Supreme Court New South Wales Medium Neutral Citation: Bernadette Mills v GM Amalgamated Investments (Dulwich Hill) Pty Ltd & Anor [2013] NSWSC 519 Hearing dates: 11.03.13, 12.03.13, 13,03.13, 14.03.13 Decision date: 09 May 2013 Before: Nicholas J Decision: Par 42 Catchwords: REAL PROPERTY - easements - easement to drain water under s 88B Conveyancing Act 1919 - condition to restore surface of servient tenement to original condition - grantee authorised excavation work on easement - whether backfilling of trench defective and cause of damage to servient tenement - whether grantee liable for breach of condition to restore Legislation Cited: Conveyancing Act 1919 Real Property Act 1900 Cases Cited: Fanigun Pty Ltd v Woolworths Ltd [2006] QSC 28; (2006) 2 Qd R 366 Rhone v Stephens [1994] 2 AC 310 Category: Principal judgment Parties: Bernadette Mills - plaintiff G M Amalgamated Investments (Dulwich Hill) Pty Ltd - first defendant JM Associated Investments (Dulwich Hill) Pty Ltd - second defendant Representation: Counsel: F Corsaro SC/G Niven - plaintiff S Golledge - defendants Solicitors: Mills Oakley - plaintiff Somerset Ryckmans - defendants File Number(s): 08/282076 Judgment 1The plaintiff is the proprietor of the land contained in folio identifier 2101/1030519 at St Helens (the plaintiff's lot). The defendants are the proprietors of the adjacent property being the land contained in folio identifier 2113/1030519 (the defendants' lot). The defendants' lot adjoins the plaintiff's land along its northern boundary. The defendants are the owners of the dominant tenement under an easement to drain water over a strip of the plaintiff's land along the common boundary. In these proceedings the plaintiff, as owner of the servient tenement, claims damages against the defendants for loss caused by subsidence resulting from defective work done in the course of replacing drainage pipes within the easement. 2The defendants dispute the claims. They deny that the condition of the servient tenement was caused by defective workmanship when the pipes were replaced. Liability is also denied on grounds that the work was carried out by an independent contractor, alternatively, that the proceedings were commenced outside the statutory six year limitation period. Background 3In about 1969 the defendants acquired unimproved property at St Helens Park (lot 10) for development and subdivision. Since about 1995 Mr Samuel Mir has been the general manager of the defendants. In about 1996 Mr Mir arranged for Sheraton Homes Pty Ltd (Sheraton), a company related to the defendants, to engage Grinsell & Johns Pty Ltd (G&J), civil engineers, to design and undertake the subdivision of lot 10. 4In about July 2001 the plan of subdivision of the land in DP 1030519 (the plan) was registered. The easement with which these proceedings are concerned (the easement) was created upon registration of the plan. The plan included an instrument headed: "Instrument setting out terms of easements ... intended to be created pursuant to s 88B of the Conveyancing Act 1919". Part 1 of the instrument identified the easement as: "Easement to drain water 1.5 wide". Relevantly, the lot burdened is identified as lot 2101 and the lot benefited as 2113. Under s 88B(3)(c) Conveyancing Act 1919 (the Act) the easement was created upon registration of the plan. The instrument, as a dealing, was recorded under s 47 Real Property Act 1900 (the RP Act) with entries on the folios of the register for the land benefited and the land burdened. Upon registration the instrument has the effect of a deed (RP Act s 3(1), s 36(11). 5Pursuant to s 181A and Pt 3, Sch 8 of the Act the expression "easement to drain water" in the instrument is to be read as follows: "Part 3 Easement to drain water Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, from time to time and at all times to drain water (whether rain, storm, spring, soakage, or seepage water) in any quantities across and through the land herein indicated as the servient tenement, together with the right to use, for the purposes of the easement, any line of pipes already laid within the servient tenement for the purpose of draining water or any pipe or pipes in replacement or in substitution therefor and where no such line of pipes exists, to lay, place and maintain a line of pipes of sufficient internal diameter beneath or upon the surface of the servient tenement, and together with the right for the grantee and every person authorised by the grantee, with any tools, implements, or machinery, necessary for the purpose, to enter upon the servient tenement and to remain there for any reasonable time for the purpose of laying, inspecting, cleansing, repairing, maintaining, or renewing such pipe line or any part thereof and for any of the aforesaid purposes to open the soil of the servient tenement to such extent as may be necessary provided that the grantee and the persons authorised by the grantee will take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and will restore that surface as nearly as practicable to its original condition." 