Mir Bros Trading Co Pty Ltd v Cavasinni Constructions Pty Ltd

[2016] NSWSC 1873

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Mir Bros Trading Co Pty Ltd v Cavasinni Constructions Pty Ltd & Ors [2016] NSWSC 1873

Hearing dates:

5 – 8 December 2016

Date of orders:

21 December 2016

Decision date:

21 December 2016

Jurisdiction:

Common Law

Before:

Fagan J

Decision:

1. Judgment for the plaintiff against the first defendant for $160,000 in damages for breach of contract.

 

2. The claims in the further amended statement of claim are otherwise dismissed as against the first defendant.

 3. Judgment for the second and third defendants against the plaintiff on all causes of action pleaded against them in the further amended statement of claim.

Catchwords:

CONTRACT – agreement to construct retaining walls on boundary – time within which walls required to exhibit agreed strength

 

PRINCIPAL and agent – individual contracting without notifying capacity as agent for corporations – personally bound by agreement – corporations also bound through actual authority

  LIMITATION of actions – accrual of cause of action in contract

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Limitation Act 1969 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185
Codelfa Constructions v State Rail Authority (1982) 149 CLR 337
Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324
Mir Bros Trading Co Pty Ltd v Cavasinni Constructions Pty Ltd [2015] NSWSC 421
Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 169

Category:

Principal judgment

Parties:

Mir Bros Trading Co Pty Ltd (plaintiff)
Cavasinni Constructions Pty Ltd & Ors (defendants)

Representation:

Counsel:
Mr Frank Kalyk (plaintiff)
Mr Daniel Neggo (defendants)

  Solicitors:
Mr Marcus Graham, Dentons (plaintiff)
Mr Brett Wilson (defendants)

File Number(s):

2013/45104

Judgment

1. Since 1976 the plaintiff has been the registered proprietor of land at the corner of Cowpasture Road and Newton Road at Wetherill Park, New South Wales. Adjoining the plaintiff’s land along its eastern boundary are properties which at relevant times were owned by the second defendant (“Cavasinni Developments”). The plaintiff claims that in 2000 it made an agreement with one or more of the defendants to allow them access onto its land for the purpose of constructing on Cavasinni Developments’ land, right up to the boundary, the walls of industrial buildings. It alleges that by a term of this agreement the defendants were required to construct the walls with sufficient strength to allow compacted fill to be placed against them on the plaintiff’s side, to their full height.

2. It is not in dispute that the second defendant (“Cavasinni Constructions”) built walls on Cavasinni Developments’ land immediately adjacent to the boundary in 2000, 2001, 2006 and 2007 and that these walls are not capable of supporting compacted fill to their full height. The plaintiff claims damages for breach of contract. Other causes of action are also relied upon and will be considered later in these reasons.

3. The plaintiff alleges that its land has potential for development by the construction of a warehouse on it. It is said that the cost of constructing a warehouse of the type which would be appropriate to the site has been increased by about $424,274 as a result of the defendants’ walls on the boundary not being in conformity with the alleged agreement.

Description of the site

4. The plaintiff’s land is a square block with its western boundary along Cowpasture Road and its southern boundary along Newton Road. The eastern boundary is 199.62 metres long. The natural slope of the land is from a high point in the north west corner, 81 metres above Australian Height Datum (“AHD”) downward towards the south-east corner. In the south-east corner the reduced level (“RL”) is about 61 metres. The natural downward slope is reasonably even at about 1 metre in 10. The portion of the eastern boundary with which this case is concerned commences 100 m back (i.e. north) from the Newton Road frontage and extends from there to the rear of the plaintiff’s land at its north-east corner. That is, a length of 99.62 metres being approximately the rear half of this boundary, relative to the Newton Road frontage.

5. The adjoining lots to the east which were at relevant times owned by Cavasinni Developments are Lots 2 and 3 in Deposited Plan 1020092 and Lot 92 in Deposited Plan 1119088. Distances along the subject boundary, measured in metres from the Newton Road frontage, have been referred to in the evidence as “chainages”. The boundary of the plaintiff’s land with Lot 2 commences at chainage 100 (ie 100 metres from the Newton Road frontage) and continues to approximately chainage 126. Lot 3 commences at chainage 126 on the boundary and extends north to approximately chainage 163. Lot 92 commences at about chainage 163 and continues to the northern end of the eastern boundary at chainage 199.62.

6. Until improvement works were undertaken on Cavasinni Developments’ land, the natural slope described at [4] continued across the boundary and through Lots 2, 3 and 92. That is, the plaintiff’s land was higher and the slope of the ground was down towards the east boundary with the Cavasinni land and beyond. The areas of Lots 2, 3 and 92 were comprised in a predecessor Deposited Plan when Cavasinni Developments took a transfer of the land on 29 June 2000. Before completing its purchase Cavasinni Developments obtained consent from Fairfield City Council on 2 June 2000 to subdivide and thereby create Lots 2 and 3. Further subdivision of residual land was approved on 10 September 2001, enabling the creation of Lot 92.

7. On 23 June 2000 Cavasinni Constructions obtained from Fairfield City Council two Development Consents for the construction of factory/warehouse buildings, one on each of Lots 2 and 3. Clause 23 in each of these Development Consents included the following:

“Any cut and fill operations carried out on the site shall be to the requirements of a suitably qualified geotechnical engineer and shall be carried out so as to not destabilise any adjoining land. Suitable batters or retaining walls are to be constructed in this regard.”

