Woollahra Municipal Council v Kincorp

Both sides also tendered extensive other exhibits. 12 Much of the evidence presented to the Court concerned whether or not the parts of terrace 4 earmarked to be retained were truly of heritage significance, whether it was appropriate to require their retention, whether there were other ways in which their retention could have been better pursued/secured on-site, and whether demolition was reasonable and/or the preferable option in all the circumstances that arose. 13 In the end analysis, the only issues central to this prosecution and the Court's consideration are -

(1) Did a breach of the consent occur? and (2) Did the/an instruction to demolish come from the Defendants? Consideration 14 The relevant June 2002 consent "incorporated plans which were approved" by the Council ("the DC plans"). On 16 January 2004 a construction certificate was issued by BCA Logic Pty Ltd, approving revised/further plans ("the CC plans"), which, by operation of s.80(12) of the EP&A Act, also became part of the development consent. (The Council eventually took over as private certifier). 15 A further s.96 modification application was made to the Council in April 2006, after the subject demolition, and was approved. While it might be regarded as, effectively, a retrospective approval of the demolition, Mr Tuxford accurately characterised the Council's decision as granting approval to the developer to replace terrace 4, instead of merely carrying out "alterations and additions" to it, as earlier approved. 16 The Defendants contend that they at all times complied with the requirements of the development consent, which incorporated among the CC plans engineering drawings which they say permitted demolition of the relevant walls on the subject site to the extent determined on site by the structural engineer, Mr John Haymes (who had been involved in the project since April 2002). Those plans were prepared by Mr Haymes' company, under his supervision. 17 The evidence is that Mr Haymes consulted Mr Waddell of Coffeys Geotechnical Engineers (who were involved in the project from August 2003 - See Exhibit K11, Exhibit P1 tab 18, Exhibit P11 tab 4, and Annexures A and B to Mr Haymes' affidavit 7.6.07). They jointly recommended the relevant demolitions "as a matter of urgency" in mid December 2005. 18 It is fair to summarise extensive relevant documentary evidence by saying that both Haymes and Coffeys had consistently advocated more extensive demolition of terrace 4 prior to that date (see, for example, Exhibit P13, dated 21 August 2003). 19 On 16 December 2005 and again on 16 January 2006, Haymes instructed JPS to demolish, and the builder consulted him throughout the relevant works. The Defendants' case is that, putting Council's case against them "at best", they merely, on 20 January 2006, "re-forwarded an earlier instruction issued by Mr Haymes to JPS" (written submissions par 11). 20 Council's Mr Wong also visited the site when the stability of the walls became an issue in mid November 2005. His file note of 14 November 2005 confirmed his advice to Daly, Haymes and Sarkis that the CC plans were paramount and must be followed throughout the project, unless approval of any modification were to be granted by Council. The Defendants' case is that those plans, properly construed, contemplated and permitted some level of demolition of the walls of terrace 4, and authorised Haymes' decision, and his instructions to JPS, to proceed with demolition. 21 The two notations which have occupied the Court's time and attention are (1) that appearing on the plan referred to in evidence as S02B, viz "Extent of demolition to be determined on site", and (2) that appearing on that plan and others (S02B, S03B, S04B, S07B/C), viz "Existing Retaining Wall to be retained. Subject to excavation and discovery". (See generally plans in Exhibit P1, Tab 5). It is note (1) which is of primary relevance. 22 The word "extent" was qualified in no way by the documents comprising the consent and, in their evidence, Council officers Wong and Kauter agreed that the word "alterations" in the consent could encompass "demolition" (T4.2.08, p50, L30-33; T6.2.08, p156, L9-13). 23 The parties are not in dispute between themselves, or with the Court, about the legal principles governing the construction of a development consent which incorporates other documents, including plans. See House of Peace Pty Ltd & Another v Bankstown City Council (2000) 48 NSWLR 498; Westfield Management Limited v Perpetual Trustee Company Limited & Anor [2006] NSWCA 245; and Alcoa Australia Rolled Products Pty Ltd v Weston Aluminium Pty Ltd (2006) 148 LGERA 439. I have strictly applied those principles in construing the consent documentation. 