Rail Corporation New South Wales v Leduva Pty Ltd

[2004] NSWSC 1133

CITATION:	Rail Corporation New South Wales v Leduva Pty Ltd [2004] NSWSC 1133
HEARING DATE(S):	06/09/04; 08/09/04; 09/09/04; 10/09/04; 23/09/04; 27/10/04; 29/10/04; 09/11/04; 10/11/04; 11/11/04; 16/11/04; 22/11/04
JUDGMENT DATE:	30 November 2004
JUDGMENT OF:	Nicholas J
DECISION:	Application for dissolution of interlocutory injunction dismissed
CATCHWORDS:	Injunctions - Interlocutory - Continuation of order restraining construction - apprehension of risk of danger to railway tunnel - damages not an adequate remedy - balance of convenience
CASES CITED:	Kolback Securities v Epoch Mining NL (1987) 8 NSWLR 533
PARTIES :	Rail Corporation New South Wales - Plaintiff Leduva Pty Ltd - Defendant
FILE NUMBER(S):	SC 4923/04
COUNSEL:	A J Sullivan QC/R J Carruthers - Plaintiff R J Burbidge QC/R W Tregenza - Defendant
SOLICITORS:	Blake Dawson Waldron - Plaintiff Cadmus Lawyers - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Nicholas J

30 November 2004

4923/04 Rail Corporation New South Wales v Leduva Pty Ltd

JUDGMENT

1 His Honour: On 22 November 2004 I held that the order made on 6 September 2004 should continue until further order and I dismissed the Defendant’s notice of motion for an order that the injunction be dissolved. These are my reasons for doing so.

2 On 6 September 2004 Rail Corporation New South Wales, the Plaintiff (Railcorp), sought interlocutory injunctive relief to restrain Leduva Pty Ltd, the Defendant (Leduva), from carrying out certain construction work at Lot 121, Henderson Road, Alexandria. Upon Railcorp giving the usual undertaking as to damages the court made an order in the following terms:

“That until 5pm Wednesday 8 September 2004 the Defendant, by its officers, employees, contractors and agents, immediately cease carrying out any works on the land comprised in folio identifier 121/103002 (known as Lot 121 Henderson Road, Alexandria NSW) within 10 metres of any of the concrete piles identified and marked CP2 on drawing 02038-40 amendment A”.

3 On 8 September 2004, upon Railcorp giving the usual undertaking as to damages, it was ordered that the injunction be continued until further order. By its notice of motion filed 27 October 2004 Leduva seeks an order that the interlocutory injunction be dissolved.

4 Mr B. C. Oslington QC and, subsequently, Mr A. J. Sullivan QC, with Mr R. J. Carruthers, of counsel appeared for Railcorp. Mr R. J. Burbidge QC with Mr R. W. Tregenza, of counsel, appeared for Leduva. I readily acknowledge the assistance provided by the detailed written and oral submissions from counsel at the conclusion of the hearing of these proceedings.

Background

5 The following narrative is of matters which were not disputed in these proceedings and for which, in any event, there is evidence which proves them.

6 Leduva is the registered proprietor of the land known as 49 (Lot 121) Henderson Road, Alexandria (the property). An underground railway tunnel runs across the property through which the main Bondi Junction-Illawarra train line runs (the tunnel). An easement for the benefit of Railcorp in respect of the tunnel runs across the property. It is depicted in DP 1030021.

7 On 9 March 2004 Railcorp entered into a development deed (the deed) with Leduva pursuant to which it consented to Leduva undertaking a development at the property subject to extensive conditions. These included cl 9.3 which provides:

“Developer must ensure that all Excavation is carried out strictly in accordance with the Development Documents”.

Clause 10.3 which provides:

“Developer must ensure that all construction is carried out strictly in accordance with the Development Documents”.


Clause 1 defined construction to mean any work relating to the development other than excavation.

