Lym International Pty Ltd v Marcolongo - [2011] NSWCA 303

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Lym International Pty Ltd v Marcolongo [2011] NSWCA 303
Hearing dates: 5 April 2011
Decision date: 22 September 2011
Before: Basten JA at [1]
Campbell JA at [5]
Sackar J at [272]
Decision:
(1) Appeal dismissed.
(2) Appellant to pay costs of the Respondents of the appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
BUILDING AND CONSTRUCTION - s 177 Conveyancing Act 1919 - "duty of care not to do anything on or in relation to land..." - whether developer's decision to use particular support system was "doing something" in relation to land - whether developer's decision to use particular support system was something that "removed the support provided by the supporting land" - whether developer's decision to use particular support system was made without exercising reasonable care - relevance of departure from construction certificate

BUILDING AND CONSTRUCTION - s 109ZJ Environment Planning and Assessment Act 1979 - whether party was a "contributing party" - effect of agreement of all parties that it would not be alleged that, had a person been a party to the action, that person would have been a contributing party

NEGLIGENCE - causation - s 5D Civil Liability Act 2002 - whether failure to warn or advise can only be causative of loss if a warning or notification, if given, would have been acted upon in a way that prevented the loss - whether it is appropriate to attribute liability to someone who puts in place the preconditions that enable another person's negligence to become effective - discussion of the principles governing causation under s 5D

AGENCY - whether one party contracted with another as agent for a third party, or whether that party separately contracted with the other in performance of contractual obligations to the third party

APPEAL - interference with judge's finding of fact - Jones v Dunkel inference - enables tribunal of fact to infer that the evidence of an absent witness, if called, would not have assisted the party who failed to call that witness - missing witness must have been expected to have been called by one party rather than other - inference not available where disputed issue is whether missing witness was agent for the party and no other reason to believe missing witness was in camp of that party

CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - discussion of for what proposition County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 is authority - majority reasons do not have as their ratio any proposition about the availability of post-contractual conduct for the purpose of finding the terms of an agreement that is wholly or partly oral

CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - post-contractual conduct can be used for the purpose of finding the terms of an agreement that is wholly or partly oral when that conduct is an admission - Tomko v Palasty [2007] NSWCA 258 - circumstances in which being an admission would not permit post-contractual conduct to be used to find terms of a wholly or partly oral contract

CONTRACTS - construction and interpretation - that a particular person is party to a contract is a matter of mixed fact and law - whether a party to litigation can make an admission concerning a matter of mixed fact and law - whether admission made by person other than party to the litigation can be admitted against that party - effect of the introduction of the Evidence Act 1995 to the pre-existing common law principles concerning admissibility of admissions for post-contractual conduct
CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - post-contractual conduct can be used for the purpose of ascertaining the terms or the subject matter of an agreement that is wholly or partly oral regardless of whether the post-contractual conduct is an admission.
Legislation Cited: Building and Construction Industry Security of Payment Act 1999
Civil Liability Act 2002
Civil Liability Amendment (Personal Responsibility) Act 2002
Conveyancing Act 1919
Environmental Planning and Assessment Act 1979
Evidence Act 1995 (Cth)
Evidence Act 1995 (NSW)
Property (Relationships) Act 1984
Uniform Civil Procedure Rules 2005
Cases Cited: Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; (2009) 239 CLR 420
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1
Day v Rogers [2011] NSWCA 124
Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317
Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213
Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669
J Blackwood & Son v Skilled Engineering [2008] NSWCA 142
Jones v Dunkel (1959) 101 CLR 298
Jones v Sutherland Shire Council [1979] 2 NSWLR 206
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70
Manly Council v Byrne [2004] NSWCA 123
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Marcolongo v Chen [2011] HCA 3; (2011) 274 ALR 634
Markisic v Commonwealth of Australia [2007] NSWCA 92; (2007) 69 NSWLR 737
Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382
National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569
Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150
Payne v Parker [1976] 1 NSWLR 191
Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154
Pitcher v Langford (1991) 23 NSWLR 142
Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492
Pusell v Grabham [1963] NSWR 172
Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434
Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149
Sutherland Shire Council v Heyman (1985) 157 CLR 424
Tomko v Palasty [2007] NSWCA 258
Tucker v McCann [1948] VR 222
Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422
Wilson v Hart (1817) 7 Taunt 295 at 304; 129 ER 118
Woolworths Limited v Strong [2010] NSWCA 282
Zanner v Zanner [2010] NSWCA 343
Texts Cited: J D Heydon, Cross on Evidence, 8th Australian edition (2010)
Commonwealth, Review of the Law of Negligence Final Report, (2002)
Category: Principal judgment
Parties: Lym International Pty Limited (Appellant)
Leonilda Marcolongo (First Respondent)
QBE Insurance (Australia) Pty Ltd (Second Respondent)
Representation: Counsel
D A Robertson (Appellant)
T Alexis SC; D H Mitchell (First Respondent)
R Cheney (Second Respondent)
Solicitors
Unsworth Legal (Appellant)
Dunstan Legal (First Respondent)
Lee & Lyons (Second Respondent)

File Number(s): 2009/326965
Publication restriction: Nil
Decision under appeal

Jurisdiction:

9101

Citation:

N/A

Date of Decision:

2009-11-26 00:00:00

Before:

Elkaim SC DCJ

File Number(s):

3372/2004

Judgment

BASTEN JA : In proceedings in the District Court, the respondent, Mrs Leonilda Marcolongo, obtained a judgment against parties found to be responsible for causing damage to a building owned by her by removing supporting land. The appellant was the developer, the proportionate liability of which was found to be 25%. It challenges that judgment, asserting that its proportionate liability was a lesser figure. I agree with Campbell JA that the appeal should be dismissed with costs. Subject to the following qualifications, I also agree with his reasons.

First, with respect to issue 1, namely the question whether Mr Young acted as a agent of the developer in contracting with MacDonald Sheetpiling (NSW 1) Pty Ltd, I agree that Mr Brown was not authorised to make admissions on behalf of the developer in respect of that issue. I do not, however, find it necessary to address the scope and operation of the Evidence Act 1995 (NSW) in respect of admissions.

Secondly, with respect to issue 4, causation of damage, I agree that it is necessary to apply the provisions of s 5D of the Civil Liability Act 2002 (NSW). Once it is accepted, as it should be, that the negligence was a "necessary condition of" the harm suffered, it was incontestable that the appellant was responsible for such harm, at least in the present statutory context, for the amount of its apportioned liability. Its failure to take reasonable care related to the maintenance of support for the respondent's land. Its breach of duty was a cause of damage to that land and the respondent's building. The damage fell squarely within the area covered by the duty. It was therefore "appropriate" for the appellant's liability to extend to its proportion of the harm so caused, within the terms of s 5D(1)(b). In that circumstance, I do not find it necessary to express a view in relation to the matters discussed by Campbell JA at [239]-[260].

Appeals to "commonsense" in the context of findings as to causation are usually little more than an exhortation to avoid over-sophisticated analysis. That exhortation should generally be accepted. The point at which careful analysis becomes necessary, and reliance on "common sense" unhelpful, is where there is a real risk that "common sense" conceals fallacious assumptions, illogical reasoning or plain careless thinking. This case does not raise such risks.

CAMPBELL JA : Mrs Leonilda Marcolongo has at all relevant time owned land at 7 xxx Street Mona Vale (" No. 7 "), on which a building containing both shops and residential units was constructed. Lym International Pty Ltd, the Appellant, at all relevant times owned an adjacent property at 5 xxx Street Mona Vale (" No. 5 "). I will refer to it as the Developer. For the purpose of constructing a new building on its land, the Developer made arrangements through which first demolition work, then excavation work, was carried out. The excavation was intended to be the site of an underground carpark. The work of demolition and excavation was carried out in June to October 2002 by Mr Rod Young, who traded under the name of Modern Demolition.

One particular wall on the northeastern corner of Mrs Marcolongo's property was in very close proximity to the boundary between No. 7 and No. 5.

The side of the excavation adjacent to Mrs Marcolongo's property was shored up using the process known as sheet piling. The sheet piling was installed by a company called MacDonald Sheetpiling (NSW1) Pty Ltd (" MSP ").

While the sheet piling was being installed on 20 July 2002, Mrs Marcolongo's building suffered damage as a result of, at least in part, some subsidence that affected its foundations.

She brought proceedings in 2004 in the District Court, initially against the Developer and MSP. The trial did not take place until August 2009.

We were informed that the extraordinary delay in bringing the case on for hearing was affected by the events involved a related piece of litigation that culminated in the High Court decision in Marcolongo v Chen[2011] HCA 3; (2011) 274 ALR 634.

By the time of the trial, MSP had been deregistered. It had been insured by QBE Insurance (Australia) Pty Ltd (" QBE "). QBE came to be a party to the litigation. Both the trial and this appeal have been conducted on the basis that QBE is liable for whatever amount MSP might be liable for.

Mr Young had at one time been a cross-defendant in the District Court proceedings, but he ceased to be a party, on the basis of an agreement between the remaining parties to the litigation. The effect of that agreement is one of the matters in dispute in this appeal.

One of the causes of an action on which Mrs Marcolongo sued QBE and the Developer was negligence, based upon breach of the statutory duty of care contained in s 177 Conveyancing Act1919 . The other was trespass, because some of the work involved in installation of the sheet piling involved incursions into the subsoil of Mrs Marcolongo's land.

The Legislation

It is convenient to set out here the legislative provisions that were relevant to the causes of action.

Section 177 Conveyancing Act was introduced into the legislation in 2000. It provides, so far as relevant:

"(1) For the purposes of the common law of negligence, a duty of care exists in relation to the right of support for land.

(2) Accordingly, a person has a duty of care not to do anything on or in relation to land (the supporting land ) that removes the support provided by the supporting land to any other land (the supported land ).

(3) For the purposes of this section, supporting land includes the natural surface of the land, the subsoil of the land, any water beneath the land, and any part of the land that has been reclaimed.

(4) The duty of care in relation to support for land does not extend to any support that is provided by a building or structure on the supporting land except to the extent that the supporting building or structure concerned has replaced the support that the supporting land in its natural or reclaimed state formerly provided to the supported land.

...

(8) Any right at common law to bring an action in nuisance in respect of the removal of the support provided by supporting land to supported land is abolished by this section.

...

(12) A reference in this section to the removal of the support provided by supporting land to supported land includes a reference to any reduction of that support."

At the times relevant to this litigation the Environmental Planning and Assessment Act1979 (" EPA Act ") contained a Part 4C, which included ss 109ZI and 109ZJ. Section 109ZJ was repealed by Schedule 4.2 of the Civil Liability Amendment (Personal Responsibility) Act2002 , but that Schedule of the Act came into effect on 1 December 2004, after accrual of the various causes of action sued on in these proceedings.

Section 109ZI contained some definitions that applied for the purposes of Part 4C:

" building action means an action (including a counter-claim) for loss or damage arising out of or concerning defective building work.

building work includes the design, inspection and issuing of a Part 4A certificate or complying development certificate in respect of building work."

Because the definition of "building work" in s 109ZI was an inclusive one, it had the effect of expanding, for the purposes of Part 4C, the definition contained in s 4 EPA Act :

" building work means any physical activity involved in the erection of a building."

It is the definition in s 4, not its extension by s 109ZI, that is relevant to this case.

Section 109ZJ relevantly provided:

"(1) After determining an award of damages in a building action ..., a court must give judgment against each contributing party for such proportion of the total amount of damages as the court considers to be just and equitable, having regard to the extent of that party's responsibility for the loss or damage in respect of which the award is made.

(2) Despite any Act or law to the contrary, the liability for damages of a contributing party is limited to the amount for which judgment is given against that party by the court.

(3) A contributing party cannot be required:

(a) to contribute to the damages apportioned to any other person in the same building action ..., or

(b) to indemnify any such other person in respect of those damages.

(4) In this section contributing party , in relation to a building action ..., means a defendant or other party to the action found by the court to be jointly or severally liable for the damages awarded, or to be awarded, in the action."

