Molinaro v Teezella
[2006] FMCA 414
•29 March 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MOLINARO & ORS v TEEZELLA & ANOR | [2006] FMCA 414 |
| TRADE PRACTICES – CONTRACT - Claims under s.52 and s.75B Trade Practices Act 1974 (Cth) – Claim under s.42 of the Fair Trading Act 1987 (NSW) – where land was purchased from the first respondent – where the second respondent is the sole director of the first respondent company - where the applicants allege breach of a special condition of the contract – where that special condition required to first respondent to carry out certain works on the property before completion of the contract – whether the first respondent’s misrepresented that it had fulfilled those requirements– where the first respondent’s employed a sub-contractor who undertook the demolition of the improvements on the land required by the special condition - whether the cross respondent is liable. DAMAGES – Whether the loss suffered by the applicants arose out of any representation made by the first or second respondents – whether the loss suffered by the applicants arises out of breach of contract – whether the cross respondent is liable to the first and second respondent – calculation and apportionment of the extent of the damage – where the court is provided with evidence of a total claim – approach to be taken when the total claim has not satisfactorily been broken down into all of its aspects. COSTS – Whether the court should make a “Bullock” order as to costs. |
| Trade Practices Act 1974 (Cth), s.52, s.75B Fair Trading Act1987 (NSW), s.42 |
| Talos v Munro (1970) 92 WN(NSW) 797 Thompson v Smith Shiprepairers (North Shields) [1984] Q.B. 405 Byrnes v Jokona Pty Ltd [2002] FCA 41 Bullock v London General Omnibus Co [1907] 1 KB 264 State of Victoria v Horvath (No 2) [2003] VSCA 24 Gould v Vaggelas (1983) 157 CLR 215 Vucadinovic v Lombardi [1967] V.R. University of Sydney v Raine & Horne Commercial (NSW) Pty Ltd & Ors [1999] VSC 140 Canterbury Municipal Council v Taylor & Ors (No 2) [2002] NSWCA 96 |
| First Applicants: Second Applicants | ANGELO MOLINARO AND ANTONIETTA MOLINARO STEPHEN NEW AND LYNN NEW |
| First Respondent: Second Respondent: Cross Respondent | TEEZELLA PTY LIMITED ACN 052 331 718 MICHAEL GILLIS WESTERN SUBURBS DEMOLITION CONTRACTORS PTY LIMITED |
| File Number: | SYG 1582 of 2004 |
| Judgment of: | Raphael FM |
| Hearing dates: | 22-23 August 2005, 20 February 2006, 2 March 2006 |
| Date of Last Submission: | 21 March 2006 |
| Delivered at: | Sydney |
| Delivered on: | 29 March 2006 |
REPRESENTATION
| Counsel for the Applicants: | Mr G. A. Sirtes |
| Solicitors for the Applicants: | Cara Marasco Solicitors |
| Counsel for the First and Second Respondents: | Mr D O’Dowd |
| Solicitors for the First and Second Respondents: | Gillis Delaney |
| Counsel for the Cross Respondent | Ms Jenny Baxter |
| Solicitors for the Cross Respondent | G W K Allars |
ORDERS
The first respondent to pay the applicants the sum of $11,721.16 by way of damages for breach of contract.
The first respondent to pay interest on the said sum at the prescribed rate from 30 January 2003 until judgment.
The first respondent to pay the applicants’ costs of the proceedings other than the applicants’ costs as against the second respondent. Such costs to be assessed pursuant to Part 21 Rule 21.02 (2)(b) utilising Schedule 1 of the Federal Magistrates Court Rules.
The cross respondent pay the first respondent the sum of $11, 721.16 by way of damages for breach of contract.
The cross respondent pay to the first respondent interest on the said sum at the prescribed rate from 30 January 2003 until judgment.
The cross respondent to pay the first respondent’s costs of the proceedings including any costs payable by the first respondent to the applicant pursuant to order 3 hereof. Such costs to be assessed pursuant to Part 21 Rule 21.02 (2)(b) utilising Schedule 1 of the Federal Magistrates Court Rules.
The applicant to pay the second respondent’s costs of the proceedings. Such costs to be assessed pursuant to Part 21 Rule 21.02 (2)(b) utilising Schedule 1 of the Federal Magistrates Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1582 of 2004
| ANGELO MOLINARO & ANTOINETTA MOLINARO |
First Applicants
STEPHEN NEW & LYNN NEW
Second Applicants
And
| TEEZELLA PTY LIMITED ACN 052 331 718 |
First Respondent
MICHAEL GILLIS
Second Respondent
WESTERN SUBURBS DEMOLITION CONTRACTORS PTY LIMITED
ACN 002 229 192
Cross Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings involve claims articulated in a Further Amended Statement of Claim filed on 7 March 2005 in contract and alleged breaches of the Trade Practices Act, s.52, s.75B as well as an alleged contravention of s.42 of the Fair Trading Act (NSW). The claims arise out of the purchase of property, being CT Folio identifier 1/510496 and known as 14 Owens Stanley Avenue, Beacon Hill in New South Wales. The land was a development site on which there was formally erected a dwelling. It was purchased from the first respondent company of which the second respondent is the sole director and share holder. The applicant claims that the respondent breached special condition 40 of the contract which was in the following form:
“40. The vendor shall prior to completion, remove any structure on the property and provide cleanfill to the property to any inground or underground cavity on the property and ensure that such fill is properly compacted and/or compressed in accordance with Council requirements and the Building Code of Australia as the case requires such that the land as filled is capable of supporting three dwelling home structures and supporting outbuildings and improvements.
The breach of special condition 40 and the alleged misrepresentation related to a statement said to have been made by the second respondent that cleanfill had been supplied to the property when it was later found that some fill utilised on the land, inter alia, was contaminated with asbestos sheeting requiring remediation.
