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  4. Gratrax Pty Ltd v TD & C Pty Ltd - [2013] QDC 63

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Gratrax Pty Ltd v TD & C Pty Ltd[2013] QDC 63

Gratrax Pty Ltd v TD & C Pty Ltd[2013] QDC 63

DISTRICT COURT OF QUEENSLAND

CITATION:

Gratrax Pty Ltd v TD & C Pty Ltd [2013] QDC 63

PARTIES:

GRATRAX PTY LTD

(Plaintiff)

v

TD & C PTY LTD

(Defendant)

FILE NO/S:

D3774/2009

DIVISION:

 

PROCEEDING:

Trial

ORIGINATING COURT:

District Court, Brisbane

DELIVERED ON:

9 April 2013

DELIVERED AT:

Brisbane 

HEARING DATE:

12 May 2012

JUDGE:

McGill SC DCJ

ORDER:

Judgment that the Defendant pay the Plaintiff $12,901 including $4,154 by way of interest.

CATCHWORDS:

CONTRACT – breach – damages – causation – whether damages increased by unexpected voluntary inappropriate action of plaintiff

NEGLIGENCE – causation – novus actus interveniens – test of – limited damages awarded

NEGLIGENCE – professional negligence – engineer – preparation of construction drawings for road – incorrect pavement materials specified – breach

PRACTICE – pleading – contributory negligence – whether plea covers cause of action for breach of contract if within scope of section

Civil Liability Act 2003 s 11(1), (4).

Law Reform Act 1995 s 10.

UCPR r 149(1)(e).

Astley v Austrust Ltd (1999) 197 CLR 1 – cited.

Blaxter v Commonwealth of Australia [2008] NSWCA 87 – cited.

Burns v Pearce [2010] WASCA 214 – cited.

Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 – considered.

Curmi v McLennan [1994] 1 VR 513 – cited.

Driver v War Service Homes Commissioner (1923) 44 ALT 130 – cited.

French v QBE Insurance (Australia) Ltd [2011] QSC 105 – considered.

Hirst v Nominal Defendant [2005] 2 Qd R 133 – followed.

Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 – considered.

Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727 – considered.

March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 – cited.

Medlin v SGIC (1995) 182 CLR 1 – applied.

Sherson & Associates Pty Ltd v Bailey [2000] NSWCA 275 – distinguished.

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 – distinguished.

South Australian Asset Management Corporation v York Montague Ltd [1997] AC 191 – considered.

Tabet v Gett (2010) 240 CLR 537 – considered.

Travel Compensation Fund v Tambree (2005) 224 CLR 627 – considered.

Voli v Inglewood Shire Council (1963) 110 CLR 74 – applied.

COUNSEL:

J W Peden for the plaintiff

R S Ashton for the defendant

SOLICITORS:

Crouch Lyndon for the plaintiff

Thynne and McCartney for the defendant

  1. [1]
    This is an action for damages for breach of contract or negligence in respect of some engineering services provided by the defendant to the plaintiff in 2007. There is some dispute as to the terms of the defendant’s retainer, and as to whether there was such a breach of contract or negligence. The defendant prepared a design for the construction of a road at Yatala, and the plaintiff alleges that the design was prepared in breach of the implied obligation to exercise reasonable care and skill, or negligently, in that the components specified for the road base and sub-base did not comply with the requirements for pavement design of the relevant local authority, the Gold Coast City Council. Negligence and breach of contract are denied, but the main defence is that the loss claimed by the plaintiff, or at least the bulk of the loss, was not caused by any deficiency in the defendant’s design, but by a failure on the part of the plaintiff to comply with the Council’s requirements for inspection, testing and further approval of the pavement design at a certain stage of the works. In the alternative, the defendant alleged that the plaintiff was guilty of contributory negligence in proceeding with the construction beyond the point when the inspection testing and further approval were required.

