Victorian Civil and Administrative Tribunal|2001-06-21

Trycala Importers & Wholesalers Pty Ltd v Growmac Imports Pty Ltd [2001] VCAT 1445 (21 June 2001)

Real Property List; Liability for Alleged Flow of Water; Whether Landlord or Tenant Liable; Vicarious Liability for Contractor; Water Act Section 16(3)

Applicant Trycala Importers & Wholesalers Pty Ltd

Medium Neutral Citation [2001] VCAT 1445

1. The claim against the third respondent is dismissed.

2. The applicant must pay the third respondent's cost of this day and of the proceeding to be taxed in default of agreement in accordance with County Court Scale "C".

3. On or before 3 August 2001 the applicant must file and serve an affidavit of documents in accordance with the Rules of Civil Procedure making discovery in particular of the following documents:

(i) Inventory and other documentation including purchase orders, invoices, consignment notes and the like relating to the stock referred to in paragraph 12 of the applicant's amended Statement of Claim;

(ii) Sale documentation and other documentation relating to the disposal and/or sale of the stock referred to in paragraph 12 of the applicant's amended Statement of Claim;

(iii) Copy insurance policy for the applicant's premises located at 18 Edgecombe Court, Moorabbin;

(iv) Insurance documentation, including policy details, quotes, claim forms and the like for the stock referred to in paragraph 12 of the applicant's amended Statement of Claim;

(v) Insurer's reports, comments, correspondence and the like in relation to the damage sustained to the stock referred to in paragraph 12 of the applicant's amended Statement of Claim;

(vi) Insurer's reports, comments, correspondence and the like in relation to the water and/or fire damage to the applicant's premises situate at 18 Edgecombe Court, Moorabbin, in so far as such documentation relates to the stock referred to in paragraph 12 of the applicant's amended Statement of Claim;

(vii) Correspondence between the applicant and the City of Kingston Municipal Council in so far as it relates to the water damage to the applicant's premises and stock as referred to in paragraphs 6 to 13 of the applicant's amended Statement of Claim;

(viii) Correspondence between the applicant and the second respondent in so far as it relates to the water damage to the applicant's premises and stock as referred to in paragraphs 6 to 13 of the applicant's amended Statement of Claim;

(ix) Correspondence between the applicant and the third respondent in so far as it relates to the water damage to the applicant's premises and stock as referred to in paragraphs 6 to 15 of the applicant's amended Statement of Claim;

(x) Correspondence between the applicant and fourth respondent in so far as it relates to the water damage to the applicant's premises and stock as referred to in paragraphs 6 to 15 of the applicant's amended Statement of Claim; and

(xi) Any other documentation relevant to issues in the proceedings.

(xii) Documents relating to any persons' water damage to stock on the applicant's premises.

4. The costs of the first and fourth respondents in seeking further and better discovery against the applicant are reserved.

5. Macafee Investments Pty Ltd is joined as a party to this proceeding.

6. The applicant is at liberty to file and serve a further amended Statement of Claim on or before 20 July 2001.

7. Macafee Investments Pty Ltd must and the other respondents are at liberty to file and serve defences to the further amended Statement of Claim on or before 10 August 2001.

8. Macafee Investments Pty Ltd must make discovery of all documents in its possession or power and relevant to the issues in this proceeding by way of list of documents filed and served on the other parties on or before 24 August 2001.

9. Adjourned to further directions 9.30 a.m., 31 August 2001.

10. The costs of the applicant and the second respondent are reserved.

For the Fourth Respondent: Mr S. Weybury, Solicitor

1. I have before me a number of interlocutory applications made in the course of this proceeding under the Water Act 1989. Trycala Importers and Wholesalers Pty Ltd claims damages and consequential relief for alleged damage to stock stored in its warehouse. The damages are in the sum of $36,025.20. It has joined a number of respondents to the proceeding alleging that each of those respondents, in one way or another, played a role in causing the unreasonable flow of water, which it says damaged its stock, caused it to suffer loss and damage. For present purposes I am concerned with the claim in so far as it was made against the third respondent, ACI Operations Pty Ltd and against Qanstruct Pty Ltd.

2. What is alleged as against those parties is that ACI was the owner of land and inferentially also the occupier of land at 18 Joel Court, Moorabbin which is in the vicinity of the applicant's warehouse where it suffered its damage from the alleged unreasonable flow of water.

3. Paragraph 8 of the amended statement of claim says:

"In or about May 2000 Qanstruct was the servant or agent of ACI for the purposes of undertaking works, including excavation works, in the alleyway."

