New South Wales Court of Appeal CITATION: Campbelltown City Council v Linknarf Limited (Formerly Franklins Ltd) [2006] NSWCA 242 HEARING DATE(S): 30/08/06 JUDGMENT DATE: 13 September 2006 JUDGMENT OF: Hodgson JA at 1; Ipp JA at 2; Tobias JA at 51 DECISION: Appeal dismissed with costs. CATCHWORDS: NEGLIGENCE - injury on road where pavement surface was delaminated - appeal by Council against order that it indemnify the respondent under s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW) - whether Council breached its duty of care. ND LEGISLATION CITED: Workers Compensation Act 1987 (NSW), s 151Z(1)(d) Brodie v Singleton Shire Council (2001) 206 CLR 512 CASES CITED: Vairy v Wyong Shire Council (2005) 80 ALJR 1 Waverley Council v Ferreira (2005) Aust Torts Report 81-818 PARTIES: Campbelltown City Council (Appellant) Linknarf Limited (Formerly Franklins Ltd) (Respondent) FILE NUMBER(S): CA 40091/06 COUNSEL: C E Adamson SC/R G Gambi (Appellant) L King SC/M Jenkins (Respondent) SOLICITORS: Phillips Fox (Appellant) Turks Legal (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 5761/03 LOWER COURT JUDICIAL OFFICER: Bishop DCJ LOWER COURT DATE OF DECISION: 02/02/06 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40091/06 DC 5761/03 HODGSON JA IPP JA TOBIAS JA Wednesday 13 September 2006 CAMPBELLTOWN CITY COUNCIL v LINKNARF LIMITED (FORMERLY FRANKLINS LTD) Judgment 1 HODGSON JA: I agree with Ipp JA. 2 IPP JA: This appeal concerns an action brought by Linknarf Limited against Campbelltown City Council for an indemnity under s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW). 3 Mr Ian Sullivan (a "worker" within s 151Z(1)(d) of the Act) recovered compensation from Linknarf under the Act. Linknarf thereupon brought proceedings against the Council. It contended that it was entitled to an indemnity from the Council under s 151Z(1)(d) on the ground that the Council was liable, by reason of its negligence, to pay Mr Sullivan damages. Bishop DCJ upheld Linknarf's claim and ordered judgment and a verdict of $87,750.48 in its favour. The Council appeals against this decision. 4 At about 4.00 am on 14 October 1997, Mr Sullivan, then an employee of Linknarf, was riding his motor cycle in an easterly direction along Stennett Road, Ingleburn. This particular area was not well lit. As Mr Sullivan was approaching the intersection between Stennett Road and Inglis Road, his front tyre hit "something" and he was thrown off onto the road. In consequence he sustained injuries. 5 The cause of Mr Sullivan's fall was a "delamination" in the eastbound lane of Stennett Road. The delamination was constituted by the collapse of the asphalt surface or pavement of the road. The delamination had occurred in an area of roadway showing signs of distress from 1.5 to 6 metres from the northern kerb, approximately 40 metres long, and ending approximately 20 metres west of the intersection between Stennett Road and Inglis Road, with the actual delamination being about 1.3 metres wide and 3.3 metres long. 6 According to an expert witness, Mr J A Clark, the delamination was probably caused by a heavy truck braking on the asphalt surface, either so as to be able to turn into Inglis Road or to slow down because of another vehicle proceeding from Inglis Road into Stennett Road. Mr Clark pointed out that heavy trucks and trailers with multiple axles constituted much of the traffic that travelled along Stennett Road near the intersection with Inglis Road. 7 It was common ground that the Council owed Mr Sullivan a duty of care. Bishop DCJ found that the Council had breached its duty of care by failing "to take warning steps" and to provide "barricades to lessen the wear on the eastern side of the carriageway". The Council contended that his Honour erred thereby. The appeal turns on this issue. 8 Linknarf relied on a notice of contention whereby it argued that Bishop DCJ should have found that the Council breached its duty of care in failing to inspect Stennett Road "for cracks, cracking, delamination, or other signs of possible road pavement failure" and in failing to carry out interim maintenance on Stennett Road "addressing cracks, cracking, delaminaton or other signs of possible road pavement failure". 9 In submitting that his Honour had erred in the findings he made, Ms Adamson SC, who together with Mr Gambi appeared for the Council, referred to the following statement by Gleeson CJ and Kirby J in Vairy v Wyong Shire Council (2005) 80 ALJR 1 at 6, [7]: "Furthermore, a conclusion that a public authority, acting reasonably, ought to have given a warning ordinarily requires a fairly clear idea of the content of the warning, considered in the context of all the potential risks facing an entrant upon the land in question. When a person encounters a particular hazard, suffers injury, and then claims that he or she should have been warned, it may be necessary to ask: Why should that particular hazard have been singled out?" 10 Bishop DCJ made no finding as to the content of the warnings, nor did he determine where they should have been placed along Stennett Road. He did not explain whether the warnings he had in mind were warnings against delamination or, perhaps, warnings that were relevant to speed or, indeed, something else. 11 No doubt, his Honour's omission to specify the content of the warnings and to determine where they should have been erected was brought about by Linknarf's omission to lead any evidence on this issue or to make submissions about it. 12 Without identifying the content of the warnings, it is not possible to determine what causative effect they might have. The omission to find precisely where the warnings should have been placed exacerbates the problem. 