8. No doubt in order to maximise the utilisation of its land area, Cavasinni Developments designed the factories/warehouses for Lots 2 and 3 to be built right to the boundary. This necessitated some “cut operations” on its own land adjacent to the boundary in order to achieve a level surface for the floor of each building. The design also necessitated excavation on the plaintiff’s side of the boundary, adjacent to Lots 2 and 3, to gain access to the depth at which footings for the factory walls would have to be dug and also to permit workmen to carry out construction of what would become the external or west face of the Cavasinni walls.

The agreement of 2000

9. I find that in early 2000 the third defendant, Vittorio Cavasinni, acted in the capacity of a director of Cavasinni Constructions although he was not appointed as such until 15 November 2000. Agostino Cavasinni, whom I infer to have been a family member, was the only formally appointed director prior to that date. A similar position applies in relation to Cavasinni Developments: the third defendant did not become a director, according to returns lodged with the Australian Securities and Investments Commission, until 22 May 2009. But prior to that, including in 2000, the directors were Agostino and Rita Cavasinni, both of whom occupied the same residential address as the third defendant.

10. The conduct of the third defendant at all times between 2000 and 2007, as described in the affidavits and in oral evidence, is consistent with him having acted as a de facto director, whose decisions and directives were customarily adopted and carried out by those concerned in the conduct of the two companies’ affairs. With respect to Cavasinni Constructions the defendants’ counsel put to the plaintiff’s principal witness, Mr Sam Mir, that he understood the third defendant was the managing director. Mr Mir agreed (T 62.20). The evidence does not reveal that any person other than the third defendant exercised executive decision making power with respect to either company at any time throughout the events relevant to this case.

11. In early to mid 2000 the third defendant met with Mr Sam Mir and his father Mr John Mir at the plaintiff’s office at Prestons, New South Wales. Mr Sam Mir was at that time the general manager of the plaintiff and his father was the managing director. The meeting had been convened by the third defendant for the purpose of seeking licence from the plaintiff for construction workers and equipment to come on to its land in order that development works on the Cavasinni property, adjacent to the boundary, could proceed. It is not clear whether the meeting took place after Cavasinni Developments had taken its transfer of the land (which occurred on 29 June 2000) or while the transfer was impending.

12. I find that a binding agreement was made at this meeting, to the following effect. My findings as to the parties who became bound by and entitled to the benefit of these terms may be more easily understood if the terms are stated first.

1. The plaintiff granted a licence for workmen and equipment to come onto its land in the vicinity of the common boundary with Lots 2, 3 and 92 and for the purpose of excavating its land to the extent necessary to facilitate development on Cavasinni Developments’ land, including the construction of factory walls right to the boundary. [The land upon which the factory walls were to be built had not yet been subdivided into Lots 2, 3 and 92 and these numbers were probably not used in the discussion. I adopt them, anachronistically, as a convenient means of identifying the portion of the Cavasinni development site to which the participants in the meeting referred].

2. The walls would be constructed to sufficient specifications to allow backfill to be placed against them on the plaintiff’s side and compacted to the full height of the walls. They would be able to withstand lateral loads imposed by such compacted backfill.

3. The plaintiff’s land would be reinstated to its original surface levels at the completion of the construction work for which the access licence was granted.

4. Construction details would be provided to the plaintiff before work commenced, showing what works would be done on the plaintiff’s land.

5. The plaintiff’s grant of the licence for access was conditional upon its review of the details referred to in (4) and a grant of approval in writing after the review had taken place, if the details should appear satisfactory.

13. The above points are substantially common ground in the affidavits of Mr Sam Mir and of the third defendant. There is a difference in those affidavits as to whether it was also agreed the walls should be able to withstand an additional surcharge of lateral force which would result from the plaintiff constructing buildings on its own land in the future, at natural ground level. This difference does not need to be resolved because the plaintiff does not assert breach of the agreement solely by reason of the walls not being able to withstand building surcharge. Nor does it assert that any damage has been caused by failure of the walls to achieve this additional performance standard. The walls as constructed cannot even hold compacted backfill to full height, let alone the additional load of a building.

14. The evidence does not establish that the third defendant expressly identified, either by name or by status or position, any company that he represented and spoke for at this meeting. There is no evidence that at the time of the meeting either Mr John Mir or Mr Sam Mir knew what person or company was (or would soon become) either the owner of Lots 2, 3 or 92 or the developer/builder. The third defendant became bound by the agreement he made orally because he did not state that he was contracting for a principal nor did he in any other way disclaim that he promised the relevant terms on his own behalf: Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324 at [103] – [106].

15. So far as promises were made from the Cavasinni side – to construct walls to certain performance specifications, to reinstate the plaintiff’s land and so on – I find that as well as being made by the third defendant in such a manner as to bind himself, they were in fact made with the authority of and on behalf of Cavasinni Developments, which then was (or was soon to become) the registered proprietor of lots 2, 3 and 92, and also on behalf of Cavasinni Constructions, which would carry out the work.

16. At the time of the meeting with Messrs Mir the third defendant appears, from all the evidence, to have acted as the mind and will of both companies. As such, he would have known and intended that Cavasinni Developments would benefit from the arrangement with the plaintiff, thereby securing full utilisation of its land. He gave evidence that his two companies had a formal documented arrangement whereby the construction company was engaged and paid by the land owning company (T 174). Ultimately Cavasinni Developments would bear the cost of the strengthening of the walls and of the reinstatement of the plaintiff’s land. Whether the third defendant agreed to the plaintiff’s terms as agent of and with the actual authority of each company is essentially a matter of his own intention and I infer that he did so intend.

