Rail Corporation New South Wales v Leduva Pty Limited

LEGISLATION CITED : Supreme Court Rules 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW)

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1980-1981) 146 CLR 249 Attorney-General for Ontario v Harry (1982) 25 CPC 67; (1982) 35 OR (2d) 248 Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 Doherty v Allman (1878) 3 App Cas 709 F Hoffmann-La Roche & Co AG v Secretary for Trade & Industry [1975] AC 295 Financiera Avenida SA v Shiblaq Times 7 November 1990 (CA (Civ Div)) Graham v Campbell (1878) 7 Ch D 490 Re Halistone (1910) 102 LT 877 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 CASES CITED : Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 Modern Transport Co Ltd v Duneric Steamship Co [1917] 1 KB 370 Municipality of Metropolitan Toronto v NB Theatrical Agencies Inc (1991) 76 DLR (4th) 522 Newby v Harrison (1861) 2 De GJ & J 287 Redwin Industries Pty Ltd v Feetsafe Pty Ltd and Anor [2002] VSC 427 Roberts v Walter Developments Pty Ltd & Ors [unreported, Supreme Court of Western Australia, Wheeler J, 13 June 1997] Smith v Day (1882) 21 Ch D 421 Upper Canada College v City of Toronto (1917) 40 OLR 483 Ushers Brewery Ltd v P S King & Co (Finance) Ltd [1972] Ch 148 Vieweger Construction Co Ltd v Rush & Tompkins Construction Ltd (1964) 48 DLR (2d) 509; Yukong Line Ltd v Rendsburg Investment Corp [2001] 2 Lloyd's Rep 113 (CA)

PARTIES : Rail Corporation New South Wales (Plaintiff) Leduva Pty Limited (Defendant)

COUNSEL : Mr BC Oslington QC, Mr M Henry, Ms S Callan (Plaintiff) Mr F Lever SC, Mr F Hicks (Defendant)

SOLICITORS : Blake Dawson Waldron (Plaintiff) McCabe Terrill (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50042/05 Rail Corporation New South Wales v Leduva Pty Limited JUDGMENT The essential background 1 The background to these proceedings concerns the following events:

i. On 6 September 2004 Rail Corporation New South Wales sought interlocutory injunctive relief to restrain Leduva Pty Ltd from carrying out certain construction work at Lot 121, Henderson Rd, Alexandria. Upon Railcorp giving the usual undertaking as to damages the court made an order in the following terms: That until 5 pm Wednesday 8 September 2004 the defendant, by its officers, employees, contractors and agents, immediately cease carrying out any works on the land comprised in folio identifier 121/103002 [known as Lot 121 Henderson Rd, Alexandria NSW] within 10 metres of any of the concrete piles identified and marked CP2 on drawing 02038-40 amendment A.

ii. On 8 September 2004, upon Railcorp giving the usual undertaking as to damages, it was ordered that the injunction be continued until further order.

iii. By motion filed 27 October 2004 Leduva sought an order that the interlocutory injunction be dissolved. After a contested interlocutory hearing extending across seven days the motion was dismissed.

iv. On 2 February 2005 the injunction was dissolved by consent.

v. On the same day Railcorp consented to the re commencement of the loading works.

vi. On 4 March 2005 Nicholas J ordered the defendant to pay the plaintiff's costs of the proceedings for injunctive relief on an indemnity basis. The separate question 2 There is before the Court for determination the following separate question ordered to be tried before all other questions including all questions of quantum:

"The question whether the defendant is entitled to be compensated pursuant to the undertaking given to the Court by the plaintiff on 6 September 2004 and renewed on 8 September 2004 and 22 November 2004." The easement 3 Rail Corp has the benefit of a registered easement for railway access through the land identified in the above-described order. An underground railway tunnel is constructed within that easement. That tunnel is part of the main Bondi Junction/Illawarra railway line through which about 280,000 passengers travelled each way in an average week. Leduva

4 Leduva is the registered proprietor of the site and was constructing an apartment block on the site adjacent to the tunnel. The Development Deed 5 As a condition of approval of the development, Rail Corp and Leduva entered into a Development Deed on 9 March 2004 ["the Deed"]. A condition of Leduva's Development Consent required Leduva to obtain Rail Corp's approval to the development so that Rail Corp could ensure that the development did not put its tunnel at risk. Without Rail Corp's approval the development could not have gone ahead.

6 Relevant provisions of the Deed and the "Rail Related Work Procedures for Underground Construction Work" ["WMS"] (a document that has contractual force under the Deed) are referred to below. The Piling Works 7 The drawings [at pages 320 and 321 of Exhibit A of the exhibits before Nicholas J] (although not "as-built" drawings) illustrate the following features of the piling works:

i. There are two rows of piles, referred to as "CP1" and "CP2" respectively ("CP" stands for "Concrete Pile" ).

ii. The CP2 piles run parallel to, and are closest to, the easement. They are load-bearing piles upon which the apartment block would be built. The design depth, namely, a depth below the base of the tunnel, is to ensure that all loads are carried to the foundation material below the tunnel thus ensuring no pressure is placed upon the tunnel wall.

iii. The CP1 piles run parallel to, and behind, the CP2 piles. They are also load-bearing piles upon which the apartment block would be built. The design depth of the CP1 piles is such that the disbursal of any load through the subsoil will place no load on the tunnel. The proceedings 8 The above-described injunctive regime was ordered in circumstances and for reasons referred to below. This injunction would serve to prevent Leduva from continuing any building work which would place load on the tunnel. The principles 9 The general approach which informs the grant or refusal to grant interlocutory injunctive relief was outlined by McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536 in the following terms:

"… Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled…

Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for the Court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, e.g., whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question…

If the Court does decide the question of law the uncertainty is to that extent removed…

Unless the plaintiff shows that there is at least a serious question to be tried which if resolved in its favour would entitle it to final relief, then the requirements of justice as between the parties will dictate that an interlocutory injunction should be refused…

Apart from this, although normally the Court "does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case"…, there are some kinds of case in which for the purpose of seeing where lies the balance of convenience or more specifically "the balance of the risk of doing an injustice"…it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief:…One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue…" 10 It is trite that interlocutory injunctive relief is granted on the basis that the plaintiff furnishes the usual undertaking as to damages to the Court. At the time when Nicholas J granted the injunctive relief in these proceedings the usual undertaking as to damages in place pursuant to part 28 rule 7(2) of the NSW Supreme Court Rules was in the following terms:

An undertaking to the Court to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, affected by the operation of the interlocutory order or undertaking or of any interlocutory continuation, with or without variation, of the order or undertaking.

