Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Rennie Golledge Pty Limited v Ballard [2012] NSWCA 376
• Hearing dates: 10 October 2012
• Decision date: 10 October 2012
• Before: Basten JA at [1]; Campbell JA at [19]; Barrett JA at [153]

Decision

(1) Grant leave to appeal.

(2) Direct Applicant to file, within seven (7) days, a Notice of Appeal in terms of the draft Notice of Appeal appearing at page 27 of the White Book.

(3) Dismiss the appeal.

(4) Order the Applicant to pay the Respondents' costs of this appeal.

(5) Reserve Reasons.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PRACTICE & PROCEDURE - amendment of defence - out of time and on eve of proposed trial - court's discretion to allow amendment taking into account circumstances of the request - consideration of Civil Procedure Act - no adequate explanation for delay - low chance of success as defence - prejudice to plaintiffs - amendment refused; TORTS - proportionate liability - whether contributory negligence provides a basis for limiting a defendant's damages under s 35 Civil Liability Act 2002 - legislative policy precludes inclusion of contributory negligence with the meaning of "concurrent wrongdoer"; TORTS - proportionate liability - where surveyor negligently represented incorrect benchmark levels on survey plan in flood-prone land - where house subsequently constructed in accordance with incorrect levels refused occupation certificate - whether alleged negligence of plaintiffs sufficient to establish proportionate liability - whether a plaintiff can be proportionately liable with respect to his or her own loss - distinction between "concurrent wrongdoer" and contributory negligence - a plaintiff who has negligently contributed to his or her own loss is not a "concurrent wrongdoer"; TORTS - proportionate liability - where surveyor negligently represented incorrect benchmark levels on survey plan in flood-prone land - where house subsequently constructed in accordance with incorrect levels refused occupation certificate - whether builders concurrent wrongdoers with surveyor - insufficient evidence to establish realistic prospect of breach of duty by builders or causation of damage
• Legislation Cited: Australian Consumer Law; Civil Liability (Personal Responsibility) Act 2002; Civil Liability Act 2002 (NSW), s 35; Pt 4; Competition and Consumer Act 2010 (Cth); Fair Trading Act 1987; Fair Trading Amendment (Australian Consumer Law) Act 2010; Home Building Act 1989; Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5; Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9; Supreme Court of Judicature Act 1873 (Eng); Uniform Civil Procedure Rules 2005 (NSW), r 36.15, 36.16, 36.17; Workers Compensation Act 1987 (NSW), s 151Z
• Cases Cited: Aon Risk Services Aust Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175; Bellgrove v Eldridge (1954) 90 CLR 613; Coshott v Fewings Joinery Pty Ltd (NSWCA, 15 July 1996, unreported); Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208; (2008) 21 VR 84; Hastings Co-operative Ltd v Port Macquarie Hastings Council [2009] NSWCA 400; (2009) 171 LGERA 152; I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109; Isaacs v The Ocean Accident and Guarantee Corporation Ltd and Winslett (1958) 58 SR(NSW) 69; Johnson v Agnew [1980] AC 367; Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216; Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; 156 CLR 522; Manly Council v Malouf t/as Fusion Point [2004] NSWCA 299; (2004) 61 NSWLR 394; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390; Oxley County Council v MacDonald [1999] NSWCA 126; Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liquidation) [2011] NSWCA 367; Spiers v Caledonian Collieries Ltd (1957) 57 SR(NSW) 483; Suncorp-Metway Ltd v Anagiotidis [2009] VSC 126; Timberland Property Holdings Pty Ltd v Bundy [2005] NSWCA 419; Transfield Construction v Peers [2008] NSWCA 215
• Texts Cited: JW Carter, Breach of Contract, 2nd ed (2011) LexisNexis Butterworths
• Category: Principal judgment
• Parties: Rennie Golledge Pty Limited (Applicant); Norman Ballard (First Respondent); Noleen Ballard (Second Respondent); James Ballard (Third Respondent); Janet Ballard (Fourth Respondent)
• Representation: Counsel: Mr DT Miller SC (Applicant); Mr J Young (Respondent); Solicitors: Indemnity Legal Pty Limited (Applicant); Sparke Helmore (Respondent)
• File Number(s): 2012/223456

Decision under appeal

• Date of Decision: 2012-06-22 00:00:00
• Before: Olsson DCJ
• File Number(s): 2011/227835

Judgment

1 BASTEN JA: This appeal was heard on 10 October 2012. At the conclusion of the hearing, the Court made orders, the effect of which was to dismiss the appeal with costs. Reasons were reserved.

