Gunnersen v Henwood
[2011] VSC 440
•7 SEPTEMBER 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 10187 of 2006
| THOROLD HARVEY GUNNERSEN and JOANNE MARGERY GUNNERSEN | Plaintiffs |
| v | |
| DENISE MARGARET HENWOOD and MORNINGTON PENINSULA SHIRE COUNCIL | Defendants |
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JUDGE: | DIXON J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 1, 4, 7, 8, 10, 11, 14, 15, 16, 17, 21 FEBRUARY 2011 | |
DATE OF JUDGMENT: | 7 SEPTEMBER 2011 | |
CASE MAY BE CITED AS: | GUNNERSEN v HENWOOD | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 440 | 1st Revision: 15 September 2011 |
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Negligence – Duty of care – Economic loss – Landslip upon an inherently fragile escarpment owned by a third party contiguous with the plaintiffs’ land – Failure of the remediation of that landslip by defendant – No physical damage to the plaintiffs’ land – Whether there was economic loss – Expenditure by plaintiffs on engineered stabilisation of the escarpment – Whether risk of future damage to plaintiffs’ land not insignificant –Whether expenditure to avoid prospective damage recoverable loss – Nature of the harm suffered – Factors relevant to determination of duty – Causation – Whether conduct of defendant a cause of claimed loss – Factors relevant to determination of cause – Whether prospective expenditure caused by conduct of defendant or naturally occurring conditions – Factors relevant to determination of breach – Whether defendant shown to have breached any duty owed – Whether defendant a concurrent wrongdoer – Whether Shire council caused the loss claimed by the plaintiffs – Wrongs Act 1958 (Vic) ss 24AH, 24AI, 43, 48, 49, 51, 52, 83.
Evidence – Expert opinion – Failure to comply with concurrent evidence directions – Application of overarching obligations – Civil Procedure Act2010 (Vic) ss 7, 9, 10 – Expert Code of Conduct – Supreme Court (General Civil Procedure) Rules 2005 r 44.06.
Evidence – Expert opinion – Basis rule – Whether opinions expressed from specialised knowledge – Evidence Act2008 (Vic) ss 76, 79.
Words and phrases – ‘harm’ – ‘insignificant risk’ – Wrongs Act 1958 (Vic) ss 43, 48.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr PG Nash QC with Mr GB Hevey | McGuinness & Hosking Pty |
| For the Fourth Defendant Denise Margaret Henwood | Mr G Lewis SC with Mr P Gates | Wotton & Kearney |
| For the Third Defendant Mornington Peninsula Shire Council | Not represented at trial | Moray & Agnew |
TABLE OF CONTENTS
Introduction
Parties pleadings and issues remaining
Contentious matters prior to slip 2
Slip 2: How and where?
Expert evidence
Procedural issues
’Basis rule’ issues
Geology of the area
Forms of slope failure
Risks from slope failure
Why slips happen
Water and slope instability
Investigation of slip 2
What caused slip 2
Construction issues are not a cause
Vegetation and slope instability
Remediation of slip 2
The response of the Gunnersens to slope instability
The dewatering bore
Monitoring survey data
Alternative engineering solutions for escarpment stability
Developments on the escarpment in 2008
Risk in December 2008
The VCAT hearing
The final fix
Why the soil nail solution?
What happened at slip 2 in late 2008
What was the risk of global instability in 2009 and what caused it?
Valuation evidence
The legal basis of the plaintiffs’ claim
A. What is the nature of the loss claimed?
I. Preventive damages / prospective loss
II. Harm defined
III. Interference with enjoyment of property
IV. Preventive expenditure and negligence
V. When is preventive expenditure reasonable loss
VI. Conclusion on loss claimed
B. Duty of care to avoid pure economic loss – novel cases – principles
I. Perre v Apand
II. The building foundations/contamination cases
III. Other cases
IV. Relevant statutory provisions?
C. A duty of care upon the Henwoods?
I. The nature of the harm
II. Knowledge or foresight of the Henwoods
III. Vulnerability to risk
IV. Conclusions as to vulnerability and control of risk
V. Contract and circumstantial proximity
VI. Intrusion on other areas of law
VII. Conclusions on duty of care
D. Breach of duty
I. The requirements of the Wrongs Act
II. Was there breach?
E. Causation
I. Statutory provisions
II. Causation at common law
III. Judicial consideration of the statute
IV. Causation under s 51 of the Wrongs Act
V. Was there cause?
Resolution of the proceeding
A postscript – proportionate liability
HIS HONOUR:
Introduction
Davey’s Bay is a small, somewhat exclusive, dress circle location in Mount Eliza, within the Mornington Peninsula Shire. It is a prestigious, low density area of suburban Melbourne with large dwellings on substantial residential allotments. Many of the properties enjoy views of Port Phillip Bay and a smaller number have direct cliff top or foreshore reserve frontage.
This proceeding involves properties enjoying cliff top frontage above the Davey’s Bay Yacht Club. These properties are the homes of the plaintiffs (whom I shall refer to as ‘the Gunnersens’) and the fourth defendant Mrs Henwood (who resides there with her husband and to whom I shall often refer to in this judgment as ‘the Henwoods’). From their cliff top vantage, they each enjoy a panorama over the picturesque Davey’s Bay, across the broad expanse of Port Phillip Bay with distant views of the city skyline, the coastline of the bay, and the Dandenongs. The panorama is predominately to the northeast, an outlook which enjoys minimum exposure to the prevailing direction of wind and rain.
The escarpment at Davey’s Bay is a fragile environment, prone to landslips. It requires careful land management. Its fragile nature is understood by residents, landowners, local councils and government departments. The wider region of the Mornington Peninsula coastline of Port Phillip Bay has a long, well-documented history of landslips. There have been many expert studies and reports. This proceeding has come about to resolve disputes, essentially between neighbours with some common interest in preserving this fragile environment, arising out of circumstances following a landslip.