Section 109ZJ allowed for apportionment of liability amongst defendants or other parties to an action. It did not make the more radical inroad on the common law concerning solidary liability that was made by the proportionate liability provisions of Part 4 of the Civil Liability Act2002 , introduced into that Act by the Civil Liability Amendment (Personal Responsibility) Act. For the " apportionable claims " to which it applied, the Part 4 provisions permitted apportionment of the total damage among all the concurrent wrongdoers who had caused the relevant loss or damage, whether or not all of those concurrent wrongdoers were defendants or other parties in the action.

It was common ground, both at the trial and on the appeal, that the excavation work that was carried out on the Developer's land was "building work" within the meaning of the EPA Act , and thus if both QBE and the Developer were liable for the damage sustained by Mrs Marcolongo's property, apportionment of the damages under s 109ZJ EPA Act was in principle possible.

The Result Below

The District Court judge held that both the Developer and QBE were liable by reason of a breach of the duty of care imposed by s 177 Conveyancing Act . He took the view that his finding on liability under s 177 made it unnecessary for him to decide the trespass claim. No complaint is made on the appeal about the judge's failure to decide the trespass claim.

The judge assessed the quantum of damage that Mrs Marcolongo had suffered as being $1,554,574.50. He apportioned responsibility for the damage 25% to the Developer, and 75% to QBE. Accordingly, he entered judgment for Mrs Marcolongo against the Developer for $388,643.62, and judgment for Mrs Marcolongo against QBE for $1,165,930.88. Judgments of that size were possible because the parties had consented to the monetary limit of the ordinary jurisdiction of the District Court being extended.

Issues on the Appeal

The present appeal is brought by the Developer. It does not dispute that Mrs Marcolongo's property was damaged, or the quantum of damages. Its contention on the appeal is that the judge was wrong in finding that it had any liability to Mrs Marcolongo at all, or alternatively that the judge should have found that its proportionate liability was less than 25%.

QBE does not cross-appeal. It has paid to Mrs Marcolongo the amount of the judgment given against it.

The Developer submits that there are four reasons why its appeal should succeed. It submits that:

1. The judge erred in finding Mr Young was the agent of the Developer for the purposes of entry into the contract with MSP.

2. The judge erred in failing to consider, or alternatively misconstruing, the agreement that the parties entered at the time that Mr Young ceased to be a party to the litigation.

3. The Developer did not, within the meaning of s 177 of the Conveyancing Act , "do anything in relation to" its own land that removed the support provided by that land to Mrs Marcolongo's land. It submits that in finding to the contrary his Honour acted without evidence.

4. Contrary to the judge's finding, the matters that his Honour found to have been breaches of duty by the Developer were not causative of any of the damage sustained by Mrs Marcolongo's building.

Concerning the first of those grounds of appeal QBE, by Notice of Contention, asserts that there is an additional reason why the judge's finding of agency on the part of Mr Young was correct. It is that there was at one time an admission in a pleading of the Developer that the Developer, 'through Rod Young" , had retained MSP to carry out the shoring, sheet piling and anchoring works.

In its written submissions on the appeal QBE submitted that, even if any of the arguments of the Developer succeeded, it would still not be open to the Court to increase the amount for which QBE had been held liable, in the absence of a cross-appeal by Mrs Marcolongo. In the hearing of the appeal, QBE abandoned that submission, and accepted that it was open to this Court to increase the proportion of liability beyond that which the trial judge had found, if this Court concluded that that should have been the result.

Outcome

I have concluded that:

1. The judge was mistaken in finding that Mr Young was the agent of the Developer for the purposes of entry into the contract with MSP.

2. The judge made no error concerning the agreement that the parties entered at the time that Mr Young ceased to be a party to the litigation.

3. The judge was correct in holding that the requirement of s 177, that the developer did "do anything in relation to" its own land that removed the support provided by that land to Mrs Marcolongo's land, was satisfied.

4. While the judge was mistaken concerning two of the causal links he identified between the breach of duty by the Developer and the damage sustained by Mrs Marcolongo's building, his overall conclusion of a causal link was correct.

5. There is no occasion to alter the apportionment of damages from that which the judge ordered.

For the purposes of deciding whether Mr Young was the agent of the Developer in entering the contract with MSP, both parties submitted that the judge was entitled to take into account certain items of post-contractual conduct. I have concluded that the parties are correct in so submitting.

Factual Background

The Development Consent and Construction Certificate

The development at No. 5 was carried out pursuant to a Development Consent granted by the Land and Environment Court on 12 September 2001. Its conditions included:

"A3. Excavations and backfilling

1. All excavations and backfilling associated with the erection or demolition of a building must be executed safely and in accordance with appropriate professional standards.

...

A5. Support for neighbouring buildings

Where excavations extend below the level of the base of the footings of a building on an adjoining allotment of land, the person causing the excavation must preserve and protect the building from damage and, if necessary, underpin and support the adjoining building in an approved manner ..."

These generalities were made more specific by some drawings bearing the name of Henry & Hymass, Consulting Structural Engineers, that formed part of the construction certificate that an approved certifier issued on 21 February 2002. Those drawings showed the excavation being protected by contiguous piles. That is to say, the entire perimeter of the excavation consisted of cylindrical piles that abutted each other.

Some People Involved in the Work

Mr William Mao was a director of the Developer. Mr Robertson, counsel for the Developer on the appeal, accepted that Mr Mao was capable of binding the Developer.

Mr Christopher Browne is a consultant with experience in arranging and overseeing financial aspects of development projects. The judge found at [52] that Mr Browne was employed by Mr Mao on an ad hoc basis to assist in the development of No. 5. I do not take this finding of Mr Browne being "employed" to be a finding that there was a contract of master and servant between them, but rather that Mr Browne was engaged by Mr Mao concerning the development at No. 5. The judge went on to say:

"It is difficult to conclude exactly what his brief was, but it seems to have involved at least dealing with Mr Young and with problems that arose in the course of construction."

At the time the construction work was being planned and carried out at No. 7, Mr Andrew Spanos was employed by MSP as a project administration manager.

The Sheet Piling System

The judge described the process of sheet piling as follows ([79]):

"... firstly some drilling was done to loosen the soil. The sheet-piling was then driven in by a machine with a jaw mechanism which grabbed the sheet and then drove it into the soil by applying a high frequency vibration to the sheet. ... this vibration was in a vertical direction and might span about two to four inches. The sheets were driven consecutively with about 150mm overlap. The anchors were put in to maintain or brace the strength of the sheet-piling."

Uncontroversial evidence showed that the sheets in question were corrugated metal sheeting, each sheet being 915 mm wide. Each sheet had an effective width of 685 mm, because the sheets overlapped. The length of the sheet was custom cut for the job, and in the present case was between 4.5 m and 6 m .

We were not taken to any specific finding, or evidence, about the location on No. 5 at which the metal sheeting was placed into the ground. However, the engineering drawing that was part of the construction certificate showed the intended contiguous pile wall as running parallel to the boundary with No. 7, and (by comparison with identified lengths on the scale plan that formed part of the construction certificate) in a location where the parts of the piles that were closest to Mrs Marcolongo's boundary were between 1.3 and 1.4 m from it. It is likely that the sheet piling was installed in approximately the same location.

Before the sheets were vibrated into the ground some triangular piles were inserted under the footing of adjacent buildings. These triangular piles are a proprietary product of MSP. The piles were inserted to provide temporary stabilisation while the sheet piling was being installed. This process was sometimes referred to in the evidence as underpinning. The judge evidently accepted evidence given by Mr Spanos and Mr Willing, the leading hand for MSP on the job at No. 5, about the process involved in installation of the triangular piles: [59], [63]. As explained by Mr Willing, the MacDonald sheet piling product included the triangular piles as well as the corrugated sheet piling itself. He said that the triangular piles are installed so that they sit approximately vertically underneath the footing of an adjacent building. The temporary piles were not intended to provide permanent support to the footing; rather, they were intended to provide it with support temporarily, during the time that the adjacent earth was being subjected to the vibrations involved in the insertion of the sheet piling. First a hole about 300 mm in diameter is drilled into the ground at a very slight angle right next to the footing using an auger. The pile is then lowered into that hole. The pile is hollow, and has holes along its length. A tube is then lowered into the pile, and compressed air forces out any debris that have collected in the pile as it is lowered into the vertical hole. At some stage in this process the pile is pushed to the back of the hole, so that the pile becomes vertical. The pile is then filled with cement. Some of the cement comes through the holes in the side and partly fills the void around the pile. The pile as installed does not reach all the way to the footing. A box-like object called a headstock, open at the top and containing a hydraulic jack, is installed on the top of the pile. The jack is then screwed up to support the footing, and the headstock partly filled with concrete.

The soil is then loosened by drilling a series of holes at intervals along the lines where the sheet piling is to be installed. The sheet piling is then vibrated into place. The judge evidently accepted at [165] that insertion of the triangular piles could predispose the ground to settlement when the vibration of the sheets into the ground occurred. Excavation then takes place within the confines of the sheet piling. Once some excavation has occurred, ground anchors are then inserted through the sheet piling, in an approximately horizontal plane. In the present case, some of those ground anchors went through Mrs Marcolongo's land.

Six or seven temporary piles were installed under the footing of Mrs Marcolongo's building. Immediately following completion of the underpinning and prior to installing the sheet piling the wall of No. 7 was backfilled using sand. The sand backfill covered up the underpinning.

A report dated 30 November 2001 from Jeffery and Katauskas Pty Ltd, consulting geotechnical and environmental engineers, was addressed to Mr Mao. It referred to the soil at No. 5 having "weak and compressible layers" , and said that the "excavation will require a full depth retention due to the close proximity to the site boundaries and the sandy soils encountered." Part of the report made recommendations concerning the type of retention system that should be installed at the site prior to bulk excavation. The MacDonald sheet piling system was described as being one of the "potentially suitable systems for this site". The report continued:

"However, the vibrations associated with the installations of sheet piles may cause settlement of the adjacent sandy soils. If these methods are to be considered, we recommend that you contact the specialist contractors and obtain their assurance that their systems can satisfactorily be used in these conditions without damaging the nearby structures."

Adoption of the MSP System for No. 5

Mr Browne's first involvement with the project at No. 5 was about three weeks before Mr Young became involved. Mr Mao requested Mr Browne to arrange for Mr Young to undertake some demolition work. Later, Mr Browne became aware that the Developer had requested Mr Young to quote for the excavation work.

On 27 May 2002 Mr Browne received a fax from Mr Young quoting for the excavation and removal of sand at No. 5. It quoted a price of $78,350 excluding GST. Mathematically that equates to $86,185 inclusive of GST. That quotation stated that one of the inclusions was:

"(3) external engineer/supervision $1,000 for the period of excavation & piling only"

The quotation made no mention of any system for retaining the sides of the excavation.

Mr Browne's evidence in chief said that after he had received the fax of 27 May 2002 he had a discussion with Mr Young to ascertain what was included in the quote. His evidence also stated (substituting names of parties for the roles they played in the litigation):

"After discussions with [Mr Young] the [Developer] agreed to enter into an agreement with [Mr Young] for the excavation work. On 5 June 2002 [Mr Young] forwarded the terms of the contract."

Mr Browne also deposed that he recalled that Mr Young recommended that "[MSP] be used for the retention or shoring system on the site." He continued:

"[MSP] had a system that I was not familiar with and I recall that I had discussions with [Mr Young] and representatives of [MSP] about the system. There was a meeting arranged between William Mao; [Mr Young] and Andrew Spanos of [MSP] so that the system could be explained to Mr Mao and myself before we made any decision. I cannot recall the date of the meeting although I do recall it was held at the Trades Union Hotel, which was just around the corner from Mr Mao's then office. At the meeting I was informed by [Mr Young] and Andrew Spanos of [MSP] that the system used by [MSP] was excellent for sites near beaches. I recall that Andrew Spanos said to me words to the effect:

'We have been on a site at Dee Why and our system is the best one to use when dealing with soils near beaches.

Sheet piling is the only way to go on your site as it has high sand content that will need to be shored. I know the types of soil in the area from the Dee Why site and MacDonald's system is great for your site .'"

The meeting at the Trades Union Hotel was the first time Mr Spanos had met Mr Mao and Mr Browne. The judge recorded at [53] that " Mr Browne said he had had no previous experience with [MSP] or with works involving sheet piling . " Mr Mao did not give evidence.