[This form of the usual undertaking as to damages is substantially replicated in rule 25.8 of the Uniform Civil Procedure Rules 2005] which now reads: "The "usual undertaking as to damages", if given to the court in connection with any interlocutory order or undertaking, is an undertaking to the court to submit to such order (if any) as the court may consider to be just for the payment of compensation (to be assessed by the court or as it may direct) to any person (whether or not a party) affected by the operation of the interlocutory order or undertaking or of any interlocutory continuation (with or without variation) of the interlocutory order or undertaking."] 11 It is clear that there is always a discretion to refuse to enforce the undertaking and that each case must be decided on its particular facts: Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1557. 12 The real question to be answered is as to the principled approach to the exercise of the discretion in the somewhat unusual circumstances which obtain in relation to the present litigation. This is primarily because the proceedings were never dealt with at a final hearing. However, even if the proceedings had been so determined, many of the factors which now require to be taken into account would likely also have required to be dealt with [assuming that the defendant had succeeded in that final hearing]. 13 Both parties have taken the Court to a number of authorities going to the principled exercise of the discretion to enforce an undertaking as to damages. Those authorities include the following:

i. Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1980-1981) 146 CLR 249 at 311, where: Gibbs J said:

"The court has a discretion not to enforce such an undertaking, but unless the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking it would seem just, speaking generally that a plaintiff who has failed on the merits should recompense the defendant for the damage that he has suffered as the result of the making of the interlocutory order … the only damages to which a defendant is entitled are those which he has sustained by reason of the grant of the injunction. The generally accepted view is that the damages must be confined to loss which is a natural consequence of the injunction under the circumstances of which the party obtaining the injunction has notice."

Aickin J observed at 261 [cited with approval in Roberts v Walter Developments Pty Ltd & Ors , WASC, 13 June 1997 per Wheeler J]: "The cases display a substantial variation in the language in which the principle is expressed. The following are examples of expressions used: some cases speak of damages being available if it turns out that the injunction was 'wrongfully granted'; others of where 'the court is ultimately of opinion that the order ought not to have been made'. ….. It seems that the first two expressions mean no more than that the plaintiff ultimately fails and are not concerned with the question whether it was correct in the circumstances prevailing at the time to grant the interlocutory injunction." [It is appropriate to note that the preponderance of authority does not support the proposition that the principled exercise of the discretion is solely concerned with the question whether it was correct in the circumstances prevailing at the time to grant interlocutory injunction. I do not understand the last sentence of the above quotation from the judgment of Aickin J as suggesting to the contrary.] ii. Financiera Avenida SA v Shiblaq Times , 7 November 1990, where Lloyd LJ stated [as cited in Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1555]: "The first question is whether the undertaking ought to be enforced at all. This depends on the circumstances in which the injunction was obtained, the success or otherwise of the plaintiff at the trial, the subsequent conduct of the defendant and all the other circumstances of the case. It is essentially a question of discretion." iii. Yukong Line Ltd v Rendsburg Investment Corp [2001] 2 Lloyd's Rep 113 (CA) at 119-120 Potter LJ, with whom Hale and Thorpe LJJ agreed, stating: "The order for an inquiry as to damages is discretionary, such discretion being exercised in accordance with equitable principles, taking into account all the circumstances of the case, but bearing in mind that, since the injunction should not have been obtained, prima facie the plaintiff ought to bear the loss … As observed by Lord Justice James in Graham v Campbell (1878) 7 Ch D 490 at 494 the undertaking ought to be given effect except under 'special circumstances'. Those special circumstances include the conduct of the injunctee at the time the injunction was obtained or later, see per Lord Diplock in F Hoffmann-La Roche & Co AG v Secretary for Trade & Industry [1975] AC 295 at 361."

iv. In Air Express , Mason J noted at 323: "so long as the claim for damages is not trivial or trifling an inquiry should be directed and the defendant will be entitled to recover the loss which is the natural consequence of the grant of the injunction. The Supreme Court of Canada has held that the court will be entitled to refuse a reference as to damages where there are special circumstances, i.e. when the plaintiff is a public body and acts in the public interest to hold the situation until the rights are determined or when the defendant, having succeeded on technical grounds, has been guilty of misconduct ( Vieweger Construction Co Ltd v Rush & Tompkins Construction Ltd (1964) 48 DLR (2d) 509 at 519)". v. F Hoffmann-La Roche & Co AG v Secretary of State for Trade & Industry [1975] AC 295 at 361, where Lord Diplock stated that the Court: "…retains a discretion not to enforce the undertaking if it considers that the conduct of the defendant in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking makes it inequitable to do so, but if the undertaking is enforced the measure of the damages payable under it is not discretionary."

vi. In Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1555 Peter Gibson LJ after citing Diplock LJ stated: "This dictum might be read as confining the exercise of discretion to the circumstances specified, but I regard Lord Diplock as merely giving examples of the circumstances in which the court might exercise its discretion against ordering an inquiry."

"In a case where an interlocutory injunction has been found in advance of the trial to have been wrongly obtained, for example, through failure to disclose material evidence on an ex parte application or through error or misapplication of law, in my judgment the same position obtains: save for special circumstances the court will exercise its discretion in favour of the respondent by enforcing the undertaking.

There are only a few reported decisions on what constitute special circumstances. If the respondent delays unduly in seeking an inquiry as to damages, he may be refused: see Smith v Day (1882) 21 Ch D 421 and Ex parte Hall (1883) 23 Ch D 644. … In Upper Canada College v City of Toronto (1917) 40 OLR 483, the court in refusing to order an inquiry as to damages … had regard to a number of circumstances including the good faith of the plaintiffs and the fact that no costs were awarded against them when the action was dismissed. In Attorney-General for Ontario v Harry (1982) 25 CPC 67 a factor taken into account by the court in refusing to enforce an undertaking as to damages…was the inequitable conduct of the defendants. These cases support the general words of Turner LJ in Newby v Harrison (1861) 2 De GJ & J 287, 290 'there may be cases in which the court will not consider it just to enforce an undertaking, though the jurisdiction to do so exists.'" vii. As was said in Cheltenham & Gloucester Building Society v Ricketts [1993] 4 All ER 276 at 285 in relation to an equally wide form of undertaking, the form of the undertaking indicates that the Court has a discretion whether to enforce it at all and that discretion is not limited in any way (although it goes without saying that the discretion must be exercised judicially).

viii. In Cheltenham & Gloucester Building Society v Ricketts [1993] 4 All ER 276 at 285 Peter Gibson LJ said: "The law was stated by Lloyd LJ (with whom Stocker LJ and Sir George Waller agreed) in Financiera Avenida SA v Shiblaq Times [1990] CA Transcript 973 thus: 'Two questions arise whenever there is an application by a defendant to enforce a cross-undertaking in damages. The first question is whether the undertaking ought to be enforced at all. This depends on the circumstances in which the injunction was obtained, the success or otherwise of the plaintiff at the trial, the subsequent conduct of the defendant and all the other circumstances of the case. It is essentially a question of discretion. The discretion is usually exercised by the trial judge since he is bound to know more of the facts of the case than anyone else. If the first question is answered in favour of the defendant, the second question is whether the defendant has suffered any damage by reason of the granting of the injunction. Here ordinary principles of the law of contract apply both as to causation and as to quantum…In a simple case the trial judge may be able to deal with causation and quantum himself as soon as he has exercised his discretion. But in a more complicated case it may be necessary for him to order an inquiry as to damages either before himself, or before some other judge or before the master or registrar. Very occasionally he may find it necessary to leave over the exercise of the discretion.' [Cited with approval in Redwin Industries Pty Ltd v Feetsafe Pty Ltd and Anor [2002] VSC 427 at [48]]. …it is also clear that he [Lloyd LJ] considered that the court had a general discretion whether to enforce the undertaking, and that this required consideration of all the circumstances of the case." 14 Spry has noted that factors taken into account include:

