MACQUARIE CITY COUNCIL v HICKS

Court of Appeal (NSW)|1993-06-09|Before: Clarke JA, Loveday J

MORGAN v_ LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL v HICKS

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL COMMON LAW DIVISION

Subdivision of land - excavation work near crest of hill - use of excavated material to fill gully - building works on crest of hill and below gully - gully vacant land sold to Council by developer - public reserve - landslip in 1983 - some remedial work carried out by Council - further slippage - resolution to carry out work in 1990 - further landslip - damage to premises.

Nuisance - right to support claimed by landholders on crest of hill - failure of Council to secure stability of lands.

Negligence - claim by downslope property owners - appeals by Council against judgment below - reasonableness of response by Council to danger - Held: Council acted unreasonably in failing to act as advised by experts.

Damages - tortfeasor may not profit from his own wrong - damages calculated without reference to the decrease in original value occasioned by presence of risk created/adopted by tortfeasor.

Nuisance - right to support claimed by landholders on crest of hill - failure of Council to secure stability of lands.

Damages - tortfeasor may not profit from his own wrong - damages calculated without reference to the decrease in original value occasioned by presence of risk created/adopted by tortfeasor.

Negligence - allegation that Council liable for damage - claim based upon alternative contentions that the Council created a hazard or added to the danger. - Held: No act of commission on the part of the Council caused or contributed to the slip.

Negligence - liability of Council for approving subdivision without appropriate safeguards. - Held: claim not pleaded - point may not be taken on appeal.

Negligence - Failure to impose satisfactory drainage requirements. - Held: Even if the work recommended by engineers was done by the Council it would not have prevented damage - in not performing the work there had been no breach of duty.

Held: The right is a negative right - it is not a right to support but a right not to have support removed - the appellants claim fails because (i) the right asserted does not exist; (ii) they neither pleaded nor proved the withdrawal of support by the respondents.

Public Trustee v Hermann (1968) 3 NSWR 94 Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 Goldman v Hargrave [1967] AC 645

Clarke JA Each of the appellants in the first proceedings owned a house in Madison Avenue, Adamstown Heights, which, on the Eastern side, adjoined a public reserve which has been vested in the Lake Macquarie City Council ("the Council") since 30 October 1974.

In a series of actions the appellants sued the Council seeking to recover compensation in respect of damage suffered by them by reason of slippage of soil from their land onto the public reserve owned by the Council. Their claims were dismissed by Loveday J and they have appealed from his Honour's judgment contending that it was affected by errors of fact and law. In a separate action Mr and Mrs Hicks, who owned land in Astor Close, Adamstown Heights, which was on the Northern side of the public reserve owned by the Council, also sued claiming to have sustained damage by reason of the slippage of soil onto their land from the reserve. In this action the trial judge found for the plaintiffs (whom I shall hereafter describe as "Hicks") and the Council has appealed arguing that this judgment is also affected by error.

The background facts can be shortly stated. Between 1961 and 1969 land west of the Pacific Highway in Adamstown Heights was developed as a residential sub-division known as the Bel-Air Estates. In the course of this development extensive excavation work was carried out on the top of a hill fairly close to the highway in the construction of Madison Drive which ran from the highway in a northerly direction to the Bel-Air Estates. The construction of the road and sub-division involved pushing a large amount of excavated material into a gully to the east of Madison Drive. Obviously the effect of this action was to build up the land in the gully with fill. Between 1969 and 1972 some of the fill was used to construct Astor Close to the north of the gully. In very broad terms the land ran downhill in a north-easterly direction from Madison Drive and the deposit of the fill in the gully meant that the surface of the land fronting Astor Close was at a lower level than the surface of the land in the gully.

Once the construction works had been completed the land fronting Madison Drive and Astor Close was sub-divided into building blocks. The appellants each bought one of these building blocks and became the owners of lots 259-264 Madison Drive. Lot 284 was situated in Astor Close and was purchased by the Hicks. Lot 293, which was a large area of land, which included the gully, was sold to the Council by the developer, and dedicated as a public reserve. It was, as I have pointed out, vested in the Council on 30 October 1974.

In May 1983 a landslip occurred on the public reserve as a result of which a large quantity of fill material was deposited on the land occupied by the Hicks and the adjoining Lot (283) which was owned by Mr and Mrs Roberts. This landslip did not directly affect the Madison Drive properties.

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL 3 HICKS (Clarke JA) (Clarke JA)

The Council sought and obtained professional advice from geotechnical engineers and carried out some remedial work on the reserve. Notwithstanding, the fill material which had become saturated during the heavy rain which preceded the slip continued to move and eventually damaged the Roberts'

house. In 1984 the Council demolished that house and carried out further work on the reserve. A small amount of additional work was also done in 1985.

In 1989 the respondent resolved to carry out further work on the reserve in 1990. In particular it determined to construct a retaining wall on the eastern boundaries of the Madison Drive properties. Before this work commenced a further landslip occurred during which further fill was deposited on the Hicks property and the rear portion of some of the Madison Drive properties slipped into the gully. The Council did some remedial work on the reserve following this landslip but the retaining wall was not constructed. The appellants all claimed that the values of their respective properties had been adversely affected by the 1990 landslip and sought damages against the Council. For their part Hicks claimed damages in respect of the nuisance constituted by the movement of the fill from the reserve onto their land and for the diminution in value of their land.

When the case was first called on for hearing before Loveday J the proceedings took an unusual turn. Senior Counsel for the respondent sought an order for a separate trial of a number of legal issues under SCR Pt31 and his Honour acceded to this application. With the benefit of hindsight this course complicated the resolution of the disputes between the parties and the case stands as a further example of the problems which can arise unless extreme care is exercised in deciding to hive off particular issues for a separate trial. I will not say any more about this matter except that the existence of the two judgments published by his Honour and the need to re-litigate some of the earlier issues dealt with in the preliminary hearing have greatly complicated the appeal.

