Bradenthorpe Pty Ltd v Leeche Earthmoving Pty Ltd
[2004] VSC 542
•24 November 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6196 of 2000
| BRADENTHORPE PTY LTD (ACN 074 646 549) AND ANOTHER | Plaintiffs |
| v | |
| LEECH EARTHMOVING PTY LTD (ACN 005 001 132) AND OTHERS | Defendants |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22-24 NOVEMBER 2004 | |
DATE OF JUDGMENT: | 24 NOVEMBER 2004 | |
CASE MAY BE CITED AS: | BRADENTHORPE PTY LTD v LEECH EARTHMOVING PTY LTD [NO. 2] | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 542 | |
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Contract – Partnership entered into contract with engineer to draw up plans and specifications for the construction of a dam and to supervise the construction of the dam – Dam leaked and not constructed in accordance with plans – Damages for rectification.
Tort – Negligence by engineer – Consequential loss of income by new partnership – Assessment of damages.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G.K. Moore | Baird & McGregor |
| For the Second Defendant | No appearance |
HIS HONOUR:
This is a claim by two plaintiffs for damages said to have been suffered by one or other or both of them as a result of the negligent construction of a dam on a farm at Tourello in country Victoria. The first plaintiff, Bradenthorpe Pty Ltd, is the owner of the property on which the dam was constructed. The second plaintiff, L & J Myers & Sons, is a partnership. At the relevant time up until 28 June 1996 the partnership consisted of six named individuals, Lindsay Anderson Myers, Jean Isobel Myers, Alan Lindsay Myers, Lois Merle Myers, David Thomas Myers and Alison Mary Myers, and thereafter until 1 July 2002, it consisted of Mr Lindsy Myers and Mrs Jean Myers and two companies, Burn-brae Agriculture Pty Ltd and Tourello Pastoral Company Pty Ltd.
Thus, either directly or through corporate entities, Mr David Myers and his brother, Mr Alan Myers, together with their father, Mr Lindsay Myers, and all of their wives, carried on the business of farming the property at Tourello and another property at Dean. The Myers grew potatoes, grazed stock and grew other cereals. The important crop for present purposes is potatoes which was produced in two forms. One way was to grow potatoes for processing into french fries. The other way was to grow and sell certified seed for use by other potato growers.
The evidence is that a large amount of water is required for growing potatoes. Having purchased the extra property at Tourello, the Myers decided to install a dam in a valley along which ran a creek, which later became known as No-name Creek, in order to build up a sufficient supply of water with which to irrigate the planned potato crop.
In 1995 the plaintiffs applied in writing to the Goulburn Murray Water Authority (“the Authority”) for a licence, pursuant to s.67 of the Water Act 1989, to construct and operate works on a waterway. Permission was given subject to a number of conditions, one of which was that a suitably qualified civil engineer, well experienced in the field of small dam engineering, was to be engaged to design and supervise the construction of the dam.
In or about October 1995 one or other of the plaintiffs, and it seems to me that it was the partnership, entered into an agreement with the second defendant, an engineer by the name of Kevin McIlvena, whereby in consideration of fees to be paid to him, he agreed to draw up and certify engineering plans, computations and specifications for the construction of the dam to the satisfaction of the Authority, to supervise the construction of the dam in accordance with the plans, computations and specifications and with the requirements of the Authority, and upon completion of the dam to certify to the Authority that it had been completed to design and to provide “as constructed” details of the dam to the Authority. Part of the agreement was that the dam was to be of sufficient size to hold 55 megalitres of water and that it was to be constructed in accordance with the requirements of the Authority.
