Tunnock, Abrahams, Hicks and Hollywood v Noosa Shire Council

[1993] QCA 310

IN THE COURT OF APPEAL	[1993] QCA 310
SUPREME COURT OF QUEENSLAND	Appeal No. 57 of 1993
Brisbane [Tunnock v. Noosa Shire Council]
BETWEEN:

D.A. TUNNOCK, R.F. ABRAHAMS and M.C. HICKS

(First Plaintiffs) Appellants

- and -

M.L. HOLLYWOOD

(Second Plaintiff) Appellant

- and -

THE PROPRIETORS "RENDEZVOUS"
GROUP TITLES PLAN NO. 620

(Third Plaintiff) Appellant

- and -

NOOSA SHIRE COUNCIL

(First Defendant) Respondent

- and -

L.H. BERRY & W J BERRY

(Second Defendants) Respondents

- and -

G.C. & H.E. ROBERTSON

(Third Defendants) Respondents

- and -

FIRE & ALL RISKS INSURANCE COMPANY LIMITED

(First Third Party) Respondent

- and -

JOHN NORDEN

(Second Third Party) Respondent

____________________________________________________________
_____

Pincus J.A. Davies J.A. Lee J.

____________________________________________________________

_____

Judgment delivered 23 August 1993

Judgment of the Court

____________________________________________________________

_____

APPEAL DISMISSED, WITH COSTS.

____________________________________________________________

_____

CATCHWORDS:	PROCEDURE - application for leave to proceed under O. 90 r. 9 Rules of the Supreme Court - whether substantial delay causing prejudice to defendants - whether demolition of building alleged to have defective foundations would make valuation difficult -whether difficult to now secure a fair trial.
Counsel:	Mr P D McMurdo QC, with him Mr D Long for the appellants. Mr M Bland for the respondent/first defendant. Mr R Bain QC for the respondents/second defendants. Mr D Savage for the respondents/third defendants. Mr B Wright for the respondent/second third party.
Solicitors:	Rigby & Co. for the appellants. Watkins Stokes Templeton for the respondent/ first defendant. Clayton Utz for the respondents/second defendants. Baker & Co. for the respondents/third defendants. Thompson King Connolly for the respondent/second third party.
Hearing Date:	6 August 1993

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No. 57 of 1993
Brisbane
Before	Pincus J.A. Davies J.A. Lee J.

[Tunnock v. Noosa Shire Council]

BETWEEN:

D.A. TUNNOCK, R.F. ABRAHAMS and M.C. HICKS

(First Plaintiffs) Appellants

- and -

M.L. HOLLYWOOD

(Second Plaintiff) Appellant

- and -

THE PROPRIETORS "RENDEZVOUS"
GROUP TITLES PLAN NO. 620

(Third Plaintiff) Appellant

- and -

NOOSA SHIRE COUNCIL

(First Defendant) Respondent

- and -

L.H. BERRY & W J BERRY

(Second Defendants) Respondents

- and -

G.C. & H.E. ROBERTSON

(Third Defendants) Respondents

- and -

FIRE & ALL RISKS INSURANCE COMPANY LIMITED

(First Third Party) Respondent

- and -

JOHN NORDEN

(Second Third Party) Respondent

JUDGMENT OF THE COURT

Judgment delivered 23/08/93

This is an appeal from an order of a single judge of the Supreme Court in proceedings which had two aspects: the plaintiffs, now appellants, sought leave to proceed under O. 90 r. 9 of the Rules and the third defendants applied for an order that the action be dismissed for want of prosecution. The judge declined the application for leave to proceed and dismissed the action.

The case concerns a home unit building erected in 1979 and which is said to have had defective foundations. The plaintiffs sued the local authority, the builders and the engineer. The engineer joined its insurer as first third party and one Norden as second third party. Of these third party claims the first has been resolved but the second remains alive; Norden is said to have participated in the engineering work.

The statement of claim of the plaintiffs, now appellants, although bearing the date 17 July 1984 was, it appears, delivered on 17 July 1985. In summary, the pleading is as follows :

The first plaintiffs (three in number) purchased a block of land in 1978 and in 1979 agreed with the third defendants ("the builders") to erect for the first plaintiffs a building comprising three home units. That was constructed on uncompacted fill deposited in 1971. The second defendants ("the engineer") provided engineering and architectural drawings for piers to be constructed under unit 3 and did so as part of the design of the building.

Those piers did not go down to firm foundations; the soil under the building was not tested and

the foundations generally were defective in various ways. As a result the earth under parts of unit 3 settled more than that under other parts of the unit, imposed strains on the structure and caused cracking. The engineer had been instructed to design and supervise the construction of the building and prepare all necessary drawings, but failed to carry out those duties properly in that he did not test the soil, did not ensure that the builders complied with their obligations, and did not ensure that the foundations were adequate.