"In or about May 2000 Qanstruct, in the course of its employment or engagement by ACI excavated a portion of the alleyway, and in doing so deposited a quantity of dirt and fill from the excavation onto the alleyway and in doing so, created a dam preventing the flow of water along the alleyway to the west beyond the applicant's land."

5. This dam of earth and fillings was, the pleading later alleges, part of the cause of the unreasonable flow of water that inflicted loss and damage on Trycala.

6. Ms Beattie appears on behalf of ACI Operations Pty Ltd. She has provided affidavit material that demonstrates, first, that contrary to the allegation in the pleading, another company, Macafee Investments Pty Ltd is the owner of the site at 18 Joel Court, Moorabbin, alleged by the applicant to have been owned by ACI, that ACI is Macafee's tenant pursuant to a lease and that the works which Qanstruct undertook were undertaken as contractor for Macafee and not as contractor for ACI.

7. Mr Weybury represents Qanstruct Pty Ltd and he concurs in that analysis of events.

8. In the circumstances Ms Beattie submits that the claim as against her client should be dismissed.

9. Counsel for the applicant was initially minded to consent to such an order, however upon further consideration he felt that he should leave his client's options open in that regard. At one stage he considered applying for an adjournment to further consider the matter but ultimately agreed that this issue should be heard and determined today. The premise of Ms Beattie's submission as I understood it was that demonstration that her client was the occupier and not the owner of the premises at Joel Court was a conclusive answer to any liability under the Water Act.

10. The claim as I understand it is brought under Section 16 of the Water Act and in particular sub-section (1) thereof. That section creates a statutory liability upon a person who causes an unreasonable flow of water from the land of one person onto the land of another person which unreasonable flow causes damage to the property of any other person. In my view logically either an owner or an occupier of land could be found to be a tort feasor with respect to that statutory tort. Indeed, given that the occupier occupies land as tenant to the exclusion of a landlord, it is more likely that a tenant and occupier would be found liable under Section 16(1) than would be a landlord who by the very nature of a tenancy is required to give quiet possession of the leased premises. Since the landlord is during the term of the lease excluded from possession of land, he is less likely to be adjudged responsible for what happens on the land in so far as it affects his neighbours.

11. Be that as it may, it seems to me that the answer to the present dispute lies not in considering the status of ACI either as landlord or tenant but rather focussing upon its connection or lack of connection with the creation of the pile of earth and fill in the alleyway. The allegation is and for present purposes I should assume that it is correct, that the existence of this pile of dirt and fill or dam as it is described in the statement of claim, is to be regarded as one of the causal factors for the unreasonable flow of water. If that assumption is made, then it seems reasonable to conclude, other things being equal, that the person who constructed that pile of earth and fill could be liable under Section 16(1). Of course all this may be disputed and remains to be proven or disproven but looking at the matter solely upon the pleadings, that is, the issue which presents itself.

12. Can it be said in the circumstances pleaded that ACI caused the pile or earth and filling to be placed in the alleyway? Mr Kappadath who appears for the applicant submitted initially that the mere fact that a person engages a contractor to carry out work for that person and for that person's benefit, was sufficient to render the person engaging the contractor precariously liable for the actions of the contractor. He later modified that submission to say that whatever the situation might be at Common Law and in any ordinary Common Law of Tort, Section 16 of the Water Act 1989 created a strict liability for unreasonable flows of water and therefore in that context of strict liability the person engaging the contractor would be vicariously liable for the consequences of whatever the contractor sought fit to do.

13. It is appropriate I think to consider first what the situation is in the ordinary Common Law of Tort in circumstances where one person engages a contractor to carry out work for him and for his benefit. In Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia Limited (1931) 16 CLR 41, 48 Sir Owen Dixon said:

"In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort. The work, although done at his request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representatives standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal."

14. If that is correct and applies under the Water Act then ACI even if it had engaged Qanstruct would not be liable for what Qanstruct did or was alleged to have done. I asked Mr Kappadath whether it was alleged that the creation of the pile of earth and filling was something specifically required by Qanstruct's contract or merely something that it did incidentally. He agreed with me that as he understood the situation and as his client's case was put, Qanstruct could have put the pile of earth and filling somewhere else or could have loaded it in a tip truck and removed it from the site entirely. In other words, it is not suggested that Qanstruct was specifically engaged and directed to create that pile of earth and filling. Qanstruct was engaged and contracted to erect the building now occupied by ACI.