24 The Prosecutor failed to adduce any expert evidence on what a reasonable and competent structural engineer and/or builder would do in interpreting or applying the note, i.e. note (1) in par [21] above. 25 The Court acknowledges that the thrust of Council's consent required the specified walls of terrace 4 to be retained, but notes that retention is subject to the structural engineer being authorised by the notation to approve some demolition on site. The issue upon which much of the hearing and my deliberations focussed was the extent of demolition so authorised. 26 As observed already, compared with other notation(s), the relevant notation occurs only on the footing plan S02B (in Exhibit P1, Tab 5). The Prosecutor relies on the plans as a whole as requiring the relevant walls above the footings to be retained (see written submissions par 26), and on the expert opinion of Council's Mr Tuxford that the note's application must be restricted to the plan upon which it appears, "meaning demolition of the footings to be determined on site" (T5.2.08, p78, L4-8). Similar evidence was given by Mr MacLeod (affidavit 25 October 2006, pars 6-11). 27 The Prosecutor asks the Court to dismiss Mr Daly's views as to what the plans meant, because (1) he is not an expert witness, and (2) his opinion or state of mind is not relevant to a matter of strict liability. The Prosecutor makes similar submissions in regard to the evidence of Messrs Haymes and Sarkis, but all three of these gentlemen have proven expertise and experience in the interpretation and application of plans. Incidentally, the Court notes that Mr Tuxford expressed a strong view of what note (1) means, but could not even hazard a guess as to what note (2) means (see T6.2.08, p120, L13-24 and p121f). 28 The charge puts the time of demolition as between 1 January and 31 March 2006. The evidence establishes that the physical act of demolition commenced on 23 January (see evidence of Mr Sarkis T5.2.08, p19, L46-48) and was concluded by 21 March 2006 (Exhibit P1, Tab 9, photo 2, and affidavit of Mr Kauter 5 September 2006, par 5). The southern wall was not demolished. However, Haymes gave Sarkis instructions to demolish the collapsing parts of the other walls of terrace 4 on 16 December 2005, and again on 16 January 2006 (Exhibit P4). On 16 December Haymes instructed JPS to demolish the "overhead walls", and, on 16 January, the "existing SE brickwork to top of sandstone". 29 Sarkis testified that, despite any ambiguity in the plans, any demolition at footing level would necessarily involve bringing down "the walls above" (T4.2.08, p92, L25-27). Haymes was not cross-examined on his construction of the note on plans of which he was the author and upon which he relied to give Sarkis the relevant site instructions. The defence makes much of the Council's failure not only to prosecute or cross-examine Mr Haymes, but also its failure to question Mr MacLeod during his oral evidence on the meaning of the notation. See Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd & Another (1991) 22 NSWLR 389 per Handley JA at 418-419 on the extension of the Jones v Dunkel principles to such situations. In coming to my decision I have not relied on any Jones v Dunkel inference. The Court accepts that Mr MacLeod is an eminent expert, but, compared to Haymes and Coffeys, he had no first-hand knowledge of terrace 4, and relied only on photographs. 30 I am not satisfied - and certainly not beyond reasonable doubt - that, upon the proper construction of the consent as a whole, the partial demolition of terrace 4 was in breach of it. 31 As Mr Gracie submitted on the Defendants' behalf (T17.3.08, p24, L14-17), for the Prosecutor to succeed, it must "show that that notation was somehow qualified on its face so that you could only (sic) demolish the footings and nothing else". There were, in fact, no "footings" as such. 32 The Defendant is entitled to the benefit of any doubt created by any "ambiguity, inconsistency or discrepancy" in the plans forming part of the development consent. 33 I, therefore, answer question (1) in par [13] above, namely whether the demolition was a breach of the consent, "NO". 