Mr Browne said that, in the course of the discussion at the Trades Union Hotel, Mr Spanos spoke words to the effect of:

"This all overseen by experts. We have our own professional people and experts. We have our work monitored by external engineers."

By reference to documents, Mr Browne stated that he believed the meeting at the Trades Union Hotel occurred between 27 May 2002 and 5 June 2002.

The judge did not make express findings about all of the evidence that Mr Browne gave. At [78] he referred to, and apparently accepted, Mr Spanos' evidence that MSP did not employ its own engineers but rather relied on external engineers for calculations and design, including the design of temporary piles. There was other evidence in which Mr Spanos denied that MSP used independent expert engineers to monitor its work. Mr Spanos explained the role of the engineers in design as being:

"Like a Lysaght roofing sheets, there's often designs done on how those roofing sheets can deal with wind loading, and there are standard design tables where you can give them to a builder and say 'If you're using them in this application, here's the criteria'. You would apply, you know, screws at this spacing, so there was an understanding of the pre-engineering that had been done 10/20 years ago, and then each project would get assessed on its ground conditions and those calculations would be confirmed for that site.

ROBERTSON

Q. In terms of the design of the underpinning, that's the temporary piles that you recalled earlier, that was done by Earth Tech in this case, was it?

A. In that same process, that's right, yeah."

Shoring the excavation using sheet piling involved a totally different construction system to shoring it using contiguous piling, as required by the construction certificate. The judge found that "the change was made principally for cost and time saving reasons" ([17]).

On 4 June 2002 Mr Spanos faxed to Mr Young a revised budget tender quotation for shoring and associated work on the site. That document came into evidence as an Annexure 2 to Exhibit AS1 to the affidavit of Mr Spanos. It was not referred to in the evidence of Mr Browne, and there is no finding, or basis for concluding, that Mr Browne received a copy of it. It had two pages besides its cover sheet. One of them was headed "Payment Conditions - Non Negotiable". The other began by saying "The present extent of shoring and associated work the subject of the above offer is as follows: -" .

The coversheet of the fax of 4 June 2002 showed that the document was address to "Modern Demolition" for the attention of Rod Young. It was headed "Revised Budget Tender Quotation" . The text of the coversheet had as its substance solely:

"Rod,

Here is the latest revision, together with the scope of works we have allowed for."

The "Payment Conditions" page stipulated a price of $252,000 plus GST. Mathematically, that equates to $277,200 inclusive of GST. Oddly, the document said that the amount of the offer was $291,000. It set out a payment schedule, for progress payments, and said, "Our tax invoices will be provided ahead of schedule milestones." It also said "In the acceptance of this offer, you agree to pay overdue charges in the form of 2% interest, in addition to our bank overdraught [sic] charges."

The "present extent of shoring" page described the type of temporary retention system that was proposed to support the excavation, the work that was included in the quote, and the work that was excluded from the quote.

An earlier version of the "Payment Conditions" page of the same document, that lacks a dated coversheet but bears a footer date of 31 May 2002, and a fax header showing that it was faxed from MSP on 3 June 2002, was part of tab 2 of Exhibit CB1 to the affidavit of Mr Browne. Mr Browne's evidence was that he did not see a copy of that document "until some time later than 3 June 2002" .

Like the 4 June quotation, the 3 June quotation consisted of two pages: a single page setting out the payment conditions and a "present extent of shoring" page. However, the document that Mr Browne received consisted only of the page setting out the payment conditions. Mr Browne did therefore not receive "present extent of shoring" page.

The only differences between the page setting out the payment conditions in the document of 3 June and the corresponding page in the document of 4 June are that the document of 3 June contained in the quote two line items adding to $252,000, and correctly stated the offer price as being $252,000, while the document of 4 June contained three line items adding to $252,000, and expressly stated that that price was plus GST.

The "present extent of shoring" page of the 3 June quotation (which was not sent to Mr Browne) and the "present extent of shoring" page of the revised quotation dated 4 June (which was sent to Mr Young but apparently not sent to Mr Browne) each included a statement:

"We have not allowed for the construction of any permanent walls in front of our sheetpiling, however as a guide, we have estimated that a blockwall system will cost in the vicinity of $40,000 to $45,000 plus GST."

The quotation faxed on 3 June 2002 (but not the revised quotation of 4 June 2002) had written in handwriting immediately adjacent to the part that quoted a price:

"Plus $45,000 plus GST

= block work

$326,700.00"

At the hearing of the appeal we were informed, without objection, that the handwriting was Mr Young's, and was on the fax as received by Mr Browne (T11).

On 5 June 2002 Mr Young sent a letter to the Developer, marked for the attention of Mr Mao, and identifying that it related to No. 5. The letter said:

"CONTRACT LYM

Dear William,

This will verify that Modern Demolition will commence a contract with Lym International Pty Ltd on the above mentioned site address.

These works will provide two contractors:

Modern Demolition - Earthworks and excavation

MacDonald Sheet piling (NSW1) Pty Ltd

Overall lump sum price inclusions:

1. Removal of all excavation materials as per specified on plans, which will include detail work in existing bulk excavation other than rock (OTR)

2. All site fencing and signs is included for a period of 6 months - commencing 30 th April 2002.

3. De watering is included in this contract for the period of excavation and piling only.

4. Location and protection of service line at rear of site to be included from anchoring.

5. Contractor for sheet piling will commence approx. 1 to 1 1/2 weeks prior to excavation commencing. The contractor will work in conjunction with Modern Demolition and the entire job will be overseen for entire contract by an external engineer.

TOTAL CONTRACT PRICE: $421,400.000 (Incl GST)

SCHEDULED PROGRESS PAYMENTS

Initial deposit of $15,000 required to be paid direct to Modern Demolition for initial earthworks commencing on site - due 5 th June 2002.

TBA - with a minimum of 2 day notice.

Quotation from Modern Demolition and MacDonald Piling will be supplied.

If you require further information please feel free to contact me."

Mr Browne's evidence also included:

"I recall that after the materials for the sheet piling was delivered to the site I was informed by [Mr Young] that [MSP] required $50,000 in cash to cover its insurance policy for the project. I understand that William Mao had arranged for the money to be given to [Mr Young] for him to give to [MSP]. I was very angry when I discovered that [Mr Young] did not obtain a receipt from [MSP] for the payment."

Mr Spanos said:

"There was a period before sheet piling commenced where MSP was awaiting confirmation from [the Developer] that it had effected insurance cover for the site, including cover that would protect MSP for works it was to perform on the site."

The work started on No. 5 in the week after 18 June 2002. There is no suggestion that in the time between Mr Young accepting MSP's quote on 14 June 2002 and the start of work the Developer took steps to obtain an alternative design for the shoring system from any engineer. Rather, it trusted assurances from MSP.

Payment to MSP for its Work

On 13 June 2002 MSP sent a fax addressed to "Modern Demolition" for the attention of Mr Young. The subject of the document was stated to be "Payment Schedule (Indicative Programme)". The fax said:

"Rod,

In order to ensure that the project runs smooth [sic], and that we are not on site waiting for materials, I suggest the following be adhered to in terms of payment schedule."

It then set out a table which listed each day on which work would proceed, and stated, in respect to each such day, the work expected to be done on that day. The entries for five days, interspersed through the 17 days that the schedule covered, also stated the amount of a payment that was expected to become due on that day.

On 24 June 2002 MSP sent to Modern Demolitions, attention Mr Young, a tax invoice, entitled "Progress Claim No. 1". It was in the form of a printed document, in which some blanks had been filled in by typing. One printed part of the form was a statement appearing prominently near its top, and inside a box, saying "This claim is made under the Building and Construction Industry Security of Payment Act - 1999 ".

The document stated "further to our Quotation dated 3 June 2002 and your acceptance dated 14 June 2002 for the execution of the works, we herewith submit our progress claim to the value of: $33,550."

We were informed by counsel, without there being any dispute, that the Quotation dated 3 June 2002 is the document I have referred to at [55]-[ 59 ] above. There was no written acceptance of that quotation, but it is agreed that the quotation was accepted orally, in a conversation between Mr Young and Mr Spanos.

The tax invoice goes on to include a list of items of work. Alongside each item of work appear columns headed "contract value", "this claim", "previously claimed", and "total claimed". One of the items of work is "installation of sheet piling" , which is attributed a contract value of $20,800. Another item of work is "installation of building stabilisation piers" alongside which appears "no charge". The total appearing at the foot of the "contract value" column was $252,000.

Progress Claims Numbers 2, 3, 4, 5, 6, 7 and 8 are in exactly the same format as Progress Claim No. 1, though each document claims different sums of money, due on a different date. Oddly, each of those progress claims is dated 24 June 2002. It appears that that date is not the product of forgetting to change the date on a standard form, because each progress claim also bears a fax header sheet showing that it had been faxed by MSP on 26 June 2002, at times between 9.54 am and 9.57 am.

Progress Claim No. 6 stated that it was due on 12 July 2002. Progress Claim No. 7 stated that it was due on 19 July 2002.

Progress Claim No. 1 bears a stamp that says "paid 26 June 2002 by: Rod" . Though there is no express finding to that effect, it is a clear enough inference that Mr Young paid each of Progress Claims 1 to 5 inclusive.

MSP had a system whereby a document entitled "internal daily report" is completed each day, concerning each job. Its reports of 19 July 2002, 20 July 2002 and 21 July 2002 relating to the Mona Vale site identified the client as being "Modern Demolitions".

MSP sent another version of a document entitled "Progress Claim No. 6" , bearing date 20 September 2002, to the Developer marked for the attention of Mr Mao. It was in substantially the same format as the version of Progress Claim No. 6 that had been sent to Mr Young, except that the claim made for "supply of foundation piles" had increased by $5,000, and the claim included four variations, whereas no variations were included in the version of Progress Claim No. 6 dated 24 June 2002. The later version Progress Claim No. 6 stated that it was due for payment on 4 October 2002.

Similarly, MSP sent another version of Progress Claim No. 7 to the Developer, marked for the attention of Mr Mao. It was in the same format as the earlier version of Progress Claim No. 7, except that it made a claim of $21,000 for installation of foundation piles (whereas the earlier version of Progress Claim No. 7 had made no claim for that item), and it included the same four variations as the later version of Progress Claim No. 6, whereas the earlier version of Progress Claim No. 7 had included no variations. This later version of Progress Claim No. 7 was dated 4 October 2002, and stated that it was due on 11 October 2002.

The Developer paid the amounts shown in the later versions of Progress Claim No. 6 and Progress Claim No. 7 directly to MSP.

The judge at [82] recounted, and evidently accepted, evidence of Mr Spanos that in about October 2002 he had become concerned about the financial position of Mr Young, and that it was shortly thereafter that progress claims previously sent to Mr Young, but unpaid had been sent the Developer.

Mr Browne's Cross-Examination

The cross-examination of Mr Browne included a portion that began when he was shown an unsigned document on the letterhead of Mr Young's business name. The document was dated Tuesday October 15, 2002. It was addressed to MSP for the attention of Mr Spanos. It stated:

"I received your letter and schedule for placing piles at a rate of eight (8) to ten (10) piles per day under normal drilling conditions and I wish to advise this is acceptable to the client.

This job will require a full working team to be supplied by [MSP] until finalisation of the job. Each pile placed in the ground must be signed off and certified to required loadings by your Engineer as per design. Variations, if any, must be discussed with Rod Young and [the Developer] before proceeding.

The time factor you have suggested is approximately 10 working days. If necessary, this time factor may be extended by an additional six (6) working days maximum under normal drilling conditions. Otherwise, penalties will commence on the seventeenth (17 th ) day at a cost of $1,800.00 per day and will be deducted from initial contract price to [MSP].

On acceptance of this quotation a progress payment of $54,000.00 is to be paid to [MSP]. A second progress payment is to be made two weeks from the date of this quotation, ie Wednesday 29 th October 2002.

Work must commence on arrival of piles ie p.m. of 15th October 2002 or a.m. 16 th October 2002.

We trust the above is acceptable to you and that this last section can run smoothly and within the time frame.

.............................. .................................