In his judgment of 15 May 1992 deciding the legal issues dealt with in the separate trial his Honour found that the fill which had been moved into the gully was the cause of the slippage which had led to the various claims and reached the following conclusions:

(1) The appellants' claims based upon breaches of various sections of the Local Government Act 1919 should be dismissed;

(2) The claim that the Council was liable in nuisance because of its withdrawal of lateral support for the appellants' land should also be dismissed.

(3) The claim in negligence in which it was asserted that the Council was liable for breach of duty arising out of its approval of the development, the approval of the sub-division and the approval of the building applications should be dismissed;

(4) The appellants' other claims in negligence in which they alleged that the Council had been negligent in its management of the reserve should not be dismissed and should be considered in the substantive hearing.

I should add that the reason why his Honour dismissed the claim in negligence referred to in (3), relating to the Council's various approvals, was the absence of an assertion in the pleadings of reliance by the appellants on the actions of the Council. In his final judgment his Honour dismissed all the remaining claims by the appellants but upheld the action by Hicks.

The first substantive ground of appeal concerned the decision in the separate trial that the appellants' claims in nuisance should be dismissed. According to Senior Counsel for the appellant his Honour erred in declining to uphold the claim that each of the appellants had a right to the support of their land and that

the events between 1983 and 1990 caused the withdrawal of that support in circumstances which rendered the Council liable in nuisance.

This contention is, in my opinion, based on a misconception and can be dealt with shortly. The appellants' counsel asserted that the authorities established that, notwithstanding the absence of an easement or contractual right, they each had a right to have their land supported by the land on the public reserve and that the Council was liable for the loss of that support, albeit that it did not, relevantly, carry out any excavation works on its land or take any positive action the result of which was physically to remove the support from the appellants' land.

However, leaving aside contractual rights of support and easements, it is not accurate, in my opinion, to speak in the present context of a right of support.

Although it is often said that the owner of land is entitled to a right of support for his or her land by the adjacent land as a natural incident to his or her property that statement is invariably made in the context in which the adjacent owner carries out work and removes support from his or her neighbour's land. (Gale on Easements, 15th Ed, p310; Bullen & Leake 3rd Ed, (1868) p406; Clerk & Lindsell on Torts (16th Ed) p24.57) It is, in my opinion, more accurate to say, however, that a landowner has a right not to have the support for his or her land withdrawn by a neighbour (see Byard & Ors v Co-operative Permanent Building Society Ltd; Adams & Anor v Co-operative Permanent Building Society Ltd, (1970) 21P & CR 807, at 820-821, Butt, Land Law, 2nd Ed, p303, paral602). As Megarry J said in Byard (at 821) "A negative right not to have the support removed cannot accurately be expressed in terms of a positive right to have the support maintained".

The claim which was made by the appellants was that the mere fact that slippage had occurred on the public reserve which removed support for the appellants' rear gardens rendered the Council liable in nuisance. The appellants did not specifically plead a case of wrongful withdrawal of support. Rather their case was pleaded in negligence, nuisance and breach of statutory duty and they claimed that the Council was liable because, with knowledge of a tendency of the surface of the reserve to slip, it had failed to take any steps, by warning or otherwise, to secure the integrity and stability of the lands owned by the appellants in Madison Drive or to protect those owners from the risk of slippage of soil on the reserve.

At the initial hearing when his Honour dealt with legal questions the claims based on nuisance were, his Honour said, pleaded in an imprecise way

but could (in the light of the arguments) be regarded as falling into two categories as follows:

(1) a nuisance which is alleged to arise through withdrawal of a right of lateral support for the plaintiffs' land;

(2) a nuisance which the plaintiffs claim arises by reason of the existence on the defendant's land of a hazard to the plaintiffs land, the existence of which hazard was known to the defendant.

His Honour rejected the claim which fell into the first category, broadly, upon the ground that the appellants were asserting a right to have their lands, upon which there were substantial quantities of fill, supported which was not a right accorded to them by law. In reaching this conclusion his Honour relied on Dalton v Angus (1881) 6 App Cas 740 (esp at 790-791) and Public Trustee v Hermann (1968) 3 NSWLR 94 at 109.

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL & HICKS (Clarke JA) (Clarke JA)

This conclusion was challenged by the appellant's who submitted, somewhat boldly, that the trial judge considered himself bound by out-moded and inflexible law. Counsel was, of course, referring to the principles of law which were expressed in Dalton, and he proceeded exhaustively to analyse that case undaunted by the statement of McHugh JA (with whom the other two judges agreed) that "If the rule in Dalton v Angus is to be overturned it can only be done by the High Court". (Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 at 740-741.)

I am not prepared to accept counsel's invitation to re-examine Dalton for two reasons. First, | agree with McHugh JA. Secondly, the claim fails for another, and even more fundamental reason. The appellants neither pleaded nor proved the withdrawal of support by the Council. Nothing the Council did effected the removal of support from the Madison Avenue properties. On the contrary it was asserted that the Council did not do everything necessary to ensure that support was maintained and the fundamental right not to have support withdrawn cannot support such a case. In this respect I respectfully

agree with Megarry J (in Byard at 820) that Halsbury (3rd Ed, Vol 12, p607) stated the law concerning the right of support too widely.

His Honour was, therefore, correct to reject the claim based on the so-called right to support.

The second ground was also rejected by his Honour for reasons similar to those which led him to reject the first claim. Insofar as the second claim appears to be based on Goldman v Hargrave [1967] AC 645 it is, perhaps, convenient to deal with it at the same time as I consider the claims in negligence.

