New South Wales Supreme Court CITATION : Piling v Prynew Nemeth v Prynew [2008] NSWSC 327 HEARING DATE(S) : 26/02/2008 JUDGMENT DATE : 14 April 2008 JURISDICTION : Equity Division JUDGMENT OF : Macready AsJ at 1 CATCHWORDS : Building & Construction. Adoption of Referee's Report as to negligence in respect of excavation. - Torts - apportionment. PARTIES : Piling Contractors (Qld) Pty Limited v Prynew Pty Limited Ferdinand Nemeth & Anor v Prynew Pty Limited and 2 Ors FILE NUMBER(S) : SC 55019/03; 55037/03 Mr SM Kettle for Piling COUNSEL : Mr J Simpkins SC for Prynew & Tsu Mr JE Robson SC & DS Weinberger for Nemeths Mr A Hewitt SC & P Dodson for QBE Thompson Cooper Lawyers for Piling SOLICITORS : Avendra Singh & Co for Prynew and Tsu Salim Rutherford Lawyers for Nemeths Curwood & Partners for QBE - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST Associate Justice Macready Monday 14 April 2008 55019/2003 Piling Contractors (Qld) Pty Limited v Prynew Pty Limited 55037/03 Ferdinand Nemeth and Virginia Nemeth v Prynew Pty Limited, Peter Tsu and Piling Contractors (Qld) Pty Ltd JUDGMENT NO 2 1 His Honour: On 26 February 2008 I gave judgment in this matter. At paragraph 145 of the judgment I saidI would decide the question whether the first and second defendant were negligent by reference to the evidence which existed before the Referee. 2 I called for submissions on this aspect from all parties. Apart from the plaintiffs, Ferdinand Nemeth and Virginia Nemeth, in matter 55037/2003, I have received submissions from all the parties. 3 My reason for doing this is set out in paragraphs 142 to 145 in my earlier judgment which were as follows: "142. Although the Referee found the failure to set out was negligent she did so on the wrong basis but the fact of the matter is that as a result of her factual findings there was a set out of the pile 122 at an incorrect location. This leaves open for consideration support for the Referee's conclusion of negligence without relying upon the failure to use surveying equipment or surveying techniques. Obviously the set out of the piles at the right locations is critical to the success or failure of the construction of a contiguous wall and a failure in this respect could be classified as negligent. 143. It is plain that the Referee regarded correct set out as fundamental in this project. As I have mentioned Mr Malicia and Mr Little were not called to give evidence. On the evidence they were the men who did the pegging and, given the evidence to this effect, they could have provided answers in respect of the faulty pegging. They are non-party witnesses but in my view it would be natural for the first and second defendants to call them. Plainly their evidence as to what happened on 5 June 2001 would have shed some light on the matter. In my view their evidence would not have assisted the first and second defendants. 144. It is open to the Court to decide any matter on the evidence taken before the referee without any additional evidence and the motion of the first and second defendants invites that approach in relation to whether the first and second defendants breached their duty of care. 145. What happened here is something that would not ordinarily happen in the construction of a contiguous piling wall. The occurrence bespeaks negligence and the evidence points to two separate breaches of care by the defendants. The first and second defendants were responsible for setting out the location of the piles and the referee has found that this was not done correctly. Given the Referee's view of the fundamental importance of correct set out it is arguable that the first and second defendant breached their duty of care in this respect. I will decide the matter by reference to the existing evidence before the Referee and I will give directions for written submissions on this point." 4 Regarding my reference to Mr Malicia at paragraph 143 it has been drawn to my attention that there was an explanation for his absence. At paragraph 231 the Referee concluded that there was a sufficient explanation for a failure to call him and she would not make an adverse inference against that failure. There was no challenge to this finding and therefore if any adverse inference were available about the failure to call a witness it would only be the failure to call Mr Little. 