Clause 6.2(b) provides:

“(b) In the event that any Alert Event causes:
(i) the Railway, the Railway Corridor or Rail Party Facilities to be at risk (as determined by Rail Party);

(ii) the safety of Railway passengers, station patrons or representatives of Rail Party to be at risk (as determined by Rail Party); or

(iii) the operation of the Railway to be at risk (as determined by Rail Party),
Developer agrees to (and must) immediately co-operate with Rail Party (including by ceasing to carry out that part of the Works in respect of which the Alert Event applies and vacating the Railway Corridor) and to assist Rail Party to take such action as Rail Party directs is necessary to avert any danger and ameliorate the risk”.


“Alert event” is defined to be an “actual or likely event or circumstance which arises because of the Works and which may interfere with or threaten …” the use of the tunnel for railway purposes, the safe operation and/or operational capacity or efficiency of the railway. It also includes any event or circumstance, which has or is likely to have a material detrimental affect on the tunnel, the safety of railway passengers and users and the operation of the railway.

By cl 32.3 Leduva acknowledged that damages may be an insufficient remedy in the event of breach by it of its obligations under the deed.

8 In May 2004 a document which has come to be known as the Work Methods Statement (WMS) was approved and contains the agreed procedures with which Leduva was required to comply in respect of excavation, shoring, piling and other matters.

9 Leduva is building an apartment complex at the property. It plans to build a four-storey building adjacent to the rail easement and other buildings, the closest wall of which is to be built approximately two metres from the boundary of the rail easement. The building is to be constructed on concrete footings in rows. The rows of footings nearest the rail easement are to be supported on concrete piles of sufficient depth that the loads applied by the building to the footings would not also place loads on the tunnel. The relevant piles are shown on pp 319, 320 Ex A in the WMS drawing number 02038-40 amendment A and are marked “CP1” and “CP2”. It is designed that the CP1 piles be at a depth of RL7.0 m and that the CP2 piles be at a depth of RL1.0 m which, having regard to the distance from the tunnel, will ensure that all loads placed on these piles are carried to the foundation material below the tunnel so as not to apply a load to the tunnel. These depths refer to the Australian Height Datum which is a height in metres above sea level which may be determined by surveyors from permanent survey marks.

10 Of the two rows of piles the CP2 piles are closest to the tunnel. The CP2 piles are designed to be sunk to the same depth as the base or invert level of the tunnel so that load will be placed upon and dispersed below the base of the tunnel thus ensuring no pressure is placed upon its wall. The CP1 piles are designed to be sunk to a depth such that the dispersal of any load through the sub-soil will place no load on the tunnel.

11 Passenger trains travel almost constantly through the tunnel. It is understood that about 280,000 passengers travel on trains through the tunnel every week.

12 The tunnel is designed to withstand at least the loads placed upon it by existing earth and buildings above and nearby. If new buildings are constructed which place additional loads on the tunnel, engineering studies would need to be carried out to ensure that it can withstand the extra load. This would involve assessing the level of load to be applied to the tunnel and the strength of the tunnel itself. The requirements set out in the WMS were designed to ensure that the new building places no load on the tunnel. This avoids the need for an assessment of loading on the tunnel. Prior to the commencement of these proceedings this type of assessment had not been performed in respect of Leduva’s development.

13 Part 2 of the WMS lays down the underground work method procedure. Part 2.5 prescribes the steps to be taken for the installation of piles which includes the following:

“3. A suitably qualified engineer is to inspect the base of the drilled pile and confirm that the bearing material is of adequate capacity and also note the depth. CP2 piles to be excavated to a level not higher than RL 1.0 m. If bearing capacity is not achieved at RL 1.0 m, excavation is to continue until a suitable founding material is reached.
…
7. Steps 2 to 6 must be completed on the same day due to possible groundwater seepage in the holes.
8. Steps 1 to 7 repeat for CP1 piles, however CP1 piles to be excavated to a level not higher than RL 7.0 m.
9. The “Certificate of Underground Construction” is to be completed and signed by the relevant people for each pile”.

14 Part 6 prescribes the form and content of the certificate of underground construction referred to in Pt 2.4(9). The terms of the certificate includes the following:

“This certificate is to be completed and signed for all underground works at Lot 121 Henderson Road Alexandria. Items are to be completed on a daily basis for piles and separately for other underground works in the appropriate space”.