In the alternative the appellants argued that the Council had created the hazardous situation on its land or that it had added to the danger constituted by the presence of fill on the reserve. The acts upon which they relied to establish that the Council had created, or added to, the danger were the remedial steps undertaken by the Council in 1983 when it removed fill from the vicinity of the Hicks' and Roberts' properties. The Council was faced with a difficult situation at this time. Fill had slipped down the surface of the public reserve and created significant dangers to the houses on the Hicks' and Roberts' land. When the geotechnical engineers were called in they advised that the fill was wet, was still moving and was likely to continue moving for some time. The Council was faced with a situation in which there was a continuing risk to the two houses on the land onto which the fill was slipping. Accordingly, it excavated a large quantity of fill and removed it from the area. Although these actions did not save the Roberts' house they did significantly reduce the dangers to the Hicks' property. Senior Counsel for the appellants argued, however, that in removing the fill which was at the lowest point of the reserve the Council exacerbated the risk that fill would slip from higher up the reserve and effectively reduce, or remove, the support for the appellants' land.

The submission could not, however, be made good unless it is proper to conclude, as a matter of fact, that the actions of the Council in 1983 did increase the danger to the houses on Madison Drive. Unless it were shown that the

danger was increased by those actions there would be no basis for concluding that what the Council did in 1983 constituted positive action which created or increased the danger to the adjoining lands.

His Honour dealt with a similar submission which had been made to him. He pointed out that work was done by the Council "to protect Mr Hicks' house" and that it comprised the removal of 9,350 cubic metres of fill, the installation of one

sub-soil drain, the installation of some minor surface drainage works, turfing and seeding. Having said that his Honour turned to the appellants' submission that this work had contributed to the 1990 slippage, which at that stage was much more broadly based than the argument in this Court saying:

"Professor Fell was accepted by both the plaintiffs and the defendant as authoritative in his views. He said (Exhibit 38C p5): 'The work carried out in 1983 is shown in Annexure D of Exhibit 51 (a mistake for Exhibit 52). It was restricted to the removal of fill in the area behind the house on Lot 284, and this should have had very little, if any, effect on the stability of the remainder of the slide area.

The work done in May 1984 is shown in Annexure J of Exhibit 52 and photographs PET 12. The photographs show cracks in the ground surface in the vicinity of the benching which are an indicator of localised sliding. The benching formed at this time probably would have created a condition which was worse than before the fill was removed for both localised and overall stability of the lower zone of sliding. However, to my knowledge there is no record of the scarp actually becoming bigger at this time, or before the additional works were done by Council later in 1984, indicating that the May 1984 works did not actually result in additional overall instability.'

Professor Fell continued, concluding that: 'The work carried out by Council in September 1984 resulted in shaping of the ground to a relatively stable form as evidenced by the relative lack of sliding between 1984 and 1990. Given that the slide was moving relatively rapidly over the period May 1983 to May 1984 one could conclude that by the time the works were completed in September 1984 they had improved the stability from what they would have been if no works had been done.'

I accept Professor Fell's evidence as to these matters. It was not the subject of any effective challenge on the part of the plaintiffs. Accordingly, there was no act of commission on the part of the Council that caused or

contributed to the 1990 slip or indeed to any movements of the fill subsequent to 1984."

This finding is an answer to this particular submission of the appellants and if it stands their submission must be rejected. Senior Counsel for the appellants recognised the difficulty constituted by this finding and submitted that it should not be permitted to stand for it was based upon an erroneous assumption. Obviously, if the assumptions upon which the opinion was based were false the opinion itself cannot be sustained.

The assumption which was said to be mistaken was that the work done in 1983 and 1984 comprised the removal of 9,350 cubic metres of fill. There is an immediate difficulty with this submission in that Professor Fell expressly referred to the work carried out in 1983 as being that work shown in Annexure D to Exhibit 51 (His Honour meant 52). That annexure was a plan of the area on which a section of land was marked from which fill was excavated and taken away. There is no reference in that annexure to the quantity of fill excavated and no indication in Professor Fell's expression of opinion that he made any assumption about the precise quantity taken away. It should also be pointed out that Professor Fell was the geotechnical engineer who was consulted by the Council in 1983 and 1984 and he was on site on a number of occasions during that period. He it was who advised the removal of the fill which was taken away and he was well aware of the bulk of fill which had been removed. There is no reason to believe that his opinion was based upon an assumption that the fill

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL ¥ HICKS (Clarke JA) (Clarke JA)

which had been taken away was greater or less than the figure of 9,350 cubic metres of fill to which I earlier referred. For this reason alone I would reject the submission but there is another difficulty with it as well. His Honour's view that 9,350 cubic metres of fill was removed reflected his acceptance of evidence that there was approximately 1500 cubic metres removed in 1983 and a further amount in 1984.

Senior Counsel for the appellants submitted that the finding relating to the excavation in 1983 was contrary to the evidence. He drew the attention of the Court to a contemporary record of the Council. This was a diary entry by a bulldozer operator to the effect that more than 3,000 cubic metres were excavated in 1983 and he submitted that the trial judge should have acted on this objective contemporary record and erred in failing to do so.

However, the accuracy of the diary note was contested by Mr Thomas who was an Assistant Parks Engineer in the employment of the Council in 1983. As part of his duties he attended at the site with residents and representatives of Coffey Partners (Professor Fell was the relevant partner) in May 1983. His Honour then records that:

"Following the decision of the Council in June, Mr Thomas caused spoil (slip material) to be removed to an average depth of 2 metres over an area shown by pink hatching on a plan, Annexure D to Exhibit 52. This area was all below RL83 and generally was to the south and west of Lot 284. Despite some suggestions to the contrary, I accept that there was no material removed from the vicinity of the escarpment that had already begun to form higher up the slope. Mr Thomas' instructions (from his superior Mr Boyle) were to take such steps as he believed appropriate to relieve the threat of damage to the Hicks' property. Mr Thomas also supervised construction of a surface 'catch drain' to direct surface water from the Hicks' property. He then turfed the area adjacent to the drain and seeded with grass seed the rest of the disturbed area."

His Honour refers to further activities carried out by Mr Thomas and pointed out that the work carried out under Mr Thomas' direction substantially comprised the whole of the work done on the site in the years following the 1983 landslip. His Honour then says:

"The Council records appear to be misleading as regards the amount of material removed. I accept, however, the evidence afforded by calculations as to this, namely, a total of 9,350 cubic metres (Exhibit 53)."