Execution of work by Cavasinni Developments in 2000 and 2001

17. Cavasinni Constructions commenced work on the plaintiff’s land in the second half of 2000 without having first submitted construction and earthmoving details and without the plaintiff having issued written confirmation of the licence. By mid-September 2000 the plaintiff’s land had been excavated adjacent to the common boundary with Lots 2, 3 and 92, to a depth of between 0.5 and 2 m over a width of approximately 7 m. The spoil from the excavation was stockpiled on the plaintiff’s land.

18. On 15 September 2000 Mr John Mir wrote on behalf of the plaintiff to the Manager, Cavasinni Constructions, protesting that this work had been done without prior submission and approval in writing of construction details as referred to at [12] (4) and (5). Mr Mir requested that he be advised when the stockpiled spoil would be removed and when the plaintiff’s land would be restored to the plaintiff’s satisfaction. He sought confirmation “as per our earlier discussion” that the plaintiff’s land would be reinstated and that “the retaining walls (factory walls) you are erecting will be structurally adequate to retain the material along our boundary to their full height”.

19. The evidence does not reveal when Mr Mir first became aware of the identity of Cavasinni Constructions as an entity relevant to the issues raised in his letter. The fact that this correspondence was addressed to the Manager of that company does not alter my view regarding the identity of the parties who became bound by the earlier oral agreement.

20. Work continued on Cavasinni Developments’ land, utilising access to and alteration of the surface of the plaintiff’s land, after Mr John Mir’s letter had been written. The plaintiff did not take steps to restrain further access over its property. It demanded, by the letter of 15 September 2000 itself and by later conduct, performance of the Cavasinni side of the bargain. That is, it demanded reinstatement of its own land and construction of the walls to the agreed specifications. I find that the plaintiff waived the breach which was constituted by the defendants’ failure to submit construction and earthworks details and by their having proceeded without prior written confirmation. The contract was affirmed by the plaintiff in full knowledge of these breaches.

21. There was no reply from any of the defendants to the plaintiff’s letter of 15 September 2000 until 1 November 2000. By facsimile of that date, on letterhead of Cavasinni Constructions, the third defendant wrote the following (extracted so far as relevant):

“1.1)   It is our intention to remove the stockpile as soon as practical. …

1.2)   The land will be restored as soon as the building’s panels have been erected, sealed and the compaction of the fill is complete. This will be done progressively, as each building is constructed.

2.1)   The disturbed areas will be refilled right up to the boundary line using compactable material as approved by a geotechnical engineer.

2.2)   All controlled fill supervision will be conducted by SMEC [T]esting [an engineering consultancy] and will be certified as required.

2.3)   The retaining walls have been designed to accommodate the existing material at full height. Please find the attached engineer’s certificate for your files.”

22. Attached was a certificate dated 15 August 2000 from a consulting engineer stating with respect to tilt-up panel walls of the building being constructed on Lot 3 that they were “structurally adequate to support the normal lateral loads exerted against the outer face excluding surcharge loads”. Shortly after the facsimile of 1 November 2000 was received, Mr John Mir spoke with the engineer and ascertained that the walls being constructed would not withstand fill to their full height. The engineer stated that the walls could be designed to achieve this capability relatively easily.

23. By letter dated 21 November 2000 addressed to the Manager, Cavasinni Constructions, Mr John Mir reported his conversation with the engineer and stated it was “absolutely imperative” that the walls should be capable of withstanding backfill to their full height. The subject line of Mr Mir’s letter referred to both Lot 2 and Lot 3. On 24 November 2000 the third defendant replied that the present under-specification of the walls had arisen because the engineer “did not understand the brief we gave him” and that the panel design would be checked. If not adequate, redesign would be undertaken.

24. By 27 April 2001 the plaintiff had received no confirmation from the third defendant that the walls of the buildings on Lots 2 and 3 had been redesigned to fulfil the conditions of the parties’ agreement. Therefore on that date Mr John Mir wrote again to the third defendant in the following terms, referring in the subject line to both Lot 2 and Lot 3:

“It was agreed during your recent telephone conversation with our Mr Sam Mir that you will confirm in writing your undertaking again that the design of your walls would accommodate fill from our site (at a future date) to the full height of your walls. This is in accordance with your earlier verbal and unequivocal undertaking to that effect.

We understand and accept that the walls will not necessarily be designed to support additional loads resulting from structures to be erected on our site.

We note with dismay that we have not to date received your written advice as promised and we therefore request that you confirm with the writer as a matter of urgency if the design does in fact cater for that.”

25. The defendants did not reply to this letter. On 10 July 2001 Cavasinni Developments transferred title to Lot 2 to an unrelated arm’s-length purchaser. On 4 September 2001 Mr Sam Mir on behalf of the plaintiff wrote to the third defendant reiterating the requirement that the factory walls on the Cavasinni side of the boundary “must cater for filling (of our site) to their full height”. The letter reminded the third defendant that it was agreed “the material replaced on our land adjacent to your factory walls would be compacted and certified by a qualified geotechnical engineer” (see items 2.1 and 2.2 quoted at [21]).

26. Mr Mir referred to his father’s letter of 20 April 2001 and stated that until there should be provided to the plaintiff an engineer’s certification that “your factory walls along our boundary are designed to retain fill to their full height [and sustain building lateral loads from our future industrial development at the natural ground level (of our site)] and certification of the replaced material – you are not permitted to enter our site or further disturb any material on our land.” In this quotation the words which I have enclosed in square brackets concern the performance criterion which the plaintiff has not pressed in its claim in these proceedings and which I have not found to have been agreed.