15 The WMS states minimum depths for the two rows of piles closest to the rail tunnel, so as to ensure that the ends bearing pressures/loads exerted by these piles will be distributed away from the tunnel structure hence safeguarding it from possible structural damage. Railcorp asserts that this is one of its main conditions and the design of the development has only been approved with this condition. It is said that the failure of Leduva to adhere to this condition, and to place loads onto the tunnel structure, is simply an unacceptable risk to Rail or its infrastructure. (TB 436).

Events leading to order on 6 September 2004

16 The following is a summary of the circumstances in which Railcorp approached the court for the order which was made on an ex parte basis on 6 September 2004.

17 In their letter to Leduva dated 6 July 2004 Railcorp’s solicitors expressed concern about its compliance with the WMS and, inter alia, directed it to follow the designated procedures for piling works and to provide individual certification in respect of depth and other requirements for each pile. It threatened that in the event of non-compliance Railcorp would move for urgent injunctive relief to prevent works in breach of the deed or would issue a stop work direction under it.

18 By their letter to Leduva dated 3 August 2004 Railcorp’s solicitors complained of shortcomings in the certification procedure, and that the information provided by Leduva was insufficient to show that it had complied with the requirements for the excavation and installation of the piles. It directed Leduva not to allow any load to be applied to the piles until Railcorp consented to the location, depth, and installation of them, and could establish compliance with the WMS.

19 On 6 August 2004 Leduva provided Railcorp with information intended to clarify inconsistencies in the documents previously provided. The certificates of underground construction and the structural certificates provided generated further concern as to non-compliance and cast grave doubt on the reliability of the information contained in them.

20 By letter dated 18 August 2004 Railcorp informed Leduva of its observation that piles CP1 and CP2 had been, or were, in the process of being loaded by construction works without Railcorp’s clearance, as it was not satisfied that WMS requirements had been adhered to. It also advised that it intended to carry out some testing of the piles on the site to verify depths.

21 By letter dated 23 August 2004 Railcorp gave a direction to Leduva pursuant to cl 6.2(b) of the deed by reason of what it said had been the occurrence of an alert event as defined in it. It complained that, in breach of cl 9, section 2.5 of the WMS no certificates of underground construction had been provided for the CP1 piles. With reference to the certificates provided for the CP2 piles it expressed concern as to non-compliance with the WMS and stated that it was unable to verify compliance on the information available. It directed Leduva, inter alia, to cease carrying out works which might result in the application of loads to piles CP1 and CP2, and not to recommence such works without its approval, and, if required, to make piles available for testing including sonic testing. A letter to the same effect was sent on 26 August 2004 by Railcorp to Leduva.

22 On 3 September 2004 the site was being prepared for the pouring of a concrete slab which, it was said, would add to the load upon the CP2 piles, and was likely to add to the load on the CP1 piles. The slab would also hinder access necessary for the testing of these piles. Later photographs showed that building work was continuing which included the construction of a besser brick wall which placed some load upon the CP2 piles.

23 On 6 September 2004 it was observed that formwork had been placed over the piles which caused Railcorp to fear that a slab would be poured which would place a load upon the piles. Railcorp alleged that work was being carried out in breach of Leduva’s undertaking given by its solicitors on 27 August 2004. Railcorp then successfully moved the court for injunctive relief (para 2).

24 When the matter was before the court on 8 September 2004, Mr Tregenza explained the activity complained of as follows (T p 4):

“Our case will be that there was no breach of the undertaking. It is true there was effectively formwork being done within the area covered by the undertaking. The undertaking prohibited placing of the loads in that area. Our case is simply to be erecting some formwork is not placing load. No further piles, layers of bricks or blocks laid after the giving of the undertaking (sic)”.