6The plaintiff purchased her lot in November 2001. In February 2002 she entered into a contract for the construction of a dwelling on the lot. Building work commenced in about February 2002 and was completed in about December 2002. 7During 2002 G&J determined that the drainage pipes should be unearthed and replaced with pipes of 2.5 metres diameter. In early October 2002 Sheraton, through Mr Mir as its managing director, contracted with Josa Pty Ltd (Josa) to carry out the work. 8By letter of 23 October 2002 to the plaintiff, G&J advised as follows: "We understand that you are the registered proprietor of lot 2101 DP 1030519 being no. ## ### ### St Helens Park. We are currently engaged by Sheraton Homes in the design and construction supervision of the estate under construction to the west of your property. In the course of these works we need to upsize a portion of the pipeline, as shown on plan herewith, laid within the easement burdening your property and benefiting the land currently under development upstream. We give you notice that we will instruct our contractors, JK Williams to, within the next 14 days, undertake these works under the terms of the 88b instrument creating the easement and to take all reasonable precautions to ensure as little disturbance as possible to your property and to restore the surface as nearly as practical to its original condition." 9Between November and 15 December 2002 the drainage work was carried out by Josa. The final stages of construction of the dwelling on the plaintiff's lot took place during this period and were completed by June 2003. 10By letter of 5 December 2002 to the plaintiff, Sheraton advised: "Pursuant to the notice given to you by Grinsell & Johns Pty Ltd consulting surveyors on the 23 October 2002, we confirm that upon completion of the implementation of the common drainage line, within the easement area of your property by the contractor. The surface and the boundary fence will be restored as nearly as practical to the original condition prior to work commencing." By letter of 5 December 2002 to Josa, Sheraton stated: "We refer to the site meeting and your subsequent fax this morning in respect to the above matter. We confirm our written advice given to Mrs Mills today, the owner of the above property, that the land surface and boundary fence will be restored as nearly as practical to the original condition prior to the commencement of the work. It is important that the trench is well compacted after back filling. However, should you have any further enquiry in this regard, please do not hesitate to contact the writer." 11The plaintiff took possession of the dwelling on about 15 December 2002. Thereafter she and her husband undertook work in the yard which included laying a concrete pavement across the whole of the site, and creating a garden bed on the northern boundary. Mr Mills carried out the concreting work for the pavement with the assistance of two other concreters. Laying of the concrete path commenced in early January 2003. Shortly after the concrete had cured it developed surface cracks over the whole of the pavement. Subsequently other cracks have continued to develop with differing degrees of severity. 12On 4 March 2003 G&J certified that the drainage works were situated within the easement. 13On 21 November 2003 the plaintiff sent Mr Mir a facsimile in the following terms: "Please be advised that my property lot 2101 is experiencing post easement works groung movement. This is due to not compacting the earth at the rear corner of my home was my house where the machine could not get in to compact apaoriately. You will recall the area of ground between my house slab and the boundary fence this area of my slab was undermined and your contactor whiles completing easement works on my property damaged plumbing. It is in the exact place where discussions between yourself and I took place in regards to if any damage is incurred to my property or home during these works that your would repair. Well now due to this I feel your presence is required to view this costly occourance of damaged concrete and brickwork due to ground movement of non-compacted grounds, which was discussed and your responsibility." 14By letter of 9 March 2006 to G&J the plaintiff referred to the letter to her of 23 October 2002, and notified it of a claim in respect of the work carried out within the easement. 15On 12 December 2008 the statement of claim was filed. The evidence 16The plaintiff said she observed the work which Josa carried out on the easement, including excavation and refilling. She estimated the depth of the trench was 1.8 metres. The work involved the use of a 20 tonne excavator. The trench was refilled with the use of the excavator, but the fill was not compacted. There was a quantity of excess earth taken from the trench which was graded off the easement and over the front of the plaintiff's lot, with the result that the level of the front of her lot was raised. 