Background

  1. [2]
    The plaintiff company is a development company having been engaged in developing property including constructing buildings and doing road works on site from 1995: p 33. The business is managed by Mr Haggar, a licensed builder, who gave evidence for the plaintiff. He has 40 years’ experience building roads, including as a contractor working for the Gold Coast City Council: p 32. He has had experience with around 100 roads or similar types of construction: p 33. This work has been done through the plaintiff since 1980, and prior to that through another company.
  1. [3]
    On this occasion the plaintiff was interested in developing a parcel of land at Yatala in connection with which the Gold Coast City Council proposed that a particular class of road, an “industrial collector” road, be constructed to a particular alignment: p 33, Exhibit 26. The road construction was a little unusual, in that it was more substantial than what would ordinarily be required as a condition of approval of a sub-division. The Council would in time have built the road itself, but the plaintiff needed the road to be built promptly. Ultimately they negotiated an arrangement under which the plaintiff would construct the road at its cost and the Council would give credit for part of the cost against the headworks contributions otherwise required of an applicant for sub-division:  p 34. For this purpose the plaintiff required an estimate of the cost of construction, something which it ordinarily did not need for the purposes of its development business. Mr Haggar approached a particular firm of engineers, which was unable to do the work at that time, and referred him to the defendant.
  1. [4]
    What the plaintiff required was initially preparation of an estimate of the cost of constructing the road and, if the negotiations were ultimately successful, preparation of the plans and specifications required for Council approval for the construction of the road.[1]Some incomplete drawings were forwarded to the defendant for this purpose:  Exhibit 30. The defendant prepared the estimates, Exhibits 2 and 3, and was then asked to proceed to the second step.[2]A set of drawings were prepared and forwarded to the plaintiff:  Exhibit 6. Ostensibly they were a preliminary set forwarded for information and discussion,[3]but there was no evidence that there was any discussion,[4]and Mr Haggar said that he did not look at the plans in any detail but simply lodged them with the Council for approval: p 37.
  1. [5]
    Among the drawings prepared by the defendant was drawing C2. It contained a typical cross section for road construction, and a detailed drawing showing the curb, channelling, sub-surface drainage and the seal, road base and sub-base which constitute the pavement.[5]The road base was identified as “150mm compacted depth of 20mm nom size class 2 FCR (2 layers) 98% modified compaction.”  The sub base was identified as “120mm compacted depth of 40mm nom size class 3 FCR 98% modified compaction.”  On the left hand side of the page there were a set of general notes followed by a set of earthworks notes which included a set of requirements for fill materials, the last being that they shall be “rated at least CBR 15”.[6]Under the pavement construction notes was a statement: “All compaction to be subjected to testing in accordance with the relevant Australian Standards and Gold Coast City Council requirements”, and a statement: “Minimum depth of courses to pavements are detailed on typical sections. Actual pavement depths are to be determined following soaked CBR tests on subgrade.”  There were also further instructions about the requirements for the subgrade below pavements.
  1. [6]
    Mr Haggar had not received from the defendant a certificate of compliance with the requirements of the Gold Coast City Council in relation to the plans,[7]but the representative of the defendant, Mr Clark, signed such certificate on 24 August 2007, stating that the road design complied with the specification and drawings of the Gold Coast City Council.[8]
  1. [7]
    In fact they did not. The requirements of the Council for the pavement of an industrial connector road included that the base course, what was under the bitumen seal, be of class 1A material, and the sub-base be of class 2 material, each to be placed and compacted to produce a Californian Bearing Ratio (CBR) of a particular reading: Exhibit 25. CBR is essentially a measure of the solidness of the material, and is something which can be tested in various different ways. Drawing 2 specified class 2 material for the base, and class 3 for the sub-base, each of which is significantly weaker than the classes required.[9]
  1. [8]
    Mr Clark said that the design work was in fact undertaken by a sub-contractor in Melbourne, and that local authorities in Victoria generally do not require industrial connector roads to be constructed to the higher standard. Nevertheless he was aware that this road was to be constructed in Queensland, and specifically for the Gold Coast City Council. He was not familiar with the requirements of the Gold Coast City Council, and he did not familiarise himself with those requirements before certifying that this design complied with them. He conceded the design did not comply with the specification:  p 94. In my opinion it follows that there was a failure to exercise reasonable care and skill in the preparation of the design and, perhaps more significantly, in the certification of it as meeting the requirements of the Council, and this was also negligence on the part of the defendant.
  1. [9]
    After the certification was provided, the engineering drawings were approved on 17 September 2007 (Exhibit 6) and the operational works approval to construct the road issued from the Council on 3 October 2007: Exhibit 16. Condition 6 of that approval was that the works be constructed in accordance with the Council’s land development guidelines, which required that the subgrade be inspected and approved on behalf of the Council, and a design for the pavement be separately approved by the Council, before the pavement was constructed.[10]The plaintiff proceeded to build the road, without engaging a supervising engineer for the job, although he did retain an engineer to issue any certificates required by the Council.[11]
  1. [10]
    When the plans came back from the Council, they were stamped “approved subject to amendments marked in red.” The amendments referred to a few dimensions, and required the road to be constructed “in accordance with GCCC standard drawing 05-02-004 Industrial Collector.” A copy of this drawing is Exhibit 22. It set out three typical cross sections for three types of industrial road, including “Industrial Collector Street”, but said nothing about the requirements for pavement materials or for testing.[12]The notes included a statement that: “for road classifications and design principles refer to GCCC land development guidelines and Queensland Streets.” 
  1. [11]
    The drawings do not expressly state the requirement that a pavement design be prepared and submitted to the local authority for approval with details of the soaked CBR test results on the subgrade, although that is consistent with the statement that the actual pavement depths were to be determined following soaked CBR tests. The requirement for a separate pavement design which is not finalised until the soaked CBR tests are available on the subgrade was confirmed as a standard practice by witnesses except for Mr Haggar, most adding that it is common for local authorities generally, not a peculiarity of the Gold Coast City Council.[13]Given Mr Haggar’s experience of road construction in Queensland including on the Gold Coast, it strains credulity for him to assert that he was unaware of this requirement when constructing this road:  p 49.
  1. [12]
    After the approval was obtained, but before work started, there was a pre-start meeting on site between Mr Haggar, his certifying engineer Mr Rebibou, and the Council inspector, Mr Irwin.[14]Mr Irwin went through the pre-start check list, a copy of which was signed by him and Mr Rebibou: Exhibit 23. He ticked various things including the roadworks heading and the sub-headings “Testing Requirements” and “Inspection Requirements”. Mr Rebibou said that these matters were gone through at the meeting, but not in any detail, and he could not recall specifically what was said in relation to roadworks: p 104. The testing requirements and inspection requirements were to be found in the guidelines, as Mr Rebibou knew: p 19. When asked “Did you tell Mr Haggar that?” he replied “Yes he knew that they were there. We had access to them, on the internet.”  Mr Rebibou said that he was not asked by the plaintiff for a pavement design until after the meeting when the work stopped, and that he was not responsible for testing or dealing with the Council: p 20.
  1. [13]
    The plaintiff prepared the sub-grade, part of which involved placing and compacting fill: p 43. Mr Haggar said that the fill he obtained was rated at CBR 15, and that is supported by documentation provided by the quarry:  Exhibit 17, 18. However, the soaked CBR test is to be carried out by reference to material which has been placed on site and compacted in a particular way, summarised in the earthwork notes on plan C2.[15]What matters for the pavement design is the CBR of the material in place, and that can only be determined once the material has been placed and compacted, and is then tested in the standard way. When those tests were done, the results for the subgrade for this road came back well under CBR 15.[16]That in itself was not necessarily a major problem; the pavement design could have been modified in such a way as to accommodate the fact that the subgrade was softer than it ought to have been, essentially by increasing the thickness of the pavement elements, either the sub-base or the base or both.[17]
  1. [14]
    The plaintiff in fact proceeded to lay the sub-base and part of the base (p 46) without soaked CBR testing,[18]or approval of the pavement design or a Council inspection. What ought to have happened is that, after the subgrade had been prepared, that is, all the necessary fill had been placed and compacted, soaked CRB testing should have been undertaken in order to determine the strength of the subgrade in that way. As plan C2 makes clear, the actual pavement design, that is the depths of the base and sub‑base, is not finalised until after those test results are known. Once the test results were available, a pavement design should have been prepared and lodged with the Council for approval along with the test results.[19]Council would inspect the subgrade, and an approval would issue such as Exhibit 9. After this approval by the Council, it was in order to proceed with the construction of the pavement.
  1. [15]
    Mr Rebibou said the Council inspector asked him more than once around the end of May if they had lodged a pavement design and he replied that he was not doing that, he had asked his client (the plaintiff) who had told him that he had that already and had done the test.[20]This was also asked of Mr Haggar in his presence. Once the Council inspector discovered that the plaintiff had been proceeding with the pavement construction without approval of the pavement design, he asked Mr Haggar to stop work, and Mr Haggar complied.[21]Mr Rebibou was contacted: p 51.  Samples for the soaked CBR tests were taken on 27 May 2008, and the test report issued on 3 June 2008:  Exhibit 32.[22]After the results were obtained, Mr Rebibou wrote to the Council on 3 June 2008 (Exhibit 15) and 25 June (Exhibit 8), in effect applying for pavement design approval. He said that it came as a surprise to him that the pavement design had not been done, because he had been under the impression that it had been done: p 20. This was not just because the works had passed beyond the point, beyond which they ought not to have passed without pavement design approval, but because, during the construction of the pavement he had already asked his client whether he had obtained the CBR tests and had been assured that he had and that he had a pavement design: p 9.
  1. [16]
    What he proposed was that what had actually been built by the plaintiff be approved as within the requirements of the applicable table in the guidelines. It was in response to this letter that the Council issued the letter of approval of the pavement design: Exhibit 9, dated 30 June 2008. This accepted a thickness of 150mm for each of the base course and the sub-base, but identified that the base course was to be class 1A material with a CBR of 80, and the sub-base class 2 with a CBR of 45. It was at this point that it became apparent to the plaintiff and Mr Rebibou that the wrong material had been used. As a result, the material that had already been laid could not be used on the road, and was removed: p 16. I was told at the trial no further work on the road had been done, which seems a little strange, but does not affect the legal position. There was initially a delay due to wet weather:  p 53. The rest of the delay was unexplained.
  1. [17]
    It is quite clear that, if the plaintiff had followed the proper, and usual, procedure, a document very like Exhibit 9 would have been issued before any pavement construction had been undertaken. At that point the plaintiff would have discovered that the information in the drawing C2 about the classes of material required for the road base and the sub-base was incorrect. The cost incurred in laying the wrong material, and in removing it, and any consequential costs, would have been avoided.
  1. [18]
    There are various other matters in issue between the parties, but essentially the plaintiff’s case is that the design was wrong in that it specified the wrong classes of material for the base and sub-base, and that this was a breach of contract or negligence on the part of the defendant, and had caused the plaintiff additional expense in having to rectify the partially completed pavement. The defendant’s response is essentially that, if the plaintiff had followed the proper and usual procedures, the error in the design would have been discovered before any pavement had been constructed, and in those circumstances the plaintiff would not have been put to any, or any significant, additional costs. This was put in terms of an event which broke the chain of causation, or as contributory negligence on the part of the plaintiff. The plaintiff’s response to this defence is that the plaintiff’s actions were not unreasonable in the circumstances, and, if the design had specified the correct classes of material, the fact that the plaintiff had laid a part of the pavement without having the test results and the pavement design approved by the Council would not have made any, or any significant, practical difference.

