Brown v Etna Developments Pty Ltd

[2025] NSWSC 358

Supreme Court

New South Wales

Medium Neutral Citation:

Brown v Etna Developments Pty Ltd [2025] NSWSC 358

Hearing dates:

10 – 14 March 2025

Date of orders:

30 April 2025

Decision date:

30 April 2025

Jurisdiction:

Equity - Technology and Construction List

Before:

Rees J

Decision:

Judgment against the defendants.

Catchwords:

TORTS — homeowner’s worst nightmare — development site next to plaintiffs’ home — developer excavates 9 metres to construct 55 apartments – geotechnical engineer identifies high risk of landslide at boundary — geotechnical advice ignored — excavations go beyond boundary — landslide — plaintiffs’ driveway collapses into development site — plaintiffs’ unable to access home by vehicle — plaintiffs’ property rendered worthless – developer and builder go in external administration – whether family members who ran the building company are personally liable.

CORPORATIONS — directors and officers — whether de facto or shadow director — whether directors personally liable for directing or procuring the tortious conduct for the company — extent of duty owed by disabled director — principles at [236]-[243].

TRESPASS — whether each defendant excavated beyond the boundary – boundary not clearly marked.

NEGLIGENCE — duty of care to maintain support for land, s 177 of the Conveyancing Act 1919 (NSW).

DAMAGES — whether rectification costs disproportionate to diminution of land value — whether reasonable to award rectification costs in the circumstances – principles at [265]-[270] — general damages.

CIVIL LIABILITY ACT — proportionate liability —— whether trespass an apportionable claim.

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5A(1), 5B(1), 5B(2)(a), 5D, 34(1)(a), 35(4)

Conveyancing Act 1919 (NSW), s 177

Corporations Act 2001 (Cth), ss 9, 9AC

Employee Liability Act 1991 (NSW), s 3(1)(b)

Cases Cited:

Allen v Chadwick (2015) 256 CLR 148; [2015] HCA 47

Alora Davies Developments 104 Pty Ltd (In Liq) v Raphael [2024] NSWSC 547

Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88

Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120

Brown v Etna Developments Pty Ltd (surveillance devices) [2025] NSWSC 218

Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233

Carrier v Bonham [2002] 1 Qd R 174

Cohen v Double Bay Bowling Club (No 4) [2021] NSWSC 872

Evans & Anor v Balog & Anor (1976) 1 NSWLR 36

Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232

Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15

In the matters of Earth Civil Australia Pty Ltd [2021] NSWSC 966

Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Limited [2010] FCA 108

Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171

JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625; [2016] FCAFC 20

Lym International Pty Ltd v Marcolongo [2011] NSWCA 303

Microsoft Corporation v Auschina Polaris Pty Limited (1996) 71 FCR 231

Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; [2010] NSWCA 331

O’Brien v Dawson (1942) 66 CLR 18

Paul v Cooke (2013) 85 NSWLR 167; [2013] NSWCA 311

Perpetual Trustee Co Ltd v CTC Group Ltd (No 2) [2013] NSWCA 58

Piling v Prynew [2008] NSWSC 118

Plenty v Dillon (1990) 171 CLR 635

Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211

Rahme v Benjamin Khoury Pty Ltd [2019] NSWCA 211; (2019) 100 NSWLR 550

Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187

Rextraw v Johnson [2003] NSWCA 287

Rove Estate Pty Ltd atf Lane Cove Estate Trust v Chomp Excavations & Demolition Pty Ltd (No 3) [2023] NSWSC 274

South Western Sydney Local Health District v Gould (2018) 97 NSWLR 513; [2018] NSWCA 69

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5

Tapp v Australian Bushmen’s Campdraft & Rodeo Association Limited (2022) 273 CLR 454; [2022] HCA 11

Town of Port Hedland v Hodder (No 2) (2012) 294 ALR 315; [2012] WASCA 212

Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19

Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463

Texts Cited:

Gino Dal Pont, Law of Agency (4th ed, 2020, LexisNexis)

Ian Ramsay, Company Directors: Principles of Law and Corporate Governance (2nd ed, 2023, LexisNexis)

Sappideen & Ors, Torts: Commentary and Materials (12th ed, 2016, Thomson Reuters)

Penelope Crossley et al, Balkin & Davis Law of Torts (6th ed, 2021 LexisNexis)

McGregor on Damages (13th ed, 1972, Sweet & Maxwell)

James Edelman, McGregor on Damages, (22nd eds, 2024, Sweet & Maxwell)

Category:

Principal judgment

Parties:

Edmund Brown (First Plaintiff)
Irena Saric (Second Plaintiff)
Etna Developments Pty Ltd (receivers & managers appointed) (First Defendant)
Nutek Constructions Pty Ltd (in liquidation) (Second Defendant)
Fotis Kalantzis (Third Defendant)
Nick Kalantzis (Fourth Defendant)
Konstadinos Kalantzis (Fifth Defendant)
Alexander Kalantzis (Sixth Defendant)

Representation:

Counsel:
AJ Rogers (Plaintiffs)
A Gauja (Fourth Defendant)

Solicitors:
Ken Law Group (Plaintiff)
CMI Law Firm (Fourth Defendant)

Fotis Kalantzis (In person, Third Defendant)
Konstadinos Kalantzis (In person, Fifth Defendant)
Alexander Kalantzis (In person, Sixth Defendant)

File Number(s):

2022/45437

JUDGMENT

1. HER HONOUR: This case is a homeowner’s worst nightmare. Edmund Brown bought a house in Gosford where he lived with his partner, Irena Saric. Next door was a development site, owned by Etna Developments Pty Ltd. Initial site investigations undertaken by a geotechnical engineer revealed that excavation of the development site posed a high risk of landslide to the boundary between the two properties. The developer engaged a builder, Nutek Constructions Pty Ltd. The developer and builder did nothing to ensure the stability of the boundary, either by following the geotechnical engineer’s advice, complying with the council’s conditions of development approval or at all. Nor did the builder respect the boundary between the properties, erecting the site fence on the plaintiffs’ land and excavating beyond the boundary.

2. Gradually, the effects of the excavation were felt by the plaintiffs, as their driveway began to tip and their power pole to tilt. The couple complained. The council applied pressure. A small landslip occurred. Little was done. Eventually, the plaintiffs’ land collapsed, trapping the plaintiffs’ motor vehicles, preventing them from accessing their home by vehicle and rendering their property virtually worthless. The plaintiffs’ property remains subject to a high risk of further instability and is expected to further deteriorate due to ground movements, which will also cause further damage to their house.

3. The plaintiffs commenced proceedings, seeking damages for trespass and negligence to make good their land, driveway, house and carport. By the trial, the developer was in external administration and the builder had gone into liquidation. The development site had been abandoned. The remaining defendants are members of the Kalantzis family, who ran or worked for Nutek, being:

1. director Fotis (Frank) Kalantzis;

2. his uncle Nicholas (Nick) Kalantzis, who actually ran the company;

3. his father Konstadinos (Kon) Kalantzis, who ran the building site; and

4. his brother Alexander (Alex) Kalantzis, who worked on-site as a contractor through his own company, All Works Civil Contracting Pty Ltd.

4. In an effort to avoid confusion, I will refer to these defendants by their first names. Of these defendants, only Nick was legally represented at trial; Frank, Kon and Alex appeared in person.

Witnesses and documents

5. The plaintiffs gave evidence and relied on the evidence of structural engineer Geoffrey Ball, geotechnical engineer David Mehan, surveyor David Armstrong, quantity surveyor Michelle Chan and valuer Angelo Konidaris. All but Mr Armstrong were cross-examined. No issues of credit arose. Mr Brown and Ms Saric were both perfectly straightforward and fair, each making reasonable concessions. Mr Ball was an impressive and fair witness, who was clearly most concerned about the dangerous state of the building site which he had monitored on behalf of the couple for some time before the collapse. Ms Chan and Mr Konidaris were knowledgeable and precise.

6. Each of Frank, Nick, Kon and Alex gave evidence. They also relied on the evidence of structural engineer Daniel Phillips, in respect of whom no issues of credit arose.

7. Although Frank was the sole director and shareholder of Nutek, it became readily apparent that he was a ‘puppet’ director. He had no knowledge of the affairs of the company. In the course of his evidence, Frank also said, “I’m just a bit illiterate with writing, and my signature”. He agreed, “I have a disability of a few things, yes, … not comprehending what I read.” He had difficulty comprehending particular words, “Just thinking other than talking and not acknowledging, yeah, stuff like that, yeah.” Frank did strongly present consistently with this evidence. Otherwise, Frank seemed straightforward, although he may have said on occasion what he thought he needed to say to help his family.

8. Nick was cross-examined at length. He was an intelligent man with a keen eye to where his interests lay. Nick offered self-serving statements when the opportunity presented itself. He made snide remarks about the plaintiffs, which was hard to fathom in the circumstances. Nick accepted no wrongdoing or fault on the builder’s part. He knew plenty when it suited him and nothing when it did not. Nick was argumentative and evasive. He denied having said, “Lawyers and courts don’t worry me, they’re like cockroaches to me, and I can walk away from all of this without paying a cent”, even though the plaintiffs had videoed him in plain sight saying just that. He expressed pride when the video was shown, even though it was damning. Nick was unable to back down when caught out in a lie: see [104]. I have not accepted Nick’s evidence unless it was against his own interest or corroborated by another reliable witness or contemporaneous document.

9. Kon was belligerent, argumentative and evasive. Kon said whatever he thought would advance his case. I have placed no weight on what Kon said, unless it was against his own interest or corroborated by another reliable witness or contemporaneous document. Having now examined all of the evidence, I accept that some of what Kon said was true.

10. Alex was an intelligent young man who was, on occasion, evasive. Some of his evidence was unlikely, for example, that he would not have used an excavator even if requested to do so by his father. The plaintiffs accepted that Alex’s evidence was not troubled with the same difficulties as to credit or reliability as that of Frank, Nick or Kon. I agree insofar as the comparison is drawn with Nick and Kon. Nonetheless, I have approached Alex’s evidence with caution.

The developer, Kon and Nick

11. In 2014, Etna Developments was incorporated and bought a development site in Etna Street, Gosford. Joseph (Joe) Lagan was a director of Etna Developments. Kon had known Mr Lagan for a long time, having already built three projects for him. Kon also knew the previous owner of the site. Kon introduced Mr Lagan to the development site; they met on site. As to obtaining development approval, Kon said “My brother took care of all … that side …”.

12. Nick was a consultant for developers. He was told of the development site when the developer first purchased it. Nick appears to have had a close working relationship with Mr Lagan, “Well Joe was an elderly gentleman and he asked me to do a lot of things for him. So, and I obliged, obviously, in the position that I was in that I could help him”. As for this development, Nick said “Joe didn’t have much knowledge in regards to – a sort of project of that size was beyond his scope so … I was advising him in certain areas.”