The respondents deny the allegations contained in the statement of claim and in particular that the fill was not clean. They have cross claimed against the demolition contractor (the cross respondent) who undertook the demolition of the improvements on the land. The cross respondent in turn denies liability, noting that it left the site some months before the alleged contamination was discovered.
History
The land at 14 Owens Stanley Avenue is a large parcel of land upon which stood a brick and fibro house with other improvements including a partially inground pool. The first applicants, a husband and wife, had agreed in 2001 to purchase one of three lots into which the land had been subdivided. That purchase did not complete but after some court proceedings a new arrangement was made between the owner of the land, the first respondent, and the first and second applicants to buy the whole of the land. During the negotiations which took place prior to this contract it was agreed that the house and improvements on the land would be demolished and removed by the first respondent. On
7 August 2002 the solicitors for the purchasers wrote to the vendor’s solicitor who was the second respondent, a principal in the firm of Gillis Delaney Brown, in the following terms:
“… Mr Molinaro has just phoned in and reported that the house erected upon the property is now being demolished (a good thing) and Mr Molinaro and Mr New are anxious to know that the cleanfill which is to be used following demolition will be compressed/compacted so that there will be no subsidence problems in the future once new structures are built upon the subject land.
In order to capture that element we suggest an amendment to your proposed special condition 40 to read as follows:
40. The vendor shall, prior to completion, remove any structure on the property and provide a cleanfill to the property to any inground or underground cavity on the property and ensure that such fill is properly compacted and/or compressed in accordance with Council requirements and the Building Code of Australia as the case requires such that the land as filled is capable of supporting three dwelling home structures and supporting outbuildings and improvements.”
This clause was placed into the contract that was exchanged on
13 August 2002. On 26 August 2002 the applicants solicitors wrote to the first respondents’ solicitors in the following terms:
“Our clients have been past the site and have reported that the demolisher has of course demolished the house and the pool and has apparently graded the soil in such a manner to take the sharp edges off the resulting cavities left by the house and pool.
The demolisher told our clients that he had not been contracted to provide any fill and it appears that what he has done is simply to demolish the structures and render the site more or less safe by rounding off the “sharp edges” that otherwise would result following demolition.
Our clients would like a reassurance that there will be appropriate clean fill used on the site to compacted, all of which is to be done in accordance with special condition 40 of the Contract.”
That letter was replied to on 4 September by the respondents’ solicitors who indicated that:
“Cleanfill will be delivered to the property within the next 14 days to provide your client with a level clear site as required by section 40 of the contract.”
Fill was delivered to the site on 23 September 2002. This was a day prior to completion. The applicant’s were not at all sure that the fill complied with what they considered to be the definition of “cleanfill” because it contained large lumps of material. The applicants retained Lachlan Taylor of Taylor Geotechnical Engineering to inspect the fill and to report to them upon it. Mr Taylor did inspect the fill and advised that provided that some of the larger lumps were broken down the fill met the definition of cleanfill. However, because the compaction of that fill had not taken place when it was required under section 40 of the contract a retention, noted as a claim under condition 7 of the contract, was made in the sum of $13,350. Between completion and
19 December 2002 the cleanfill was spread on part of the land in purported compliance with the vendor’s obligations. The applicants did not consider that the fill had been properly compacted but by
19 December an agreement had been reached whereby all but $2,000 of the retention was returned to the first respondent. The applicants, who were by now the owners of the land, agreed to carry out any further compaction themselves.
The applicants asked Mr Taylor to organise a compacting contractor. He did this. He employed a company know as Matthews Contracting Pty Limited. Mr Steven Matthews went onto the site on 29 January 2003. He immediately saw that over the site were spread small shards of fibro material. Mr Matthews identified the fibro sheeting as bonded asbestos and called in Work Cover. Mr Matthews’s company was licensed to remove asbestos and so he was given the task of doing that. During the course of his remediation work he discovered underneath the cleanfill larger sheets of asbestos in two piles as well as other unsatisfactory compaction materials.
The appropriate procedures for dealing with asbestos remediation took place. Mr Hills of New Environment Management and Technology Pty Limited attended at the property on 29 January 2003 in order to issue a certificate for the clearance of the property. He found some more broken pieces of fibro cement sheeting and suggested some further remediation be carried out. This consisted of scraping the top level of the property in particular areas identified by Mr Hills in a map attached to his affidavit. The further remediation was carried out on 17 February 2003 and on 19 February 2003 Mr Hills issued an asbestos clearance report. It is the costs of all of this work that forms the basis of the claim for damages. The work involved removing the polluted fill, carting it and dumping it at specially selected sites, providing replacement fill and compacting. In addition there was the scraping of the surface.
Evidence
The applicants gave their evidence through the affidavits of Mr Angelo Molinaro, Mr G A Zuur, Mr S New, Mr J W Hills, Mr Steven Matthews and Mr Lachlan Taylor. In order to understand what took place on site the most important evidence is that of Mr Taylor. Mr Taylor first visited the site in September 2002 when he went to look at the fill that had been deposited there. This was heaped up in piles and had not been spread. He gave certain advice to the vendors, which I have described, but was not asked to and did not make any general observations about the site. He returned in October to carry out the geotechnical testing of the cleanfill that had been compacted up on the site. He concluded that it had not been compacted in accordance with AS3798 – 1996 “Guidelines on Earthworks for Commercial and Residential Development”. He prepared a report and sent it to the solicitors. He noted in the report that:
“Some minor amounts of building refuse consisting of wood, glass, concrete, brick pieces and steel are also observed on the surface of the filling.”