5 On the evidence it is plain that it was either Mr Malicia, Mr Little or a combination of the two men who did the re-pegging. I have already concluded at paragraph 139 that the Referee was correct to have inferred that there was a re-pegging at an incorrect location. As one cannot determine which of the two men did the re-pegging no adverse inference about the failure to call either one of them can be made. 6 The question is whether one can infer negligence by reason of the process of reasoning which is described by the doctrine of res ipsa loquitur. In Metrolink Victoria Pty Ltd v Auspro Logistics Pty Ltd [2008] VSC 23 a case referred to by Prynew and Tsu in their submissions Kaye J said:- "[19] At the hearing before the magistrate, and on appeal, Metrolink relied solely on the reasoning described by the maxim res ipsa loquitur, in contending that the magistrate, on the no case submission, should have reached the conclusion that there was evidence on which she was entitled to make a finding of negligence against the defendant. In response, Mr Purvis submitted, both before the magistrate and on appeal, that there was no evidence at all before the magistrate which would have entitled her to apply res ipsa loquitur. [20] The phrase res ipsa loquitur does not encapsulate an independent legal doctrine or principle of law, but, rather, describes a particular process of reasoning which may be adopted by a court in certain circumstances where a plaintiff seeks to establish negligence on behalf of a defendant. Essentially, it is invoked where a plaintiff is unable to adduce affirmative evidence as to how or why a particular accident, in consequence of which the plaintiff has suffered injury, has occurred. Where the plaintiff is able to show that he or she has suffered injury as a result of an accident which, in ordinary circumstances, would not have occurred but for negligence on the part of the defendant, the plaintiff is entitled to rely upon the proof of the happening of that accident as evidence of the negligence of the defendant. The proof of that accident does not shift the primary onus of proof from the plaintiff. Indeed, the process of reasoning described by the maxim res ipsa loquitur is a process which the Court may, but is not obliged to, employ in a particular case. [21] In essence, a court is entitled to adopt the process of reasoning described by the maxim where the court concludes, first, that the accident by reason of which the plaintiff was injured was of such a kind that it does not ordinarily occur without negligence, secondly, that there is an absence of explanation for the occurrence which caused the injury, and, thirdly, that the instrument or agency which caused the injury to the plaintiff was at the relevant time under the control of the defendant. In Mummery v Irvings Pty Ltd, Dixon CJ, Webb, Fullagar and Taylor JJ, in their joint judgment, emphasised the importance of the first condition, to which I have just referred. Their Honours stated: … to overlook or to exclude this requirement might well be thought to produce the result that mere proof of any occurrence causing injury will constitute sufficient proof of negligence in any case where an object which, physically, has caused injury to the plaintiff is under the control and management of the defendant and the actual cause is, therefore, not known to the plaintiff and is, or should be, known to the defendant. The requirement that the accident must be such as in the ordinary course of things does not happen if those who have the management use proper care is of vital importance and fully explains why in such cases res ipsa loquitur. [22] The question, therefore, which the magistrate was required to answer, on hearing the no case submission, was whether Metrolink had adduced evidence as to the happening of an accident, as a result of which Metrolink had suffered damage, which a tribunal of fact could (not necessarily would) conclude was of such a kind that it does not ordinarily occur without negligence. In other words, was there sufficient evidence before the magistrate as to the happening of the accident which would have left it open to the magistrate to legitimately conclude that the accident was of such a kind that it would not have ordinarily occurred without negligence on behalf of Auspro's driver? [23] In considering that question, it is important to bear in mind that Metrolink's case was essentially based on an inference. In order to succeed, Metrolink was required, ultimately, to persuade the Magistrates' Court that, in the factual circumstances proven by it, the more probable inference was that the accident was the result of negligence by the driver of Auspro's vehicle. In order to give rise to such an inference, Metrolink was required to prove sufficient facts on which such an inference might be properly based. Otherwise, and in the absence of the proof of such facts, the process of reasoning relied upon by Metrolink would have been no more than guesswork or speculation. [24] As I have stated, Metrolink relied on the proof by it of the happening of an accident which, Metrolink contended, was of a kind that does not ordinarily occur in the absence of negligence by the driver of the vehicle which collided with the bridge. In order to found such an inference, which