17The plaintiff also described the laying of the concrete pavement over her lot, including the easement. It was carried out by Mr Mills assisted by licensed concreters. For many years she and Mr Mills have operated a home improvement business which provides fencing, landscaping, and concreting services. He has been a licensed concreter for over 10 years, and she assists him in the business several days a week. 18The plaintiff gave detailed evidence of the preparation process which included levelling the surface, then laying and compacting road base to provide a firm basis upon which to lay the concrete. From about January 2003, after the concrete had cured, the plaintiff noticed widespread cracking in the surface, which has continued since then. 19Mr John James Forrest is a structural engineer whose business includes the conduct of forensic engineering investigation. He was retained as the plaintiff's expert, and provided a report dated 27 July 2011 (Ex B) following inspection of the plaintiff's lot in May 2011. The report included the following: "6.4 Based on my observations between 2004 and May 2011 and the evidence of location of pavements immediately after construction, there is evidence of very severe movement in the external pavement, landscaping and fences along the northern boundary and immediately adjacent to the easement through #68. 6.5 It is my opinion that in consideration of the type of defects to the improvements in this area, the movement is contributable to the lack of adequate compaction of backfill material within the easement as a consequence of the upgrade works. ... 6.14 Based on the performance of the concrete pavement, well beyond the Zone of Influence of the easement, there is no evidence to indicate that inferior sub-grade and/or sub-base preparation had been applied to any areas across the site. 6.15 The existence of surface cracking throughout the pavement is not a major structural concern or indicative of inferior pavement works. 6.16 However, the areas immediately adjacent to the easement and the excessive movement in these areas are indicative of inadequate compaction of fill material. ... 6.19 Based on standard engineering design parameters, the Zone of Influence of the easement to adjacent ground can be determined by a 45 degree line from the horizontal angled upwards from the base of edge of the easement. The ground above this Zone of Influence line is deemed to be of inferior quality and therefore, additional slab works are required. ... 6.24 Similarly, it appears that the upgrade works are likely to have impacted the performance of the pavement sub-grade below the pavement, landscaping and boundary fence adjacent to, and immediately above, the drainage easement. 6.25 It is clear that the improvements were constructed after the upgrade works and that inadequate performance of the backfill material within the easement is the predominant cause of the defects to the improvements along the northern boundary." He recommended that: "7.2 The external concrete pavement, landscaping and fencing immediately above and within the Zone of Influence of the easement should be removed and replaced. 7.3 To maintain the quality of the works, the extent of pavement replacement will need to be extended to suit existing slab joints and the ability to match the existing surface finish. 7.4 The compaction of the fill material within the easement should be assessed and re-compacted and/or consolidated to ensure that the YR50 condition and impacts to the dwelling and improvements are minimised." 20Mr Forrest explained that the fill material to which he referred in par 7.4 of his report was the material which replaced that taken from the trench. He said that on a visit to the plaintiff's lot in 2004, at a point from which the pavement had been removed, between the north western corner of the building and the boundary he pushed a crow bar by hand to a depth of about 1.8 metres. He said that this would not have been possible had the fill been properly compacted. In cross-examination he accepted that the greatest degradation of the pavement was near the games room at the north western corner adjacent to the boundary. He said that his investigation satisfied him that the procedure followed by Mr Mills in laying the pavement was consistent with standard procedure and good practice. He adhered to the view that the cracking was indicative of settlement at the trench. The conclusions expressed in his report were not challenged. 21Mr Geoff Young, a civil engineer and geotechnical consultant of 30 years experience, gave evidence of his inspection of the plaintiff's lot on 9 May 2011, and of the results of dynamic cone penetration tests at three locations there. Two tests (points nos. 1 and 3) were conducted outside the easement at the front and rear of the lot, and one test (point no. 2) inside the easement on the northern boundary. At another point (no. 4) inside the easement near the northwest corner of the dwelling a rod was pushed into the ground to depths greater than 0.5 metres without resistance. 