During his cross-examination Mr Thomas was confronted with the diary record and expressly disputed its reliability. Mr Thomas explained that the operator had no means of measuring the quantity of fill removed and in his

opinion the estimate put forward by the operator in the diary note was in error to a significant degree. His Honour's findings on this issue involve the acceptance of Mr Thomas' evidence and conclude the point against the appellants. In my opinion there is no substance in the submission that Professor Fell's opinion was based upon a false assumption.

The next point advanced by the appellants' counsel was that the Council was liable for the loss of support to the appellants' lands because the hazardous condition of the public reserve had been created by the Council in giving approvals to the sub-division in 1973 and in approving the development and building applications lodged in respect of the Hicks' and Roberts' properties. It was submitted, in particular, that the Council, in failing to impose relevant conditions on its development approval of the sub-division as to the construction and maintenance of sub-surface drains, the removal of trees and flora growing in

the gully, in failing to prohibit the deposit of any trees cut down in the vicinity of Madison Drive in the gully and in failing to require compaction of the fill created the hazardous situation in the public reserve. However, this case was not pleaded and it is not now open to the appellants to ventilate it in this Court.

It is true that his Honour noted in his substantive judgment in the action that "Despite the judgment given by me on the summary dismissal application the plaintiffs still argued that the Lake Macquarie City Council created the danger and was accordingly liable". However, that statement was made in the context of the consideration of the appellants' claim that the Council was liable for breaching s344 of the Local Government Act 1919 (to which I will come later). His Honour rejected the submission applying what I said in Egger v Gosford Shire Council (1989) 67 LGRA 304, at 343, to the effect that in granting development approvals the Council had not created the danger. That had been created by the developers not by the granting of the approvals. It is unnecessary to re-examine that question in this case for there is no doubt in my mind that the particular case which the appellants have sought to raise in the appeal was not

pleaded and was never developed during either of the two hearings before Loveday J.

Senior Counsel for the appellants also sought to rely on what he described as the failure of the Council to impose satisfactory conditions as to drainage, the removal of vegetation and the compaction of the fill in the public reserve in support of their alternative case based on Goldman v Hargrave.

The appellants submitted that the public reserve was, before and after 1983, in a hazardous state which constituted a danger to adjoining land owners in Madison Drive; that the Council had been aware of the danger to adjoining land holders since 1983 and had failed to take reasonable care to remove or reduce that danger. They therefore contended that when the potential damage became a reality the Council was liable in damages. The cause of action upon which they relied was discussed in Goldman (supra) and Leakey v National Trust (1980) QB 485. I will assume for the moment that the claim was soundly based in law.

The issue between the parties was whether the appellants had established that the Council had failed to take reasonable steps to remove or reduce the danger of slippage occurring on the reserve. Before Loveday J and this Court senior counsel for the appellant contended that the Council had been unreasonable in failing to carry out the stabilisation measures itemised in a report from Coffey Partners of 15 June 1983.

"(a) Removal of the house on Lot 283 (Roberts' house);

(b) Flattening the batter of the cut uphill of the house location on Lot 283 to allow a tractor excavator or back-hoe mounted on a bulldozer to work on the slope;

(d) Construction of sub-surface drains to intersect the coal seam which is a known aquifer and the base of hill downhill of the coal seam to relieve ground water pressure in the fill;

(e) Backfilling the excavation to the original ground surface level with free draining fill;

(f) Backfilling cracks and containing the whole slide area to prevent inflow of surface water;

(g) Construction of catch drains to divert surface water off the slide area;

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL 9 HICKS (Clarke JA) (Clarke JA)

(e) Reinstating trees and grass cover to control erosion and assist in drying out the slope."

In dealing with this submission the trial judge found that it was probable that if these works had been carried out promptly they would have worked and in the result prevented the 1990 landslip. He based this conclusion on the evidence of Mr Love, a Geotechnical Engineer from Coffey Partners, who said that "the installation of sub-soil drains which would keep the toe area drained would on the balance of probabilities have been sufficient to stabilise the area". His Honour observed, however, that there were two important provisos to this statement by Mr Love. The first was that the model on which the report was based was correct. In fact as more examinations and inspections were carried out on the site it was learned that the model was not in fact correct. This was accepted by Mr Love. He said "the slide plain was a lot deeper than what was envisaged in that model and therefore the sub-soil drains would have had to be excavated deeper, because one of the conditions in the stabilisation measures was that the sub-soil drains had to go through all the fill to the natural material or undisturbed material".

His Honour accepted this evidence and observed that the obvious consequence was that the rectification would require considerable extra work and cost much more money. Indeed, his Honour thought that in terms of 1983 currency the cost for the construction of the drains would have been at least $250,000-$300,000.

The second proviso is even more important. That was that the remedial work was done before a substantial scarp developed. The evidence demonstrated that the scarp developed in the gully in January to February 1984 and accordingly the remedial work suggested in June 1983 would have been effective only if carried out before that time. But, according to Mr Love, it would not have been practicable to carry out that work in the six month period between June 1983 and January 1984. He said, in a report dated 7 June 1992:

"Tn our opinion, knowing what we now know of the sub-soil conditions, we consider that there was probably not sufficient dry weather in 1983 in which to allow drying out of the slide mass to enable excavation of the toe area and the excavation of sub-soil drains without causing additional mobilisation of the slide and significantly increasing the risk to the surrounding properties."

On the basis of this evidence his Honour expressed the opinion that it would have been "unlikely" that even if it had decided to do so the Council could have carried out the removal of fill and the installation of drains before March 1984.

This conclusion is soundly based on the evidence of Mr Love and, having regard to his opinion that following the development of the scarp the work spoken of in the June 1983 letter would not have stabilised the condition of the public reserve, it is dear that his Honour's conclusion "that even if the work on the reserve below the scarp had been carried out as recommended by Coffey Partners the work would have been ineffective to prevent damage to the Madison Drive properties" was correct.