(Signed) Rod Young (Signed) Andrew Spanos

Modern Demolition MacDonald Sheetpiling (NSW) on

Behalf of Lym International behalf of MacDonald Sheetpiling"

There was some crossing out and an illegible handwritten amendment following the word "paid" in the final sentence of the fourth paragraph, but the illegibility of the handwriting does not affect the outcome of the case.

Mr Browne said that the document had come from his records, but he could not say with any accuracy when he received it. The cross-examination continued:

"Q. But you see that Mr Young has [sic - is?] there signing off the document on behalf of Lym International?

A. No, I see a document with no signatures on it.

Q. Do you accept that Mr Young in creating this document on his letterhead described himself as acting on behalf of Lym International?

A. Yes.

Q. At some point after this letter's creation obviously you came into possession of a copy of it?

A. Correct.

Q. You at no time disputed with Mr Young or anybody else the proposition that Young was acting on behalf of Lym when he did things in connection with this project?

A. Mr Young was to my knowledge the one that had taken out the contracts with MacDonald Sheet Piling.

Q. Your understanding was that he had done so for and on behalf of the same entity to which you were consulting, Lym?

A. Yes, yes."

Two pages of transcript later, Mr Browne was being cross-examined about a different letter, which he had written on 22 October 2002 to MSP. While that letter is not in the appeal papers, it appears, from the context of the cross-examination, that it contained an assertion that MSP was liable to the Developer for some damage sustained on the site. The cross-examination continued:

"Q. I'm suggesting to you the assertion that you were in any position to hold MacDonald responsible for anything is consistent only with the belief on your part that you enjoyed some contractual relationship with them.

A. No, incorrect."

The cross-examination then turned to another letter dated 29 October 2002 that Mr MacDonald, of MSP, wrote to the Developer marked for the attention of Mr Browne. It is on the topic of a damaged sewer. It said:

"Please note that our offer of work and contract has been made with Modern Demolition, your agent the contact of Rod Young. With this in mind, we have notified Modern Demolition on two separate occasions regarding the abovementioned sewer line. I can confirm that these notifications were sent on 17 th August, and 29 th August 2002.

We hereby again notify that our company puts Modern Demolitions, on notice and advises your company as per our quotation and offer dated 25 th May, 2002, revised on the 3 rd June, 2002, Acceptance and direction of our offer dated the 14 th June 2002 and further confirmed on 5 th July, 2002.

Pursuant to our sub-contractor agreement clause 5.2, we confirm liability for damage to or as a result of the execution of the sub-contract works is with the contractor (Modern Demolition) or any servant or agent of the contractor.

Our company formally requires the contractor or any servant or agent of the contractor to notify their insurers, that under our sub-contract you are indemnify our company from any claims or demands arising out of the project and associated works."

Mr Browne's cross-examination on the letter included:

"Q. ... you'd agree that the letter conveys the understanding of Mr MacDonald that the contract that MacDonald had with Modern Demolition amended with Modern Demolition [sic] as your agent, or as a Lym's agent. Do you see that? I'm speaking of the first sentence, sir.

A. It's stating that - that Modern Demolition is - is acting as our agent. I didn't interpreter [sic] it that way.

Q. You didn't interpreter [sic] this letter that way or you didn't interpreter [sic] the relationship that way?

A. I didn't interpreter [sic] the relationship that way.

...

Q. I take it from time to time you had come to understand that MacDonald viewed the relationship that way, is that right?

...

A. No, I never at any stage because my understanding from the outset was Modern Demolition had engaged MacDonald Sheet Piling - that was it. They - there were supposed to be the contractor for the site and my - at that - I wasn't involved in the actual engaging of MacDonald. My understanding at that time and today is that they were responsibility [sic] to Modern Demolition."

An Identified Deficiency in the Works

Over a weekend during the time the hearing was proceeding, one of the headstocks under Mrs Marcolongo's building was examined. It was found to have been inadequately constructed in that the cavity containing the jack was never filled with concrete, the flange at the top of the jack was not placed flush with the bottom of the footing, and the headstock did not extend 100 mm outside the line of the edge of the footing and building wall but rather sat about 100 mm within this line.

Issue 1 - Agency of Mr Young

Mrs Marcolongo contended that when Mr Young engaged MSP to carry out the works of shoring, sheetpiling and anchoring he did so as the agent of the Developer. The Developer denied that there was any such agency. Rather, it submitted, it had a contract with Mr Young and he, in performance of his obligations under that contract, separately contracted with MSP. The judge upheld Mrs Marcolongo's contention on this topic.

The Developer submits that the Judge was mistaken in so doing. As will appear, I accept this submission.

The Judge's Reasoning

The reasoning by which the judge arrived at the conclusion that Mr Young contracted with MSP as agent for the Developer is elusive. His Honour listed, at [192] the following factors that the Developer had contended were against the existence of an agency:

"(a) MSP addressed its quotation for the work to be performed to Mr Young (Modern Demolition).

(b) The payment schedule dated 13 June 2002 was issued to Modern Demolition.

(c) The tax invoice dated 24 June 2002 was addressed to Modern Demolition.

(d) The group of tax invoices, all dated 24 June 2002, were addressed to Modern Demolition.

(e) Modern Demolition made the first payment of $33,550 on 27 June 2002.

(f) The letter dated 5 June 2002 from Modern Demolition to [the Developer] specifically refers to Modern Demolition subcontracting with MSP.

(g) The apparent admission by Mr Browne at T 271.32 is at best equivocal."

That "apparent admission" is the final question and answer that I have set out at [79] above.

The Judge said at [193] that in his view the letter of 5 June 2002 (set out at [60] above) was the most significant in that list. He continued:

"However, contrary to the submissions of [the Developer] I read it as being consistent with an agency position rather than a subcontract authorisation. I make the following points about this letter:

(a) It does not provide any instruction by [the Developer] for Modern Demolition to subcontract with MSP. Rather, it states that there will be two contractors working on the site, Modern Demolition and MSP, without any suggestion that they would be contracted to each other.

(b) Paragraph 5 specifically envisages a separate external engineer removing the suggestion that Mr Young was to monitor the operations of MSP.

(c) Although the total contract price includes moneys to be paid to MSP this, in my view, is as consistent with an agency as with a subcontract. Mr Young is being given the money to pay MSP. That does not mean he is required to contract with MSP.

(d) My reading of the letter is consistent with the invoices being sent to Modern Demolition.

(e) Mr Young was not called to give evidence. Counsel for [the Developer] submitted that no inference should be drawn against any party for the failure of Mr Young to give evidence. I do not agree. I think that on the case run by [the Developer] it is the party that would have been expected to call Mr Young. However, I do not draw any inference beyond that his evidence would not have assisted [the Developer's] case."

He then referred to the final two questions and answers in the evidence of Mr Browne, which I have set out at [79]. His comments concerning that evidence were:

"(a) The fact that Mr Young had taken out the contract with MSP does not necessarily mean he was contracting on his own behalf or on behalf of MSP.

(b) It is the second question and answer that I think are firmly against [the Developer's] interests and amount to an admission, to the extent that Mr Browne was able to make it, that Mr Young was the agent of [the Developer]. Mr Mao, the principal of [the Developer], did not give evidence and I draw the same inference in that respect as I did with Mr Young. The difference, of course, is that there can be no doubt at all that Mr Mao is a witness in [the Developer's] camp."

That is the totality of the judge's reasoning on the topic.

Jones v DunkelFinding Concerning Mr Young

The Developer submits that the judge was mistaken at [193(e)] of his judgment, set out at [87], in drawing even a limited Jones v Dunkel(1959) 101 CLR 298 inference concerning Mr Young's absence. I agree.

Jones v Dunkelauthorises, but does not require, a tribunal of fact to engage in two different types of reasoning. One is to infer that the evidence of an absent witness, if called, would not have assisted the party who failed to call that witness. The other is that the tribunal of fact can draw with greater confidence any inference unfavourable to the party who failed to call the witness, if that witness seems to be in a position to cast light on whether that inference should properly be drawn: Manly Council v Byrne[2004] NSWCA 123 at [51]. It is only the first of those courses that the trial judge followed in the present case.

Glass JA identified a number of propositions for drawing such an inference in Payne v Parker[1976] 1 NSWLR 191 at 201-202. Among these were the following conditions:

"(6) Whether the principle can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained.

(7) The first condition is also described as existing where it would be natural for one party to produce the witness: Wigmore , par 286, or the witness would be expected to be available to one party rather than the other: O'Donnell v Reichard[1975] VR 916, at 921, or where the circumstances excuse one party from calling the witness, but require the other party to call him: ibid [1975] VR 916, at p. 920, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him: ibid [1975] VR 916, at 920, Regina v Burdett(1820) 4 Barn & Ald 95; 106 ER 873, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other: Earle v Castlemaine District Community Hospital[1974] VR 722, at 733, or where his absence should be regarded as adverse to the case of one party rather than the other: ibid [1974] VR 722, at 734. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary: ibid [1974] VR 722, at 728. If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied. There is, however, some judicial opinion that this is not necessarily so: ibid [1974] VR 722, at 728. Evidence capable of satisfying this condition has been held to exist in relation to a party's foreman: Cafe v Australian Portland Cement Pty Ltd (1965) 83 WN (Pt 1) (NSW) 280; his safety officer: Earle v Castlemaine District Community Hospital[1974] VR 722; his accountant: Steele v Mirror Newspapers Ltd[1974] 2 NSWLR 348; his treating doctor: O'Donnell v Reichard[1975] BR 916, at 921."

The drawing of the Jones v Dunkelinference was a step the judge took on the way to his conclusion that Mr Young contracted with MSP as agent for the Developer. It would therefore not have been open to the judge to assume, at the time he was deciding whether the inference was open, that Mr Young had indeed been the agent of the Developer. Apart from that disputed agency (which, in any case, was at best an ad hoc one for the purpose of entering a particular contract) there is no reason to believe that Mr Young had had any contact with anyone on behalf of the Developer, outside the confines of this particular construction job. His role in that job (apart from the alleged agency) was as an independent contractor, who had obtained the job after submitting a quotation. There is no reason to believe there was any contact between Mr Young and anyone on behalf of the Developer after this particular construction job had concluded, other than in the context of the present litigation. The contact that they had in that context was that the Developer had sued Mr Young, by a cross-claim that it ultimately did not press. Nothing in Mrs Marcolongo's amended ordinary statement of claim (the last pleading she filed before the trial) said that Mr Young either was, or was not, the agent of the Developer for the purpose of entering the contract with MSP. Nor was there such an allegation in the defence of either the Developer or QBE at the time at which the matter went to trial. Thus, there was no direct issue on the pleadings about whether Mr Young had contracted with MSP as agent for the Developer.

In all these circumstances, the judge was mistaken in finding that the Developer would have been expected to call Mr Young. Thus, the limited Jones v Dunkelinference that the judge drew should in my view not have been drawn.

Availability of Subsequent Conduct

Before deciding whether the judge's finding of agency is correct, it is necessary to be clear about the scope of the evidence that is available for making that decision. That necessitates an examination of whether certain conduct that occurred after Mr Young engaged MSP can properly be used, and if so on what basis it can be used.

QBE submits that the judge was correct in referring to extrinsic materials, including post-contractual conduct, in order to ascertain the capacity in which Mr Young contracted. There are two particular instances of post-contractual conduct that QBE wishes to invoke. The first is what it characterises as an admission by Mr Browne in the witness box. The second is the conduct of the Developer in paying MSP's insurance premium before the work started, and paying Progress Claim No. 6 and Progress Claim No. 7 when MSP sent those documents to it in September and October 2006.

The Developer seeks to draw support from the various Progress Claims that MSP sent to Modern Demolitions ([54]-[61] above) for its contention that Mr Young did not contract with MSP as an agent of the Developer. One basis on which it seeks to do so is that the sending of the Progress Claims was conduct contemporaneous with the entry into the contract.

In my view, that basis is not available. The relevant contract was entered on 14 June 2002, and the Progress Claims were not sent until 24 June 2002.

The Developer alternatively supports those Progress Claims being available to ascertain the capacity in which Mr Young contracted because, even if they are post-contractual conduct, they are an admission. The Developer also seeks to rely on MSP's internal reports ([72] above) as support for Mr Young having contracted in his own right.