13 The written submissions filed on Linknarf's behalf made no real attempt to justify his Honour's findings about warnings and Mr King SC, who together with Mr Jenkins appeared for Linknarf, hardly mentioned the warning issue in his oral argument. In my view, it was not appropriate to make a finding of breach constituted by a failure to provide warnings without specifying what the warnings should have said and where they should have been placed. The Council's submissions as to the findings concerning warning signs should be upheld. 14 Similar considerations apply to the finding that the Council breached its duty by failing to erect barricades along Stennett Road. This was an issue that was not even pleaded. No evidence was led that bore on it. There was no evidence as to where the barricades should have been placed and what the practicalities were of erecting barricades along a road in an industrial area that was frequently used by industrial and other vehicles. In my view, this finding, too, cannot stand. 15 The argument on appeal concerning the warnings and the barricades took up little time. The principal issue on appeal was the question raised by the notice of contention. 16 Although oral evidence was led at the trial, none of it bore significantly on the matters raised by the notice of contention. In substance, the notice of contention falls to be resolved by consideration of reports by Douglas Partners, (consultants to the Council), Mr Clark's report, and matters that were not in dispute. Both parties accepted that this Court is in as good a position as the trial judge to make a decision on the issue. 17 On 29 November 1996 Douglas Partners provided the Council with its estimates of costs for "pavement investigation" of Stennett Road and another road. The investigation was to "assess the observed failures of various sections of the pavements, comment on the possible causes of the observed failures, estimate the future life and recommended remediation measures where appropriate". The letter of 29 November 1996 noted that observed defects in Stennett Road "comprises delamination of asphalt". The portion of Stennett Road, the subject of Douglas's investigations, was approximately 1.1 km in length and included the area that broke up, became delaminated and caused Mr Sullivan's accident. 18 In March 1997 Douglas produced its report. The Council received the report in April or May 1997. 19 The report identified positions on Stennett Road by reference to certain "chainages". The term "chainage" in this context was intended to mean a particular position on the road measured in metres. The accident occurred more or less at chainage 475m. 20 Under the heading "Visual Assessment" the report stated: "Stennett Road was generally in a good condition with low levels of pavement distress observed along some sections of the pavement, mainly between chainage 60m and 550m." 21 When dealing with the "observed pavement distress" along the eastbound carriageway at chainages 165m to 495m, the report stated: "Minor crocodile cracking with pumping on cracks, short sections of moderate crocodile cracking … The crocodile cracking was generally of significant length between chainages 172m and 260m, and 465m and 495m; elsewhere was in short isolated lengths. Most of the observed distress was between 1.5 and 3m offset from the kerb". 22 Douglas observed a "green tinge" in the base layer in certain areas. One such area was "bore 5". Bore 5 is very close to chainage 475m. The report stated that the green tinge "indicates the probable presence of the mineral picrite, which generally weathers rapidly when exposed to moisture potentially resulting in significant losses in strength of this layer". 23 The report stated: "Based on the findings of the investigation, it is considered that the observed pavement distress within Stennett Road between chainage 70m and 500m is due to fatigue failure of the asphalt wearing course. The relatively high curvature results indicate relatively low strengths within the upper section of the pavement and most likely indicates the cause of the observed [crocodile] cracking to be related to the base layer and upper section of the sandstone sub-base layer. At sections where cracking has occurred and pumping was observed indicates [sic] that the cracks fully penetrate the wearing course. Higher deflections and curvature readings within these cracked sections indicate a reduction in pavement material strength considered to be attributable to moisture infiltration into the pavement." 