For these reasons I would reject the submission that the respondent had failed to act reasonably in carrying out the works to which senior counsel for the appellants drew our attention. That conclusion does not, however, finally determine the issue of reasonableness. The condition of the reserve created a risk of danger to the backyards of the properties on Madison Drive and this was conceded by Senior Counsel for the Council. Stability could have been achieved

only, according to the trial judge, by the construction of a retaining wall along the Eastern boundaries of the Madison Drive properties sufficient to hold the back yards of those properties should the land on the reserve slip again.

The construction of such a wall would have cost a great deal of money. Evidence tendered by the respondent established that the cost of constructing a retaining wall on the common boundary between the reserve and Lots 260-263 would have been in the region of $350,000-$375,000. If the wall had been extended, as suggested by the appellants' counsel, the cost would have increased to $400,000-$425,000. Those figures were accepted as correct by the appellants' legal representatives.

In determining whether the respondent had failed to act reasonably in not constructing the retaining wall it is necessary to have regard to a number of factors.

The evidence accepted by his Honour established that the respondent's funds for the 1983 year had been allocated so as to provide a minimal amount for the maintenance of undeveloped park land. The estimated deficit for the year was $430,000. The respondent's funds were under great strain. If the respondent had been required to spend even $250,000 this would have had a significant effect on its finances with a consequential direct effect on its work force and other works would have had to be eliminated or curtailed "to the detriment of the entire community".

In addition his Honour found that the expenditure of a sum of money approaching $250,000 in any later year on the construction of this wall would have placed significant strain upon the respondent's resources and would have required it to take steps to limit its operations in other areas.

These factors had to be weighed against the risk to the appellants. The evidence, which was accepted by his Honour, demonstrated that there was no significant risk to the appellants' houses or the swimming pool on the property owned by Mr and Mrs Joy. The risk which did exist was that fill which was on

their properties would slip into the gully, thereby removing part of their back yards. This is in fact what occurred.

A further, not insignificant, factor was that the Council was faced with the execution of works necessary to stabilise the lots along Madison Drive as well as with the execution of works necessary to prevent damage to the Hicks property in Astor Close. For this reason it would have been wrong for the judge solely to examine the cost of the construction of the retaining wall in determining whether it had been shown that the respondent acted unreasonably.

Having regard to all these factors I do not think that his Honour was in error in holding that it had not been shown that the respondent had failed to use reasonable care in the circumstances to remove or minimise the risk of danger. The Council was placed in a difficult situation and it did expend nearly $100,000 (although a small amount was recovered from its insurer) in seeking to stabilise the gully. Although it is correct to observe, as senior counsel for the appellants observed, that most of these moneys were spent on the protection of the Hicks and Roberts properties they were nonetheless moneys expended on the stabilisation of the hazardous situation in the gully and, obviously enough, their expenditure limited the respondent's resources and ability to spend moneys in other areas on the reserve.

I have so far dealt with the issue of negligence upon the basis that the principles expressed in Goldman were applicable to the appellants' claims. His Honour accepted that they were. Senior counsel for the Council argued both at the trial and before this Court that those principles should not be applied insofar as the Council as a neighbouring landowner did not, in the circumstances, have an active duty to provide support for the Madison Drive properties.

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCILIV HICKS (Clarke JA) (Clarke JA)

The argument focused on the nature of the right enjoyed by owners of land not to have support withdrawn and the absence of any duty on a neighbouring owner to take steps to ensure that nothing occurred on his or her property which may remove support from the land of neighbours. In the 9th

Edition of Salmond on Torts (Stallybrass) the view is expressed (at p266-p267) that the duty being not to remove support a landowner is only liable if he or she actually removes it, not if, for instance, he or she allows his or her house to fall into disrepair and cause subsidence next door.

The author's opinion is supported by some cases decided at the turn of the century and is quoted, with apparent approval by Dixon J in Torette House Pty Ltd v Berkman (1939-40) 62 CLR 637 at 657-658 and by Glass JA in Fennell v Robson Excavations Pty Ltd [1977] 2 NSWLR 486 at 492 (see also the citation from Megarry J's judgment in Byard which follows his Lordship's reference to Bond v Nottingham Corporation [1940] Ch 429 (at 438).

Although it is unnecessary to express a concluded opinion on this question I am presently disposed to the view that the opinion expressed in Salmond is correct and that the council was not under a duty to stabilise the fill on the reserve which had been placed there by the developer.

Finally, I should not leave this subject without mentioning that the evidence revealed that most, if not all, of the appellants had brought fill onto their properties, that some had extended their backyards with fill onto the reserve, that the arrangements which some had made for the disposal of the rainwater could only have increased instability in the area and the likelihood of spillage and that fill constituted a major proportion of the material lost from each property.

I turn now to the claim that the Council had breached s344 of the Local Government Act 1919. That section reads:

"The Council shall have the care, control and management of -

(a) public reserves which are not under the care of or vested in any body or persons other than the council, and are not held by any person under lease from the Crown; and

(b) public reserves which the Governor by proclamation places under the care, control, and management of the council."

The section simply deals with management of, relevantly, reserves. Neither expressly, nor by implication, does it create a specific duty, much less a duty a breach of which is actionable at the suit of a specific section of the public. I am unable to find any basis for this claim.

That leaves the appeal by the respondent against the judgment in favour of Hicks.

The case which Hicks sought to advance was based on the principle articulated in Goldman (supra). The principle is best expressed in the words of Windeyer J in the High Court ((1963-64) 110 CLR 40 at 71) "a person has a duty to exercise reasonable care when there is a hazard on his or her land, of which he or she knows or ought to be aware, if by the exercise of reasonable care it can be rendered harmless or its danger to his or her neighbours diminished".