As will appear, it is of importance for any consideration of the availability of post-contractual conduct that any contract between Mr Young and MSP was not wholly in writing. MSP's quotation of 3 June 2002 was accepted orally. As well, the Developer concedes, in my view correctly, that there must be oral elements in the contract arising from the discussions between Mr Browne and Mr Young (Appeal tp 15).

Admissibility and Legitimacy of Use of Evidence of Post-Contractual Conduct

Sometimes the question of whether post-contractual conduct can properly be used in seeking to find the terms of a contract arises if there is an objection to its admissibility. At other times a question arises of whether evidence of post-contractual conduct that was not objected to can legitimately be used either to find the terms of, or to construe, a contract.

Under the Evidence Act 2005 , sometimes evidence that is relevant is excluded from admissibility. However, relevance is always an essential precondition for admissibility. Relevance is defined by s 55 of the Evidence Act as " evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding . "

The topic of the use that may legitimately be made of evidence that has been admitted without objection has its complications (see J D Heydon, Cross on Evidence , 8 th Australian edition (2010) at [1650]-[1680]). However, it can at least be said that it would be improper for a judge to use, in assessment of the probability of the existence of a fact in issue, evidence that in truth does not rationally affect that probability. Further, sometimes a rule of evidence specifically restricts the use that may be made of admissible evidence, by providing that a type of evidence is admissible to prove some particular type of matter, or by imposing a condition on the use of evidence in a particular way. (Section 83, mentioned further at [125] below, provides a presently relevant example.) Thus questions of the admissibility of evidence, to the extent they are based in relevance, or in such restrictive principles, can also cast some light on whether evidence admitted without objection can legitimately be used in a particular way. The judgment of Mason J in Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales(1982) 149 CLR 337 at 351-352 illustrates this, as his Honour discussed in terms of admissibility the topic of when surrounding circumstances may legitimately be used in the construction of a written contract. It is for these reasons that the following discussion sometimes talks of admissibility, and counsel in submissions sometimes spoke of the admissibility of the evidence, even though the evidence that is the subject of present contention was admitted without objection, and the dispute is about how it can legitimately be used.

Assistance from Wilson v Hart ?

One authority that QBE cites in support of its contention that the subsequent conduct can legitimately be used, is the statement of Park J in Wilson v Hart(1817) 7 Taunt 295 at 304; 129 ER 118 at 122 that it "is the constant course to shew by parol evidence, whether a contracting party is agent or principal."

Wilson v Hartdoes not bear on the present problem. It arose from the provision of the Statute of Frauds requiring a contract in writing or a note or memorandum thereof concerning contracts for the sale of goods for the price of £10 or more. The issue related to whether, when the documentation relating to a contract for the sale of goods showed a particular person as the purchaser, it was open to prove by oral evidence that that person was acting as an agent, and for the principal of that person to then be sued on the contract. Nothing in the facts of Wilson v Hartinvolved using subsequent conduct to decide whether a contract had been entered between particular parties.

For What is County Securities Authority?

Another authority that QBE cites to support the use of post-contractual conduct is County Securities Pty Ltd v Challenger Group Holdings Pty Ltd[2008] NSWCA 193 at [161] ff per McColl JA. Deciding whether County Securitiesis authority for the use of post-contractual conduct requires a close examination of the facts of the case.

County had sued Challenger and its related company CHL, alleging that it had paid an amount of around $338,000 more than it was obliged to pay when it settled an agreement (" the Transfer Agreement ") with Challenger and CHL. Under the Transfer Agreement County acquired CHL's Equity Swap Business. County had failed in the court below, but County appealed successfully to this Court.

CHL operated a business under which it entered into Equity Swaps with entities called ACE and ACM. Under an Equity Swap, CHL agreed to pay to ACM or ACE an amount equal to the economic benefit that would be derived from ownership of a certain number of shares (" Notional Shares ") in Seven Network Ltd (" Seven "); ACM or ACE paid interest to CHL; and payments were made between the parties to the swap from time to time so that CHL always held a certain percentage of the then value of the relevant number of Seven shares (" Collateral Amount "). CHL established a hedge to protect itself from loss on the Equity Swaps. The hedge was comprised of shares in Seven (" Physical Stock ") equal in number to those to which a particular swap related, and a debt that CHL owed on a Margin Loan that it had acquired to enable it to fund the part of the purchase price of the Physical Stock that had not been derived from the Collateral Amount. As Spigelman CJ explained at [5] it was essential that the Equity Swaps be kept quite distinct from the hedge, because if ACE and ACM knew that CHL had acquired Physical Stock it might be arguable that CHL was "warehousing" Seven shares for ACE and ACM.

One part of the Transfer Agreement was a transfer to County of the Equity Swaps. This part of the transaction was wholly in writing, contained in a Novation Agreement entered on 23 June 2003: see [80]. The other part of the Transfer Agreement required the transfer to County of the components of the hedge, including County undertaking the debt owing on the CHL Margin Loans. At the time of settlement EML was the lender of the CHL Margin Loans.

Settlement of the transaction occurred on 26 June 2003: see [83]. The Physical Stock was transferred to County in an off-market transaction, pursuant to a Share Transfer form that the relevant County officer signed on 24 June 2004: [83]. County paid the whole of the amount that CHL then owed to EML on its Margin Loan Account. That payment happened pursuant to a Transfer Request that County had sent to EML on 23 June 2003. It directed EML to "pay out the loan balance on account" CHL from available funds in County's account: [81]. On 26 June 2003 Mr Basten, the relevant officer of CHL, credited back to County interest that had accrued on the Margin Loan Account between 1 and 26 June 2003. However there was an amount of about $338,000 of interest that had been capitalised previously on that loan account, which was not credited back. County did not realise at the time that there was any capitalised interest in the Margin Loan Account, Mr Basten did not realise there was any capitalised interest when he credited back the interest that had accrued in June, and it was contrary to the way in which County had been informed the Equity Swap Business worked that there should be any such capitalised interest: [127], [197]. Mr Basten credited the June interest because Mr Gilsenan, the Chief Financial Officer of Challenger, had directed him that the transfer was to be at no profit to Challenger: [74], [84]. It is not clear from the judgments when that direction had been given.

County's claim in the litigation was that it had overpaid the purchase price by that $338,000, and was entitled to have Challenger and CHL reimburse it for that overpayment. The correctness of that claim depended on whether the parties had agreed that County had agreed to take over liability for the total amount owing on the CHL Margin Loans, or had agreed only to take over liability for the principal amount of those loans.

The primary judge had found that the Novation Agreement, the share transfers and the Transfer Request constituted the terms of the Transfer Agreement: [92]. Thus his view was that the contract was wholly in writing.

On appeal County contended that there were oral terms in the agreement ([138], [142]), and that neither the Transfer Request nor the share transfers contained contractual terms: [140]. Challenger and CHL accepted on the appeal that when the court was deciding what agreement had been entered into, it was entitled to take into account the terms of the Transfer Request and "the parties' conduct in entering into the transactions to effect the transfer of the Equity Swap Business to County ": [148]. " The parties' conduct " would appear to include Mr Basten's action in crediting back the June interest.

Contrary to the view of the primary judge in County , McColl JA (Beazley JA agreeing) held the Transfer Agreement to be a contract ascertained by looking at the whole relationship between the parties ([170]) and that included conversations ([181]). Spigelman CJ held that it was partly written, partly oral and partly to be inferred from conduct: [2]. McColl JA at [183] (Spigelman CJ at [30] and Beazley JA at [66] agreeing in this respect) held that the Transfer Request was not a contractual document, but rather a communication to a third party made by one of the contracting parties in the implementation of the Transfer Agreement.

Spigelman CJ at [30] said that the Transfer Request was not part of the Transfer Agreement, but was evidence from which the terms of that Agreement could be inferred. This was done not by construing the words of the Transfer Request itself, but by taking the Transfer Request into account, along with other evidence, in deciding what was the agreement between the parties. When used in that way, other evidence outweighed any inference drawn from it that the parties had agreed to transfer the total amount owing on the margin loan accounts: [31]. Overall, the Chief Justice found that the agreement was to transfer the Equity Swap Business, and that the capitalised interest was not part of that business: [35]. Spigelman CJ found that the action of Mr Basten in paying out the June interest was post-contractual conduct, of an objective nature, that " significantly reinforces [the] conclusion that the margin loan that was assigned pursuant to the Transfer Agreement was limited to the principal paid for the acquisition of the hedge shares and did not extend to capitalised interes t": [46]. Thus his Honour (and in this respect Beazley JA agreed with him) based the liability of Challenger and CHL on breach of an implied term that there was no capitalised interest: [52]-[55].

McColl JA made no decision about the date on which the contract was entered. Rather, she held that:

"It is not easy to identify offer and acceptance, or even the precise date upon which the parties agreed to be bound, other than to say that considering the events which happened after the idea of County acquiring the Equity Swap Business was floated, it is clear there was a contract..." [170].

The part of McColl JA's judgment at [161] ff, on which QBE relies, considers the extent to which the re-crediting of the June interest could be relied on. Her Honour said: "There is a factual question about whether this was conduct contemporaneous with the Transfer Agreement or post-contractual conduct".

Her Honour went on to say at [161]-[162]:

"The present state of the law throughout Australia on whether, and if so when, it is possible to use post-contractual conduct as an aid to construction of the contract is not yet settled, the view, favoured in this Court, being that subsequent communications cannot be looked to as an aid to construction of a contract, but can be looked to as an aid to deciding whether a contract has been entered into: Pethybridge v Stedikas Holdings Pty Ltd[2007] NSWCA 154; (2007) Aust Contract R 90-263 (at [59]) per Campbell JA (Beazley JA agreeing); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd)[2008] NSWCA 149 (at [99] ff) per Giles JA (Hodgson and Campbell JJA agreeing).

However it is permissible to have regard to the conduct of parties, even subsequent conduct, as constituting an admission of the state of the parties' rights: see Pitcher v Langford(1991) 23 NSWLR 142 (at 160); Grey v Australian Motorists & General Insurance Co Pty Ltd[1976] 1 NSWLR 669 (at 684-685); Jones v Sutherland Shire Council[1979] 2 NSWLR 206 (at 231); Eslea Holdings Ltd v Butts(1986) 6 NSWLR 175 (at 188E), although care must be taken about identifying the fact said to have been admitted: Sagacious (at [106])."

Ultimately, her Honour did not apply any of the law concerning using post-contractual conduct as an aid to construction or as an admission, because of her decision at [201]-[202] concerning this factual question:

"Mr Gilsenan's direction to Mr Basten was an admission that the transfer was to take place on the terms for which County contended. It is worth briefly re-visiting Mr Gilsenan's evidence in this respect to make good this proposition.

Mr Gilsenan said that he instructed Mr Basten that the transfer of the swaps was to be 'at book' and that if a corporation sold or disposed of an asset at book value one would not expect any profit or loss to be recorded. He also accepted that 'the book value [of the Challenger shares] would have been the value of the shares bought off the market plus brokerage'. His direction to Mr Basten was consistent with an agreement that the price County was to pay for the transfer did not include capitalised interest. Mr Basten complied with the direction on 26 June by crediting the June interest to County. Mr Gilsenan's admission that the transfer was to take place at book value was communicated to County by this action. It constituted an objective circumstance to which the Court could have regard in determining the terms of the contract . It was not post-contractual conduct . Rather it took place contemporaneously with the final act of settlement, which, as the primary judge found (at [53]), was on 26 June 2003." (emphasis added)

As Mr Gilsenan was both the CFO of Challenger and a director of CHL ([74]), and it was not disputed that he had authority to contract on both of their behalves ([174]), he was able to make an admission on behalf of those parties to the contract, about matters relevant to the terms of the contract. However, her Honour held that his conduct in making that admission was not post-contractual.

As Beazley JA agreed with this aspect of McColl JA's judgment, the majority reasons in County do not have as their ratio any proposition about the availability of post-contractual conduct for the purpose of finding the terms of an agreement that is wholly or partly oral.

Another Basis for Availability of Post-Contractual Conduct - As Admissions?

