Juliex Pty Limited v Shoalhaven City Council

Background

1. These proceedings concern the contamination of Juliex's property at Nowra ("the property") as a result of Shoalhaven Council polluting neighbouring land for approximately 100 years. Shoalhaven Council is the registered proprietor of land ("the contaminated land") approximately 25 metres from the property. That land is contaminated due to the operation by Shoalhaven Council of coal carbonising gasworks on it between the early 1900's and the late 1960's, and also due to the leaking of underground diesel and petrol tanks beneath a bus depot from between about 1984 to about 2000. The contaminants in the soil or groundwater of the contaminated land have migrated and penetrated the soil or groundwater of the property.
2. On or about 16 December 2003, Shoalhaven Council issued a certificate in relation to the Property pursuant to s 149 of the Environmental Planning and Assessment Act 1979 (NSW). When the s 149 certificate was issued it is alleged that Shoalhaven Council knew, or ought to have known, that firstly, the certificate could be attached to a contract for sale of the property; and secondly, that it would be relied upon by potential purchasers of the property. That certificate did not contain any reference to the presence, or potential presence, of any contaminants in the soil or groundwater, or both, of the property.
3. On or about 28 January 2004, Juliex purchased the property for the purpose of demolishing the existing structures and constructing a medical centre.
4. In 2008, Juliex lodged a development application with Shoalhaven Council seeking approval for the demolition of the existing structures and construction of a medical centre with car parking, associated driveways and landscaping. As part of that application, Juliex was required to obtain an assessment of contamination of the property. As a result of that assessment, Juliex became aware of the existence of contaminants in the soil of the property and was required to fix the contamination. That, it says, caused a delay of the construction and operation of the medical centre.

The relevant UCPR Rules

1. The relevant rules are UCPR 14.14, 14.26 and 17.7. They read: "14.14 General rule as to matters to be pleaded specifically (1) In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise. (2) In a defence of subsequent pleading, a party must plead specifically any matter: (a) that, if not pleaded specifically, may take the opposite party by surprise, or (b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or (c) that raises matters of fact not arising out of the preceding pleading. (3) Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality. 14.26 Admission and traverse from pleadings (1) An allegation of fact made by a party in a pleading is taken to be admitted by any opposite party required to plead in response unless: (a) in the pleading in response, the opposite party traverses the allegation, or (b) a joinder of issues under rule 14.27 operates as a denial of the allegation. (2) A traverse may be made by denial or by a statement of non-admission, either expressly or by necessary implication, and either generally or as to any particular allegation. (3) Despite subrule (1), a pleading in response to a pleading that alleges the suffering of damage or an amount of damages is taken to traverse the allegation unless it specifically admits the allegation" 17.7 Judgment on admissions (1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions. (2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined."
2. Juliex seeks judgment pursuant to UCPR 17.7.
3. Section 56 of the Civil Procedure Act 2005 (NSW) reads: "56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court."
4. When exercising its discretion to enter judgment under UCPR 17.7, the Court must have regard to s 56 of the Civil Procedure Act: see Frinty v Landmax Developments [2010] NSWSC 734 per Ball J at [9].
5. The Court must also have regard to s 57 and s 58 of the Civil Procedure Act. It is not necessary to reproduce them here.
6. Both parties referred to Moon v Mun [2013] NSWCA 217, where Barrett JA discussed judgment on admissions. At [40] to [44] his Honour stated: "[40] Two key points must be made about the court's power to order judgment on admissions contained in pleadings: first, the admissions must be clear and unambiguous; and, second, the power is discretionary. [41] As to the first matter, it was said in Ellis v Allen [1914] 1 Ch 904 at 909 that judgment on admissions is permissible where "there is a clear admission of facts in the face of which it is impossible for the party making it to succeed". The matter was put thus in Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503: 'A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted; he is not entitled to ask the Court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission.' [42] The discretionary nature of the power was referred to by this Court in Termijtelen v Van Arkel [1974] NSWLR 525 and is consistent with the purpose of the power as explained by Barwick CJ in Re the Trade Marks Act 1955-1958 and the Registered Trade Marks "Certina" and "Certina DS" (1970) 44 ALJR 191 at 192: 'The power which the rule gives to a Justice in chambers must be exercised with great caution… But in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense.' [43] The power to award judgment on admissions on the pleadings is properly exercisable only where the court can see that a clear and unanswerable case is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial. The evaluative question relevant to exercise of the discretion is whether it is just to award judgment without regard to the merits of the parties' contentions. [44] … The pleadings, taken in isolation, did not show [a clear and unanswerable] case in relation to the terms of the contract, the subject matter of the contract or the indebtedness of the appellants to the respondent. Far from indicating a firm foundation for a judgment without a trial on the merits, the pleadings demonstrated that important issues were in dispute."
7. On 17 June 2014, Juliex filed a statement of claim pleading that Shoalhaven Council is liable to it for the loss and damage suffered as a result of the contamination of the property it owns. Juliex pleads three causes of action, namely, nuisance, negligence and negligent misrepresentation. Juliex claims damages of $1,293,802.73.
8. On 27 August 2014, Shoalhaven Council filed a defence. On this motion, it is not in issue that Shoalhaven Council has admitted in that defence that the property is contaminated and that Juliex has suffered loss and damage as a result of that contamination. It is common ground between the parties that Shoalhaven Council has admitted that its use of its land has caused the contamination of the property.
9. What is in issue is whether Shoalhaven Council admits causation and, if there are admissions, whether those admissions meet the threshold set out in Moon v Mun. Specifically, the dispute concerns whether paragraphs [13] (regarding nuisance), [17] (regarding negligence) and [24] (regarding negligent misrepresentation) admit causation of loss and damage.
10. It is necessary for me to briefly set out the principles relating to causation and how it should be pleaded, and also the relevant paragraphs of the pleadings that refer to causation.