13. Surveyors prepared a contour and detail plan of the development site for Mr Lagan. By December 2014, architectural drawings had been prepared for a proposed development, comprising three 6-level buildings with 53 apartments, 57 undercover car spaces and 14 external car spaces. The depth of excavation was expected to be between 6 metres and 8 metres.

14. Once the architectural drawings were to hand, geotechnical engineers were retained to undertake investigations on site. On 8 December 2014, Network Geotechnics undertook geotechnical fieldwork, drilling four boreholes and obtaining laboratory tests.

The builder

15. In January 2015, Nutek was incorporated. Nick’s email signature described Nutek as “Builders/Project Managers” and himself as “Project Manager”. It is convenient at this juncture to consider who ran the company, specifically, whether Nick and Kon were de facto directors. This is relevant where the plaintiffs contended that Frank, Nick and Kon were personally liable as directors, either actual or de facto directors, for directing or procuring the tortious conduct of Nutek.

16. Nick was a director and shareholder (through his company, Brokers Property Holdings Pty Ltd) of Nutek from time to time. In October 2017, Frank was appointed as a director as well. Nick said that Kon could not be a director of Nutek, as Kon was the licenced supervisor for the company. As such, there was an arrangement that Frank would be the director. As described at the outset, Frank was “a bit illiterate” and said “I have a disability of a few things”. Given Frank’s disabilities, the fact that Nick appointed Frank as a director of Nutek is troubling.

17. In February 2018, Nick ceased to be a director of Nutek, leaving Frank as the sole director. In September 2020, Frank became the sole shareholder of Nutek but held the shares non-beneficially. In February 2021, Frank became the beneficial owner of Nutek’s issued shares. Frank did not know how many shares he owned in Nutek, nor whether he was the sole shareholder or held shares with others. He did not know whether he held his shares in the company beneficially, and did not know what that meant. Frank did not know that his shareholding in the company changed from non-beneficial to beneficially held.

18. Whilst Frank was the sole director of Nutek, he agreed that Nick and Kon were running the show; Nick and Kon were really in charge. He agreed that Kon and Nick organised matters and let him know what was happening. Frank was not sure what the registered office of a company was, “I didn’t handle the office as much. My uncle did, Nick Kalantzis.” Nor did he have any dealings with the company at the registered office, Success Tax Professionals, “I don’t know, I didn’t handle all that”; Nick dealt with that. Frank did not know what happened to place Nutek in liquidation, nor who the liquidator was. He found out that the company was in liquidation when Nick gave him a letter. Frank had no idea what the assets of the company were, or its debts. He knew nothing about its financial affairs.

19. Nick described himself as an employee of Nutek, where the contract of employment was verbal. (In fact, his service company rendered an invoice to Nutek for his services.) Nick said he answered to the company director, Frank, in the first instance and then to the on-site supervisor, Kon. However, as Nick was familiar with his job, “I didn’t have to be told what to do, you know, I knew.” Nick saw his primary role as contract administrator for Nutek. This involved entering into agreements, paying invoices and ensuring compliance with planning instruments. Nick liaised with SafeWork, the council and consultants engaged by the company. Nick was also on-site two to three days a week, for two to three hours in the mornings, to meet with consultants and hold site meetings.

20. Kon said that he was a contractor, being a site supervisor working under a contract for services in the employ of Nutek. For completeness, in cross-examination Kon added, “I'm also not just a … site supervisor. I also contracted the company as well. Things that I can do that I know, I contract as well.” There were no documents which shed light on the arrangements between Kon (or Nick) and Nutek. There was no contract for services, no invoices or payslips and no banking records. I infer that Kon was working for the family company under an informal arrangement from which he expected to receive a financial benefit. Kon agreed that he controlled the structural building side of things, while Nick handled the administrative side of things.

21. Ms Saric watched Nick and Kon over the years on the development site, “pretty much commanding works around the site.” Ms Saric said, “I’ve seen Nick and Kon, and I’ve seen [the] kids doing the job[s] as Nick and Kon would say. That is what I have seen. How they called each other, how they named each other on the paper, I did not ask for paperwork.” Ms Saric agreed that Nick never said that he was a director of Nutek, “he was acting as one, so I did not ask him to provide me any paperwork … He spoke on behalf of [the] business. He was … managing it all.”

De facto directors

22. A person not formally appointed as a director of a company may still be considered a director if they act in the position of a director, or the directors of the company are accustomed to act in accordance with their instructions or wishes: s 9AC(1), Corporations Act 2001 (Cth). Whether a person fulfils the role of de facto director is a question of fact: Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; [2010] NSWCA 331 at [893]. In considering this question, Ward CJ in Eq (as the President then was) summarised relevant factors to consider in In the matters of Earth Civil Australia Pty Ltd [2021] NSWSC 966 at [955]:

They include: the size of the company and the allocation of the responsibilities; the internal practices or structure of the company; whether those outside the company considered the person to be a director; the duties that would be expected to be performed by a director in the relevant company (namely, top-level management functions); the duties actually performed by the person; whether others in the company considered the person a director; whether the company held out the person as a director; and whether the person held themselves out as a director. …

23. The “vital factor” is that the de facto director “has the potentiality to control”: Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233 at [230] (Young JA). See more recently Alora Davies Developments 104 Pty Ltd (In Liq) v Raphael [2024] NSWSC 547 at [84]-[91] (Black J).

24. I am satisfied that both Nick and Kon were de facto directors of Nutek. Whilst Frank was a director, he did not run the company at all. Nick acknowledged that Frank was appointed as Kon could not be a director, given his role as a supervisor. Nick and Kon ran the company together. They did have clearly delineated areas of responsibility. Kon ran the building site. Nick ran the office and dealt with developers, consultants and regulatory authorities. Having viewed a video of a meeting between Nick and the plaintiffs on 18 September 2021, I agree that Nick clearly portrayed himself to the plaintiffs as the builder. Consistently with this, Ms Saric emailed the council after the meeting, reporting that “Nick the builder” had come to speak to them.

25. Performing their respective roles necessarily required Nick and Kon to work together. Obviously enough, Kon could not construct a development in accordance with the developer’s specifications or the council’s conditions of approval without knowing what those requirements and conditions were, this being information largely in Nick’s domain. Likewise, Nick could not liaise with developers and council in respect of construction works without being informed by Kon as to how those works were progressing. The brothers clearly did work together, including at regular site meetings. Between them, Nick and Kon ran the company, and both acted as directors.

Geotechnical report

26. As earlier mentioned, in December 2014, geotechnical testing was undertaken on the development site. In July 2015, the geotechnical report was completed. The geotechnical report was addressed to the developer, albeit described as “Etna St Pty Ltd”. Whether this was an error, or an earlier name used by Etna Developments, is not known. The postal address for the developer – being a PO Box in Ettalong Beach – was the same as Nutek’s address later recorded on its construction contract with the developer: see [68]. Nick had an office at Ettalong Beach. Whilst Nutek had yet to be formally engaged by the developer, the geotechnical report likely came to Nick’s attention, where he appears to have been providing consultancy services to the developer and the report was sent to his office. I so find.

27. The proposed development then included basement construction requiring a depth of cut from 6 m to 11 m. So far as the western side of the development site was concerned – this being the boundary with the plaintiffs’ land – the geotechnical engineer observed that the site had been previously disturbed (cut). Access to the plaintiffs’ home was “via a long driveway adjoining the existing cut on the western boundary of the site”. The geotechnical engineer noted the following site features relating to slope instability:

“2.   A driveway located on the western boundary appeared to be in fill.

3.   An east facing slope range from 25° to 30° over the length of about 70m was present along the western boundary. The slope height ranged from 2m to 3m. … “

28. The fill was assessed to be uncontrolled, in the absence of records to the contrary. The geotechnical engineer identified possible landslide hazards to the existing slopes, including “Failure of the 25° to 45° slope along the western boundary (supporting the adjacent lands driveway).” The risk associated with this hazard was “assessed to be possible and consequence major indicating high risk.” To address this risk during construction, the geotechnical engineer advised:

… by installing CFA [contiguous flight auger] piles along the wall to retain the driveway west of the subject site, prior to the proposed excavation which is approximately 10m depth excavation the failure of the slope is assessed to be rare and consequence major indicating low risk.

29. As Mr Phillips explained, CFA shoring is a widely used method for supporting deep excavations, offering a reliable and efficient solution for retaining soil and preventing ground collapse during construction. In CFA shoring, a continuous auger is drilled into the ground to create a vertical shaft, simultaneously removing soil and injecting concrete. This process creates a continuous wall of overlapping concrete columns, forming a sturdy shoring system that supports the surrounding soil.

30. The geotechnical engineer recommended that design and construction be carried out in accordance with their advice, to reduce the risk of instability. In summary, the geotechnical engineer advised: (emphasis added)

“Along the western boundary of the site there is an existing batter exposing uncontrolled fill material, depths ranging 1m to 3m with east facing slopes ranging 25° to 45°. The embankment supports a long driveway used by the residents to the west of the subject site. Prior to any excavations for the proposed development, the embankment along the western boundary should be retained by CFA piles to reduce the risk of slope failure along the western boundary. It is recommended the piles to achieve a minimum socket of 2m below the proposed excavation depth.”

31. In August 2015, town planner Matthew Wales lodged a development application on behalf of Etna Developments. The geotechnical investigation report formed part of the documents submitted to the council.

Buying the house next door

32. Also in August 2015, Mr Brown bought the house next door. His property is a ‘battle-axe’ block. The driveway runs uphill from Etna Street along the rear of a number of other properties, before reaching the plaintiffs’ house and carport. The boundary between the plaintiffs’ land and the development site is some 100 m long. This may be seen in the below plan and aerial photograph, where north is at the top, Mr Brown’s property is outlined in red on the left and the development site is indicated with the blue arrow on the right. (The aerial photograph was taken in November 2016, before work began on the development site.)

33. To the south of both blocks, and uphill, is Rumbalara Reserve. As the geotechnical engineer noted in their report, “Along … parts of the southern boundary, exists a concrete drain which collects surface water runoff from the … bushlands to the south.” A development report and statement of environmental effects prepared by Mr Wales also noted:

“The subject site lies adjacent to a natural drainage depression which is traversed by an existing 525mm dia. RCP [reinforced concrete pipe] that collects stormwater runoff from the upstream catchment and overflow from the Council’s water reservoir. The 525mm dia. RCP discharges to Council’s existing piped stormwater system in Etna Street.”

34. As Mr Brown described it, in heavy rain, water ran down from Rumbalara Reserve onto his property, where “a channel at the back of our property … diverts water to the side, away from the house.” This becomes relevant where the defendants contended that the landslip was caused by rainwater coming from Rumbalara Reserve, and the plaintiffs contended in response that one of the first things that the builder did was to break up the existing drainage channel.

Development approval

35. In May 2016, Etna Developments obtained development consent to construct 55 apartments. The development was to be implemented substantially in accordance with the plans and supporting documents, including the geotechnical report. All building works were to be carried out in accordance with the Building Code of Australia. No activity was to be carried out on-site until a Construction Certificate was issued, other than site investigation for the preparation of the construction and/or implementation of environmental protection measures that were required by the consent, such as erosion control.