25. On 20 September 2001 the third defendant sent to the plaintiff a certificate from its consulting engineer stating with reference to Lots 2 and 3 that the walls on the boundary were designed “to support the lateral loads imposed thereon by backfilling to the full height of the walls”. The certificate expressly stated that the walls were not designed to support surcharge loads from any buildings constructed upon the plaintiff’s land or from any live loads on that land.

26. On 9 November 2001 Cavasinni Developments transferred title to Lot 3 to an unrelated arm’s-length purchaser. At that stage the plaintiff’s land along the boundary had not been reinstated. There remained an excavation from about 7 m inside the plaintiff’s boundary steeply down toward the footings of the walls built by Cavasinni Constructions. Agricultural drainage pipe had been laid in the vicinity of the footings, along their length, to carry groundwater away, presumably south towards Newton Road. The agricultural pipe had been backfilled with granular material suitable to enhance drainage from the footings. There was some uncompacted fill over the footings and over the granular drainage medium. Stockpiles of excavated material remained on the plaintiff’s land above and to the west of the line of excavation.

27. The condition of the walls of the buildings on Lots 2 and 3 at the boundary was then and still is such that no further backfill could be placed against them without risk of collapse. For the walls to be strengthened to a standard where they could fulfil the promised requirement of being able to support compacted backfill to full height it would be necessary to enter Lots 2 and 3 and carry out substantial structural works, at considerable expense. No evidence was tendered to demonstrate that the transferees of these lots from Cavasinni Developments would grant consent either to the plaintiff or to any of the defendants to undertake this work or that any of the defendants would be willing to do it if such access could be obtained.

28. Fairfield City Council issued occupation certificates for Lot 2 on 21 October 2002 and for Lot 3 on 28 October 2002. The evidence does not establish with any accuracy the date upon which all construction work in relation to the developments on Lots 2 and 3 ceased and/or was completed. It is possible that Cavasinni Constructions continued work on one or both of the buildings after title had been transferred. I infer that all construction work had been completed by no later than the dates, respectively, of issue of the construction certificates.

Execution of work by Cavasinni Constructions in 2006 and 2007

31. By 11 December 2006 Cavasinni Constructions had commenced construction on Lot 92, along the boundary with the plaintiff’s land, of a block-work factory wall. The method of construction was by the laying of hollow core concrete blocks in courses, filled with steel reinforced concrete poured through the cores. This wall had been raised to about 2 m height by mid-December 2006.

32. Having seen that further work was now being undertaken on the plaintiff’s eastern boundary and that reinstatement along that portion of the boundary which was common to Lots 2 and 3 had still not taken place, Mr Sam Mir instructed solicitors on behalf of the plaintiff to write to Cavasinni Constructions. A letter from the plaintiff’s solicitors dated 23 January 2007 included the following:

“Our clients have instructed us that in accordance with correspondence between the parties and in particular your letter dated 1 November 2000 there was an agreement that our client would permit you to excavate part of our client’s land in order for you to construct a factory wall on the boundary of your property. The agreement was subject to the following conditions:

1.   The land would be reinstated to the natural existing levels and state after works were completed;

2.   All disturbed areas would be refilled using compactable material approved by a geotechnical engineer;

3.   The compaction would be supervised by SMEC Testing and would be certified as required;

4.   The retaining wall would be designed and built to support lateral forces placed upon it be [sic] the fill of our clients property to the full height.

In relation to the above conditions we note that:

1.   The land has not been reinstated to the natural existing levels and there is rubbish and pallets left on our client’s property;

2.   Our clients have concerns that the fill and compaction had not been performed in accordance with the agreement and request that you provide evidence from a geotechnical engineer that approved compact material was used and also certification that the compaction meets the standards required.

3.   ….

We are instructed to request that you attend to the above matters within fourteen days of the date of this letter.

You are not permitted to pass on or through our clients property other than to attend to the above matters, however prior to doing so you must obtain our client’s consent and must furnish full details of who will be on the property, for what purpose and on what days.”

33. So far as relevant, the reply of the third defendant on letterhead of Cavasinni Constructions dated 26 January 2007 contained the following:

“We do agree that the works have not been completed, principally because there is ongoing activity with construction of more buildings. Rest assured that once the work is completed we will meet our requirements.”

34. A further letter from the plaintiff’s solicitors dated 30 January 2007 asserted that the plaintiff had envisaged the works would be completed “within a reasonable time” and that they had been “conducted over a 5 year period which is not acceptable”. The letter concluded as follows:

“We confirm due to your failure to comply with the agreement you are not permitted or authorised to access our client’s property until notified further in writing of our client’s consent.”

35. After this, work continued on the Lot 92 side of the boundary. Apparently after 30 January 2007 it was not necessary for Cavasinni Constructions to have further access to the plaintiff’s land in order to make progress with construction on Lot 92. On 9 March 2007 the third defendant notified the plaintiff’s solicitors by facsimile that work to the factory wall adjacent to the plaintiff’s land was nearing completion. It was said that block work would be placed on Wednesday, 14 March 2007 and that granular backfill (against the western aspect of the wall, to permit percolation and drainage of groundwater down its face) would commence after curing over 21 days. That is, by about 7 April 2007. The facsimile concluded: “When the works to this factory wall is complete, any outstanding works to your client’s property will be attended to”.