The court had the benefit of a view,[1] numerous survey and engineering drawings, and photographs. Along the northeast facing cliff top above Davey’s Bay, from Davey Point looking southeast, are properties with access from Denistoun Avenue and further to the east, properties accessible from Elm Court. The Gunnersens purchased 6 Denistoun Avenue, Mount Eliza in November 1993 as their family home. It is an older residence, a lightweight timber structure on stumps, located, at the closest point, only a couple of metres behind the edge of the escarpment. On their title is about one third of the escarpment below, a triangular shaped area to the toe. To the northwest, the escarpment is Crown land and to the southeast, it is owned by the Davey’s Bay Yacht Club. Crown land is managed either by the Victorian Department of Sustainability and Environment or by Mornington Peninsula Shire Council (‘Mornington Shire’) as the committee of management for the Mount Eliza foreshore under s 14 of the Crown Land (Reserves) Act 1978.
[1]See the Evidence Act 2008 (Vic) s 54.
To the southeast, their original neighbour, Nigel Peck owned a large allotment of about 1.1 ha at 7 Denistoun Avenue, on which stood a stately old weatherboard residence. In the late 1990s, 7 Denistoun Avenue was subdivided. Three lots were created by the subdivision: two were prime building allotments on the cliff top, while the third consisted substantially of the face of the escarpment. The Henwoods purchased the lot next to the Gunnersens’ property, which is now known as 7 Denistoun Avenue. The other lot was also sold for residential development. The balance of mostly unusable land comprising the escarpment below the Henwoods’ land, was gifted to the Yacht Club.
During 1999 and 2000, the Henwoods constructed a residence at 7 Denistoun Avenue. In 2001, they moved into their home, becoming neighbours of the Gunnersens. Constructed on geotechnical advice, the footings and foundations of the Henwood residence are bored piers founded at differing depths within 12 metres of the escarpment and a stiffened raft slab beyond 12 metres from the escarpment. The residence is set further back from the edge of the escarpment than the Gunnersen residence. The title boundary of the Henwoods’ land extends only a short distance down the face of the escarpment.
Immediately below, between the toe of the escarpment and the bay, is the Yacht Club. The Yacht Club complex is located partly on land which it owns and partly on Crown land. To the rear (southwest) of the grassed apron, at the base of the escarpment, is a long row of lockers used by club members to store sailing equipment. The lockers are partitioned from each other with separate doors in a long narrow building about two metres high, which stands on a wooden sub-frame resting on standard concrete stumps. The escarpment rises about 15 metres, as a steep vegetated slope, immediately behind the lockers. Above the escarpment at this point is the Henwood property. On the grassed apron at the toe, commencing near the lockers behind the main club building, there was a constructed access path climbing north westerly to the top of the escarpment. The course of the path was immediately below the Gunnersens’ property and it rose to the top of the escarpment on Crown land.
In September 2004, two landslips occurred within days of each other. Referred to collectively as slip 1, these landslips destroyed the lower section of this path. Slip 1 occurred on Crown land above boat sheds belonging to the Yacht Club (also located on Crown land) and below the north-east corner of the Gunnersen land. The dispute does not now concern this slip. It was central to the settled claims made earlier in the proceeding against the State of Victoria and Mornington Shire.
In February 2005, another landslip, referred to as slip 2, occurred entirely on land owned by the Yacht Club immediately below the northeast corner of the Henwood land near its common boundary with the Gunnersen land. The slips were unrelated. Slip 2 caused damage to Yacht Club land and property, including partial demolition of the storage lockers, and gave rise to a need to remediate the surface of the escarpment. Together, these slips sharply focussed the attention of the Gunnersens on the risks to their property due to the fragile nature of the escarpment. The Gunnersens’ concerns about the management of the fragile environment by neighbouring landowners had already been excited by events occurring over a number of years.
The following drawing illustrates in relation to the escarpment both the location of the slips and the alignment of title boundaries.
Following slip 2, although there had recently been precedent heavy rainfall at Davey’s Bay, suspicion was immediately cast on a broken section of irrigation pipe immediately above slip 2 that was connected to the Henwoods’ water supply. The Henwoods moved promptly to remediate the slope, engaging geotechnical engineers, who designed and supervised works, agreed with the Yacht Club, to restore the slope to the condition it was in before slip 2. The Yacht Club accepted these works as appropriate.
The Gunnersens, too, engaged consultants, a solicitor with past experience in like claims in the area and a geotechnical engineer Mr Warren Peck. Although issue was not contemporaneously taken with the remediation of slip 2, much attention was focussed generally on the stability of the escarpment, on how slip 1 might be remediated and whether engineered remediation works might improve the stability of the escarpment above the Yacht Club beyond the metastable state in which it existed. In the period from 2005 to 2009, a complex investigation of cause and consequence was conducted.
There were negotiations for a collective solution, in a context of litigation for this proceeding was commenced in late 2006. As I will shortly note, some agreement was reached between parties. In these investigations and negotiations, the positions and objectives of the parties naturally differed. The projected costs and expenses were substantial.
In 2008, further slip activity occurred at the site of slip 2. This movement was confined to the escarpment on land owned by the Yacht Club. It was influential in how the geotechnical experts saw the risks of future movement on the escarpment and opinions were divided. Various proposals for engineered stability works could not be implemented by agreement. Acting on advice, the Gunnersens obtained a declaration from VCAT that a particular engineering solution, recommended to them by Mr Peck and to be carried out on Yacht Club land, was essential to alleviate soil erosion and could proceed without Mornington Shire approval.
In 2009, the Gunnersens carried out engineering works installing 137 soil nails into the face of the escarpment at the site of slip 2, costing, with associated work, $866,544. The work is intended by its designers to improve the safety of the escarpment against slips.
Parties pleadings and issues remaining
At this early stage it is useful to explain how agreement about slip 1 has affected the structure of the proceeding and the issues which remain to be resolved by the court. The proceeding, when commenced in December 2006, named the State of Victoria, Frankston City Council, Mornington Shire and Denise Margaret Henwood as defendants. The Frankston City Council was the first defendant to exit the proceeding with a Deed of Release in October 2009.
The State of Victoria is also no longer a party. In late 2010, the Gunnersens resolved their claims with each of the State of Victoria and Mornington Shire. These settlements did not release Mornington Shire from the proceeding because a proportionate liability defence was taken by the Henwoods alleging that Mornington Shire was a concurrent wrongdoer.