Credibility

  1. [19]
    Ultimately there were few factual conflicts in the evidence, and little that I need to resolve in that regard. I should however say something in a general way about credibility. I was not generally impressed with Mr Haggar as a witness. At several points in his evidence he struck me as being evasive, and at other times he seemed to be very keen to assert that if anything had gone wrong it must have been somebody else’s responsibility.[23]His answers when questioned about a problem with precast drainage pits in the road seemed to me to be somewhat evasive (p 56), and his evidence about the pre-commencement meeting with the Gold Coast inspector and the certifying engineer was also evasive:  pp 68-9.
  1. [20]
    He sought to distance himself from the conversation with the Gold Coast inspector at the pre-start meeting, when the check list Exhibit 23 was worked through; I prefer the evidence of Mr Rebibou, to the effect that Mr Haggar was involved in this conversation (p 113). Mr Rebibou did not have any detailed recollection of what was said during this conversation, but I think it likely that the inspector at least referred to the fact that the ordinary inspection and testing regime would apply. I find it difficult to accept that Mr Haggar did not know what that was, given his experience of road building.[24]If that really were the case, it would have been easy enough for him to ask at that point. He had been told that he was expected to comply with some testing and inspection regime, and if he did not know what was required, he should have asked. I do not accept that someone in his position who in fact was ignorant of the details of the testing regime would not ask in such circumstances. He claimed there was no mention of testing the subgrade in his discussions with the Council Inspector: p 24, p 74. That may have been right, in the sense that there was no specific reference to testing of the subgrade, but, if there was a general reference to the usual testing requirements, that covered testing of the subgrade because that was part of the usual requirements.
  1. [21]
    He was also inconsistent in his evidence about the requirements for testing. At one point he said that everything that had to be done by way of testing should have been noted on the plan: p 75. But the one thing that was noted on the plan was the reference to soaked CBR testing of the subgrade, and that was the one thing that he did not do, asserting that he believed that all that was required was the certification of the fill in the stockpile: p 91. I cannot accept that anyone with any experience of road building could imagine that a reference to “soaked CBR testing” could have been a reference to a certificate given in relation to material in a stockpile,[25]or the outcome of a roll test, where a heavy vehicle is driven over the subgrade to see whether it stands up satisfactorily: p 91. Otherwise it was obvious from the plan that it did not detail testing requirements, just referred to the Council requirements.
  1. [22]
    At one point Mr Haggar’s answers suggested that it was the defendant’s responsibility to forward the results of subgrade testing and a pavement design to the Council as required by the relevant part of the guidelines: p 74. Plainly that was not the case. Later he said that the test results, that is the results of the soaked CBR test on the subgrade, go to the certifier who gives a certificate to the Council at the completion of the job: p 76. That cannot be honest evidence from a person with extensive experience in road building, in the light of the evidence of the other witnesses as to the usual procedures for such matters.
  1. [23]
    Finally, the idea that the approval of the plans implied final approval of the pavement design incorporated within the plans is clearly inconsistent with the terms of the approved drawing C2, which stated that “actual pavement depths are to be determined following CBR tests on subgrade.” In view of that statement, it is clear that the approval given by the Council to the drawings did not amount to approval of the actual pavement depths. Overall, I do not accept Mr Haggar as a reliable witness, and do not accept his evidence unless it is supported by other evidence or is inherently plausible.
  1. [24]
    With regard to Mr Haggar’s claim that if grade 1 material had been specified he would not have laid the pavement himself, I am sceptical of this claim, for which there is no independent support. The current guidelines require grade 1A or grade 1B material for road base for (it seems to me) any kind of sealed road in the Gold Coast area. There was no evidence about how long that requirement had been in place, or indeed about whether it was a peculiarity of the Gold Coast City Council. But Mr Haggar said he had experience with building roads within the Gold Coast area before. The effect of his evidence was that he had had an unpleasant experience trying to lay class 1 material so he would not do so again: p 38. But for as long as those guidelines have been in place, class 1 material would have been required for any road that he was required to construct within the Gold Coast City Council area. I find it hard to accept in these circumstances that Mr Haggar’s attitude would have been as he said: either he would have stopped laying pavement within the Gold Coast area because they always required class 1 material, so that the specification of classes 2 and 3 on this occasion would have come as a surprise (which was not his evidence), or this was only the second occasion when he had been called upon to build a road within the Gold Coast area while this requirement was in force, with the previous occasion being when he had problems with laying class 1 material, which was also not his evidence. It would be possible for his evidence on this matter to be true, but it strikes me as inherently unlikely rather than inherently likely, and there was no independent support for it. In these circumstances, bearing in mind my attitude to Mr Haggar’s credibility generally, I am not prepared to accept his evidence that, had the defendant’s plan specified class 1A material for the road base, he would have engaged an independent contractor to lay the pavement.
  1. [25]
    Mr Clark was I thought rather defensive in the witness box, and keen to put forward his theories about why the defendant’s mistake about the pavement content did not matter, but when asked directly did concede that the plans were not in accordance with the requirements of the Council guidelines: pp 93, 94. He conceded that the second set of instructions he received involved preparing construction drawings: p 54. I am cautious about whether Mr Clark’s strong feelings about this matter might have distorted his evidence, but generally I thought his evidence was reliable. Where there are matters of conflict, and ultimately I thought there were few, I generally prefer his evidence to that of Mr Haggar.
  1. [26]
    Mr Rebibou seemed to me to give his evidence in a straight forward fashion, and subject to the usual caveat that the recollection of an honest witness may be mistaken, I am generally prepared to accept his evidence. I am not sure that there is any real conflict between the evidence of the two expert witnesses. I discuss later one apparent conflict in this evidence, and say something about how I interpret certain evidence of Mr Bryett. Interpreted in this way, I think there is no real conflict between this evidence of Mr Bryett and the evidence of Mr Barry.
  1. [27]
    Despite this, there was a fairly strong attack on Mr Barry, on the basis that his experience lay largely in areas other than pavement construction. Although it may be correct to say that pavement design and construction were not the central feature of Mr Barry’s experience, I accept that he had ample practical experience in that area to be appropriately qualified as an expert, and for his opinions to be given weight. I accept his evidence under cross-examination as to the extent of his actual experience. It also seemed to me that he made reasonable concessions during cross-examination. Ultimately it does not seem to me that there is any real conflict between the experts, and accordingly accept the evidence of both of them.

First issue:  retainer

  1. [28]
    There is no issue that the work originally required of the defendant was the preparation of cost estimates, and no complaint about the estimates the defendant in fact prepared. It was further alleged that the defendant was retained to prepare “full road design including drainage to Gold Coast City Council’s specifications as required in the terms and conditions to subdivisional approval and the Council’s works requirement” for the road: Statement of Claim paragraph 3. The defence at paragraph 2(c) alleged that the retainer in relation to design was to complete preliminary drawings for the proposed road based on engineering drawings prepared by other engineers.
  1. [29]
    The retainer was oral. Mr Haggar said that the defendant was to design the road, and that this was to be “to Council’s drawing, specifications and approval”: p 35. Mr Clark gave evidence for the defendant that Mr Haggar had called him to “advise us to get the documents completed”, that is the engineering documents which had been provided in an incomplete form, to bring them up to the standard where they could be used as construction documents:  p 54. This evidence does not support the allegation in the Defence. Once the negotiations about cost with the Council had been completed, I would expect that Mr Haggar would have been giving instructions to prepare documents which could be used for the construction of the road, the first step being to lodge the documents for approval by the Council. I therefore find that the defendant was retained to provide a design for the road to the specifications of the Gold Coast City Council in accordance with the conditions in the subdivision approval which the Council had issued.

Second issue:  breach

  1. [30]
    It was accepted that the standard of care to be applied was that set out by Windeyer J in Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84; the defendant was bound to exercise due care, skill and diligence, the competence and skill that is usual among engineers practicing their profession, and due care. It is, I think, not to the point that class 2 and class 3 material may be commonly used as a road base and sub-base in Victoria; this road was to be constructed in Queensland, within the area of the Gold Coast City Council, and the requirements of the Council were available on the internet. There was nothing special about industrial collector roads so far as the Gold Coast City Council was concerned:  Exhibit 25 shows that class 1 material is required for the base course under sealed roads whether they are major traffic routes, industrial or commercial streets or residential or rural-residential streets, the only difference being that in the latter two cases it can be class 1B material; all of the sealed roads required a class 2 sub-base. The design prepared did not provide for the classes of base and sub-base material which were required in the Council specifications.
  1. [31]
    As it happens, this aspect of the design was something that Mr Clark was personally familiar with, because he told me it was his decision to specify those two classes of material: p 78. In my opinion, in these circumstances to certify that the design complied with the specifications of the Council involved a want of due care on his part. He said he was not personally familiar with the requirements of the Council; in that case, when asked to certify he ought to have checked the requirements of the Council before doing so. Had he done so he would have discovered that he could not properly give a certificate for the design in that state, and presumably the design would have been rectified. I consider that a reasonably skilful engineer exercising due care would not have provided a certificate that the design complied with the specification of the Gold Coast City Council when it did not in fact do so in this respect, and that that amounted to negligence and a breach of the implied contractual obligation to exercise due care and skill.
  1. [32]
    Mr Clark’s attitude, that the pavement is a PC item in any tender of a contractor because the design cannot be finalised at that stage (p 78), is not an answer to this. What cannot be finalised at that stage is the thickness of the base and sub-base, but there is nothing in the specification to suggest that in some circumstances other classes and material may be acceptable. In these circumstances, specifying classes 2 and 3 was necessarily going to be wrong whatever the result of soaked CBR testing on the subgrade. It follows that the fact that the pavement is always a PC item in a contractor’s tender is in my opinion irrelevant. This may have provided an explanation for a failure to take reasonable care but it does not excuse it.
  1. [33]
    Mr Clark also advanced the notion that the design was in terms subject to conditions, and that one of these was that the requirements of the specifications of the Gold Coast City Council be complied with. It is, I think, one thing to say that that picks up requirements of the Council in respect of matters not otherwise specified on the drawings, but another matter to say that, when a particular piece of information, such as the class of the pavement materials, is specified, saying also on the diagram that the road is to be constructed in accordance with the requirements of the Council puts the responsibility of ascertaining the correct material back on the owner or developer rather than on the design engineer. I consider that the plaintiff was entitled to rely on the information stated expressly on the drawing, and the fact that, had the plaintiff checked the guidelines for the specifications for the pavement material, the error would have been exposed does not excuse the defendant.
  1. [34]
    Mr Clark also drew attention to the fact that the reference to the class of material appeared under a drawing which was marked “NTS indicative only”. He suggested that the words “indicative only” were broad enough to indicate that the classes of material specified ought not to have been relied upon. But the words appear in the context of the letters “NTS” which stand for “not to scale”, and even the defendant’s expert witness accepted that their function was to indicate that dimensions taken from the plan were not to be used slavishly. I do not consider that that was relevant to the classes of material, or detracts from the fact that the drawing on its face specified class 2 material for the road base and class 3 for the sub-base.
  1. [35]
    Counsel for the defendant also advanced a submission in relation to breach which was based on the failure of the plaintiff to follow the testing and inspection procedure and to obtain the further approval of the pavement design; but that has nothing to do with the question of breach, which is concerned with the defendant’s actions and whether those actions measure up to the standards of due care of an engineer. In my opinion there was clearly a breach here.