24 The indication that moisture infiltration had occurred at points where cracking and pumping was observed makes the presence of picrite at bore 5 particularly significant. On the day of the accident, major cracking was found in this area. 25 According to the report, contributing causes to the pavement distress included weathering and breakdown in the base layer, the relatively thin layer of base material observed, and the use of crushed sandstone as sub-base material under a relatively thin base layer. 26 Under the heading "Estimated Future Pavement Performance" the following was stated: "The estimated future life of the pavement is based on the deflection testing results and is summarised in Table 4 … The future pavement life for all sections of Stennett Road is governed by the curvature results with estimated future life ranging from 1 to 6 years (based on curvature) and 3 to 20 years based on deflection. The results indicate the upper section of the pavement is of relatively low strength and pavement failure by fatigue of asphalt would therefore be expected to occur. The estimation of future pavement life based on the curvature results from the deflectograph testing may be on the conservative side given the existing good condition of the pavement along most of its length for a pavement of 5 to 6 years service." 27 Under the heading "Estimate Future Life" in Table 4 the following was stated in regard to the eastbound lanes: "From curvature results: less than 1-2 years for left and right kerb lanes … From deflection results – less than 1 year for left kerb lane, Ch 0 – 750m – 6 to 10 years for right kerb lane …" 28 I understand the report as a whole to mean that, while the estimated future life for all sections of Stennett Road ranged from 1 to 6 years (based on curvature) and 3 to 20 years (based on deflection), the specific estimated future life of the eastbound lane from chainages 0m to 750m was less than 1 to 2 years for the left and right kerb lanes (from curvature results) and less than 1 year for the left kerb lane (from deflection results). This understanding is confirmed by the statement by Mr Clark in his report that, according to the Douglas report, "the future life of the pavement in the eastbound lane in the area of this accident was less than 1 year but [Douglas] acknowledged their estimation may have been on the conservative side". 29 The Douglas report went on to deal with rehabilitation measures as follows: "The pavement distress observed along Stennett Road is considered to be related to fatigue failure of the asphalt wearing course caused by high curvature under heavy vehicle movements. Overall the pavement is generally in a good condition with the areas of pavement distress comprising: · Eastbound lane – chainage 70m to 495m, intermittent areas of distress located between 1.5m and 3m offset from the kerb. … It is likely that the fatigue failure of the asphalt will continue to progress along the length of the pavement, however a time frame is not possible to estimate. For rehabilitation of the pavement therefore, it is recommended that treatment measures initially be aimed at maintenance of the failed sections with a longer-term view to major rehabilitation works comprising possible in-situ stabilisation of the pavement material. For short-term maintenance and rehabilitation the following treatment measures are recommended: · Cracked Sealing – Sealing of longitudinal cracks on a regular basis … · Resheeting With Asphalt – Comprising removal of asphalt from the areas of crocodile cracking and delamination and replacement with asphalt. The area of re-sheeting should extend at least 0.5m in width and 5-10m in length beyond the cracked area. The exposed base layer should be allowed to dry out for at least two days, and the works should therefore be undertaken during forecasted dry weather. A primer seal should then be applied to the surface of the base layer followed by re-sheeting with asphalt. It is important that a good seal is achieved between the existing and new asphalt sections and that surface water does not pond on or around the patched area. For longer term rehabilitation of Stennett Road, once significant sections show fatigue failure of asphalt, rehabilitation of the pavement by in-situ stabilisation is recommended. In-situ stabilised is considered to be the most economically feasible method of rehabilitation. It is recommended that the stabilisation be undertaken to a depth of 250mm followed by sealing with 50 mm asphalt. Stabilisation with 2.5 – 3% 80/20 cement/flyash is considered appropriate based on the laboratory test results." 