Tom Dimitropoulos P/L v Lockwood - [2015] SADC 49

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
TOM DIMITROPOULOS P/L v LOCKWOOD & ANOR
[2015] SADC 49
Judgment of His Honour Judge Tilmouth
23 March 2015
DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT - MEASURE OF DAMAGES - DAMAGE TO LAND AND BUILDINGS
A Magistrate gave judgment against the appellant for property damage caused to a septic tank soakage pit on the respondent's property. The application for review is brought on the basis that it should have been held the respondents were guilty for contributory negligence, that damages were awarded at a higher level than necessary for the replacement of the damaged soakage pit, and that since the system was carried out without appropriate approvals or certificates of compliance, the replacement system was unlawful.
Held 1: As the appellant had the total charge over the circumstances in which the damage was caused, there is not room for a finding of contributory negligence.
2: The award of damages for the replacement of the whole septic system was correct, because by regulation the respondents were obliged to replace both the soakage pit and the septic tank.
3: It was not appropriate to reduce the measure of damages on account of the fact that the system might have been illegally installed, to the extent that necessary approvals or certificates were not obtained.
4: Application for review dismissed.
Magistrates Court Act 1991 (SA) s 35, s 38(6), s 38(7) and 38(7)(b); Civil Liability Act 1936 (SA) s 44; Livingstone v Rawyards Coal Co (1880) 5 App Cas 25; Hadley v Baxendale (1854) 156 ER 145; Harbutt's Plasticine Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447; Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333; Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452; South Australian Public Health (Wastewater) Regulations reg 4, reg 11, reg 11(1) and (2), reg 23(1)(e); Gwam Investments Pty Ltd v Outback Health Screenings Pty Ltd (2010) 106 SASR 167; Magistrates Court (Civil) Rules 2013 (SA) r 124, referred to.
Nelson v Nelson (1995) 184 CLR 538, applied.
Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215, discussed.

TOM DIMITROPOULOS P/L v LOCKWOOD & ANOR
[2015] SADC 49
The proceedings

This is an application for review of a judgment given by a Magistrate sitting in the minor civil jurisdiction of the Adelaide Magistrates Court on 11 December 2014. The applicant seeks review of an award of damages entered against it of $11,973.50 for damage caused by it to a sewage soakage pit on a country property owned by the respondents at Avon in the mid-north of this State.
The facts
The respondents (the Lockwood’s) purchased the Avon property in around January 2014. They engaged the appellant (TD Towing) through a contractor, to assist them in moving into the property. On 4 November 2014 an employee of TD Towing transported a container loaded with the Lockwood’s possessions to the property by truck. As the truck then broke down, the employee Mr Fletcher, arranged for a low loader to be driven to the property to assist in its recovery. Access could not be obtained to the broken down truck due to the close proximity of trees along the primary driveway. Consideration was then given to gaining access through a paddock adjacent to the driveway.
Mrs Lockwood gave evidence before the Magistrate that the driver of the second truck Mr Esposito, insisted on crossing the paddock despite her insistence that he should not, for fear of damaging a septic tank. He did so all the same once she had retreated to the house to attend to her children. Upon returning outside she saw Mr Esposito opening a farm gate to the access paddock. Mrs Lockwood claimed to have yelled out to Esposito ‘you can’t go that way’ whilst pointing towards the septic tank and soakage pit area, but he simply kept driving. As the low loader passed through the paddock it squashed the soakage pit of the septic tank. She saw a depression caused by the wheels of the truck passing over the pit where the loader had almost become bogged.
Eventually the first truck was towed out to a point enabling it to be winched onto the low loader, using the Lockwoods’ 4 wheel drive. Having then examined the soakage area she noticed an unpleasant odour and saw ‘a massive hole, everything had collapsed all in there’. Mrs Lockwood took a series of photographs using her mobile phone, including the side and rear of the low loader adjacent to the septic tank (where the breather pipe can be seen), of the depression adjacent to the soakage area itself, and the container on the rear of the first truck, amongst several other photographs.