lay at the heart of that case, Metrolink was obliged to adduce evidence of sufficient facts in order to enable the Court to reach the conclusion that the accident was of a kind which would not ordinarily occur in the absence of negligence by the driver of the truck involved in it. In this context, there was an extraordinary paucity of evidence adduced by Metrolink. Metrolink adduced no evidence as to the actual layout of the scene, such as evidence as to the nature, shape or dimensions of the bridge, or of the road leading to it. Metrolink led no evidence as to what part of the bridge was struck by Auspro's vehicle. Metrolink called no evidence as to what part of the truck collided with the bridge. Thus, Metrolink's case, of necessity, was based on the bald (if not bold) proposition that any collision by any part of any truck with any part of any bridge is an occurrence which would not ordinarily occur without negligence by the driver of such a vehicle. [25] The question, then, is whether Metrolink called sufficient evidence upon which the magistrate should have concluded that, as the tribunal of fact, she could (not necessarily would) find that the accident was of a kind which does not ordinarily occur in the absence of negligence by the driver of the vehicle which collided with the bridge. In my view, in the entire absence of any evidence, other than the fact of a happening of a collision with a bridge by a truck, there was no evidence on which the magistrate, as the tribunal of fact, might, or was entitled to, reason — other than by way of guesswork or speculation — that the accident so proven was of a kind which ordinarily would not have occurred other than through the negligence of the driver of Auspro's truck. It would and could be no more than speculation to assert, without more, that any collision by any part of any truck with any part of any bridge, is a collision which would not ordinarily occur without negligence on the part of the truck driver. In order that such an assertion be the result of a legitimate process of reasoning, there must be some evidence which could entitle a Court to reason — not guess — that the collision proven by Metrolink was of a kind which would not ordinarily have occurred but for the negligence of the truck driver. Thus, in my view, Metrolink failed to adduce sufficient evidence to form a legitimate basis for the type of reasoning described by the maxim res ipsa loquitur. It follows that, on the no case submission, the only conclusion which could have been open to the magistrate was that she would not, as the tribunal of fact, have been entitled to rely on the line of reasoning described by that maxim. In the absence of any other evidence as to the happening of the accident, it follows that the magistrate was bound to find that there was no case to answer on the issue of negligence." 7 In their most recent submissions Prynew and Tsu made the following points: "On the facts as determined by the Court, Tsu has no liability for the acts or omissions of Malicia and Little in carrying out the pegging. His mere directorship of Prynew is insufficient. The employer was Prynew, not Tsu. The evidence, therefore, merely established that Little may or may not have done the re-pegging. Prynew bore no evidentiary onus to call all the people who were possibly involved. " 8 On the first point the evidence only points to Prynew doing the work and there is no evidence that Mr Tsu had an active role in the set out of the pegs. In these circumstances any responsibility is that of Prynew alone. The fact that Mr Tsu is a director is of no consequence. 9 On the second point it is plain that there was a re-pegging by Prynew and that that led to the pile being in the wrong position. This is painfully apparent when one looks at the photographs and sees how the pile has deflected and the gap left by the failure to peg it at the location of the short pile to ensure that the short pile was re-drilled. It seems to me that this accident is of such a nature that it would not ordinarily occur without someone's negligence. The set out was critical and was under the control of Prynew who gave no explanation for the position and deflection of the pile. 10 In submissions Prynew suggested the following: "For all one knows the pegging may have involved partial reliance on the location of previously constructed piles. If that is so, an inaccurate pegging for the location of Pile 122 could easily have occurred without Prynew's negligence; the position being based on the grout that Piling had negligently permitted to escape and form a plug." 11 The problem is that there are no facts which would provide any basis for such an inference or indeed any other reason which might explain the re-pegging. 