30 The following inferences arise from the Douglas report. (a) Crocodile cracking was of significant length on the eastbound carriageway only between chainages 172m and 260m, and 465m and 495m; this constitutes a distance of 118 metres. On the westbound carriageway the distance was substantially less. (b) The probable presence of picrite in the area where the delamination eventually took place was an indication of potential significant loss in the strength of the base layer in that area. (c) The pavement distress between chainage 70m and 500m was due to fatigue failure in the asphalt. The cracking was related to the base layer and upper section of the sandstone sub-base layer. (d) The estimated future life of the eastbound lane from chainages 0m to 750m was less than 1 year. (e) Pavement failure by fatigue of asphalt would continue to progress along the length of the pavement, but it was not possible to estimate the time within which the failure would occur. (f) In the longer-term major rehabilitation works should be undertaken comprising in-situ stabilisation of the pavement materials. (g) Initial treatment measures should be aimed at the failed sections. The short-term maintenance recommended was re-sheeting with asphalt. This comprised removal of asphalt "from the areas of crocodile cracking and delamination and replacement with asphalt". In the context of the report, the word "delamination" in this phrase signified potholes. (h) In-situ stabilisation of the pavement material was the most economically feasible method of rehabilitation. 31 The Council knew that Stennett Road was an access route to and from an industrial area and knew or ought to have known that much of the traffic along it, in the area where the accident occurred, comprised heavy trucks and trailers with multiple axles. 32 There was no evidence that anything was done by the Council in response to the March 1997 Douglas report. A photograph tendered in evidence shows an asphalt patch near the area of delamination that caused Mr Sullivan's accident. There was no evidence, however, as to when this patch was installed. It is common ground that the Council's documents produced on subpoena did not disclose that, between 28 October 1996 and 14 October 1997, it undertook any inspection, repairs or maintenance on Stennett Road. This gives rise to the inference, as there was no evidence to the contrary, that the Council did not undertake any inspection, repairs or maintenance on Stennett Road during that period. 33 As I have mentioned Mr Sullivan was injured at about 4.00 am on 14 October 1997. Later that day, a test pit was excavated within the causative delamination. A geotechnical engineer noted that the pavement and sub-grade conditions found in the pit were in general agreement with the findings in the March 1997 Douglas report. 34 By a report dated 23 October 1997 Douglas confirmed that the distress observed on the pavement was the result of continuing fatigue failure of the asphalt as discussed in the March 1997 report. Douglas's investigations after the accident showed pavement distress on Stennett Road on the eastbound lane over an area 1.5 to 6m from the kerb for approximately 40m ending approximately 20m from the intersection with Inglis Road. According to Douglas there was "slight to major crocodile cracking with a section of delamination approximately 1.3m wide and 3.3m long". 35 Mr Sullivan and another witness had regularly driven along Stennett Road. In the days leading up to 14 October 1997 neither had noticed any cracks in the road in the area where the accident occurred. In my view, however, the notion that a motor-cycle rider would notice crocodile cracks on the surface of the road on which he is riding is unlikely. 36 The Council led no evidence to contest the statement in the October Douglas report that there was major crocodile cracking around the delamination on the day of the accident and did not seek to cross-examine the author of the report. 37 In February 1998 the Council prepared two detailed estimates of the costs for the reconstruction of the relevant parts of Stennett Road. These totalled $219,500 and $213,000, respectively. Ms Adamson submitted that the estimate for $213,000 was the cost of temporary maintenance and not long-term rehabilitation. This submission was based on the phrase "heavy patching" which was part of the description of the work to be done in the heading of the $213,000 estimate. I do not accept this submission. There is substantial similarity in the description of the work on which each estimate was based. In context, both estimates concerned long-term rehabilitation. 38 On 10 December 1998 the Council agreed with another interested party that the latter would fund 50% of the long-term rehabilitation works required. 39 On 12 January 2005 Mr Clark provided his report on which the Council relied. Mr Clark agreed with Douglas that the weathering characteristics of the base material of the road were deficient, and agreed with Douglas's view as to the cause of the cracking. 40 Mr Clark noted: "For short-term maintenance [Douglas] recommended that the asphalt wearing course be removed and replaced in the areas which had cracked and delaminated. Whilst I generally agree with that recommendation its implementation would be dependent on the development of the extent and severity of the cracking and delamination and particularly the delamination or potholing . Whilst cracking alone is indicative of a pavement failure it usually does not provide a broken road surface requiring immediate maintenance for reasons of vehicle traffickability". 