(a) whether it is shown that the plaintiff did not disclose a material fact that they were under a duty to disclose when the interlocutory relief was granted [Spry, The Principles of Equitable Remedies, (6th ed 2001) 657];

(b) the fact that damage or detriment suffered by the defendant appears to be insignificant [ Re Halistone (1910) 102 LT 877 at 889; see Spry The Principles of Equitable Remedies, (6th ed 2001) at 660];

(c) conduct on the part of the defendant, in relation to the injunction or the undertakings, that renders the award of damages inequitable [ F Hoffmann-La Roche & Co AG v Secretary of State [1975] AC 295 at 361; Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1557; Modern Transport Co Ltd v Duneric Steamship Co [1917] 1 KB 370 at 379-380; see Spry, The Principles of Equitable Remedies (6th ed 2001) at 660]. 15 Spry also notes that if there is a finding that there has been inequitable conduct on the part of the defendant, such conduct may render it just that no order as to damages be made at all; or, on the other hand, it may be more appropriate simply that the amount of damages that would otherwise have been ordered should be diminished to such an extent that it can no longer be said that the order of the court is 'practically unjust'. [See generally Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239; Spry, The Principles of Equitable Remedies (6th ed 2001) at 661.] 16 Gee notes [Gee, Commercial Injunctions, (5th ed 2004) at 306] that there has been decisions in Canada to refuse an inquiry where claimant was acting in the public interest and the defendant's conduct leading to the institution of the proceedings was viewed with disfavour [Attorney General for Ontario v Harry (1982) 35 OR (2d) 248; Municipality of Metropolitan Toronto v NB Theatrical Agencies Inc (1991) 76 DLR (4th) 522]. 17 Gee has commented [Gee, Commercial Injunctions (5th ed 2004) at 306] that if the defendant has provoked the bringing of the proceedings or brought them on themselves it may be inequitable to enforce the proceedings. Examining the circumstances 18 During the presentation of the subject application the parties took the Court to an enormous amount of evidence:

i. the whole of the evidence [including selected transcript] before Nicholas J was tendered; [This included for example, 27 affidavits and reports and other sundry items constituting the plaintiff's evidence before Nicholas J and 28 affidavits and reports and other sundry items constituting the defendant's evidence before Nicholas J]

ii. a number of additional affidavits were also relied upon;

iii. the two volumes of tender bundles placed into evidence by the defendant covering a miscellany of materials, even descending for more abundant caution to the inclusion of associates' notes. 19 During the presentation of the subject application each of the parties traversed numerous matters of detail including contemporaneous correspondence material to the brackets of time prior to 6 September 2004, between 6 September and 16 November 2004, between 16 November and 14 December 2004 and between 14 December and 2 February 2005. However during final address Mr Lever SC, leading counsel for the defendant, made clear that the gravamen of the case being pressed:

(i) did not include a contention that the plaintiff was not entitled to the injunctive relief granted up to 16 November 2004.

(ii) was solely referable to the continuance of the injunction between 16 November 2004 and 2 February 2005 [in turn made up of the above-described two brackets].

(iii) in essence did not, otherwise than as providing context/background, require the Court to examine the anterior period or to revisit the approach taken by Nicholas J in ordering the injunctive relief. 20 Hence it becomes unnecessary in these reasons to do more than to sketch out and often in no more than general terms, the matters justifying the findings necessary for determination of the instant application. 21 To that end I proceed first to examine the Development Deed and then in non-exhaustive fashion, to an overview of the pertinent circumstances. The Development Deed 22 The recitals included acknowledgements:

i. that the defendant proposed to carry out the works on or near land upon which there were situated the plaintiff's facilities;

ii. that the plaintiff had particular statutory obligations to safely and efficiently operate and maintain its facilities and operate a railway on the railway corridor without interruption;

iii. that the deed was entered into to regulate the manner in which the works were required to be carried out. 23 Clause 6.2 dealt with "Alert Events". The definition of "Alert Event" was as follows:

"Alert Event means an actual or likely event or circumstance which arises because of the Works and which may interfere with or threaten:

(a) the use of the Railway Corridor for railway purposes or the operation of Rail Party's Facilities;

(c) the operational capacity or efficiency of the Railway ; or

(d) the future safe operation of the Railway or the future operational capacity or efficiency of the Railway,

including (without limitation) any event or circumstance which has or is likely to have a material detrimental effect on:

(e) the Railway Corridor and the Rail Party's Facilities;

(f) the safety of Railway passengers, station patrons or representatives of Rail Party; or

(g) the operation of the Railway." 24 Clause 6.2 then provided as follows:

(a) If Developer becomes aware of an Alert Event occurring, Developer must, at its cost, immediately inform Rail Party's Representative of the Alert Event and keep Rail Party's Representative informed about the Alert Event and provide Rail Party's Representative with sufficient information to enable Rail Party to assess the nature of the Alert Event and the likely effect of the Alert Event on:

(i) the Railway, the Railway Corridor and Rail Party's Facilities;

(ii) the safety of Railway passengers, station patrons or representatives of Rail Party; and

(iii) the operation of the Railway. (b) In the event that any Alert Event causes:

(i) the Railway, the Railway Corridor or Rail Party Facilities to be at risk (as determined by Rail Party);

(ii) the safety of Railway passengers, station patrons or representatives of Rail Party to be at risk (as determined by Rail Party) ; or

(iii) the operation of the Railway to be at risk (as determined by Rail Party), Developer agrees to (and must) immediately co-operate with Rail Party (including by ceasing to carry out that part of the Works in respect of which the Alert Event applies and vacating the Railway Corridor) and to assist Rail Party to take such action as Rail Party directs is necessary to avert any danger and ameliorate the risk." 25 Clause 7 dealt with development and building applications and approvals and included a number of provisions inter alia requiring the defendant to only construct the Works in accordance with the development consent unless otherwise agreed in writing by the plaintiff and dealing with matters such as variations and modifications. 26 Clause 8 dealt generally with design development documents including requirements that the defendant not make any variation or modification of the design which may have a material impact upon the railway, the railway corridor wall of the plaintiff's facilities without first providing details of the proposed variation or modification to the plaintiff for its review. 27 Clause 10.3 required the defendant to ensure that all construction was carried out strictly in accordance with the Development Documents. The definition of "Development Documents" extended to include Architectural Drawings, Structural Drawings, Excavation Drawings, contract for the execution of the Works, specifications of the Development, the Development Approval, the Design Method Statement, the Excavation Method Statement, the Construction Method Statement, the Excavation Program, the Construction Program and other material specifications, drawings, method statements and the like compendiously set out within this definition. 28 Notably the parties have always proceeded in the litigation upon the basis that the words "Design Method Statement" are to be taken as having referred to the 'Work Method Statement' which is itself strictly described in the contractual documents as "Rail Related Work Procedures For Underground Construction Works" to be found on page 303 of Exhibit A before Nicholas J. The Work Method Statement was one of the contractual documents contemplated and produced under the deed and was prepared by the defendant's geotechnical engineers and presented to the plaintiff by the defendant as a statement of the procedures it would bind itself to follow in exchange for the plaintiff's approval to the Development proceeding. 29 The Work Method Statement relevantly included:

The existing Illawarra Relief Tunnel runs parallel and underneath Henderson Road. This tunnel has a Railway easement around it which is shown on Structural Drawing 02038 - 40 and Structural Drawing 02038 - 41. These are attached in Appendix A of this Report. The cut and cover tunnel was constructed in an open slot and back filled with approximately 7 metres of fill.

