Hercus Engineering v Lythgo
[2006] VSC 453
•28 November 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 5865 of 2006
| HERCUS ENGINEERING | Appellant |
| v | |
| LYTHGO | Respondent |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22 NOVEMBER 2006 | |
DATE OF JUDGMENT: | 28 NOVEMBER 2006 | |
CASE MAY BE CITED AS: | HERCUS ENGINEERING v LYTHGO | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 453 | |
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Appeal from Magistrates’ Court – negligence – preparation of written report on soil conditions – sale of land – duty of care of experts – scope of duty – expert evidence – notice – r.19.02 of Magistrates Court Civil Procedure Rules 1999 – Duty of Magistrate to address relevant facts – causation – Magistrates’ Court Act 1989 s.109
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D. Masel | Monahan & Rowell |
| For the Respondent | Peter Cahill (Solicitor) |
HIS HONOUR:
This is an appeal on questions of law from a decision of the Magistrates' Court at Bendigo pursuant to s.109 of the Magistrates’ Court Act 1989.
The appellant is an engineer. On 10 June 2003 he tested the stability of soil on a series of lots within a subdivision including lot 123 ("the block"). He prepared a written report as to soil conditions on the block, indicating the appropriate classification or stability pursuant to an Australian Standard, indicating footing recommendations, and making further construction recommendations.
On 11 May 2004 the respondent purchased the block pursuant to a contract which required him to pay a deposit of $3,650 and a further $69,350 on 6 July 2004.
The respondent's evidence was that prior to purchase he inquired of the selling agent whether there was a soil test provided with the block and was told: "Yes, there was one provided with the block."
After signing the contract, but on a date which is uncertain,[1] the respondent was given a copy of the appellant's report. Thereafter the respondent, who is a carpenter by trade, obtained a design for foundations for a house upon the block from another engineer. This design was premised upon the appellant's report, which had indicated the site was stable.
[1]A date which may or may not have been within the statutory cooling off period provided for by s.31 of the Sale of Land Act 1962.
When work commenced, however, it was ascertained that the block contained a substantial quantity of fill, and further and supplementary works were required for the proposed house foundations.
The respondent alleges that the appellant was negligent in preparing and carrying out the soil test forming the basis of the report.
The respondent claims the cost of the redesign of the foundations and of the additional cost of foundations necessary to accommodate the true condition of the site.
The case before the Magistrate was marked by two procedural matters which are now the subject of contention.
(a)His Honour held that the appellant's duty of care was not in issue because it was deemed to be admitted by the defence; and
(b)His Honour held that the appellant could not give expert opinion evidence because no notice of intention to call expert evidence had been given in accordance with the Magistrates' Court (Civil Procedure) Rules 1999.
Ultimately, his Honour found for the respondent after giving brief reasons for his decision.
The notice of appeal raises a series of discrete grounds but it is convenient to deal with the matters agitated before me under three headings.
Duty of Care
Paragraph [13] of the statement of claim alleged:
"The second defendant knew or ought to have known that the plaintiff as a prospective purchaser of lot 123 would rely on the soil test as being true in determining the potential cost of construction of foundations for a dwelling house and consequently the price to be paid for the purchase of lot 123 and the second defendant was thereby under a duty of care to the plaintiff to ensure that the soil test was true and correct and that the investigation was carried out to the appropriate standard."
In response the defence stated:
"The second defendant states in relation to paragraph [13] of the plaintiff's statement of claim that a soil test in relation to lot 123 was true and correct and carried out to the appropriate standard."
Rule 9 of the Magistrates' Court (Civil Procedure) Rules 1999 provides in part:
"(1)A defence must state which of the facts stated in the statement of claim are —
(a) admitted;
(b) denied;
(c) not admitted.
(2)A defendant who in the defence does not state whether a fact stated in the statement of claim is —
(a) admitted;
(b) denied;
(c) not admitted —
must be taken to admit the fact.
…
(5)The defendant must state specifically with particulars any fact or matter which —
(a) makes the claim of the plaintiff not maintainable; or
(b)if not stated specifically, might take the plaintiff by surprise; or
(c)raises questions of fact not arising out of the statement of claim."
His Honour took the view that having regard to the defence, the allegation of duty of care was deemed to be admitted.
The appellant contends firstly, that the defence did not admit as a matter of law that a duty of care existed. In my view this contention is as a matter of strictness correct. The deemed admission provided for by the Rules extended to facts only.[2]
[2]This is not to say that the denial of a duty of care was satisfactorily pleaded nor to say that the terms of r.9.02(5)(a) and (b) were complied with.
Next, and perhaps more fundamentally, the duty of care in fact contended for by the respondent before the Magistrate was not simply to ensure that the soil test was true and correct or that such test was carried out to the appropriate standard, the duty contended for was in substance one to take reasonable care in testing and reporting as to the appropriate basis for the design and construction of footings for a house upon the block.[3]
[3]Cf. San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 & Anor [1986] 162 CLR 340.
