De Pasquale Bros Pty Ltd v Cavanagh Biggs & Partners Pty Ltd & Anor [1999] QSC 171 [2000] 2 Qd R 461

IN THE SUPREME COURT OF QUEENSLAND Brisbane Before the Hon. Mr Justice Chesterman BETWEEN: AND: AND: BETWEEN: AND: AND: AND: No. 1358 of 1991 DE PASQUALE BROS PTY LTD ACN 009 743 499 Plaintiff CAVANAGH BIGGS & PARTNERS PTY LIMITED ACN 010 279 777 First Defendant TASMAN CONSTRUCTIONS PTY LTD ACN 009 815 874 Second Defendant No. 2026 of 1991 NJF HOLDINGS PTY LTD ACN 009 910 481 Plaintiff DE PASQUALE BROS PTY LTD ACN 009 743 499 First Defendant CAVANAGH BIGGS & PARTNERS PTY LTD ACN 010 279 777 Second Defendant TASMAN CONSTRUCTIONS PTY LTD ACN 009 815 874 Fourth Defendant REASONS FOR JUDGMENT- CHESTERMAN J Judgment delivered 23 July 1999 CATCHWORDS: CONTRACT- implied terms- breach- whether engineer had breached an implied term to exercise reasonable care in designing the building. STATUTE - interpretation - Property Law Act 1974 s. 179 - whether the statutory obligation not to remove support from buildings is the same in scope and content as the common law obligation with respect to natural land - categories of persons liable for contravention of section. Copy made by the Supreme Court Library Queensland for the purposes of research or study 26th August 2015 -- 1 of 27 -- Counsel: Solicitors: Hearing Date: NUISANCE- causation- whether engineer "created" the nuisance (loss of support). NEGLIGENCE - reasonable foreseeability of damage - duty of care - whether engineer's failure to engage geotechnical consultants amounted to negligence - economic loss - whether damage was physical or economic loss. DAMAGES - assessment of damages - whether expenditure not incurred by reason of negligence should reduce the award of damages. Mr C Hampson QC & Mr J Houston for the plaintiff (action no. 2026/91) Mr R Perry for the plaintiff (action no. 1358/91) and first defendant (action no. 2026/91) Mr J Cavanagh appeared in person for first defendant (action no. 1358/91) and second defendant (action no. 2026/91) Mr Masinello (sol) for the second defendant (action no. 1358/91) and fourth defendant (action no. 2026/91) Marsdens for the plaintiff Clarke & Kann for the plaintiff and first defendant Mr J Cavanagh appeared in person Masinello & Associates for the second and fourth defendants 19, 22-25 March; 28, 30 June; 1-2 July 1998. -- 2 of 27 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane Before the Hon. Mr Justice Chesterman BETWEEN: AND: AND: BETWEEN: AND: AND: AND: No. 1358 of 1991 DE PASQUALE BROS PTY LTD ACN 009 743 499 Plaintiff CAVANAGH BIGGS & PARTNERS PTY LIMITED ACN 010 279 777 First Defendant TASMAN CONSTRUCTIONS PTY LTD ACN 009 815 874 Second Defendant No. 2026 of 1991 NJF HOLDINGS PTY LTD ACN 009 910 481 Plaintiff DE PASQUALE BROS PTY LTD ACN 009 743 499 First Defendant CAVANAGH BIGGS & PARTNERS PTY LTD ACN 010 279 777 Second Defendant TASMAN CONSTRUCTIONS PTY LTD ACN 009 815 874 Fourth Defendant REASONSFORJUDGMENT-CHESTERMANJ Judgment delivered 23 July 1999 These two actions were heard together. The plaintiff in action 2026 of 1991 ("NJF") and the plaintiff in action 1358 of 1991 ("De Pasquale") were the owners of adjoining properties on which were erected commercial buildings. Both buildings have their frontage onto Stafford Road at Stafford. They form part of a retail/commercial complex on the northern side of Stafford Road. NJF's building ("the first building") was the older. Its main -- 3 of 27 -- 2 load bearing walls are brick and form the east and west boundaries of the site. The walls extend down to concrete strip footings poured in a trench excavated during construction. The ground floor is a concrete slab. 2 Immediately to the west of the first building is the one owned by De Pasquale ("the second building"). It was built in the first half of 1986 on what had been vacant land. It is brick and concrete. The ground floor is level with the footpath in Stafford Road and consists of a suspended concrete slab. Beneath that is a basement which is given over to a car park. 3 The second building was designed by Cavanagh Biggs & Partners Pty Ltd ("Cavanagh Biggs"). It was built by Tasman Constructions Pty Ltd ("Tasman"). 4 The first building suffered relatively minor damage in the nature of cracking to the western brick wall and internal fittings during the excavation for and construction of the second building. It suffered serious structural damage about two years later, in the second half of 1988. In its action NJF sought damages against De Pasquale for breach of section 179 of the Property Law Act 1974 or, alternatively, for negligence and/or nuisance. As well it claimed a mandatory injunction requiring De Pasquale to carry out such work as was necessary to repair its premises and to provide adequate support for its building. As against Cavanagh Biggs & Tasman, NJF sought damages for negligence. 5 In the same action De Pasquale sought against Cavanagh Biggs damages for negligence and/or breach of contract to reimburse it for any sum for which De Pasquale was found to be liable to pay NJF. 6 In its action, 13 58 of 1991, De Pasquale alleges that its building has been damaged by reason of a lack of support in the ground in which its foundations were laid. It claims that Cavanagh Biggs is responsible and seeks damages for breach of contract and/or negligence. -- 4 of 27 -- 3 7 After the trial had run for a number of days, a compromise was reached involving all parties save Cavanagh Biggs. De Pasquale has promised to reinstate the first building in an agreed manner, or to pay an agreed amount for the reinstatement. NJF, however, maintains its claim for damages against Cavanagh Biggs and De Pasquale maintains its claim for contribution or indemnity against Cavanagh Biggs in respect of its compromise with NJF. In addition, De Pasquale persists in its action for damages against Cavanagh Biggs for the cost of restoring the second building. Helpfully, the nature and extent of the remedial work necessary to reinstate both buildings and the cost of effecting that work has been agreed by all parties, including Cavanagh Biggs. The only question that remains for the Court's adjudication is whether Cavanagh Biggs is liable to pay the agreed amounts to NJF and/or De Pasquale. 