The first defendant ("the Council") as the local authority knew or ought to have known about the existence of the fill, placed in 1971; it granted a building approval in respect of the building, in 1979, without ensuring that the by-laws were complied with. The Council failed to inspect the foundations properly, failed to get the fill compacted, and failed to keep a public record of fill on residential lands in the Sunshine Beach area. Further, the Council should have warned the first plaintiffs of the presence of the fill and did not do so. The second plaintiff was the purchaser of lot 3, bought in 1982. In 1979 a Council officer told the first plaintiffs that the drawings for the piers under unit 3 were satisfactory and that nothing further in relation to footings or piers was required; the first plaintiffs acted on that advice. The third plaintiff is the body corporate in respect of a group titles plan registered on the land. It suffered loss because parts of the common property, pathways and swimming pool and surrounds have been damaged by the subsidence.

The plaintiffs claim they suffered loss consisting of $86,590 being the estimated cost of rectification work and $60,000 being the diminution in value of the building.

After delivery of the statement of claim, events happened which will make an amendment of the plaintiffs' pleading necessary, if the action is to proceed. No application for an amendment has yet been made. The evidence shows that the first plaintiffs sold their interest in the land in 1987 and the second plaintiff in 1988. In 1990 the group titles plan was extinguished, the unit building having been demolished in 1989. Mr McMurdo QC, who led for the appellants, contended that the damages sought by the first and second plaintiffs - the third plaintiff being no longer in existence - would consist in the diminution in the value of the relevant units due to the deficiency in the foundations. It was said during the argument, and appears to us correct, that the demolition of the building is likely to make more difficult the task of a valuer who has not seen it standing.

Our attention was drawn to the fact that the defence delivered on behalf of the engineer contained an admission that he was instructed to prepare the necessary engineering drawings to permit the building to be constructed. A further reference to aspects of the pleadings appears below.

Before the primary judge, it was argued on behalf of the defendants that there had been substantial delay, causing prejudice to them. The judge's view was that there were two periods of delay which were unexplained or not satisfactorily explained; they were from 6 July 1990 to 16 September 1991, and from 4 November 1991 to 2 February 1993.

The total of these periods is nearly two and a half years, but that is not a substantial period compared with that which has elapsed since the contract for construction of the building was made, nearly 14 years.

The application for leave to proceed was made necessary by the terms of O. 90 r 9, reading as follows :

"When no proceeding has been taken in a cause for one whole year from the time when the last proceeding was taken, any party who desires to proceed shall, before taking any step in the cause, give a month's notice to every other party of his intention to proceed. When three years have elapsed from the time when the last proceeding was taken, no fresh proceeding shall be taken without the order of the Court or a Judge, which may be made either ex parte or upon notice. A summons on which no order has been made shall

not be deemed a proceeding within this Rule; but notice of trial, although avoided by non-entry or countermanded, shall be deemed such a proceeding."

The precise date of the last step taken in the proceedings before the three year gap, making the application necessary, was not debated before us, but the month can be fixed; it was January 1990. The next step taken was on 2 March 1993, when the appellants' solicitors delivered interrogatories to be answered by the second defendant, the engineer; the response to that was an application by the builders to strike the action out.

In the primary judge's reasons, his Honour discussed a number of assertions made by defendants on the question of prejudice caused by delay and these were discussed before us. The engineer made an affidavit to the effect that in or about December 1989, as it appeared that the plaintiffs were not proceeding with the action, he decided to "semi-retire".

As was pointed out by Mr McMurdo QC for the appellants, there was no basis for thinking, at that stage, that the plaintiffs were not proceeding. In November and December 1989 a number of exchanges between the plaintiffs and the defendants, including the engineer, took place which gave no indication that the action was being abandoned. But, more fundamentally, the engineer's affidavit is in our view of no real assistance, for the reason that he puts forward a contention not properly supported by evidence. The contention is, at least implicitly, that the engineer would have difficulty in meeting any judgment because of his "semi-retirement". But the affidavit makes no assertion that the engineer would be unable to pay, nor does it say that his overall financial position has worsened since the end of 1989. In short, the engineer's affidavit proves nothing of any consequence.

The second point taken concerning prejudice was one on behalf of the builders. It was alleged that two witnesses, described in an affidavit as "vital", were a backhoe operator who dug the excavation for the foundations of the building and his assistant, who was said to have been "present when the engineering inspection occurred". But that was long ago and it seems unlikely that the occasion would so have imprinted itself on their memories that they could have given any useful account of it, even a few years after the events. Apart from that, the supposedly "vital" witnesses were, one might reasonably infer, not proofed and no account is given of what, if anything, they could say. Again, this allegation of prejudice appears to us to have no substance.