The Gunnersens now seek no relief from Mornington Shire, having settled on confidential terms, which were in evidence. Such terms included an indemnity by the Gunnersens in relation to any liability or damages that may be apportioned against the Shire, including any liability to pay contribution and a covenant by, and indemnity from, the Gunnersens not to make any further claim or demand, institute any new proceeding, or reinstate any allegation made against the Shire in the pleadings. Mornington Shire has not participated in the proceeding since late 2010.
Broadly speaking, the Gunnersens claim the Henwoods breached agreements between them and, further, breached a duty of care owed by them to the Gunnersens. A further cause of action, based upon an alleged easement of support for the Gunnersens’ land, was withdrawn at trial. Breach of legal obligations was alleged to have caused instability in the escarpment with consequent harm, or risk of harm, to the Gunnersens’ property. This harm, or risk, is alleged to have caused the Gunnersens to incur expense.
The Gunnersens allege that ‘by reason of the existence of slip 2’, their land has declined in value. They also allege they have incurred expense in investigating the stability of the escarpment and the security of their property, in developing and constructing a remedial solution involving reinforcement of the escarpment by soil nails, and in investigating alternative solutions. They further contend these expenses are compensable damages caused by the conduct of the Henwoods in breach of their legal obligations. By the time this proceeding came on for trial, the Gunnersens had expended substantial sums totalling $1,026,170. The claim is broken down as follows:
(a)$866,554 was expended on the engineering, design, supervision ($110,482) and construction ($756,072) of a reinforced engineered remediation of part of the escarpment on land below the Gunnersens’ land, owned by the Yacht Club;
(b)$32,398 was expended on investigations, including the services of an expert geotechnical consultant, and for survey work, including monitoring the plaintiffs land, between 2004 and 2008 for movement;
(c)$49,215 for bores installed for dewatering on the Gunnersens’ land;
(d)$78,003 was spent on alternative remediation solutions: dual crib block retaining walls and, later, a secant bored pile wall, each of which was not proceeded with.
The quantum of these sums for the heads of damage described is agreed. The principal issue, globally, was whether the Gunnersens were entitled to recover this expenditure in negligence from the fourth defendant, Mrs Henwood.
The Henwoods, by their defence, apart from contesting factual allegations, contend that the remediation works were unnecessary or were excessive and resulted in a substantial benefit to the Gunnersens. Any risk of erosion and slippage upon the escarpment was the consequence of natural geological and environmental conditions. Defences of contributory negligence and voluntary assumption of risk were abandoned in final submissions. Further, the Gunnersens’ claims are contended to be apportionable claims.[2] Mornington Shire was an alleged concurrent wrongdoer. The Henwoods contend that their liability is limited to the proportion of the loss or damage claimed by the Gunnersens that the Court considers just, having regard to the extent of the responsibility of the Henwoods for that loss or damage.
[2]Part IVAA of the Wrongs Act 1958 (Vic).
The Davey’s Bay Yacht Club Inc is not alleged to be a concurrent wrongdoer and has never been a party to the proceeding. No explanation for its absence from the proceeding was proffered.
The remaining parties have proceeded to trial on the basis of an amended statement of claim, from which allegations against Mornington Shire were struck out, and an amended defence, in which allegations against Mornington Shire were reinstated. The plaintiffs have not filed a reply to that amended defence. Rather, the parties have, by agreement, proceeded on a statement of issues remaining between them for determination in the proceeding. The parties were content to conduct the trial on the basis of the agreed statement of issues and I will determine the proceeding on the evidence adduced rather than the pleadings.
It needs to be recorded at the outset that neither the pleadings nor the issues statement provide effective guidance as to the nature of the claims being made in negligence. The defendants took no issue with that state of affairs prior to or during the trial. I merely note that, in some respects at least, the lack of clear definition of an issue for determination obfuscated the extent and nature of the evidence led and the submissions made. There are legal issues, both complex and novel, arising out of this dispute, which may have been assisted by more careful pleading, including the scope and extent of the duty of care, the nature of the loss claimed and causation.
What is alleged is that the Henwoods, negligently and in breach of duty to the Gunnersens, took insufficient or no steps to prevent, detect or repair a leaking irrigation pipe. The escarpment also became weakened and more prone to collapse, on the one hand, by negligent failure to prevent or promptly rectify the leaking irrigation pipe and, on the other hand, by reason of actions in breach of permits and agreements in relation to the building of the Henwood residence. One such issue which arose out of disputes concerning the Peck subdivision of 7 Denistoun Avenue and the subsequent construction of the Henwood residence, concerns revegetation of the upper section of the escarpment, including both the sloping land below the cliff edge and the flat land behind it back to where the residence stood. This conduct caused slip 2 and, as a result, the Gunnersen land has developed cracks, has moved, and has otherwise shown signs of instability ‘indicating the possibility of a further cliff face collapse involving or affecting the Gunnersen land’. The consequence of slip 2 and the possibility of further slips is that the Gunnersen land has declined in value, required installation of a dewatering bore, and until the Gunnersens carried out remediation works in 2009, ‘weakened and put at risk the easement of support over the Henwood land in favour of the Gunnersen land’.
The key issues for resolution in the proceeding are, in summary:
· What is the nature of the harm claimed as damages by the Gunnersens and can such damages be recovered in negligence?
· Did the Henwoods owe a duty to the Gunnersens to take care not to inflict upon them loss of the kind claimed?
·Did any wrongful conduct on the part of the Henwoods cause the loss and damage claimed by the Gunnersens?
· Was any duty owed by the Henwoods to the Gunnersens breached by the Henwoods?
The proportionate liability defence raises further issues:
·Does Mornington Shire owe a duty to the plaintiffs as owners of land likely to be affected by the weakening of the escarpment by any awakening of the dormant slip behind the Yacht Club or by the onset of any further slips?
·Did Mornington Shire breach any duty of care to the plaintiffs when granting the necessary permits for the subdivision and subsequent development of the Henwood property?
·Did Mornington Shire cause the harm claimed as damages by the Gunnersens?
·Was Mornington Shire a concurrent wrongdoer in relation to the claimed loss and damage?