Causation

1. It is well known that there are four elements required to establish a cause of action in negligence. They are firstly, duty of care; secondly, breach of the duty of care; thirdly, causation; and finally, damage.
2. The relevant test for causation for negligence is set out in s 5D of the Civil Liability Act 2002 (NSW). The common law test for causation is no longer the relevant test: Travel Compensation Fund v Tambree t/as Tambree and Associates [2005] HCA 69; 224 CLR 627 at 642-643 (per Gummow and Hayne JJ); Adeels Palace Pty Ltd v Bou Najem [2009] HCA 48 at [41], [44].
3. Causation has been described as "one of the most important yet ill-defined principles of the law" and it has been commented that "the elusiveness of the causation principle has not been diminished by the current test for causation" in s 5D: see Bargaric M & Erbacher S, "Causation in negligence: From anti-jurisprudence to principle - Individual responsibility as the cornerstone for the attribution of liability" (2011) 18 JLM 759, 759-764. Justice M Beazley AO has likened understanding s 5D to "…standing on the deck of the Titanic: a dark and unfriendly abyss loomed ahead with life jackets, let alone lifeboats, in short supply": see Justice M J Beazley AO, "Causation and statutory determinism: The Civil Liability Act 2002 (NSW), s 5D" (2013) 87 ALJ 591, 591. Although her Honour was referring to the use of s 5D in personal injury litigation, there can be no doubt that there is a lack of clarity surrounding the provision in regards to all negligence proceedings.
4. The relevant test for causation for nuisance is that of the ordinary principles of causation in tort: see Almeroth v W E Chivers & Sons Ltd [1948] 1 All ER 53.
5. Section 5D of the Civil Liability Act reads: "5D General principles (1) A determination that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the harm ('factual causation'), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused ('scope of liability'). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent: (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party."
6. Justice M J Beazley AO has explained the operation of s 5D(1)(a) and (b) as: "…a two stage test for determining causation: that is, factual or 'but for' causation and the 'scope of liability' for which a defendant should be made responsible". Her Honour remarked that that test "is redolent, if not a reproduction, of McHugh J's approach to causation in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12: see Justice M J Beazley AO, "Causation and statutory determinism: The Civil Liability Act 2002 (NSW), s 5D" (2013) 87 ALJ 591, 594.
7. When examining pleadings concerning causation under the Civil Liability Act, the general purpose of pleadings must be kept in mind, as outlined by the High Court in Dare v Pulham (1982) 148 CLR 658; (1982) 44 ALR 117 at 121: "Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it… they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial… and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court… [T]he relief which may be granted to a party must be founded on the pleadings…"
8. So far as pleadings for causation under the Civil Liability Act are concerned, Justice P Garling RFD suggested recently (see Justice P Garling RFD, "A Judicial Perspective on the Civil Liability Act 2002 - Ten Years On" (Speech delivered at the NSW Bar Association Personal Injury Conference, 3 March 2012), that in claims involving s 5D(1), each part of the two stage test needs to be included for causation to be adequately pleaded: "80 To plead that the damage was caused by the breach of duty, as is now common, would not adequately plead the necessary elements of establishing causation under the Civil Liability Act. … 82 …In a claim involving s 5D(1), which is likely to be the majority of cases, an allegation that factual causation has been established will need to include the pleading that but for the negligence the identified particular harm would not have occurred. 83 As well, there should be included 'a scope of liability' allegation, namely that it is appropriate for the defendant's liability to extend to the plaintiff's harm. Unless that is specifically pleaded, a defendant is denied the opportunity to put that factor in issue."
9. In other words both factual causation and scope of liability need to be pleaded.