The closest edge of the railway easement to the development lies 2 meters in plan from the centreline of the nearest 600 diameter pile. These piles are at 4800 centres typically and extend to the invert level of the railway tunnel. The Structural Drawing 02038 - 40 and 02038 - 41 in Appendix A diagrammatically show this.

Given that there is sufficient distance between the railway easement and the closest line of piles and that the closest piles do not produce any loading on the tunnel, as they are proposed to extend to the same level as the bottom of the existing tunnel, there is little possible impact of the development on the railway tunnel.

ii. Section 2 dealt with underground work method procedure matters including the following requirements in relation to piling: · step 1 (surveyor to set out locations of proposed piles and mark on the ground in a clear, visible manner the position of the outside tunnel walls); · step 2 (CP2 piles to be drilled first); · step 3 ("A suitably qualified engineer is to inspect the base of the drilled pile and confirm that the bearing material is of adequate capacity and also note the depth. CP2 piles to be excavated to a level not higher than RL 1.0m. If bearing capacity is not achieved at RL 1.0m, excavation is to continue until a suitable founding material is reached."); · step 4 related to the installation of prefabricated reinforcement cages in pile holes; the second sentence reads "Pile reinforcement to extend so that it can be positively connected to the capping beam reinforcement." · step 5 (pour concrete into excavated hole); · step 6 (relates to the placement of vibration pads on top of all piers); · step 7 (steps 2-6 must be completed on the same day due to possible ground water seepage in the holes); · step 8 (steps 1-7 to be repeated for CP1 piles, except that CP1 piles to be excavated to a level not higher than RL 7.0 m); · step 9 (The "Certificate of Underground Construction" is to be completed and signed by the relevant people for each pile). iii. Section 3 dealt with rail-related risk assessment matters;

iv. Section 4 dealt with emergency response procedures;

v. importantly section 6 required Certificates of Underground Construction to be completed and signed for all underground works, items being required to be completed on a daily basis for piles and separately for other underground works in the appropriate space on the particular forms. These forms required completion of, inter alia, the following matters:

b) what the form recorded as for example 'piles' or 'strip footing';

vi. the document required a statement of the positions held by the persons who were required to complete the certificates including the Masters Civil Foreman, the Structural Engineer, the On-site piling supervisor (for piling activities only): each of these persons had to append their name, signature and the date on which they signed the document. 30 The rationale for a reliable contemporaneous system of certification was to provide Rail Corp with the high degree of assurance it obviously needed to ensure that the public infrastructure and public safety were not endangered. As will already have become apparent, the WMS included a specific work regime in Part 2.5 which it was specified must be complied with and a certification process designed to ensure that Rail Corp would have contemporaneous, reliable, accurate and independent written evidence that the development did not endanger the public safety or the public infrastructure. I accept that in effect, the contract required Leduva to prove, by an agreed mandatory procedure, that the piles had been correctly constructed so as to avert any danger to public infrastructure or public safety. 31 Plainly another matter of special significance comprised the public interest to have a reliable record of the building work. If a problem of public safety arose in relation to the tunnel in, say, 15 years time, it would be important to have a reliable record not only as to the depth of the piles, but also as to the founding material on which they rested, and other matters dealt with in the Certificates of Underground Construction. As the plaintiff has submitted, from that perspective such a documentary record has long term significance itself. 32 Leduva's position in the proceedings before Nicholas J at least over a particular period constituted an attempt to establish substituted or substantive compliance through Mr Ryan's contradictory affidavits and evidence. Ultimately as will appear from what follows, it was forced to accept that the certification provided by Leduva could not be relied upon. The period from early July up to 16 November 2004 33 This period covers the time during which directions were given by the plaintiff to the defendant and during which the hearing of the sundry applications [first for injunctive relief and then for dissolution of the injunctive relief granted] were heard by Nicholas J. 34 By reason of the concession that the defendant's case does not require the period anterior to 16 November 2004 to be scrutinised otherwise than as background, it is appropriate to simply adopt a vastly cut down version of the plaintiff's written submissions on the present application. 5 July 2004 35 Rail Corp became concerned about Leduva's compliance with the WMS. Blake Dawson Waldron on behalf of Rail Corp wrote to Leduva on 5 July 2004 directing Leduva among other things to follow designated procedures for piling works and to provide individual certification for each pile. The direction included a direction not to apply load until the WMS had been complied with. Leduva was warned of the possibility of injunction proceedings or a stop work notice if it did not comply. 8 July 2004 36 On 8 July 2004 the Project Manager for the defendant, sent a fax to BDW in response to their fax dated 5 July 2004 attaching various documents. The following observation may be made about those documents:

i. No CP1 certificates of underground construction were attached.

ii. The survey it attached appeared to have been prepared on 21 June 2004. That survey identifies only 22 CP2 piles, whereas there are 31. Mr Ryan accepted the survey may be inaccurate because it omits some of the piles. It indicates no CP1 piles. Mr Prasad had admitted to Rail Corp that the "piling works had been commenced but overlooked by the surveyor and engineer" .

iii. The purported Certificates of Underground Construction for the CP2 piles did not identify the pile or piles to which each certificate related. Only seven certificates were attached whereas there are 31 CP2 piles. It was therefore impossible to know whether all CP2 piles were intended to be covered by the certificates. As the evidence later revealed, although these certificates recorded depths, no depths were recorded on the certificates when they were signed by Mr Ryan.

iv. None of those certificates indicated the strength of the concrete used.

v. The attached fax from Tony Walker of Jeffrey & Katauskas Pty Limited, Consulting Geotechnical & Environmental Engineers dated 27 May 2004 headed 'Site Report' stated, "It would appear that nearly all the piers have not reached their design level." 3 August 2004 37 On 3 August 2004, Blake Dawson Waldron wrote to Leduva directing that "Leduva must not allow any load to be applied to the piles until such time as Rail Corp has consented to the location, depth and installation of each of the piles and can establish that the piles comply with the Work Method Statement." 6 August 2004 38 Following that direction, further documentation was supplied on 6 August 2004. The Certificates of Underground Construction had been altered to include pile numbers, and various "Structural Certificates" concerning piles prepared by Mr Ryan were also attached. Railcorp was concerned that the dates on the certificates at Exhibit A pp. 446-456 did not match previous material that had been supplied. Further, the certification ought to have been done on a daily basis.