8 The damage to the two buildings has a common cause. The ground into which their foundations are laid lacks the capacity to support them in an area a few metres north of the Stafford Road frontage near where the buildings adjoin. The brick work of the western wall of the first building has settled causing substantial cracking and distortion. Two concrete columns meant to support the concrete slab and beams of the second building in that vicinity do not in fact carry any load, because the ground beneath them is too soft. 9 I largely accept the explanation for the phenomenon of lost support given by Mr Philp. The ground in which both buildings have been constructed is clay overlaying deeper rock which is fractured and porous. The rock is water bearing. The water is under pressure. The depth of the clay which overlays the rock, five to six metres, was sufficient to keep the water confined within the rock aquifer. When the second building was constructed the ground was excavated to provide space for the basement car park. The ground slopes upwards from Stafford Road to the north, so that the deepest part of the excavation, about 3.8 metres, was -- 5 of 27 -- 4 close to Stafford Road and adjacent to the first building. The excavation reduced the thickness and therefore the effectiveness of the impermeable clay cap over the aquifer. Forced upwards by the artesian pressure, water permeated to the surface in the south eastern comer of the second building. When moist, clay tends to become plastic. The volume of water percolating to the surface was enough to tum the clay into mud with the consistency of a viscous liquid. In this state the clay was incapable of supporting any weight. It was possible to push a metal rod two metres into it without meeting resistance. Moving roughly concentrically away from the route of the water from aquifer to surface, there was a zone of clay reducing in stiffness as a function of proximity to the spring. That is, the ground was softest at the spring but became firmer the further away it was from the spring. Because the soil where it had turned to mud lacked cohesion and stiffness, the adjoining soils under load (i.e. where they supported buildings) moved downwards and laterally towards the softened area. This accounts for the settlement of part of the western wall of the first building and the loss of support beneath the columns in the second building. 1o The case against Cavanagh Biggs is that it did not undertake any geotechnical investigation of the soil conditions underlying the site of the second building and that, had it undertaken such an investigation, the presence of an underlying artesian aquifer would have been detected. The existence of such a phenomenon would have been recognised as a problem which, with appropriate action, could have been overcome. To excavate in ignorance of the lurking aquifer is said to have been careless. 11 In my opinion this case is made out, but it is necessary to address it in more detail. In 1982, Cavanagh Biggs had been approached by De Pasquale about constructing a building on the site. Mr Cavanagh wrote to Coffey & Partners, a firm of geotechnical consultants on 23 July, 1982:- -- 6 of 27 -- 5 " ... we request that a site investigation involving a report on the foundation material at the site of the proposed development ... as shown on the attached drawing ... The scope of the work be carried out by your company include:- 1. Determine the most suitable method and details for supporting the adjacent building by excavations are carried out for the ... foundations of the proposed building. 2. Foundation investigation to determine the most suitable footing for the columns including depth and bearing capacity for the foundations." 12 On 29 July, 1982, Coffey & Partners replied: "We can carry out an investigation at the above site as required by your letter of23rd July. It is intended to auger drill five holes to a probable maximum depth of 4 or 5 metres ... our estimate of costs and fees is ... $1 634. If you have any queries or wish to alter the scope of this investigation ... please contact ... our Brisbane office." 13 In October 1982, Cavanagh Biggs obtained a quote for similar investigative work from Hollingsworth Consultants, another firm of geotechnical engineers who wrote: "Following discussions with you during the site visit on 22nd October, 1982, we understand that the scope of the work is to include foundation investigations, assessment and recommendations for excavation, retaining walls and particularly the support of adjacent building foundations. GEOLOGY A preliminary review of the local geology indicates that the site is located close to the boundary of an outcrop revealing the disconformity between the Neranleigh- Femvale Group overlain by the Brisbane Rhyolitic Tuff. The tuff in this area is welded and blocky in outcrop. A characteristic of the tuff in other areas is to have a damp and weak basal zone associated with this basal zone is a zone of 'weathering' on the upper surface of the Neranleigh - Femvale Group. If such a zone were encountered at the Stafford Road site, the investigation may have to be expanded ... The proposed programme would be .. 1) Inspection of existing foundations ... via three excavations created by a backhoe .... " -- 7 of 27 -- 6 14 Neither firm was engaged. Mr Cavanagh explained that he thought geotechnical testing was unlikely to be necessary, but he resolved to postpone a decision on the question until the site had been excavated and the nature of the soil revealed. The excavation showed that the site consisted of very firm or stiff clay which Mr Cavanagh considered to be adequate to support the design loads for the building. This assessment is not challenged. The clay into which the foundations were laid was more than adequate to support the structure. What Mr Cavanagh did not allow for was the sapping of the support offered by the clay by the effect of the artesian water. 