The issues

2 The respondents (the plaintiffs in the Court below) built two dwellings on land at One Mile Beach, near Port Stephens. The land was low lying and a condition of the development consent was that the floors be above a specified datum level. In surveying the land, the applicant (the sole defendant in the Court below) mistakenly recorded the level of a reference point. The houses, as constructed, were too low and the respondents incurred significant losses as a result of the need to raise or rebuild the houses.

3 The applicant did not dispute liability and the matter was set down for hearing for an assessment of damages. However, shortly prior to the hearing, the applicant sought leave to amend its defence in order to limit its liability to that proportion of the damage or loss for which it should properly be held responsible. It sought to argue that the claims against it were "apportionable claims" within the meaning of Pt 4 of the Civil Liability Act 2002 (NSW). If that defence were permitted and upheld, the applicant would not have been jointly and severally liable for the whole of the damage or loss suffered by the respondents, but only for that portion which was considered just having regard to the extent of its responsibility: s 35(1).

4 The primary judge, Olsson DCJ, dismissed the application to amend. The judgment was based on two propositions, namely that the amendment should not be allowed:

(a) because to permit the amendment would require varying the judgment on liability entered against the applicant in September 2011;

(b) in the exercise of the Court's discretion, because -

(i) the delay in seeking to raise the defence was not justified;

(ii) to allow the amendment would delay the resolution of the proceedings and cause prejudice to the respondents;

(iii) a refusal to amend would not preclude the applicant pursuing a claim for contribution against any concurrent tortfeasor against whom it had a good cause of action, and

(iv) the cause of action was, in any event, likely to fail.

5 The appeal, brought with leave, challenged that interlocutory judgment. Absent any attempt to vary the order as to liability, the first proposition was sufficient to dispose of the motion to amend. The primary judge was correct in her finding in this respect, for the reasons set out below. The second proposition was also correctly upheld, as explained by Campbell JA.

Effect on judgment on liability

6 The trial judge held that the judgment entered in September 2011 resolved against the defendant (the present applicant) "issues of breach, causation and the entitlement to damages": at [49]. The significance of this conclusion was that the applicant did not seek to have the judgment set aside or varied: accordingly, it was only entitled to such relief as was consistent with that judgment. On the assumption, conceded in argument, that it bore some level of responsibility for the loss suffered by the respondents, it submitted that there was no inconsistency between the judgment entered and any final orders, which would involve an order that it pay the respondents a sum of money.

7 The concept of a limited proportionate liability involves a qualification of the general principle that where there are several concurrent tortfeasors a successful plaintiff is entitled to recover several judgments against each for the full amount of his or her loss: Speirs v Caledonian Collieries Ltd (1956) 57 SR(NSW) 483 at 503 (Street CJ and Herron J) and 512 (Myers J); Timberland Property Holdings Pty Ltd v Bundy [2005] NSWCA 419 at [55]. The question of contribution between the concurrent tortfeasors is a matter to be resolved as between them, being a matter in which the plaintiff has no interest. Nor is the common law principle affected by statutory provisions which may require differential calculations of the amount of damages, as between the several tortfeasors: see, eg, Workers Compensation Act 1987 (NSW), s 151Z; Oxley County Council v MacDonald [1999] NSWCA 126 at [51] (Sheller JA); Timberland at [57].

8 The common law principle is, however, varied by Pt 4 of the Civil Liability Act. Where that Part applies, the liability of the defendant who is a concurrent wrongdoer is "limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss": s 35(1)(a). Further, the court may only give judgment against the defendant "for not more than that amount": s 35(1)(b).

9 The proposed amended defence alleged that each of the builder and the plaintiffs was a concurrent wrongdoer and that the liability of the applicant for damages to the plaintiffs "is limited to an amount ... reflecting that proportion of the damage that is just having regard to the extent [of] its responsibility for the damage or loss": proposed amended defence, paragraph 10. The applicant expressly eschewed, however, any need or proposal to set aside the judgment already entered. That judgment, entered by consent, included the following orders:

"1. Judgment for the plaintiffs for damages to be assessed.

