 Civil Procedure Act , 2005 (NSW), is that these proceedings be ready for hearing when they are given a third hearing date. In complex matters, where parties are struggling to get on top of a great deal of factual and expert information, a counsel of perfection is of little assistance in achieving a just result. 17A significant potential problem, in terms of readiness for hearing, is the adequacy of the defendant's pleading of proportionate liability, because it is open to the plaintiffs to join these named concurrent wrongdoers, and the question of whether there should be any pleading by the plaintiffs in reply. If there is any joinder of these parties by the plaintiffs, this has consequences for the defendant as well, because if they are joined, whether the plaintiffs are successful or not, the defendant is at risk as to costs of this joinder (by reason of the provisions of s 35A Civil Liability Act 2002 (NSW)). 18Whether the plaintiffs join these parties to the proceedings or not, the desirability of the defendant providing full particulars of the facts and matters for asserting that each of the alleged concurrent wrongdoers is liable, and of the plaintiffs setting out their pleadings in reply, are matters that the parties can now consider, taking into account the additional time they have before the matter is next listed for hearing. 19The pleading and evidentiary problems parties face in proportionate liability claims in litigation involving allegations of negligence arising from construction problems has been helpfully set out by Justice McDougall in his article "Proportionate Liability In Construction Litigation" (2006) 22(6) BCL 394 . I have provided a copy of this article to the parties and drawn their attention to the sections concerning onus of proof, multiple parties and pleading issues. In particular, Mr Justice McDougall has the following to say concerning the correct approach to pleadings: " Further, in considering pleadings, it will be necessary to have regard to the onus of proof and, at least in New South Wales, to the requirements of s 5D of the CL Act. It will be observed that the form of defence propounded in Nemeth simply sought an order that the relevant defendant's liability be "limited to such other proportion [of the plaintiff's loss and damage] as the Court determines is just and equitable, having regard to the extent of [that defendant's] liability for any damage." To my mind, a defence in those terms should not be permitted. If pleaded, it should be struck out; and if sought to be raised by amendment, leave to amend should be refused. That is so even having regard to the more liberal rules that attend proceedings entered in the Technology and Construction List. If a defendant wishes to take advantage of the statutory regime for limitation of its liability, it should plead, and particularise adequately, the material facts. To my mind, that would require the defendant to identify the other persons whom it believes to be concurrent wrongdoers, and to set out the material facts that, it says, show that they are concurrent wrongdoers. In other words, I think, a proper pleading should address the issues raised by s 35(1)(b) of the Act: identifying the alleged concurrent wrongdoer and the circumstances that may make that person a concurrent wrongdoer. In 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. " 20Both parties in these proceedings may find assistance in reviewing their pleadings from these practical observations. 21An additional problem in these proceedings is the time factor. Given the long period of time that has elapsed since the activities of the parties asserted to be concurrent wrongdoers, and the activities of the council since that time, the question arises as to whether the persons identified by the defendant as concurrent wrongdoers are liable to the plaintiffs under the general law. There is a potential inconsistency on this issue between the NSW Supreme Court ( Ucak v Avante Developments Pty Ltd [2007] NSWSC 367) and decisions of the Federal Court ( Shrimps v Landmark Operations Limited [2007] FCA 1468) and Victorian Supreme Court ( Atkins v Interprac Financial Planning Pty Ltd [2007] VSC 445), as is pointed out in Lim and Wayland, "Litigation Update: proportionate liability", Australian Civil Liability (Newsletter) (2008) Volume 5 No 1 (May 2008) . I have suggested that the parties consider this issue as well. The question of whether liability arose before the relevant date for the Act was one of a series of reasons why Schmidt J in Permanent Custodians Ltd v King [2010] NSWSC 509 refused to permit such an amendment. 22As I am dealing with these proceedings without more information than is contained in the pleadings, it is not possible for me to do more than outline some potential problem areas. The parties will return on 20 May to advise whether, having considered these matters, they are ready to take a third hearing date. 23I note Mr Justice McDougall's comments, in his helpful overview of these statutory provisions, about the benefits of specialist list case management, in the Supreme Court's Technology and Construction List, for early recognition of problems specific to building cases. There is no such list in this court, which puts the responsibility on practitioners for identifying problems. The court, in return, should be flexible and provide what assistance it can to practitioners in managing these often complex cases.

Hanson v Tamworth Regional Council

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