I have determined that the Gunnersens’ claims fail. I have also concluded that, had the Gunnersens succeeded, the proportionate liability defence would have failed.
I will now state my findings, observing that in addition to the sequence of events that led directly to the engineered remediation in 2009, for which damages are claimed, the issues raised require consideration of risk inherent in the fragile natural environment and, also, of Mornington Shire’s involvement going back about 10 years, not just as an occupier of land but also as the local council.
Contentious matters prior to slip 2
The Gunnersens and the Henwoods do not appear to enjoy good relations as neighbours. So much might be thought to be obvious from their position as adversaries in litigation in this Court, but in addition, there is a history of incidents occurring on and in respect of their lands relating to building approvals and development, vegetation, objections to council, applications to VCAT, and of agreements between them to resolve particular issues, with allegations of breach of such agreements. Evidence was led about many of these matters. Some of this evidence formed background matters, irrelevant to the issues in dispute in the proceeding, but part of the history involves Mornington Shire in its role as the local council and whether its conduct in that role caused the loss and damage asserted.
The Gunnersens contended that the escarpment on the Yacht Club land was weakened and became more prone to collapse by reason of four matters. They were:
·the wrongful actions of the Henwoods in constructing their home and associated works in breach of, and otherwise than in accordance with, the terms of planning permit P981681, the s 173 agreement, the March 2000 agreement and the 2001 agreement;
·the wrongful devegetation of the Henwood land contrary to the conditions attaching to the said planning permit and the said agreements;
·the wrongful installation of the reticulation system watering the land on the cliff top and/or the cliff face adjacent to the Henwood land;
·the negligent failure of the Henwoods to prevent or promptly rectify the leaking of the reticulation system into the cliff face.
The Henwoods allege Mornington Shire failed to take proper steps, when discharging its functions as a public authority, to address stability issues arising from the reports in relation to the Henwood land, particularly in granting the building permit and in relation to vegetation issues. The failures of Mornington Shire have, it is alleged, weakened the cliff face on the Yacht Club land and rendered it more prone to collapse. These allegations take the inquiry back in time from the occurrence of slip 2.
At a much earlier, unidentified, point in time, probably prior to the Henwoods’ purchase, a flyer had been distributed by Mornington Shire providing information to residents about the care needed in, and the appropriate strategies for, management of the fragile environment on the escarpment. This document was seen by the Gunnersens but not by the Henwoods. Mr Henwood was, however, familiar with the risks, and the appropriate responses, in terms of prudent land use about the escarpment. He described the recommendations made by Mornington Shire in the flyer as commonsense, agreeing, in particular, that property owners ought avoid the uncontrolled discharge of water onto the slope of the escarpment.
Concerns existed, at the time of the application for planning approval for the subdivision of 7 Denistoun Avenue, about vegetation on the escarpment. For those ignorant of the fragile nature of the escarpment, the panorama improves with removal of vegetation. In the period from the initial application for approval for the subdivision through to the construction of the Henwood residence, there were justifiable concerns about protecting the existing vegetation. It was discovered that copper nails had been placed in a mature Cyprus pine, presumably to destroy it. A stand of Aspen trees died suddenly and without apparent cause. The Cyprus pine was saved by the Gunnersens’ prompt action. That tree stands just behind the edge of the escarpment, virtually directly above slip 2. Its importance to the integrity of the immediate area of the escarpment is not in doubt.
From at least 1999, permit conditions affected (what would become) the Henwood land, requiring the consent of the responsible authority for vegetation removal. While an application for planning permission for subdivision of 7 Denistoun Avenue was before the Mornington Shire, a further application was made for permission to demolish the existing property and clear vegetation. The permit issued required that native vegetation, other than on the land for construction of the development, must not be felled, lopped, topped, ringbarked or otherwise destroyed or removed except with the consent of the responsible authority.
In 2000, an obligation arose out of agreements, negotiated at the time the Henwood residence was being constructed, to revegetate both the area behind and over the edge of the escarpment, where inappropriate vegetation and noxious weeds had been removed. These areas were to be revegetated according to an agreed plan using appropriately selected and specified plants. The design was tailored to maximise the surface stability on the escarpment using appropriate vegetation. The need to exercise extreme care with water upon the escarpment was well recognised. However, the design provided that the vegetation should be carefully watered in with an appropriate irrigation system.
Planning Permit P981681 was issued by Mornington Shire on 22 December 1999. At that time, construction of the Henwood residence was already underway. The Gunnersens objected to the issued permit and applied for review to VCAT. The VCAT application was resolved by an agreement on 4 March 2000. The parties to this agreement were the Gunnersens, Denistoun 7 Pty Ltd, the registered proprietor of the land at 7 Denistoun Avenue being subdivided, and the Henwoods as purchasers by an uncompleted contract of sale for Lot 1 on that plan of subdivision. An amended permit was issued on 4 April 2000, following the resolution of the VCAT hearing in late March 2000.
A requirement of the amended permit, following on from the March 2000 agreement, was that particular restrictions on subdivision and development be recorded in an agreement pursuant to s 173 of the Planning and Environment Act 1987. Relevantly, the permit and the s 173 agreement were to provide that:
(a)Development on the cliff face or on any part of the land seawards of [the line of a stone fence] be prohibited except in accordance with development plans approved by the responsible authority.
(b)Prior to any building or works being constructed or undertaken cliff stabilisation measures must be effected to the satisfaction of the responsible authority in accordance with the said development plans.
(c)All development plans required for the purpose of the agreement must be prepared by a duly qualified geotechnical engineer (as to engineering matters) and a duly qualified arborist (as to vegetation matters) and submitted for approval to the responsible authority and the responsible authority must consult with any affected neighbouring owners prior to approving any such plans.
(d)The prohibition on the removal, destruction, felling, lopping, topping, ringbarking, poisoning or nailing of any vegetation on the land seawards of the line of the said stone fence without the consent of the responsible authority which consent must not be given without the responsible authority first consulting the owners and occupiers of adjoining lands and any requests for such consent must be accompanied by an arborist’s report.
(e)Further management of the cliff face be in accordance with management plans approved by and to the satisfaction of the responsible authority.