2. Plaintiffs to provide discovery of documents relevant to the assessment of damages on or before 14 October 2011.

3. Plaintiffs to serve evidence as to quantum on which they intend to rely on or before 14 October 2011.

4. Defendant to serve evidence as to quantum on which it intends to rely on or before 11 November.

...

8. Costs reserved."

10 Because the orders are not final, they did not give rise to a res judicata in the sense that the causes of action pleaded (or any of them) had merged in the judgment. However, the first order potentially estopped the applicant from disputing any issue which was necessarily determined by the terms of the order. Where there is doubt as to the scope of the matters determined, it will be open (and in some cases necessary) for the court to consider the record in order to establish what was, objectively, intended to be determined: Isaacs v The Ocean Accident and Guarantee Corporation Ltd (1957) 58 SR(NSW) 69 at 74-75 (Street CJ and Roper CJ in Eq), a case involving a final judgment made by consent but without admission of liability.

11 The respondents' claims were pleaded in contract, tort and under the Australian Consumer Law, although the last had not commenced at the date at which the relevant conduct occurred. In its defence, the applicant conceded that it had failed to exercise reasonable skill and care in providing surveying services, in breach of contract and in breach of its duty of care in tort and had also contravened the relevant provisions of the Trade Practices Act 1974 (Cth), as in force at the time of the conduct.

12 The entry of judgment on liability, for damages to be assessed, was sufficient to preclude the applicant from asserting that it was not liable in damages to the respondents. On the other hand, the respondents were put to proof as to the quantum of their losses recoverable from the applicant.

13 In determining what has been resolved by an entered judgment or order, it will not often be helpful to define the elements of a cause of action in the abstract. Particularly is that so in respect of causation, which can arise in different ways in different contexts. Thus, for example, in a simple motor accident, causation can arise as an issue at at least two stages. At the first stage, there may be a question as to whether the speed at which the defendant was driving materially contributed to the collision in which the plaintiff was injured. At a second stage, there may be a question as to whether a specific injury identified by the plaintiff was in fact caused by the accident, or was a pre-existing condition.

14 In the present case, the critical question was whether the entry of judgment on liability was inconsistent with the later claim that either the respondents themselves, or the builder, were or was responsible for a proportion of any loss suffered, with the result that the applicant was not liable for that proportion of any loss.

15 With respect to the potential responsibility of the respondents, as Campbell JA explains, Pt 4 should not be construed to incorporate as concurrent tortfeasors plaintiffs who are partly responsible for their own loss. However, in considering the point of principle, it is legitimate to consider how a claim of contributory negligence could properly be dealt with by a defendant consenting to judgment on liability, though not damages. The example is instructive because at common law contributory negligence was a complete defence until 1966 when, in this jurisdiction, it became subject to apportionment: Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9(1). As a practical matter, it is quite unlikely that parties would consent to orders in respect of liability where a defence of contributory negligence had been raised and remained in dispute. On the other hand, where the respective proportionate liabilities of the plaintiff and the defendant had been agreed, one would expect to find the agreement reflected in the terms of the order, such as a judgment on liability for the plaintiff for 70% of the damages to be assessed (reflecting an agreement that the plaintiff had been contributorily negligent to the extent of 30%). A judgment as to liability unqualified as to the agreed proportion would need to be varied, to reflect properly the agreement as to apportionment. (Such a variation may be available even after the entry of orders and the lapse of the period specified in the Uniform Civil Procedure Rules 2005 (NSW), r 36.16, pursuant to rr 36.15(1) or 36.17; see also In re South American and Mexican Coy; Ex parte Bank of England [1895] 1 Ch 37 at 44-45.

16 The same reasoning applies in relation to proportionate liability as between concurrent tortfeasors. Absent some contemporaneous indication to the contrary, a judgment as to liability, unqualified by reference to apportionment, should be construed as a judgment against the only defendant for the whole of the plaintiff's damage or loss. Such a judgment would be inconsistent with a liability of the defendant for part only of the loss suffered. The issue of apportionment as between concurrent tortfeasors is an inherent element of the extent of the defendant's liability and is separate from and independent of the assessment of the quantum of the plaintiff's loss.