There is no suggestion in that report of fibro pieces that might be asbestos. Mr Taylor was contracted to carry out the recompaction works in January 2003. Mr Taylor explained to the court that for the purposes of his evidence the word “fill” meant any substance that had been placed into land. This definition included existing excavated material on the site as well as imported fill. The areas of the site to which Mr Taylor’s attention was directed were the areas previously occupied by a pool and a cellar. These areas had already been filled before completion but there were still indentations left. It was in order to smooth out the indentations that the extra cleanfill had been provided. The first level of fill as well as the second cleanfill level would have to be removed in order to re-compact it in a manner which would comply with the requirements of the Australian standards. When that work was being carried out the further asbestos was found as well as other pieces of building material described by Mr Taylor in a detailed report annexed to his affidavit and photographed. It appears that most of this contaminated material was found in what was described as the old house area (lot 2), which was not the swimming pool and not the old basement. Some contaminated filling was excavated from the pool areas and some contaminated filling was excavated from the old basement. The importance of defining where the contaminated material came from is that the respondents argue that any obligations under special condition 40 or the representations extended only to the pool and basement areas. This is not an argument I can accept if it is intended to mean that the first respondent could fail to removed all of the improvements and leave some of them in an area other than an “in ground” or “underground” cavity. The obligation to remove was a general one.
Mr Taylor did not assert that he saw any of the fibro shards on his earlier visits to the site in September and October. The reports that he had prepared from those visits do not make reference to them although the October report makes reference to other material. Mr Taylor does not claim any expertise in identification of asbestos but he does not suggest that there was any suspicious material on the site at those times.
Mr Hills gave evidence about his investigations once he had seen the shards of asbestos material on top of the site. He says he went down to about 10 centimetres looking for material and took samples of both the material he found on the surface and that which came from the deeper fill in the house footprint area. He told the court that he did not see any significant building material around the site.
Mr Gillis gave the evidence for the respondents. He explained that he was the sole director and shareholder of the vendor company and he was also the solicitor for that company. He was therefore both a legal practitioner and part time property developer. He organised the cross respondent to undertake the demolition of the improvements and said that he expected that the removal of the pool and basement area would include some filling in of those areas so that there was no a sheer drop into the holes. Whilst he agreed that the cross respondents were not retained to undertake compaction of soil he noted that the pool had only been a metre deep and came out of the land by about half a metre or so. A similar situation existed with the basement area. He was satisfied that the contractors had smoothed off the areas of excavation so that there were only indentations in the land. Mr Gillis told the court that he discussed the preparation of the site with Mr Zuur who told him that his client wanted the depressions in the pool and basement area to be filled. But he did not mention that the old house had been built on brick peers. He noted that there was a fall of about one to one and a half metres over the whole of the site and there was no suggestion that the company was required to leave a level block.
Mr Gillis indicated that he instructed the company who supplied the cleanfill to spread it where it was required in order to give the applicants a level building area. At some stage during the course of Mr Gillis’ evidence there appeared to be confusion as to what fill was brought onto the site. I am satisfied from Mr Gillis’ and Mr Taylor’s evidence that the only fill brought onto the site by the respondents was what I will describe as the “orange fill” which was seen by Mr Taylor in piles on 23 September. The other filling of the site was done prior to that date. Anything else brought to the site which resulted in a finding of asbestos pieces upon the surface would have been brought to the site after the property sale had been completed.
Mr Gillis made about two inspections of the site whilst it was being demolished. The first time it was about two thirds demolished and there was a lot of rubbish around the site. On the second occasion the house was all but demolished. Mr Gillis confirmed that there was temporary fencing around the site and under cross examination agreed that he did not see any plastic sheeting around. He said that on neither of the two occasions was anybody wearing protective gear and he saw no evidence of an attempt to dispose of asbestos related debris. Mr Gillis confirmed that at the request of Mr Zuur he had asked Tony Scarcella, the demolition contractor, to smooth out the indentations where the land fell away from the pool and the excavated room under the house. Mr Gillis was questioned about the clean fill that he had ordered. He stated that the original intention was to place this in the pool and basement area. He did not think that very much fill was needed and therefore only three loads were ordered. He thought that would be all that was needed to level the whole of the site. He indicated that the pool was eight to ten metres in length and about a third of it was out of the ground so that not a lot of fill would be needed to fill it in.
Mr Gillis was cross examined by Ms Baxter for the cross respondent. He told the court that the house had been vandalised before it was demolished and that people could walk in and around the property without restriction. Mr Gillis confirmed that his company’s contract with Western Suburbs Demolition was to remove all the building material, footings, demolish the pool and remove the building refuse. He said that he never discussed asbestos with Mr Scarcella although he had seen certificates from Mr Scarcella indicating that he was qualified to remove asbestos. He did not ask for progress reports nor did he ring Mr Scarcella to check up on how the work was going. He did not speak to Mr Scarcella when he went to the site because he only looked at the work from his car. Mr Gillis indicated that he believed there was very little necessity for extra fill to be brought on to the site because the site sloped away and in order to provide three buildings and retention tanks the owners would have to do a lot of cutting and filling to the extent that dirt would probably have to be shifted off the site.