36. Before a construction certificate would be issued, the developer was required to:

1. design retaining walls using a practising civil / structural engineer;

2. prepare an erosion and sedimentation control plan; and

3. submit design details on engineering works, including to divert and pipe the natural watercourse and secondary stormwater flow path along the western boundary.

37. Site works were not to commence until sediment control measures were installed in accordance with approved plans. Erosion and siltation control measures were required to be maintained during the works in respect of any part of the land where the natural surface was disturbed or earthworks were carried out.

38. Further, the certifier was to be provided with “certification … that the structural engineer’s details have been prepared in accordance with the recommendations of the geotechnical report(s) listed as supporting documentation in this development consent”. In addition:

“If an excavation associated with the erection or demolition of a building extends below the level of the base of the footings of a building on an adjoining allotment of land, the person causing the excavation to be made is responsible to notify the neighbour and responsible for the protection and preservation of the adjoining allotment of land.”

…

Action the following when an excavation extends below the level of the base of the footings of any building, structure or work on adjoining land:

a.   notify the owner of the adjoining land, and

b.    protect and support the building, structure or work from possible damage from the excavation, and

c.   underpin the building, structure or work where necessary, to prevent any such damage.

These actions must be undertaken by the person having the benefit of the development consent at their own expense.

39. In September 2016, an engineer prepared a dilapidation report to check on the structural conditions of the public domain prior to commencing construction. Photos were taken of the plaintiffs’ driveway, which had a “few cracks”. In January 2017, further engineering drawings were prepared. In February 2017, the geotechnical engineers attended a project meeting at the developer’s offices in Rockdale and then undertook supplementary fieldwork on site, drilling four more boreholes. Two of these boreholes were on the western boundary, being BH 7 and BH 8.

40. In March 2017, the geotechnical engineers provided a supplementary report to the developer (still referred to as Etna St Pty Ltd) at the same Ettalong Beach PO Box as Nutek. Again, whilst Nutek had yet to be formally engaged by the developer, the supplementary report likely came to Nick’s attention where he appears to have been providing consultancy services to the developer and the report was sent to his office. I so find.

41. The supplementary report set out the results of the further fieldwork, “in order to better assess the ground support requirements for the basement excavation”. The geotechnical engineers then understood that the depth of excavation could be up to 9 metres. Temporary excavation batter slopes were recommended, including near BH 7 and BH 8, where fill was present. The recommended temporary batter was 1.5:1.0 “if less than 2m in overburden. Contiguous piles for > 2m depth in overburden.” Further, “Any excavation deeper than 3m, and not supported with piles should be constructed with 1.5m wide benches at 3m depth intervals.”

42. Mr Phillips explained that benching and battering is a simple and effective method for controlling the risk of ground movement and collapse. Battering a slope involves creating a step or inclined gradient, instead of a vertical cut. This method allows for better drainage, as water can flow down the stepped or inclined surfaces, preventing the buildup of hydrostatic pressure that often triggers slope failures. Overall, battering a slope provides a more stable and secure excavation environment, minimising the risk of landslips and ensuring the safety and longevity of the construction project.

43. In addition, the geotechnical engineer advised in their supplementary report:

Excavation faces should be assessed by a geotechnical consultant during bulk excavation and prior to detail excavation to verify the applicability of above batter angles. There may be a need for some slope stabilisation treatment, if adverse joints and dipping planes are exposed.

If the above batters are not practical, steeper batters with slope stabilisation work and/or supporting with contiguous piles may be required.

44. Having reviewed the engineer’s drawings, the geotechnical engineers also noted that, for the area along the western boundary, excavation “would expose fill … This area may need contiguous piles if the recommended batters cannot be accommodated within the boundary.” The geotechnical engineers also recommended “ground movement monitoring at Etna Street and adjacent land be carried out prior to and during excavation.”

45. The status of the supplementary geotechnical report is unclear. There is no evidence that the council modified the conditions of consent to permit construction in accordance with this report. I note that, in September 2017, a construction certificate was issued for Stage 1 for “Piling, Shoring, Excavation and Retaining Walls”. (The construction certificate was not in evidence.) I infer that the supplementary geotechnical report was commissioned in the course of obtaining a construction certificate. I also infer that the developer was permitted to construct the works in accordance with the recommendations in the supplementary report.

46. As I read it, the supplementary geotechnical report modified the original recommendation to install CFA piles along the western boundary for any excavation. Instead, temporary excavation batter slopes could be used at specified angles, depending on the depth of overburden. Otherwise, CFA piles or benches were required. Which method to adopt was to be the subject of assessment by a geotechnical engineer.

47. As to the geotechnical engineer’s recommendation that excavation faces be assessed during bulk excavation, Mr Phillips said it would be up to the discretion of the project engineer to liaise with the geotechnical consultant as to when these inspections would be necessary. As a precaution, the project engineer should engage the appointed geotechnical engineer before excavating fill batters on the western boundary exceeding 2 m in depth and (as happened) once stormwater discharge lines from neighbouring properties were discovered.

A rough start

48. In August 2017, work commenced on the development site. Bushes and trees on the boundary with the plaintiffs’ land were removed. The existing drainage sump at the rear of the development site was filled in. Ms Saric saw Kon on the bulldozer, who reassured her, “Don’t you worry we are going to clean all this nicely …”. As the plaintiffs later described events in an email to their mayor, “There was a lot of excavating along the boundary of our properties and the removal of some large trees”.

49. Mr Brown said that soon after this, a site fence was erected but entirely on his property by some 3 to 4 m. As mentioned, in September 2017, the certifier approved a construction certificate for Stage 1 for “Piling, Shoring, Excavation and Retaining Walls”. These works were undertaken on-site for several months before work ceased. It is likely that the contractor which undertook the Stage 1 works had a copy of the development approval and the construction certificate, setting out the conditions and restrictions which governed how that work could be done.

50. Three features of these early works should be noted. First, the canal that collected water from Rumbalara Reserve was broken. Ms Saric saw Kon break up this drain, “I was standing on the corner watching him breaking those concrete things [that] were meant to scoop … up the water from the hill [and] send it towards [and] under … Etna Street … that was all crushed … and I watched Kon doing it with an excavator. I was actually standing on my side of the property chatting to him when he said he’s going to make it all nice and pretty.”

51. Nick submitted that the plaintiffs could not rely on Ms Saric’s evidence that she saw Kon removing the drain, as it was not put to Kon: Browne v Dunn (1893) 6 R 67. Ms Saric gave this evidence in answer to cross-examination by Nick’s counsel. Kon then cross-examined Ms Saric on this evidence, putting an alternative proposition that the defendants removed the stormwater drains but installed an alternative system of drainage. (Ms Saric rejected the latter proposition.) Kon volunteered the same evidence in cross-examination. In these circumstances, it is not unfair for the plaintiffs to rely on this evidence, where Kon had an opportunity to challenge it, and put forward his alternate version of events. In the result, there was no dispute that Kon removed the existing stormwater drains.

52. Second, Mr Brown observed that during these early works, no retaining was built, nor site drainage constructed.

53. Third, problems were encountered with the site fill. On 6 October 2017, Nick took photographs of a great number of tyres that had been exposed on-site, after Kon had undertaken a scraping exercise to prepare for building the retaining wall on the boundary. Nick’s photograph also records the cut along the western boundary, seen behind the stockpile of tyres (where the plaintiffs’ house is in the top left corner of the photo):

54. Mr Brown observed the discovery of tyres from his house, “They’d found tyres at various locations around the site and they’d piled them all up, they put them all in a big pile. … There was digging all over the site and they appeared to be finding tyres in different places and putting them together.” Ms Saric agreed that there was a big hill of tyres in the centre of the excavation site “before they abandoned the site in 2017, before they left.”

55. Kon said that he only discovered the tyres four years later, on 19 September 2021. I do not accept his evidence, including because he tendered photos of tyres taken four months earlier, on 12 June 2021, in support of that fact, and where photos taken by him in March 2021 also included tyres: see [97]. What I do accept is that, on discovering a large quantity of tyres buried underground, Kon stopped work and referred the matter to Nick, who said they needed to inform the developer. Kon said he was directed by the developer to suspend work.

56. Geotechnical engineer David Mehan said that the presence of tyres in fill suggested dumping rather than a controlled fill, and this could weaken the stability of the soil. Mr Phillips agreed that the appropriate procedure, on the discovery of tyres during excavation, would be to stop work and for the project engineer to appoint a geotechnical engineer to review and assess site conditions and provide instructions to ensure the continued stability and safety of the excavation until an appropriate alternative design solution was prepared and implemented. The geotechnical engineer should undertake further testing to determine the extent of tyres and update geotechnical reports to reflect the impact of tyres. The geotechnical engineer, structural engineer, civil engineer, architect and other stakeholders, including the council, developers and impacted neighbours, should collaborate to arrive at an alternative design solution.

57. There is no evidence that the steps described by Mr Philips were taken. Rather, Mr Brown said that, after several months of works being performed, the site was effectively abandoned. As the plaintiffs later described events in an email to their mayor, “a building site was started next door but this ground to a halt fairly quickly.” An aerial photograph of the development site in December 2017 indicates that the site had been stripped of vegetation; tyres had been stockpiled.

58. Kon initially agreed that he had done this work with his son Frank. He later strongly denied it, “We only did work there after the signing of the contract. Why would we go there before and do any work? … Why would we go and do work without payment before that? … I did not do work.”

59. Nick agreed that Kon undertook the work described by the plaintiffs, “we were asked by the developer to do some preliminary works in regards to site establishment, i.e. site fencing, site sheds, temporary power, temporary water, temporary facilities, and that's what we were undertaking after the site had been cleared by a previous contractor.” Nick also acknowledged to the plaintiffs, in the video recorded on 18 September 2021, that he was working on the site “as a sub-contractor” before the construction contract was signed with Etna Developments: see [117].

60. Given Kon’s initial acceptance that he undertook this work, Nick’s agreement that Kon did so, and the fact that Ms Saric saw Kon doing the work means that I am comfortably satisfied that he did it. The initial clearing and excavation of the development site was undertaken by Kon, with the assistance of his son Frank, and with the knowledge and involvement of Nick.

61. There are no invoices which shed light on whether the developer was charged for this initial work by Nutek or by Kon, Frank or Nick. Both Kon and Nick said “we” undertook the preliminary works, that is, it was done collectively rather than individually. Nick then understood that Nutek might be engaged in the future to undertake building work on the site. Where Nick was presumably hoping that Nutek would be so engaged, it is likely that the early works were provided via Nutek.

62. It is convenient to deal with the defendants’ suggestion that the development site was excavated by another contractor before they came onto the site, either in 2017 or before the building contract was signed in May 2020. Kon said that the site was excavated by another contractor, who he said was “Kings Construction.” When asked why Kon did not mention this in his affidavit, “I didn’t think it was relevant to be mentioned. Why would I mention that?” Nick said the preliminary works in 2017 were undertaken after the site had been cleared by a “previous contractor”, but did not identify the previous contractor.

