Lord v McMahon

Supreme Court of NSW|2015-12-08|Before: Slattery J

Judgment

This is the Court's fourth judgment in these proceedings. In the orders made with the Court's third judgment on 1 December 2016, the Court directed the parties to bring in short minutes of order to give effect to its reasons: Lord v McMahon (No. 3) [2016] NSWSC 1686. The parties have not been able to agree upon short minutes of order. So a further hearing was necessary on 8 December 2016 to resolve the remaining differences between the parties about the final orders. Following that hearing, this judgment explains the form of final orders.
Events, matters and persons are referred to in this judgment in the same way as they are in the Court's three previous judgments. This judgment should read together with the Court's prior judgments in these proceedings.

A Solution to the Seepage Problem

The parties differ about whether the orders the Court made on 1 December 2016 in relation to the road drainage works should be varied to make reference to the cost of solving a seepage problem, the form of which solution has not yet been agreed between them. But the experts were sure they could resolve this without the need for any further investigation or evidence. This matter was mentioned in the Court's third judgment: at [9] and [10].
The Court has decided not to make detailed orders in relation to this seepage problem in the final orders. It is of low value, worth only about $1000 to resolve. The experts were confident that they did not need any further assistance in solving it.

The Form of the Charge

The parties were at odds about the form of charge that should be imposed on Lots 2 and 3 for the cost of executing the dam works. Mrs Lord proposed a charge modelled on that already incorporated in the orders made on 1 December with respect to the road drainage works.
On the other hand, Mr McMahon proposed a charge only over Mrs Lord's land, on the basis that his land should not be charged in respect of the execution of works proposed to be carried out by himself, at his own expense, on his own land. He says that any mutual charges should be limited to the work done on Mrs Lord's land.
The Court prefers Mrs Lord's submissions on this issue. Mr McMahon's submissions do not adequately recognise the fact that once contractors are retained they will be working on both Mrs Lord's and Mr McMahon's land at the same time. Even though the substantial burden of the cost of the works will be to Mr McMahon's account, both Mrs Lord and Mr McMahon must be given a substantial incentive to complete the works on each other's land. And they each need to be bound into a mechanism which will allow those works to be completed and paid for in the event that one or other of them does not contribute his or her share, or pay the contractors in a timely way.

The inclusion of Exhibit L and the form of orders concerning a Fence

Mr McMahon objected to the inclusion of Exhibit L among the drawings to be followed in the execution of the dam works. It is to be noted that the Court's orders made on 1 December do require Exhibit L to be used to guide the execution of the roadway works. Mr McMahon's argument was that the plan, Exhibit L, was a document produced solely by Mr Diversi, which was never fully agreed to by Mr McVey and that it contained the architecture of the southern spillway solution that has now been rejected by the Court.
When Mr Vindin of counsel was pressed as to why he wanted to include Exhibit L in the plans with which the dam works must comply, he was only able to identify the diagram of the wire and star-picket fence between Lots 2 and 3 proposed in Exhibit L (page C08) as the reason for its inclusion. Mr Waugh then submitted that Mr McVey had not agreed to the construction of a fence of this kind as depicted in Exhibit L. He submitted that there was a potential contest about Mr Diversi's notes about the fence on Exhibit L: namely, whether those notes did indeed accurately reflect an agreement between the experts that a fence of that type would be constructed at that location.
The Court has decided that the orders to be made will not mandate the construction of a fence in precise accord with Exhibit L and will not otherwise require construction of the dam works in accordance with any other part of Exhibit L. The information in Exhibit L may nevertheless be useful to the parties and their experts are free to refer to it. But it would only be confusing for the Court to require any construction in accordance with Exhibit L.
However, it is obvious a fence will be constructed at the location of the Lot 2 and Lot 3 boundary in the future. This is so, not least because of the operation of the Dividing Fences Act 1991 (NSW), which provides that one party can require a fence to be constructed and that the cost of any fence that is to be constructed must be borne equally. Given the present relationship between these parties, it seems almost inconceivable that one of them will not want to have a fence constructed here.
With those observations the Court has decided to leave this issue to the parties. And Exhibit L already represents what appears to be a reasonably conventional low-cost rural fencing solution. The Court would expect the parties, with the assistance of experts, to agree upon and adopt some fencing solution of this general character. But a particular solution will not be dictated at this stage because the parties may need more flexibility than is provided by the particular fence depicted in Exhibit L.
Only if the parties cannot agree upon the fence to be constructed should they refer this issue back to the Court. If it is required, this issue can be dealt with when costs issues are argued in March 2017.

Should the orders define an outcome for the works?