12 There were plainly two separate acts which were negligent. One was the incorrect re-pegging and the other was the creation of the short pile in the first instance. 13 In my view the Referee was correct in her conclusions that Prynew was negligent. 14 The next matter is the question of apportionment. 15 As I mentioned at paragraph 178 of my earlier judgment the Referee's conclusions and her reasons on the apportionment question were at paragraph 821 in the following terms: 821. The Piling breaches that led to the subsidence were limited to the construction of the short pile. In this, Prynew and Tsu shared a responsibility. Prynew and Tsu were also liable for their failure to seek advice from the design engineer and, therefore, the consequences of not carrying out advice that otherwise would have been provided. They were, therefore, responsible for continuing to excavate without plugging the short pile and for their continued failure to seek advice from the design engineer when rain was forecast and when it commenced and the consequences of this. They, therefore, shared a greater responsibility than Piling. The construction of the short pile created the problem and for this I find Piling to be 50% responsible and Prynew and Tsu to be 50% responsible. Once the problem was unearthed, the failure to seek and follow advice from the design engineer led to the subsidence. For this, I found Prynew and Tsu to be 100% responsible. In my view, under section 109ZJ of the Environmental Planning and Assessment Act 1979, having regard to their relative culpability and the seriousness of their breaches, a just an equitable split of the damages payable to Nemeth is Prynew / Tsu 75% and Piling 25% and I so find. 16 In respect of the apportionment between Prynew and Tsu the Referee's conclusion at paragraph at 825 was as follows: "825 The registered proprietors of 44 Mona Road, Darling Point were Mr Tsu, who held a 30% share and Prynew, who held a 70% share, as tenants in common (exhibit D8 paragraph 2) . As an owner of the property, when involving himself at the site, Mr Tsu was acting in his own interest as well as that of Prynew. Accordingly, I consider the most equitable apportionment of liability is in the same proportion as their respective ownership, i.e. Tsu 30% and Prynew 70% and I so find." 17 Having regard to my findings that only Prynew was negligent in respect of the short pile, the facts are now different from what the Referee said in the second and sixth sentences in paragraph 821. In their earlier submissions Prynew and Tsu suggested that the Referee's apportionment wrongly assumed that the two matters (negligent construction and negligent failure to repair) were entitled to equal weight. It was submitted that but for the defective construction there would have been no occasion to address the question of repair and that the Referee ought to have apportioned on the basis that the potency of negligent construction was far greater than the failure to repair that construction. What this submission overlooks is that the failure to repair was a substantial matter. If there had not been a failure to repair then no damage would have occurred to the Nemeth's house. In the circumstances it seems to me that the Referee's apportionment was appropriate. 18 The fact that only Prynew was responsible for the defective construction aspect does not detract from this conclusion. However, it does have an affect on the Referee's apportionment as between Prynew and Mr Tsu. In my view it is appropriate to adjust her findings to 25 percent to Mr Tsu and 75 percent to Prynew. 19 In written submissions QBE did not address the matters I had called for submissions. Instead they took the opportunity to raise a question which was whether I had overlooked a particular matter in my judgment. This was said to be the Referee's findings at paras 859, 861 and 862. 20 In respect of the direction said to flow from para 861 of the Referee's report what the Referee was referring to in the third sentence is unclear. It might have been a reference to what she said in either para 854 or 860. If it was para 854 it was not a direction in the correct sense of that word and if para 860 it was, as I have pointed out, irrelevant on her findings. 21 In respect of the direction said to flow from paras 859 and 862 it is plain that: (a) There was no request for a direction. (b) There was no finding as to when any doubt arose let alone a doubt before the first subsidence. (c) The Referee seemed only to rely on the failure to comply with the 2 August 2001 direction. 22 In these circumstances I do not propose to make any change to my earlier judgment even if it were appropriate for such a procedure to be followed. 23 I direct the parties to bring in short minutes and directions in respect of the cross-claim between QBE and Prynew. 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