Third issue:  causation

  1. [36]
    The damages claimed by the plaintiff were those set out in Exhibit 1: the pavement costs thrown away, being the cost of trimming and compaction of the subgrade, a final trim to the road pavements, the cost of purchasing the sub-base class 3 material and half the cost of purchasing the class 2 material used as the road base, on the basis that some of that could have been re-used, and a figure for the increase in costs which had occurred over a period of 18 months. As well, the plaintiff claimed for the cost of standing down its plant for two weeks, the cost to remove the existing material and to re-trim and re-compact the sub-base, and an amount for additional survey costs and wasted engineering fees.
  1. [37]
    The first issue is to what extent these amounts were caused by the defendant’s negligence at all, leaving aside the question of whether there was a break in the chain of causation because of the conduct of the plaintiff. The first thing that occurs to me is that I cannot see any logical justification in allowing both the cost of the original trimming and compacting the subgrade and the cost of re-trimming and compacting the subgrade after the material which ought not to have been placed there was removed. The class 3 material which was placed as sub-base was unsuitable and had to be removed, and the class 2 material which was placed as road base was in the way and also had to be removed. It is understandable that after that had occurred some re-trimming and re-compacting of the subgrade would be necessary, but I do not see why the plaintiff should recover both the trimming and compaction of the subgrade prior to the laying of the incorrect material and re-trimming and re-compaction of the subgrade after the incorrect material had been removed. Presumably if the correct material had been laid the subgrade would have still needed one lot of trimming and compaction. Accordingly in my opinion item 1(a) is not recoverable.[26]
  1. [38]
    The next matter is the allowance for the increase in costs over a period of 18 months. It is understandable that there would be some delay in the construction schedule and that might well have produced some increase in the cost of laying the pavement, but I can see no reason why the defendant is responsible for that increase in costs. No explanation was given to justify the delay other than the fact that there was some few days occupied in negotiating with the Council about the pavement design, and thereafter there was some disruption caused by heavy rain. There was no evidence to suggest that either of those things produced a delay of anything like the order of 18 months. Not only was there no evidence led to connect the delay in completing the road, whether for 18 months or any other period, with the negligence of the defendant, the further delay after the problems caused by wet weather was entirely unexplained by the evidence. There is therefore no evidentiary basis for the claim in paragraph 1(d). In relation to the other items, although the justification for them was not always entirely obvious, there was no particular contention about them, and indeed the defendant’s expert essentially accepted the plaintiff’s calculations in relation to quantum. That does not, I think, compel me to include items 1(a) and (d), which struck me as clearly unjustified, but otherwise subject to the issues of causation I am prepared to accept that the plaintiff’s damages have been proved at $91,668.40.
  1. [39]
    It is clear enough that the “but for” test of causation can be satisfied here: but for the incorrect specification of class 2 and class 3 material on the drawing, the plaintiff would not have laid class 2 and class 3 material, and would therefore not have thrown away the cost of doing so. It is recognised that one example of an exception to the “but for” test of causation is a situation where the deliberate act of the plaintiff or another does something which makes the consequences of the wrongful act more serious than they otherwise would have been: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506.
  1. [40]
    The effect of intervening negligence was considered, though not in depth, in Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529. In that case an undersea pipeline was damaged by a dredge which had strayed out of the designated area for dredging. One issue was whether a company whose employee had incorrectly marked a navigation chart which was being used at the relevant time by those in charge of the dredge to assist them in avoiding the pipeline was a cause of the damage to the pipeline, in circumstances where there was also negligence on the part of the officers navigating the dredge.
  1. [41]
    Gibbs J said at p 543:

“It is true that those in charge of the dredge should have observed the error on the track plotter chart. They might also have checked their position by conventional means. But the fact that they were negligent does not in the circumstances mean that the chain of causation between the negligence of Decca and the damage was broken. It is unnecessary to discuss the principles governing questions of causation. Here the negligence of the officers of the dredge was not independent of the negligence of Decca. They continued to rely on Decca's chart, but failed to check its correctness or to notice its inaccuracies. The negligence of the navigators of the dredge, and of Decca, were concurrent causes leading to a common result. The effect of the errors on the chart persisted until the damage occurred. The negligence of Decca was a cause of that damage.”

  1. [42]
    Stephen J at p 583 said to similar effect:

“The position is not, in truth, one of a break in the casual sequence of events but rather of two different acts of negligence, each of which played its part in causing the damage sued for. Decca's negligence was not disarmed of its harmful potentiality, and superseded, by the other negligent conduct; on the contrary it remained fully operative, although had conventional navigation been properly adhered to this might well have resulted in the damage being wholly averted. In these circumstances there was, in my view, no novus actus interveniens and Decca remains liable for what was a consequence of its negligence.”

  1. [43]
    Mason J agreed with Stephen J (p 593) and Jacobs J also agreed with Stephen J on this point:  p 605. Murphy J agreed with Stephen J that Decca was negligent, but does not appear to have addressed the issue of causation. It follows that, if there is a difference on this point between Gibbs J and Stephen J, it is the latter who gave the authoritative statement of the majority.
  1. [44]
    The issue was considered again by the High Court in Medlin v SGIC (1995) 182 CLR 1. The plaintiff was injured as a result of which he was suffering from chronic pain which was generally at a low level, though in some circumstances it could become quite severe. The alleged intervening event was his decision to retire early from an academic position. He was not under any pressure from his employer to leave, but on the analysis adopted by the majority of the High Court the injury was a contributing cause to the reasoning which had been found to motivate his decision to retire early. The pain produced fatigue and loss of intellectual energy, and meant that his teaching duties occupied so much time that he had little time for research and creative work which he wanted to devote himself to, with the result that he was not performing at the level he thought was desirable. Significantly the trial Judge did not consider the question of whether, had the plaintiff not been injured, his premature retirement would nevertheless have occurred. Their Honours at p 9 said:

“If … that subsidiary ‘but for’ question were answered in the negative, that negative answer would be a factor supporting, but not compelling, the conclusion that the premature termination of the plaintiff's appointment had been caused by the accident.”

  1. [45]
    Four of the five Judges constituting the court said at p 6:

“For the purposes of the law of negligence, the question whether the requisite causal connection exists between a particular breach of duty and particular loss or damage is essentially one of fact to be resolved, on the probabilities, as a matter of common sense and experience. And that remains so in a case such as the present where the question of the existence of the requisite causal connection is complicated by the intervention of some act or decision of the plaintiff or a third party which constitutes a more immediate cause of the loss or damage. In such a case, the ‘but for’ test, while retaining an important role as a negative criterion which will commonly (but not always) exclude causation if not satisfied, is inadequate as a comprehensive positive test. If, in such a case, it can be seen that the necessary causal connection would exist if the intervening act or decision be disregarded, the question of causation may often be conveniently expressed in terms of whether the intrusion of that act or decision has had the effect of breaking the chain of causation which would otherwise have existed between the breach of duty and the particular loss or damage. The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant's wrongful act or omission is, as between the plaintiff and the defendant and as a matter of common sense and experience, properly to be seen as having caused the relevant loss or damage. Indeed, in some cases, it may be potentially misleading to pose the question of causation in terms of whether an intervening act or decision has interrupted or broken a chain of causation which would otherwise have existed. An example of such a case is where the negligent act or omission was itself a direct or indirect contributing cause of the intervening act or decision. It will be seen that, on the plaintiff's evidence, the present was such a case.

Nor can the question of causation of damage in a negligence action be automatically answered by classification of operative causes as ‘pre-eminent’ or ‘subsidiary’. Regardless of such classification, two or more distinct causes, without any one of which the particular damage would not have been sustained, can each satisfy the law of negligence's common sense test of causation. This can be most obviously so in a case where a ‘subsidiary’ cause operates both directly as a cause of the particular damage and indirectly as a contributing component of a ‘pre-eminent’ cause. As will also be seen, the findings of the learned trial judge left open the likelihood that the present was such a case.”