Mr Tony Scarcella, the principal of the cross respondent, gave evidence that he carried out the demolition work in accordance with his usual practice. He explained that he was able to get on to the site easily including into the house because of its vandalised state. The most significant part of Mr Scarcella’s evidence was that before commencing work he observed that the older part of the house was constructed using fibro sheeting which he suspected was made from bonded asbestos and he had noticed some common marking to that effect. He therefore faxed notification to commence demolition to Work Cover. He stated that he then applied his usual asbestos processes which were to wear protective clothing, to avoid breaking the asbestos by removing it using hand tools, to place protective plastic sheeting on the ground and put the asbestos in it before removing it to the tip. He produced a receipt from Kari and Ghossayn Waste Depot and Quarry indicating that a load of approximately .96 of a tonne of asbestos had been taken there on 17 August 2002. He claimed that he had ensured that all demolition material from the pool area was removed and taken to the tip before completion of the job. He claimed that he removed the brick piers and loaded them on to his truck and all refuse was removed. He undertook the smoothing of the pool and underground room fall using the bulldozer and confirmed that it was not part of his contract to fill or compact the site area. Mr Scarcella noted that he had not received any complaints concerning the work which he had done on the site until after commencement of proceedings.
The evidence of Mr Scarcella was corroborated by his brother Vincent who worked on the site with him. He also recalled the manner in which the asbestos found on the site was removed and that all the other building material had been removed from the site. He indicated that the site was fenced whilst Western Suburbs were working on it but that the fencing was removed when they left the site. Mr David Beaumont also worked on the site. His job was mostly to drive the larger of the two dump trucks. This was not the truck that was used to deposit the asbestos. Mr Beaumont did not recall asbestos being on the site, he did not recall the Scarcella brothers being dressed in safety equipment or plastic sheeting being placed on the ground and the asbestos being put into that. He indicated that he had only worked with Mr Scarcella, who was his former father in law, on a few occasions but he did confirm in his affidavit that his experience in working for Mr Scarcella on other jobs was that he was meticulous about checking for asbestos and disposing of any asbestos material.
Finally, an affidavit was produced from Matthew Dean. Mr Dean was not available for cross examination. He indicated that he worked only on the pool area where he was required to break up the concrete and steel. He said that he did not recall building materials scattered over the site.
Issues arising from the evidence
The evidence establishes a number of changing scenarios in relation to this land. Before exchange of contracts the property consisted of a substantial area of land on which had been erected a fibro house that had been built utilising asbestos material. The house had been extended in part as a two storey residence. A concrete pool had been built which was partially inground but where the land fell away was exposed. The demolition of the pool was conducted by a sub-contractor to the cross respondent [Affidavit of Matthew Dean]. The residential building was in a state of delapidation before the exchange of contracts. The site was unfenced. Most of the windows were broken and holes had been punched in the fibro allowing the building to be easily entered. There was a concrete car port on the western side of the building in front of the pool.
The vendor and purchasers agreed that the improvements on the site would be demolished and the site left clear and compacted so that it could support the proposed three new structures that were intended to be built. Mr Gillis hired the cross respondent to undertake the demolition work. I accept the evidence of both Tony and Vince Scarcella that they identified asbestos in the fibro used for the older part of the building. I accept the evidence that .96 of a tonne of that fibro was removed from the site. I accept that whilst they were working on the site it was fenced and it was unlikely that any third party dumping of material took place at that time.
Between contract and completion the purchasers visited the site. They did not complain that there was any building material that had not been removed from the site. They did complain that the site had not been compacted and levelled in accordance with the special conditions. The vendor agreed to do this work and brought in some clean fill. That fill was then spread over the site, in particular the area previously occupied by the pool and basement area of the old residence. This was the orange fill. The fill was inspected by Mr Taylor who confirmed that the fill was clean fill but should be broken down in order to comply with AS3798. Mr Taylor also noticed that building refuse such as wood, pieces of fibro sheeting, glass and pieces of brick were observed scattered across the areas where the previous residence was located. But this detritus was notices after the clean fill has been partially spread. The question arises in relation to this finding as to whether the debris was:
a)contained in the orange fill;
b)the residue of the demolition of the house;
c)extraneous debris brought on site by a person or persons unknown.
At this stage the Geotech expert did not consider whether the fibro sheeting contained asbestos. He looked at the site to determine whether or not the site had been properly compacted. He concluded that it was not. He recommended remediation and recompaction. This was the subject of a contractual dispute between the vendor and the purchasers which was settled in December 2002. The applicants argue that I should find on the balance of probabilities that the detritus scattered about the site and found by Mr Taylor came from the buildings originally erected thereon. They say that the nature of the detritus was so similar to that found in the improvements that this is an inference that can easily be drawn. The respondents and cross respondents would say that the site was unfenced so anyone could have spread rubbish over it, that the material was on top of the orange fill which was laid over the excavated area. Mr Taylor has confirmed that the orange fill was clean fill and thus the complained of detritus could not have come from the original house. Regrettably, the photographs annexed to Mr Taylor’s helpful report were not of great assistance in ascertaining what was on the site in October 2002 by way of detritus. But it may be that it doesn’t matter. It was the detritus investigated by Mr Matthews in January 2003 that was found to contain asbestos and require extensive remediation by scraping. What I have to consider is whether the detritus which he found on top of the site in January was, on the balance of probabilities, detritus from the original house.
It was the existence of detritus on the ground in January 2003 that caused Mr Matthews to call in Mr Hill to conduct testing. Mr Hill deposed to the fact that he made two site visits and found small pieces of fibro cement spread around the footprint of the old house. Some of it was on top of the earth and some of it was within a few inches of the top. He had samples analysed and they turned out to contain asbestos. Dealing with the asbestos became a significant element in the remediation works. Mr Matthews indicated in his evidence [T49] that the work he believed he was originally going to undertake was not a particularly big job. It involved taking out the back fill which consisted of “scrapings of grass and demolition rubble from the old pool area and the old beneath the house area”. He was required “to clean the pool back out and then layer and compact it and cut and fill the back area”. The unsatisfactory building material which was found in the pool area and back of house area is illustrated in the photographs attached to the Taylor Geotechnical Engineering report. They show that in addition to large pieces of concrete, building rubble, old pipes etc. fibre concrete later identified as asbestos fibre was also found. The photographs indicate that the depth at which this particular detritus was found was well beneath the orange clean fill.
