The Owners Strata Plan 83737 v Michael Santangelo & Barbara Czajka Pty Ltd

[2024] NSWSC 167

Supreme Court

New South Wales

Medium Neutral Citation:

The Owners Strata Plan 83737 v Michael Santangelo & Barbara Czajka Pty Ltd [2024] NSWSC 167

Hearing dates:

26 February 2024

Date of orders:

26 February 2024

Decision date:

26 February 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Plaintiffs’ motion dismissed; defendants’ motion dismissed; costs to be costs in the cause

Catchwords:

CIVIL PROCEDURE – separate determination of questions – whether the amount of damages to which a party are entitled should be heard separately

EVIDENCE – expert evidence – whether single party expert should be appointed

Legislation Cited:

Civil Liability Act 2002 (NSW)

Conveyancing Act 1919 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Category:

Procedural rulings

Parties:

The Owners Strata Plan 83737 (First Plaintiff)
Joseph Assaf (Second Plaintiff)
Angela Assaf (Third Plaintiff)
Michael Santangelo & Barbara Czajka Pty Ltd (First Defendant)
Anthony Bonvino (Second Defendant)
Maria Bonvino (Third Defendant)
Michael Santangelo (Fourth Defendant)
Barbara Santangelo (Fifth Defendant)
Tradevco Pty Ltd (Sixth Defendant)
Ferrocon (Aust) Pty Ltd (Seventh Defendant)

Representation:

Counsel:
D Weinberger (Plaintiffs)
J P Knackstredt (Second and Third Defendants)

Solicitors:
HWL Ebsworth (Plaintiffs)
BCP Lawyers & Consultants (First, Fourth and Fifth Defendants)
McLachlan Thorpe Partners (Second and Third Defendants)
McCabes Lawyers (Sixth Defendant)
Lander & Rogers (Seventh Defendant)

File Number(s):

2022/292215

EX TEMPORE JUDGMENT (REVISED)

1. The plaintiffs are the Owners Corporation of a six unit development in Drummoyne, and the registered proprietors of four of those six units.

2. The first to fifth defendants, as joint venturers or as part of a consortium, developed the adjoining property. That development has completed. The first to fifth defendants engaged the sixth defendant as excavation contractor in relation to the adjoining development, and the seventh defendant as the project manager of the adjoining development.

3. The plaintiffs allege that the development of the adjoining property has caused damage to their property, primarily cracking in masonry walls, masonry structures and various finishes such as plaster wall, lining, ceiling and tiles.

4. The plaintiffs allege that the developers engaged a geotechnical engineer, Jeffery & Katauskas Pty Ltd, to conduct a geotechnical investigation to the adjoining property, and that the geotechnical engineer recommended the use of certain hydraulic equipment, and that certain monitoring and other procedures be followed.

5. The plaintiffs claim that the defendants had a duty to take reasonable care in carrying out the development, including by conducting an excavation using low vibration emitting equipment and by carrying out various other procedures, but that reasonable care was not taken.

6. The plaintiffs’ claim appears to include a claim under s 177 of the Conveyancing Act 1919 (NSW) for breach of the statutory duty not to remove support to adjoining land.

7. Cross-claims have been exchanged between a number of the defendants and a number of the defendants allege that the claim is made and the proceedings are apportionable claims for the purposes of the Civil Liability Act 2002 (NSW).

8. The current state of the proceedings is that the plaintiffs have served all their evidence, save as to the evidence proposed to be adduced by a single expert.

9. There are two motions before the Court. The first in time is that served by the second and third defendants, who represent half of the consortium that developed the adjoining property. By that motion, those defendants seek an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 28.2, that “the amount of the damages to which the plaintiffs are entitled” be heard separately and after the trial of all other issues.

10. Mr Knackstredt, who appeared for the second and third defendants, accepted that this question:

“… requires consideration of reasonable remediation methodology and associated cost.”

11. Thus, the proposed separate question is not simply a question of hearing quantum after liability.

12. Second, the plaintiffs, by Notice of Motion filed on 9 February 2024, seek an order under UCPR r 31.46 appointing Mr George Zakos as a single expert to inquire and report on the work required to remediate the as yet unremediated physical damage to the property and the cost of that work. I add that some of the work that the plaintiffs contend to be necessary arising from the defendants’ alleged conduct has been carried out. It is not proposed Mr Zakos look at that question.