(f)All disturbed surfaces on the land resulting from any development must be revegetated and stabilised to the satisfaction of the responsible authority.
The s 173 agreement between Mornington Shire and Denistoun 7 Pty Ltd was duly registered at the Office of Titles.
Earlier, in January 2000, Jeremy Tuxen, a gardening contractor employed by the Henwoods on the recommendation of the Gunnersens, provided a quote to Mr Henwood for landscaping works, to improve what the quote described as the badly eroded face of the escarpment below the Cyprus pine. The quote covered an area measuring approximately 14 metres wide by 7 metres in gradient. Mr Tuxen recommended, by the quote, construction of a retaining wall with sleepers, star pickets and wire mesh, and a drip irrigation system to re-establish vegetation. He also recommended six-monthly inspections to monitor the health of the vegetation, levels of erosion, and vermin activity.
By September 2000, this proposal, in a more refined form, was submitted to Mornington Shire for approval under the s 173 agreement. However, issues had by then arisen between the Gunnersens and the Henwoods concerning alleged breaches of permits. Some of these issues concerned vegetation and cliff integrity issues. Other issues involved work in contravention of the restrictions required by the s 173 agreement. The Gunnersens had concerns about unauthorised building works with potentially detrimental impact, and raised overlooking and privacy considerations. Solicitors were corresponding, and meetings were occurring between the Gunnersens and Mr Henwood and his consultants.
In February 2001, agreement to resolve differences was again reached between the Henwoods and the Gunnersens. Submitted to Mornington Shire at some earlier point was a drawing prepared in November 2000 by Murphy Design Group Landscape Architects — a landscape concept plan. Whether it ever met with the approval of Mornington Shire was not revealed in evidence. This drawing was adopted as the accepted proposal for the revegetation of the upper area of the escarpment below the Henwood land and became annexure 2 to the agreement of 17 February 2001. Clause 1.3 of the February 2001 agreement obliged the Henwoods:
1.3To carry out or cause to be carried out prior to completion and occupation of the said dwelling house being constructed on Lot 1 landscaping works including the planting of trees and shrubs in accordance with the landscape plan comprising Annexure 2 and thereafter to maintain and keep maintained in good heart and condition all vegetation comprising such landscaping so that ...
The agreement secured due performance of the Henwoods’ obligations including, as to revegetation, a $25,000 bank guarantee to be released upon conditions including certification by an independent landscape architect that the work had been satisfactorily completed.
It appears that the completion of the work was independently certified as satisfactory by one Allan Wyatt. In or about May 2002, the security deposit of $25,000 was returned to the Henwoods. There is a suggestion in the evidence that Mr Wyatt recommended further revegetation of the escarpment and that Mr Henwood intended to have that work done, having established with the Mornington Shire that the vegetation planting did not require a permit. As part of these revegetation works, the Henwoods caused an irrigation system to be installed but did so without approval from Mornington Shire, notwithstanding the terms of earlier agreements. Mr Henwood disingenuously suggested in evidence that the irrigation system was work which was too minor to warrant attracting the Shire’s interest by seeking approval.
The irrigation system was a 19 millimetre diameter, high-density polyethylene pipe drip system. It was attached to the mains by a timer, which turned the water on every second day for approximately 10 minutes at a time. The irrigation system wound in and out of the vegetation on the escarpment and was mostly buried under mulch. The tap was at the front of the house near the mains connection. The irrigation system, which was zoned, was controlled from a control box in the house. The section of the irrigation system delivering water to the escarpment area was designated as a separate zone. During 2003, Mr Henwood instructed that the escarpment zone be turned off. However, plants began to die and the system was reconnected. There was no evidence that it was thereafter turned off again. Despite the debate about the significance of vegetation for stability, and the nature of the allegations made against the Henwoods in the respect, there was insufficient evidence for any finding of any deficiency in, or complaint of deficiency about, the vegetation of the escarpment in 2003–2004 after Mr Henwood reactivated the irrigation system in 2003. As I have noted there was a contractual obligation to maintain the vegetation and keep it in good heart and condition but there is neither allegation, nor evidence, of breach in this respect.
What happened concerning the operation and maintenance of this irrigation piping following installation is unclear. Mr Henwood had no recollection about this matter at all. The irrigation system on the escarpment was not readily visible from the Henwood property and once the vegetation had been replanted on the escarpment nobody walked on the escarpment, partially because it was very steep, but also to avoid destabilising the slope surface.
Mr Henwood believed, because it was his usual practice, that he inspected the irrigation system before paying Jeremy Tuxen, who did not give evidence. Mr Henwood did not thereafter inspect or attempt to inspect the irrigation system saying, indifferently, it was a matter left to Mr Tuxen. There was no evidence that Mr Tuxen had been informed or was aware of this responsibility, was directed to act in any particular way, or that he had ever inspected or maintained the irrigation system.
I find that neither Mr Henwood nor Mrs Henwood knew anything about the operation of the irrigation system. Despite the recommendation of Mr Tuxen in January 2000, that future management of the cliff face include six-monthly inspections, I find there was no form of management, inspection or maintenance of the irrigation system at all. Although the Henwoods understood the need to exercise particular care about water on the escarpment, and knew that such care was vital to manage the risk of slope instability and had received advice to that effect, they did nothing to monitor, maintain or manage the risk of inappropriate or unintended discharge of water onto the escarpment from the irrigation system. There was plainly a want of care for the proper management of the risk of slope instability upon and affecting the escarpment. Clause 1.3 of the February 2001 agreement did not, in terms, create an obligation to maintain the irrigation system as opposed to the vegetation.
Slip 2: How and where?
In 2005, the Commodore of the Davey’s Bay Yacht Club was Mr William Ferme, a retired engineer. On the evening of 29 January 2005, Mr Ferme was at the Davey’s Bay Yacht Club with his wife. They had stayed behind on the premises to clean up after a social function. At about 11.30 pm Mrs Ferme drew Mr Ferme’s attention to the sound of a sustained water flow on the cliff face above the lockers at the rear of the Yacht Club. Mr Ferme described distinctly hearing the sound of rushing water in a sustained flow for about four to five minutes before it abruptly stopped.