What Hicks said was that the Council was aware at all relevant times of the danger constituted by the unstable surface of the reserve and yet it failed to take reasonable measures to ensure that damage was not occasioned to neighbouring properties by that danger.

The Council accepted, as I have pointed out, that the presence of unstable fill on the reserve constituted a hazard of which it was aware following the slip on 4 May 1983. It submitted, however, that the evidence demonstrated that the remedial works it performed represented a reasonable response to the risk of damage to adjoining owners and that his Honour was in error in concluding that it was liable to Hicks.

The thrust of its argument was that the cost of rendering the Hicks property safe from the effects of further landslip from the public reserve was so great that it was not unreasonable of the Council to perform only the limited works which it carried out in 1983 to 1985.

There is no doubt that the Council was well aware that there was a significant danger to the Hicks property. This was first bought to its attention on 5 May 1983 when Hicks wrote to it requiring that the ground in the reserve be stabilised. Thereafter the Council sought advice and in the ensuing two years carried out works on the reserve. The nature of that work was described by Mr Thomas, the Assistant Parks Engineer, under whose direction it was carried out and, as his Honour said, this work represented substantially the whole of the work carried out following the 1983 landslip. What he said was that soil to an average depth of two metres was removed from a portion of the reserve situated to the South and West of the Hicks' property and extending over a fairly large area. Thomas also said that he supervised the construction of a surface "catch drain" to direct surface water from the Hicks property and he then turfed the area adjacent to the drain and seeded with grass seed the rest of the disturbed area.

Notwithstanding the completion of this work the fill within the reserve continued to move and Hicks made a number of complaints demanding further work by the Council. These led, ultimately, to Thomas going to the reserve again in May 1984 and removing further spoil from the site using bull dozers and an excavator. Then in September 1984 he supervised the removal of more fill from the reserve, reshaped part of the reserve and carried out further drainage work and some sub-surface draining. According to a memorandum written by the Parks and Recreations Engineer on 27 March 1985 approximately $65,000 had been spent in stabilisation works but the slope was "still dynamic" and "additional work will have to occur as required". He noted that a contingency sum of $25,000 had been allocated by the Council in the 1985 budget.

The statement as to the expenditure of money on the stabilisation of soil above the Hicks property is consistent with the contents of a memorandum written by Mr Thomas on 27 September 1984 wherein he said that stabilisation works had cost in the order of $60,000, there being an additional $6,000 spent in 1985.

Following the Thomas memorandum in which he said that his department was unable to give an undertaking that the land had been fully stabilised and that no further damage would occur, the Town Clerk wrote to its insurance brokers referring to the statement made by Thomas, pointing out that recommendations in the original geotechnical report had not been carried out due to monetary restraints and concluding:

"As Hicks will not sign a full release unless he receives an engineer's certificate stating that the slip is completely stabilised, it is apparent that the finalisation of this claim may become a drawn out and time consuming affair.

Could you please inform QBE of the current position in this matter and advise Council if insurance coverage would extend to any further damage that may occur."

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL3 HICKS (Clarke JA) (Clarke JA)

Nothing further seems to have been done following the writing of that letter until July 1988 when the City Engineer wrote a report concerning the continued movement of the filling within the public reserve which led to a committee of the Council recommending that $5,000 be allocated for geotechnical investigations in the area.

In November 1988 Hicks wrote to the Council referring to the Council resolution to allocate $5,000 for geotechnical investigations and asking what progress had been made. It was not, however, until 3 April 1989 that the Council appointed Coffey Partners to carry out the geotechnical investigations.

It would appear from a report of Coffey Partners that the Council's interest in the public reserve was re-activated following an inspection mid way through the year (1988) after a lengthy period of heavy rain when it was noticed that the fill had moved and Coffey Partners had once again been called to the site.

For reasons which are not clear a report on the geotechnical investigations was not issued until 5 September 1989. In that report Mr Love observed that the slide had remained active since the instability was first noticed in 1983 and that measures taken to reduce the risk of damage to the house on Lot 284 could only be regarded as insufficient "as active movement is continuing in the form of slump failure of fill material along the crest of the excavated scarp and overall creep like movement of the fill which was gradually altering the surface profile across the site". Mr Love also pointed out that unless appropriate remedial measures were installed a number of serious consequences could follow. In particular he said that a severe rainfall event could result in saturation of the fill and the slide could flow rapidly down slope, possibly into Astor Street. Such a flow slide could occur violently and could endanger life. He added that the risk of one or more of the three possibilities he had mentioned occurring was high and that there was an associated risk of damage to property or persons. He recommended that appropriate remedial measures be undertaken to reduce this level of risk.

Mr Love recommended the installation of six sub-soil drains draining into three main sub-soil drains to take water to a single point near the North-Eastern corner of Lot 283 whence the water would be directed to the Astor Street drainage system together with the construction of a retaining wall along the rear boundaries of the Madison Drive properties. In addition he considered that the scarp slopes should be regraded and he suggested a number of erosion protection measures.

Despite the fact that in early 1989 there had been heavy rainfalls which had led to some significant slippage in the public reserve and which received publicity in the local press, and the contents of the report there does not appear to have developed in the Council any sense of urgency. This troubled Mr Morgan who wrote to the Council on 29 September and again on 16 November requesting early attention to the matter. The Mayor did not respond until 30 November and the Council then allocated $300,000 in its 1990 works budget to carry out further work on the site. This work had not however commenced when a further and significant land slip took place on 3 and 4 February 1990 after intense rainfall. I should add that in 1986 and 1988 Hicks was in touch with the Council and on two occasions, at least, sought site inspections which in fact took place. In addition, Mr Morgan was showing considerable interest in having remedial works carried out on the reserve.