22Mr Young's report dated 2 September 2011 (Ex D) included the following: "17 The significant damage was the settlement of the concrete slab near the north-western corner of the residence where there is evidence of settlement of up to 120 mm. There was also a void under the concrete slab near the northern boundary. (Refer Photos 5 to 9.) This suggests settlement of the ground. 18 On the outside of the residence there was cracking in the concrete slabs. In addition, the brick edging to the slabs was damaged in a few locations. Refer Photos 10 and 11. In the case of Photo 10, there is evidence of settlement of the slab on the right side near the easement along the northern boundary and the cracking also supports this observation ..." 23He said that the result of the test at point 2 indicated soft soil conditions in contrast to the very stiff to hard conditions found at points 1 and 3. The result at point no. 4 indicated that the soil had not been compacted and had a soft consistency. Mr Young observed (par 37) that the significant damage on the lot was located along the northern boundary. His report continued: "39 Based on some soft conditions in the easement area, voids under concrete slabs and evidence of settlement near the easement, the significant damage along the northern boundary is considered most likely to be caused by the settlement of poorly compacted backfill in the easement trench. ... 41 The normal practice for filling works is to place the filling in layers, for which the thickness is appropriate to the machinery being used, and compact the filling to the required density. As the area that was filled was a trench, only small compacting equipment such as a plate compactor would be suitable and the filling layers thicknesses would be expected to be about 200 mm or less. As the filling is compacted in layers, it is normally tested for compliance with the specification and project requirements. ... 43 Compacted clayey filling would be expected to have a consistency of stiff or better. 44 The easy probing near the easement area suggest that the filling has not been properly compacted as the consistency of the filling is typically soft. The poorly compacted clayey filling would have had a significant amount of voids between the 'lumps of clay'. As it rained or the filling became wet, water would have soaked into the ground, partly filling the voids, saturating the surrounding lumps of clay resulting in the clay becoming soft and behaving plastically. The overlying self-weight would cause the soft clay to squeeze into the voids, thus leading to settlement. The settlement has resulted in voids under the concrete slabs at the rear of the site and settlement of the concrete slab at the end of the long driveway. (Refer Photos 7, 8 and 15.) ... 46 It is therefore concluded that the damage along the northern boundary is most probably caused by poorly compacted backfilling of the easement trench which has settled over time. The damage includes settlement of the concrete slabs, especially near the north-western corner of the residence and cracking of slabs. The area of settlement is expected to be mainly within 1 m to 2 m of the edge of the backfilled trench. 47 As the filling is considered not to have been properly compacted, further settlement is expected to continue for years to come ..." 24In evidence, Mr Young explained that compaction may involve the use of a vibrating machine, and gave the following evidence (T p 81, l 19 - l 47): "Q. How do you operate it? A. Usually petrol or Diesel operated. You walk up and dawn compacting the ground. Q. 100 millimetres? A. 100, two hundred. Q. Then what happens? A. You either get it tested or sometimes you test it every second layer then one or two layers down and then get a density test in. Q. What is that? A. Usually get a technician from a geotechnical firm to come in and they check the density of the material because in trenches you need to compact the material a certain density. They are usually certain ratios. For trenches you normally require something like 95 percent density ratio. That is in the Australian standards. Then you would check that it has been compacted to that level being 1.2 metres deep and say 2 hundred millimetres layers at the maximum you have to have five layers compacted up to the surface. Q. Layer, compact, layer, and testing every two layers? Does the standard prescribe the type of test and how it is taken? A. It talks about a density tests usually talk about a nuclear densometer. Q. Putting a probe in the ground? A. Put a probe in the ground, take a sample back to lab. Q. What happened when this reaches ground level? A. You finish it off however you are required to do so on site." 25Mr Daniel Boubli, a civil engineer, was retained by the defendants to inspect the plaintiff's lot along the easement. His findings are recorded in the report of 24 August 2012 (Ex 2) following his visit to the lot on 29 June and 20 July 2012. The report includes his review and criticisms of the findings recorded in Mr Young's report. 