41 Mr Clark expressed the view that the delamination appeared to have been "a recent and sudden occurrence". He agreed that the delamination occurred because of the force applied to the surface by a truck applying its brakes. He said: "Hard braking would cause significant horizontal force on the asphalt wearing course and because of it being cracked could readily cause it to tear up and be thrown aside from the roadway in the manner shown in the Council photographs. Such an event causes a sudden failure in a pavement surface." 42 In my opinion, by May 1997 the Council should have foreseen that there was a significant risk that the pavement of Stennett Road near the intersection with Inglis Road could suddenly wear away and break up through the force imposed on it by the industrial traffic. The Council should have foreseen that, particularly were this to occur at night, there would be grave danger to passing traffic, particularly motor-cycles. 43 Despite these risks, on the evidence, no steps were taken by the Council to limit the dangers that foreseeably could arise and, in particular, the Council took no steps to implement the recommendations in the March 1997 Douglas report concerning interim maintenance of the road. 44 Ms Adamson pointed to the observation in Mr Clark's report that the implementation of the Douglas recommendations as to short-term maintenance would be dependent on the development of the extent and the severity of the cracking and particularly delamination or potholing. She emphasised Mr Clark's opinion that, whilst cracking alone was indicative of a pavement failure, it usually did not "provide a broken road surface requiring immediate maintenance". She submitted that, in these circumstances, it was reasonable for the Council to delay short-term maintenance measures. She submitted that such short-term measures would be a waste, and would be unnecessary, were the long-term maintenance measures to be put in place (as apparently occurred in 1998). 45 I do not, however, agree that these submissions answer the contentions that the Council was negligent in doing nothing. 46 Firstly, the Council did not call any witness to prove that the Council gave any consideration to the situation that had developed. Ms Adamson's submissions were based on mere speculation. From an evidential point of view, there has been silence from the Council on this issue. There is no evidence, express or from which any inference could be drawn, that the Council intended to carry out long-term rehabilitation of the road within a reasonable, or any, time. There is no evidence that the Council believed that it was reasonable to leave the situation in the state that it was, and, if so, on what grounds. 47 Secondly, there was no suggestion that the major crocodile cracking observed on the day of the accident would not have been detected had the Council carried out inspections of the road at reasonable intervals. In my view, in the light of the March 1997 Douglas report (and the potential risk of road failure that it revealed), such inspections were required. Mr Clark said that the extent and severity of the cracking were elements to examine in determining whether short-term maintenance should be carried out. The Council made no attempt to determine the extent or severity of the cracking even though it knew that the pavement was at risk. The area particularly at risk was relatively small, and it is not possible to discern a valid reason for the Council's omission to take any care in this regard. 48 Thirdly, it does not appear that the cost of taking short-term maintenance measures would have been costly. The eventual cost to the Council in 1998 of implementing long-term measures was $100,064. It is likely that the cost of short-term maintenance over the 118m (that the March 1997 Douglas report indicated was subject to significant crocodile cracking) would have been far less. 49 In Brodie v Singleton Shire Council (2001) 206 CLR 512 Gaudron, McHugh and Gummow JJ said at 585, [180]: "[The Shire Council] did [not] lead evidence of reasons why it could not or did not carry out further work on the bridge. As Samuels JA put it, giving the judgment of the New South Wales Court of Appeal in Hill v Commissioner for Main Roads [(1989) LGRA 173 at 181] 'there was at least an evidentiary onus on the defendant to bring into contention the assertion that there were exculpatory economic circumstances which it might adopt as a shield'." See also Waverley Council v Ferreira (2005) Aust Torts Report 81-818 at 68, 083,[78]. These remarks apply to the same effect in the present case. 50 In my opinion the failure of the Council to take any measures to remove the foreseeable risk of harm caused by the pavement of Stennett Road breaking up in the area near Inglis Road was negligent. Accordingly, I would uphold the notice of contention and dismiss the appeal with costs. 51 TOBIAS JA: I agree with Ipp JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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