58. Four matters support a conclusion that there was no other contractor who cleared or excavated the development site after it was acquired by Etna Developments, other than Nutek. First, the plaintiffs had lived next door since October 2015 and first noticed the commencement of work on the development site in August 2017. Second, consistently with the plaintiffs’ observations, the aerial photograph of the development site taken in November 2016 indicates that clearing and excavation work had not then begun; a site shed appears to have been erected in the northeast corner of the development site: see [32]. Third, whilst the plaintiffs accepted that they were not at home every hour or day on which work was undertaken on-site, nor did they see anyone other than the defendants working on-site. Of the works done in August 2017, Ms Saric said “I have seen the whole family around the site. I was not paying attention to which one was at the excavator at the time. The trees were all gone down. It was only them.” Fourth, where Nick appears to have been providing some kind of consultancy for the developer, he was likely in a position to proffer evidence as to the identity of the “previous contractor”, but did not. Kon identified a previous contractor, but not until the witness box.

59. I find that the early works were done by Nutek. It is likely that the builder had the development approval and construction certificate at the time, setting out the conditions and restrictions which governed how those works could be done and I so find.

60. Every so often after the early works were abandoned, Mr Brown saw builders on-site but no work was done to progress the development. From 2017 until March 2021, Mr Brown saw Kon on the site two or three times, looking at the site, coming in and dropping things off and moving things about. Occasionally, Mr Brown approached the builders (including Frank) about the fact that the site fence was still in place on his land. He was told that the project had been delayed but they were about to start again and everything would be made right. On 28 September 2019, the plaintiffs took a video of an excavator being operated on the development site. Ms Saric said the operator was Frank. As a shrub obscures view of the operator, I cannot say from the video footage alone. The operator appears to be moving building material which was in the shape of a pallet, rather than excavating per se.

Driveway tilts

66. In December 2019, the plaintiffs observed that the concrete slab, which formed their driveway, had moved. The slab was tipping towards the excavation. The plaintiffs called the council, and were advised to contact the certifier. On 3 December 2019, Mr Brown sent an email and photographs to the certifier:

Now we’re getting cracks in some of the concrete slabs of the driveway leading up to our house, and one of the slabs has noticeably tipped towards the excavation (which comes really close in some spots). We need to see about getting this rectified, and getting the retaining wall built to prevent further damage. Additionally, we really need the fence alongside our house to be repositioned on the boundary as it’s currently quite a bit over on our side.”

67. It is likely that the certifier passed on the plaintiffs’ concerns to the developer and Nutek at the time. By May 2020, Mr Brown said he started to see cracks in the walls at the eastern end of his house.

Building contract

68. In May 2020, Etna Developments and Nutek signed a building contract. Nick undertook the negotiations with the developer. Nick said it took years to get to the stage of this contract, as the developer had issues with finance. This was the first time that Frank had signed such a contract, “That’s why I left that up to Nick Kalantzis to do.” In short, the builder agreed to construct the development for $18 million.

69. Many of the ‘blanks’ in the building contract were left blank, in particular, the contract did not specify the building works. Nick said that the development consent and the geotechnical report referred to in that approval formed part of the contract, “They were annexures to the contract”. Nick said that Nutek was provided with the contract drawings and engineering details by the developer when they signed the building contract. (I have already found that Nick received the geotechnical reports some years earlier, and Nutek had the development consent by 2017.)

70. Initially, Nick accepted that the builder was obliged to construct the development in accordance with the approved plans and specifications and to comply with the conditions of development approval. Nick accepted that Nutek was bound to comply with the building code, “Yes, all builders are”. While Nick acknowledged the development condition, where excavation undertaken by the builder extended below the adjoining land, he then said that, although Nutek excavated the site, “These conditions are for the developer, not us.”

71. Nick then strongly distanced himself from the geotechnical reports that accompanied the contract, “It’s not something that I would have looked at too … much, yeah.” In the delineation of roles within the company, Nick said that Kon “would more so have looked at the reports in consultation with the structural engineer.” Although Nick had a copy of the geotechnical reports, “This document is not for Nutek. This document forms part of the structural design that’s given to the structural engineer to design the building structurally.” Nick then said of these reports, “There’s certain documents that … don’t apply to us in … the mix … just part of the developer’s paperwork that was given to us as reference. …” Nick denied that he understood that he was expected to have regard to these documents, “No, because the document is for reference to the engineer, not to me.” Nor did Nick accept that anybody reviewing the geotechnical report was on notice that there was a high risk that the driveway would collapse.

72. Kon said that instructions were primarily relayed to him through the plans given to him by Nutek, including the survey and geotechnical reports. Kon said he was aware that the developer had obtained a geotechnical report to assess the site conditions and relied on that report and contract specifications in carrying out his duties as a labourer and excavator operator. However, Kon does not appear to have gone so far as to read the geotechnical report, “I don’t get to go as far as geotech reports. … I’m only aware of what I get handed by my engineer and my architect. … I assume they were clear … by the engineering drawings that I had, it was pretty straightforward.”

73. Nor did Kon think it necessary to familiarise himself with the conditions of approval for the construction of the development. Kon accepted that, as the person with the building licence, he was best placed in the Kalantzis family to ensure compliance with Nutek’s obligations in respect of development applications. However, when asked whether he read the development approval attached to the building contract, Kon said “No, not really.” Whilst he accepted that it was a matter of some significance for the site supervisor to acquaint himself with the terms of the development approval, he said he was given a set of drawings, which he followed while “all that other is … in the office, all the other paperwork and DAs and all that. Nick takes care of all that”. The only thing he looked for in the conditions of consent was the permitted hours of operation of the site, “I don’t need to look at the other things.” For a builder of 40-years’ experience, Kon’s evidence was unbelievable and I do not accept it.

74. The engineering experts agreed that the builder was obliged to follow the recommendations of the geotechnical engineer, as they had expertise in relation to the stability of the ground, whilst the builder and the structural engineer did not. Mr Phillips himself deferred to the expertise of the geotechnical engineer.

75. Mr Phillips said that a builder would be expected to know the geotechnical report, before commencing building works, and to have regard to it in conducting those works. As Mr Phillips noted, “a geotechnical report is indispensable for site excavation, serving as a foundational document that informs critical decisions and mitigates risks throughout the construction process. By assessing the geological and soil conditions of the site, the report provides essential insights into factors such as soil stability, composition and potential hazards”. Mr Phillips considered that a competent builder would have serious regard to the risk assessment in the geotechnical report as “high risk”. Mr Phillips said that, if the builder was unable to interpret the geotechnical report, they needed to employ someone else who could make it clear.

76. Mr Ball said that, once the builder took possession of the site, the responsibility to achieve the design outcomes lay with the contractors and individuals who carried out the works. Whilst Mr Ball accepted that, for a simple project, the structural drawings may be the only documents that the builder needs to refer to, “if it's a development of this nature, that involves 8, 9 metre deep excavation, well then the geotechnical engineer would be the man, the engineer, that the builder would be conferring with, before he hands over to the structural engineer. Such that the structural drawings would not normally contain the requirements of the geotechnical engineer.”

77. I comfortably prefer the evidence of the experts to that of Nick or Kon. I have already found that Nick had the geotechnical reports for some time before the building contract was signed. The geotechnical reports were sent to Nutek’s office when they were available in July 2015 and March 2017. I have also found that Nutek had the conditions of development approval and the construction certificate when Nutek undertook the initial site clearing and excavation in 2017. The defendants accepted that these materials came into their possession in any event when the building contract was signed in May 2020.

78. Where Nick liaised with consultants as part of his role, and appears to have been involved in commissioning the geotechnical reports, I do not accept that he did not look at the reports or thought they were irrelevant to Nutek. Where Nick’s area of responsibility was ensuring compliance with planning instruments and liaising with council, nor did I accept that he considered that the conditions of development consent did not apply to the builder undertaking the construction on behalf of a developer. Nor do I accept Kon’s evidence that he did not think it necessary to familiarise himself with the geotechnical reports or the conditions of development approval.

79. By these documents, Nick and Kon (and Nutek) were on notice that the risk of a landslide along the western boundary was “assessed to be possible and consequence major indicating high risk”. To address this risk, either CFA piles had to be installed prior to excavation or, failing that, temporary batters and benches had to be constructed under the supervision of a geotechnical engineer. Further, the work was to be undertaken in conformity with the conditions of development approval, which were directed to minimising erosion and sedimentation and addressing the natural watercourse and stormwater flows along the western boundary.

Complaints to council

80. In August 2020, it rained heavily. As the drain running from Rumbalara Reserve had been removed, run-off from the reserve gushed past the boundary of the plaintiffs’ property, generally following where the drain used to be. As Ms Saric put it, “the rain just literally freefalls now.” The plaintiffs contacted NSW Fair Trading, who advised them to contact the council again. On 8 September 2020, the plaintiffs emailed their local mayor, describing the buildings works which had been undertaken and their efforts to raise the problems being experienced on their property with those responsible for the development:

Now, we have streams of water flowing along the boundary of our property during heavy storms, the concrete slabs of our driveway are cracking and tipping down towards the excavation and our carport has sunk a little.

…

•   We have several times spoken to workmen who have turned up to periodically start up the digger or drop off some more or use building materials from elsewhere.

We have also tried to contact the builders … but nobody has ever called us back to discuss the matter.”

81. On 22 September 2020, the plaintiffs followed up the mayor, “We understand you are very busy, but unfortunately this is very urgent. We are expecting spring rains to start any day now and our property is in a serious danger from damaging even more than it is”. The council sent a Development Control Officer to inspect. On 10 November 2020, Mr Brown followed up the Mayor’s office again and was contacted by a development control officer, Mark Jennett, who advised that he was investigating their concerns. Where an administrator had then been appointed to the council, the couple also followed up the administrator, “the building site is abandoned for over 4 years and we had a poor response wherever we enquired”.

Another start

82. On 14 October 2020, an engineer inspected the site and prepared another dilapidation report. Cracks in the plaintiffs’ driveway were again noted. The engineer was Hossein Rahimi of Structural Holdings Pty Ltd, being a structural engineer.

83. In January 2021, work recommenced at the development site, with more excavation, rock breaking and soil removal, including along the western boundary. Frank said he went to the site in January 2021, when excavation work was going on at the boundary between the development site and the plaintiffs’ land. Soil was being dug out using a digger in order to construct a retaining wall. On 16 January 2021, Alex said his company entered into an oral contract with Nutek to remove material from the development site to off-site locations. His job involved hammering the rock in the middle of the site and then loading trucks to take the material off-site.

84. On 18 January 2021, Ms Saric emailed the council, “There’s a bit of activity on the building site next door, but they seem to be just working at the front of the site and not addressing the drainage or driveway issues. I was wondering if an inspector has been out yet to look at the damage to our driveway?”. The Development Control Officer replied, “I did attend the site last week … Unfortunately the owners are not very forthcoming with council and things are taking longer than they should”.