15 Mr Philp's opinion was that a geotechnical investigation of the site should have been commissioned as part of the design process for the building. He explained (T589.20-.60): "The information that you are after is really to understand the geology of the site, and in understanding the geology ... look at the particular materials that you are going to excavate ... and the particular materials you are going to found on for bearing strength, and also to observe ground water conditions ... if the bore holes had been 5.2 or 5 or 6 metres deep, you would have intersected the water bearing aquifer ... [Would] the sort of investigation that might have been commissioned ... have shown that there was water under pressure from the rock? - It would at the end of the site investigations ... If you ... detected water under pressure, should that have rung alarm bells?- Yes Is the mechanism you have described common or frequently encountered? - ... artesian ground water conditions ... are commonly known. You don't strike them everywhere. But they are well-known? ... That's a better phrase, well-known.'' 16 The opinion of Dr Stocker, in his report of February 1999 was that: "The need for geotechnical investigation appears to have been well recognised. In July 1982 Mr John Cavanagh ... invited the two leading local geotechnical consultancies at the time .... to submit proposals for a site investigation ..... " -- 8 of 27 -- 7 Dr Stocker then referred to the letter from Hollingsworth Consultants from which I quoted in paragraph 13 of these reasons and continued: "Despite these two assessments of the level of investigation needed, and the clear warning that this was likely to be a problem site and ... that it was clear that the problem may arise from materials at lower levels than the proposed excavation would reveal, neither Cavanagh Biggs .. . sought geotechnical advice." 17 Mr Cavanagh, on behalf of his company, contended that it was not negligent not to have commissioned a geotechnical investigation of the site, because such an investigation would not have revealed the problem that subsequently developed. He claimed he would have had three bore holes drilled, none of which would have been in the south east comer because it was not a load bearing area. 18 Dr Stocker had a complete answer: " ... Mr Cavanagh had already been advised by geotechnical consultants that the investigation would comprise more than drilling of three holes - Hollingsworth Consultants explained why clearly, and the scope of Coffey's proposal work was commensurate with a more intensive study. There appear to be a total lack of understanding of why geotechnical investigations are performed. They are not performed simply in the vague hope of accidentally finding any anomalies. They are conducted:- • to discover the geological structure of the site • to measure existing soil and rock properties • to establish ground water levels/pressures ... the question remains: would a proper geotechnical investigation have identified the problems inherent in excavating the site. The question is not whether the damp area ... would have been detected ... The exact nature of the problem that emerged and its initial location would be unlikely to be identified. However, both the consultant firms approached in 1982 would have been well aware of the generic problems likely to arise on the site ... In my opinion the risks would have been identified. The geology of the site would have been identified in detail, revealing the potential for problems. The artesian pressures would have been measured ... the need for extensive subfloor drainage works could have been identified. In turn, the risk of this causing soil softening would have been identified ... The severe risk of softening of the foundation soils and loss of bearing capacity would have been identified." -- 9 of 27 -- 8 19 Mr Cavanagh explained that his relationship with De Pasquale was one of general advisor in relation to questions of engineering. He provided engineering design and inspection services to De Pasquale on a number of projects. De Pasquale relied upon him, to his knowledge, not just for advice on matters within Cavanagh Biggs' own field of expertise, but in relation to what other advice should be obtained. Mr Cavanagh, during submissions, conceded very fairly that De Pasquale relied on him for expert advice with respect to its developments and would accept his advice without reservation. Had Mr Cavanagh recommended geotechnical investigation of the site, his recommendation would have been accepted. The cost of performing the investigation would not have been an obstacle. I think it is clear that Mr Cavanagh endeavoured to save his client's money, and I have no doubt De Pasquale encouraged him in that attitude. Nevertheless, Mr Cavanagh accepts that had he recommended site investigation it would have occurred despite the cost. 20 In these circumstances it seems to me there was no good reason why a geotechnical investigation should not have been commissioned, and persuasive reasons why one should have been. Mr Cavanagh's assessment of the suitability of the soil revealed by excavation was misguided for the reasons advanced by Mr Philp. What he saw in the excavation was no guide to what lay beneath. Moreover, the letter from Hollingsworth Consultants had alerted him to the possibility of a problem in the vicinity of the site. In my view, Mr Cavanagh did not exercise reasonable care in proceeding without a geotechnical investigation. 21 Moreover, Mr Cavanagh became aware, during construction, of a potential problem that should have been investigated. Construction commenced at the end of January 1986. Work was complete by about mid-August. In about May, before the concrete slab was poured for the basement car park, Mr Cavanagh saw evidence of a problem with subterranean water in the south east comer of the basement. He noticed a damp area roughly circular and about -- 10 of 27 -- 9 400 millimetres in diameter. He could not ascertain the cause of the dampness. There was no indication of any percolation or flow of water but there was surface mud. Its extent increased rapidly to about 10 square metres. Mr Cavanagh could not understand why the area grew so quickly. He was concerned about it to the extent that he did not want the area concreted over until the origin of the moisture was known. Surprisingly, he took no steps to investigate the cause and did not seek geotechnical advice. De Pasquale was anxious to have the building completed and tenanted. It did not wish to delay pouring the slab. As a compromise, Tasman was instructed to install a 200 millimetre diameter inspection pipe in the concrete in about the middle of the damp area "so that any moisture could be monitored". 