15. At Common Law therefore, even if Qanstruct had been contracted by ACI to do work and it turns out now that that is not the fact, ACI could not be liable vicariously for what Qanstruct did in the circumstances such as the present. What then of the argument that Section 16 of the Water Act creates some different regime? Mr Kappadath said that the basis for this was that Section 16 creates an absolute liability, unlike the Law of Negligence whose liability is fault based. Certain it is that in making out liability under Section 16 proof of negligence or deliberate wrongdoing is not essential. The liability however is not absolute in one sense because a person who causes a flow of water from the land of one person onto another person, leading thereby to loss and damage is not liable unless the flow of water is unreasonable. The very concept of unreasonableness does introduce to some degree a fault based theory of liability under the section. However, in my view that is neither here nor there.

16. The principle stated by Sir Owen Dixon in the Colonial Mutual Life Assurance Society case is stated quite generally and would apply as much to tort of absolute liability as it would apply to a tort where there is liability only on a fault basis. In any event there is nothing that I can see in Section 16 of the Water Act that appears to codify in any way the concept of vicarious liability or even mention it. The inference is irresistible therefore that Section 16 intends in so far as it posits concepts of causation simply to adopt the law of ordinary analysis of vicarious liability. A person is regarded as causing those things which flow from the actions of those for whom that person is vicariously liable but not for those acts flowing from the acts of those for whom the first person is not vicariously liable.

17. Section 16(5) which deals with liability for works constructed or done by predecessors in title might be regarded as perhaps trenching upon the issue of vicarious liability incidentally but it does so in a respect which is irrelevant to the present facts in so far as I can see. Mr Kappadath referred to and relied on Section 16(3) of the Water Act which he said established a stricter regime of vicarious liability than the one which exists at Common Law. The sub-section States:

"(3) If the person who caused, or interfered with, the f low (as the case requires)

(a) is the servant of another person and acted in the course of the servant's employment; or

(b) is the agent of another person and acted within the scope of the agent's authority-

that other pe rson is liable to pay damages in respect of the injury, damage or loss."

18. But this provision does no more than restate the Common Law as to vicarious liability for torts and applies it to Section 16 of the Water Act. As to Common Law vicarious liability for tortious acts of servants see Fleming, The Law of Torts (9th ed. 199;8) 413-29 and for tortious acts of agents Halsbury's Laws of England (4th ed. Reissue) Vol 1(2) paras 162-3. But both the common Law and Section 16(2) are irrelevant here. As Sir Owen Dixon said a contractor such as Qanstruct acts "As principal" in carrying out works, not as agent.

19. It follows therefore that I must uphold Ms Beattie's application that her client be dismissed from the proceeding.

20. Mr Kappadath has foreshadowed an application to join Macafee Investments Pty Ltd which the evidence before me discloses is the landlord of the ACI building. What I have said already would appear to indicate that any claim mounted against Macafee based upon the same theory as the claim mounted against ACI Operations Pty Ltd and without something further to take the matter outside the principle of the Colonial Mutual Life Assurance Company case would be doomed to fail. However, I think it would be wrong for me to say anything more downright on the subject until I have heard submissions from Mr Kappadath in support of any application in that regard which he desires to make. [Mr Kappadath informed me later that his clients proposed claim against Macafee might be more widely based than indicated above. Hence I made an order joining Macafee.]

21. I have given reasons for acceding to an order that the claim against the third respondent ACI Operations Pty Ltd should be dismissed on a summary basis. As a consequence of that Ms Beattie who appears for ACI Operations Pty Ltd has sought an order that her client's costs be paid by the applicant on a full indemnity basis. The application for dismissal which was successful was based upon a number of grounds. The pleading against her client asserted that it was the owner of certain premises. It had engaged the fourth respondent Qanstruct Pty Ltd to carry out certain works which were said to have been part of the cause of an unreasonable flow of water onto the applicant's land which caused loss and damage. The fact was that ACI Operations Pty Ltd is the tenant of the premises and not the owner and the fourth respondent was engaged to carry out the work, in the course of which it is alleged to have created a pile of earth or fillings which was part of the cause of the unreasonable flow of water, not by ACI Operations Pty Ltd but rather by Qanstruct Pty Ltd. These matters were pointed out in a letter of the 28th of May from ACI's solicitors to the applicant's solicitors.

22. In any event Ms Beattie observes the question of the ownership of the land was a matter of public records which could have been checked by a search under the Transfer of Land Act 1958. If the truth as to the ownership of the land were established, that is that it was owned not by ACI but Macafee Investments Pty Ltd, the likelihood that Qanstruct Pty Ltd, the fourth respondent, was engaged by Macafee rather than ACI would also have been plausibly established. Accordingly in Ms Beattie's submission there should be a cost award in her client's favour on a full indemnity basis. She refers to Section 109(3)(c) of the Victorian Civil and Administrative Tribunal Act 1998 which provides for the making of costs orders against parties based upon whether a party has made an allegation without a proper basis in fact or law. She submits that the claim made against her client was without any proper basis in law, according to the principles of vicarious liability and also without any proper factual basis having regard to the ownership of the land and the identity of the party which engaged the fourth respondent to carry out the works.