36. It is common ground that, contrary to the intention stated in this facsimile, none of the defendants has ever reinstated any part of the plaintiff’s land along the boundary where it was disturbed by Cavasinni Constructions’ works. The block work wall on the boundary of Lot 92 is no more capable of withstanding compacted backfill loads than the tilt-up panel walls along the boundaries of Lots 2 and 3. On 4 August 2008 Cavasinni Developments transferred title to Lot 92 to an unrelated arm’s-length purchaser.

37. Fairfield City Council issued an occupation certificate for Lot 92 on 6 June 2008. Again for this building the evidence does not establish when construction work was completed and Cavasinni Constructions may have continued work on the building after it had transferred title. I infer that all construction work had been completed by no later than the date of issue of the construction certificate.

Limitation period for the plaintiff’s cause of action in contract

38. The plaintiff first issued its statement of claim, against Cavasinni Constructions only, on 12 February 2013. The second and third defendants were joined pursuant to leave granted by Harrison As J on 16 April 2015. The plaintiff’s cause of action for breach of the agreement of mid-2000 with respect to the walls on Lots 2 and 3 and with respect to reinstatement of the plaintiff’s land adjacent to those walls was complete when the defendants failed to fulfil their obligations in those respects. Damage is not an element of the cause of action for breach of contract. Therefore the fact that no damage may have been incurred by the plaintiff until long after the walls were left by the defendants in their deficient state and long after the plaintiff’s land was left without restoration to natural levels will not have deferred the commencement of the running of time.

39. In order to determine when breach of the agreement of mid 2000 occurred in relation to the walls on Lots 2 and 3 it is necessary to construe that agreement with respect to the time within which performance was required. As summarised at [12] no express agreement was made as to the time within which the walls would be brought to the agreed standard of construction or within which the plaintiff’s land would be restored. There was no date agreed by which the defendants would commence to excavate on the plaintiff’s land or to construct their walls. In the event, all of this work commenced reasonably promptly after the agreement was made. I construe the agreement as meaning that the walls would satisfy the performance standard upon which the parties had agreed by the time construction of them was finished, including construction of other parts of the buildings to which they were integral so far as those other parts may have contributed to the required structural strength. The boundary walls may well have derived some stiffening through roof members, internal walls and side walls, by transfer of loads.

40. The plaintiff submitted that the defendants’ obligation to bring the walls to the agreed standard would only be subject to a contractual time constraint if there should be implied into the agreement, upon the principles in Codelfa Constructions v State Rail Authority (1982) 149 CLR 337, a term that this be done within a reasonable time. I reject that argument. It is not a question of implying an additional term but of construing the timeframe which the parties must be taken to have intended and mutually consented to in agreeing that the walls should be built to a nominated standard.

41. The plaintiff further urged that the agreement should not be construed as requiring that the engineering standard of the walls had to be achieved upon the walls (and the buildings of which they are part) being completed, because the evidence did not demonstrate that the defendants would be unable to strengthen the walls after that time, even if the land and buildings may have been sold in the meantime. I regard that consideration as being beside the point. It addresses the possibility of the defendants making good a breach of their obligation, not the likely intention of the parties as to the time by which they intended to agree that original fulfilment of the condition should have been achieved. I reject this further argument of the plaintiff.

42. I infer that the date by which Cavasinni Constructions had completed the boundary walls on Lots 2 and 3 and all related structural members of the buildings of which they were part can have been no later than the date of issue of the respective construction certificates on 21 and 28 October 2002. The walls did not comply as at those dates and the plaintiff’s cause of action in contract with respect to their structural deficiency accrued no later than 28 October 2002. This cause of action became statute barred six years later on 27 October 2008: s 14 Limitation Act 1969 (NSW). That is, four and a half years before the action was commenced.

43. The time within which reinstatement of the plaintiff’s land had to be completed was a reasonable time from when the walls were complete. This was by implication, not of an additional term but of law and of construction: Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1. A reasonable time could have been no more than three months. That is, by 28 January 2003. The plaintiff’s cause of action for the defendants’ failure to reinstate its land along the Lot 2 and Lot 3 boundaries became statute barred on 27 January 2009, over four years before the statement of claim was filed.

44. The time by which the defendants were required to reinstate the plaintiff’s land – and hence the date of accrual of the plaintiff’s cause of action – was not deferred by the plaintiff’s correspondence of 2001 and 2007 in which the defendants were pressed to complete this work. An innocent party does not, by demanding the performance of an obligation which has become overdue, thereby contractually extend the time within which the relevant term may be fulfilled. Such correspondence affirms the contract and prevents the innocent party from terminating it in reliance upon the breach; it does not absolve the defaulting party with respect to the breach or defer the date when the breach becomes actionable in damages.

45. None of the correspondence between the parties in 2001 and 2007 gave rise to a consensual variation of the original agreement by way of postponing the date for the defendants to bring the walls to compliant strength or for them to reinstate the plaintiff’s land. The correspondence is in the nature of discussion about when the overdue reinstatement would be effected. It was written in ignorance, on the plaintiff’s part, that the walls were not constructed to the standard upon which the parties had agreed.