The pleading framework

1. It is necessary to briefly examine the relevant pleadings in Juliex's statement of claim in relation to nuisance, negligence and negligent misrepresentation. These causes of action and the responses in the defence are as follows.

Nuisance

1. At [55] of the statement of claim Juliex pleaded: "55 [Juliex] have suffered loss and damage by reason of the nuisance created, or adopted or continued, by the Council. Particulars Particulars of the loss and damage suffered are set out in the Schedule of Damages"
2. Shoalhaven Council responded at [17] of its defence: "13. In answer to paragraph 55 of the Statement of Claim the Defendant: 13.1 admits the Plaintiffs suffered some loss and damage as a result of Council's failure pleaded; 13.2 does not admit the Plaintiffs suffered loss and damage to the extent pleaded in the Schedule of Damage." (Emphasis added).

Negligence

1. At [61] to [63] of the statement of claim Juliex pleaded: "61 By reason of the negligence of the Council, [Juliex] have suffered loss and damage. Particulars Particulars of the loss and damage suffered are set out in the Schedule of Damages 62 The loss and damage suffered by [Juliex] would not have occurred but for the negligence of the Council. 63 The liability of the Council extends to the loss and damage suffered by [Juliex]."
2. Shoalhaven Council responded at [17] of its defence: 17. In answer to paragraphs 61, 62 and 63 of the Statement of Claim the Defendant: 17.1 admits the Plaintiffs suffered some loss and damage as a result of Council's failure pleaded; 17.2 does not admit the Plaintiffs suffered loss and damage to the extent pleaded in the Schedule of Damage. (Emphasis added).

Negligent misrepresentation

1. Juliex pleaded at paragraphs [73] to [75] of the statement of claim: "73 By reason of the negligence of the Council, [Juliex] have suffered loss and damage. Particulars Particulars of the loss and damages suffered are set out in the Schedule of Damages 74 The loss and damage suffered by [Juliex] would not have occurred but for the negligence of the Council. 75 The liability of the Council extends to the loss and damage suffered by [Juliex]."
2. To which Shoalhaven Council responded at [24] of its defence: "24. In answer to paragraphs 73, 74 and 75 of the Statement of Claim the Defendant: 24.1 admits the Plaintiffs suffered some loss and damage as a result of Council's failure pleaded; 24.2 does not admit the Plaintiffs suffered loss and damage to the extent pleaded in the Schedule of Damage." (Emphasis added).
3. Juliex pleads factual causation, that is the "but for test" and pleads that the liability of the Council extends to the loss and damage suffered by Juliex (the scope of liability).

Has causation been admitted on the pleadings?