85. On 28 January 2021, Nutek obtained insurance in respect of the project, albeit the policy did not cover public liability or “Vibration, Weakening or the Removal of Support”.

‘Structural Statement’

86. On 11 February 2021, Mr Rahimi issued a “Structural Statement” in respect of the development as follows:

“We have reviewed the stability of current state of bulk excavation around boundary of the above mentioned site, considering mechanical properties of cut soil, rock and the distances from the boundaries, we consider current bulk excavation around boundaries as stable for temporary construction stage.”

87. Whilst Nick said that Mr Rahimi was the developer’s original engineer, I can find no mention of Mr Rahimi in the documents before the dilapidation report of October 2020. The precise status of the Structural Statement is unclear. The statement is addressed to no one. The instructions given to Mr Rahimi, which elicited the Structural Statement, are not known. Nor is the information on which Mr Rahimi relied.

88. On one view of it, it may be inferred that both the insurance and Structural Statement were obtained in response to council’s recent attendance on site in respect of the plaintiffs’ complaints. Having regard to the timing of the issue of the statement, Mr Ball said, “I can see that that could be a stopgap measure just to fulfill a query or a complaint of a neighbour”. Mr Phillips agreed, “I can see it’s almost like someone’s flagged, someone’s gone down and inspected it, you can continue work and kind of move past that.”

89. On another view of it, the Structural Statement may be seen as an attempt to fulfill the requirements of the supplementary geotechnical report. Two problems emerge in this regard. First, Mr Rahimi was not a geotechnical engineer, although Mr Phillips said “I can’t speak to the engineer that signed this off, but if he’s signing it off he obviously feels like he’s confident enough to take on a role almost like a geotech”. Second, the Structural Statement does not refer to the supplementary geotechnical report or squarely address its requirements. Mr Ball said, “it’s certainly not a document that would support the requirements of the geotechnical report, which is … ongoing monitoring … of temporary bulk works.”

90. But Nick and Kon relied on the Structural Statement as effectively complying with, or absolving them from compliance with, the geotechnical report or supplementary geotechnical report. Nick said he understood from the Structural Statement that the driveway and the land beneath it was stable without a retaining wall, “That’s why we undertook the works.” Nick said that the effect of the Structural Statement was “that there was no risk … How was I supposed to know that it was a serious risk when I had a report from an engineer saying that there wasn’t?”.

91. That was not what the Structural Statement said. The Structural Statement simply confirmed that the “current” state of the excavation was stable for “temporary construction stage”. The experts were unclear on what “temporary construction stage” meant. On its face, the Structural Statement contained no ongoing assurance as to the stability of the site if further excavation work was undertaken such that the “current state” changed. As Mr Ball put it, “It’d be out of date virtually the next day.”

92. By this time, Mr Brown had noticed an increase to the damage to his property. The window in the living room now rattled when the front door was closed. He noticed cracks in the internal gyprock sheets at the eastern end of his home. There were also slight gaps appearing in the panels of the roof eaves at that end of the house. The slabs in the driveway were noticeably tipping further towards the development site.

93. In March 2021, Kon thought it would be a good idea to purchase the plaintiffs’ house. On 1 March 2021, Kon approached the plaintiffs, who were open to this idea. On 3 March 2021, the plaintiffs discussed the matter further with Kon and Nick at their home. Mr Brown offered to sell the house for $670,000. Kon agreed with the price, but said he left it for Nick and the developer to finalise any sale.

Power pole slumps

94. As Mr Ball described it, about 30 metres along the driveway from Etna Street towards the plaintiffs’ home, “the slope of the ground increased significantly … that’s about the steepest part of the site. That’s where the deepest excavations have taken place.” A power pole was on the plaintiffs’ land at this point, near the boundary with the development site.

95. On 19 March 2021, Mr Brown saw the power pole looking precarious. Some of the soil around the base of the pole had been washed away. The concrete foundation was visible. There was a slight tilt towards the excavation. Mr Brown sent Kon a text message and photos, “There’s been a bit of a collapse overnight, could you send someone to shore it up? The concrete base for the supply pole is exposed”.

96. Although Kon initially said “I never got the text”, he did reply to it, advising that he would be there shortly. He attended at site and took a photograph from the development site looking up towards the plaintiffs’ house. The earth underneath their driveway and surrounding the power pole has slid down the embankment, taking the site fence with it. (A stormwater pipe from the neighbouring properties can also be seen on the right hand side of the photograph.)

97. Kon arranged for fill from the development site to be moved into the void. The site fencing was put back together. He took a photograph after this had been done. Evident in both the ‘before’ and ‘after’ photograph are old tyres. The landslip revealed that the tyres already encountered on the development site in 2017 continued in the fill underneath the plaintiffs’ driveway.

98. Ausgrid disconnected the electricity supply, leaving the plaintiffs without power. Although Ausgrid provided a portable generator to the couple, this broke down the next day. The plaintiffs bought a small camping stove to heat their meals. After a week without power, a new pole was erected on the other side of the plaintiffs’ driveway. Nick told Mr Brown that Ausgrid had requested that the builder remove the old power pole, which it did. However, Ms Saric was later advised by Ausgrid that no order has been placed for the pole to be removed. Rather, it appears that the builder took the opportunity to re-install the power pole further away from the boundary.

99. Nick became aware that the power pole had moved, but denied that this caused him any concern as to whether the Structural Statement might not be adequate, “Well you get minor movements on a building site all the time, I mean it’s not something that doesn’t occur you know. … it was a leaning power pole that had to be replaced.” Nick was reluctant to accept that the power pole moved as a result of the excavation. Rather, the power pole was “already on the lean, and I believe it moved a bit further … this was a fairly old pole and it was rotten, so I believe over a period of time it does move.”

100. Kon did not accept that the power pole was leaning as a result of the excavation work either, “that post was on a lean … long before we even did anything on that site there, and I told them … all the pressure was on the wire, and if the wire snaps, somebody could get electrocuted.” Kon said he considered that the landslide was caused by a storm, “if it had substantial rain and that, well it could have moved, the grass could have moved. … the rain caused this problem here. Not our excavation.” Kon also said that this happened because of pipes coming from the adjoining houses, that drained where the power pole was.

101. Mr Ball did not agree that the stormwater pipe caused the power pole to move as the stormwater pipe was north of the pole and the ground sloped downhill. “It would be most unlikely that the discharge from that stormwater pipe will erode the pole.” I agree. As can be seen in the previous photograph, the stormwater pipe is downhill from the power pole. It is difficult to see how water discharged through that pipe could be responsible for the movement of ground uphill from the power pole. Nor do I accept that the power pole was already “on a lean” or rotten, where the only source of this information was Nick and Kon, who were unreliable witnesses. Mr Brown was prompted to text Kon about the power pole as he noticed a change, being a slight tilt towards the excavation. I prefer Mr Brown’s evidence in this regard.

102. What this event must have indicated to Nick and Kon was that, whatever the Structural Statement said, the stability of the “current state” of the excavation around the boundary may well have changed since 11 February 2021. Further advice was needed from a geotechnical engineer as to what measures, if any, should now be taken to preserve the integrity of the plaintiffs’ land.

103. On 25 March 2021, Kon said he told the plaintiffs that the developer was looking into remediation measures to restore their driveway. The plaintiffs told him that they did not want to talk to him and he should go away. Mr Brown and Ms Saric denied this conversation. I prefer the plaintiffs’ evidence on this subject, particularly where they were then clearly speaking to Kon and Nick, including about buying their house.

104. On 12 April 2021, the plaintiffs’ solicitor sent an email to Nick at Nutek, attaching a draft contract for sale of the plaintiffs’ property for $670,000. Nick said that it was he who instructed the solicitor to prepare the contract for sale on behalf of the developer. He did not depart from this evidence, even when it was pointed out that the contract had been prepared by the plaintiffs’ solicitor “obviously … that’s a mistake. … Unless they use the same solicitor”. Nick maintained that he instructed the solicitor to produce the contract for the developer and then ‘doubled down’ on the lie, suggesting that the developer instructed the solicitor to issue the contract, but as the developer was not “computer savvy”, the contract was sent to Nick to forward to the plaintiffs, “Well Joe was an elderly gentleman and he asked me to do a lot of things for him. So, and I obliged, obviously, in the position that I was in that I could help him, and so yes.” Nick said that he was often asked by Mr Lagan to speak with his solicitor, “Yes, did it on plenty of occasions.” Nick’s evidence was at odds with the contemporaneous records and he was quite unable to back down when caught out in an (immaterial) lie.

105. On 13 April 2021, Nick forwarded the contract to “PCL Money”. On 16 April 2021, Nick forwarded his email to “PCL Money” onto the plaintiffs, presumably to confirm that he was making efforts to obtain finance. On 21 and 22 April 2021, Ms Saric followed up Nick as to “when we’ll be signing these papers please?” Nick apologised for the delay, “tomorrow I should have the paperwork for loan. We can sign next week!” On 23 April 2021, Ms Saric replied, “As per conversation with Kon this morning, Wednesday next week is plenty of time to deposit 5% of your personal money to show us you are serious …”. On 27 April 2021, Ms Saric followed up Nick again. There is no evidence of a reply.

106. On 16 April 2021, the plaintiffs took a photograph which they described as “First collapse around excavation.” By this time, Mr Brown said the cracks in the internal gyprock of the house were quite noticeable. A gap of about 1.5 cm had opened up between the cornice and the eastern wall of the house.

107. On 28 April 2021, the plaintiffs obtained a report from a building inspector on the state of their house. The building inspector considered that the excavation works in the adjoining development site had contributed to the damage observed, together with the removal of mature trees. The building inspector identified a number of safety issues, which required immediate rectification. In short, “there does seem to a considerable amount of movement” to the driveway and house, with resulting cracks, gaps, misalignments, leaning and subsidence. In addition, the site posed major safety concerns for the public:

1.   The excavation works are in excess of 1.5 m with no form of control measure implement to prevent a collapse on workers or persons below

2.   The installation of temporary construction fence has not been maintained which could impact on persons using the driveway by falling approx.. 5m to ground below

3.   The excavation works has commenced to undermine existing concrete driveway which has the potential to impact on workers and person below.

108. Later that day, Ms Saric emailed Nick, “we need to engage a lawyer to advise us what to do. He should be in touch with you.” On 5 May 2021, Ms Saric emailed Nick again, asking him to come to the couple’s home, “We should talk before any lawyers and home insurance gets involved.” Nick replied that he would do so, but does not appear to have done so.

109. On 17 May 2021, the plaintiffs’ solicitor wrote to Nick at Nutek, providing a copy of the builder inspector’s report. The solicitor complained, “Despite multiple attempts by our client to engage in meaningful discussions with you regarding the excavation, damage to our client’s house and sale of the Premises, we are instructed that you have continually evaded our client”. The plaintiffs demanded that Nutek rectify the damage to their home as set out the report of the building inspector, move the power pole back to its original location and move the construction fence onto their property. The plaintiffs remained willing to sell the property for the earlier agreed price of $670,000. Otherwise, the plaintiffs could commence legal proceedings. There was no reply.