In coming to a view as to where the detritus came from, both that on the surface and within an inch of two of the surface and that buried in the former swimming pool and basement, I can only have regard to the evidence and inferences naturally available from that evidence. I cannot make my own best guess. If the evidence does not satisfy me on the balance of probabilities then the allegation has not been established. On this basis I am unable to make a finding that the asbestos found on the top of the site in January 2003 came from the asbestos within the building that had been demolished by the cross respondent. The cross respondent completed its work in August 2002. It left the site unfenced. In September 2002 complaints were made about the quality of the compacting. No complaints were made about detritus on the site. Clean fill was ordered and spread. It was not compacted satisfactorily but there was no complaint about possible asbestos. The parties then negotiated for some time about the compaction. The site remained unfenced. Mr Taylor had seen the clean fill in piles and had made complaints about it on 23 September. He returned to the site in October after the fill had been spread. He did notice some detritus but described it as minor amounts of building refuse in the old house area. That does not accord with the description given by Mr Hill who found small pieces of asbestos strewn all over the site but who specifically denied seeing a significant amount of building materials [T106]. These facts are just not consistent with the finding that the material on the surface and just within the top soil was material left on site by the second respondent.
The other material found in the pool area and the basement area is in a different category. This was found so relatively deep that I cannot see any other explanation for how it got there than that it was left there during the original demolition works and covered over. One only has to look at the size of some of the lumps of concrete to appreciate that if they had been left on the site by a third party Mr Molinaro, who attended regularly and who was anxious to ensure that before exchange of contacts all his concerns were alleviated, would have seen it. I am unable to draw an inference that at some later date someone may have come to the site, dug it up, planted some quantity of building material and asbestos and covered it over again. The fact that the material was found in two areas only and that those areas were areas near which particular works of demolition had been carried out leads me to conclude that on the balance of probabilities the cross respondents was responsible for it either on its own account or through its subcontractor.
In their final submissions Counsel for the first respondent and cross respondent urged upon me a suggestion that the material found in the under house area could have been material from a house which predated the one that the cross respondent knocked down. They reminded me that the photographs of the concrete there found described that concrete as “concrete footings” whereas there was evidence that the footings in the demolished house were made of brick piers. I accept that the footings of the house were made of brick. But it is quite clear from the evidence that the swimming pool was made of concrete and I tend to the view that what was photographed was not footings at all but pieces of concrete from the pool labelled footings.
Ms Baxter for the cross respondents asked me to believe her client when, through Mr Tony Scarcella, it said it had adopted all the appropriate procedures for removing debris including asbestos. She seemed to indicate that this evidence was unchallenged. First Mr O’Dowd did challenge it and second Mr David Beaumont’s evidence could be said to be contradictory. He did not notice anybody walking around in white asbestos resistant suits or any plastic being laid on the ground to capture the asbestos. The court did not have the benefit of hearing Mr Dean or seeing him under cross examination and therefore his evidence cannot be given very much weight particularly as he was the person responsible for the demolition of the swimming pool. With both Mr Beaumont and Mr Tony Scarcella driving the dump trucks there may well have been times when Mr Dean was left alone on the property and he could have allowed some debris to become buried. The respondents have no case to prove but when there is a plausible explanation for what occurred and they do no more than suggest another possible theory, in this instance the pre-existing house, I am entitled, when weighing up whether that theory should lead to me to a finding that the applicant has not satisfied me upon the balance of probabilities of its claim as to the origin of this rubble, to take into account that there was no cross examination of the applicants’ witnesses which might have suggested this. I remain of the view that on the balance of probabilities the material found in the old swimming pool and underneath the house belonged to the house which the cross respondent demolished.
Discussion
The applicants’ claims against the respondents are found in a further amended statement of claim filed on 7 March 2005. It alleges that as at completion and in breach of the contract the first respondent had failed to perform its obligations in accordance with Special Condition 40 (the contract claim). The applicant then alleges further or in the alternative that:
12. “The First Respondent represented to the Applicants, that the First Respondent had otherwise complied with its obligations under Special Condition 40, which included the obligation to provide clean fill to the property, including any in-ground or underground cavity on the property, in accordance with Council requirements and the requirements of the Building Code of Australia. (“the Representation.”)
Particulars
The Representation was express and/or implied. Letter dated 23 September 2002 from Gillis Delaney Brown, the Solicitors for the Respondents to Williams Woolf & Zuur. The then Solicitors for the Applicants stating that clean fill had been delivered on 23 September 2002.
…
15. The Respondents failed to advise the Applicants that the First Respondent had not provided clean fill to the property, including any in-ground or underground cavity on the property, in accordance with Council and the requirements of the Building Code of Australia;
Particulars
See the report of Mr. Lachlan Taylor dated 12 March 2003
16. By reason the Representation and the failure to advise, upon which the Applicants’ relied, the Applicants:
i) understood and believed that the First Respondent had provided clean fill to the property, including any in-ground or underground cavity on the property, in accordance with Council requirements and the requirements of the Building Code of Australia;
ii) made a claim for compensation under the Contract commensurate with their appreciate of the extent of the First Respondent’s failure to comply with Special Condition 40 of the Contract;
iii) caused the Applicants to settle their claim against the First Respondent pursuant to clause 7 of the Contract for the sum of $2,000 in accordance with the letter dated 19 December 2002 from Gillis Delaney Brown to Williams Woolf & Zuur.
As against the second respondent the applicant claims:
19. At all material times, Second Respondent was a person involved in the contravention within the meaning of s.75B of the Trade Practices Act, 1974 (Cth).