22 I should record that I prefer Mr Cavanagh's description of the conditions in the basement prior to pouring the slab to Mr Hunt Sharp's. I do not think the extent of the dampness or the quantity of mud was as great as Mr Hunt Sharp describes. In particular I am not satisfied that photographs 24 and 25 attached to exhibit 4 depict the site as it was in May 1986. I think Mr Hunt Sharp has got these photographs out of sequence. 23 In a letter written to De Pasquale on 17 May, 1988, following a complaint from NJF that construction of the second building had damaged the first building, Mr Cavanagh set out a "chronological statement of the history of the project". He wrote: "During construction it became apparent that a problem wet area existed in the South East comer of the Site. A possible water spring was located (19 .6.86) and left open for further investigation." 24 In cross-examination Mr Cavanagh all but conceded that he ought to have engaged geotechnical consultants to explore the sub-site to find the source of the water. He had no idea where the water causing the dampness came from. He thought it may have been a spring. He said he would not have recommended geotechnical investigation until he "found out what was going on", but he had no means of finding it out without geotechnical advice. The -- 11 of 27 -- 10 presence of the water was of concern to him. In ensuing months, Mr Cavanagh made a number of visits to the site to monitor the presence and amount of ground water. He had further investigative work done, though not by geotechnical experts, to ascertain whether the water was coming from beneath Stafford Road and whether it was town water and therefore from a leaking pipe. He met Mr De Pasquale and the builder on site on 30 October, 1986 ""for the purpose of discussing the water problem". 25 In my opinion, in not recommending to De Pasquale that geotechnical investigations be conducted when a growing damp spot was observed and a spring was suspected, Cavanagh Biggs did not exercise reasonable care and skill. The water was a potential problem. Mr Cavanagh was sufficiently concerned to wish to delay pouring the slab. He wanted to ascertain the source of the water and therefore the likelihood that it may create a problem for the building. He himself lacked the skill necessary to determine those facts but did not recommend that someone with the skills be engaged. 26 I accept Mr Philp's evidence that an investigation at the time would have revealed the artesian aquifer. It is likely that upon its discovery advice would have been given to relieve the water pressure in the aquifer by drilling into it and inserting a column, filled with gravel, through which the water could percolate upwards and be dissipated on the surface. This is the method the parties have agreed should be adopted to solve the problem now. Had pipes been installed in 1986, the upward movement of artesian water into the clay beneath the basement would not have occurred and the soil would not have lost its bearing capacity. 27 Mr Cavanagh continued to be concerned about sub-soil drainage. In mid 1988, he inspected the second building because of his concern. The concrete slab laid over the damp spot had been pushed upwards about 4 inches. There was water in the inspection hole which penetrated the concrete to the ground below the slab. In July and August 1988, Mr Cavanagh -- 12 of 27 -- 11 had a number of discussions with Mr Victor De Pasquale, Mr Masinello, Mr Hunt Sharp and an engineer retained to advise NJF. The discussions concerned the presence of water under the De Pasquale building and what consequences it might have for both buildings. Mr Cavanagh recommended that the slab in the area of the wet spot be removed in an endeavour to locate the source of the water. When the slab was removed the soil was seen to be saturated and gelatinous. Water on top of the mud appeared to be in motion. 28 After the concrete was removed mud began to exude upwards and to spread into the . basement drains and over much of the area which the slab had covered. The phenomenon was described as a "mud volcano". Over a number of weeks mud was removed by backhoe and truck. It seems that altogether about 80 cubic metres of mud, ooze and water were removed which equates to about 10 cubic metes of unswollen ground. Although not appreciated at the time it seems that the mud exuded from the volcano was forced upwards by water pressure from the artesian aquifer. The exuded mud came from soil transported underground by the effect of the water. Some came from beneath the first building, removing support from foundations and ground floor slab. 29 The result was that part of the western wall of the first building subsided causing considerable cracking and damage to the fabric of the building. 30 There is a dispute whether Mr Cavanagh directed the removal of the mud. He denies he did. On the other hand it is asserted by Mr De Pasquale and by Mr Masinello that Mr Cavanagh directed the removal of the mud and its replacement with gravel. Although I do not think Mr Cavanagh tried to mislead the court, I am satisfied that his recollection is mistaken and that it was he who ordered the removal of the mud. -- 13 of 27 -- 12 31 My reasons for this conclusion are: (a) Mr Cavanagh was perturbed when he observed the state of the ground. He told Mr Masinello "the water is coming from under the original source" and "we must find out where it is coming from". Unless the clay were removed the source of the water could not be ascertained. Mr Cavanagh did not engage, nor recommend the engagement of, any one else to investigate the source of the water; (b) Mr Hunt Sharp observed Mr Cavanagh on site from time to time when the work of removing the clay was performed. If Mr Cavanagh were concerned, as he now professes to have been, that the clay should not have been removed he could easily have directed the cessation of work; (c) Mr Cavanagh states that the mud was removed without reference to him and that, had he been asked, he would have said it should not be removed until a clear indication had been received from Coffey & Partners as to appropriate remedial action. Mr Cavanagh could not have expected such advice because he did not request Coffey & Partners to