110. On 2 June 2021, Ms Saric contacted engineer, Geoff Ball, as she was concerned about the safety of her home. On 6 June 2021, Mr Ball attended the plaintiffs’ property to advise on the stability of the land, home and driveway. Mr Ball was on the road taking photographs of the site, when Nick approached to prevent him from doing so. Mr Ball observed that “it is clearly evident that the land dividing [the lots] is unstable and displays areas of localised landslip.” No temporary shoring was evident. Mr Ball also observed that there were “tyres everywhere”, which appeared to have been “just pulled out of the fill”, that is, different tyres from the neat stockpile photographed in 2017. As Mr Ball later informed the NSW Building Commissioner, he then formed the view that the building works were unsafe and posed a very significant risk to the stability of the plaintiffs’ property.

111. On 24 June 2021, the plaintiffs obtained a boundary survey from David Armstrong, who observed encroachments by the excavation works had gone beyond the boundary by some 2 metres in places.

112. Mr Ball instructed geotechnical engineer David Mehan to carry out stability assessments of the land near the boundary, to record ground movements over a period of time. Mr Mehan undertook a ‘desk top’ study based on the publicly available reports submitted by the developer to the council. On 27 July 2021, Mr Mehan attended the site and noted that the reinforced concrete pipe which collected stormwater runoff (noted in Mr Wales’ statement of environmental effects) had been broken up and partly removed. The drainage pit and stormwater detention area was filled with mud and spoil. Mr Mehan observed that the natural ground had subsided along the boundary and moved towards the excavation, leaving a slip scarp. He observed no temporary excavation support in use as part of the excavation earthworks. Some excavated spoil had been placed against the cut on the boundary, apparently to support the excavation. Mr Mehan concluded: (emphasis in original)

1.   Excavation being undertaken at … Etna Street has proceeded without provision of temporary excavation support apart from placement of excavated spoil against the cut on the common boundary. This is unusual for deep excavation in the Central Coast region.

2.   The subsurface conditions along the common boundary are a deep sandy clay soil. This material would not usually be expected to stand unsupported at anything more than a metre deep. The height of unsupported soil appears to be in the order of 2-3m and collapse of this material has a high risk of occurring.

3.   The ground along the common boundary shows evidence of ground subsidence and differential movement between the ground on either side of the boundary and, in places, constitutes a landslip.

4.   The cause of the landslip and subsidence has been the loss of support of the ground which had occurred due to the excavation on the construction site.

5.   Spoil and rock have been placed along the common boundary presumably to support the excavated land, however the steepness of the slope and presence of water from existing broken drainage pipes at the base of the excavation (together with the drainage concentrated to this location) leads me to the view that further subsidence and or slip on the common boundary will occur.

6.   Interference with pre-construction drainage pipework has increased the risk of instability.

7.   The risk of subsidence or landslip on or near the common boundary is high to very high.

8.   Excavation support is required to reduce the risk of landslip/subsidence on the common boundary.

113. Mr Mehan said that if he had known that there were tyres in the soil on the plaintiffs’ land, he may have deleted “high” in paragraph 7 and just put “very high”. The presence of buried tyres would have made the risk worse. The risk classification used in reports such as this ranged from very low through five gradings up to very high, “There’s no higher grading than very high.” It is not suggested that Mr Mehan’s report was provided to the defendants at the time. His report does, however, document the state of the site.

114. On 25 August 2021, Mr Ball wrote to the plaintiffs’ solicitor, explaining the import of Mr Mehan’s report: “a risk classification of “high to very high” is prescriptive to being subject to unpredictable and imminent collapse”. In light of Mr Mehan's report, Mr Ball was of the view that the house was not in imminent danger of collapse but did display evidence of movement. The ground forming the boundary with the excavation was “unstable, has already collapsed in part, and is in imminent danger of further collapse”. In light of this, “remedial works in the form of a piled retaining wall MUST BE undertaken immediately”.

115. On 2 September 2021, Nick was on site wearing hi-visibility workwear. On 3 September 2021, Ms Saric emailed the council, noting that she had seen a lot of council cars coming to the site in the last few days, “I wonder if they are finally starting to listen and build a retaining wall between our properties?”. Ms Saric asked for an update, “as they simply won’t communicate with us. … We are also worried as the rain season will start in a few months so it would be wonderful to know our property will get secured from being washed off”.

116. On 13 September 2021, the plaintiffs’ solicitor sent a letter by registered post to Frank and Nick at Nutek, and to Etna Developments, setting out the cracking being experienced at the plaintiffs’ home and driveway, and the fact that the security fencing had been placed on their driveway. Further:

“More significantly, however, the excavation works undertaken have led to a severe weakening in the land beneath our client’s driveway with the effect that there is now a danger that the driveway will collapse.

Our clients have commissioned a report from [Mr Ball] which identifies the following problems:

(i)   the land dividing [the two properties] is unstable;

(ii)   the [plaintiffs’] house … displays evidence of movement which is likely to have resulted from earthworks undertaken on [the development site];

(iii)   the ground and driveway servicing [the plaintiffs’ property] is unstable and in imminent danger of collapse;

(iv)   the ground forming the boundary alignment between [the two properties] is unstable and in imminent danger of further collapse.

[Mr Ball’s] report expresses the view that remedial works in the form of a pile retaining wall must be undertaken immediately.”

117. The plaintiffs demanded that the builder undertake remedial works in the form of a pile retaining wall within 7 days, failing which legal proceedings would ensue. Nick denied receiving this letter and also denied that the letter gave him pause as to whether the Structural Statement was wholly adequate, “It wasn’t my job to be concerned. My job was to follow instructions of my consultants and that’s what we did.” More likely the letter was received and did prompt concern, as action followed.

118. On 14 September 2021, Nick and geotechnical engineer Richard King were on site. The appearance of Mr King is noteworthy, as it indicates that the developer and the builder realised that they needed advice from a geotechnical engineer. On 16 September 2021, Nick and Frank were on the plaintiffs’ driveway. On 18 September 2021, Nick came to the couple’s home. The plaintiffs recorded the meeting and the video was admitted over Nick’s objection: Brown v Etna Developments Pty Ltd (surveillance devices) [2025] NSWSC 218. In the meeting, the parties referred to their discussions to buy the plaintiffs’ property; Ms Saric was told by Nick, “don’t take any notice of Kon. He shot his mouth off before he engaged his brain …”. Nick offered to talk to them, “As soon as I get this bloody wall up, and they leave me alone”.

119. Ms Saric expressed concern, “you excavated, you damaged it, and now you have to fix it”. Nick said not to worry about it, “We gotta get the wall up before we can fix anything.” Further:

ED:   The wall should have been up years ago, shouldn’t it?

NICK:   No. I only arrived here, when? Christmas time. Under contract …

ED:   So, you could’ve done it before.

NICK:   Yeah but I wasn’t under contract then. I was just – I was just coming here as a sub-contractor, now … I’m the full contractor.”

120. As already noted, Nick’s comments acknowledged that he had worked on the development site before the contract with Etna Developments was signed. The video continued. Nick acknowledged receiving the letter from the plaintiffs’ solicitors (unlike in cross examination). He advised, “As soon as we get the wall we’re going to fix it, of course, we can’t leave it like this.” Ms Saric said Nick needed to fix it now and he replied, “We can’t fix it now Irena. You can’t – how you going to fix it? Where are we going to shore it to? Where’s it going to sit? Where’s the footing gonna sit?” As Nick gestured on the video, he acknowledged that land on the boundary between the two properties was no longer there.

121. The video continued. Nick said he would do the retaining wall then renew the driveway. The couple asked why the area had not been supported before excavation began. Nick proffered various explanations as to why that had not been done including “It’s all rock. You can’t drive piles into rock.” He acknowledged their complaint: “If I was the owner here, I’d be pissed too. Believe me …”. Mr Brown complained that the builder was damaging their property and Nick replied, “Mate, this was already damaged before. … We didn’t cause this damage. It hasn’t moved.” Mr Brown asked whether Nick had had a survey done “like a Geotech survey” and Nick replied “Nah, no, no … It might have been a little bit of movement, but it’s not going anywhere else.” Nick suggested that the builder would erect the wall and then he would come and “see youse about doing something.” As I understood it, he was referring to the negotiations to buy their property. In cross examination, Nick begrudgingly acknowledged that the plaintiffs then had concerns, “As I said, we provided the adequate documentation to prove them wrong … that was their concern, not mine.”

122. On 19 September 2021, Ms Saric reported to the council that “Nick the builder” had come to speak to them and said they would start the retaining wall the next day. Otherwise, Ms Saric reported that the builder continued to work on the eastern side of the site, excavating and hammering. On 20 September 2021, the council replied, having spoken to Nick and the engineer, presumably Mr King. The council officer advised:

“We have received the engineering details on supporting the western boundary. These works have to be completed in accordance with the Engineer and signed of[f] by the Engineer when completed. Some of these works will require tying into the main building slab which will require works away from the western boundary. I’m not sure that’s what they were doing in you[r] videos but I will find out …

“I have reiterated to both [Nick and the engineer] that only works allowed that pertain to the stabilisation of the Western Boundary. Works will need to be completed across the site but I don’t want them making further problems on the eastern side until they finish the Western side”.

123. It would appear that, by this point in time, the developer and builder knew that work needed to be undertaken to stabilise the western boundary, and had obtained an engineering design from Mr King to do so. This was, of course, four years after the early works in 2017 and nine months after resumption of work in January 2021. On 21 September 2021, Ms Saric updated the council that the builder had yet to start on the retaining wall but was continuing to work elsewhere on the site, “I’m really sorry, they will not do what they are told.”

251. Ms Chan is a quantity surveyor. She calculated the cost of installing a piled retaining wall system along the western boundary and rectifying the existing driveway. Ms Chan undertook this task based on Mr Ball’s proposed remediation works and drawings. The estimated costs were calculated on two bases: first, that the excavated platform fill material would be disposed of at a nearby waste facility; second, that this material would be disposed of at sites within 10 km for re-use. The first option would cost $3,421,320 and the second option was estimated to cost $1,990,128. In estimating the costs of works, Ms Chan did not factor in remediation works relating to tyres in the subsoil condition, nor remediating stormwater damage. Ms Chan said that, if she took either matter into account, the estimated costs would increase.

252. In addition, Mr Ball estimated that it would cost $66,000 to repair the house, $61,000 to repair the turning circle and $11,000 to replace the carport. Where the carport was poorly constructed, Mr Phillips considered that reinstating the structure was not appropriate. He proposed that only the carport posts and footings be replaced, being $2,320 plus GST. Mr Ball considered that the existing carport was a basic structure which would need to be replaced. The extent of the ground settlement which had impacted on the carport, whether or not caused by the excavation works, was irrelevant. In order to effect the remediation of the land, he considered that the carport would need to be demolished in any event and so he just made an allowance to replace the structure. Mr Phillips agreed that, to remediate and build the land back up, it would be necessary to demolish the carport.