Sonic testing

25 Sonic testing was conducted on some CP2 piles on several occasions during September 2004 by Mr Bruce McPherson, a geo-technical engineer employed by Douglas Partners Pty Ltd. The CPI piles were not tested. He tested fourteen of thirty one CP2 piles. The result was that nine appeared satisfactory, the information for three was uninterpretable, one (CP2-23) is probably short, and one (CP2-6) may be short. Railcorp is concerned that the result indicates a real possibility that some of the CP2 piles are short and hence a reasonable basis for apprehension of risk to the tunnel from the construction.

The issues considered

26 The underlying purpose of the arrangement between the parties was to enable Railcorp to maintain such control over the progress of construction as would ensure the integrity of the tunnel and the public safety. Recital C of the deed states that Railcorp “ … has certain statutory obligations to safely and efficiently operate and maintain (its) Facilities and operate a Railway on the Railway Corridor without interruption”. As earlier mentioned, the WMS prescribes the methods and procedure for underground construction work and for certification of compliance with them.

27 It was common ground that reliable certification was of great importance to Railcorp to enable it to be satisfied that the piles had been installed to the specified depth. It also ensured that each pile was founded on suitably sound material for the support of the load it was carrying. Thus by the certificates it was intended to provide Railcorp with reliable and accurate expert evidence of the proper construction of the piles which was said to be essential for the avoidance of danger to the tunnel.

28 Mr Chaperon described it thus (T p 15):

“Well, for us, the certification is everything; that is our record and our certification that the piles, there was the minimum requirement as set out in the DA conditions, as set in the deed. For us, the certification was what was needed, to ensure that, yes, the pile was to required depths”.

29 Mr Sullivan QC submitted (T p 233):

“One cannot stress too highly the importance of that certification and its reliability because once the building is built … it is very hard if not impossible without demolishing the building to check on those matters. You could have a situation where 10 or 15 years down the track or even 2 years down the track this tunnel, because an improper load has been placed on it, collapses or causes damages and then it would be a bit late for Railcorp to say “Well, we relied on this inadequate certification”. So the integrity of the certification was supposed to be done in a way which would ensure that Railcorp discharging its public functions would be comfortably satisfied that there was no danger to public safety”.

30 It was acknowledged by Mr Burbidge QC that Railcorp was entitled to be satisfied, or to satisfy itself, that there was no risk (T p 82) and that the depth of the piles was “ … one of the core rail conditions” (T p 85).

31 Mr William Ryan is a civil and structural engineer who was retained by Leduva to sign the certificates, which were provided to Railcorp. It also appears that Leduva depended upon him to measure the depth of each hole in CP2 so as to ascertain whether it was at or below RL1. He gave evidence on behalf of Leduva about these and other matters, firstly on 8 and 9 September, and then on 29 October 2004. The principle purpose for recalling him was to correct and clarify evidence given earlier. This was necessary, as Mr Burbidge QC explained, because some of the evidence given by him was “ … inaccurate and confused to say the least” (T p 126).

32 It was common ground that the certificates of underground construction with which Mr Ryan was involved were unsatisfactory and unreliable. Mr Burbidge QC candidly accepted that Railcorp could not rely upon the certificates as showing that the CP2 piles were of the specified depth (T p 193).

33 In support of the continuation of the injunction Railcorp submitted that the parties had agreed on a system of certification to provide it with reliable assurance that the piles were of the specified depth so as to avoid the risk of danger to the tunnel and to the travelling public, and that it is entitled to have such assurance before construction resumes. It was put that the injunction should continue until Leduva demonstrates to Railcorp’s reasonable satisfaction that the piles are of the required depth and/or that the construction of the building will not put the tunnel or the public at risk.

34 Railcorp submits that by reason of its failure to comply with the certification requirements of the WMS Leduva has placed it in a state of uncertainty as to the depths of the piles, and has left it without the assurance it undertook to provide. To show that its apprehension of damages is reasonable it points, inter alia, to the view of the tunnel engineers Mr John Hilton and Mr Christian Bodner in their report of 15 November 2004 which is:

“Under the current circumstances we consider that the tunnel has a very real possibility of being damaged due to loading from piles with a toe level located between the top and bottom slabs of the tunnel. We confirm our position that the existing SKM analysis and assessment is sufficient to show that the tunnel will not be damaged as a result of piles founded on the CP2 line above the underside of the tunnel”.