1. Juliex submitted that paragraphs [13], [17] and [24] contain "conscious, deliberate, clear and unambiguous" admissions by Shoalhaven Council and that they are sufficient to establish that Shoalhaven Council is liable to Juliex in either negligence or nuisance, or both. Specifically, Juliex submitted that the repeated admissions in those paragraphs of "some" damage are "sufficient" admissions for judgment to be entered. Counsel for Juliex argued that since these admissions are "sufficient", it does not need an admission on causation to perfect its causes of action and obtain judgment.
2. Juliex also submitted that firstly, since the real issue in the proceedings is the quantum of damages suffered by Juliex, in exercising its discretion to enter judgment on admissions this Court is required to have regard to the just, quick and cheap resolution of the real issues in the proceedings; and secondly, that the entering of judgment in its favour on the admissions made by Shoalhaven Council would simplify the proceedings significantly, which would in turn save time and costs.
3. Counsel for Shoalhaven Council contended that although it has admitted in respect of each action that "some" damage has been suffered by Juliex "as a result of" the nuisance and negligence, it preserves and has pleaded that it does not admit that there is loss and damage to the extent pleaded in the schedule of damages. Rather, Shoalhaven Council submitted that the use of the word "some" clearly preserves a causation argument in respect of all of the heads of damage in the schedule of damages, and accordingly, while there is an admission of some generic or inchoate loss and damage, it has traversed the allegation that the scope of the loss and damage claimed by Juliex was caused by its nuisance and/or negligence.
4. Shoalhaven Council submitted that on a fair reading of the pleadings, because the admissions do not admit specifically any part of the heads of damage in the schedule, they do not "specifically admit" the allegations as required by UCPR 14.26. Counsel for Shoalhaven Counsel argued that this Court should not have to read meanings into pleadings, which upon a fair construction, do not clearly appear, in order to fix the defendants with an admission: Ash v Hutchinson & Co (Publishers) Ltd [1936] 2 All ER 1496; [1936] Ch 489 at 503.
5. According to Shoalhaven Council, since it has traversed the allegation concerning the scope of liability, s 5D has not been satisfied. Counsel for Shoalhaven Council argued that since there has not been an admission that but for Shoalhaven Council's negligence and nuisance, the damage set out in the schedule of damages would not have occurred, causation under s 5D cannot be made out on the pleadings.
6. Counsel for Shoalhaven Council also submitted that in any event, this was not "a clear and unanswerable case [which] is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial" (referring to Moon v Mun at [43]).
7. So far as s 56 of the Civil Procedure Act is concerned, Shoalhaven Council submitted that it is unnecessary to enter judgment for Juliex "for damages to be assessed" either to obviate delay or save expense. It argued that since Juliex has submitted that it would be necessary, should judgment not be ordered, to prove particulars of negligence which have not been admitted, Juliex cannot be correct to say that there is simply no need for any issue to go to trial. Shoalhaven Council further submitted that it is one thing to point to s 56 and the saving of time and expense, and it is another to take away a party's clear defence.