However Tomko v Palasty[2007] NSWCA 258 deals, though not exhaustively, with that topic. Basten JA at [13]-[14] (with whom Mason P agreed) held that post-contractual conduct can be used for that purpose when that conduct is an admission. Einstein J at [68] (with whom Mason P also agreed) similarly held that:

"... subsequent communications may legitimately be used against a party as an admission by conduct of the existence or non-existence, as the case may be, of a subsisting contract, where an issue concerns whether a particular person was a party to that contract."

Counsel for the Developer submits, concerning such post-contractual conduct, "unless it is closely contemporaneous it should not be admitted unless it is a clear admission" (tp 16).

I do not accept that submission, for two reasons. First, once a post-contractual admission passes the test of relevance, it is admissible unless it is excluded under s 135 Evidence Act (supposing that it is not hearsay or opinion evidence). Second, sometimes post-contractual conduct can be availed of to find the terms of a contract not wholly in writing even if that conduct is not admissible as an admission.

If being an admission were the only route through which post-contractual conduct could be available as an aid to finding the terms of a contract not wholly in writing, there would be limitations on the use to which that conduct could be put. Conduct relied on as an admission is evidence against the party to litigation on whose behalf the admission is made, but it is not evidence against any other party to the litigation unless that other party consents: s 83 Evidence Act . Sometimes that could limit the use that could be made of post-contractual conduct, in determining, as against a person who had not made the admission, what the terms of the contract were. Further, it is not possible to prove, on the basis that it is an admission, conduct of someone, who is not a party to the litigation in which that proof is sought to be made or acting with the authority of such a party (s 87). (It is unnecessary to discuss whether the Evidence Act permits an admission to be made by a privy of a party.)

However, subject to a problem to which I will turn in the next few paragraphs, those limitations do not apply in the present case. Here QBE seeks to use the conduct of the Developer in paying the insurance premium and the second versions of invoices 6 and 7 as relevant subsequent conduct. QBE contends that that is conduct capable of being an admission by the Developer that it was the other party to the contract under which MSP did the sheet-piling work. As well, the Developer seeks to use the evidence concerning MSP sending the first version of the invoices to Mr Young and his payment of the first five of them against QBE, to prove that Mr Young was not the Developer's agent. It contends that that evidence can be admissible against QBE (standing in the shoes of MSP) insofar as it is an admission by MSP about who were the parties to the contract. The Developer contends that, as it was MSP who composed and sent the invoices, that conduct amounts to an admission that it was Mr Young who was the other party to the contract. Thus, it contends, the conduct is a permissible source for ascertaining the terms of an agreement to which MSP was a party, by reason of being an admission by MSP.

The topic of these putative admissions is the identity of the party other than MSP to a contract that undoubtedly existed for the performance of the sheet piling work. That a particular person is party to a contract is a matter of mixed fact and law. Under the common law, Mahoney JA in Grey v Australian Motorists & General Insurance Co Pty Ltd[1976] 1 NSWLR 669 at 684-5 held that a party-witness can be asked in court to admit a conclusion depending on a legal standard (whether particular debts had been sold), and referred to authority supporting the view that there can be an admission of a matter of mixed fact and law. Glass JA at 675-6 reached an opposite conclusion, while Samuels JA expressed no opinion on that topic.

The Developer also contends that the statement of the judge in [201(c)] that "an inappropriate and ineffective system was allowed to be used" was not justified on the evidence.

The written submissions of QBE do not argue against the contention that the judge was mistaken in [201(c)]. In those circumstances I take it as conceded. However, concerning the judge's statement that "an inappropriate and ineffective system was allowed to be used" , I would point out:

- it is not clear whether the judge is saying that the entire sheet piling system was inappropriate and ineffective, or whether he is saying that the temporary props under the foundation were inappropriate and ineffective.

- it would not be necessary for Mrs Marcolongo to prove that the sheet piling system was inappropriate and ineffective to succeed in proving that that system had been adopted without sufficient care, and that its adoption caused damage to her.

Mr Robertson accepts that s 5D(1)(a) Civil Liability Act is satisfied in the present case because "the choice to go with sheet piling was a necessary condition of the damage as it occurred" (AT 31). That concession is consistent with Woolworths Limited v Strong[2010] NSWCA 282 at [50] which held that application of s 5D(1) requires the court to consider the particular harm that the plaintiff in the proceedings has suffered. He submits, however, that it is not appropriate under s 5D(1)(b) to attribute liability to someone who merely puts in place the preconditions that enable another person's negligence to become effective.

Mr Robertson, adopting as an approximation that the sheet piling system was installed about a metre from the boundary, submits that the cause of the damage to Mrs Marcolongo's building was defective installation of the temporary piles. He submits that installation of the temporary piles underneath Mrs Marcolongo's building:

"... wasn't a part of the system that was ever described or exposed to [the Developer]. [The Developer] was never asked to approve or otherwise on the evidence. ... As far as [the Developer] was concerned, the system was the sheet piling. .... The fact that MSP chose to use another mechanism which was ineffective is not something that can be in my submission attributed to them. In other words, unless they had knowledge that these temporary piles were going to be used and approved that, then there's no basis for the attribution of cause." (AT 32-33)

Reaching a decision concerning that submission requires some examination of s 5D and its role in the law of negligence. In Adeels Palace Pty Ltd v Moubarak[2009] HCA 48; (2009) 239 CLR 420 at [11], [41] the High Court has made clear that a court's decision about causation by negligence must now be approached in accordance with s 5D.

The law of negligence operates in a framework of assumptions about how one person in society should act towards another. Those assumptions are involved in the notion of taking reasonable care. The assumptions are incompletely articulated, and come to be understood more through ostensive definition than through explicit exposition. The assumptions are seen as having a sufficiently wide degree of acceptance to be applied to everyone in the society, and a sufficient degree of wide acceptance to be applied by everyone who is given the opportunity to think about and discuss them. Being applied to everyone in a society makes them a fit subject for being the law rather than a private or sectional standard. Being able to be applied by everyone who is given the opportunity to think about and discuss them makes the topic of whether there has been a failure to exercise reasonable care a topic fit to for a jury to apply, as usually occurred in the earlier days of the tort of negligence. The members of a jury might initially have been randomly chosen members of society, but the trial process itself, and the opportunity for discussion in the jury room, provided each juror with the occasion for reflection and discussion about the standard of conduct that was being applied.

The question that arises under s 5D(1)(a) of whether a breach of duty is a necessary condition for a particular harm to a plaintiff that follows it in time is purely an objective factual inquiry, dependent on knowledge of how in fact one type of event brings about a different type of event.

There are also two different types of normative evaluation involved in the application of s 5D. One of them arises in the inquiry under s 5D(2), of whether, in an exceptional case and where there has been negligence that cannot be established as a necessary condition of the occurrence of harm, that negligence should nonetheless be accepted as establishing factual causation. Section 5D(2) directs the court to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. The occasion for making that sort of evaluation does not arise in the present case. The other arises under s 5D(1)(b), of deciding "that it is appropriate" that the person who has failed to act with reasonable care should be held liable for the particular harm concerning which factual causation has been established.

The Review of the Law of Negligence Final Report , September 2002 ( "the Ipp Report" ) that is the avowed source of the Civil Liability Act , recommended that the test for causation should include separate elements of factual causation and scope of liability (Recommendation 29, at [7.49]). At [7.42] the Report says:

" ... a finding that the negligent conduct was a necessary condition of the harm may, by itself, be sought to justify a conclusion that the defendant ought to be held liable for the consequences of the negligence. The point is not that imposition of liability may not be justified, but only that a finding that the negligence was a necessary condition of the harm is not, by itself, sufficient to support that conclusion, because there is an infinite number of necessary conditions of every event. For this reason, the Panel recommends a legislative statement to the effect that the issue of causation has two elements - factual causation and scope of liability - both of which need to be addressed."

One of the ways in which the existence of an "infinite number of necessary conditions of every event" is manifested in the attribution of responsibility lies in separating out those necessary conditions that fail, at a general level, to meet a standard of acceptable behaviour by one member of society towards another from other necessary conditions that do not involve such a failure. Evaluation of any action for the purpose of attribution of responsibility recognises that the action occurs in the context or against a background of circumstances and actions that are in themselves neutral or normal for evaluative purposes. In attributing responsibility for a motor car collision, it may well be that the accident would not have happened if one of the drivers had not been invited to meet a friend, supposing that the accident happened en route to that meeting. While the friend's invitation is a factual cause of the accident, it is inappropriate to attribute responsibility to the friend for issuing the invitation. This is because inviting a friend to visit is the sort of thing that is itself part of the ordinary background of social action that is not in itself blameworthy. Suppose instead that the accident would not have happened if one of the drivers had not borrowed the car involved. Whether the owner's lending the car is itself blameworthy, and deserving of the imposition of liability for the accident, will depend on matters such as whether a defect that the owner should have known about was part of the physical cause of the accident, or whether there was no such defect and the accident would not have occurred without negligent driving by the other driver involved. It is the blameworthiness of the particular necessary condition for the accident that makes it appropriate to attribute responsibility to the person who performed that necessary condition. Conversely, if a person's action is a necessary condition of particular harm happening but is not itself blameworthy, that person's action is not seen, for the purposes of attribution of responsibility, as justifying the imposition of liability. That does not involve denying the causal role of the necessary condition, just saying that not all causes deserve the attribution of legal liability.

This does not, however, provide an adequate explanation of the operation of s 5D(1)(b). That is because s 5D is concerned with providing for a test for when "negligence caused particular harm" . "Negligence" is defined in s 5 as meaning "failure to exercise reasonable care and skill" . The scope of s 5D is wider than the tort of negligence, because s 5A(1) provides that "This Part [Part 1A - Negligence] applies 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." However, the notion of a failure to exercise reasonable care and skill, whether used in the law of tort or in the other contexts to which s 5A(1) refers, already has within it the notion that there has been a departure from proper standards. Section 5D(1)(b) implicitly assumes that there might be some situations in which a person has failed to exercise reasonable care, and that that failure to exercise reasonable care was a necessary condition of the occurrence of the harm, but even so it is appropriate for the scope of the negligent person's liability not to extend to the harm so caused.

Deciding whether conduct has failed to meet the standard of reasonable care is an evaluation of the conduct, by reference to standards of how one member of society ought behave towards another. The normative element in that exercise involves applying to the particular alleged breach a standard of how, at a fairly high level of generality, people ought behave towards one another. The focus of s 5D(1) is different to that - it evaluates both the conduct itself and also the connection that there is between a failure to exercise reasonable care, and particular harm that a particular plaintiff suffers following that event.

The Ipp Report's total explanation of its concept of scope of liability is at [7.43]-[7.50]. It is reproduced in the Schedule to this judgment. By reference to terminology that the common law used, it identifies some types of situation where it might not be appropriate to hold a defendant liable for the consequences of his failure to take reasonable care. The identified types are situations where:

(a) as a matter of common sense that people would say that the negligence was not a cause of the harm;

(b) the negligence is not the "real cause" or "effective cause" of the harm;

(c) another necessary condition "intervenes" between the defendant's conduct in the harm and "breaks the chain of causation". The example is given of a driver who negligently injures a pedestrian, who is further injured when the ambulance in which she is being taken to hospital is involved in a collision as a result of negligence on the part of the ambulance driver. In that situation, the first driver would not be held liable for the injury resulting from the second accident, notwithstanding that the first driver's negligence was a necessary condition of the harm suffered in the second accident.

(d) the damage is too remote - ie not a reasonably foreseeable consequence of the negligence.

The common law used the first three of these concepts as ways of holding that something that was a necessary condition of the occurrence of harm was not "really" a cause of the harm. It then used the concept of remoteness of damage as a way, once a "real" cause had been found, of limiting the damages for which the person who had engaged in the action or inaction that was the "real" cause was held responsible. It was only by use of the concept of remoteness of damage that the common law explicitly recognised that it was limiting liability for the consequences of a wrongful action.

Of particular relevance for this case, it did not always happen that identification of a later cause of the harm in question was enough to "break the chain of causation" between the harm and an earlier necessary condition of the harm. The common law has long ago abandoned the "last opportunity rule" as a test of causation.