  1. [46]
    One of the issues raised as relevant in that passage is whether the original negligent act or omission was a direct or indirect contributing cause of the intervening act or decision. In the present case, that was not so. The original negligent act was the specification of the wrong grade of material for the base and sub-base. The intervening act or decision was the plaintiff’s decision to begin laying the pavement without first doing soaked CRR testing, arranging for the Council inspection and obtaining the final pavement design approval from the Council. On the hypothesis that the plaintiff would in any case have done the work itself, that decision was not in any way caused directly or indirectly by the error of the defendant.
  1. [47]
    Mr Haggar said that he had previously had difficulty laying class 1 material, and that he would not have sought himself to lay class 1 material, but would have secured the services of a specialist contractor: pp 38 and 39. The effect of that evidence was that, if class 1A material had been correctly specified, the plaintiff would not have done the work itself, but it is not clear whether this applies to the whole pavement construction or just to the laying of the class 1 road base. That was an issue not explored in the evidence. Presumably if the plaintiff had secured a specialist paving contractor to lay the class 1 material, or the whole of the pavement, that contractor would have been aware of the usual procedure and would not have commenced to do whatever work it was to do before the final pavement design approval was obtained. In that sense it could be said that the defendant’s negligent act was indirectly a cause of the plaintiff’s act or decision. That strikes me as a very indirect causal connection, arising only because of an idiosyncratic attitude of the plaintiff not communicated to the defendant. But in any case, for reasons given earlier, I am not prepared to accept this evidence of Mr Haggar.
  1. [48]
    Another significant feature of that passage is that it does not distinguish between the position where the intervening act or decision was that of the plaintiff and the position where it was that of some third party.
  1. [49]
    Another point considered in Medlin was whether the question turned on whether it was unreasonable for the plaintiff to have retired early in the circumstances in which he found himself. The court at p 11 said that the question was not whether his decision to retired was not reasonable but whether, in the context of what was reasonable between the plaintiff and the defendant in determining the defendant’s liability for damages, the premature termination of the plaintiff’s employment was the product of the loss of the plaintiff’s earning capacity notwithstanding that it was brought about by his own decision to accept a voluntary retirement. This point was reiterated at p 13. In the present case it was submitted for the plaintiff that the question was whether the plaintiff’s conduct had been unreasonable, but it seems to me that the effect of this decision is that the question is rather whether it is reasonable to treat the plaintiff’s own decision to commence laying the pavement when he did as reasonable as between the plaintiff and defendant in the context of determining the defendant’s liability for damages for its negligence.
  1. [50]
    The plaintiff’s argument that the question was one of reasonableness of the plaintiff’s conduct was based on the analysis undertaken in Sherson & Associates Pty Ltd v Bailey [2000] NSWCA 275, in particular by Heydon JA from [77]. In that paragraph his Honour referred to a number of authorities on the point, not including Medlin, but including TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 162 where Priestly JA said in effect that a plaintiff cannot recover damages for losses which he would not have incurred had he acted reasonably in the ordinary course of his business.
  1. [51]
    The decision in TCN Channel 9, and in particular the comment of Priestley JA at p 162, were specifically in the context of mitigation of damages, and referable to the decision of Irvine CJ in Driver v War Service Homes Commissioner (1923) 44 ALT 130, which was also directed to the question of mitigation of loss in the context of a claim for damages for breach of contract. In the present case no argument was advanced before me that the plaintiff had been guilty of failure to mitigate its loss, and there was no plea of failure to mitigate in the defence.
  1. [52]
    A complicating feature of Sherson is the fact that the alleged failure of the plaintiff to behave reasonably was said to be relevant to the extent of the liability of the defendants on the basis of one or more of the issues of aggravation of damage, failure to mitigate damage, breaking the chain of causation, and contributory negligence:  [56]. It appears to have been assumed that the issue of whether the defendants had proved unreasonableness on the part of the plaintiff was relevant to all of these issues, and that the first question was whether the appellant defendants could upset the finding of the trial Judge that the plaintiffs had not behaved unreasonably. What was actually decided was that, given that the trial Judge’s decision as to reasonableness was one turning on matters of judgment and degree and on the evaluation of competing considerations, the defendant appellants had failed to show that it was appropriate for an appellate court to overturn it:  [80].
  1. [53]
    The House of Lords considered the question of causation in South Australian Asset Management Corporation v York Montague Ltd [1997] AC 191.  That was a case where valuers were negligent in valuing property, and lenders entered into transactions in reliance on the negligent valuation, in circumstances where, had they been aware of the correct value of the property in question, the transactions would not have been entered into at all. The Court of Appeal held that as a result the valuers were liable for the full loss suffered, in circumstances where the market had fallen substantially after the transactions were entered into.[27]On appeal that was varied to limit the liability of the valuers to the difference between the valuations they gave and the correct value of the property. Lord Hoffmann, with whom the other members of the House agreed, said at 213:

“Rules which make the wrongdoer liable for all the consequences of his wrongful conduct are exceptional and need to be justified by some special policy. Normally the law limits liability to those consequences which are attributable to that which made the act wrongful. In the case of liability in negligence for providing inaccurate information, this would mean liability for the consequences of the information being inaccurate.

I can illustrate the difference between the ordinary principle and that adopted by the Court of Appeal by an example. A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering but has nothing to do with his knee.

On the Court of Appeal’s principle, the doctor is responsible for the injury suffered by the mountaineer because it is damage which would not have occurred if he had been given correct information about his knee. He would not have gone on the expedition and would have suffered no injury. On what I have suggested is the more usual principle, the doctor is not liable. The injury has not been caused by the doctor’s bad advice because it would have occurred even if the advice had been correct.”

  1. [54]
    That approach seems to me to favour the plaintiff. If the defendant’s advice had been correct, that is to say if class 2 and class 3 material had been appropriate or acceptable for the base and sub-base, the plaintiff would not have suffered the loss. That however is a limitation on the general concept of causation, rather than the application of a test for determining whether some intervening event has broken the chain of causation. What if, in that example, the mountaineer choose to undertake without a safety rope a climb which would usually be made, and ought to have been made, using one, the knee gave way during the climb, and because of the absence of a safety rope, the climber suffers significant injury which would have been avoided had he been using the rope?
  1. [55]
    The approach of the House of Lords was rejected in Australia, at all levels of the court process in Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413. All members of the High Court rejected the approach of the House of Lords. Gaudron J referred to the limitations of the “but for” test at [19] and said at [21]:

“As the valuation was a decisive consideration in MGICA's decision to insure the loan from Permanent Custodians to Beca, it is simply common sense to treat that transaction as resulting from the valuation. And subject to a qualification shortly to be mentioned, once that is accepted, it is also common sense to hold a valuer responsible for the loss arising out of that transaction, save to the extent that it is attributable to some other cause.”

  1. [56]
    Her Honour went on to note that, because the valuation was given in a context where the property was treated as security only to the extent of 65% of the valuation, if the lender had advanced more than 65% of the valuation that part of the loss might have been referable to the actions of the lender: [24]. That issue however did not arise on the facts of that case. Her Honour went on to note that the fall in the market price was not to be treated as a supervening cause, because a factor contributing to a foreseeable risk of injury is not to be treated as a supervening cause if the risk eventuates: [25]. This was subject to the following qualification at [26]:

“A person who negligently provides information or advice should not be held liable for loss that would have been suffered if the information or advice were correct. Thus, if some part of the loss suffered by Permanent Custodians would have been suffered even if the property were worth $5.5 million, the appellants cannot be held liable for it.”

  1. [57]
    Once that qualification was accepted, however, it was said to be contrary to commonsense to adopt the approach adopted by the House of Lords: [28]. McHugh J at [35] said that “speaking generally, the valuer is liable only for such losses as a reasonable person would regard as flowing naturally from the negligent valuation or which are of a kind that should have been within the valuer's contemplation.”  That qualification seems to me to parallel the approach adopted by Lord Hoffmann in the passage quoted.
  1. [58]
    Gummow J identified the question in terms of who should bear the risk of a decline in the property market, bearing in mind that the cause of action and hence the quantum of damages crystallised at the point when the loss or damage became manifest. His Honour said at [92]:

“In this way, the temporal question is resolved in a fashion which imposes on the negligent party both the benefit and the burden of the contingency. Other possible contingencies which may affect the value of the property may not reasonably be foreseen by the negligent party, or may be too remote from or not caused by the act of negligence. Losses arising from such contingencies would not be recoverable. The party which is not at fault should not carry the burden of a contingency when that party has no control over it, in circumstances where the contingency is not remote and is reasonably foreseeable by the party at fault and where the legal wrong, in this case careless representations, induces the faultless party to expose itself to the contingency.”

  1. [59]
    Kirby and Callinan JJ, in a joint judgment, noted that this was not a case where the respondent sought to hold the appellant liable for consequences which would have arisen even if the advice had been correct, because on the facts if the advice had been correct the loss would not have been suffered. As well, if there had been no negligence, the transaction would not have proceeded at all, that is to say the plaintiff would not have provided the mortgage insurance at all. Their Honours said at [120]:

“To adopt this approach involves giving content to, or defining the duty of care by having regard to the kind of loss or damage in respect of which the tortfeasor must exercise reasonable care. The duty devolving on the appellant was a duty to exercise reasonable care inter alia to enable the respondent to decide whether to enter into an insurance transaction, which turned out to be imprudent, at all, if an accurate valuation suggested that it should not.”

  1. [60]
    Kenny & Good was concerned more with the limits of the test for causation, rather than the effect of a supervening event. Medlin was cited, but the approach adopted in that case was not discussed in any detail. Since the whole point of the valuation was to enable the insurers to decide whether to provide finance insurance, which depended on the strength of the security compared to the amount sought to be advanced, entering into the transaction which it would not have entered into had it had a valuation prepared with reasonable care and skill and therefore at a lower amount was really the very thing that the insurer sought to guard against by the valuation. What the financier and the insurer did in response to the valuation was exactly what one would expect them to have done in response to a valuation in those terms.
  1. [61]
    The question of causation was considered by the Court of Appeal in Victoria in Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727. The vendor of a commercial building subject to a lease engaged a solicitor to attend to the conveyancing in connection with which the solicitor negligently prepared answers to requisitions on title which failed to disclose a relevant agreement collateral to the lease. When these draft documents were provided to the vendor, it knew they were wrong but used them to make a fraudulent misrepresentation to the purchaser. The purchaser subsequently recovered damages for fraud against the vendor, who brought third party proceedings against the solicitors and at first instance recovered damages for negligence and breach of retainer.
  1. [62]
    On appeal it was held that the vendor’s act broke the chain of causation. Kenny JA with whom the other members of the court agreed said at pp 736-7:

“It is plain enough that the solicitor's negligence was a necessary pre-condition (in the ‘but for’ sense) for the fraud committed by Trenorth, but I do not think that it is to be accurately characterised as a ‘cause’ of the fraud. This is a case in which the negligent act (by Samuel) ‘set the scene’ for a deliberate wrongful act (by Trenorth). In effect, Trenorth took advantage of the opportunity created by Samuel's negligence to transform the outcome of her conduct into a fraud. The true cause of Trenorth's loss was its own deliberate and wrongful act, the solicitor's negligence being but an antecedent (though necessary) pre-condition. Alternatively, if it was a link in a chain of causes, the chain was severed by Trenorth's fraud.