34 I turn now to examine the role played, in the demolition itself, by Kincorp and Daly. 35 As already noted, concern about the integrity of what remained of terrace 4 was evident from about November 2005. By 16 December 2005 Sarkis was of the view that the walls of terrace 4 constituted a danger (T4.2.08, p88, L51-53). Haymes and Coffeys came to their firm view on that date. Coffeys reported to Bourke (Exhibit K1), and Haymes issued the instruction to JPS. Daly and Kincorp had no involvement in this aspect of the project at that stage. 36 The Christmas "shut down" made it impossible for the demolition to occur immediately, but there is evidence of further cracking and movement in at least the northern wall during that "break", as observed by Mr Sarkis (see T4.2.08, p89, L29-35, and T5.5.08, p22, L4-23). JPS's site foreman, Mr Shalalah, was organising scaffolding on 11 January 2006 to be delivered on 17 January (Exhibit P7 and T5.2.08, p27, L11-25). Mr Haymes issued his further site instruction on 16 January 2006. 37 The Court accepts Mr Haymes' expertise, his desire to assist the Court, and his evidence (1) that he considered all options at every stage, and (2) that his motivation was public and site safety, rather than cost considerations (see T7.2.08, p294). It must be remembered that no one was really aware of conditions at the basement level when the CC plans were prepared by his company, under his direction (see T7.2.08, p278, L35-6). He opined that the cracking which occurred in the walls was typical of walls of that age sitting on sand without proper footings, and, over time, he observed their deterioration first-hand. He was of the opinion that the state of terrace 4 was "very poor" (T7.02.08, p279, L48). 38 On 12 January 2006, Sarkis emailed to Daly a request for approval of the instructed demolition works as a contract variation (T5.2.08, p6, L30-58), and Mr Daly declined the request (T5.2.08, p7, L44-52). See Exhibit P2, tab 8, fol 147. (In the end, a variation was paid, to the extent of the work ordered by Haymes). 39 Neither email implicates Daly or Kincorp in the giving of the relevant instruction. When Council's Mr Wong attended the site on 13 January 2006, no-one from Kincorp was present. The evidence indicates a failure by JPS to advise Council of the proposed demolition works, even during that site visit. Mr Wong dealt mainly with the JPS foreman, Mr Shalalah - Wong's diaries and some of his file notes are in evidence (Exhibit P9 and Exhibit P10), and they were dealt with in his oral evidence (T6.2.08, p147, L25-53). 40 On 16 January Haymes went through the contents of his site instruction with a JPS representative (almost certainly Mr Shalalah, who initialled the instruction). (See Exhibit K5, and T8.2.08, pp302-304). Mr Sarkis and his staff appear to have welcomed Mr Haymes' involvement at every stage of the relevant demolition works, so that JPS could approach it correctly, in the sense that, as it was done gradually, they could see what could be saved (T4.2.08, p46, L33-36; T4.2.08, p59, L37-46). 41 Mr Daly and Kincorp neither had a role in, nor could have applied any expertise to, those works. The Court accepts Mr Daly's evidence that he was engaged as a project manager, to act on behalf of a sick and absent client, rather than as a construction supervisor, and the Court accepts his truthfulness in giving his version of events (see, especially, T8.2.08, pp366-373) - the direction to JPS came from Haymes and/or Coffeys (T8.2.08, p366, L19-25). 42 As at 19 January, Sarkis was aware of the need to proceed, but had no communication from/with Daly other than in the email exchange of 12 January concerning the possible contract variation (see par [38] above). The demolition contractor was booked for Monday 23 January, and the site diary confirms the commencement of works on that day. On 19 January Sarkis asked Daly/Kincorp for "an instruction to demolish … along with an approval for this variation". On 20 January, Kincorp confirmed the Haymes recommended level of demolition. See email exchange in evidence at Exhibit P2, tab 8, fol 148, Exhibit P5, and Exhibit K5. 43 However, it was Haymes again, and not Daly or Kincorp, who oversaw, and gave all necessary instructions, over the next few weeks (until at least 8 February when a "continue demolition" instruction was issued (Exhibit P1, Tab 18)). 44 Mr Daly's sworn evidence is that he did not intend to do any more than confirm the extent of works as a variation in accordance with the site instruction he understood Haymes had given to Sarkis. As the Prosecutor points out, it is the communication itself, not its subjective intent, which is crucial to this case. Therefore, the Court needs to examine very closely the actual words exchanged between Sarkis and Daly in the context of the history I have just summarised. 