There was some recognition in the common law that the law was applying its own concept of causation, which was not the same as applied in some other fields of discourse. In National Insurance Co of New Zealand Ltd v Espagne(1961) 105 CLR 569 Windeyer J noted at 590 that:

"Sir Frederick Pollock long ago sounded a warning that 'the lawyer cannot afford to adventure himself with philosophers in the logical and metaphysical controversies that beset the idea of cause'."

See further, Mason CJ's comments in March v E & MH Stramare Pty Ltd(1991) 171 CLR 506 at 509.

Thus, the common law searched for "a cause" of a particular harm by the use of concepts like the first three identified. However, this search involved a covert application of evaluative standards, concerning when and why it was appropriate for a person to bear legal liability for his or her actions or inactions. The recommendation of the Ipp Committee that is now embodied in s 5D recognised the common law's implicit reliance on normative assessments in determining causation. The Ipp Committee's recommendation did not suggest that the conclusions at which the common law had arrived concerning when it was appropriate to hold a person responsible were wrong. Rather, its recommendation required that the covert application of evaluative standards become explicit.

In Zanner v Zanner[2010] NSWCA 343 this Court held that the notion of common sense that the common law had applied in deciding causation could be used in carrying out the task under s 5D(1)(b): at [12] per Allsop P, and [79] per Tobias JA (Young JA agreeing with both).

I respectfully agree. When a jury decided negligence cases under the common law, the question of causation was the province of the jury. The normative standards that were involved in deciding causation were ones that ordinary members of the community understood and could apply. The widely held understanding of ordinary people is often called "common sense" - sense that is common to everyone - and judges adopted and invoked this notion of "common sense" to explain to jurors the sort of connection between failure to exercise reasonable care, and subsequent harm to the plaintiff that warranted finding that the defendant was legally liable. Now negligence cases are decided by judges sitting alone, without the assistance of other fellow citizens to help them decide whether holding a defendant responsible for having acted negligently would accord with common standards of when people ought be held responsible. In this context a judge's decision about whether it is "appropriate", within the meaning of s 5D(1)(b), to hold a defendant liable for the consequences of his negligent act should still be decided by reference to the standards that the general mass of the community would understand and apply. As McHugh J said in Dovuro v Wilkinsat [34]:

"If negligence law is to serve any useful social purpose, it must ordinarily reflect the foresight, reactions and conduct of ordinary members of the community or, in cases of expertise, of the experts in that particular community. To hold defendants to standards of conduct that do not reflect the common experience of the relevant community can only bring the law of negligence, and with it the administration of justice, into disrepute."

While a judge has some feeling for this simply by being a member of the community, a judge also has available assistance from cases that decide when it is, and when it not "appropriate" to hold a defendant liable for the consequences of his negligence. Insofar as they are decisions about the facts of particular cases they do not operate as precedents, in the sense of cases that provide binding authority for subsequent cases. Rather, they fill the somewhat different role of ostensive definition (definition by showing), that the common law has long used previous cases to perform. Reading a variety of cases that have considered whether a defendant should be held liable for the consequences of his negligence enables one to come to an understanding of the standard by which that appropriateness is to be ascertained.

The Ipp Committee's report recognises that whether it is appropriate to attribute to a negligent defendant responsibility for particular harm that results from that negligence depends to some extent on the class of relationship between the plaintiff and defendant. For example, suppose that the defendant is a medical practitioner and the plaintiff his patient who has sustained a rare complication after undergoing an operation that the plaintiff agreed to undergo only because the defendant failed to warn that that complication could arise from that operation. The relationship between plaintiff and defendant would be a relevant element in a conclusion about the appropriateness of attribution of liability. Alternatively, a conclusion about the appropriateness of attribution of liability can have as a relevant element that the defendant is a motor vehicle driver and the plaintiff a passenger in another vehicle. One can see that there are elements of personal reliance and trust in the relationship between medical practitioner and patient that are not exactly parallelled in the relationship between the motorist and passenger in another vehicle, and that can bear upon the community's commonly held ideas about when liability should be attributed.

In Zannerthe plaintiff was a woman who had been injured when her 11-year-old son accidentally drove a motor vehicle into her while she was standing in front of it. She had permitted him to drive the vehicle, and was aware of his lack of experience. It was argued that no responsibility should be attributed to the son, and that all responsibility fell on the mother. The court rejected that argument. The reasoning by which the argument was rejected illustrates the process involved in applying s 5D(1)(b). Allsop P said, at [12]:

"Injury to the mother was entirely foreseeable should negligence occur. The scope of the risk of harm protected by the duty and created by the breach included injury to the mother. The injury was not coincidental to the breach. It was the direct and immediate consequence of the negligence. The son in the car ran over his mother. The content of the duty and the attenuated standard of care were directed to the exercise of care to avoid injury to the mother in the very manner that occurred. There was no intervening act of a third party or of an abnormal event. The only other causal factor was the negligence of the person (the mother) to whom the duty was owed. There is no reason why the appropriate apportionment of respective responsibility is not best allocated through contributory negligence. Common sense would attribute the mother's injury to the negligence of her son, as well as to her own negligence in putting herself in that position."

Tobias JA's reasoning, at [80]-[82] was:

"In my view the respondent's submission that the issue of policy that arises out of a case such as the present concerns the question of responsibility for the conduct and control of motor vehicles should be accepted. It was submitted that it would be a rare case indeed where a motor vehicle case attracted some other policy consideration, once factual causation was established, which would justify a denial of liability on the grounds of causation. Such a rare case may be one where the relevant harm is only remotely connected to the defendant's conduct.

The present case involves two necessary conditions that contributed to the occurrence of the respondent's injuries. The first was the first appellant's conduct in his control of the vehicle; the second was the respondent's conduct in permitting the first appellant to drive the vehicle and then standing in front of it. It is the latter factors that give rise to the respondent's contributory negligence. Be that as it may, it does not follow that because the respondent contributed to her injuries in the manner referred to, as a matter of policy the first appellant should not be held to account with respect to his own negligence. After all the most proximate cause of those injuries was his negligence.

As has already been observed, it cannot be said that the first appellant was not fully aware, notwithstanding his age, of the dangers associated with driving a motor vehicle and, in particular, of the necessity to ensure, given his knowledge that the respondent was standing in front of the vehicle, that his foot did not slip from the brake to the accelerator. In these circumstances it seems to me that it is appropriate for the scope of the first appellant's liability to extend to the harm to the respondent directly caused by his conduct and that, subject to the question of contributory negligence, there was no policy reason why responsibility for that harm should not be imposed upon him."

Day v Rogers[2011] NSWCA 124 provides an example of the application of s 5D(1)(b) to a situation in which the harm suffered by the plaintiff is a consequence of the interaction of the defendant's negligence with several other causal factors. The plaintiff had briefed the defendant to act for him as a barrister concerning a claim under the Property (Relationships) Act1984 . When that case came on the hearing, the affidavits filed on behalf of the plaintiff were read. The opposite party in the litigation then made an application under Uniform Civil Procedure Rule 29.9 for the case to be dismissed, basically on the ground that the affidavits were so defective that the case was bound to fail. The defendant argued that application. The judge then dismissed the case, but because it was not a dismissal on the merits it was possible for the plaintiff to start again. He sued to recover the costs that were wasted because of the proceedings being dismissed and needing to be recommenced. The failure to exercise reasonable care alleged and found against the defendant was in his preparation of affidavits for use in the proceedings.

The plaintiff succeeded in his negligence action in the court below, but the defendant overturned it in this Court, because this Court held that the preparation of the affidavits fell within the scope of the advocate's immunity from suit. However this Court also considered, and rejected, an argument that negligence in preparation of the affidavits had not caused the waste of the costs, because of the existence of intervening causes. One such intervening cause was the defendant's own conduct of the application under UCPR 29.9, concerning which he clearly had advocate's immunity, and concerning which he had not been sued. His conduct of that application had some fairly basic deficiencies, identified at [139]. Further, a majority of this court (Allsop P at [2], Sackville AJA at [151]) held that the application should not have succeeded.

The defendant accepted that his negligence was a necessary condition of the occurrence of the harm to the plaintiff, but disputed that the scope of his liability should extend to the wasted costs ([134]). Concerning the scope of liability, Giles JA (Allsop P and Sackville AJA agreeing) said at [145]-[147]:

"It must be asked whether it is "appropriate" for the scope of the appellant's liability to extend to the wasted costs consequent on the dismissal (s 5D(1)(b)), with consideration of whether and why responsibility for the harm should be imposed on the appellant (s 5D(4)). The starting-point is that the appellant's negligence brought the occasion for [the opposite party's] application pursuant to r 29.9.

It is not necessary ... to attempt to forecast what might have occurred if the appellant had acted otherwise than he did in his conduct of the proceedings at the hearing. Speculation on whether the dismissal might have been averted if the appellant had acted otherwise than he did in opposing the application is not a sound basis for finding a break in causation, and does not in my view materially weigh against imposing responsibility on him. His negligence brought the situation about, and failure so to act as to avert the dismissal, whether or not negligence in itself, should not work to his advantage.

As to error on the part of [the District Court judge], a barrister or solicitor should prepare and conduct proceedings so as to guard against the judge falling into error. Even if [the judge] was persuaded to an over-strict view of the presentation of both parties' asset positions, by his negligence the appellant enabled [counsel for the opposite party] to exercise the persuasion. The appellant submitted that it was not appropriate that he should be found to have caused the respondent's harm, if the judge had contributed to the harm but it was not open to the appellant to claim for contribution or reduction for proportionate liability. That is no reason to relieve the appellant from his responsibility for the harm."

I have deliberately set these passages out in full because coming to an understanding of an abstract concept like "appropriate for the scope of the negligent person's liability to extend to the harm so caused" is assisted not only by considerations of history and policy, but also by concrete examples of how the concept is applied.

In my view, it is appropriate for the scope of the Developer's liability to extend to the harm suffered by Mrs Marcolongo's building. There is no finding by the judge that, if there had been no negligence in installation of the temporary piles, the damage would not have occurred. We are not asked to make such a finding. However, I put the finding of appropriateness on a wider basis than that. The Developer made a radical departure from its own commissioned engineering design for a deep excavation in an urban area that was to go within a metre or so of a neighbouring building. It departed deliberately from a legal requirement that attached to its having permission to carry out the development at all. It did so without adequate inquiry, and for no better reason than to save itself time and money. That is conduct that involves a very serious departure from the standards that a landowner in twenty-first century Australia is entitled to expect from his or her neighbour.

Though those are matters that are relevant to breach, characterisation of the conduct that constitutes the breach is relevant to the decision about attribution of responsibility.

Further, it was readily forseeable that creating an excavation could cause damage to neighbouring buildings if it was not properly retained. The neighbours had a particular vulnerability to inadequate carrying out of the excavation. They had little scope for taking action of their own to prevent it occurring - objection to the development application, complaint to the Council in the course of construction, or in extreme cases seeking an injunction against an anticipated tort. The point of imposing the duty of care on the Developer is to protect against precisely the sort of damage that Mrs Marcolongo sustained. While there was a contributing cause of the damage, namely the negligent installation of the temporary piles, the installation of the piles only occurred because it was an intergral part of the sheet piling sytem. I recognise that that contributing cause operated after the Developer decided to adopt the sheet piling system, but I do not accept that members of the community would regard that as a reason why the Developer should not be held liable. Taking all these matters together, it is in accord with common sense that the Developer be held liable.

Questions of the relative responsibility of the Developer and MSP are more appropriately resolved through apportionment than through excusing the Developer from liability altogether.

Apportionment

When I have found (at [233]-[235]) that the judge was mistaken in finding that the matters that he identified in [201(b)] and [201(c)] were causes of the damage, his reasoning process concerning apportionment has proceeded on a flawed basis. Thus it is necessary for this Court to assess the apportionment for itself.

An apportionment between a plaintiff and a defendant of their respective shares in the responsibility for damage was held, in Podrebersek v Australian Iron & Steel Pty Ltd(1985) 59 ALJR 492 at 494, as involving:

"... a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man ... and of the relative importance of the acts of the parties in causing the damage ..."

Those factors are also relevant to the apportionment of responsibility between defendants for the purpose of contribution between tortfeasors: J Blackwood & Son v Skilled Engineering[2008] NSWCA 142 at [94]. In particular, they apply to apportionment under s 109ZJ EPA Act .