46. The wall along the plaintiff’s boundary with Lot 92 cannot be regarded as having been completed, including with respect to its integration with the building of which it was part, until the issue of the occupation certificate for this building on 6 June 2008. Time commenced to run for the plaintiff’s cause of action in breach of contract relating to the Lot 92 boundary wall on that date. Allowing three months for reinstatement of the plaintiff’s land in this location, time commenced to run for the breach of that obligation from 6 September 2008. 6 years from then would have been 5 September 2014. Time had not expired when the statement of claim issued on 12 February 2013 for the plaintiff’s claim for breach of contract in relation to either the deficient strength of the walls or the defendants’ failure to reinstate the plaintiff’s land along this segment of the eastern boundary.

47. However so far as the plaintiff’s claim relates to work on the Lot 92 boundary, the action which it commenced within time was brought only against Cavasinni Constructions. Cavasinni Developments and the third defendant were only joined with effect from 16 April 2015. By the time these two defendants were added to the proceedings the plaintiff’s cause of action against them in relation to the wall on the boundary with Lot 92 had become statute barred (on 5 September 2014).

48. In the plaintiff’s original statement of claim it pleaded against Cavasinni Constructions that its failure to construct the walls on the boundary to sufficient strength and its failure to reinstate the plaintiff’s land to the natural ground surface constituted a nuisance. When Harrison As J permitted amendment of the statement of claim on 16 April 2015 (Mir Bros Trading Co Pty Ltd v Cavasinni Constructions Pty Ltd [2015] NSWSC 421) other causes of action were added, including the claim in contract which I find has succeeded and which is not statute barred so far as it concerns the Lot 92 boundary. The additional causes of action arose out of the facts which had originally been pleaded. The amendments took effect from the date of the original filing: s 65(2)(c) Civil Procedure Act 2005 (NSW).

49. When the plaintiff obtained leave to expand its case against Cavasinni Constructions it also obtained leave to join Cavasinni Developments and the third defendant. The date of commencement against those parties is taken to be the date of filing the amended statement of claim by which they were added, namely 16 April 2015: r 19(1) and (2) Uniform Civil Procedure Rules 2005 (NSW). Harrison As J granted leave for the joinder pursuant to s 64 Civil Procedure Act (see [48]). Her Honour found that the prerequisites for a grant of leave under s 65(2)(b), which would have the result that joinder would take effect from the date of commencement of the proceedings (s 65 (3)), were not made out. Essentially this was because the plaintiff had not “made a mistake in the name of the party to the proceedings” when it filed the original statement of claim.

50. The plaintiff re-agitated this issue at the final hearing. Rather than decline to entertain this on the basis that there was no change of circumstances which would warrant reconsideration of an interlocutory decision, I have considered the merits. I agree with Harrison As J. I regard it as plain on the face of the original statement of claim that the plaintiff made no mistake about the name of the party it was suing. It chose to sue only the construction company and only in nuisance. It pleaded the existence of the land owning company, Cavasinni Developments, by name and capacity.

51. The result is that Cavasinni Developments and the third defendant have been joined too late for the cause of action to be maintained against them in contract, for breaches concerning the Lot 92 wall and failure to reinstate the plaintiff’s land on that segment of the boundary.

The plaintiff’s “entire contract” argument

52. To overcome its difficulties under the Limitation Act the plaintiff propounded a construction of the agreement of mid-2000 according to which the defendants’ obligations should be construed as one entire and indivisible undertaking. Upon this construction, the plaintiff argued, the defendants’ promise to make its walls strong enough to withstand compacted backfill to full height and to restore the plaintiff’s land to natural levels could not be said to have been performed at all until the whole was done. It was further submitted there could be no breach arising from deficient execution of the task having until the entirety of it was completed. On the dates referred to above, that would have been no earlier than 6 June 2008: see [46].

53. I reject this argument. The construction advanced would be highly artificial. The factual context in which the agreement was made and which dictated the way it would be performed militates strongly against treating the defendants’ obligations as entire and indivisible. In particular, it was in the nature of the work to be carried out that the walls on each segment of the boundary, corresponding with each of the defendants’ lots and buildings, would likely be completed at different times. It would lead to absurd results if the wall along the boundary of one lot might be built to a deficient standard and yet no actionable breach arise until other, unrelated walls on different segments of the boundary had been erected. It is a natural understanding of the contractual arrangement that each segment of wall should have to be capable of withstanding lateral forces from the time it was put in place, not that its attainment of this capacity might be deferred, perhaps for years, until another wall further along had been built.

Plaintiff’s alternative causes of action

54. In pars 5A, 6 and 6A of its further amended statement of claim the plaintiff has alleged that if the conditions stipulated through Mr John Mir in mid-2000 were not agreed by the defendants, then the defendants have trespassed upon its land. But I have found that the conditions were agreed and that the defendants’ entry on and disturbance of the plaintiff’s land was pursuant to a licence. There has been no trespass. The conditions of the licence have been infringed and this has given rise to a cause of action in contract only.

55. In pars 7 – 7F the plaintiff has pleaded that the two Cavasinni companies by various communications and conduct represented to the plaintiff that they had agreed to the conditions stipulated by the plaintiff for entry upon the plaintiff’s land. The plaintiff alleges that in reliance upon those representations it understood that the conditions were agreed and on that understanding permitted and suffered the defendants to enter on the plaintiff’s land and carry out works there. It is said that if, contrary to the plaintiff’s claim, the defendants did not become bound by the conditions stipulated in mid-2000 then the conduct of the two Cavasinni companies would have been misleading and deceptive in contravention of the Trade Practices Act 1974 (Cth), as in force at relevant times. It is alleged that the third defendant has been a “person involved” in the misleading and deceptive conduct and is therefore personally liable in respect of it.