The owner of TD Towing Mr Dimitropoulos, came to the property the following Sunday and according to Mr Lockwood, said that he would pay for the cost of repair, stating ‘Yes, we’ll fix it’. Quite properly in the context of such informal discussions, the Magistrate did not take this as amounting to a formal admission. Quotes were obtained and although it appears the septic tank itself was not damaged, the Magistrate noted the effect of Local Government requirements meant that the most economical solution was to replace the entire existing septic tank and soakage pit with a system called ‘Envirocycle’. This was installed by a firm, Proactive, at a cost of $11,973.50, the judgment sum.
The Lockwoods had in fact obtained another quotation for up to $14,122.00 to supply and install a replacement septic tank and soakage system. Despite continuing discussions between the parties as to the cost of repairs, including a less expensive alternative proffered by another company Plumbing and Pipeline solutions of $5,454.00, no agreement was reached settling the matter.
Evidence before the Magistrate
According to the evidence of the first driver Mr Fletcher, Mrs Lockwood opened the gate of the paddock, whilst indicating that was the best access point for the low loader. According to him she indicated ‘Yep no worries’, and opened the gate for them. As he proceeded he observed the ground underneath the rear wheels collapsing, only then realising there was a soakage pit. Mr Esposito, the second truck driver, gave evidence to a similar effect, suggesting that all three walked through the gate to make sure everything was clear before proceeding to bring in the low loader. Mr Esposito also explained that Mrs Lockwood told them only to watch out for the breather pipe of the septic tank and that this ‘was the only thing she was concerned about … she never said nothing about the septic tank, nothing’. He explained that on the walking inspection of the property, it could not be seen because it was covered with dirt and corrugated iron, a situation the photographs rather tend to confirm.
Reasons of the Magistrate
His Honour considered there could be no doubting TD Towing owed a duty of care to the Lockwoods to take reasonable care to avoid damage to their property and that the need for retrieval of the first truck came about ‘through no fault or responsibility of the [Lockwoods]’. There can be no quarrel with these conclusions. As the first truck could not be accessed because of ‘some logistical difficulties’, the Magistrate considered ‘the situation called for careful planning and execution by the defendant’s employees in relation to the manner of attempting retrieval of the first truck’. Once again this conclusion is sound.
So far as the differing recollections of the events are concerned, his Honour considered there was ‘no reason to question the honesty of any witness’. He suspected ‘the different recollections are as a result of reconstruction’. On the other hand his Honour doubted whether Mrs Lockwood appreciated the presence or location of the soakage pit. He considered her recollection with respect to that was ‘not an accurate recollection and arises from reconstruction’.
As a consequence the Magistrate accepted and preferred the evidence of Mr Fletcher and Mr Esposito to the effect that they walked over the area in question and that ‘none of them detected or realised the presence of the soakage pit’. He did so on the further basis that their recollections were ‘more specific than those of Mrs Lockwood’ and because the:
… generalised aspect to the evidence of Mrs Lockwood … left me with the impression that some aspects of her evidence had probably arisen through reconstruction when she had subsequently discussed the events with her husband.
Nevertheless his Honour accepted Mrs Lockwood’s evidence that Mr Esposito was impatient, expressly finding:
... the impression gained is that there was a degree of impatience and irritation on the part of Mr Esposito which has resulted in some haste in execution of the exercise at hand.
There is no demonstrated basis at all to depart from these conclusions with respect to the evidence of the witnesses in the case.
Having made these primary findings of fact, his Honour considered that because of the difficult position in which the first truck had broken down, and because the low loader ‘comprised a truck, cabin and trailer of considerable length and weight’, the ‘task at hand required more careful planning and consideration than was exercised by Mr Esposito and Mr Fletcher’. The Magistrate further reasoned that had there been such an exercise:
… the futility of the low loader being driven across the paddock would have been realised and other options, including the defendant despatching a smaller and lighter tow truck would have to be considered.
By choosing to dispatch a vehicle of considerable weight and length to the property to remedy a situation arising through no fault or responsibility of the property owners, the Magistrate considered this to be an inadequate response. He considered careful inspection should have led to the realisation of ‘the presence of the soakage pit, or at least the possibility of the presence of the soakage pit’. Accordingly his Honour concluded there was a lack of care resulting in damages for which TD Towing was liable to compensate.