Mr Ferme had a particular interest in investigating this noise — he was aware of slope instability in the escarpment behind the Yacht Club. In September 2004, just days apart, two landslips (slip 1) had occurred following significant rain to the northwest of the Yacht Club, destroying the access walking path to the Club from that direction.
About a week later Mr Ferme and two members of the Yacht Club committee attempted to climb up the escarpment to investigate what Mr Ferme had heard. They observed the surface soils on the escarpment to be quite sodden. However, the difficulty of the scramble over saturated steep terrain resulted in an inconclusive investigation.
The beginning of February 2005 was marked by a period of heavy precedent rainfall. In the 24 hours before 9:00 am on 3 February 2005, heavy rainfall was indicated by the Bureau of Meteorology at Moorooduc (105mm) and Mornington (96mm). Ongoing, lighter rainfall followed that downpour for several days. In that month, Victoria experienced its wettest February since 1973 and the seventh wettest February over the preceding 106 years. Records from the Bureau of Meteorology identified an unusually intense low pressure system as the cause of this rainfall. The system brought abnormally low temperatures and severe storms with gale and storm force winds to most parts of Victoria. The centre of the low developed and deepened over Melbourne with very little movement and the continuous rainfall for about 30 hours was noted by the Bureau of Meteorology as the most significant feature produced by the low pressure system. Statistical evidence comparing the intensity of monthly precipitation from the Moorooduc station confirmed that this storm was, extrapolating to Davey’s Bay, an extreme rainfall event for the escarpment. I consider that saturation of the surface soils, broadly across the escarpment as observed by Mr Ferme, was a probable consequence of the 3 February 2005 storm.
On 18 February 2005, Mr Ferme went to the club and found that there had been a slip on the escarpment above the eastern end of the lockers. The soil and debris, which had slid down the slope, dislodged the six easternmost lockers approximately one metre from their foundations.
Expert evidence
Procedural issues
Many of the significant issues between the parties turned on expert geotechnical opinion. The Gunnersens and the Henwoods each employed consultant geotechnical engineers who provided advice to each of them throughout the course of events. Such advice concerned investigations of conditions or appropriate responses to developments, such as remediation proposals or perceived risks to the stability of the escarpment. Most of these experts were involved in multiple roles: investigating cause and designing and certifying remediation projects on the one hand and, on the other, reviewing and commenting upon such remediation projects. These experts were also negotiating with each other, or supervising such dealings, on behalf of their instructing parties for possible global remediation solutions. Other parties, no longer active in the proceeding, such as Mornington Shire, also retained experts who have considerable experience with both the prevailing conditions and the various proposals. One of these experts was called in the proceeding. In addition, the Henwoods instructed an expert to express an opinion independent of any active involvement in the dispute.
Each of the parties also called valuers, with whose evidence I shall later deal. The comments I am about to make concern the geotechnical expert evidence.
Of a large and under-used court book, prepared presumably at significant expense, perhaps as much as one third of it was comprised of documentary material generated by, or for, the geotechnical experts. The Court Book comprised much source material as well as significant duplication, the purpose of which, like much non-expert material, was never revealed. More than a third of the hearing time in Court was consumed by the geotechnical experts. The Court was treated to traditional cross-examination of specialist experts. Each of these matters unreasonably increased, in my view, not only the legal expenses of the parties involved in the dispute but also the resources, in terms of judicial time, needed to resolve the dispute.
With the introduction of the Civil Procedure Act 2010, relevant parts of which commenced operation on 1 January 2011, an overarching purpose to be achieved in the determination of proceedings by this Court has been articulated: to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute.
By s 10 of the Act, the overarching obligations, set forth in Part 2.3 (ss 16–27), apply to the parties, the legal practitioners and, with some exceptions, to expert witnesses in civil proceedings, in addition to, rather than in derogation of, existing duties applying to experts, for example, the Expert Code of Conduct. There are sanctions for contravening the overarching obligations set forth in Part 2.3 (ss 28–31) of the Act. The Court may make any order it considers appropriate in the interests of justice when satisfied on the balance of probabilities of a contravention of any overarching obligation. Application for such an order is ordinarily to be made in the court in which the proceeding was or is being heard, and prior to its finalisation.
To enjoy the benefit of experts giving evidence concurrently, and in aid of that process, courts direct that experts confer and prepare a joint report prior to trial. Concurrent expert evidence is now the preferred process for taking expert evidence in civil cases. Its advantages will ensure its continued use. Enhanced judicial control over privately retained experts is achieved. The experience of the courts, mostly reported through extra-judicial comment in journal articles, conferences and seminars,[3] is greater efficiency and expedition, achieved by refocussing emphasis to professional dialogue rather than cross-examination. The process allows the critical areas of disagreement between experts to be more efficiently identified and processed, both on the taking of evidence and in judicial decision making.
[3]For access to such comment, see the Supreme Court of Victoria, Commercial Court Seminar, 27 October 2010 including, in addition to the presentations of the Honourable Justice Kim Hargrave and NJ Young QC, the selected bibliography at type="1">
On 8 October 2010, I ordered that pursuant to r 44.06, the expert witnesses for the parties communicate with each other and confer in the absence of the parties’ lawyers, and file a joint report setting out the matters on which they agreed, the matters on which they disagreed and the reasons for disagreement. There was a point to this order. At one level, the order was capable of meeting the objects specified in s 9(a), (c), (d), (f) and (g) of the Civil Procedure Act 2010. It matters not that when the order was made, the Act was yet to commence operation. At another level, the order implements prudent contemporary trial management processes developed in recent times in the superior courts and of the type Parliament has chosen to endorse by the Act.
I was informed in openings that no joint report was available, although the experts had met in conference. Further, notwithstanding that the trial date had been fixed well in advance, one of the experts would not be in Australia to give his evidence during the time allocated. These factors, together with the large volume of expert material in the Court Book, most of which was unsorted in terms of its relevance to the remaining issues at trial, led me to conclude that the concurrent evidence process could be problematical. I acceded to the expressed desire of counsel to take evidence in the traditional way. As a result, the consequences I have referred to above at [54] were unavoidable. I have no doubt that concurrent evidence, or ‘hot–tubbing’, could have saved two days of hearing time. The attendant savings in reduced written material before the Court and in the processes of decision-making are not easily estimated.