Conclusion

1. So far as the causes of action in negligence and negligent misrepresentation are concerned, Juliex has pleaded that the particular loss and damage suffered would not have occurred but for the negligence of Shoalhaven Council (s 5D(1)(a) i.e. factual causation), and also that the liability of Shoalhaven Council extends to the particular loss and damage suffered by Juliex (scope of liability under s 5D(1)(b)). A similar pleading has been made for nuisance. The heads of damages have been particularised and set out in a schedule. They include damages for fixing the contamination (such as testing, contaminated soil disposal, water removal and processing of contaminated waste) as well as loss of rental on 3 consulting rooms/an x-ray room for the period of delay and the costs of renting other premises for the period of delay. The schedule sets out details of the service provider, dates and particulars of work done, the invoice number where appropriate, and the amount of each invoice. The last item, item (7), is a claim for loss of rental and additional costs in renting other premises during the delay.
2. In response to the causation pleading for each cause of action, Shoalhaven Council admits in response to the s 5D(1)(a) allegation that Juliex suffered "some" damage as a result of its failure, but does not admit to the s 5D(1)(b) allegation that Juliex suffered loss and damage to the extent set out in the schedule.
3. Since the introduction of the statutory test for causation, although it is apparent that s 5D(1) is a two stage test, "little concrete guidance has been provided regarding its application" by the High Court: see Bargaric M & Erbacher S, "Causation in negligence: From anti-jurisprudence to principle - Individual responsibility as the cornerstone for the attribution of liability" (2011) 18 JLM 759, 765. However, the recent decision of Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19, a medical negligence case, has provided some clarity. French CJ, Crennan, Kiefel, Gaeglar and Keane JJ unanimously held that it is necessary for both s 5D(1)(a) and s 5D(1)(b) to be made out in order for causation of particular harm to be established. The Court began at [11] by addressing the confusion between the two questions under the previous common law regime: "[11] The common law of negligence requires determination of causation for the purpose of attributing legal responsibility. Such a determination inevitably involves two questions: a question of historical fact as to how particular harm occurred; and a normative question as to whether legal responsibility for that particular harm occurring in that way should be attributed to a particular person. The distinct nature of those two questions has tended, by and large, to be overlooked in the articulation of the common law. In particular, the application of the first question, and the existence of the second, have been obscured by traditional expressions of causation for the purposes of common law of negligence in the conclusory language of 'directness', 'reality', 'effectiveness' and 'proximity'.
4. The High Court continued at [12], [14] and [21] to outline the distinction to be drawn between the two questions in s 5D(1) of the Civil Liability Act: "[12] Statute now requires that the two questions be kept distinct. … [14] The distinction now drawn by s 5D(1) between factual causation and scope of liability should not be obscured by judicial glosses. A determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is entirely factual, turning on proof by the plaintiff of the relevant facts on the balance of probabilities in accordance with s 5E. A determination in accordance with s 5D(1)(b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused is entirely normative, turning in accordance with s 5D(4) on consideration by a court of (amongst other relevant things) whether or not, and if so why, responsibility for the harm should be imposed on the negligent party. … [21] To determine factual causation … is to determine only that s 5D(1)(a) is satisfied. Satisfaction of legal causation requires an affirmative answer to the further, normative question posed by s 5D(1)(b): is it appropriate for the scope of the negligent medical practitioner's liability to extend to the physical injury in fact sustained by the patient?" (My emphasis added).
5. Applying this authority to these circumstances, if s 5D(1)(b) is still in issue, causation will not have been made out, because a determination that negligence caused particular harm must now comprise elements of both factual liability and scope of liability. Accordingly, if the scope of liability is still in dispute between the parties, an admission of factual liability by Shoalhaven Council will not, as put by counsel for Juliex, be "sufficient" to perfect a cause of action for negligence and the entry of judgment by admission.
6. On a fair reading of the pleadings, it appears that the extent to which the breaches caused the damage alleged s 5D(1)(b) is still in issue. Juliex has made a specific pleading about the scope of liability, the extent of which has not been admitted by Shoalhaven Council. The repeated statement in the defence that Shoalhaven Counsel "does not admit damage to the extent pleaded" in response to Juliex' proposition that "the Plaintiffs suffered loss and damage to the extent pleaded in the Schedule of Damage" constitutes, in my opinion, a traverse by an express statement of non-admission under UCPR 14.26(2). Further, a pleading in response to a pleading alleging damage or an amount of damages is taken to traverse the allegation unless it specifically admits the allegation under UCPR 14.26(3). Accordingly, the two step test under s 5D(1) has not been satisfied. Causation has not been admitted and that issue should be determined at trial.
7. However, if I am wrong and the relevant paragraphs do, or were intended to, constitute admissions of causation; those admissions are not clear and ambiguous as required by Moon v Mun. The purpose of the discretion under UCPR 17.17 is to obviate when a clear case presents itself, and it would be inappropriate to do so in any other circumstances: the discretion must be exercised with great caution (Barwick CJ in Re the Trade Marks Act 1955-1958 and the Registered Trade Marks "Certina" and "Certina DS" (1970) 44 ALJR 191 at 192).
8. To order that paragraphs [13], [17] and [24] constitute clear admissions would be to "read meanings" into the pleadings which "do not clearly appear". There is no firm foundation for judgment without a trial on the merits, because on the face of it, it cannot be said that: "it is impossible" for Juliex, having made an admission of some causation, "to succeed" (Moon v Mun at [41]). Hence, I would not in the exercise of my discretion, order that judgment in relation to causation be entered on admission.
9. The result is that the plaintiffs' notice of motion filed 24 October 2014 is dismissed.
10. Costs are reserved.
11. I would have ordered the parties to attend mediation but as I understand it, an unsuccessful mediation has taken place. That is not to say that some form of dispute resolution should not be attempted in the future.

The Court orders that: (1) The plaintiffs' notice of motion filed 24 October 2014 is dismissed. (2) Costs are reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 June 2015