On the question of damages, the Magistrate formed the view on evidence before him that damage to the soakage pit rendered the septic tank entirely useless, because ‘new regulations effectively required the replacement of the whole of the existing system’. He also considered a quotation produced by TD Towing of $5,454 to install a 1000 litre concrete septic tank. The evidence of Mr Lockwood was that the capacity of the old septic tank was 3,000 litres and the minimum size required under the regulations was 5,000 litres. The Magistrate acknowledged ‘the Envirocycle’ system was ‘a better system than the old system but in my view the plaintiffs were effectively left with little choice other than to proceed with the new system’.
The application for review
The right of review to the District Court is found in s 38(6) of the Magistrates Court Act 1991 (SA). Section 38(7) thereof furnishes the District Court with powers of affirmation and rescission as well as the capacity to ‘substitute a judgment that … [it] … considers appropriate’. There is however no power of remission except in respect of reviews against default or summary judgments (s 38(7)(d)(iii)), which of course this case is not. There are essentially two matters of complaint taken on the review and a third issue that arose during the course of the review itself.
Contributory negligence?
The first was that his Honour failed to consider the question of contributory negligence. This was clearly a relevant consideration by virtue of s44 of the Civil Liability Act 1936 (SA), and yet the Magistrate failed to mention the topic. This was an omission giving rise to an error of law, thus requiring this court to reconsider the matter and to substitute a judgment it considers appropriate on the point.
Given the unassailable findings of fact quoted or summarised earlier, the question of contributory negligence however, hardly arose. The basis of the claim to contribution arises from the consent of Mrs Lockwood to taking the low loader into the paddock and failing to warn of the presence of the soakage pit. Whatever she might have done or said in that respect, was entirely subsumed by the failure to better plan and consider the most appropriate course of action. A modest inspection of the property would have almost certainly revealed the presence of the soakage pit. More than that, it was Messrs Esposito and Fletcher who exercised complete control over the recovery process. The utter reality of the situation was that it was solely their responsibility to plan and control the decision making process. Mrs Lockwood hardly had any experience or influence over that exercise, so it was quite reasonable for her to leave the strategy to them, as they were exclusively familiar with the heavy vehicles involved. So considered, there could be no room for a finding of contributory negligence.
Damages - betterment
The second and more difficult question relates to the measure of damage awarded. As seen, the Magistrate well understood that by his award he was compensating the Lockwoods for a better system than they had previously, a situation justified by his view that they had little choice other than to proceed with the new system. This conclusion stems from his understanding quoted earlier, that ‘new regulations effectively required the replacement of the whole of the existing system’.
There was, however, very little conclusive and no direct evidence as to what the regulatory requirements actually were. The issue seems to have arisen from the higher quotation obtained by the Lockwoods which mentioned that due ‘to new plumbing regulations, which came into force in June 2013, “any new or replacement septic, soakage system needs to be designed by an Engineer”’.
Mr Lockwood suggested on the review that his understanding was that local Council requirements were that if a septic tank or soakage pit was damaged, the whole had to be replaced. That is clearly the premise on which the Magistrate proceeded. As there was no formal evidence of this, I caused inquiries to be made, in light of the power of the court to ‘inform itself as it thinks fit’ in s 38(7)(b) of the Magistrates Court Act, particularly given that the court has no power to remit for further consideration.
The problem with the damages award, if there is one, is that on the face of matters the Magistrate assessed damages at a level more akin to an award in contract than in tort. In the result the Lockwoods received an award going beyond the cost and expense of repairing the soakage pit itself, but to replace it and the septic tank as well. The object of an award of damages is to compensate for the damage and loss sustained, a principle that informs the assessment of damages in both causes of action. The classic rendition of the principle is that of Lord Blackburn in Livingstone v Rawyards Coal Co,[1] as being:
… that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.
[1] (1880) 5 App Cas 25, 39.