54. Upon this Trade Practices Act cause of action the plaintiff claims damages against all defendants and also a finding that it would be unconscionable for the defendants to deny their agreement to the conditions which Mr John Mir stipulated in mid-2000. Because I have found that the agreement of 2000 was made substantially in the terms alleged by the plaintiff, this action for misleading and deceptive conduct does not arise. The representations alleged to have been made by the defendants have not been falsified by the evidence.

55. In par 11 the plaintiff pleads a cause of action in nuisance founded upon the defendants having left upon the plaintiff’s land stockpiles of excavated material. I have found that this placement of material was carried out pursuant to the licence granted by the plaintiff and for that reason alone it does not constitute a nuisance. The continuance of the material on the plaintiff’s land is actionable as a breach of the defendants’ contractual obligation to reinstate the stockpiles to the natural ground level. But aside from breach of contract there is no action under the common law of tort, in nuisance, for the failure of the defendants to come upon the plaintiff’s land and reinstate it to natural levels.

56. In pars 12 and 13 a cause of action in negligence is pleaded. It is alleged that the defendants owed the plaintiff a common law duty of care in carrying out works on either side of the boundary not to remove support which had until that time been provided by Cavasinni Developments’ land for the plaintiff’s land. Section 177 of the Conveyancing Act 1919 (NSW) creates a duty of care “in relation to the right of support for land”. Subsection (5) provides that the duty may be excluded or modified by express agreement between the person owing the duty and the proprietor of the “supported land” to whom the duty is owed. In the present circumstances, where the plaintiff granted a licence to the defendants to carry out works on the plaintiff’s land, stipulating conditions which created a very specific contractual obligation for the defendants to provide lateral support, I find that the content of the duty as it would exist under the statute has been wholly replaced by the express terms.

57. Independently of s 177 of the Conveyancing Act, there would be no duty of care. It is not alleged that any physical damage has been sustained by the plaintiff as a result of the failure of the defendants to construct walls which would afford adequate support. Only pure economic loss has been suffered. Namely, diminution in value of the plaintiff’s land. The plaintiff has not pleaded nor adduced evidence of any degree of vulnerability in the plaintiff which could possibly attract under the common law, and without the aid of statute, a duty of care with respect to such economic loss: see Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 169; Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185. Far from the plaintiff having been vulnerable in this respect, it was well able to negotiate contractual protection for itself and it did so.

58. Lastly the plaintiff has pleaded in par 13A that the defendants have left “underground drainage and footings” on the plaintiff’s land which constitute an ongoing trespass. The only evidence of this is that at about chainage 100 – 105 there are three items of subsurface structure which protrude beyond the boundary into the plaintiff’s land. The first of them is a concrete footing which, for 550 mm along the boundary of Lot 2, extends 500 mm into the plaintiff’s land. The second and third are two subsurface piles under a footing, each of which extends 130 mm across the boundary.

59. These trespasses are not disputed. They are negligible. There is no evidence that they have any effect upon the amenity or value of the plaintiff’s land. They have caused no damage. The engineering drawings of the likely development on the plaintiff’s land depict works which would be undertaken on this segment of the boundary in detail, by cross-section. Those drawings show that the minimal incursions of concrete from the Cavasinni Developments’ side of the boundary would be built over by an elevated structure designed to carry traffic. They would be hidden from view and would be of no consequence. In those circumstances I will dismiss the plaintiff’s claim in trespass based upon these minor concrete structures.

Damages for breach of contract

62. The plaintiff’s manner of proving its damages flowing from the breach of contract has assumed that it would be able to prove actionable breach in respect of the walls on all of Lots 2, 3 and 92 and in relation to the failure to reinstate the plaintiff’s land along the entirety of these segments of the boundary. On the findings I have made, the Court is only concerned with damage caused by the deficiency of the walls on the Lot 92 boundary and failure to reinstate the plaintiff’s land in that location. If I am able to make an assessment of damages from the plaintiff’s evidence concerning the whole boundary, I will have to adopt a fraction of it as referable to Lot 92.

63. The plaintiff caused its engineer, Mr Higgins, to prepare structural specifications for a warehouse to be built on the northern half of the plaintiff’s land to the standard of a typical likely development for the area. The design which has been adopted makes allowance for the condition of the eastern boundary in the events which have occurred. That is, there being no retaining walls on that boundary capable of withstanding compacted fill. This design has been referred to in the evidence as Option 1.

64. The eastern wall of the warehouse in Option 1 is set back 6 m from the plaintiff’s eastern boundary. The footing of this eastern wall would be at RL 74. The footing of the Lot 92 wall is at RL 67.125. For Lot 3 the RL is 66.69 and for Lot 2 it is 65.3. In geotechnical terms the zone of influence exerted by such a warehouse building on the plaintiff’s land would be the subsurface area within which the mass of the building would impart, through its footings, additional lateral loads on the ground. The consensus of the engineering experts in this case is that the zone of influence of this warehouse would lie at a 45° decline from the footing of the east wall of the warehouse in Option 1. At that angle, given the offset of the building from the boundary and the RLs of the footings of the Cavasinni walls, the warehouse would not impose any lateral surcharge against those walls. Further, the footings of the warehouse east wall in Option 1 would be supported on piers constructed under it so that the zone of influence would likely drop away from the plaintiff’s building even more steeply than at 45º.