T have referred to the facts in some detail to demonstrate that the Council did not at any stage carry out the work recommended by its experts, that there were continuing complaints about instability and the risk to adjoining properties, that the Council made no significant response to those complaints during the period between 1985 and 1988 and that when it was moved to take steps by arranging a geotechnical investigation following further slippage, which attracted fairly wide publicity, it never responded with any sense of urgency. It may well be that there was a limited period between the delivery of the report in September 1989 and the land slip in February 1990 but having regard to the lengthy passage of time prior to the delivery of that report and the nature of the risks referred to in it there is much to be said for the view that even at that stage the Council failed to respond appropriately.

Having regard to all these factors I am of opinion that it was well open to his Honour to conclude that the Council had not taken appropriate and reasonable measures and I would not be disposed to interfere with his conclusion to that effect.

The Council also contends that his Honour's assessment of the damages suffered by Hicks was erroneous insofar as they related to the loss of value of the property.

The Council's submissions were quite ingenious. Senior counsel argued that the evidence demonstrated that following the 1983 landslip the Hicks' property was virtually valueless. More to the point it had remained valueless until 1990 so that the landslip which occurred in that year did not decrease the value of the land at all. Accordingly his Honour erred in allowing damages for the drop in value of the property occasioned by the 1990 slip. In developing this submission counsel pointed out that there was no evidence that the Council was aware of the hazardous condition of the reserve prior to the 1983 slip. Nor was there evidence upon which it could properly be held that the Council ought to have been aware of the hazardous condition prior to that event. Accordingly, and I am prepared to accept that this is so, the Council was not liable for any decrease in value of the property occasioned by that slip. Quite apart from that consideration the Statute of Limitations would operate to deny Hicks a right to recover damages in an action commenced in 1991 for the damage occasioned in 1983.

Tam not at all sure that this particular submission was made to his Honour. In his separate judgment on damages the trial judge observed at the outset that the Council conceded that a claim for diminution in value could properly be made in nuisance even though the judge himself was not aware of any previous case in which such damages had been awarded.

His Honour pointed out that counsel for Hicks had submitted that the value of the property immediately before the February 1990 slippage was $210,000 and following the slippage only $100,000 with the consequence that the damages payable should be assessed at $110,000.

It is the figure of $210,000 for the pre-1990 slippage value which the Council challenges. His Honour noted, however, that "This value was agreed by all counsel to be a fair value of the property at that date unaffected by any considerations of land slip and of what had previously occurred".

His Honour also said that he understood the submissions advanced by Hicks' counsel to indicate that it was appropriate to regard the Hicks property as unaffected by considerations of land slip before the 1990 slip because of the Council's assurances and of events between 1983 and 1990. The assurances were, as his Honour explained, those given by the Council verbally and in writing to

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCILS HICKS (Clarke JA) (Clarke JA)

the Hicks stating that once the work had been concluded in March 1985 all further threat to their dwelling had been removed. The events to which his Honour referred were the lack of significant movement of fill mass in the period 1985 to 1990, the work undertaken by the Council and the passage of a significant period of time in which no further significant slippage occurred.

I pause to observe that I am not sure that it is accurate to say that there was no significant movement of fill in the period in question for in 1988 there was some movement which I do not think it would be accurate to describe as insignificant and which attracted publicity in the local press. However, that may not matter for his Honour found it impossible to accept that the value of the property had ever been fully restored since the 1983 land slip. On the other hand his Honour did not accept the assertion by Mr Higgs, a valuer called by the Council, that there had been no change in the market value of the Hicks' property between May 1983 and February 1990. His final conclusion on this question was:

"In my view the true picture is between the extremes posed by Mr Higgs and the valuers called by the plaintiffs. The value of the property was not fully restored. On the other hand the Council's assurances would have positively affected the value of the property, assuming that these assurances would have been 'transferable' to any prospective purchaser".

His Honour thought that the passage of time without a major slip and general inflationary factors would also have been relevant in effecting some restoration of the value. Notwithstanding, his Honour accepted that the property was worth less in February 1990 "because of the risk of slippage than would have been the case if there had been no such risk. The slippage of February 1990 confirmed the hazard and further depressed the value'.

In assessing what should be allowed his Honour took account of the fact that there was a continuing risk of slippage of filling onto the Hicks' property in 1991 (when the action was commenced) and that this served to decrease the value of the property after the 1990 slip. On the other hand, he was not, as I have indicated, able to accept that the effects on value of the events of 1983 had been totally spent by 1990. In all the circumstances his Honour assessed the diminution in value at 75 per cent of $110,000, that is $82,500. One factor which he specifically took into account was that although the property remained at some risk from slippage that risk had been reduced by, first, the 1990 slip itself and, secondly, the installation by the Council of remedial drains in 1990.

In reaching this conclusion his Honour rejected the evidence given by Higgs that there had been no increase in value between 1983 and 1990. He also rejected the evidence of the Hicks' valuers that the value of the property should be regarded as being fully restored prior to the 1990 slip. He was, of course, entitled to reject the evidence of each of those experts albeit that in doing so he made the task of assessment of the damages much more difficult. But, the evidence of Higgs having been rejected, it is not open to the Council to assert in this Court that the opinion which Mr Higgs was expressing should now be accepted. At least it is not open unless there is compelling evidentiary material (which there is not) which demonstrates that his Honour erred in rejecting that evidence.

Senior counsel for the Council vigorously attacked the conclusions of Mr Skelton (the Hicks valuer) who was, according to the submission, accepted by his Honour but as I have pointed out his Honour did not accept at face value the evidence of any of the valuers as to the extent to which there had been a restoration of value between 1983 and 1990. Accordingly, I do not think that this submission takes the case any further.

Counsel for the Council also challenged the post-1990 slip valuation saying that the evidence that the property was worth $100,000 after the slip failed to take into account the remedial work carried out by the Council. I do not think that is correct. His Honour's assessment did reflect the reduction in the risk of slippage from the installation of the drains in 1990 and in that way account was taken of the remedial work. For these reasons I would reject the challenge to his Honour's assessment of the damages.