An assessment of damages in negligence restores the injured party to the position in which they would have been but for the wrong, in contrast to those assessed in contract, which simply stated are what may fairly and reasonably be considered as the probable result of the breach of the contract: Hadley v Baxendale.[2] The onus of proving the quantum of any unjustified betterment lies on the defendant: Harbutt’s Plasticine Ltd v Wayne Tank & Pump Co Ltd,[3] and Tyco Australia Pty Ltd v Optus Networks Pty Ltd.[4]
[2] (1854) 156 ER 145, 151.
[3] [1970] 1 QB 447.
[4] [2004] NSWCA 333.
On the other hand as McMillan LJ said in Banco de Portugal v Waterlow & Sons Ltd:[5]
Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticize the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.
[5] [1932] AC 452, 506.
The appeal – further evidence
In this case there was no direct evidence of the value of the damaged soakage pit, other than by inference from the lesser quotation that was before the Magistrates Court. Nor was there any formal proof that more loss than what the Lockwoods had actually suffered was justified, because they had no practical choice in the matter.
Given the paucity of the information relating to regulatory requirements involving septic tanks, both parties expressed their consent to the court inquiring into the matter and contacting the local Council if necessary.
The Council concerned is the Wakefield Regional Council. The property Lot 1, 1338 Avon Road, Long Plains lies within the Council boundaries. Informal inquiries reveal the capacity of a septic tank is dependent on the size of the dwelling as determined by an engineer, but as a rule of thumb, generally a 3 bedroom house requires a septic tank of 3000 litres, and a 4-6 bedroom house requires a septic tank of 4000 litres. The subject home has five bedrooms.
The procedures concerning inspection and installation of septic tanks (also known as wastewater systems) were governed by the South Australian Public Health (Wastewater) Regulations 2013 (SA). Those regulations, promulgated under the South Australian Public Health Act 2011(SA), came into effect on 14 June 2013, so they were applicable when the subject septic tank and soakage pit were replaced. This is consistent with the note on the quotation referred to earlier. The historical version of the Regulations, applicable between 1.07.2013 and 30.06.2014, related to ‘wastewater systems’, defined to mean ‘an on‑site wastewater system’ and to ‘wastewater works’ defined to mean ‘the installation of a wastewater system (including a temporary system)’. The work in question appears to have been undertaken around 21 February 2014, judging from the Proactive tax invoice rendered to the Lockwoods.
Regulation 11(1) of the Wastewater Regulations, spell out in part the ‘Wastewater system requirements’. A person undertaking wastewater works was required to ensure the installation of an on‑site wastewater system was the subject of product approval, and was undertaken in accordance with wastewater works approval and in accordance with prescribed Codes. Prescribed Codes are designated in regulation 4 (1)(a) ‘in relation to an on-site wastewater system - the On-site Wastewater Systems Code published by the Minister’. Regulation 11(2) of the Wastewater Regulations, once again to paraphrase, required a qualified person (usually a plumber) within 28 days after completing the work, to certify the work was undertaken in accordance with the wastewater works approval. Both regulations 11(1) and 11(2) created criminal offences for non-compliance with maximum penalties of $5,000, although an expiation fine of $315 is allowed for each instance.

The notation in the quote referred to earlier that ‘new plumbing regulations’ required ‘any new or replacement septic, soakage system needs to be designed by an Engineer’, may well stem from the requirement that applications for waste product approvals under regulation 23(1)(e) of the South Australian Public Health (Wastewater) Regulations, ‘may include a certificate of an independent wastewater engineer in relation to the wastewater system or wastewater works concerned’.
All this information was transmitted to the parties and they were invited to make further submissions in writing should they chose to. Mr or Mrs Lockwood were specifically invited to forward any document giving approval for the installation of the new system or any certificate given with respect to it, or any other document relating to it.