253. Mr Phillips made no recommendation for the rectification of the driveway until the impact and extent of tyres was ascertained. The plaintiffs’ driveway was not well constructed. Geotechnical investigations should be undertaken. Bulk excavations may be required and could impede further into the plaintiffs’ land in order to remove tyres and stabilise ground conditions. A civil engineer should also be engaged to provide a stormwater management plan to redivert the stormwater discharge from neighbouring properties into the drainage system on Etna Street.

254. As to Mr Phillips comments on the driveway, Mr Ball considered that the extent of the collapse of the ground, both vertical and lateral translation, was such that any driveway, no matter how well constructed, would have been completely destroyed as a result of the excavation works carried out on the development site. Mr Ball agreed that the proper procedure had been described by Mr Phillips but “I adopted the simplest easiest cheapest way to reinstate that boundary, knowing that that would be the lowest common denominator for a cost of damages, and that the correct procedure would be, before you would actually go and do it, would be to do the investigation and, but we needed to quantify an amount, whereas Mr Phillips shied away from quantifying the amount … Whereas I, I said "Okay, I'm going to ignore the obstacles, they'll only make it dearer. I will assume that everything is okay and this is how we construct a wall", and, and then I got Ms Ch[a]n to price it on that basis. I didn't even make her aware that there were tyres or drainage issues involved. I just wanted her to quantify what I designed as a replacement wall as the cheapest lowest common denominator for a rectification cost.”

255. The cost of rectification sought by the plaintiffs is conservative for two reasons. First, Ms Chan’s lower estimated cost of rectifying the western boundary and driveway was based on the assumption that the excavated fill could be re-used at nearby building sites. Where the fill material includes tyres, it seems unlikely that this material could be so used. More likely, the fill will need to be disposed of at a waste facility. This would bring Ms Chan’s calculations up to some $3.4 million. In addition, Ms Chan’s calculations did not factor in remediation costs referable to the tyres or stormwater damage. When these matters are taken into account, it is likely that the cost of remediation will be higher. But the plaintiffs have not sought these higher amounts. Allowing for additional repairs to the house, turning circle and carport, and taking into account Mr Phillips’ ‘quibble’ in respect of the carport, the cost of rectification is $2,122,232.

Diminution

257. As to the evidence concerning the diminution in value of the plaintiffs’ land, Mr Konidaris valued the plaintiffs’ property in its current state, including the fact that vehicular access from Etna Street was not possible. The current market value was $75,000. If the damaged driveway was restored so that vehicular access was available, then the value would be $245,000. If the structural damage to the property, including the house, was also corrected, then the property was worth $820,000.

258. As to whether Mr Konidaris’ figures would be affected by the presence of tyres under the soil on the plaintiffs’ land, the valuer said it would be rare for an interested purchaser to get a geotechnical report when buying a home, unless there was some particular reason to do so, “there’s the whole caveat emptor situation when you’re buying a property.” If the use of the property was unaffected by the presence of tyres under the soil, then there may be no difference in value. If the use of the site was affected, or the presence of tyres under the soil caused movement in the brickwork of the house, then that would probably have some detrimental effect, although he was unable to say how much. In that situation, someone may obtain the cost to rectify the problem and deduct that from the value with some sort of contingency.

259. As for the pooled water and eroded water channels seen by Mr Phillips under the house, Mr Konidaris considered that any difference in value would be fairly small on this account. Given the age of the house, a lot of people would be looking to rebuild in any case, and the presence of water under the house may simply affect the timing of those renovations.

260. The diminution in the value of Mr Brown’s house and land is $745,000, according to Mr Konidaris. I do not consider that there is any proper basis to reduce this figure further by reason of the presence of tyres under the soil, or any water which may travel under the house from time to time, for the reasons articulated by the valuer.

General damages

261. Mr Brown is an electrician, who works as a lift mechanic. He and Ms Saric also own a business, which repairs and alters motorcycle leathers. Their business has a shop in Annandale, where Ms Saric picks up leather items that need repair. She repairs the items at home, before taking them back to Annandale for collection by the customer. The couple’s main reason for buying the Gosford house was for easier access to load and unload Ms Saric’s van than they could when living in an apartment in Sydney. The couple planned to build a garage/shed to the east of their house for Ms Saric’s home workshop. Before any of the events with which this judgment is concerned, they got a quote to construct a 60 m² shed.

262. Mr Brown said that he and his partner had been unable to properly enjoy the use of their property due to the site fence constructed on their land in 2017. Nor have they been able to develop their property on the boundary as they had earlier wished. The couple had been unable to construct a shed near the boundary. Since the driveway collapsed, the plaintiffs have had no vehicular access to their home. Mr Brown’s work car has been trapped in the car port. His employer had to hire a car for Mr Brown, which put some strain on their employment relationship. Nor have they been able to enjoy the use of their motorcycles, which remain trapped at the top of the property. They have to park their cars in the street, which is approximately 100 m away, and carry everything up and down the driveway. Where Ms Saric often has to carry leather materials, which can be heavy, she is now having problems with her back. Nor can visitors or tradespeople access their property by car. Twice, their vehicles have been vandalised while parked on the street.

263. Ms Saric said that, when the site fence was erected on the plaintiffs’ land in 2017, they lost three to four metres of land on the eastern side of their home and were obliged to abandon their plans for a home workshop. Since their driveway has been destroyed, they have been unable to move their business from Annandale to Gosford, which means that Ms Saric continues to drive three hours each day and carry work materials from the roadway to the house. These materials are quite heavy, being something in the order of 7 kg per leather racing suit. The couple spend about two hours a week loading and unloading materials from her car and carrying them to and from the house. If Ms Saric was able to have a workshop at home, she could close her shop in the city and instead work with motorcycle shops with a drop off and collection system. This would save their company rent and encourage customers from the Central Coast and Newcastle to use their business for repairs and alterations.

264. These events have caused the couple a large amount of stress over five years. They have also spent a significant amount of time consulting with council, various government departments and professional experts. They had also expended money on lawyers. Mr Brown has been unable to sell his home due to the ongoing issues with the property and the continuing damage to the driveway, carport and house.

Conclusion

265. Damages for physical loss to the land are assessed in the same manner in trespass as for negligence. Compensatory damages are the sum which, so far as money can do, will put the plaintiff in the same position they would have been if the tort had not been committed: Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15. In assessing this amount, account must be taken of what is reasonable: Roberts v Goodwin Street Developments Pty Ltd (2023) 110 NSWLR 557; [2023] NSWCA 5 (Kirk JA and Griffiths AJA) at [92].

266. Where, as here, the tortfeasor has removed the support provided for the plaintiff’s land, “the plaintiff has an election to claim as compensation the difference between the value of the land before the harm and the value after the harm, or he may claim the cost of restoration which has been or may be reasonably incurred [where] due emphasis has to be given to that word “reasonably””: Minter v Eacott (1952) 69 WN (NSW) 93 at 95 per Street CJ.

267. In Evans v Balog [1976] 1 NSWLR 36, Samuels JA (with whom Moffitt P and Huntley JA agreed) adopted the statement of principles in McGregor on Damages (13^th ed, 1972, Sweet & Maxwell), at 40:

“The test which appears to be the appropriate one is the reasonableness of the plaintiffs' desire to reinstate the property; this will be judged in part by the advantages to him of reinstatement in relation to the extra cost to the defendant in having to pay damages for reinstatement rather than damages calculated by the diminution in value of the land.”

268. The same principle continues to be expressed in the most recent edition of James Edelman, McGregor on Damages, (22^nd eds, 2024, Sweet & Maxwell) at [40-012].

269. In Evans v Balog, the Court considered that it was reasonable for the plaintiff to elect rectification, at 40:

“It undoubtedly was. They had, in effect, lost their family home. That is the nature of their damage, and not some diminution in the value of their land. Fair compensation requires that they be given back what they had before; and the only way in which that purpose can be achieved is to award them the sum reasonably necessary to restore their property to the condition in which it was before the defendants effectively destroyed it. This the learned judge did; and, in my opinion, he was right. It is not to the point that the diminution in value basis might on one view produce no damages, while the reinstatement basis produces a substantial sum. The disproportion in question in cases of this kind are not always to be revealed by arithmetical comparison. The cost to a defendant of competing measures is a significant factor. But it is but one ingredient in the calculation of whether the plaintiffs' claim is reasonable or not. There are cases, and this, in my opinion, is one, where the nature of the plaintiffs' loss is such that there is only one mode of fairly repairing it. If that turns out to be more expensive than another, the wrongdoer has no one but himself to blame.”

270. More recently in Roberts v Goodwin Street, the Court of Appeal considered the onus which fell on the plaintiff and the tortfeasor respectively, when considering whether rectification or diminution was the appropriate measure of damage, at [119]:

…

(2)   … Being awarded the cost of rectification is prima facie reasonable. It is not generally necessary for the claimant to put on evidence that the cost of rectification is not disproportionate to any diminution in value, in the absence of the issue having been raised with evidentiary support by the defendant. Nor is it generally necessary for the claimant positively to establish an intent to reinstate. Such an intention is implicit in the making of the claim.

(3)   Because there is an overall limitation that the damages awarded must be reasonable in all the circumstances, it is open for a defendant to seek to persuade the court that the costs of reinstatement should not be awarded. In the context outlined there is at least an evidentiary onus on the defendant to make out that such costs are unreasonable. The costs might be unreasonable because there is no actual intent to reinstate, or in some cases it may be that there is such a disproportionality to the diminution of capital value that to award rectification costs would be unreasonable.

271. There is a big difference between the diminution in value of Mr Brown’s house and land, of $745,000, and the cost of rectifying the house and land, being $2,122,232. Obviously enough, Mr Brown bought an affordable and modest property. It is now effectively worthless as a result of the excavations at the development site and the resulting landslips along the western boundary, preventing access to the house other than by foot. As to whether it is reasonable to nonetheless award damages to enable Mr Brown to be put in the same position he would have been in if the tort had not been committed by the defendants, it remains the case that Mr Brown has, in effect, lost his home. Mr Brown and Ms Saric have lived in their Etna Street home since they bought the property in 2015. It was not suggested to the plaintiffs that they had a strong desire to move. They were not asked whether they had been looking around. The fact is that, since all of these events have occurred, they had not moved house.

272. In these circumstances, I consider that this is one of those cases “where the measure of the plaintiffs’ loss is such that there is only one mode of fairly repairing it. If that turns out to be more expensive than another, the wrongdoer has no one but himself to blame”: Evans v Balog at 40. I consider that the cost of rectification is prima facie reasonable, including by reason of the fact that the damage has been done to Mr Brown’s home and where the defendants have not discharged their onus of establishing that the costs are unreasonable, either because there is no actual intent to reinstate the land or that there is such a disproportionality to the diminution of capital value that it would be unreasonable to award such costs: Roberts v Goodwin Street at [119].