undertake the necessary investigation; (d) As between Cavanagh Biggs, Tasman and De Pasquale, it was Mr Cavanagh who was regarded as the expert. It was to him that Mr De Pasquale looked for advice including advice as to what further experts should be retained. Tasman would not have removed the mud without an instruction from De Pasquale. It is unlikely that Mr De Pasquale would have himself considered mud should be removed without seeking Mr Cavanagh's opinion. It is even less likely that he would have ordered the removal of the mud if Mr Cavanagh had advised against it. -- 14 of 27 -- 13 (e) Mr Cavanagh's account changed in a material particular. In his statement he recounts an approach from Mr Masinello, who asked what should be put in the void formed by the excavation of the saturated clay. Mr Cavanagh replied that the excavation should be lined with an impervious geofabric screen, and the hole then filled with road base. This is what happened. In cross-examination (T153.20-.30) Mr Cavanagh denied giving any such advice. (f) On 14 December, 1988, Mr Cavanagh wrote to the brokers who had effected liability insurance for Cavanagh Biggs to advise them that NJF had intimated an intention to involve Cavanagh Biggs "in possible claims for damage to the first building" and to provide a brief report "on the history of the project in which we were involved". That history includes an account of the removal of the concrete slab, the excavation of soil and the filling of the excavation with the water proof geofabric and road base. There is no suggestion in the report that the removal of the mud and the replacement with gravel occurred without Mr Cavanagh's knowledge or instruction and contrary to his opinion as to what should happen. It is impossible to believe Mr Cavanagh would not have mentioned these things if they were the fact. 32 The expert evidence which I accept is that the soil beneath the foundations of the west wall of the first building would have lost its capacity to support the wall which would, as a result, have settled and cracked even if mud had not been from the "boil". The removal accelerated and exaggerated the loss of support and the extent of settlement and damage. Had a geotechnical investigation been conducted in the second half of 1988, its revelations of the subterranean aquifer and the need to remove the pressured water from it would have come too late to prevent damage to NJF' s structure. Had the geotechnical investigation been -- 15 of 27 -- 14 undertaken in 1986 when it should have, Mr Cavanagh would have known the origin of the water and the futility, if not the danger, of removing mud. Indeed, had the earlier investigation been conducted the problem would have been solved by the insertion of the drains to relieve the water pressure. The removal of the mud and the consequent exacerbation of damage to the NJF building was a consequence of the failure to commission a geotechnical investigation in 1986. 33 One further question of fact should be noticed. As part of its work of designing the second building, Cavanagh Biggs determined whether it was necessary to provide further support to the first building by underpinning its foundations to prevent damage during the excavation. The evidence in relation to underpinning is in disarray. It is not possible to find what design of underpinning was in the end employed. Nor was it possible to find the extent to which the building was underpinned. The basis on which Cavanagh Biggs assessed the loads which should be supported by the underpinning has been criticised, but it is not possible to know whether the criticism is justified because of the uncertainties I have identified. It does not much matter because one thing is clear: the underpinning did not extend to the layer of rock which would have provided a suitable foundation. It only extended deeper into the clay which ceased to be a sufficient base with the release of the artesian water and the consequent softening of the soil. De Pasquale's claim against Cavanagh Biggs 34 There is no doubt that Cavanagh Biggs' failure to engage geotechnical consultants in 1986 amounted to negligence in the discharge of its retainer to De Pasquale. There was an implied term in the contract that Cavanagh Biggs would exercise reasonable care in the design of the second building. The High Court has recently reaffirmed the principle that a contract for the performance of professional services will include a term, implied by law, that -- 16 of 27 -- 15 reasonable care should be exercised in the performance of the services: see Astley v. Austrust Ltd (1999) 73 ALJR 403 at 414 (paragraph 4 7). Apart from contract Cavanagh Biggs might be liable in negligence. Astley also reiterated the existence of concurrent liability. The damage suffered by the second building is economic loss for the reasons which I endeavour to explain later in my reasons. The law remains uncertain in its understanding of what incidents in the relationship between plaintiff and alleged tortfeasor must be present, in addition to foreseeability of loss, before a duty of care will arise in respect of such loss. There is some doubt whether one looks to find an assumption of responsibility and known reliance which have been features in the cases until Bryan v. Maloney (1995) 182 CLR 609 at 624; or whether one applies the "three-fold test" proposed by the House of Lords in Caparo Industries PLC v. Dickman [1990] 2 AC 605 which gained the support of Kirby J in Pyrenees Shire Council v. Day ( 1998) 192 CLR 330 at 419-20. Because of this uncertainty I prefer to base my finding against Cavanagh Biggs on the contract. 