35 Also of weight is the (untested) opinion of Mr Geoff Hughes in his report to Mr Ted Nye of 16 November 2004 concerning the structural capacity of the tunnel which was:

“Any substantial lateral loading from the adjacent development on the side wall of the tunnel will be unacceptable, since although there is surplus flexural capacity in the wall, there is already inadequate shear capacity”.

36 In the circumstances it claims that the order should continue until Leduva satisfies it by reliable certification or by expert assessment that there are no reasonable grounds for apprehension that the tunnel is at risk.

37 For Leduva it is submitted that the proper interpretation of Railcorp’s entitlement under the deed and WMS is to have put before it material which objectively provides reasonable satisfaction as to the piles. It is not conceded that Railcorp has demonstrated a serious question to be tried that it is without such material. Furthermore it is put that, having regard to the whole of the evidence in these proceedings, Railcorp has not established that any pile is in fact short or otherwise does not meet design requirements, and has not established the existence of any danger to the tunnel.

38 To the contrary, it is put that there is ample evidence from Mr Ryan on 29 October 2004 which, if accepted, establishes that piles CP1 and CP2 were installed to the required depth. It is also submitted that there is evidence from Dr Brian Burman and Mr Ted Nye that the further construction of the building is unlikely to put the tunnel at risk.

39 Mr Burbidge QC submits, in effect, that Railcorp’s case rises no higher than one of suspicion that some CP2 piles are short, and it is without proof that any is in fact short and thus it follows there is no arguable case that the construction will put the tunnel at risk. It is put that the sonic testing has resulted in a high rate of confirmation of piles to the required depth from which it should be inferred that there would be the same result for the untested piles.

40 In summary, it is Railcorp’s suspicion that not all the piles comply with the WMS, the grounds for which include the flawed certification process and the sonic testing results. There now arises the need for an expert assessment of the risk of loading on the tunnel which would have been avoided had certification been reliable. As no complete or final assessment has yet been made the question whether there is, or is likely to be, any loading and, if so, whether it is such as to be a relevant risk, remains open. Railcorp’s position now is that it does not insist on certification if it can be otherwise reasonably satisfied that the tunnel will not be at risk should construction proceed and the piles are loaded. Thus continuation of the order would afford the parties the opportunity to obtain information to allay Railcorp’s present fears.

41 The approach to be taken by the court in these proceedings is explained in the well-known passage in Kolback Securities v Epoch Mining NL (1987) 8 NSWLR 533 at p 535 per McLelland, J:

“ … Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled: … Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for the Court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question: … If the Court does decide the question of law the
uncertainty is to that extent removed”.

42 It is often the case that the court is required to consider whether damages would be an adequate remedy. However, in my opinion it is plain that damages would not be an adequate remedy in this case. That this might be so was acknowledged by Leduva in cl 32.3 of the deed.

43 Assuming Railcorp demonstrates a serious question to be tried which if resolved in its favour would entitle it to final relief it will become necessary to decide where the balance of convenience, or the balance of the risk of doing an injustice, lies. Although in considering this question it may be appropriate to evaluate the strength of a plaintiff’s case for final relief the court does not attempt to decide contested factual issues or issues of credit of witnesses.

A serious question to be tried

44 It is accepted that Railcorp ought not rely upon the certificates and was without the assurance which Leduva agreed to provide. Further, without proceeding to any finding, it is fair to treat with considerable misgiving Mr Ryan’s evidence with regard to the preparation and contents of both sets of certificates, and to the measurements and estimates he made of the depths of the piles.

45 Railcorp claims continuation of the order on the ground that Leduva in breach of the deed and WMS failed to provide any certification for the CP1 piles, and any certification in compliance with the WMS for the CP2 piles.

46 It also claims it is arguable that Leduva has acted negligently in the course of construction in that it failed to ensure that the piles were of sufficient depth to avoid risk of danger to the tunnel and to the public, and that it has arguable claims for both public and private nuisance.