One of the differences between Mrs Lord's and Mr McMahon's draft form of orders is that Mrs Lord's proposed orders contain a set of seven outcomes that the works are designed to achieve. These outcomes are defined in addition to the requirement that the works be executed in conformity with Exhibits J, N, 11 and 12.
The Court has decided not to take the course Mrs Lord proposes on this issue, for several reasons. First, the exact plans that govern the construction of the dam works are already referred to in the body of the orders and should produce the same outcomes, if they are followed during construction. The Court's orders already require the works to be executed substantially in accordance with those plans. This form of order is appropriate, notwithstanding that Mr McVey's plans are less well developed than Mr Diversi's. Mr McVey's plans are, in my view, sufficient for present purposes, especially those in Exhibit 12 (16120 - D-03 - C and 16120 - D - 04 -D). Mr Diversi understood them.
Secondly, to the extent there may be unintended differences between the outcomes set out in Mrs Lord's draft orders and the plans in Exhibits J, N, 11 and 12, setting out the outcomes in this way may create confusion, rather than clarity.
Thirdly, the outcomes contain a degree of false precision that is unhelpful: for example, expressions such as "significantly reducing [the dam] in size to about 60% of the surface area of the existing dam" and "accordingly less than 50% of the volume of the existing dam" (italics emphasis added) are used. These percentages do not add any real precision to the result that should be achieved from construction in conformity with Mr McVey's plans, as explained by him.

A Swale to Limit the Dam Catchment

The parties were particularly at issue as to whether the Court should order a swale to limit the catchment area of the modified dam to an area of 4,000m² to 6,000m². Whether a swale should be used to limit the dam catchment was not covered in any detail by Mr McVey's diagrams. It was however discussed in some detail in the oral evidence.
Mrs Lord seeks to limit the catchment of the new dam to 4,000 - 6,000m². The evidence on this issue was not decisive on what measures would be taken to achieve this objective. The construction of a grass swale along the driveway of Lot 3 was one option discussed. There may be others. A particular solution should therefore not be mandated in the orders.
But this is also a place where a standard has already been set in the orders proposed by Mr McMahon. Exhibit 11 (page 42) already makes clear that Mr McVey's proposed dam already has a proposed runoff area of 4,016m² and is significantly reduced from the present catchment, because it is offset from the drainage line. The same exhibit (at page 49) also contains a diagram of the area of the proposed catchment. The parties really have this area of contention already resolved. The Court will not order that the catchment of the dam as constructed must not exceed 4,000m² - 6,000m². Exhibits J, N, 11 and 12 give sufficient guidance to the construction.

Other issues

As with the form of orders made on 1 December 2016, it is desirable to place responsibility for the performance of the works in the hands of one party. The Court has again chosen Mr McMahon to be that party for the purposes of execution of the dam works. By far the greater proportion of the works are taking place on Mr McMahon's land, so Mr McMahon has again been given this primary responsibility.
The parties ultimately did not disagree that some kind of continuing inspection regime was necessary, so that Mr Diversi could inspect the course of the works on behalf of Mrs Lord, who has an interest in being able to verify whether or not the works are being carried out in accordance with the Court's orders. Such a regime should promote confidence that the works will be carried out in accordance with the Court's orders and reduce the risk of short-term conflict during the works. The Court's orders create such a regime.
Although the inspection regime is designed to reduce conflict, it may turn out upon inspection that Mr Diversi forms the opinion that some aspect of the works are not being constructed in accordance with the Court's orders. The matter may be relisted to resolve such an issue. The Court has included a grant of general liberty to apply. But the parties are encouraged to attempt, with the assistance of their experts, to resolve any differences that emerge in relation of the execution of the works, before further troubling the Court about such issues. Liberty to apply is also granted if the parties need to clarify or adjust the form of these orders as the works progress.

Conclusions and Orders

For these reasons the Court orders as follows: 1. Order that to remedy the nuisance arising from the defendant's dam that dam works ("the dam works") are to be carried out by the defendant substantially in conformity with the works proposed by Mr McVey contained in Exhibit 11 pages 42 - 51 (being part of Mr McVey's report dated 26 August 2016), Exhibit J page 1 (being part of the Agreement of the Experts dated 26 August 2016), Exhibit 12 (being Mr McVey's report dated 30 August 2016) and Exhibit N items 2.1 - 2.7 (being part of the experts' Summary/Agenda dated 31 August 2016. 2. Order that the defendant will pay for the entire cost of the dam works on Lot 3 and that the cost of the dam works on Lot 2, in the first instance, will be borne and shared by the plaintiff and the defendant equally. 3. Order that each party will be jointly and severally liable to pay all expenses to complete the dam works and is liable to indemnify the other party, so that each party pays its correct proportion of this expenditure in accordance with order 1 hereof and that such liability will be a charge on each party's respective interest in Lot 2 and Lot 3. 4. Note that the parties have agreed that they will undertake their best endeavours to reach a mutually acceptable solution to remedy the seepage problem identified in the Court's third judgment (at [9] and [10]) in relation to the roadway works as defined in those orders. 5. Order the parties to make their best endeavours to agree upon the form of a boundary fence to be erected at the joint cost of the parties on the boundary of Lots 2 and 3, after the completion of the dam works. 6. Order that in the course of the construction of the dam works on Lot 3 that Mr Diversi may on reasonable notice to the legal representatives of the defendant, have access to Lot 3 to inspect the dam works to ascertain whether or not those works are being carried out in accordance with these orders; and, when requested to do so, the defendant will endeavour to arrange for Mr McVey to accompany Mr Diversi on site during these inspections but if Mr McVey is not available on reasonable notice, Mr Diversi's inspections of the dam works may proceed anyway. 7. Grant liberty to apply in respect of the form and implementation of these orders. 8. Confirm that the proceedings are adjourned to 7 March 2017 at 9:30am principally for argument concerning costs.

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: 20 December 2016

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