FEDERAL COURT OF AUSTRALIA
Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd
[2004] FCA 403TRADE PRACTICES – Alleged misleading conduct – Reports regarding remediation of contaminated site – Whether reports contained misleading statements – Reliance on reports – Whether consultant’s report was activity in connexion with the sale … or the possible sale … of an interest in land’ – Liability established as against corporation that issued report, but not against corporation that passed it on without adopting its contents.
CONTRACT – Contractual liability of vendor of land under special condition of contract in respect of failure to ensure remediation of land – Breach of contract.
NEGLIGENCE – Whether there was a relevant duty of care – Breach of duty.
NEGLIGENT MISSTATEMENT – Duty of care.
ASSESSMENT OF DAMAGES
Trade Practices Act 1974 (Cth) ss 52, 53A(1), 75B, 82(1), 87
CHARBEN HAULAGE PTY LTD v ENVIRONMENTAL & EARTH SCIENCES PTY LTD and CALTEX PETROLEUM PTY LTD
N 626 of 2002
WILCOX J
8 APRIL 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 626 of 2002
BETWEEN:
CHARBEN HAULAGE PTY LTD
APPLICANTAND:
ENVIRONMENTAL & EARTH SCIENCES PTY LTD
FIRST RESPONDENTCALTEX PETROLEUM PTY LTD
SECOND RESPONDENTCALTEX PETROLEUM PTY LTD
CROSS CLAIMANT ON THE FIRST CROSS CLAIMCHARBEN HAULAGE PTY LTD
FIRST CROSS RESPONDENT TO THE FIRST CROSS CLAIMENVIRONMENTAL & EARTH SCIENCES PTY LTD
SECOND CROSS RESPONDENT TO THE FIRST CROSS CLAIMENVIRONMENTAL & EARTH SCIENCES PTY LTD
CROSS CLAIMANT ON THE SECOND CROSS CLAIMCALTEX PETROLEUM PTY LTD
CROSS RESPONDENT TO THE SECOND CROSS CLAIMJUDGE:
WILCOX J
DATE OF ORDER:
8 APRIL 2004
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Judgment be entered in favour of the applicant, Charben Haulage Pty Ltd (‘Charben’), against the respondents, Environmental & Earth Sciences Pty Ltd (‘EES’) and Caltex Petroleum Pty Ltd (‘Caltex’), in the sum of two million one hundred and forty seven thousand and eight hundred dollars ($2,147,800) (‘the said sum’).
2. EES and Caltex pay to Charben its costs of the proceeding.
3.Judgment be entered in favour of Caltex against EES in the said sum, subject to deduction from the judgment debt any part of it that may be paid by EES to Charben.
4.EES pay to Caltex its costs of the proceeding, including any costs paid by Caltex to Charben pursuant to order 2.
5. The cross-claim made by EES against Caltex be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 626 of 2002
BETWEEN:
CHARBEN HAULAGE PTY LTD
APPLICANTAND:
ENVIRONMENTAL & EARTH SCIENCES PTY LTD
FIRST RESPONDENTCALTEX PETROLEUM PTY LTD
SECOND RESPONDENTCALTEX PETROLEUM PTY LTD
CROSS CLAIMANT ON THE FIRST CROSS CLAIMCHARBEN HAULAGE PTY LTD
FIRST CROSS RESPONDENT TO THE FIRST CROSS CLAIMENVIRONMENTAL & EARTH SCIENCES PTY LTD
SECOND CROSS RESPONDENT TO THE FIRST CROSS CLAIMENVIRONMENTAL…
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- Case
- [2004] FCA 403
- Decision Date
CaseChat Overview and Summary
The court found that the defendants had breached their contractual obligations by making misleading statements about the site's environmental condition. The defendants argued that groundwater monitoring wells were not required because contaminant migration could be excluded, but the court held that the Guidelines did not impose such a positive obligation. The defendants also represented that significant vertical migration of hydrocarbons was unlikely and that the site had not been impacted down gradient of the fuel storage activities. The court found these representations misleading as the evidence did not support the defendants' positions, and they had not conducted sufficient investigations to make such representations responsibly.