47 In the present case, on the material before me, I am satisfied that Railcorp has at least a reasonable prospect of success on these grounds at trial. There is, at the very least, a prima facie case that some of the CP2 piles are short. The truth as to the CP1 piles and those CP2 piles which were not sonic tested is unknown. Plainly there is a serious question to be tried that Leduva’s entitlement to proceed with construction is conditional upon compliance with the WMS which includes provision of reliable certification to Railcorp that the building load would not put the tunnel at risk.

48 On the evidence it is plain that an underlying assumption of the contract pursuant to the deed and the WMS is that in order to safeguard the tunnel it is necessary for the building load to be supported by the CP1 piles to a depth or RL7.0 m and by the CP2 piles to a depth of RL1.0 m. The parties proceeded on the basis that Leduva would provide Railcorp with accurate information as to the depth (and other matters) of the piles so as to satisfy it that the building load would not put the tunnel at risk. At this interlocutory stage it is not for the court to decide whether failure to fulfil these requirements would, in fact, put the tunnel at risk. However, at present Railcorp has demonstrated a serious question to be tried that such would be the consequence of failure.

49 Put another way, I find that there are serious questions to be tried whether the CP1 and CP2 piles are of the depth specified in the WMS, and whether the load of the proposed building upon the piles would probably jeopardise the safety of the tunnel.

50 These are questions on which, as the evidence shows, opinions differ. The case is arguable from both points of view. It is not necessary for me to take it further.

Balance of convenience

51 If the injunction is dissolved and Leduva proceeds with construction upon the CP1 and CP2 piles access to them for the purpose of ascertaining depth will be lost, or supposedly, will become very limited. If the injunction is not dissolved Leduva will suffer substantial financial loss from not being permitted to proceed with construction.

52 Much of the expert evidence relevant to balance of convenience in affidavits, reports, and oral was directed to the means of ascertaining the depths of the piles and of assessing whether the tunnel would be at risk if construction proceeded whether or not the piles were of the specified depth. Each party adduced evidence from engineers highly qualified in the relevant field. Taken as a whole it demonstrates the present existence of substantial disagreement as to reasonable and practicable methods of investigation and assessment.

53 For example, Railcorp’s proposal for diamond drilling is rejected by Leduva. Leduva’s proposal for drilling through the wall of the tunnel is rejected by Railcorp. On the other hand it may very well be that there are reasonable alternative methods of assessing risk irrespective of the actual depth of the piles such as through an analysis of the kind undertaken by Mr Nye for Leduva and described in his reports of 8, 11 and 16 November 2004 and explained in his oral evidence. He directly challenged the validity of the assumption underlying the deed and WMS that avoidance of risk to the tunnel necessitated support of the building load by piles CP1 and CP2. In turn, his assessment is contested by Mr John Hilton and Mr Christian Bodner in their report of 15 November 2004.

54 However, so far it has not been shown that there is a reasonably practicable method of ascertaining depth once access has been lost, or that it is unnecessary to know the depth in order to be satisfied that further construction will not jeopardise the safety of the tunnel. The conflict cannot be resolved at this stage and should be left to a final hearing.

55 Preservation of the status quo by continuing the order will afford the parties the opportunity for further investigation and assessment relevant to the risk of danger to the tunnel the scope for which is likely to be reduced if further construction was permitted to proceed. It is also a matter of common sense that the status quo be preserved having regard to the views of Messrs Hilton and Bodner (para 34) and of Mr Hughes (para 35).

56 In my opinion the balance of convenience favours Railcorp. The order should be continued to protect its arguable entitlement to the assurance that the proposed construction will not endanger the tunnel.

Conclusion

57 Noting that Railcorp adheres to the usual undertaking as to damages first given on 6 September 2004, I decline to dissolve the existing order made on that date and extended on 8 September 2004 until further order.

58 If the parties do not agree on costs arrangements should be made with my Associate before 3 December 2004 to re-list the matter.

Order

59 It is ordered that the Defendant’s notice of motion filed 27 October 2004 be dismissed.

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Last Modified: 12/06/2004