23. Mr Kappadath who appears on behalf of the applicant submits that in the circumstances I should consider the embarrassment which his instructors have found themselves in in having their instructions withdrawn. The precise date during which those instructions were withdrawn has been the subject of some debate. What appears from the Tribunal file is that a document styled "List of documents in possession or power of applicants dated the 8th of June" and signed by the applicant's solicitors was filed in the Tribunal on the 12th of June. We also note that at a directions hearing last week the applicant was not represented and in response to a direction for a written explanation as to how that came to be, the solicitors for the applicant stated that their instructions had been withdrawn.

24. Ms Beattie says that her client had had no notice, at least before the last 24 hours that instructions had been withdrawn.

25. What then are the proper principles to apply? Section 109(1) of the Victorian Civil and Administrative Tribunal Act establishes a general principle that costs lie where they fall. Sub-section (3) states a variety of circumstances in which costs orders may be made as between the parties. One of those circumstances is the one relied upon by Ms Beattie. Another of them is a circumstance where having regard to the nature and complexity of the proceeding if it is thought appropriate that a costs order be made. The practice in this List has been to regard proceedings under Part 1 of the Water Act as being of such a nature as to justify departure from the ordinary rule laid down by Section 109(1) that costs lie where they fall. The practice in such proceedings is that costs generally follow the event. The event here is a victory for Ms Beattie which would support the view that her client should have a costs order in its favour. The fact that she has been able to secure a summary dismissal is indicative of the strength of the contentions which she makes and the weakness of the case made against her client would reinforce the view that there should be a costs order in favour of the third respondent, but are the circumstances such as to justify the making of an order for indemnity costs which Ms Beattie seeks for the whole or any part of the relevant period? She referred me to a decision of Woodwood J. in Fountain Selected Meats Sales Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397, 401 where His Honour said:

"I believe that it is appropriate to consider awarding solicitor and client or indemnity costs whenever it appears that an action had been commenced or continued in circumstances where the applicant property advised should have known that he had no chance of success."

"In such cases the action must be presumed to have been commenced or continued for some ulterior motive."

27. Ms Beattie makes no such allegation here but relies upon the following phrases of His Honour's reasons:

"or because of some wilful disregard of the known facts or the clearly established law"

28. She places reliance upon those matters, referring to the circumstances I have already described.

29. I should note however, the wider effect of what His Honour said, namely according to the head note that "for an order to be made ordering other than party and party costs special circumstances must pertain". Section 109(1) of the Victorian Civil and Administrative Tribunal Act states, as I have already indicated, the general principle that costs lie where they fall That means that whilst we do have jurisdiction to make awards for costs on a full indemnity basis the presumption in the Tribunal against making costs awards at all would appear to indicate that orders for indemnity costs in the Tribunal would be made even more sparingly in the Tribunal than they would be made in Court.

30. In the present circumstances, enquiries could have been made from publicly available sources which might have prevented matters reaching their present stage, however there are always difficulties in penetrating the legal relationships of third parties and it would be wrong for instance to conclude that the register kept under the Transfer of Land Act is an absolutely conclusive statement of ownership. Ownership interests existing in equity are not generally shown on the register and one particular and important example of that is the possibility that there are dealings as yet unregistered and as yet not lodged for registration. A party who conducts a search and regards the result as the final and conclusive answer to the question, who owns this land, would be proceeding upon a false assumption.

31. In the circumstances therefore I do not think that the conduct of the applicant in joining ACI Operations Pty Ltd is so egregiously misconceived as to justify an order for indemnity costs. I believe however that there should be an ordinary award of costs as between party and party. The costs orders here are customarily made upon the County Court Scale and as I would understand it, a claim for $36,000 would be one dealt with under County Court Scale "C".

32. Accordingly, I will order that the third respondent's costs of the proceeding of this application be paid by the applicant. such costs to be taxed in default of agreement in accordance with County Court Scale "C".

Civil and Administrative Tribunal Act 1998

Trycala Importers & Wholesalers Pty Ltd v Growmac Imports Pty Ltd [2001] VCAT 1445

At a glance

Court

Decision date

Source

Judgment (67 paragraphs)

Trycala Importers & Wholesalers Pty Ltd v Growmac Imports Pty Ltd [2001] VCAT 1445 (21 June 2001)

Parties

Legislation Cited (2)

Cases Cited (2)