The Magistrate had exhibits before him, including the Proactive invoice dated 14 February 2014 for the installation of an RI Treat - 4250 aerobic septic tank ‘as quoted’ of $11,973.50, and an electrical certificate of compliance from Woods Electrical Pty Ltd of the same date in respect of electrical cabling to a switch board at the house. Photographs tendered show that the system was in fact installed. There were no materials relating to compliance with the regulations discussed earlier. The inquiries of the Wakefield Regional Council further reveal that it has ‘no record of a septic approval engineering works done on this property’. Further inquiry of the Council (also transmitted to the parties for their comment) indicated Pro-Active Plumbing had installed a system at the property in question in 2014 on the basis that Mr Lockwood told them he had obtained approval. The Council never in fact received any such application for approval, whereas the Lockwoods claim there was such a certificate lodged through Proactive. The exact situation remains unclear.
The review – analysis
On the basis of this new material, it seems tolerably clear that after 14 June 2013, septic tank works undertaken by the Lockwoods as owners of the subject premises, which required product approval given in accordance with regulations, certification that the works were undertaken in accordance therewith, and possibly that the soakage system was designed by an Engineer. There is no direct evidence as to compliance with these issues.
We have then competing interests by which TD Towing was ordered to pay a sum of money for damages caused by its negligence of more than the assumed actual loss, whilst on the other hand a completely new system had to be installed by the Lockwoods in compliance with a new statutory regime, brought about through no fault of their own, and when they had (so far as we know) a perfectly functioning and satisfactory system in operation beforehand.
There is precious little evidence of what the exact cost of repairing or replacing the soakage pit was. It went only so far as indicating the soakage pit itself was rendered useless and had to be replaced. The quotation obtained by Mr Dimitropoulos on behalf of TD Towing of $5,454.00 was in fact for the ‘supply & install a new septic tank and soakage trench’, which in itself is some anecdotal evidence that replacement of the whole system was necessary. It was however for a 1,000 litre septic tank, whereas the original held a capacity of 3,000 litres. It was on this basis that the Magistrate proceeded.[6]
[6] At [38].
Despite the better position in which the Lockwoods now stand, in point of principle it is inappropriate on the assumptions made by the Magistrate, which are substantiated by the further material now before the court, to make any deduction on account of betterment, since the fact of the matter is that the Lockwoods were left in a predicament they had to fix. Requiring the expenditure of money in these circumstances, and acquiring a better and more expensive waste management system, is merely an incident of mitigation expense: Gwam Investments Pty Ltd v Outback Health Screenings Pty Ltd.[7] Expressed in another way, the Lockwoods ‘had no choice but to replace it as soon as they could … but also to mitigate their loss …’: Harbutt’s Plasticine v Wayne Tank & Pump Co.[8]
[7] (2010) 106 SASR 167, [162]. See also [58]-[59].
[8] [1970] 1 QB 447, 468 per Lord Denning MR.
It might be noted that things could be worse for TD Towing. Quite apart from the more expensive quotation referred to above, Mr Lockwood performed a good deal of associated works himself, for example digging and re-digging holes, purchasing a tank for over $8,000 and paying for an electrician.
Unfortunately matters do not rest there. As can be seen, although the new regulatory regime required complete replacement of the whole system, the requisite approval and certification was not apparently obtained. The further question then arises whether these facts somehow compromise the preliminary conclusions just reached as to the appropriate measure of damages. The contract to install the system was not illegal as such, however it appears that it may have been illegally performed during the course of the contract through the failure to comply with the approval and certification requirements.
Assuming that the contract was illegally performed, the inability of the Lockwoods to enjoy the benefit of an amount of damages to which they were otherwise entitled, coupled with the fact that the purpose and the policies of the Regulatory scheme would be sufficiently served by the penalties prescribed, so as to render it inappropriate to reduce the award on account of the assumed illegality: Nelson v Nelson.[9]
[9] (1995) 184 CLR 538, 570, 613, 616.
This conclusion is perhaps best illustrated by reference to Fitzgerald v FJ Leonhardt Pty Ltd.[10] The facts were that a driller licensed under the Water Act 1992 (NT) entered into a contract with a landowner to drill a number of bores. A dispute arose as to how much was owing under the contract. A number of the bores were unauthorised under the Act, as the landowner inadvertently had not obtained bore construction permits under s 57(1) of the Act. Section 56(1)(a) of the Water Act made it an offence punishable by a fine of $5,000 for a first offence to construct a bore unless it was so authorised.