Towards the end of 1995 Mr McIlvena drew up engineering plans, computations and specifications for the construction of the dam and quotations were obtained from earthmoving contractors. As a result, in or about late December 1995 the first defendant, Leech Earthmoving Pty Ltd, agreed with the partnership to construct the dam. Mr McIlvena pegged out where the wall was to go and in his specifications he described where it was to be. He specified that there was to be bulk earthworks with placement, spreading, watering and compaction in 200 millimetre layers. Further, there was to be moisture content and compaction testing carried out upon the engineer’s direction. The drawings showed that the outfall pipe was to be held in place with a series of concrete collars and Mr McIlvena specified that he would attend the site every second day for routine inspection and at other times for set out or advice. Part of the specifications by Mr McIlvena was that the minimum requirement in terms of plant and equipment for the project was that there be two twin power scrapers, one 20 tonne excavator with rock breaker, one water tanker, one 15 tonne sheep’s foot roller (vibrating), one bulldozer, one grader and other items of equipment.
The dam was constructed in January and February of 1996. Mr David Myers has given evidence that he visited the site of the dam construction every evening, and on occasions during the day as well, during the period of construction. He did not see Mr McIlvena on any of those occasions until about 50 per cent of the work had been completed. The only equipment that he saw on site were two excavators and one bulldozer. There was no water tanker and there was no sheep’s foot roller. Mr Myers was a patently honest witness and I have no reason to doubt any of his evidence. He said that there was some moisture in the soil at the time of construction and there was one short rainfall but otherwise, as one would expect in those months, it was dry.
It would seem that the fact that there was no proper watering of the clay during compaction and that there was no proper compaction because of the absence of the sheep’s foot roller have led to the subsequent problems that have been experienced with the dam.
Other problems with the construction observed by Mr Myers were that the dam wall was not placed in the position marked out by Mr McIlvena but rather some 15 metres upstream with the result that the dam does not contain the required 55 megalitres but something like 40 megalitres and, secondly, that the dam does not contain the required second spillway which was an additional requirement imposed by the Authority.
The dam has not proved to be watertight. Mr Myers gave evidence that very soon after it started to fill there was leaking. There was a discussion on site with Mr McIlvena when he suggested that this would improve with time. Mr Myers said it has not and the photographs that have been tendered in evidence and the observations yesterday during the view amply support the claim that the dam does leak at two points, one on the south end of the wall and the other from around the outlet pipe.
The result is that water escapes and the plaintiffs have been left, during their growing season, with insufficient water to produce the crops that they would otherwise have been able to produce. In the circumstances that there has been no appearance by Mr McIlvena I think it is sufficient to say that I am satisfied that there was a breach of contract on his part in that his work was not carried out in a proper and professional workmanlike manner.
Mr Peter Reid, the expert engineer called on behalf of the plaintiffs, has summarised what he considers to be the failings by Mr McIlvena: he failed to adequately investigate the site; failed to adequately design a dam to provide the required volume of water; failed to carry out an adequate survey so as to be able to calculate the volume of water the dam would hold; failed to adequately design the spillway; failed to write adequate specifications in that he did not adequately test the materials to be used for construction of the dam; failed to adequately supervise the construction in that he did not visit the site enough, did not carry out any compaction or moisture tests during construction or require them to be carried out, did not stop the work when it was being done in an improper manner and did not stop the work and insist on the previously specified machinery being provided. I accept that evidence.
I see no reason why the cost of the rectification works that now have to be performed to prevent leakage from the dam and to attempt to ensure that the required amount of water is retained should not be paid by Mr McIlvena as damages for breach of contract. As I have said, the contract was with the partnership as first constituted.
After the construction of the dam and prior to the consequential loss of income claimed by the partnership occurring, there was a change in the composition of the partnership. It seems to me that if there is any claim here, it is a claim in tort by the partnership as secondly constituted.
There is no reason, in my opinion, why Mr McIlvena did not owe a duty of care in tort at the same time as he owed a contractual duty. In my opinion, that duty extended not just to the immediate contracting party but to other people of a type who it was reasonably foreseeable could suffer loss if the design and supervision of the dam was not properly carried out. I consider that the partnership as secondly constituted comes within that category.
I turn then to the question of the calculation of the damages. Mr Reid has given evidence that the cost of the engineering part of the rectification in round figures is $55,000. That has been broken up into the various constituent parts. I accept Mr Reid’s evidence in respect of that part of the claim.