39 In contravention by Leduva of the direction on 3 August 2004, load was being applied to the piles in the period 10-13 August 2004. 18 August 2004 40 On 18 August 2004 Rail Corp wrote to Leduva pointing out that CP1 and CP2 piles had been or were in the process of being loaded by construction works [even though Rail Corp had not provided clearance to do so because Rail Corp was not satisfied that the methods and certification required by the WMS had been adhered to]. 23 August 2004 - Notification of Alert Event 41 On 23 August 2004 Rail Corp notified Leduva of an Alert Event and directed Leduva as follows: · to cease to carry out works (a) which may result in (i) load being applied to CP1/CP2 piles or (ii) obstruction to any pile, and (b) within 1 metre of a CP1/CP2 pile; · Leduva was not to recommence any such works until approved by Rail Corp; · Leduva was also directed that it must if required make piles available for testing including sonic testing. 26 August 2004 - Further Alert Event notified 42 A further Alert Event was notified by Rail Corp on 26 August 2004. Rail Corp notified that it intended to perform sonic testing on selected CP1 and CP2 piles as soon as site conditions would permit and that Leduva must facilitate such testing.

27 August 2004 43 On 27 August 2004, Leduva gave an undertaking through its solicitor to comply with direction 1 only in the Alert Event notice of 23 August 2004. 30 August 2004 44 On 30 August 2004, BDW sought an amended undertaking but none was provided.

45 Leduva did not comply with its undertaking in relation to direction 1. Proceedings are commenced 46 By 6 September 2004 Rail Corp had not received any response to its letter of 26 August 2004. The proceedings were commenced on that date. Possibility of risk 47 I accept that the defendant's failure to provide any reliable certification of the depth of the piers in itself amply justified the plaintiff's determination of the possibility of a risk. In this regard the following matters serve to provide some of the adjectival information justifying that view taken by Nicholas J and the same view presently taken by the court on the instant application. Connell Wagner evidence

48 There was an apprehension of damage whilst the injunction was in place. In their joint report dated 15 November 2004, the highly qualified tunnel experts Mr Hilton and Mr Bodner of Connell Wagner, stated:

"Under the current circumstances we consider that the tunnel has a very real possibility of being damaged due to loading from piles with a toe level located between the top and bottom slabs of the tunnel. We confirm our position that the existing SKM analysis and assessment is insufficient to show that the tunnel will not be damaged as a result of piles founded on the CP2 line above the underside of the tunnel."

[The events following 16 November are examined later in these reasons.] Sonic Testing Results 49 It was not until the proceedings commenced that the defendant agreed to some sonic testing being carried out and made available some piles for that purpose. 50 The results of testing indicated that there was a real possibility that some of the CP2 piles were short. 51 Sonic testing was never put forward by Rail Corp or Douglas Partners as a definitive form of testing. I accept that the sonic testing which showed up a probability of short piles presented a totally unacceptable risk to the public safety, and was no substitute for the concise authoritative certification required by the Deed which, if provided, would be based on measurement of each hole before the concrete pour. 52 No sonic testing was possible in respect of the piles in CP1 because the defendant had built over those piles. No diamond drilling testing of those piles had been possible for the same reason. The Deed expressly contemplated certificates of underground construction being provided to the plaintiff by the defendant in respect of these piles in order to give to the plaintiff an assurance that the piles have been constructed to their designed and agreed depth. However, no such certificates of underground construction, as required by the Deed, had ever been provided by the defendant to the plaintiff for the CP1 piles despite numerous requests for the same. 53 In those circumstances, the plaintiff had no reliable means of knowing whether those piles were constructed as designed and agreed and had thus no way of being reasonably assured that a risk to public safety and to public infrastructure would not exist if those piles are subjected to their intended design loads. 54 In respect of the CP2 piles, Mr Bruce McPherson of Douglas Partners was the geotechnical engineer retained by Rail Corp for the purposes of sonic testing of the piles. 55 The results of Mr McPherson's testing revealed the following (page references are to the pages of Exhibit D, which is Exhibit BM1 to Mr McPherson's affidavit):

(a) CP223 has a probable length of 9-12 metres; this makes it short (p.21).

(b) CP226 has a length either in the range of 7.5-9 metres or in the range 12-13.5 metres (p.38).

(c) 8 of the CP2 piles have an enlargement down to 2 or 3 metres (which is suggestive of an absence of sleeve liners) (pp. 4, 11, 21, 38).

(d) 4 piles were uninterpretable meaning that of 9 piles which were interpretable, 1 is probably too short and 1 may well be too short (pp. 4, 11, 21, 38). 56 Assuming there were in the order of 65 piles in total, only a relatively small number were tested. The problems identified were significant and indeed alarming having regard to the small number tested. 57 Sonic testing constitutes a preliminary form of testing. As stated in Annexure "B" to Dr. Burman's affidavit dated 25 October 2004 "Sonic testing of the piles as they have been installed at this site is at best problematic and … the interpreted results are of limited credibility, albeit possibly the best that can be done in the circumstances." 58 All that can be safely said is that the sonic testing did not reliably demonstrate that all of the CP2 piles tested had been excavated and constructed to the required depth so as to give the plaintiff the required assurance contemplated by the Deed and the WMS. 59 That Mr Ryan's evidence was unsatisfactory was not contested before Nicholas J, nor was it contested on the instant application. Some of the highlights of that evidence and of the defendant's concessions before Nicholas J were: · at the beginning of the hearing on 29 October 2004, Leduva admitted in open Court (TS 126.41-46): "That it is clear that some of the evidence given by the key witness, Mr Ryan, was inaccurate and confused to say the least and in consequence of that, we prepared a further affidavit by Mr Ryan setting out what he says to be the exact position dealing with matters line by line." · his further evidence only landed him in even further contradictions in his evidence. Later on the same day Leduva submitted (TS 135.24-29): "What is suggested is that we have failed to give the documentation and it is surrounded by suspicion and uncertainty and that the Rail has not properly discharged its obligation to ensure that it is all totally safe and so on. So much could not be gainsaid." · two sets of certificates relating to piles had been produced by Mr Ryan, being (i) the Certificates of Underground Construction (the form required by the WMS) and (ii) certain "Structural Certificates" which were not required by the WMS; · no Certificates of Underground Construction had been provided in relation to CP1 piles; · in his earlier evidence Mr Ryan attempted to give the impression that he actually measured the depth of some CP1 holes. As it turned out in further cross-examination, he actually measured none; · the failure to provide Certificates of Underground Construction for the CP1 piles was a breach of the Deed and of Rail Corp's directions. Mr Ryan had made no attempt, in any of his affidavits, to explain why no such certificates have been provided, nor has Leduva provided any explanation; · his evidence was inconsistent as to whether he was present for the drilling of the CP2 piles; · initially Mr Ryan's unqualified evidence was that the dates of his structural certificates indicated the dates on which he was on site. When confronted with his invoices and car logs which indicated he was not on site on certain days referred to in his certificates, he accepted the certificates were mistaken in that respect; · Leduva acknowledged that the documentation was "not up to scratch" (TS 82.20) and that there were "plainly shortcomings" and that Leduva's witnesses "when cross-examined on the matter said some things that were pretty silly and obviously wrong, which is true"; · Leduva referred to "the unhappy matter of the documentation". This concession was undoubtedly properly made at the time (27 October 2004). On 29 October 2004, Mr Ryan gave further evidence reinforcing the correctness of the concession. At TS 201, Mr Ryan accepted the Certificates of Underground Construction, at the time he signed them: i. did not record the piers to which the certificates related;