26After meeting in conclave, Mr Boubli and Mr Young prepared a joint report dated 7 March 2013 (Ex F) which identified points of agreement and disagreement. Relevantly it was agreed that infiltration of water into the fill beneath the slab could cause settlement of the overlying slab. There was disagreement that the cause of the movement of the sections of the external concrete pavement, landscaping and fencing, adjacent to, and over, the easement along the northern boundary of the lot, was initiated by settlement of the backfill material within the trench excavation within the drainage easement, and that as a consequence of the easement excavation the strata above the 45º zone-of-influence line, from the invert of the pipe emanating from the edge of the easement, has been compromised (D3, D4). 27In cross-examination Mr Boubli acknowledged he was not a geotechnical engineer, and had undertaken no geotechnical investigation on site as he felt there was no need to do so. He accepted the expertise of Mr Young in this field, and the results in Mr Young's report. Mr Boubli's view was based on his interpretation of the penetrometer results recorded by Mr Young. He was provided with no information from Sheraton or anyone else as to any compaction of the soil when the work was done. He agreed that proper compaction within a trench usually requires compaction in layers. He said that loss of vertical stability in the side of a trench will affect material within the zone of influence which, in this case, would result in cracking. 28I accept the evidence of the plaintiff, Mr Forrest, and Mr Young, none of which was undermined in cross-examination, or otherwise. On the issue as to whether the movement and cracking of the concrete pavement adjacent to, and over, the easement along the northern boundary of the plaintiff's lot were attributable to the non-compacted condition of the backfill of the trench, I accept the evidence of Mr Forrest and Mr Young that this was the case over that of Mr Boubli who said it was not. I was entirely unpersuaded as to Mr Boubli's qualification and expertise in respect of soil and geotechnical science relevant to the questions in this case. Furthermore, his report and oral evidence demonstrated that his inspection and investigation of the lot were quite cursory, and his contrary opinion was the product of a difference of interpretation of the results of the tests recorded by Mr Young whose greater expertise he properly acknowledged. 29Mrs Mills' evidence was that an excavator was used to backfill the trench. Her evidence also establishes that the concrete pavement over her lot was laid over a properly prepared sub-base. Mr Forrest and Mr Young described the requirement for compaction to be part of the standard procedure for the carrying out of backfilling in a proper and workmanlike manner. The defendants adduced no evidence as to the work actually done in the process of backfilling and for the completion of the trench. That it was important that the trench be well compacted after back filling was stated in Sheraton's letter to Josa of 5 December 2002. The observations of Mrs Mills were not contradicted. Taken as a whole, the evidence supports the findings, which I make, that Josa failed to backfill the trench in accordance with good practice in the course of replacing drainage pipes within the easement. I also find that this failure caused the subsidence and settlement of the surface and soil under the concrete pavements on the plaintiff's lot along the boundary adjacent to, and over, the easement, which has resulted in the continuing process of cracking of the pavement. 30Mr Samuel Mir, the general manager of the defendants, gave evidence of the relationship between the defendants, Sheraton, and G&J as to the development of the subdivision. He also gave evidence of the circumstances in which Josa was engaged to undertake the drainage work on the easement. The evidence is summarised earlier, and it is unnecessary to refer to the detail. It establishes that, in carrying out the work, Josa was acting as an independent contractor under a contract with Sheraton. Determination 31The determination of the defendants' liability for the plaintiff's loss occasioned by Josa's defective workmanship turns on the proper construction of the terms of the easement. The terms are set out in full in par 5 above. Relevantly, the rights of the defendants as owners of the dominant tenement, lot 2113, are as follows: "Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement ... and every person authorised by that person, from time to time and at all times to drain water ... across and through the land herein indicated as the servient tenement, together with the right to use, for the purposes of the easement, any line of pipes already laid within the servient tenement for the purpose of draining water or any pipe or pipes in replacement ... therefor ... and together with the right for the grantee and every person authorised by the grantee, with any tools ... or machinery, necessary for the purpose, to enter upon the servient tenement ... for the purpose of laying ... maintaining, or renewing such pipe line or any part thereof and for any of the aforesaid purposes to open the soil of the servient tenement to such extent as may be necessary provided that the grantee and the persons authorised by the grantee will take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and will restore that surface as nearly as practicable to its original condition." 