65. Option 1 calls for a line of piers to be installed on the plaintiff’s land along and just inside the eastern boundary, supporting beams which would run from east to west from the caps of the piers to the footing of the warehouse east wall. To the south of the warehouse these beams would be supported at their western ends on a thickened concrete in-ground member running north-south. The beams would carry a concrete deck, forming a roadway. The piers along the boundary, the footing of the warehouse east wall and the thickened concrete member to the south of the warehouse would carry the loads of this roadway superstructure. The result would be no reliance at all on the walls which have been deficiently constructed by Cavasinni Constructions.

66. The cost of construction of the warehouse in Option 1 has been agreed by two quantity surveyors, one for each party, at $867,496. I find that figure proved on the balance of probabilities.

67. The engineers have also considered a design referred to as Option 2a which would involve the same warehouse but positioned and constructed upon an assumption that the Cavasinni walls on the eastern boundary could hold compacted fill to their full height. Upon that assumption the warehouse in Option 2a is moved 6 m further west and, in lieu of the pier, beam and roadway deck structure, backfill would be placed against the boundary walls with a concrete slab roadway close to the east wall of the warehouse (for heavy traffic) and asphalt pavement over the remainder of the surface to the east boundary, for car parking. I find that this development could have been carried out and that the Cavasinni walls on Lots 2, 3 and 92 would have supported it, if they had been built to the standard required by the parties’ agreement. There is no evidence that a heavy vehicle roadway close to the warehouse or an asphalt paved car park up to the boundary would impose live or other loads on the walls relevantly greater than the loads of the compacted backfill alone, which is what the Cavasinni walls were required to withstand.

68. The cost of construction of the warehouse in Option 2a has been agreed by the quantity surveyors at $443,222 which, again, I accept. The difference between the costings of the two options is $424,274, which the plaintiff claims is the measure of its damages for the defendants’ breach of contract. Despite criticism from the defendants I consider the plaintiff’s methodology, comparing Options 1 and 2a, is essentially valid.

69. Under Option 2a, cutting from elsewhere on the plaintiff’s land and filling against the Cavasinni walls, combined with moving the warehouse 6 m to the west, would achieve a level area between the east wall of the plaintiff’s warehouse and the eastern boundary, with usable car parking and roadway. This would be at significantly less cost than the elaborate structure under Option 1 which has become necessary because the land cannot be levelled by cutting and filling in this location due to the inadequacy of the retaining walls.

70. The defendants have submitted that Option 1 is not a fair comparison. They say it has exaggerated the cost of the development by retaining the warehouse at approximately 6 m from the boundary, rather than moving it a further 6 m away, as under Option 2a, to eliminate surcharge load from the heavy traffic roadway superstructure. I reject that submission. It ignores the fact that, given the deficient condition of the Cavasinni walls, it would be essential for the plaintiff to construct some such pier and beam support for a deck and roadway at the east of its site in order to bring these surfaces to a usable level. A deck and roadway supported on piers and beams would be necessary at the eastern end of the site even if the warehouse were also moved 6 m west under Option 1. The cheaper method of cut and fill cannot be used through fault of the defendants.

71. As the plaintiff is statute barred in respect of all breaches except those concerning the Lot 92 boundary I must make an estimate of the amount of this additional cost of development which is attributable to those actionable breaches only. Neither party adduced evidence directed to isolating any particular part of the cost differential calculated at [68] as being referrable to the defendants’ breaches at the Lot 92 boundary. The best the Court can do in these circumstances is make an estimate.

72. I consider it reasonable to ascribe the extra development costs which the plaintiff will incur equally and distributively to the defaults of the defendants along the entire 100 m of affected boundary. The portion occupied by the boundary of Lot 92 is 37 m out of a total of just under 100 m. 37% of $424,274 is $156,981, which is the figure I will adopt subject to uplift for one year’s increase in prices: see [73]. The plaintiff suggested that the proportion of cost associated with breaches of contract in relation to Lot 92 should be calculated by reference to the volume of excavation of the plaintiff’s land along the Lot 92 boundary which will be necessary to execute the works in Option 1, as a fraction of the excavation required along the whole boundary. This would yield a proportion of about 56%. I see no logic in the submission. A significant element of the works required under Option 1 to compensate for the deficiency of the Cavasinni walls is the pier, beam and roadway construction. This work is evenly distributed along the eastern boundary. The excavation work is a relatively small component

73. The costs of Options 1 and 2a were calculated by the parties’ quantity surveyors at rates current to December 2015. Allowing a small margin for possible inflation of costs over the year from December 2015 to judgment, the best estimate I am able to make of the plaintiff’s damages attributable to the breaches of contract by Cavasinni Constructions in relation to Lot 92 is $160,000.

74. As this quantification of damages is based upon current cost, there would be no justification for awarding interest up to judgment.

Orders

75. For these reasons, the orders of the Court are:

1. Judgment for the plaintiff against the first defendant for $160,000 in damages for breach of contract.

2. The claims in the further amended statement of claim are otherwise dismissed as against the first defendant.

3. Judgment for the second and third defendants against the plaintiff on all causes of action pleaded against them in the further amended statement of claim.

76. Costs will follow the event subject to hearing the parties as to any different costs order which ought to be made, at the time of these reasons being published.

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Amendments

11 April 2017 -

[44], second sentence: delete 'And' substitute with 'An'.

[44], last sentence: delete 'absolve the breach' substitute with 'absolve the defaulting party with respect to the breach'.

[44], last sentence: delete 'the date which it became' substitute with 'the date when the breach becomes'.

Decision last updated: 11 April 2017