Particulars
The Second Respondent either knew that the Representation was false or alternatively did not care whether it was true or false or alternatively was knowingly concerned in the contravention within the meaning of s.75B of the Trade Practices Act, 1974 (Cth.) when he caused the letter dated 23 September 2002 from Gillis Delaney Brown, the Solicitors for the Respondents to be sent to Williams Woolf & Zuur, the prior Solicitors for the Applicants stating that “clean” fill have been delivered on 23 September 2002.
20. In the premises, the Applicants claim as against the Second Respondent the damages claimed against the First Respondent set forth in paragraph 17 hereinabove.
It should be noted in relation to these claims that it is not alleged that the first or second respondent ever represented that the clean fill had been properly compacted. It was found by the applicants that the fill had not been properly compacted and this was the subject of negotiations between the parties and a retention from the settlement monies. This breach of the contract was eventually settled by the purchasers retaining $2,000 out of the retention monies. This was a sum reached by negotiations between the parties that may well have involved other matters apart from this particular dispute.
With regard to the representations concerning the delivery of clean fill it is accepted that the fill was “clean” but contained oversized material and therefore did not satisfy the requirements for suitable material as set out in s.4 of the Australian Standard AS3798-1996. The reliance on this representation that is alleged is that the applicants settled the dispute concerning the clean fill for $2,000. I have a difficulty with this assertion. Firstly there was a settlement of the compaction costs of $13,350. That must necessarily have included something for breaking up the larger bits of fill into small pieces. The fill itself was otherwise clean, which was the actual representation alleged to have been made. And if the problems concerning the material that was discovered on, just within and under the fill had not existed, no loss could be said to have arisen out of the reliance. I have found that the first respondent is in no way responsible for the contamination of the orange fill. Therefore any loss suffered by the applicants in relation to that contamination could not arise out of any representation made by the first or second respondent. The loss suffered by the applicants in relation to the contamination of the fill underneath the clean fill does not arise out of representations alleged or made. It arises out of the breach of Special Condition 40. By the end of the proceedings the applicant was making only the faintest of claims under the Trade Practices Act or the Fair Trading Act (NSW) and for the reasons given I am not satisfied that they were made out. This means that the claim against Mr Gillis must be dismissed as it is a claim made only under the statutory counts.
Insofar as the breach of contract is concerned I have found as a fact that the first respondent, through its agents, left material in the ground that had their origin in the improvements to the property and therefore “failed to remove any structure on the property”. The settlement between the parties was a settlement made in the absence of any knowledge of this particular breach. It was made upon the assumption that the compaction of the clean fill had not been properly undertaken.
The respondents allege that there has been either an “accord and satisfaction” or a “merger on completion” of the terms of Special Condition 40. I am unable to accept this submission. In regard to the alleged “accord and satisfaction” this presumably applies to the agreement to settle the retention claim of $13,500 for the sum of $2,000. I have not been provided with any particulars relating to that settlement. But at the time the settlement was entered into there does not appear to have been any suggestion that the applicants were aware of problems relating to the filing, either above or below the clean fill. No claim relating to the requirement to remediate the land was made and so no claim could have been satisfied. In regard to “merger on completion” this doctrine does not apply where an intention is expressed or implied in the contract that a particular obligation will continue to bind the parties even after completion: Talos v Munro (1970) 92 WN(NSW) 797. It seems to me to be clear from the conduct of the parties in relation to Special Condition 40 that it was not intended to merge. The failure to compact was noticed prior to completion and a retention was specifically made. If the parties had known about the contamination of the site then a further retention would have been made in that regard (or possibly completion would have been held up until it was remedied). The implication of non merger is consistent with the known facts and this ground of defence cannot succeed.
The first respondent had employed the cross respondent to undertake the demolition work so as to comply with Special Condition 40. Mr Tony Scarcella accepted that if I found building material from the property had been left in the ground he was liable for that failure to comply with his agreement with Teezella Pty Limited. His defence was two-fold. First he said that he did not leave the material in the ground and cover it over and second he relied on any defences which Teezella had against the applicants so that if there was no liability from Teezella to the applicants there would be no liability from Western Suburbs Demolition Contractors Pty Limited to Teezella. Having found that Teezella is liable in breach of contract to the applicants I am satisfied that the cross respondent is similarly liable to Teezella.
It is at this point that a significant difficulty surfaces. What is the extent of the damage? I did ask the parties to provide me with some assistance if I should find (as I have found) that the first respondent and cross respondent are only responsible for the cost of remediating the area within which the debris from the improvements was found. The applicant took me to several invoices found as Exhibit T to the affidavit of Mr Molinaro of 28 January 2005. The first in the sum of $654.50 for site meetings and testing was not pressed. The second for $5,005 including GST for three days supervision of earthworks remediation at $2,550 and to carry out density and laboratory compaction testing for $2,000 is pressed. I accept that it is reasonable to make a claim for Mr Taylor’s costs for some supervision of earthwork remediation in the areas of the old house. But I have no evidence as to how much of that $5,005 including GST relates to that area. The second invoice for $4,730 including GST relates to a report that was supplied to the applicants’ solicitor in the sum of $400, the supervision of final asbestos clean up in the sum of $500, a site meeting re asbestos cleaning in the sum of $300, a site inspection re additional asbestos on site in the sum $100 and liaising with Matthews Contracting, a new environmental and compilation of site remediation report in the sum of $3,000. Once again I do not have any evidence about the break up of this figure between the larger area over which the orange fill had been spread and the smaller area which I believe is the responsibility of the respondent and cross respondent.