13. The applications are related in that, if I were to order the separate question as proposed by the second and third defendants, there would be no point appointing Mr Zakos as a single expert as his opinions would relate only to the proposed separate question.

14. It is convenient therefore to deal first with the second and third defendants’ application.

15. I should add that the defendants other than the second and third defendants either consent or do not oppose either application.

Separate question?

16. Mr Knackstredt focused on that aspect of the plaintiffs’ case that he, I think correctly, infers arises under s 177 of the Conveyancing Act. Mr Knackstredt submitted that there is a “real issue” as to whether the plaintiffs will establish either breach of duty or causation in relation to all or some of the defendants and that there was a real prospect that the plaintiffs will not establish that all, or indeed any, of the defendants are liable to them.

17. Mr Knackstredt submitted that this was particularly the case in relation to the developer defendants, including the second and third defendants, who will contend that they fulfilled any duty they might owe the plaintiffs by engaging suitably qualified parties to carry out the work.

18. Mr Knackstredt submitted that in those circumstances it would not be fair to the defendants to impose on them the costs of preparing the case in relation to the questions proposed to be severed.

19. However, I am not in a position to make any assessment at this stage as to how likely it is that the plaintiffs will succeed in the proceedings, particularly in light of the geotechnical report to which I have referred and the allegations that the plaintiffs propose to make about the alleged departure by the developers from the course the plaintiffs contend the geotechnical expert recommended.

20. There may well be an interaction between the evidence the plaintiffs have adduced as to the current allegedly damaged state of the property and the evidence that they would wish to adduce on the proposed separate question relevant to the work needed to remediate the alleged damage. There thus appears to be some prospect that some witnesses will be called both in the main proceedings and under the proposed separate question. For example, the plaintiffs have served expert evidence from structural engineers as to the current state of the property, including dilapidation and condition reports. It may well be that the plaintiffs wish to call evidence from those same witnesses as to the work needed to fix alleged problems. If that occurred, the undesirable prospect arises of the Court forming different views about witnesses at separate points in litigation. That is a factor weighing against ordering a proposed separate question.

21. Mr Knackstredt also submitted that separate resolution of the “liability issues” is likely to promote settlement discussions. That might be right, but it is not a matter about which any confident prediction could be made at this stage.

22. Finally, and this is an issue which arises whenever these applications are made, ordering a separate question will have the usual consequences of delay and the appellate complications for a party losing the first round and not wishing to engage in the expense of the second round until final appellate consideration of that loss.

23. I do not propose to order a separate question.

Single expert?

24. The difficulty with ordering that a single expert be appointed over the objection of some or all of the parties is that the prospect arises of there being disagreement as to the precise question to be proposed to the single expert, the assumptions the expert is to make, and the material with which the expert is to be provided.

25. In this case, disagreement as to remediation methodology has already emerged from the competing evidence of the solicitors of the plaintiffs and the second and third defendants on this application.

26. Indeed, on 1 December 2023, when first proposing a single expert, the plaintiffs’ solicitor spoke of the “risk ... that differently appointed experts [will] propose different remediation [methodologies] and different costings for the over 1,000 specific individual defects … which our clients put in issue”.

27. It is true that this proposition was put in the context of an argument that such outcome could be avoided by the appointment of a single expert. But it points to the potential unfairness, in this case, of depriving the second and third defendants of an opportunity of having their own expert proposing a remediation methodology or costings that are different than those that might be favoured by Mr Zakos.

28. This points to the prospect of the second and third defendants, and indeed of the other defendants, in due course seeking leave to adduce their own evidence on the remediation question; whether or not Mr Zakos is appointed as a single expert.

29. Finally, as Mr Knackstredt also pointed out, even if Mr Zakos were appointed as a single expert, there will be a further quantum issue, perhaps not quite so complex, that will require the parties to obtain their own expert evidence; including the cost of the damage that has been remediated and the loss of rent claims that the plaintiffs make.

30. I do not consider this as an appropriate case for the appointment of a single expert.

31. The result is that the second and third defendants’ Notice of Motion of 30 January 2024, and the plaintiffs’ Notice of Motion of 9 February 2024, are both dismissed, with costs to be costs in the cause.

**********

Decision last updated: 27 February 2024