iii. did not record "Today's date" . · Mr Ryan did not subsequently record the missing information on the certificates, nor was he consulted about the information subsequently entered on the certificates. He never saw the certificates again after he signed them which at that time did not record the critical information, namely, the identity of each pier and its depth; · there were signs of unexplained alteration to documents provided to Rail Corp; · Mr Ryan acknowledged that he did not follow the required procedure for daily completion of forms for piles. This was also acknowledged by counsel for Leduva; · his evidence as to the words identifying the pier numbers at the top of the certificates at Exh SC 1 pages 459-465 was contradictory. Those pier numbers did not appear at the top of those documents when Mr Prasad first sent them to Rail Corp on 8 July 2004 - see Exh SC 1 pp. 414ff. The numbers were inserted between that date and when they were next sent to Rail Corp on 5 August 2004. Initially Mr Ryan said he thought the pier numbers were inserted on the day the form was filled in and that he was consulted about that. He then said the pier numbers were originally identified using a grid reference which was no longer on the certificates. He said he was the one who wrote the grid reference on the sheets, that he wrote it, that "they were written in ink actually", and that someone had rubbed them out. The originals of these certificates were called for and produced and became Exhibit C. After being shown Exhibit C, Mr Ryan changed his evidence to suggest the grid references must have been written in pencil. He later admitted that his categorical evidence before this Court on 8 September 2004 was false. He was asked, "You have got no explanation for that false evidence?" to which he replied, "No, I haven't."; · it is plain from TS 184-190 that there has been alteration in the dates on Certificates of Underground Construction. · Mr Ryan admitted that when he signed the Certificates of Underground Construction, one critical entry, namely the entry for "Excavated depth RL" was blank and was filled out by someone else but he did not know who that was (TS 49.30-50.44 on 9/9/04).

SKM Report 60 Very late in these proceedings, Leduva produced a preliminary unsworn report dated 8 November 2004 by Mr Nye, the gravamen of which was that the weight of the overburden removed during construction exceeds the weight of the building, that therefore there is less load on the tunnel even if there were no piers at all. 61 Mr McPherson rejected that conclusion for the reason given in his 10/11/04 report. 62 The following should be noted:

i. Mr Nye's report is expressed to be a preliminary assessment only dependent on further information.

ii. As Mr McPherson points out in his report dated 10 November 2004, Mr Nye has given no consideration to the problem of mobilised wedge failure which can be exacerbated by piers, and which therefore makes it essential that the piers reach the correct depth.

iii. As Mr McPherson points out it is overly simplistic to compare the weight of the overburden with the weight of the building because the piers create a concentration of pressure at points on the tunnel if they are too short, as distinct from the even spread of pressure from the overburden. A proper analysis would be quite complex. The design which used piers avoided the need for such complex analysis which has not been done.

iv. Nevertheless Mr McPherson's initial assessment is that there would be increased load on the tunnel by reason of concentrated pressure from short piles. The effect of that on the tunnel would need to be assessed by a structural engineer. 63 Mr Nye prepared a further report dated 11 November 2004 on the fourth page of which he opined that "a key issue is knowing where the tunnel is within the easement". That was not a key issue in the WMS prepared by Mr Nye's firm, nor was it identified as a key issue. The design in the WMS required the CP2 piles to be situated below the tunnel so that lateral forces would not impact on the tunnel. However once it was recognised that the CP2 piles may not extend below the tunnel, it is understandable why the distance of the piles from the tunnel wall became a key issue. 64 When the matter came back to Court on 16 November 2004, Mr Nye had prepared a further report of that date. In paragraph 4 of that report, Mr Nye accepted the tunnel could not be loaded by the building structure. Counsel conceded that Mr Nye, in his earlier report, had made an incorrect assumption in that respect; T294.35-.45 and T295.10-.16. 65 Between 16 November 2004 until Rail Corp consented to a dissolution of the injunction on 2 February 2005, the safety of the tunnel [on the assumption that the piers were not at their specified depth] was investigated by Rail Corp through its geotechnical engineers, Connell Wagner, and importantly, Rail Corp addressed the key issue identified by Mr Nye, namely, the distance of the piers from the tunnel wall. 16 November - 14 December 2004 66 An ATS sketch dated 12 November 2004 [MFI D2 ('the Sketch')] was provided to Rail Corp on or about 16 November 2004 [Defendant's Tender Bundle ('DTB') tab 52-54]. The sketch showed that the tunnel was not right up against the edge of the easement, but placed at some distance from the easement boundary. However this 'survey' or sketch by Mr Todarello of ATS was not a field survey, it was "a scaled-off calculation" and was not based on as-built drawings. It was prepared by calculation of plans which were not on their face as built plans and may or may not have been correct. 67 In an internal fax of Rail Corp dated the same day [DTB tab 55] as the receipt of the ATS sketch, namely 16 November 2004, Rail Corp confirmed the abovementioned ATS sketch by stating that the same conclusions as to the location of the tunnel was reached by Mr Ian Jones of Rail Corp. Leduva sought to place significance on this 'agreement' by Mr Jones.

68 On 17 November 2004 a letter [DTB tab 57] was sent from Mr Elias of Cadmus Lawyers (Leduva's solicitor at the time) to Mr Fox of BDW (Rail Corp's solicitors) requesting whether experts from Connell Wagner were prepared to meet with Mr Nye and Dr Burman to determine (if possible) whether any significant load would be engendered on the tunnel by the weight of the building if the piles were assumed to be no longer than 8-10 metres. 69 Also on 17 November 2004, Mr Hilton of Connell Wagner told Mr Nye that Rail Corp would be sending its survey team into the tunnel which "may happen next week" [DTB tab 58]. This did not occur until 15 December 2004 when Mr Cornish of Hard & Forester was retained to conduct this survey. 70 On 23 November 2004 a letter [DTB tab 66] was sent from Mr Fox (Rail Corp's solicitors) to Mr Elias in reply to the 17 November 2004 letter, making the point that Rail Corp would be seeking advice from external engineering consultants, as it had been doing, in respect of engineering propositions advanced by the Leduva in the course of the litigation to date. [Counsel for Rail Corp highlight that Leduva was made aware of this prior to its service upon Rail Corp of the final Nye Report on 17 December 2004]. The 23 November letter outlined Rail Corp's view that a precise survey must be obtained to identify the precise location of all CP2 piles relative to the tunnel and expressed a desire to obtain this information by engaging the surveyors Hard & Foresters [Mr Cornish], before considering any further engineering submissions from Leduva. 14 December 2004 - 2 February 2005 71 On 14 December 2004 a letter was sent from Mr Fox to Mr Elias [DTB tab 72] detailing the availability of the tunnel for a field survey.