The next invoice in the sum of $29,041.54 is from Matthews Contracting Pty Limited as a progress claim for excavation works. It is pressed. I have little doubt that some of this charge relates to the work which I have found necessary but I am not sure that the claim is limited just to those areas. The largest item in the account is for tip fees in the sum of $9,858.10, representing 18 loads of contaminated waste. Particulars of these loads are contained in appendix 6 to the Taylor Geotechnical Engineering Report. These seem to indicate that some 232.49 tonnes of material was taken away and that seems to tie up with the tip fees claimed on the tax invoice, although not exactly. The next invoice is also from Matthews Contracting Pty Limited in the sum of $5,820.65. The only claim made there is for $2,210.20 representing a management report plus GST. Finally there is an account from Messrs William Woolf and Zuur for legal costs in the total sum of $9,486.79 which is said to relate “in connection with settlement of compaction of fill issue”. Once again I am not informed how much relates to legal work in respect of the breach of contract and how much relates to the other contaminated fill. The total amount claimed in respect of the breach of contract by the applicant is $51,054.53 including GST.
In their submissions the first respondent and the cross respondent made much of the fact that there was a very large discrepancy between the amount of material that was eventually taken from the site and the amount of material that was originally planned to be taken from the site when only the swimming pool area and basement area were going to be required to be recompacted. There is found as exhibit H to the affidavit of Mr Molinaro a letter of 24 September 2002 which sets out the claim as originally made. There is no item for tipping because it was expected that the material would be taken out of the ground and recompacted. There was a reservation of $1,000 for carting imported material onto the site. This document does not give very much assistance to me in trying to assess the amount of tipping fees related to the contaminated material that was in reality taken from the site or the cost of any imported material that was needed to replace that excavated material before compaction. Both the cross respondent and respondent argue that whatever amount I might award to the applicants there must be deducted the sum of $13, 350 plus GST as this amount was allowed in the settlement.
Ms Baxter for the cross respondent says that in the absence of any better evidence I should calculate the amount due as a percentage of the claim equivalent to the percentage that the house and carport and pool bear to the whole site which was required to be re-mediated.
She says this is 13% percent. It is to be remembered that the orange fill that was contaminated was spread all over the site. Ms Baxter also makes an argument that as Mr Matthews made an original assessment that he would have to remove 160 tonnes of material from the site in order to deal with the contamination that he first found on and in the orange fill this took care of the total claim because only about 160 tonnes of material was taken from the site include the stuff under the house and swimming pool. I am not at all sure that this is right for two reasons. The first is that the figure of 160 tonnes given to Workcover was an estimate and if 160 tonnes of fill had not been recovered then the claim would have been reduced. The second point is that by my calculation some 232 tonnes were removed.
What is the court to do where a party has provided satisfactory evidence of a total claim but has not satisfactorily broken that claim down so that the court can apportion damages in respect of the part of the claim which its accepts. In the Queens Bench decision of Thompson v Smith Shiprepairers (North Shields) [1984] Q.B. 405 Mustlii J discussed the approach that should be taken to assessment of damages in circumstances where there are more than one defendant, and neither defendant is liable for the totality of the loss. His Honour said at 443D-444A:
“If we know, and we do know, for by the end of the case it was no longer seriously in dispute, that a substantial part of the impairment took place before the defendants were in breach, why in fairness should they be made to pay for it? The fact that precise quantification is impossible should not alter the position. The whole exercise of assessing damages is shot through with imprecision. I see no reason why the present impossibility of making a precise apportionment of impairment and disability in terms of time, should in justice lead to the result that the defendants are adjudged liable to pay in full, when it is known that only part of the damage was their fault. What justice does demand, to my mind, is that the court should make the best estimate which it can, in the light of the evidence, making the fullest allowances in favour of the plaintiffs for the uncertainties known to be involved in any apportionment.”
This approach was confirmed by Allsop J in Byrnes v Jokona Pty Ltd [2002] FCA 41 at 135 where his Honour cited the above decision and said that where assessment and apportionment of damages is left to assumption that:
“It is a means of making the fullest allowances in favour of the applicants for the uncertainties known to be in the assessment.”
The evidence which I shall utilise in making my “best estimate” is the following. The report of Taylor Geotechnical Engineering which indicates that the building refuse consisting of wood, fibro sheeting pieces (asbestos) glass, concrete, brick pieces and steel that I have found to be the responsibility of the first respondent was contained in the old pool area, the old house area and the old basement area. It was the old basement area and the swimming pools area that needed to be re-compacted. The purchasers made a claim for $13,500 in respect of the recompaction charges. That claim was later settled for $2,000. The applicants are prepared to allow $2,000 but the respondents say that the full $13,500 should be allowed against any damages. In his final written submissions counsel for the applicant states:
(b) secondly, the Court ought to note by reference to the invoice of Matthews Contracting Pty Ltd, that the actual cost that concerned itself with the compaction of the damage fill is considerably less than $13,350.00. The Court is invited to revisit Annexure “G” of the affidavit of Steven Matthews sworn 2 February 2005, constituting the Tax Invoice of Matthews Contracting Pty Ltd dated 22 January 2003. the following items in the invoice appear to relate solely to the compaction exercise:
·15 Tonne Compactor mobilisation - $220.00.
·EX150 Excavator 8 hrs @ $90.00 per hour - $720.00.
·15 tonne Compactor 4hrs with operator @$90.00 p/h - $360.00.
·15 tonne Compactor 4hrs dry hire @$70.00 p/h - $280.00.
·EX150 Excavator 9 hrs @ $90.00 p/h - $810.00
·15 tonne Compactor 9 hrs dry fire at $70.00 p/h - $630.00.