35 It is accepted that the building requires additional support under the two columns which rest in mud and that the cost of effecting this work is $103,070. However, $23,000 of this relates to the construction of gravel piles to remove the artesian water. Had Cavanagh Biggs properly performed its retainer it would have known of the existence of the aquifer and of the need to remove the water pressure. The piles would have been installed as an additional part of construction at extra cost. That item of cost has not been incurred by reason of the negligence of Cavanagh Biggs. It is an expenditure that would have occurred had the geotechnical investigation been conducted earlier. There is no evidence of the 1986 cost of the work which is presumably less than present cost. However, as De Pasquale has had the benefit of the money not spent in 1986 there is probably no reason to reduce the amount of -- 17 of 27 -- 16 the present cost which should be deleted from the cost of rectification for the purpose of assessing damages. Likewise, had Cavanagh Biggs engaged consultants in 1986 their fees would have been payable by De Pasquale. The amount that would have been spent on obtaining the reports should go in reduction of the assessment. It is likely that the scope of the investigation would have been larger than contemplated by either Hollingsworth Consultants or Coffey & Partners when they submitted their first quote. I think an appropriate amount to allow is $4,000. 36 In relation to the rectification of its own building De Pasquale is entitled to an award of damages in the sum of $76,070. Cavanagh Biggs' Liability to Indemnify De Pasquale in respect to damage to NJF Building 37 The contract between Cavanagh Biggs and De Pasquale was not reduced to writing. It is clear, however, that Cavanagh Biggs was retained to design the De Pasquale building including, of course, its foundations. The work of design included planning the construction so that it would not damage any part of the adjoining NJF structure. In the discharge of this part of its retainer, Mr Cavanagh obtained from Mr Hunt Sharp architectural drawings of his building showing the location and type of foundations. Cavanagh Biggs also obtained engineering drawings for the NJF building though they were not, apparently, seen by Mr Cavanagh himself. Mr Hunt Sharp alerted Mr Cavanagh to the possibility that the De Pasquale site might be affected by water which, on occasions, seeped out of the ground. Cavanagh Biggs engaged the services of a consulting engineer to design a system of underpinning the foundations of the first building. This was necessary because the excavation for the new structure would expose part of those foundations and perhaps proceed to a depth below them. It was necessary therefore to extend the foundations to a greater depth to -- 18 of 27 -- 17 maintain their efficacy. It will be recalled that the work which Mr Cavanagh contemplated the geotechnical consultants might undertake included determining "the most suitable method and details for supporting adjacent buildings while excavations are carried out ... ". 38 It is apparent, and I so find, that De Pasquale wished to have its building constructed in such a way that its design and erection did not damage adjoining structures and, in particular, the first building. Cavanagh Biggs was retained to put into place a method of construction that would give effect to that desire. It was an implied term of the contract between De Pasquale and Cavanagh Biggs that the latter by its officers would exercise reasonable care and skill in the performance of that part of the retainer. The failure of Cavanagh Biggs to engage geotechnical consultants and to ascertain the existence of the aquifer and thus to appreciate the need to prevent the artesian water destabilising the ground supporting the first building was a breach of that term. 39 Mr Cavanagh on behalf of Cavanagh Biggs has accepted that the proposed work to repair the lost support to the NJF building is reasonable and appropriate, and that the cost of effecting the work, $134,750, is reasonable. As well, he concedes that it was reasonable for De Pasquale to settle with NJF on terms that it would have the work carried out for that price or pay the money to NJF. There is no doubt that De Pasquale was liable to make good the damage to NJF. Section 179 of the Property Law Act imposed that obligation on it. 40 It follows that Cavanagh Biggs' breach of contract has resulted in a loss to De Pasquale of the amount it must spend or pay to NJF to repair the building. Accordingly it is entitled to damages. NJF's Claim against Cavanagh Biggs 41 Although not argued with great elaboration NJF put its case against Cavanagh Biggs on two bases: -- 19 of 27 -- 18 (i) Breach of section 179 of the Property Law Act; (ii) Negligence. Breach of Statute 42 Section 179 provides: "For the benefit of all interests in other land which may be adversely affected by any breach of this section, there shall be attached to any land an obligation not to do anything on it which will withdraw support from any other land or from any building, structure or erection which has been placed upon it." 43 On first reading it might be thought that the obligation imposed by the section does not extend beyond the owner of land not to do anything which might adversely affect other land. Such a limitation is not, however, found in the words of section 179. The operative part IS: "There shall be attached to ... land an obligation not to do anything on it which will withdraw support from any other land .... " The obligation is expressed in perfectly general terms. Nothing shall be done on land which will withdraw support from other land. The obligation does not arise by reason of the ownership of land. No-one is permitted to do anything on land which has the proscribed result. The language of the section does not permit distinctions between categories of persons who do things on land which withdraw support from other land. 44 This construction, which may at first sight appear startling, is consonant with pre- existing principles of liability which the section extended to the case of support for improvements on land. At common law an incident of the ownership of land was the right to have it supported by adjacent land: Dalton v Angus (1881) 6 App Cas 740 at 791 per Lord Selbome. However, the right existed only in respect of unimproved land i.e. land in its natural state. There was no obligation in respect of the support of a building erected on adjoining land. Lord Penzance pointed out (6 App Cas at 804): -- 20 of 27 -- 19 " ... the owner of the adjacent soil may with perfect legality dig that soil away, and allow his neighbour's house, if supported by it, to fall in ruins to the ground." 