32The grant permits the owner of the dominant tenement, and every person authorised by it, from time to time and at all times to drain water across and through the servient tenement. For that purpose such owner, and its authorised person(s), are permitted to enter upon the servient tenement and carry out necessary work for laying, maintaining, or replacing drainage pipes and, for that purpose, to excavate to the extent necessary. 33The right of the authorised person to enter and work upon the servient tenement depends upon demonstration that it was authorised to do so by the grantee/owner of the dominant tenement. In this case, the defendants accepted that Josa was a person authorised by them within the meaning of the easement. 34The grant is subject to a condition in terms of the proviso, namely: "... that the grantee and the persons authorised by the grantee will take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and will restore that surface as nearly as practicable to its original condition." 35Upon its proper construction, the condition is binding upon both the grantee and the authorised person(s). It operates to impose upon both the grantee and its authorised person(s) the obligations to take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and to restore that surface as nearly as practicable to its original condition. The defendants' acceptance of these obligations is reflected in Sheraton's letters of 5 December 2002 to the plaintiff and to Josa. 36So far as concerns the grantee, the condition is binding for as long as it remains the owner of the dominant tenement. In terms, the condition is unqualified, and operates irrespective of whether it was the grantee or the authorised person which carried out the work. It follows, in my opinion, that the nature of the legal relationship between the grantee and the authorised person is irrelevant to the issue of liability of the grantee for breach of the condition. This conclusion renders it unnecessary to determine the issues of the defendants' liability with regard to the law of vicarious liability for Josa's defective workmanship. 37In this case, the defendants continue to enjoy the benefit of the easement and are bound by its conditions (s 36(11) RP Act). It may be said that the condition is in the nature of a burden which is relevant to the exercise of the right, so that the burden is enforceable against a party who is entitled to exercise the right that is subject to the condition (Fanigun Pty Ltd v Woolworths Ltd [2006] QSC 28; (2006) 2 Qd R 366 par 98; Rhone v Stephens [1994] 2 AC 310, pp 322-323). 38The plaintiff has the right to seek relief against the defendants for breach of the condition. She alleges breach by reason of their continuing failure to restore the surface of her lot as nearly as practicable to its original condition. Contrary to the defendants' submission, in my opinion, the obligation of restoration extends to rendering the surface as nearly as practicable in the circumstances to the condition in which it was prior to the commencement of the excavation work. In other words, it requires doing such work as may be necessary to bring the surface of the plaintiff's lot back to its normal condition. 39The evidence establishes that when Josa finished the work, by reason of the failure to compact the backfill, the surface of the plaintiff's lot was left at risk of subsidence, a condition which did not exist before the work commenced. Since then the risk has eventuated, and subsidence has occurred. The situation of subsidence is a continuous state of affairs. Although Josa carried out the work, the defendants have suffered the work to remain defective, and have taken no steps to remedy it. Left unremedied, as is the case, subsidence of the surface of the plaintiff's lot, and the risk of subsidence, continues. It follows, in my opinion, that the plaintiff has established continuing breach of the conditions of the easement by the defendants, and is entitled to the relief she claims. 40As I have found the breach is continuing the cause of action for breach accrues continuously so that a statutory limitation period does not apply. 41It was agreed that the amount of damages to be awarded to the plaintiff for the cost of remediation of the concrete pavement was the amount of $106,323.15. Conclusion 42It is ordered that: (1)There be a verdict for the plaintiff in the sum of $106,323.15 and judgment accordingly. (2)The defendants' pay the plaintiff's costs of the proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 May 2013