Of course, these excavation charges relate to the excavation of a considerably greater amount of fill than merely the clean orange top fill. Hence, the Applicants’ concession to deduct $2,000.00, representing an acknowledgement of the deduction already agreed and given by the vendor, comfortably accommodates that proportion of the remediation costs referable to the site compaction, which was a discrete proportion of the work conducted on 14-16 January 2003 by Matthews Contracting Pty Ltd.
My understanding of the original compaction exercise is what was contained in the letter from Taylor Geotechnical Engineering to the applicants dated 30 October 2002 and found as exhibit “P” to Mr Molinaro’s affidavit. That quotes a price of $5,280. It would therefore appear that in the negotiations towards the settlement there must have been some form of give and take which could have involved items outside the original retention claim. Doing the best I can I would find that it was this claim for $5,280 that was settled for $2,000 and would therefore give credit to the respondents for $5,280.
I also take into account the evidence that the contaminated detritus was buried reasonably deeply under the house footprint. Therefore to adopt the cross respondent’s proposal of 13% of the total area would not be appropriate. The 13% figure would underestimate the amount of fill removed from those areas. The amount of fill removed was more than the amount that would have been removed and recompacted under the October 30 proposal. Thus there must be something given for recompaction. The parties agree that 232.49 tonnes of material in total was taken away at a dumping cost of $9,858.10. I would find that some element of the reports made by the various experts was required and I would also find that some part of the legal costs incurred by the applicants in relation to the negotiation of these matters was a valid item of damages. Having re-read the affidavits and considered the evidence I think that the best estimate which I can come up with having made the fullest allowance in favour of the plaintiff for the uncertainties known to be involved is an award of 33.33% of the total amount claimed of $51,054.53, namely $17,001.16 from which I have deducted the sum of $5,280, leaving an award in favour of the applicants against the respondents in the sum of $11,721.16.
The cross respondent argues that it had no liability for compacting the soil. Therefore any compaction costs should to be excluded from an award against it in favour of the respondent. This is correct only in so far as the original contract did not require compaction. But by leaving detritus in the ground some extra compaction costs were incurred that the cross respondent was responsible for. The effect of the decision which I have made above is that the compaction costs of $5,280 have already been excluded and I do not propose to make any further adjustment. I would thus award the first respondent the same amount of $11,721.16 on the cross claim against the cross respondent.
The first respondent urges me to make a “Bullock” order so that the applicants’ costs are paid directly by the cross respondents. A Bullock order is made in circumstances where the plaintiff has joined two or more defendants because of doubt to which was liable: Bullock v London General Omnibus Co [1907] 1 KB 264. The principle was articulated clearly in State of Victoria v Horvath (No 2) [2003] VSCA 24 In Gould v Vaggelas (1983) 157 CLR 215 at [11] the High Court held that it is not appropriate to make such an order where a plaintiff has alleged completely independent causes of action against two defendants where the breaches of duty alleged are in no way connected with one another. In Vucadinovic v Lombardi [1967] V.R. 81 applied by the Supreme Court of Victoria in University of Sydney v Raine & Horne Commercial (NSW) Pty Ltd & Ors [1999] VSC 140, Pape J noted that the most vital element to consider in whether or not to make a Bullok is the conduct of the plaintiff and whether it was reasonable for the plaintiff to join the defendants. His Honour said that:
“It seems clear that the jurisdiction to make either of those orders does not depend upon the fact that prior to action brought one defendant has sought to throw the blame on to the other defendant, but upon whether the plaintiff had acted reasonably in joining both defendants.”
In University of Sydney v Raine & Horne Commercial (NSW) Pty Ltd & Ors (supra) Hedigan J sheds some light on the challenge that the court is met with when considering the issue of Bullock order. His Honour said at [11]:
“As is frequently the case in disputes concerning costs, when the arguments involve the transfer of the obligation to meet the costs of the successful party against an unsuccessful party to an impecunious other party, the Court is not faced with simply a choice between a fair result or an unfair result but a choice of alternatives, when neither of the parties disputing the question on whom the costs should directly fall have committed any wrong.”
What is clear is that there is a broad discretion whether or not to make an order for costs in Bullcok form: Vucadinovic v Lombardi (supra) at [87]; Hong v A & R Brown Ltd [1948] 1 KB 515 Gould v Vaggelas (supra), University of Sydney v Raine & Horne Commercial (NSW) Pty Ltd; (supra) State of Victoria v Horvath (No 2) [2003] VSCA 24; Canterbury Municipal Council v Taylor & Ors (No 2) [2002] NSWCA 96. I am of the view that this case is not of the type to which a Bullock order would respond. The applicants did not sue the cross respondent. They were in no doubt as to who they should sue. I have found that the first respondent is responsible to the applicant and the cross respondent is responsible to the first respondent. The social policy behind a Bullock order is an attempt to ensure that successful defendants are protected against an impecunious plaintiff. In this case a Bullock order might mean that the applicants would be required to recover their costs from a possible impecunious cross defendant. I do not think that is fair to the applicants at all. I would decline to grant such an order. The order I would make in regard to costs is that the first respondent pay the applicants’ costs of the proceedings, including all reserved costs, and that the cross respondent pay the first respondent’s costs of the proceedings, such costs to include any costs paid by the first respondent to the applicant. In this way the liability for costs falls where it is due on the person liable for the damage, but the applicants are protected from the possible impecuniosity of the cross respondent by their own right to recover form the person who breached their contract, the first respondent. This leaves the question of the costs of the second responent, Mr Gillis. He was brought into the action by way of a claim under the Trade Practices Act and the Fair Trading Act. That claim has failed. Mr Gillis is entitled to his costs, as against the applicants. There remains the question of interest. The remediation works were substantially completed by 29 January 2003 and it is from that date that the applicants became liable for the costs involved. Interest should run from that date at the rate prescribed by the Court rules.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 29 March 2006
4
2