At trial, the participating experts in the joint conference revealed the want of a facilitator as the primary reason for non-compliance with the order. Of itself, this requirement seemed capable of being readily satisfied by agreement or by court direction and seems a lame excuse. That the experts in this matter had rather a long association with their instructing parties, not just in opining on specialist issues but also in partisan negotiation of competing interests about complex and expensive solutions to technical problems, seems the probable explanation. Either way, the resultant inefficiencies will be borne by the parties and competing users of the resources of the civil justice system.
At an appropriate point before the proceeding is finalised, this issue can be revisited.
’Basis rule’ issues
Section 76 of the Evidence Act 2008, proscribes evidence of opinion as prima facie inadmissible. There is an exception in s 79 in relation to opinions based on specialised knowledge:
79 Exception—opinions based on specialised knowledge
(1)If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
There are several aspects to the statutory exception. It is not disputed that the various experts who expressed opinions to the Court have ‘specialised knowledge’ or that such knowledge is based on their training, study or experience. Rather there is an issue that some aspects of the opinions expressed cannot be said to be wholly or substantially based on specialist knowledge, usually by reference to experience, rather than training or study. Issues in this context arise concerning the evidence of most of the experts in both the geotechnical and valuation fields.
Expressing an opinion about an issue that may influence the decision of a willing, but not anxious, purchaser may fall within the field of expertise of a land valuer. It is not admissible opinion evidence if it is not wholly or substantially based in specialist knowledge and is merely analysis of fact.[4] A transparent process of reasoning is ordinarily necessary to demonstrate the basis of the opinion. Without it, opinions so expressed are inadmissible expressions of personal views, speculation, common sense and the like. As such, opinions expressed are dressed up with ‘a spurious appearance of authority, [subverting] the legitimate processes of fact finding’,[5] when careful evaluation of the logical steps to such opinions, including the basis for them, is needed. Opinions which do not go beyond a bare ipse dixit (I say so), fall short of being ‘intelligent, convincing and tested’.[6] There is an element of discretion in concluding that an opinion is substantially based on specialist knowledge.
[4]Quick v Stoland (1998) 87 FCR 371, 380–1, 383.
[5]HG v The Queen (1999) 197 CLR 414, 427–9 [39]–[44] (Gleeson CJ).
[6]Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 745 [87] (Heydon JA).
However, a failure to demonstrate that an opinion expressed by a witness falls within the s 79 exception is a matter that goes to the admissibility of the evidence, not its weight. What is ordinarily required of an expert is reasoning demonstrating sufficient connection between the opinion expressed and relevant specialised knowledge. If such reasoning is absent, the evidence of the expert will not be admissible to found the proposition expressed by the opinion.[7]
[7]Dasreef Pty Ltd v Hawchair [2011] HCA 21 (22 June 2011), 620–623 [30]–[42].
I have applied these observations when making findings on the expert evidence led at trial.
Geology of the area
From the expert evidence, I will make some general observations concerning the geology and geological history of the area. The area of the escarpment in issue (‘the site’) is a section of north-easterly facing cliff face approximately 15 metres in height, the slope of which is approximately 40 to 43 degrees from horizontal. The cliff is generally covered in vegetation. To the northwest of the area in question, some engineered support for the escarpment is provided by an existing pre-cast concrete crib wall constructed in or about 1983. It is below the upper intact section of the access path I have described. Beyond that, the escarpment forms Davey Point. Further around to the west of Davey Point is a small bay around to Pelican Point.
To the southeast, moving away from the area in question, is a private steel staircase descending from the top of the escarpment to the beach at Davey’s Bay and an access track from private land accessed via Elm St to the beach. Beyond this track, on a section of the escarpment east of a small gated lane, there was a major landslip in 1995, known colloquially as the Hosking slip. The small lane runs up to Brookwood Drive and provides access down to and across the beach to the Yacht Club. To the east beyond that lane is Kackeraboite Creek.
The geology of the Mount Eliza coastal foreshore generally is variable and complex. The geology of the site consists of a mantle of Tertiary age sediments comprising Baxter Sandstone, made up of ferruginous sandstone, sand and sandy clay with occasional gravel. To the east of the site, exposed in the sides of the Kackeraboite Creek bed, is Devonian granite. The presence of the Manyung Fault in the area has revealed the presence of a downwarp or fault in the vicinity of the site. To the east are clays weathered from the Tertiary Basalt prior to the Manyung Fault.
The main elements in the ground stratigraphy in the area of the site, as described from the surface, are:
·A thin layer (typically 0.05 - 1m thick) of aeolian or coluvial, siliceous and calcareous sands.
·The Baxter Sandstone of the Tertiary Brighton Group occurs widely over the Mount Eliza area and forms a mantle over the site. The sandstone usually overlies Marina Cove Sands from which they are often difficult to distinguish. The Baxter Sandstone consists of moderately to poorly sorted sands with variable amounts of gravel and sand. The silt and clay portions can be relatively high as a result of the weathering of the feldspars. The Baxter Sandstone is often ferruginised. Acid leeching often extends down to include the upper part of the Balcombe Clay, removing the carbonate. The ironstone layers are variable in thickness and cementation (often thin).
·The Marina Cove Sands consist of well-sorted, very fine sands overlying the Balcombe Clay and underlying the Baxter Sandstone. Marina Cove Sands are often friable, but occasionally cemented with limonite and/or clays.
·Balcombe Clay can be either calcareous or non-calcareous, fossiliferous, highly plastic clay. The clay and silt content can be variable and the Balcombe Clay can be a silt. In the area of Davey’s Bay, the Balcombe Clay is reported to be non-calcareous silts and clays, often containing fossils. The particle size gradings show that the Balcombe Clay in this area contains a high proportion of clay. Further, it appears that the Balcombe Clay has been warped, resulting in a reduction of shear strength in the direction of the dipping to the northwest, although the relevant part of the escarpment slopes to the northeast. Balcombe Clay is recognised as a failure surface for landslips in this coastal region.