45 On 5 January 2006 JPS/Sarkis emailed Kincorp/Daly (Exhibit P2, fol 144): "to what extent are we going to demolish[?]". 46 On 12 January 2006 JPS/Sarkis emailed Kincorp/Daly (Exhibit P2, fol 145): " Attached is the costing for the demolition works, included is the rebate for the works by JPS, … Please send me an instruction to demolish the building along with an approval for this variation ". 47 On 12 January Kincorp/Daly replied simply (Exhibit P2, fol 147): " This quotation for works & rebate is not approved ". 48 That reply went on to suggest that Daly would call Sarkis "in the morning to discuss further", but there is no evidence regarding any such discussion the next day. 49 On 19 January 2006 JPS/Sarkis emailed Kincorp/Daly (Exhibit P2, fol 148): " We are planning to start the demolition of the building as per your request on Monday, can you please send me an instruction back as per our discussion ". 50 On the same day Kincorp/Daly replied (Exhibit P2, fol 148): " Confirming our meeting on site Monday 16/1/06 with John Haymes, ourself & myself. The existing terrace at 52 Glenmore Road, Paddington to be demolished by the builder to the level as indicated on John Haymes Instruction dated 16/1/06, Headed as - Eastern End - copy attached (faxed) ". 51 The Prosecutor relies on the fact that, as all Haymes' "instructions" are on pro forma documents headed "Site Inspection Report - Instruction", one must closely examine their substance. 52 The one dated 16 January 2006 was addressed to the "client", Bourke, but a copy went to the site. Sarkis did not regard it as an "instruction" to him or JPS (T5.02.08, p45, L51). He regarded Kincorp/Daly, rather than Haymes, as his principal, and Haymes had no direct contractual relationship with him as the builder. 53 Haymes testified that he did not regard it as his "responsibility" to instruct the builder "directly". He said he "would direct that advice to the project manager because that would be certainly a change to the intent of the project" (T7.02.08, p299, L20-22). Yet Sarkis and JPS relied heavily on Haymes and acted readily on his instructions, before and after Daly's email of 20 January. They organised the demolition and carried it out with Haymes' on-going supervision. 54 Kincorp/Daly merely confirmed that JPS/Sarkis should act on the Haymes instruction(s). 55 In any event, the practical preparations for the demolition had commenced on 11 January, with work to commence, ultimately, on 23 January. None of the preparations sprang from any communication from Daly or Kincorp. 56 On 20 January Kincorp/Daly commented on the contractual issue (ie the variation sought in respect of JPS's compliance with the engineer's instruction), and "reforwarded" to JPS/Sarkis that instruction from Haymes - no causal connection between that communication and the commencement of works on 23 January has been established. 57 The Defendants rely on the fact that the responsibility to comply with the terms of the development consent lay upon the builder under the terms of its contract with the owner (Exhibit P3). 58 I am not satisfied - again I say, certainly not satisfied beyond reasonable doubt - that the Defendants, or either of them, authored/gave a relevant instruction. I, therefore, answer question (2) in par [13] above "NO". 59 Before concluding, I should deal briefly with one other aspect of the Prosecutor's cross-examination of Mr Daly. Daly addressed an invoice to Bourke dated 5/7/06 (Exhibit P2, tab 7, fol 111), in which he rendered a fee for "(b) Woollahra Council meetings & correspondence due to breach of DA conditions (Demolition of existing Terrace)", outside their fixed price agreement. Mr Clay tested Mr Daly on whether the phrasing of that item reflected his "understanding" of what had occurred (T8.2.08, p372, L30; p373, L36). In fact, that item reflects the heading on Council's letter of 21 March 2006 to Bourke (annexure 'B' to Kauter's affidavit of 5 September 2006), upon which one would expect Bourke to seek the project manager's assistance, and the Court found Mr Daly frank and convincing in his responses to Mr Clay's questions. Conclusion 60 As a result of my findings, the summonses and charges against the Defendants must be, and are, dismissed. 61 The exhibits may be returned, except for: · Exhibit P3, which will remain in the Court's file on this matter; and · Exhibit P4 and Exhibit P5, which will be returned to the Court's file in Matter No. 50030/2006.

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