The plaintiffs also rely on an estimate given by a Mr Laurie Crimeen of the cost of the contractor to rectify the dam. That was an estimate given in April 2001, totalling $94,195. Mr Reid has expressed the opinion that that is a reasonable figure and I accept that evidence. Bearing in mind that that quotation is over three years old, it seems to me appropriate to round that figure off to $95,000 which makes a total of $150,000 for the rectification work.
The claim for the loss of income is put in three different ways. In a very conservative and reasonable claim, the plaintiffs have basically limited their claim to two seasons. The first way in which the claim is put is that in the 1998-99 season and the 1999-2000 season, the cropping area that was intended to be used had to be reduced because of the lack of water. In the 1998-99 season, it was said that 16 hectares would have been planted to potatoes but that only 10 hectares of crop were planted. However, in a subsequent part of the claim it appeared that in that year an area of 11.2 hectares had been certified as the appropriate area of certified seed crop planted and Mr Myers accepted that that figure would be the correct figure.
An expert report prepared by a Mr Pitt, who holds a Master of Agricultural Science Degree and various positions within the potato industry, had been prepared. In the circumstances, Mr Pitt was not called, but Mr Myers was able to give evidence that the figures from which Mr Pitt had made his calculations had come from him and that apart from one or two corrections the figures were accurate. I am prepared to act on that evidence.
The relevant calculation was that in the 1998-99 season the plaintiffs obtained a gross margin of $7199 per hectare, so that the loss was 4.8 hectares by that gross margin leading to a figure of $34,555.20. In the following season the amount of crop planted was only eight hectares as against the planned 16 hectares so there was a loss of eight hectares. The gross margin in that year was $8117 which leads to a figure of $64,936.
The second way in which the claim was put was that the seed quality actually obtained in the harvest year 1999 was lower than would have been obtained if there had not been the lack of water. Apparently, water is required in an effort to reduce scab. The evidence, which I accept, was that in the 1999 year 21.5 tonnes of the Coliban variety of potato was not of the required quality and that it all had to be downgraded and therefore could not be certified. Consequently, it was sold at a price of $125 per tonne less than it would otherwise have obtained. That is a loss of $2688.
In respect of the Shepody variety of potato, there was a ten per cent wastage in the harvested crop of 61 tonnes because of the lack of water. This meant that 6.1 tonnes of that variety with a potential value of $302 per tonne were wasted. This leads to a loss of $1842.
After correction from what seemed to be an arithmetical error, there was a wastage of 50 per cent of the Desiree variety of the crop of 23.4 tonnes because of the lack of water. This meant that 11.7 tonnes with a potential value of $415 per tonne were wasted. This leads to a loss of $4855.50. The three items under the heading of loss of seed quality come to $9385.50.
The third way in which the plaintiff have suffered consequential loss from the lack of water is that it was said that there were lower yields in the crops. In this case the claim is made in respect of four years, 1997, 1998, 1999 and 2000.
Mr Pitt had done a calculation of yields by comparing the partnership’s results on the property at Dean, where the partnership also grew seed potatoes and there was no shortage of water, with the yield attained on the Tourello property where there was a shortage of water. He assessed the overall loss in terms of yield at three tonnes per hectare. Mr Myers verified that this was a reasonable estimate of the lower yield. An average value of $310 per tonne was attributed to the lost crop in each of the four years. That seems reasonable to me. The total for the four years came to a figure of $34,293. The loss of income suffered by the second plaintiff, the partnership, therefore totalled $143,169.70.
In the result, it seems to me that the first plaintiff has not suffered any loss as it was merely the owner of the land which it licensed the partnership to farm. The partnership is the entity which has incurred all of the expenses and suffered all the losses.
Accordingly, there will be judgment for the second plaintiff against the second defendant for the sum of $293,169.70. The second plaintiff has indicated that it does not seek interest.
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