The court concluded that Charben was entitled to judgment against the defendants for the specified amount of $2,147,800. The defendants were ordered to pay Charben's costs, and judgment was entered in favour of Caltex against EES for the same amount, subject to any payments made by EES to Charben. EES was also ordered to pay Caltex's costs, including any costs paid by Caltex to Charben. The cross-claim by EES against Caltex was dismissed with costs.
Orders
Orders of the court
1. Judgment be entered in favour of the applicant, Charben Haulage Pty Ltd (‘Charben’), against the respondents, Environmental & Earth Sciences Pty Ltd (‘EES’) and Caltex Petroleum Pty Ltd (‘Caltex’), in the sum of two million one hundred and forty seven thousand and eight hundred dollars ($2,147,800) (‘the said sum’).
2. EES and Caltex pay to Charben its costs of the proceeding.
3. Judgment be entered in favour of Caltex against EES in the said sum, subject to deduction from the judgment debt any part of it that may be paid by EES to Charben.
4. EES pay to Caltex its costs of the proceeding, including any costs paid by Caltex to Charben pursuant to order 2.
5. The cross-claim made by EES against Caltex be dismissed with costs.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Established by: WILCOX J
Counsel for the applicants argued another non-compliance with the Guidelines. They said the Guidelines required that ‘groundwater monitoring wells be installed unless migration of contaminants could be positively excluded’. They referred to pages 8 and 9 of the Guidelines. However, the relevant sentence is: ‘If the excavation and chemical testing of the tank pits and other areas of elevated contaminant concentrations shows that there has been no migration of contaminants, there may be no need to drill monitoring wells’. Dr Swane interpreted this sentence as requiring that ‘if you can’t demonstrate that there has been no migration then you should drill’. I can understand his view that this is good practice. But this goes beyond what is stated at pages 8 and 9 of the Guidelines. The relevant sentence does not impose the positive obligation suggested by counsel for the applicants. I do not accept that EES failed to comply with the Guidelines in this regard.(iii) Significant vertical migration was unlikely The second representation relied on by the applicant is that ‘significant vertical migrations of hydrocarbons was unlikely’. Mr Kidd did not agree with that view of the situation when he prepared his draft site audit report of 21 June 2000. He said in evidence that he thought ‘assessment of the groundwater was necessary’ and ‘given it was a steep site and … there was no groundwater investigations done at that stage … it was good judgment to say, in my opinion, that there was a potential for offsite migration down the slope’. There may be room here for argument about degrees of probability. However, whether or not the evidence expressly negatives the representation in the report, the expert evidence clearly shows that EES was not in a position responsibly to make that representation. Mr Kidd had noted in his draft site audit report of 21 June 2000, speaking of both Report 19844B and Report 19844C, that ‘no groundwater samples were collected from beneath the site for testing and therefore the contamination status of the groundwater beneath the site is largely unknown’. As mentioned, Ms Bauer agreed in cross-examination that, because EES had made no groundwater investigations, Mr Kidd (as auditor) was not in a position to assess the level of groundwater contamination on the Site. During the course of her evidence, Ms Bauer hypothesised that any groundwater flow would take place (roughly laterally) along the seam between the sandy loam strata and the sandy clay. It was pointed out to her that this seam was intersected at its western point by a retaining wall. Ms Bauer was asked how she could be confident that contaminated groundwater, that flowed along the seam, had not reached the retaining wall and then been directed vertically. Ms Bauer responded that, ‘to be correct’, she could not be confident that this had not occurred.(iv) No down gradient impact The third representation relied on by counsel for the applicant is that the former service station activities had not impacted on the Site down gradient of the fuel storage activities. It follows from what I have said about EES’ failure to delineate the migration of contaminants that it was not in a position, responsibly, to make this statement.