273. In respect of the claim in trespass, once a plaintiff obtains a verdict in an action for trespass, they are entitled to an award of damages, where the purpose of an action for trespass to land is not merely to compensate the plaintiff for damage to the land: Plenty v Dillon (1990) 171 CLR 635 at 654 (Gaudron & McHugh JJ). Whilst only Mr Brown is entitled to compensation to the damage to his property and improvements, both plaintiffs are entitled to general damages for trespass.

274. As to general damages, I consider that the plaintiffs are each entitled to general damages of $50,000 to compensate them for the trespass to their land and home over a protracted period of time. The stress and inconvenience suffered by the couple was significant. Their treatment by the defendants, in particular, Nick and Kon, was both dismissive and insulting. The plaintiffs’ efforts to engage the defendants in respect of the ongoing acts of trespass were studiously ignored, until the defendants were imposed upon by the council to engage. After the landslip, the plaintiffs were roundly abused by Kon and the builder’s workers. The defendants’ actions in seeking to remediate the site then exacerbated the problem where, after a period of initial cooperation, the defendants took matters into their own hands and repeatedly came onto the plaintiffs’ land and effected works without the endorsement of Mr Ball or the plaintiffs’ consent, leading to an injunction.

APPORTIONABLE CLAIMS

275. A number of concurrent wrongdoers were identified in the defence, of which only Structural Holdings Pty Ltd was pressed (at least, by Nick, with Frank, Kon and Alex not indicating any different position).

276. Nick submitted that any liability should be apportioned under the Civil Liability Act: s 35(4); Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135]–[137]. The Structural Statement was prepared before the landslip and relied upon in conducting excavations. Additionally, the contract between the developer and the builder was a construction contract only. Therefore, the design team must accept a significant degree of responsibility. (This was not pleaded, and I will ignore it).

277. Finally, Nick submitted that his fellow defendants, particularly Kon, should bear more of the blame. In doing so, Nick relied on para 12 of the Technology and Construction List Response as articulating such a claim. This was, with respect, a misreading of that paragraph. However, I have since noticed that “Konstadinos Kalantzis Sole Trader” was listed as a concurrent wrongdoer in para 11(c) of the pleading. While Nick did not press this sub-paragraph is closing submissions, in an abundance of caution, I will treat Kon as having been identified as a concurrent wrongdoer by Nick. Whilst Frank and Alex did not make any written or oral submissions on this subject, as they were self represented and had filed a common defence with Kon and Nick, I will treat them as having embraced the same submission.

278. The plaintiffs submitted that the claim in trespass was not an apportionable claim under the Civil Liability Act as it was an intentional tort. If there was a finding that any of the defendants were liable in trespass, then they were liable for the entirety of the judgment. The plaintiffs submitted that there was no evidence that implicated any nominated concurrent wrongdoer as a joint tortfeasor. As to the concurrent wrongdoer claim in respect of Structural Holdings, the plaintiffs submitted that the letter was “thin” and, in any event, was provided before the first collapse in March 2021. That should have put the defendants on notice that the excavation work might be a problem. There is no evidence that anyone drew that to the attention of Mr Rahimi. The letter from the plaintiffs’ solicitor of 13 September 2021 set out in stark terms, and predicted with unfortunate accuracy, the very thing that occurred. There was no suggestion that the defendants raised this with anyone who might know what the builders say they did not know. In those circumstances, Mr Rahimi could not be criticised, both given the limited terms of the document and the lack of action taken in light of subsequent events.

Consideration

279. The developer did not file a defence or seek to engage the concurrent wrongdoer provisions. Accordingly, judgment should be entered against the developer in the full amount. Proceedings against the builder are stayed by reason of its winding up.

279. Section 5A of the Civil Liability Act provides that Part 1A will apply to “any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise”. Section 34(1)(a) of the Civil Liability Act provides that an apportionable claim is a claim for economic loss or damage to property in an action “arising from a failure to take reasonable care”. As Leeming JA explained in Paul v Cooke (2013) 85 NSWLR 167; [2013] NSWCA 311, “the effect of s 5A is that Pt 1A of the Act applies uniformly to a class of claims for damage, irrespective of how the cause of action has been formulated, so long as the damage results from a failure to exercise reasonable care and skill”: at [41].

280. In Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187, Barrett J expressed the view that the requirement for an action to be ‘arising from a failure to take reasonable care’ would be made out where if, at the end of the trial, the evidence warrants a finding to that effect and regardless of the absence of any plea of negligence or a failure to take reasonable care: at [30]. In Perpetual Trustee Co Ltd v CTC Group Ltd (No 2) [2013] NSWCA 58, Macfarlan JA disagreed with Barrett J’s reasoning in Reinhold, suggesting that section 34(1)(a) required the failure to exercise reasonable care to be an element of the cause of action brought against the defendant: at [22]-[23]. However, Macfarlan JA’s views did not form the ratio of that case, as Barrett JA disagreed (at [37]-[38]) and Meagher JA chose not to express a view on the matter (at [36]). In Rahme v Benjamin Khoury Pty Ltd [2019] NSWCA 211; (2019) 100 NSWLR 550, however, the Court of Appeal adopted Macfarlan JA’s approach: at [135] (per Macfarlan JA, Bathurst CJ and McCallum JA agreeing).

281. That approach was recently questioned obiter in Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232 per Stern JA and Basten AJA. However, as the law presently stands, the Civil Liability Act 2002 (NSW) does not apply to an action in trespass – where trespassory interference will generally be intentional – unless a defendant is sued for a negligent trespass. For example, in Rove Estate Pty Ltd atf Lane Cove Estate Trust v Chomp Excavations & Demolition Pty Ltd (No 3) [2023] NSWSC 274, Williams J held that s 34(1)(a) did not apply in relation to a trespass to land claim at [209]:

… In order for s 34(1)(a) to apply, it is necessary for the absence of reasonable care to have been an element of the cause of action on which the plaintiff succeeded: Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135]–[137] (Macfarlan JA, Bathurst CJ and McCallum JA agreeing). In the present case, negligence was neither pleaded as an element of the causes of action in trespass, nor found as a matter of fact giving rise to the defendants’ liability for trespass. It follows that [the] claim … is not an “apportionable claim” within the meaning of s 34(1)(a), that s 35 of the Civil Liability Act therefore does not apply. …

283. The plaintiffs’ pleading of their claim in trespass is not entirely clear on this subject. As mentioned, the defendants are said to have undertaken building works on the development site in such a manner as to interfere with the plaintiffs’ use and enjoyment of their land. Particulars of the building work which are said to have so interfered include removal of the soil and subsoil in and about the boundary, trespassing on the plaintiffs’ land, together with “failure to take or any sufficient proper steps to secure the stability of the plaintiffs’ land.” In these circumstances, I consider that the claim in trespass is apportionable, where the failure to exercise reasonable care is an element of the cause of action brought against the defendants.

284. No particulars were provided of the suggested failure by Structural Holdings to take reasonable care. In the absence of a proper pleading as to what Mr Rahimi or his company, Structural Holdings Pty Ltd, is supposed to have done, and little evidence as to what exactly he did, the concurrent wrongdoer claim has not been established. The Structural Statement is, indeed, a curious document. But there is no evidence as to what the engineer was asked to produce, or why, or what information the engineer was given before producing that document. As the plaintiffs submitted, the Structural Statement was overtaken by events which put the defendants on notice that further investigations needed to be undertaken to ensure that the right of support to the plaintiffs’ land was protected. Nothing was done. If anything, once Mr Rahimi was appraised of the landslide on-site, his advice was ignored and he was fired. The concurrent wrongdoer defence against Structural Holdings fails.

285. So far as “Konstadinos Kalantzis Sole Trader” is concerned, Kon described himself as a “Sole Trader” in both of his affidavits. I have earlier concluded that Kon was working for the family company under an informal arrangement from which he expected to receive a financial benefit. However Kon was working at the time he made his affidavits, I am not satisfied that Kon was working for Nutek as an independent contractor or “Sole Trader”. He was working for the company as, effectively, a director or employee.

286. Turning to the task of apportionment, the liability of a defendant who is a concurrent wrongdoer in relation to an apportionable claim is limited to an amount reflecting the proportion of the damage or loss that is just, having regard to the extent of their responsibility for the damage: s 35(1), Civil Liability Act. In determining the relative responsibility of concurrent wrongdoers, it is necessary to compare the blameworthiness and causative potency of the conduct of each of them: Reinhold at [50]-[52]. Factors relevant to the assessment of blameworthiness and causative potency include, but are not limited to, which of the wrongdoers was more actively engaged in the activity causing loss and which was more able effectively to prevent the loss: Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463 at [93]-[97]. As Palmer J observed in Yates, the policy of Part IV is that a wrongdoer who was “in a real and pragmatic sense, more to blame for the loss than another wrongdoer should bear more of the liability".

287. There is no doubt that Kon ran the building site. He undertook the bulk of the excavation work and supervised the excavation work of others. But I do not see him as primarily responsible for what happened. Kon does not appear to have had any particular interest in paperwork. Nick was the person in charge of the paper. Nick was in possession of the relevant reports and information, in particular, the geotechnical reports. Nick was responsible for liaising with the council. Nick was well aware of the risks identified by the geotechnical engineer and the steps which were recommended in order to ameliorate those risks.

288. Nick was also well aware of what was happening on-site; he attended the site frequently. Nick did labouring and truck driving on site and, as I have found, excavation work as well. Nick was best placed to stop what Kon was doing, if he perceived that it was contrary to the geotechnical engineer’s advice or the conditions of development approval. Nick was also best placed to ensure that Kon took steps to comply with the geotechnical engineer’s advice or the conditions of development approval if needed.

289. Whilst Kon was more actively engaged in the activity causing loss, in the sense that he operated the excavator and supervised excavation work by others, Nick was more effectively able to prevent the loss occurring by communicating the necessary information in the geotechnical report and the conditions of approval to Kon and others, allocating the resources of Nutek to attend to those matters, and ensuring that this happened. In these circumstances, I do not consider that any significant apportionment in favour of Kon would be just in the circumstances. I consider that Kon should be responsible for 30% only.

ORDERS

290. For these reasons, I make the following orders:

1. Judgment against the first defendant in favour of the first plaintiff in the sum of $2,172,232.

2. Judgment against the third to sixth defendants in favour of the first plaintiff in the sum of $2,172,232, apportioned as follows:

1. 70% against the third, fourth and sixth defendants; and

2. 30% against the fifth defendant.

3. Judgment against the first defendant in favour of the second plaintiff in the sum of $50,000.

4. Judgment against the third to sixth defendants in favour of the second plaintiff in the sum of $50,000, apportioned as follows:

1. 70% against the third, fourth and sixth defendants; and

2. 30% against the fifth defendant.

5. Order the defendants to pay the plaintiffs’ costs of the proceedings.

6. Liberty to apply in the event that any party seeks to vary Order 5.

7. Direct the Prothonotary to refer this matter to Building Commission NSW and the Australian Securities & Investments Commission.

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Decision last updated: 30 April 2025