The history of ground movement and slope instability was studied for the City of Frankston in the Frankston Coastline Management Study in November 1993. The study examined the area of coastline between Olivers Hill and Canadian Bay. The study collates records of ground movements in this region over the preceding 25 years. In March 1997, the lead geotechnical consultants for that report, Douglas Partners Pty Ltd, prepared a further report Davey’s Bay Stability Study for the Department of Natural Resources and Mornington Shire.
From the reports, I conclude that Davey’s Bay is situated in a geologically sensitive area of naturally occurring landslides, where inappropriate developments and the changing pattern of land use has, in places, reduced the overall cliff stability. The history of instability is well established. Many residential buildings have been constructed either wholly within or on the margins of active landslide zones. Severe ground movements have caused damage resulting in the demolition of some buildings along the coastline or have required remedial foundation treatments. The first geological account of slope instability in the region was in 1900 and the phenomenon has been increasingly investigated and reported on since then. The foreshore area east of the Yacht Club has been particularly noted as an area of active instability and ground movement.
These and other reports were either commissioned or received and considered by the Department of Natural Resources and Environment, and at local government level, including by Mornington Shire. That much is clear from what general correspondence was in evidence between those entities. However, evidence of the precise nature and extent of such consideration or consultation, and of conduct in response to the information in and recommendations made by the reports, was not led at trial. Save to the very limited extent evident throughout this judgment, and as more specifically considered below. I am unable to make findings about the conduct of Mornington Shire in response to the content of these reports.
Forms of slope failure
The forms of slope failure that are recognised include:
·falls — both rock falls and earth falls;
·slides — which can be either rotational, that is with a concave curved rupture plane, or translational with a sub-planar rupture surface; and
·flows — referring to earth and debris flows which develop from slides.
Three specific landslip hazards have been identified for the site.
Slip type A is a shallow translation debris flow within the upper silty sands. This type of landslip originates in the surficial, silty sands that form the facing of the escarpment. The sands are typically shallow with a depth generally less than one metre. It is considered that this type of landslip is triggered by times of high or sustained rainfall, such as storm events or possibly by saturation by manmade watering systems. The result is a brief increase in pore water pressure and saturation of the sands. Localised shallow arcuate or translational flow of the upper sand can occur, which is typically extremely rapid. Generally large slips of this kind are localised and contained to a maximum width of about 10 metres, with an accumulation verge that extends approximately three metres onto the flat ground in front of the toe of the cliff.
Slip type B is a deeper global failure within the Baxter Sandstone. This type of landslip consists of a global circular failure plane that is predominantly within the Baxter Sandstone stratum for this site. This type of failure is most likely caused by a long-term rise in groundwater levels. It is considered less likely than the earth and debris flow failure, and typically has a moderate speed. Such landslips can generally be contained to a maximum width of about 20 metres with an accumulation zone that extends approximately 10 metres into the area in front of the toe of the cliff.
Slip type C is a deep-seated global failure that penetrates to the Balcombe Clays. This type of landslip consists of a global, circular failure plane that penetrates to the Balcombe Clays. It typically occurs in cliff faces where the Balcombe Clays are exposed or at shallow depth. It is typically slow. At the site, Balcombe Clays are found at or below the toe of the cliff. John Piper, one of the geotechnical experts called, and whose evidence I accept, considered that there is a low risk of this type of landslip occurring, even though the computed Factor of Safety (FoS) predicted slope failure.[8] The low FoS was explained by the use of conservative, sheer strength properties which were adopted in the analysis, and the likelihood that the dip of the Balcombe Clay is not to the north. There was little evidence to show that such a slip had occurred in the past. Slip type C would be catastrophic in its impact both on the usability of the boat storage area and the path, and in its effect on the properties behind the escarpment. As will later become apparent, the low risk of a type C slip due to naturally occurring conditions is significant.
[8]Factor of safety computations are explained below at [111].
Slip 2 was, I find, a type A slip. It disturbed the surface soils of the escarpment over a width of four to five metres, commencing at about RL13m and it extended approximately 10 metres down the slope. The slip plane, roughly parallel to the surface, was at a depth of about one metre. The volume of material, comprising the soil and debris flow that damaged the Yacht club lockers, was approximately 50 cubic metres in volume. The head of the slip was approximately three metres below the lowest sleeper in the retaining wall, about eight metres below the edge of the escarpment and approximately 11 metres below the easternmost point of the common boundary between the Gunnersens and the Henwoods. The axis of the slip, when notionally extended up the slope, positioned it below the easternmost point of the common boundary. I am also satisfied that there was a tension crack at the head of the slip, of about two metres in length, approximately half of which ran horizontally away from the top corner of the slip to the north.
Risks from slope failure
Studies by John Piper for the Davey’s Bay Yacht Club identified that there were risks to both persons and property from the prospect of slip activity at the site. Only slip type A poses a risk to persons because of the speed of movement of the slip debris. Identified at risk of a slip type A are people in or about the Yacht Club lockers and sheds, people on the relatively flat platform at the base of the escarpment and within three metres of it, people who are on the access path from the top of the escarpment to the Yacht Club and people who are at the top of the cliff face (within two metres of the edge of the escarpment). The risk to property includes risk of damage or destruction of the lockers and sheds of the Yacht Club, and risk to boats stored within three metres of the cliff face. Properties such as pathways and staircases could also be damaged. A slip type C, a deep-seated failure, could affect the properties at the top of the escarpment including both the Gunnersen property and the Henwood property. As I have noted, the Douglas Partners Davey’s Bay Stability Study, identified damage to buildings and building foundations consequent upon severe ground movements.
Why slips happen
The experts agreed as to the factors which can destabilise a marginally stable slope and cause type A slips. They are:
(a)Introducing water to the slope. Saturation increases the weight of the slope, resulting in seepage forces and softening of the clays on the sheer plain. Slopes may be saturated by a variety of causes including:
I will hear further from counsel on the question of costs.
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CERTIFICATE
I certify that this and the 159 preceding pages are a true copy of the reasons for judgment of Dixon J of the Supreme Court of Victoria delivered on 7 September 2011.
DATED this 7th day of September 2011.
Associate
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