[10] (1997) 189 CLR 215.
It was held in the first place that a permit under s 57(I) of the Water Act imposed an obligation on the landowner, not the driller, to obtain a permit under s 57(1) for the construction of a bore. It might be added with respect to the matter currently before the court that the obligation to obtain the approval for the works under regulation 11(1) of the Regulations rests on the owner of the premises as the operator thereof, whereas the obligation to obtain the certificate under regulation 11(2) rests on the person ‘who has undertaken wastewater works ..’, that is Proactive.
Returning to Fitzgerald v FJ Leonhardt, the High Court held the contract was not unenforceable, as it could have been performed without any breach if the landowner had obtained a permit. It was further held there was an implied obligation on the landowner to procure the grant of any required bore construction permits, so that public policy did not require interference with the enforceability of the contract.
The applicable principles are those outlined in the joint judgment of McHugh and Gummow JJ:[11]
The question then becomes whether, as a matter of public policy, the court should decline to enforce the contract because of its association with the illegal activity of the owner in, if not causing, then at least suffering or permitting the construction and drilling of bores, within the meaning of s 56(1), without the grant to the owner of permits pursuant to s 57. The refusal of the courts in such a case to regard the contract as enforceable stems not from express or implied legislative prohibition but from the policy of the law, commonly called public policy. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable.
In such a case, the role of the common law in determining the legal consequences of commission of the offence may thereby be diminished because the purpose of the statute is sufficiently served by the penalty. Here, the imposition of an additional sanction, namely inability of the driller to recover moneys otherwise owing by the owner, would be an inappropriate adjunct to the scheme for which the Act provides. The contrary decision would cause prejudice to an innocent party without furthering the objects of the legislation.
Their Honours continued:[12]
… courts should not refuse to enforce contractual rights arising under a contract, merely because the contract is associated with or in furtherance of an illegal purpose, where the contract was not made in breach of a statutory prohibition upon its formation or upon the doing of a particular act essential to the performance of the contract or otherwise making unlawful the manner in which the contract is performed.
The preferable course, in cases of contract alike to those involving trusts, is as follows. A case may come within one of the accepted exceptions or qualifications to Holman v Johnson. As indicated above, these are set forth, with examples from authority, in the following passage from the judgment of McHugh J in Nelson v Nelson “first, the courts will not refuse relief where the claimant was ignorant or mistaken as to the factual circumstances which render an agreement or arrangement illegal. Second, the courts will not refuse relief where the statutory scheme rendering a contract or arrangement illegal was enacted for the benefit of a class of which the claimant is a member. Third, the courts will not refuse relief where an illegal agreement was induced by the defendant’s fraud, oppression or undue influence. Fourth, the courts will not refuse relief where the illegal purpose has not been carried into effect”.
[11] At 570 (footnotes omitted)
[12] At 229-230, see also Kirby J at 246 and 251.
Applying these principles to this case, the Lockwoods were aware of the factual circumstances giving rise to the requirement for certification, and yet they understood Proactive would, or had, attended to it with no relevant involvement on their part. The regulatory scheme does not exist for the class of tortuous participants such as TD Towing. The fourth of the Nelson categories does not arise.
Conclusion and orders
For all the above reasons, the application for review must be dismissed albeit by means of a more circuitous route than that taken by the Magistrate. The judgment of $11,973.50 plus a filing fee of $131.00 and solicitors fees of $500.00, are therefore affirmed. The judgment sum of $11,973.50 attracts interest from the date of judgment on 11 December 2014, pursuant to s 35 of the Magistrates Court Act at the rate prescribed by R124 of the Magistrates Court (Civil) Rules 2013 (SA), namely 5 per cent per annum. For the sake of ease of enforcement, a lump sum of $200 in lieu thereof is fixed, to be paid in addition to the above judgment sums. There will be no order as to the costs of the review itself: s 38(5) Magistrates Court Act 1991 (SA).