The fact that there is a supervening deliberate wrongful act does not, in all cases, mean that the chain of causation between the negligent act and the loss is broken. It will not necessarily be broken if the negligent act was in breach of a duty of care not to expose the injured plaintiff to a risk of injury arising from deliberately wrongful conduct.”

  1. [63]
    Her Honour went on to give Curmi v McLennan [1994] 1 VR 513 as an example of such a case. After discussing the facts of that case, and referring to some other similar cases, her Honour continued:

“This is not such a case. I do not think it can be said, as a matter of commonsense and experience, that the perpetration of a fraud by Trenorth was something which ‘in the ordinary course of things’ was likely to occur if Mallesons was negligent in advising its client on the sale of the Preston premises. The supervening act, namely the fraud, was so irregular as to break the chain of causation.”

  1. [64]
    Her Honour had previously cited Medlin (supra) at p 6 as well as March v Stramare. There was however no express reference to the formulation of the test in that case, and the test that was actually applied as formulated on p 737 is in somewhat different terms. That case has the unusual feature that the supervening act was a particularly serious one, fraud, and as Callaway JA pointed out in his concurring remarks at p 728, “it will usually be found that fraud breaks a chain of causation the antecedent link in which is negligence or at all events is the sole cause of any increase in the loss.” 
  1. [65]
    In the present case it could be said that as a matter of commonsense and experience the plaintiff’s proceeding to lay the pavement without obtaining the appropriate testing, inspection by the Council inspector and approval of the pavement design was not something which in the ordinary course of things was likely to occur if the defendant was negligent in the identification of the grades of material to be used to the base and sub-base. On the other hand, the supervening act was not as irregular as a fraudulent act, and hence inherently less likely to break a chain of causation.
  1. [66]
    The test in Medlin (supra) to which I have referred was cited and applied by Keane JA, with whom the other members of the court agreed, in Hirst v Nominal Defendant [2005] 2 Qd R 133 at [27]. His Honour went on to say at [29]:

“The reasoning in Medlin confirms the propositions that voluntary or deliberate or unusual conduct on the part of a plaintiff does not necessarily sever the causal nexus so as to relieve a negligent defendant from liability for loss suffered by a plaintiff; and that it is necessary to have regard to the extent to which the plaintiff's voluntary conduct has been constrained by the defendant's misconduct, and then to ask whether as between plaintiff and defendant it was reasonable of the plaintiff to make the choice which was the immediate cause of the loss. …  [These propositions] recognize that there may be a point at which it is possible to say that it is not reasonable as between the plaintiff and defendant that the defendant is responsible for the voluntary conduct of the plaintiff, e.g. because the choice made by the plaintiff may be so unexpected a response to the defendant's conduct that the defendant should not bear any of the consequences of that decision, it cannot be said that this point was reached in this case.”

  1. [67]
    In that case the plaintiff was a police officer who was pursuing a speeding vehicle which had failed to stop when lights and siren were activated, and was then involved in the collision with another innocent vehicle on the road in circumstances where the Court of Appeal confirmed a finding of contributory negligence against the plaintiff, and the trial Judge’s apportionment of liability. At [44] Keane JA summarised the circumstances under which the collision occurred and continued:

“In these circumstances, I consider that the learned primary judge was correct to conclude that this decision further to escalate the danger was unreasonable, and not merely an error of judgment.”

  1. [68]
    His Honour had previously characterised the question in relation to contributory negligence as whether the decision, taken in the particularly difficult circumstances that arose in that case where the police officer was confronted with the need to decide how to respond to the offender’s high speed flight, should be characterised as an error of judgment or a failure to take reasonable care for his own safety: [36]. This analysis confirms that the test for a supervening event breaking the chain of causation is different from the test for contributory negligence, because the police officer’s conduct was held to be contributory negligence, but not to break the chain of causation. It confirms my impression that the High Court in Medlin adopted a different test for whether conduct of the plaintiff broke the chain of causation from that contended for by counsel before me.
  1. [69]
    That approach was also adopted by the Court of Appeal in New South Wales in Blaxter v Commonwealth of Australia [2008] NSWCA 87. In that case it was held that as a result of the defendant’s negligence the plaintiff had suffered serious psychiatric injury, and that this had led to his drinking to excess, so that the plaintiff’s voluntary choice to drink did not break the chain of causation. The same approach was adopted by the Court of Appeal in Western Australia in Burns v Pearce [2010] WASCA 214, a case involving two successive collisions by the defendant and the plaintiff with the same cow at night on a country road.
  1. [70]
    More recently, Kiefel J, with whom Crennan J agreed, summarised the current Australian law in relation to causation in Tabet v Gett (2010) 240 CLR 537 at [111]-[112]. Her Honour noted that it was necessary to understand the purpose of making an inquiry about causation and that may require value judgments and policy choices. That reflects what was said in Travel Compensation Fund v Tambree (2005) 224 CLR 627 by Gummow and Hayne JJ at [46], where their Honours accepted that considerations of legal policy may enter into the selection of those causative factors which are determinative of liability, though this was not to adopt a quite different proposition that in any given case the ultimate issue was whether the defendant ought to be held liable to pay for the harm suffered. In the same case Callinan J at [81] said of the resolution of questions of causation:

“Value judgments may sometimes be inescapably involved, but that they may, does not justify the division of the question into a ‘but for’ test and a further inquiry whether a defendant should in law be held responsible for a plaintiff's damage.”

  1. [71]
    That however appears to have been precisely what was done by the legislature when enacting the Civil Liability Act 2003 s 11(1) which provides:

“(1) A decision that a breach of duty caused particular harm comprises the following elements—

  1. (a)
    the breach of duty was a necessary condition of the occurrence of the harm (factual causation);
  1. (b)
    it is appropriate for the scope of the liability of the person in breach to extend to the harm so caused (scope of liability).”
  1. [72]
    Subsection (2) deals with an exceptional case where subsection (1)(a) has not been satisfied, which does not arise here. Subsection (3) is concerned with an evidentiary issue which does not arise here. Subsection (4) provides:

“For the purpose of deciding the scope of liability, the court is to consider (among other relevant things) whether or not and why responsibility for the harm should be imposed on the party who was in breach of the duty.”

  1. [73]
    That suggests that the legislature requires an approach different from that adopted by the High Court in Tabet, at least to some extent. An example of the application of the statutory test is the decision in French v QBE Insurance (Australia) Ltd [2011] QSC 105. In that case a taxi driver who was conveying an inebriated passenger took the passenger to an incorrect address, although he had been given the correct address by someone else. Being at that address unable to arouse the passenger, he simply ejected him from the taxi and left him lying on the footpath. The passenger subsequently woke up and wandered in an intoxicated state for some time before collapsing on a busy road where he was struck and killed by passing motor vehicles. Fryberg J noted that the risks to which the deceased was exposed by the defendant’s conduct were obvious and one of those risks eventuated. The defendant assumed some responsibility for the deceased’s welfare and his conduct involved in abdication of that responsibility. Given the facilities available the taxi driver was in the best position to control the risks. Hence the death of the deceased was not too remote a consequence.
  1. [74]
    It is not clear whether s 11 was intended to be an exhaustive statement of the law in relation to causation, to the point of excluding any other rules in relation to the effect of a supervening event for example, though it occurs to me that, because of the width of subsection (4), the factors which on the authorities were at common law regarded as relevant to determining whether a supervening act or decision broke the chain of causation could be accommodated in the statutory scope of liability aspect of causation. For practical purposes what matters is that the legislation does not so far as I can see impose a different test for assessing the significance of a supervening act or decision.
  1. [75]
    The statutory factual causation test is satisfied here: if the correct classes of material had been specified on the plan, the plaintiff would not have laid the pavement with the incorrect classes of material. As to the scope of liability test, laying pavement in the class of material specified in the drawings was the sort of thing which one would naturally expect to occur as a result of the specification of those classes of material in those drawings, and therefore the scope of liability test will be satisfied unless the plaintiff’s decision or choice to lay that material at a time when, under the requirements of the Gold Coast City Council and the usual practice in the industry, such pavement ought not to have been laid excludes such causation. I therefore consider that the resolution of the question of causation turns on the application of the tests laid down by the High Court in Medlin, as expounded further by the Court of Appeal in Hirst.
  1. [76]
    That involves a consideration of whether, in the context of what was reasonable as between the plaintiff and defendant in determining the defendant’s liability in damages, the premature laying of the pavement by the plaintiff was the product of the defendant’s incorrect design notwithstanding that it was brought about by the plaintiff’s own decision to proceed to lay the pavement. That is to be considered bearing in mind the extent to which the plaintiff’s voluntary conduct had been constrained by the defendant’s misconduct, and whether the choice made by the plaintiff was so unexpected a response to the defendant’s conduct that the defendant should not bear any of the consequences of that decision.
  1. [77]
    In my opinion in this case a significant factor is that this is not a case where the plaintiff’s voluntary conduct has been constrained by the defendant’s misconduct. This is not a case where the defendant’s action in specifying the incorrect grades of material in some way contributed to the plaintiff’s choice to proceed to lay the pavement without obtaining the soaked CBR tests on the subgrade, without having the subgrade inspected by the Council officer, and without obtaining approval of the final pavement design, as required by the conditions of the approval for the operational works and the usual practice in the industry in relation to the construction of roads. I accept that this is the sort of thing that may happen from time to time, and that it could not be said to be an unforeseeable event, but there was no evidence that the constraints imposed by the guidelines and the usual practice are routinely or frequently disregarded.
  1. [78]
    This was not simply a case where ordinary prudence, or a duty to take reasonable care for one’s own financial well-being, indicated that particular conduct should not occur. Because of the operation of the applicable legislation, the construction of the road was under the control of the local authority, and the local authority required that that conduct not occur. This was not just a breach of the local authority’s guidelines, it was a breach of the conditions of the approval for the construction of the road, which relevantly required compliance with those guidelines.[28]I was not taken to the provisions of the legislation constraining the undertaking of such works, so as to show what the consequence of a breach of such a condition is under that legislation, but obviously the intention of whatever structure is in place is that, when conditions are imposed in this way, they are to be complied with. The conduct was not as serious as fraud, but it was more serious than a mere failure to take reasonable care.
  1. [79]
    If and insofar as value judgments may be relevant, either at common law or as a result of the wording of s 11, I do not consider that it is appropriate that the defendant’s liability in damages for its negligence should be greater than it would otherwise have been because the plaintiff did the wrong thing, in circumstances where there was nothing in the defendant’s conduct which caused the plaintiff to do the wrong thing. In this analysis, it is important to bear in mind that the “wrong thing” that I am referring to is not the construction of the pavement in the wrong materials, but the laying of the pavement prematurely.
  1. [80]
    In those circumstances, I consider that insofar as the plaintiff’s loss was the product of the premature laying of the pavement, damages associated with that are not recoverable, because that was, relevantly, caused by the plaintiff’s decision to lay the pavement at that time without the required testing, inspection and approval, which in the traditional formula has broken the chain of causation. The defendant is liable only for such loss which the plaintiff would have suffered had it not acted in that way.