45 Dalton itself recognised an exception to the rule where a structure had been in existence for more than twenty years during which it had enjoyed support from adjoining land. In such cases a right to that support was acquired by prescription so that its withdrawal was actionable. There are obvious difficulties in acquiring real property rights by prescription in a jurisdiction where title to land is effected by a system of registration. That apart, the principle established in Dalton will extend only to structures that had acquired a right to support after twenty years' enjoyment. Section 179 was enacted to remove the anomaly that a right to support existed with respect to unimproved land but generally not to improved land. 46 The point of this is that the common law obligation was not imposed on the adjoining land owner only, but to those persons who by their activities on the land withdrew support from a neighbour. The point emerges clearly in Dalton itself in which the appellant was a contractor engaged by the owners of land, public works commissioners, to excavate and then erect a building. The excavation deprived Angus' factory of lateral support. The controversy before the House of Lords was whether the factory had, as a matter of law, acquired a right of support. That being established the liability of the contractor was regarded as obvious. It was mentioned only by two of the Law Lords. Lord Selbome said (791): " ... if the Plaintiffs are entitled to recover at all, they are entitled to recover against both the Commissioners and Dalton." Lord Watson said (831-2): "He [the land owner] is bound ... to see that the contract is performed, and is therefore liable, as well as the contractor, to repair any damage which may be done." -- 21 of 27 -- 20 47 The Queensland Law Reform Commission report No.16 which recommended and drafted the Property Law Act, commented that the right at common law to have land supported "is confined to land in its natural state, there being no natural right to support for buildings ... ", noted that the qualification was difficult to justify, and said of the proposed section that it would avoid "the necessity for attempting to distinguish between support for land and support for buildings upon it ... ". 48 · Because the section extends the applicability of the common law to buildings, it would be sensible to construe the section, unless its language clearly prevents such a course, so that the statutory obligation with respect to buildings is the same in scope and content as the common law obligation with respect to natural land. As to the latter, those who actually performed the act which led to the withdrawal of support were liable to make good the damage. Dalton appears authority for this proposition as is Pantalone v. Alaouie (1989) 18 NSWLR 119 (the headnote to which is misleading in part). That case was concerned with the common law right to support which extended to a building because the withdrawal of support was sufficient to cause subsidence of the natural land irrespective of the erection of improvements. Giles J assimilated liability for acts causing loss of support to that of liability for nuisance and held that those who "created the nuisance" had to make good the damage. To the same effect is the decision of the Court of Appeal, Fennell v. Robson Excavations Pty Ltd ( 1977) 2 NS WLR 486 which makes it clear that the person creating the nuisance need not be in occupation or control of the land where the loss of support originates. The statutory right should be consistent with this position, unless, as I say, the words of the statute limit the obligation. They do not do so. 49 It follows, in my opinion, that Cavanagh Biggs contravened section 179 if it did something on De Pasquale's land which withdrew support from the first building. -- 22 of 27 -- 21 50 It was the removal of soil which led to the loss of support to the first building. The excavation itself did not have that result, but it set in progress the geomorphological events which deprived the soil of the capacity to support the building. Water came to the excavated surface with the results described. Cavanagh Biggs did not itself remove the soil. That work was done by Tasman, who performed it pursuant to its contract with De Pasquale. But in reality, it was Cavanagh Biggs who was responsible for the excavation. The second building was put up in accordance with Cavanagh Biggs' proposals. It advised both De Pasquale and Tasman that an excavation dug to specified depths in specified locations was appropriate for the building and that, if an identified method of underpinning the adjoining building were executed, both structures would be adequately supported and neither would suffer damage. The giving of this professional advice by engineers retained to give it was what caused the soil to be removed, and the consequent damage. 51 There was a dispute about Cavanagh Biggs', and Mr Cavanagh's, precise role in the construction of the second building. He denied that he was retained to supervise construction and he is probably right if one understands supervision to be that which is meant when the word is used as a term of art in large construction contracts. There is, however, no doubt that he exercised a degree of responsibility over Tasman with respect to construction. He inspected work at various stages. He attended on site when requested and answered any questions the builder had about how work should proceed. In particular Mr Cavanagh inspected the excavation and concluded that no geotechnical investigation was necessary. He discussed the question with Mr De Pasquale and told him of that opinion. He directed the excavation under the foundations of the first building, and the underpinning of its foundations. Mr Masinello, in his statement, describes Tasman's contract with De Pasquale as requiring Tasman to "operate under the direct instruction and supervision, of ... Cavanagh Biggs ... ". -- 23 of 27 -- 22 The statement goes on "Mr John Cavanagh, or one of the engineers from his office, provided the instruction and supervision on an almost daily basis". I expect there is some exaggeration of the extent of involvement by Cavanagh Biggs in the routine construction work performed by Tasman but I accept the relationship between it and Cavanagh Biggs was much as depicted. Construction proceeded under the overall direction of the engineers. 