The culpability of the Developer was, for the reasons I have earlier given, of a very high order. MSP's manner of constructing the temporary piers was of greater relative importance in causing the damage. I would apportion the damages in the same way the trial judge apportioned them.

Orders and Costs

The judge ordered both defendants to pay the plaintiff's costs of the proceedings, and ordered how that liability should ultimately fall between the two defendants. That apportionment reflected the 75:25 split that his Honour had found was appropriate for liability, so far as the costs of the plaintiff in the period after 3 February 2005 were concerned, and 50:50 for the period prior to 3 February 2005. The parties requested the opportunity to make further submissions on costs if the appeal were to be upheld in any respect, in particular concerning the appropriateness of making a Bullock order.

I propose that the appeal be dismissed, with costs. In that circumstance, there does not appear to be any need for the parties to make any further submissions concerning costs. However, if there are any matters of which the Court is not presently aware that might impact upon costs, the parties have the opportunity under UCPR 36.16 to deal with that situation by filing a Notice of Motion within 14 days.

The orders I propose are:

(1) Appeal dismissed.

(2) Appellant to pay costs of the Respondents of the appeal.

**********

SCHEDULE

7.43 It is in the context of the second element - namely scope of liability for consequences - that the statement that causation is a matter of commonsense is most often made. However, courts use various other terms and phrases to describe the sort of connection between negligent conduct and harm that can justify the imposition of legal liability to pay damages. These include 'real cause' and 'effective cause' . It is also said that if another necessary condition 'intervenes' between the defendant's conduct and the harm and 'breaks the chain of causation' , the defendant will not be liable for the harm.

7.44 The concept of foreseeability is used in this context as well. A basic rule of negligence law is that a negligent person will not be held liable for unforeseeable consequences of their negligence (although there are important qualifications to this rule - such as the principle that the victim of negligently-caused harm must be 'taken as found' - that need not be discussed in detail here). A point that should be noted is that the rule laid down in the Shirt case ..., that a person cannot be liable for failing to take precautions against a far-fetched or fanciful (albeit foreseeable) risk of harm, does not apply in this context. Once a person is held to have behaved negligently, they can, in theory at least, be held liable for foreseeable consequences of that negligence, even if they were of a very low probability.

7.45 None of these terms and phrases provides very much guidance as to the likely outcome of individual cases, and the question of 'the scope of liability for consequences' tends to be seen as one that has to be answered case-by-case rather than by the application of detailed rules or principles. This is not to say that there are no relevant guidelines in the law. For instance, it is said that a person is not liable for 'coincidental' consequences of their negligence. Suppose that a driver negligently injures a pedestrian, who is further injured when the ambulance in which she is being taken to hospital is involved in a collision as a result of negligence on the part of the ambulance driver. The first driver would not be held liable for the injury resulting from the second accident, because the sequence of events would be considered a 'coincidence' , even though the first driver's negligence was a necessary condition of the harm suffered in the second accident. On the basis of this example, it is easy to see the appeal of the 'coincidence principle' as an outworking of ideas about personal responsibility.

7.46 However, this principle of 'no liability for coincidences' is not of universal application. For instance, in Chappel v Hart, the failure of the defendant to warn the plaintiff was accepted to have been a necessary condition of the materialisation of the risk because the plaintiff would not have had the operation, at the defendant's hands or when it was performed, if she had been warned; and in that case she would almost certainly not have suffered the harm. But the fact that the risk materialised despite the exercise of reasonable care by the defendant could be called a coincidence. The best explanation of the difference between this case and the example discussed in paragraph 7.45 is not that the doctor caused the patient's harm whereas the first negligent driver did not cause the harm suffered in the second accident. Rather, the explanation would seem to lie in differing ideas about the responsibilities of doctors to their patients on the one hand, and the responsibilities of drivers to pedestrians on the other. In Chappel v Hart, several of the judges made this point by saying that the doctor should be liable because the risk that materialised was precisely the risk about which (in discharge of the reactive duty) he should have warned the patient.

7.47 For present purposes, the important point is that there appears to be a perception amongst various groups that courts are too willing to impose liability for consequences that are only 'remotely' connected with the defendant's conduct. In other words, there is a feeling that the net of responsibility for the consequences of negligence is being cast too widely. The question that confronts the Panel is whether there is anything that we can usefully propose by way of legislative statement that might reduce the element of uncertainty in the law and indicate to courts that issues of responsibility are directly relevant in this context.

7.48 A major difficulty here is to strike a balance between making legislative statements that are so abstract and general as to be more or less useless, and making detailed provision that denies courts the flexibility they need to deal with the infinitely various facts of individual cases. What is needed is a provision that will suggest to courts a suitable framework in which to resolve individual cases. Terms and phrases such as 'effective cause' , 'foreseeability' and 'commonsense causation' do not provide such a framework because they express a conclusion without explaining how that conclusion was reached. They discourage explicit consideration and articulation of reasons, for imposing or not imposing liability for the consequences of negligence, that are securely grounded in the circumstances of individual cases and address issues of personal responsibility.

7.49 The Panel believes that it is possible to give some helpful legislative guidance that holds out a reasonable prospect of furthering the objectives of the Terms of Reference. Such a provision would be to the effect that in determining liability for the harmful consequences of negligence (whether in such terms or in terms of 'legal cause' , ' effective cause' , 'commonsense causation' , 'foreseeability' , 'remoteness of damage' and so on), it is relevant to consider, (a) whether (and why) responsibility for the harm should be imposed on the negligent party, and (b) whether (and why) the harm should be left to lie where it fell.

[The Report then set out the terms of its recommended legislation, which differed in some respects from s 5D, but which included in para (h) a recommendation that is in substance the same as s 5D(1)(b) and s 5D(4), and continued]

7.50 It may be helpful to give an example of how paragraph (h) of this Recommendation (dealing with scope of liability) might be used. Consider the case of Chappel v Hartagain. Because the plaintiff would not have had the operation, at the hands of the defendant and at the time it was performed, if she had been warned of the risk, the defendant's failure to warn played a part in bringing about the harm suffered by the plaintiff. But this conclusion does not settle the question of whether the doctor ought to have been held liable for that harm. In favour of denying liability, it could be argued that in the absence of negligence on the part of the defendant in performing the operation, the harm suffered by the plaintiff was a mere coincidence for which the defendant ought not to be liable. On the other hand, it could be argued that even though the occurrence of the harm was a coincidence, it was the very risk about which the plaintiff had inquired. For that reason, the imposition of liability would be justified in order to reinforce the doctor's reactive duty to inform and the patient's interest in freedom of choice. The provision in paragraph (h) of Recommendation 29 does not support either of these arguments against the other. Rather, it is intended to encourage courts to articulate such arguments and to discourage them from explaining decisions in terms of unhelpful phrases such as 'commonsense' or 'real and effective cause' . Articulation of principles of personal responsibility will further the objectives underlying the Terms of Reference.

SACKAR J : I have had the advantage of reading the judgment of Campbell JA in draft and I am in agreement with his reasons and the orders he proposes.

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Decision last updated: 22 September 2011

Medium Neutral Citation:	Lym International Pty Ltd v Marcolongo [2011] NSWCA 303
Hearing dates:	5 April 2011
Decision date:	22 September 2011
Before:	Basten JA at [1] Campbell JA at [5] Sackar J at [272]
Decision:	(1) Appeal dismissed. (2) Appellant to pay costs of the Respondents of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	BUILDING AND CONSTRUCTION - s 177 Conveyancing Act 1919 - "duty of care not to do anything on or in relation to land..." - whether developer's decision to use particular support system was "doing something" in relation to land - whether developer's decision to use particular support system was something that "removed the support provided by the supporting land" - whether developer's decision to use particular support system was made without exercising reasonable care - relevance of departure from construction certificate BUILDING AND CONSTRUCTION - s 109ZJ Environment Planning and Assessment Act 1979 - whether party was a "contributing party" - effect of agreement of all parties that it would not be alleged that, had a person been a party to the action, that person would have been a contributing party NEGLIGENCE - causation - s 5D Civil Liability Act 2002 - whether failure to warn or advise can only be causative of loss if a warning or notification, if given, would have been acted upon in a way that prevented the loss - whether it is appropriate to attribute liability to someone who puts in place the preconditions that enable another person's negligence to become effective - discussion of the principles governing causation under s 5D AGENCY - whether one party contracted with another as agent for a third party, or whether that party separately contracted with the other in performance of contractual obligations to the third party APPEAL - interference with judge's finding of fact - Jones v Dunkel inference - enables tribunal of fact to infer that the evidence of an absent witness, if called, would not have assisted the party who failed to call that witness - missing witness must have been expected to have been called by one party rather than other - inference not available where disputed issue is whether missing witness was agent for the party and no other reason to believe missing witness was in camp of that party CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - discussion of for what proposition County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 is authority - majority reasons do not have as their ratio any proposition about the availability of post-contractual conduct for the purpose of finding the terms of an agreement that is wholly or partly oral CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - post-contractual conduct can be used for the purpose of finding the terms of an agreement that is wholly or partly oral when that conduct is an admission - Tomko v Palasty [2007] NSWCA 258 - circumstances in which being an admission would not permit post-contractual conduct to be used to find terms of a wholly or partly oral contract CONTRACTS - construction and interpretation - that a particular person is party to a contract is a matter of mixed fact and law - whether a party to litigation can make an admission concerning a matter of mixed fact and law - whether admission made by person other than party to the litigation can be admitted against that party - effect of the introduction of the Evidence Act 1995 to the pre-existing common law principles concerning admissibility of admissions for post-contractual conduct CONTRACTS - construction and interpretation - admissibility and legitimacy of use of evidence of post-contractual conduct - post-contractual conduct can be used for the purpose of ascertaining the terms or the subject matter of an agreement that is wholly or partly oral regardless of whether the post-contractual conduct is an admission.
Legislation Cited:	Building and Construction Industry Security of Payment Act 1999 Civil Liability Act 2002 Civil Liability Amendment (Personal Responsibility) Act 2002 Conveyancing Act 1919 Environmental Planning and Assessment Act 1979 Evidence Act 1995 (Cth) Evidence Act 1995 (NSW) Property (Relationships) Act 1984 Uniform Civil Procedure Rules 2005
Cases Cited:	Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; (2009) 239 CLR 420 Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1 Day v Rogers [2011] NSWCA 124 Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213 Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 J Blackwood & Son v Skilled Engineering [2008] NSWCA 142 Jones v Dunkel (1959) 101 CLR 298 Jones v Sutherland Shire Council [1979] 2 NSWLR 206 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Manly Council v Byrne [2004] NSWCA 123 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Marcolongo v Chen [2011] HCA 3; (2011) 274 ALR 634 Markisic v Commonwealth of Australia [2007] NSWCA 92; (2007) 69 NSWLR 737 Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; (2009) 261 ALR 382 National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569 Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150 Payne v Parker [1976] 1 NSWLR 191 Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 Pitcher v Langford (1991) 23 NSWLR 142 Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492 Pusell v Grabham [1963] NSWR 172 Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Tomko v Palasty [2007] NSWCA 258 Tucker v McCann [1948] VR 222 Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422 Wilson v Hart (1817) 7 Taunt 295 at 304; 129 ER 118 Woolworths Limited v Strong [2010] NSWCA 282 Zanner v Zanner [2010] NSWCA 343
Texts Cited:	J D Heydon, Cross on Evidence, 8th Australian edition (2010) Commonwealth, Review of the Law of Negligence Final Report, (2002)
Category:	Principal judgment
Parties:	Lym International Pty Limited (Appellant) Leonilda Marcolongo (First Respondent) QBE Insurance (Australia) Pty Ltd (Second Respondent)
Representation:	Counsel D A Robertson (Appellant) T Alexis SC; D H Mitchell (First Respondent) R Cheney (Second Respondent) Solicitors Unsworth Legal (Appellant) Dunstan Legal (First Respondent) Lee & Lyons (Second Respondent)
File Number(s):	2009/326965
Publication restriction:	Nil
Decision under appeal	Jurisdiction: 9101 Citation: N/A Date of Decision: 2009-11-26 00:00:00 Before: Elkaim SC DCJ File Number(s): 3372/2004