72 On 15 December 2004, Hard & Forester were retained by Railcorp to conduct a field survey as to the precise location of the CP2 piles relative to the tunnel. This involved performing survey works on Leduva's property and in the tunnel. Mr Cornish requested information from Leduva on 21 December 2004 for this purpose [DTB tab 79]. Further survey work was conducted on behalf of Rail Corp on 22 December 2004 [as referred to in the Hard & Forester report dated 7 January 2005 [DTB tab 80]]. 73 The final [SKM] Nye Report was completed on 14 December 2004 [MFI D3]. It was served on Rail Corp on 17 December 2004 [reference at DTB tab 92 p2]. It concluded there was an "extremely low" risk to the tunnel. In the Introduction on page 1 in the third paragraph, Mr Nye records that the major technical issue on the site has been doubts over the depth of the piles. At page 3, under "Survey information", Mr Nye states that "[a] very important issue in/for any technical assessment is knowing the relative position of the building foundations to the tunnel both horizontally and vertically in space." I interpolate that despite this acknowledgment it did not appear important enough for Mr Nye's assessment that a survey of the actual position of the railway tunnel relative to the easement be actually carried out. Mr Nye's reliance on the Rail Corp drawings as provided by Mr Todarello to determine the location of the tunnel was inadequate, as Mr Todarello's drawings could not necessarily be regarded as 'as built' drawings, [cf Mr Hilton's 24 May 2007 affidavit which was unchallenged]. Mr Hilton deposed that in the absence of 'as built' plans depicting the location of the railway tunnel wall, a physical survey of the actual location of the tunnel was required before it was possible to conclude that the construction and location of the piles did not pose a risk [other than a negligible risk] to the structural integrity of the railway tunnel. 74 On 7 January 2005, Mr Cornish completed his survey and a copy was provided to Leduva on 12 January 2005. At the same time, Rail Corp had forwarded this Hard & Forester survey to its engineering consultants and was awaiting their comments on the 14 December 2004 Nye Report [DTB tab 81 p1]. 75 On 14 January 2005 Leduva asked Rail Corp to consent to the dissolution of the injunction given the conclusions provided in the Nye and the Hard & Forester reports [DTB tab 82]. 76 Rail Corp responded to this request on 18 January 2005 [DTB tab 83] advising that it was conferring with its engineering experts, [as discussed in its letter to Leduva of 12 January 2005] regarding the views expressed in the Nye Report and advising that it would articulate its position upon receipt of this advice from its engineers. Rail Corp also expressed its willingness to explore an alternative solution proffered in the Nye Report to the then perceived problem: the isolation of the piles from the building such that no loads would be applied to the piles. 77 By letter dated 20 January 2005 [DTB tab 84] Leduva's solicitors advised Rail Corp's solicitors that they were yet to receive replies from Rail Corp's engineers in relation to the Nye Report and confirmed that Rail Corp had been unable to indicate when such replies would be forthcoming from its engineers. 78 A further letter dated 21 January 2005 from Leduva's solicitors to Rail Corp's solicitors [DTB tab 85] advised that no response had been received to its earlier fax communication on the same day, and requested that clear instructions be obtained as to when Rail Corp's engineers, Connell Wagner, would be forwarding their reply [regarding the Nye Report]. The letter required a response from Leduva's solicitors by no later than 5.00pm on Monday 24 January 2005.

79 Connell Wagner completed their initial review and assessment of the Nye Report on 24 January 2005.

80 On 2 February 2005, Rail Corp was advised by Connell Wagner that in view of the additional information available, namely the Hard & Forester report and two photographs in the Nye Report [DTB tab 94] net load transferred to the tunnel by the CPI and CP2 piles was negligible, albeit maintaining that the Nye Report contained errors and inconsistencies. Following this, the injunction was dissolved by consent on the same day. The respective stance of the parties: 'the essential divide' The defendant's stance 81 The defendant:

i. accepts that there is no issue but that the concerns of the plaintiff may have [constituted] reasonable grounds to apply for an interlocutory injunction, given its statutory functions and obligations as to public safety: submissions at [152];

ii. accepts that the issue as to whether it would be inequitable or unjust for Railcorp to meet the usual undertaking as to damages must be considered in the light of the whole of the circumstances;

iii. contends that whereas Railcorp seeks to focus entirely and exclusively on the conduct of Leduva in respect of the delivery of certificates prior to September 2004, that is not the limit of the matters to be considered where the court must consider whether it is unjust or inequitable for Railcorp to compensate Leduva in respect of the loss and damage it has incurred as a consequence of the interlocutory injunction;

iv. contends that it is reasonable for the court to proceed upon the basis that the final outcome of the proceedings on the merits would have been:

a) that on the expert evidence, there was no material risk to the tunnel by the construction activities for the underground works;

b) that Railcorp would have been found for Leduva's costs of the substantive or final proceedings;

v. whilst accepting that the plaintiff had up until 16 November 2004 reasonable grounds for having obtained the injunctive relief, contends that on the evidence now before the Court, these grounds fell away on that date, hence entitling the defendant during the ensuing period to enforce the usual undertaking as to damages;

vi. places heavy reliance upon the proposition that it having been the case that the substantial loss and damage likely to be suffered by the defendant was the subject of evidence before Nicholas J, the usual undertaking as to damages was plainly an important factor in his determination as to whether or not to dissolve the interlocutory injunction as a matter of the balance of convenience between the parties;

vii. contends that the usual undertaking as to damages ought to be given ordinary effect and that there is nothing unjust nor inequitable in holding the plaintiff to that undertaking, where it has taken the benefit of the undertaking for the grant and continuation of the interlocutory injunction. The plaintiff's stance 82 In my view the plaintiff's stance is of substance in terms of the principled exercise of the Court's discretion. As the plaintiff has submitted, the whole of the circumstances in which the injunction application was brought, maintained, and ultimately dissolved, including the conduct of Leduva and the findings made by Nicholas J are relevant to the question whether the undertaking should be enforced. 83 The following factors are pointers to the proper exercise of the discretion being to refuse the application to enforce the undertaking:

i. the cause of action upon which the injunction was granted was breach of contract, namely, a breach of the provisions of the Development Deed [which incorporated the Work Method Statement] in failing to provide proper certification of the piling works;

ii. had the matter had gone to a final hearing, there can be no doubt that a finding that Leduva had committed a breach of contract would have been made;

iii. there were concessions to this effect by Leduva during the interlocutory hearing;

iv. the Principal Judgment (at [32] and [44]) and the Costs Judgment (at [11] and [31]) record concessions that the certification was not adequate and could not be relied upon by Rail Corp;

v. unlike the usual interlocutory injunction, in this case the question of breach is susceptible of resolution on the present state of the evidence, if not on Leduva's admission of breach in failing to provide reliable certification. Accordingly, it simply cannot be said that the injunction was not properly granted. The contrary is clearly the case;

vi. the reason the injunction was dissolved was not because it was found there was no breach of contract by Leduva [plainly there was], but rather because Rail Corp embarked on an investigation, the very carrying out of which the Development Deed was designed to avoid. In other words, after the injunction was granted, Rail Corp obtained a survey of the tunnel as constructed and performed further engineering and geotechnical analysis that it would not have been necessary to perform, and which the Development Deed obviated the need to perform, if Leduva had provided reliable certification;

vii. this same point is also acknowledged in Leduva's Commercial List Statement at para 14 where it is alleged, "The requirements set out in the WMS [Work Method Statement] were designed to ensure that the new building placed no load on the Tunnel and avoided the need for an assessment of loading on the Tunnel as referred to in paragraph 12 above."