52 In my opinion these activities by Mr Cavanagh, on behalf of Cavanagh Biggs, amounted to "doing a thing" on land which deprived NJF of support for its building. It was Cavanagh Biggs' advice and directions which caused the excavation and removal of support. The nuisance can therefore be regarded as having been created by Cavanagh Biggs. It does not matter that concurrent activities by Tasman contributed causally to the result: Fennell at 492 per Glass JA. It is a question of fact, not of law, whether a defendant has "created" a nuisance or is the person who has caused the withdrawal of support. My conclusion in this case differs from that of Giles J in Pantalone which is a broadly similar case. There the engineer appears to have had a more limited role and the subsidence was a fortuitous consequence of an excavation. It was not the result of a particular direction from the engineer, nor the inevitable consequences of proceeding in accordance with the engineer's design. In this case, given the geology of the site of which Cavanagh Biggs was ignorant, the loss of support was the inevitable consequence of excavating in accordance with Cavanagh Biggs' design. In my opinion this is sufficient to regard Cavanagh Biggs as creating the nuisance. In reality it instigated the events which led to the loss of support. In Fennell (at 495), Samuels JA quoted with approval from the Law of Torts by Street: "A person is liable in nuisance if he bears 'some degree of personal responsibility' ". -- 24 of 27 -- 23 His Honour also referred with approval to Salmond, Law of Torts, 16th edition, in which it was said that anyone who by a positive act of misfeasance (as opposed to mere non-feasance, such as an omission to repair) creates a nuisance is always liable for it. Though quite general in their expression, these comments appear to support my conclusion. It follows that Cavanagh Biggs was in breach of the obligation imposed by section 179. It is evident that the section confers a private right of property and that damages or an injunction may be obtained as a remedy for infringement of the right. Negligence 53 Damage to the first building consists of widespread cracking, some as wide as 8 millimetres, in the southern half of the western wall. Because of the settlement of the foundations beneath that part of the wall there are differential movements across brick wall joints. In places the wall has settled by as much as 35 millimetres. Bricks have become loose. There is internal cracking and separation on the first floor particularly at the junctions of walls and ceilings. Differential movement in the ground floor structure has caused cracking to the walls and the slab flooring in the basement. 54 The damage was caused by a factor external to the building itself: the loss of support to the foundations by the weakening of the soil. This means the damage is to be categorised as physical and not economic loss. The distinction is important because the basis for liability for economic loss is more confined than for physical damage. The loss is economic where damage consists of a defect in the structure itself arising from inadequate design or building so that the value of the structure is diminished and it may require remediation. This appears to be established by a judgment of Deane J in Council of the Shire of Sutherland v Hayman (1985) 157 CLR at 503 - 5; Murphy v Brentwood District Council [1991] 1 AC 398 at 468 per Lord Keith; Bryan v Maloney at 617 per Mason CJ, Deane and Gaudron JJ. -- 25 of 27 -- 24 By contrast the first building was structurally sound and free of relevant defects. It was damaged by means extrinsic to the building itself. 55 This being a case which falls in the "settled area of the law of negligence concerned with ordinary physical injury to ... property", reasonable foreseeability of the injury is normally sufficient to establish a duty to take reasonable care to avoid foreseeable loss. See Bryan v Maloney at 61 7. It is not in contest that damage to the first building was foreseeable if care were not taken to protect its foundations during the excavation and construction of the second building. Plans were prepared to strengthen those foundations so that they could withstand the disturbance emanating from the adjacent excavation. Not only was damage of the type that occurred foreseeable, it was foreseen. The foundations were rendered inadequate not by reason of the excavation itself, but by reason of the geomorphological forces it unleashed. I have already found that Cavanagh Biggs was careless in not ascertaining the nature of the sub-soil conditions and making provision for the dissipation of artesian water. There being ( 1) foreseeability of loss, (2) lack of care and (3) damage, the tort of negligence is made out. There is, in this case, sufficient proximity between the building owner and the engineer who undertook the design of an adjoining structure and, as part of the process, endeavoured to protect the integrity of the existing building but, carelessly, did not do so. 56 It is agreed that the cost of the work which should be undertaken to repair the first building is $134,750. I give judgment in favour of NJF against Cavanagh Biggs for this amount, but order that NJF take no steps to enforce or execute the judgment without the leave of the court because De Pasquale has agreed to effect the restoration, or pay for it, and it has obtained judgment for the cost of restoration against Cavanagh Biggs in its action. Cavanagh Biggs should not be exposed to the same liability to both NJF and De Pasquale. -- 26 of 27 -- 25 57 De Pasquale applied by OS 2 of 1997 for orders that its agent, Coffey Partners International Pty Ltd be allowed onto NJF's land to investigate what remedial work should be undertaken to the NJF building. The need for the relief sought in the summons has been superseded by events and I order that OS 2 of 1997 be dismissed. 58 In action 2026 of 1991 I give judgment: (a) for the plaintiff against the second defendant in the sum of$134,750. I order that the plaintiff take no steps to enforce of execute the judgment without the leave of the Court; (b) for the first defendant against the second defendant in the sum of$134,750. In action 1358 of 1991 I give judgment for the plaintiff against the first defendant in the sum of$76,070. I order that OS 2 of 1997 be dismissed. -- 27 of 27 --