Fourth issue: Contributory negligence – preliminary point

  1. [81]
    There was a preliminary point taken, by counsel for the plaintiff, that insofar as the cause of action lay for damages for breach of contract, contributory negligence had not been pleaded. The defence in fact contained a plea of contributory negligence, in conventional terms, but counsel for the plaintiff submitted that, because the plea did not identify expressly the particular statutory provision relied upon, in breach of UCPR r 149(1)(e), the defence did not extend to the cause of action in contract. This was based on the proposition that contributory negligence had been held not to be available in an action for damages for breach of contract, and that, insofar as that situation had subsequently been reversed by statute, it was necessary to refer to that specific statutory provision otherwise the rule had not been complied with.
  1. [82]
    In Astley v Austrust Ltd (1999) 197 CLR 1 the High Court held that contributory negligence was not a defence to a claim for damages for breach of contract, even where the breach relied on was a breach of an implied term that services would be performed with reasonable care and skill, which was paralleled by a similar obligation in tort. This came as something of a surprise to many people, particularly when it was realised that it applied to actions for damages for breach of an implied term in a contract of employment relating to the safety and well-being of an employee, so that for practical purposes contributory negligence ceased to be available in industrial accident cases.
  1. [83]
    The legislative response was not particularly swift but it was decisive. By the Law Reform (Contributory Negligence) Amendment Act 2001, which was taken to have commenced on 7 August 2001, s 10 of the Law Reform Act 1995 was amended so that it applied to reduce liability because of contributory negligence in circumstances where the damage was suffered partly because of the wrong of someone else, that wrong being defined to extend to “an act or omission that amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort.”  A definition to that effect was inserted in s 5 of that Act. In the present case, the implied obligation to perform the services with reasonable care was the same as a duty of care arising independently of the contract, so the situation was one where the provision applied, as indeed was the case in Astley (supra).
  1. [84]
    Accordingly it is the case that strictly speaking the defence of contributory negligence depended upon s 10 of the Law Reform Act 1995, so that compliance with r 149(1)(e) required that provision to be identified. It is certainly the case that a plea of contributory negligence must be specifically pleaded:  r 115(1)(l). It is in practice commonly pleaded without reference to the provision of the statute, but the fact that the plaintiff was suing for damages for breach of contract was not a distinguishing feature in that situation. Contributory negligence was a complete defence to an action in negligence at common law, and the 1995 Act is a consolidation of inter alia the Law Reform (Tortfeasors’ Contribution, Contributory Negligence, and Division of Chattels) Act 1952, by s 10 of which contributory negligence would no longer defeat the claim, but the damages recoverable would be reduced to such extent as the court thought just and equitable. This only applied to claims where the act or omission giving rise to the claim occurred after the commencement of the Act:  s 12, a provision retained in s 11 of the 1995 Act.
  1. [85]
    It follows that since the UCPR was adopted in 1999 every plea of contributory negligence ought to have referred to s 10 of the Law Reform Act 1995. The amendment made in 2001 in response to Astley (supra) did not change that. In relation to such pleas, the requirements of r 149(1)(e) have been more honoured in the breach than the observance, and bearing that in mind I consider that the plaintiff had sufficient notice from the pleading of the actual case the defendant intended to run, and that contributory negligence was being relied upon in respect of both claims, in contract and in tort, as is permitted under the statute. The breach of r 149 was an irregularity, and should be disregarded. The real importance of r 149(1)(e) is in cases where it may not be obvious what the legislative basis of the claim or defence may be; that is not the case with contributory negligence. There is therefore no substance in this preliminary point, and indeed I do not consider the defence requires amendment.

- Precautionary finding

  1. [86]
    Bearing in mind the conclusion that I have reached in relation to the question of causation, it is strictly speaking unnecessary for me to deal with the issue of contributory negligence. The matters relied on as breaking the chain of causation were the same as the matters relied on as amounting to contributory negligence. Nevertheless, I should make a finding on a precautionary basis of whether the plaintiff’s premature laying of the pavement amounted to a failure to take reasonable care for its own financial well-being. It would however in the circumstances be quite artificial for me even to attempt to make a precautionary finding as to apportionment. On this point, the issue was correctly identified as whether the plaintiff’s action was reasonable.
  1. [87]
    One matter relied on by the plaintiff was the statement of Mr Bryett in Exhibit 28 p 2, “I am also of the opinion that a constructor could have reasonably assumed that if a minimum subgrade CBR 15 was achieved during earthwork’s preparation then the TDC pavement design could be utilised without change, excluding the need to determine actual pavement depths following CBR testing.”  I do not consider however, that this amounts to an expression of opinion that was reasonable for the plaintiff to have done what he did, because it assumes that the minimum subgrade CBR 15 was achieved. That can only be determined by testing in situ after the subgrade has been prepared and compacted.[29]It follows that this is not an expression of opinion that the CBR testing on the compacted subgrade can be dispensed with, but rather that, if that testing revealed that the subgrade in situ had a CBR of 15 (or more), it would be reasonable to assume that the pavement design would not require alteration. That is not what the plaintiff did, since there was no proper testing of the subgrade before the pavement was laid. It also did not in my opinion amount to an expression of opinion that, even if proper testing revealed that the subgrade had achieved a CBR of 15, the Council procedures for inspection and final approval of the pavement design could be reasonably disregarded.[30]
  1. [88]
    It was also submitted that the effect of Mr Rebibou’s evidence was that it was reasonable for the plaintiff to have proceeded with the construction of the pavement courses. This was based on his evidence at pp 3-4; but as the answer on p 4 makes clear, what Mr Rebibou was saying in this passage was that it was reasonable for the plaintiff to assume that the material specified in the design would not change as a result of the testing of the subgrade. It may well be reasonable to assume that the materials required for the base and sub-base would not change from those identified on the drawing as a result of the CBR testing; but that does not mean that it was reasonable to proceed to lay the sub-base and base without conducting soaked CBR testing in order to confirm that the subgrade had met the required standard of strength, or that it was reasonable to proceed to lay the sub-base and road base without first complying with the Council’s requirements for inspection by the Council of the sub-grade, and approval of the final pavement design. Mr Rebibou did not say that it was reasonable for the plaintiff to have proceeded to lay the pavement under those circumstances, and they were the ones which prevailed.
  1. [89]
    It may also be reasonable to assume that fill material rated at CBR 15 would if compacted properly provide a subgrade of sufficient strength to enable the pavement to be laid upon it, but it does not follow that it is reasonable for a person who has obtained such material and thinks that it has been properly laid and compacted to dispense with the standard testing procedure which was specified on the design drawing, is required by the local authority for all road projects, and is in accordance with the usual procedure for road construction, and which is designed to determine, in a standardised fashion, whether the required strength of the subgrade has in fact been achieved.
  1. [90]
    In my opinion, it was not reasonable for the plaintiff to proceed to lay the pavement without having conducted those standard tests, and without having complied with the requirements of the local authority for an inspection of the subgrade and approval of the final pavement design prior to laying the pavement. It may well be that at times road constructors do proceed without complying with the steps,[31]but it does not follow that is reasonable for them to do so; in effect, they take the risk that what they have done will prove to be acceptable to the local authority. If it turns out that it is not, they have to accept the consequences of that choice. The issue for the purpose of contributory negligence is whether it was reasonable for the plaintiff to proceed to lay the pavement in these circumstances. In my opinion, for the reasons that I have given, it was not, and it follows that, were it necessary to do so, I would find that the plaintiff was guilty of contributory negligence.