There is, however, another basis upon which I consider the assessment can be sustained. The argument for the Council was that in determining the compensation the court was required to deduct the post-1990 slip value from the pre-slip value and that in carrying out this exercise the court should value the land prior to the slip upon the basis that the earlier slip had significantly reduced the value and the continued possibility of slip effectively maintained the depressed value until the 1990 slip.

What this argument overlooks is that if the Council had not been in breach of its duty to Hicks there would have been no risk of slippage from the reserve onto their land or, at least, there would have been a much smaller risk of damage from slippage than there was in 1983. To argue, as the Council did, that the value earlier in 1990 was almost negligible because of the ever present danger of slip appears to me to be a good example of the Council seeking to benefit from its own wrong. It is a well established legal maxim that "no person shall take advantage of his or her own wrong" (Broom's Legal Maxims, [10th Ed] 191, particularly at 195). Indeed, as Broom points out, this maxim is based on elementary principles and is fully recognised in courts of law and equity and admits of illustration from every branch of legal procedure. While not a perfect analogy an example of the application of this principle in the law of tort is to be found in Whitwham v Westminster Brymbo Coal and Coke Co (1896) 1 CH 895 and (1896) 2 CH 538. In this case the breach by the Council was the failure to take reasonable steps to remove, or significantly to reduce, the risk of damage to Hicks' property from the unstable fill on the reserve. It would, as it seems to me, be quite unjust to assess the pre-1990 landslip value upon the basis that the land was in a vulnerable condition where that vulnerability resulted solely from the Council's failure to take reasonable steps. It is to me a clear illustration of a party seeking to benefit from its own wrong. In order properly to assess damages in a case such as the present I would be disposed to think that the damages should be assessed, in broad terms and with one proviso, as being the difference between the pre-1990 slip value, upon the assumption that there was no, or no significant, risk of slippage and the value subsequent to the slip.

The proviso is that where, as here, the party in default attempts to remedy the situation and the remedial steps taken have an effect on the post slip value then those steps should be taken into account in reaching that value.

Ihave dealt with the arguments on damages in a way which conforms with the approach taken by the parties and his Honour at first instance. However, I wish to make it plain that I think that it was wrong to look at the damage flowing simply from the 1990 slip. Let me explain why. Prior to Goldman there was a generally held view that a person could not be liable for a nuisance emanating from his or her land which he or she had not created unless it was proper to conclude that he or she had adopted or continued it. The arguments which had been considered in some of the earlier cases concerned the notion of continuance. The significance of Goldman is that it provided a further basis of liability in

WRIRGAN v LAKE MACQUARIE CITY COUNCIL; LAKE MACQUARIE CITY COUNCIL ¥ HICKS (Handley JA) (Handley JA)

respect of the hazards which spread from a person's land to those of neighbouring occupiers. That basis, as I earlier pointed out, was expressed by Windeyer J in the High Court in these terms (at 71):

"In my opinion a man has a duty to exercise reasonable care when there is a fire upon his land (although not started or continued by him or for him) of which he knows or ought to know, if by the exercise of reasonable care it can be rendered harmless or its danger to his neighbours diminished."

I do not understand the Privy Council to have qualified that expression of duty and as it seems to me it now represents the law. It will be seen that Windeyer J speaks of duty in the language of the tort of negligence rather than nuisance. Windeyer J himself considered that the liability in Goldman was in negligence (p72) and so did the Privy Council (p657) although it did not exclude the possibility that the escaping hazard may be regarded as a nuisance. In this context it should be remembered that an occupier of land may seek an injunction to protect it from a potential nuisance (Goldman (1963-64) 110 CLR at 59-60) and it would not seem inaccurate to describe the possible movement of the fill from the Council's land to that of the Hicks as a potential nuisance. Nonetheless, like Windeyer J in Goldman, I am of opinion that in the present case the Council's liability is in negligence.

What is important is that the Council is liable because it failed to take reasonable care to render harmless, or reduce the danger from, the hazard of which it was aware constituted by the unstable fill on its land.

Accordingly, the damages which should be awarded against it are those damages which flow from its failure to take the necessary steps in compliance with its duty to take reasonable care.

Of course the cause of action did not arise until the damage was caused, that is, when the fill moved onto the Hicks' land in 1990, and there can be no question that the Statute of Limitations was relevant either on the issue of liability or damages notwithstanding that the failure to exercise due care first occurred more than six years before the institution of the proceedings.

What is more to the point in the present discussion is that the damages to be awarded should fully compensate the Hicks for the consequences suffered by them as a result of the Council's failure to exercise due care. Upon the hypothesis, which was accepted by the parties, that diminution in the value of the land was a proper head of damage the two questions which arise are:

(a) Did the Council's negligence result in a diminution of the value of the Hicks' land? and (b) If so, to what extent?

The answer to the first question must, on the evidence accepted by his Honour, be 'Yes'. If the Council had exercised reasonable care and stabilised the fill on the reserve then the Hicks' property would have had a particular value. As it was the Council failed to take reasonable care and the Hicks' property remained vulnerable and was less valuable. This decrease in value clearly resulted from the Council's breach of duty.

The point of this discussion is that senior counsel for the Council was wrong to concentrate on the losses occasioned by the 1990 incident. Certainly the physical losses were recoverable but in determining the diminution in value of the land the Court was required to consider the effect of the breach of duty rather than the effect of one consequence of that breach, that is, the 1990 incident.

For these reasons the appeals in each case should be dismissed with costs.

Counsel for the appellants (Morgan, Alen, De Vitis, Joy, Simpson and Michilis) and respondent (Hicks): C J Stevens QC and P Kerr

Solicitors for the appellants (Morgan, Alen, De Vitis, Joy, Simpson and Michilis) and respondent (Hicks): Bale Boshev & Associates

10 Counsel for the appellant/respondent (Council): M S Jacobs QC and P C Tomasetti

Solicitors for the appellant/respondent (Council): Peter Rees

At a glance

Court

Decision date

Before

Source

Judgment (168 paragraphs)

Parties

Cases Cited (2)