A point of more weight is the demolition of the building; that occurred in 1989. It does not appear that the defendants were told of the plaintiffs having sold their interests in the building, in 1987 and 1988, nor is there any suggestion that the defendants were given notice that the building might be demolished. It was argued against the appellants, and we think justly, that since the damages now appear to be based on a difference in value, it must be hard for the defendants to obtain any definitive valuation of a building their valuer has not seen. Mr McMurdo pointed out that a valuer might obtain assistance from photographs and other material indicating the condition of the building before demolition, but that appears somewhat less than satisfactory. As to the question of liability, the destruction of the building must affect the prospects of the Court's being able to reach accurate findings on the extent and nature of the subsidence; there is nothing to suggest that the defendants' solicitors prepared in detail on that issue before demolition. Further, if the building were still in existence it might be possible for the details of the construction to be investigated in relevant respects, for example by exposing and cutting into parts of the foundations.

It appears to us that to a considerable extent the resolution of the issues would depend upon documentary evidence: Council records; reports of examination of the subsoil done on behalf of the appellants; plans and specifications. Yet some aspects of the case may well depend upon recollection. The second third party, who is said to have been engaged to inspect the foundations on a number of occasions, could hardly be expected to have any significant memory of the result of his inspections after so many years. The builders and their workmen are unlikely to recall in detail their observations of the subsoil, or the course of construction of the foundations or of the building in general. The pleadings between the defendants are such as, at least potentially, to make communications between them during the course of construction relevant; the engineer complains that the builders failed to report on inadequacy of compaction of the fill and as we have mentioned, the second third party is said to have made three inspections of the footings on behalf of the engineer which, it is reasonable to presume, may have led to some relevant conversations. It may be hard for these to be recalled now, even in outline. We note that Borg v. Muscat (1972) Qd.R. 253 is authority for the view that the whole lapse of time since the relevant events occurred, not merely the delay from January 1990 to March 1993, should be taken into account: see pp. 257G, 259C-E.

In answer to such contentions, Mr McMurdo pointed out that even if there had not been the delay of more than three years, much of this sort of difficulty would have existed. He relied on the fact that the effect of the subsidence was not noticed until some years after the construction was done; that, being no fault of the appellants, in itself caused delay. It must further be said in favour of the appellants that the course of the proceedings, until the beginning of the relevant period of delay (January 1990) although slow, was by no means such as to show that the plaintiffs, rather than the defendants, were especially dilatory. During most of the period of four and a half years between the issue of the writ and the beginning of the substantial delay necessitating the application for leave to proceed the suit was conducted in a rather leisurely fashion; for example, the engineer's defence was not delivered until October 1986, well over a year after the plaintiffs' statement of claim.

In our opinion, however, the Court must take into account in exercising its discretion the fact that (as it appears to us) there would now be likely to be substantial difficulty, particularly on the defendants' side, in proving dealings between the parties in the course of construction, in 1979 and 1980. Further, the case was one in which it was incumbent upon the plaintiffs, as the principally relevant facts were already years old when the action was begun, to keep the matter moving. There were inconclusive discussions about settlement in mid-1989, following which steps with a view to completing the interlocutory stages of the action resumed; the plaintiffs' solicitors changed, in February 1989. The new solicitors have given evidence about the two substantial delays referred to by the learned primary judge.

His Honour was of opinion that the delay from July 1990 to September 1991 was unexplained; during that period the solicitors were waiting to receive instructions from the plaintiffs, in the form of statements. During the second period, his Honour found the solicitors were awaiting funds in order to engage a valuer. At that stage, with all respect to the solicitors and the plaintiffs, the dispute was very old and it was incumbent upon them, if they were serious about the matter, to have it set down as swiftly as possible. It also appears to be legitimate to take into account against the appellants that they are only now, years after it became necessary to do so, contemplating amendment of their pleading to take account of the change in the nature of the loss complained of: the dropping of the claim for rectification and confining of the damages to a diminution in value. It appears to us that the plaintiffs should promptly have advised the defendants of the sale of their respective interests in the building and of their having given up possession; that would at least have alerted the defendants to the desirability of proceeding on the basis that future access to the building the subject of the suit could not necessarily be guaranteed.

It was contended for the appellants, in Mr McMurdo's impressive submissions, that the conclusion at which the learned primary judge arrived was unreasonable in the relevant sense, and should be set aside. Having considered the nature of the case, the length of delay and the apparent difficulties of securing a fair trial at this stage, we are of opinion that his Honour's conclusion was correct. The appeal will be dismissed with costs.