It seems to me that the Magistrate adopted a generous and flexible approach to the statement of claim but failed to adopt such an approach towards the defence.
Put another way, even if the facts alleged in [13] of the statement of claim were properly to be regarded as deemed to be admitted, then a serious question remained as to the scope and nature of any consequent duty of care falling upon the appellant.
Breach of Duty
The appellant was constrained in his capacity to meet the respondent's case, in that he was denied the opportunity to give expert opinion evidence.
The course adopted by the Magistrate was taken in circumstances where:
(a)no application for leave to dispense with the relevant notice requirements was made pursuant to the relevant rule of court;[4]
(b)no application was made for an adjournment when it became apparent that the Magistrate would not permit expert opinion to be adduced in the absence of notice of its content in accordance with the rule;
(c)no submission was made that the rule did not or should not be applied to a party.
[4]Rule 19.02 of the Magistrates Court Civil Procedure Rules 1999 provides:
(1)A party who intends at the hearing to adduce the evidence of a person as an expert witness must, not later than 10 days before the day fixed for the hearing, serve on every other party a statement in accordance with sub-rule (2) or a copy of a report in accordance with sub-rule (2.1).
(2) The statement must-
(a)give the name and address of the witness;
(b)describe the qualifications to give evidence as an expert; and
(c)give the substance of the evidence it is proposed to adduce from the witness as an expert.
(2.1) In-
(a)any claim for damages for personal injury; or
(b)a proceeding under the Accident Compensation Act 1985; or
(c)a proceeding under the Workers Compensation Act 1958-
a party may serve on another party a copy of a report of an expert witness.
(2.2) The report must-
(a)give the name of the witness; and
(b)describe the qualifications to give evidence as an expert.
(3)Save with the leave of the Court or by consent of the parties, a party must not except in cross-examination adduce at the trial of a proceeding any evidence from a witness as an expert unless that party has served a statement under sub-rule (1) or a copy of a report under sub-rule (2.1).
It seems to me that in these circumstances the Magistrate was justified in taking the approach he did.
Nevertheless, the appellant gave evidence as to the facts of what he did and in addition the respondent's expert engineering evidence was the subject of challenge in cross-examination.
In my view the Magistrate erred in finding that "Mr Brown's evidence was uncontradicted" (Mr Brown being the respondent's expert witness).
The evidence of Mr Brown was the subject of challenge and it was incumbent upon the Magistrate to address such challenge by reference to:
(a) the appellant's evidence as to the facts of what he did; and
(b) the matters put to Mr Brown in cross-examination.[5]
[5]Fletcher Construction Australia v Lines MacFarlane & Marshall Pty Ltd (No. 2) (2002) 6 VR 1 [98]-[106], [157], [164], [171].
Causation
At best the respondent's evidence amounted to evidence that after paying the deposit, he would not have proceeded to complete the purchase, if the report provided to him had properly clarified the state of the soil on the block.
Counsel for the appellant expressly submitted to the Magistrate that in circumstances where the land was purchased in advance of receipt of the report, the contents of the report could not be said to have caused the loss claimed.
After some preliminary remarks to the effect that in his opinion, "relying on soil tests whether before or after the signing of the contract I would have thought would be part of the transaction and would be caught up in it", the Magistrate held that the evidence as to damage was "unchallenged in terms of quantum and causal relationship to the breach."
This was simply not correct. The question of causation of loss was directly and expressly challenged immediately before the Magistrate gave his reasons.
Moreover, in my view, it was simply not open on the plaintiff's evidence to conclude the plaintiff suffered the loss claimed as a result of the breach of the duty alleged (albeit some lesser loss might hypothetically have occurred).
On the evidence the plaintiff would have lost his deposit if after receiving an accurate report, he had failed to complete the purchase. Such contractual loss was not taken into account when assessment was made of the cost of additional works.
Moreover, if the plaintiff's damages were more properly to be calculated by reference to the cost caused simply by the need to get a replacement report, then it can be seen that on the face of it such differential would be limited to redesign costs, costs thrown away (if any) and delay costs.
Accordingly, in my view, ground 1 of the amended notice of appeal is made out.
"The Magistrate erred in law in finding that the negligence of the appellant caused the loss of the respondent as there was no evidence of reliance by the respondent on the appellant's report prior to entry into the contract to purchase the subject land."
The grounds directed to the manner in which the Magistrate dealt with the questions of duty of care and breach of duty, do not satisfactorily reflect the defects I have identified in the Magistrates' reasons, but in the circumstances it is unnecessary to say more about them.
Accordingly, the matter must be remitted for rehearing in accordance with law.
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