[Rail Corp has admitted this allegation in its Commercial List Response] viii. this further analysis resulted in Rail Corp concluding, despite the failure by Leduva to comply with the Development Deed in providing reliable certification [which remained unremedied at the time of the dissolution of the injunction and at the time the proceedings were discontinued], that there was no material risk to the tunnel. Rail Corp accordingly consented to the dissolution of the injunction. As Spry observes in The Principles of Equitable Remedies , 2001, [page 656], a reason why it may be inappropriate to enforce an undertaking even where final relief is not granted is: "…for example, it may appear that in the particular circumstances an interlocutory injunction was properly granted and that it is only through the occurrence of subsequent events that the grant of final relief has become inappropriate ." [citing Ushers Brewery Ltd v P S King & Co (Finance) Ltd [1972] Ch 148]

ix. the subsequent event in this case was Rail Corp's investigations which it would not have needed to perform but for Leduva's breach of contract in failing to provide certification. That Rail Corp agreed to dissolve the injunction on the basis of its expert's investigations is:

(i) the subject of findings by his Honour at paras 12 and 13 of the Costs Judgment;

(ii) also a finding now made on all of the evidence presently before the Court.

x. an interlocutory injunction is properly granted where there is a relevant breach of contract and time is needed to secure public safety, even if no permanent injunction results;

xi. the stop-work order [even if it be regarded as temporary] was plainly justified having regard to Leduva's breach of contract in failing to provide certification;

xii. it may be that in other types of cases where an interlocutory injunction anticipates or is closely related to final injunctive relief [eg. the use of a patent is either right or wrong at both the interlocutory and final stages] it might be said that the interlocutory and final injunctions stand or fall together;

xiii. here however, the interlocutory injunction was in a discrete category and was justified irrespective of whether a final injunction would have been granted. Rail Corp had the contractual power to temporarily order Leduva to stop work, and did so;

xiv. the injunction gave effect to that agreement: see the statement of Lord Cairns LC in Doherty v Allman (1878) 3 App Cas 709 at 712-720 extracted below. In this sense Rail Corp succeeded. ["If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties ."]

xv. the authorities make it clear that for an undertaking to be enforced it must be shown that the injunction was the causa sine qua non of the alleged damage: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249;

in other words the "but for" test of causation is applied in this area. In Air Express, the Court rejected an argument that principles of causation used in contract and tort cases should apply, namely, that it is sufficient if cause of the loss is one of a number of concurrent causes;

the Court held that parties seeking to enforce an undertaking as to damages must show that the making of the injunction was a cause without which the damage would not have been suffered; per Gibbs CJ, as he then was, at 313.6, Stephen J at 320.2 and Mason J, as he then was, at 325.3. That was the approach adopted by Aicken J from whose judgment the appeal was brought and with whose judgment Barwick CJ relevantly agreed;

the principle applies in the present case. As set out in paras [7] and [21] of the Principal Judgment, Rail Corp had the power under the Development Deed to direct Leduva to cease work where an "Alert Event" occurred. Rail Corp issued such a direction in view of the absence of proper certification. Leduva failed to comply with that direction and did not stop work; for the detail. Accordingly, Rail Corp sought and obtained an injunction. 84 It has been necessary to include in these reasons a reasonably detailed chronological account of the principal events relied upon by the respective parties in their attempts to justify their respective cases: the defendant contending to an entitlement to enforce the undertaking on and from 16 November 2004 and the plaintiff denying that contention. 85 It is particularly important in standing back from all of the detail to keep steadfastly in mind that the departure from the contractual Work Method Statement with which the plaintiff ultimately went along, was solely caused by the conduct of the defendant. In the particular circumstances which obtained the plaintiff was entirely justified in proceeding at every stage with special caution. That is what it did. 86 The short answer to its case is that the plaintiff was justified in not agreeing to the dissolution of the injunction prior to 2 February 2005 (or, relevantly, between 17 December 2004 and 2 February 2005) because, given that the defendant had failed to satisfy it as to the depths of the piles in breach of the deed, the plaintiff was entitled to obtain such expert advice as was reasonably necessary to satisfy itself as to the correctness or otherwise of Mr Nye's opinion, [served on 17 December 2004], that the risk posed by the development to the tunnel was negligible even if the piles were not at their specified depth. 87 The expert advice received by the plaintiff was constituted by Connell Wagner's opinion as to the risk posed to the tunnel in both the Nye Report and the Field Survey of Hard & Forester. As the plaintiff has contended, that advice would not have been necessary if the defendant had honoured its obligations under the Deed. 88 The finding is that on the evidence, the plaintiff was not obliged to accept at face value the Nye Report nor the Sketch.

89 An important part of these findings concerns the fact that there was no challenge made to the evidence of Mr Hilton that a physical survey to locate the position of the tunnel wall was essential and that the Sketch relied on by Mr Nye was insufficient. The plaintiff was not acting unreasonably in acting on that advice, and in waiting

(i) until Mr Cornish's Field Survey was provided to Connell Wagner and

(ii) for a " sign off " by Connell Wagner before consenting to a dissolution of the injunction. [I note that leading counsel for the defendant on a number of occasions through the addresses sought to make the point that the latest affidavit of Mr Hilton had only been received shortly before the hearing of the motion and that it was 'inappropriate' for the plaintiff to be heard to submit that the defendant had not challenged that evidence. However it is plain that at no time was there any objection to the admission of the later affidavit. It is equally plain that at no stage did the defendant seek to have the hearing adjourned in order to prepare for and prosecute any such challenge to this evidence. In those circumstances there is no substance in any suggestion that the Court proceed otherwise than by accepting the evidence given by Mr Hilton in that affidavit.] 90 Further and as the plaintiff has also contended, the timeframe in which Mr Cornish and Connell Wagner undertook their respective tasks has not been subjected to any analytical criticism either through cross-examination or in address. I accept that even disregarding the time of year at which Mr Cornish and Connell Wagner were called upon to perform their works consequent upon service of the Nye Report, an attempt at such criticism could not be sustained bearing in mind the importance and the significance of the issue upon which their opinions was sought. 91 In substance, the issue was whether abandonment of a critical safeguard embedded in the carefully considered and approved WMS intended to prevent load being placed on the tunnel would make any difference. Connell Wagner's opinion on the issue and the plaintiff's decision on the issue had potential ramifications for decades into the future. 92 At the end of the day the application to enforce the undertaking requires to be dismissed because of the special circumstances which obtained. Using the words of Lord Diplock in F Hoffmann-La Roche & Co AG v Secretary for Trade & Industry supra at 361 those special circumstances critically included "the conduct of the injunctee". 93 In this regard the finding is that the plaintiff acted entirely properly during the period of its further investigations which took place between 16 November 2004 and 2 February 2005, being the investigations which led to its own geotechnical engineers analysing the safety of the tunnel if the views were not at their specified depth and concluding that the relevant risk was negligible.

Short minutes of order and costs 94 The parties will be given an opportunity to address as to costs on which occasion short minutes of order should be brought in.

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.