Conclusion

  1. [91]
    It follows from my findings earlier that the defendant is liable only for such additional costs as the plaintiff would reasonably have been put to if it had not commenced laying the pavement prematurely. There should have been no need to re-trim and re-compact the subgrade, which ought to have been ready to go. There was no evidence to the effect that it was usual to purchase pavement material in advance of when it is to be laid, so there is no reason to think the incorrect material would have been purchased in those circumstances. There would have been no costs incurred for removing material, and there would have been no need to re-establish the centre line of the road. I accept however that there would have been some additional engineering fees, and there may well have been some delay in construction associated with this change in plan, although I cannot see that a delay in the order of two weeks would be justified in such circumstances. All that would be covered was any delay associated with the need to change the plans because it had emerged that grade 1A and 2 materials were to be laid rather than grade 2 and 3; in the circumstances, I think two days would be a reasonable allowance for any delay associated with that, so I will allow 20% of item 2, $6,372. There would have been some additional engineering fees I expect, but it seems that the plaintiff’s claim is based on the engineering fees which were wasted, and I did not think all of them were wasted; I will allow half of item 5, $2,375. This produces a total of $8,747.
  1. [92]
    I will also allow interest of 10% per annum for 43/4 years, the sum of $4,154. Accordingly there will be judgment that the defendant pay the plaintiff $12,901, including $4,154 by way of interest. I will hear submissions in relation to costs when these reasons are delivered.

Footnotes

[1]  Although the Council agreed that the plaintiff would construct the road, it was still necessary for the plaintiff to apply for Council approval of its construction of the road, Exhibit 16, thanks to the miracle of modern bureaucracy.

[2]  Haggar p 3, p 83; Clark p 54, p 71.

[3]  As noted on the drawings Exhibit 6; see Clark p 61.

[4]  Clark p 109. I do not accept his statement at p 61 that he told Haggar they were only preliminary drawings.

[5]  See as to structure of pavement Barry p 127.

[6]  For the meaning of this see Barry p 139.

[7]  Haggar p 105. The drawings required certification: Bryett p 43.

[8]  Exhibit 7. When the Council realised no such certificate was included in the documents lodged by Haggar, the relevant officer contacted Clark and drew the omission to his attention, whereupon Clark provided the certificate direct to the Council:  Clark p 63.

[9]  The CBRs are class 1A 80, class 2 45, and class 3 15, the lower numbers indicating weaker material. As to CBR, see Rebibou p 118-9, p 25.

[10]  Exhibit 25 clause 5.2; Exhibit 24 clause 9.2.1(h), clause 9.3.2; Exhibit 13 clause 3.3.2.

[11]  Haggar p 41; p 82; Rebibou p 110, p 20.

[12]  Rebibou p 112.

[13]  Rebibou p 7; Clark p 106; Barry p 136, p 142; Exhibit 31; Bryett p 41.

[14]  Rebibou p 113; I prefer this account to Haggar pp 68-69.

[15]  Bryett p 41.

[16]  Exhibit 8: the tests showed CBR of 7 or 8.

[17]  Barry p 130.

[18]  He did roll tests:  p 45-6. This is something done before a soaked CBR test is done, not a substitute for it:  Rebibou p 8.

[19]  Rebibou p 23-4.

[20]  Rebibou p 5, p 9.

[21]  Haggar Page 49. No doubt his compliance made it unnecessary for the Council to issue a formal Stop Work Order.

[22]  For the interpretation of this and the correct test dates, see Exhibit  33, Barry p 120.

[23]  E.g. Haggar p 76 line 40.

[24]  Haggar p 32, including as a contractor for the Gold Coast City Council.

[25]  Haggar claimed he previously had had accepted a quarry rating in place of a soaked CBR test:  p 91. That was unsupported by, and really contrary to all the other evidence, and what in fact happened here, and I reject that evidence. In re-examination Haggar said that the rating of the fill is not as important as to the compaction:  p 104. It follows that he knew that what matters is the result achieved when the material is laid.

[26]  This item was not supported by the analysis in Exhibit 29, nor was item 1(d).

[27]Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] QB 375.

[28]  Exhibit 16 Condition 6. The requirement in Condition 1, that the works be carried out in accordance with the approved engineering drawings (Exhibit 6) was subject to this condition.

[29]  Bryett p 40.

[30]  Bryett said his company always adhered to them strictly: p 39.

[31]  Rebibou p 14.

Close

Editorial Notes

  • Published Case Name:

    Gratrax Pty Ltd v TD & C Pty Ltd

  • Shortened Case Name:

    Gratrax Pty Ltd v TD & C Pty Ltd

  • MNC:

    [2013] QDC 63

  • Court:

    QDC

  • Judge(s):

    McGill SC DCJ

  • Date:

    09 Apr 2013

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2010] QDC 40926 Oct 2010Application for security for costs granted: Robin QC DCJ.
Primary Judgment[2013] QDC 6309 Apr 2013Action for damages for breach of contract or negligence in respect of some engineering services provided by the defendant to the plaintiff. Judgment that the Defendant pay the Plaintiff $12,901 including $4,154 by way of interest: McGill SC DCJ.
Appeal Determined (QCA)[2013] QCA 385 [2014] 2 Qd R 26117 Dec 2013Appeal dismissed: Fraser and Morrison JJA and M Wilson J.

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Astley v Austrust Ltd (1999) 197 CLR 1
2 citations
Jump To
Cite 1 - (1999) 197 CLR 1
Cite 2 - (1999) 197 CLR 1
Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd (1997) AC 191
2 citations
Jump To
Cite 1 - (1997) AC 191
Cite 2 - (1997) AC 191
Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd (1995) QB 375
1 citation
Jump To
Cite 1 - (1995) QB 375
Blaxter v Commonwealth of Australia [2008] NSWCA 87
2 citations
Jump To
Cite 1 - [2008] NSWCA 87
Cite 2 - [2008] NSWCA 87
Burns v Pearce [2010] WASCA 214
2 citations
Jump To
Cite 1 - [2010] WASCA 214
Cite 2 - [2010] WASCA 214
Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
3 citations
Jump To
Cite 1 - (1976) 136 CLR 529
Cite 2 - (1976) 136 CLR 529
Cite 3 - (1976) 136 CLR 529
Curmi v McLennan [1994] 1 VR 513
2 citations
Jump To
Cite 1 - [1994] 1 VR 513
Cite 2 - [1994] 1 VR 513
Driver v War Service Homes Commissioner (1923) 44 ALT 130
2 citations
Jump To
Cite 1 - (1923) 44 ALT 130
Cite 2 - (1923) 44 ALT 130
French v QBE Insurance (Australia) Limited [2011] QSC 105
2 citations
Jump To
Cite 1 - [2011] QSC 105
Cite 2 - [2011] QSC 105
Hirst v Nominal Defendant[2005] 2 Qd R 133; [2005] QCA 65
2 citations
Jump To
Cite 1 - [2005] 2 Qd R 133
Cite 2 - [2005] 2 Qd R 133
Kenny & Good Pty Ltd v MGICA (1999) 199 C.L.R. 413
2 citations
Jump To
Cite 1 - (1999) 199 C.L.R. 413
Cite 2 - (1999) 199 C.L.R. 413
Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727
2 citations
Jump To
Cite 1 - [1999] 1 VR 727
Cite 2 - [1999] 1 VR 727
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
2 citations
Jump To
Cite 1 - (1991) 171 CLR 506
Cite 2 - (1991) 171 CLR 506
Medlin v State Government Insurance Commission (1995) 182 CLR 1
2 citations
Jump To
Cite 1 - (1995) 182 CLR 1
Cite 2 - (1995) 182 CLR 1
Sherson & Associates Pty Ltd v Bailey [2000] NSWCA 275
2 citations
Jump To
Cite 1 - [2000] NSWCA 275
Cite 2 - [2000] NSWCA 275
Tabet v Gett (2010) 240 CLR 537
2 citations
Jump To
Cite 1 - (2010) 240 CLR 537
Cite 2 - (2010) 240 CLR 537
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
2 citations
Jump To
Cite 1 - (1989) 16 NSWLR 130
Cite 2 - (1989) 16 NSWLR 130
Travel Compensation Fund v Tambree (2005) 224 CLR 627
2 citations
Jump To
Cite 1 - (2005) 224 CLR 627
Cite 2 - (2005) 224 CLR 627
Voli v Inglewood Shire Council (1963) 110 CLR 74
2 citations
Jump To
Cite 1 - (1963) 110 CLR 74
Cite 2 - (1963) 110 CLR 74

Cases Citing

Case NameFull CitationFrequency
Gratrax Pty Ltd v T D & C Pty Ltd[2014] 2 Qd R 261; [2013] QCA 38529 citations
1

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