17 This important distinction, between apportioning liability for "damage or loss" and assessing damages, is reflected in s 35, which refers to the former and not the latter. Damages are the monetary quantification of the "damage or loss" suffered by the plaintiff: Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; 156 CLR 522 at 527 (dealing with s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) allowing claims for contribution between concurrent tortfeasors), referred to in the context of Pt 4 of the Civil Liability Act in Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 at [37] (Giles JA, Bathurst CJ, Campbell and Macfarlan JJA and Sackville AJA agreeing). Thus the issue as to liability for damage or loss is conceptually distinct from the monetary assessment of the compensation (damages). The interlocutory order made in September 2011 resolved the former issue, but not the latter (nor questions of costs).

18 It follows that the primary judge was correct in concluding that the defence could not be amended to raise the question of apportionment without variation of the interlocutory order, which was not sought. That conclusion is sufficient to support the orders made by this Court.

19 CAMPBELL JA:

Nature of the Case

20 The Applicant carries on the business of a surveyor. The First Respondent is married to the Second Respondent, and is the son of the Third and Fourth Respondents. At all relevant times the First Respondent has been the registered proprietor of a block of land at One Mile Beach, near Port Stephens ("the Land"). The area where the Land is located is flood-prone.

21 The Respondents decided that two dwellings should be constructed on the Land. One of them was referred to as the "main house", the other as the "cottage". The First and Second Respondents planned to live in the main house. The First Respondent explained that the purpose was to allow his parents to live in the cottage close enough to the First and Second Respondents for help and assistance in the later years of life, whilst still allowing all four Respondents to have independent space.

22 In July 2008, Capital Homes Pty Ltd ("Capital Homes"), a builder, requested the Applicant to prepare a survey and contour plan of the Land. That request was made as agent for the First and Second Respondents. The Applicant prepared a survey plan, which identified a particular benchmark near the Land and stated the Australian Height Datum (AHD) of that benchmark, and sent the plan to Capital Homes. The AHD is a uniform national scale that adopts the mean sea level around the Australian continent as zero elevation. Capital Homes incorporated some survey information concerning the AHD of the benchmark from that plan into building plans for two houses on the Land. The local council subsequently granted a development consent to build in accordance with those plans. Building work commenced.

23 However, when the houses had reached lock-up stage it was ascertained that they were not constructed in accordance with the approved plans. The finished floor levels of the houses were significantly lower than the AHD that the plans stated. The council required houses in the area to have floor levels of, or above, a certain AHD to protect the houses from flooding. An occupation certificate for the buildings was refused.

24 The Respondents began proceedings in the District Court against the Applicant, pleading breach of contract, negligence, and misleading and deceptive conduct concerning its conduct of the survey. Judgment by consent was entered, and the matter set down for hearing for assessment of damages.

25 A week before the hearing was due to start at the Newcastle sittings, the solicitors for the Applicant advised the solicitors for the Respondents that they intended to seek leave to amend the defence, to raise a contention that the claim that the Respondents brought against the Applicant was an apportionable claim, within the meaning of Part 4 Civil Liability Act 2002. A notice of motion, by which the Applicant sought leave to file an amended defence to raise that matter, and leave to serve a particular affidavit, was set down for the first day of what had been planned to be the trial, 22 May 2012.

26 The primary judge heard that notice of motion, and reserved judgment on it. When the primary judge delivered judgment on 22 June 2012, she dismissed the motion. However, the judgment was not delivered until after the Newcastle sittings had concluded. Thus, the trial that had been listed did not take place.

27 The Applicant now seeks leave to appeal against that decision in the court below. The application was heard on the basis that all arguments to be put on any appeal are put on the application for leave to appeal. The District Court has stayed the proceedings in that Court pending the determination of the present application.

28 Mr D Miller SC appeared for the Applicant both at the hearing of the notice of motion and on the appeal. Mr J Young appeared for the Respondents at both the hearing of the notice of motion and on the appeal.

29 At the conclusion of the hearing of the application for leave to appeal in this Court on 10 October 2012, the Court ordered:

"(1) Grant leave to appeal.

(2) Direct Applicant to file, within seven (7) days, a Notice of Appeal in terms of the draft Notice of Appeal appearing at page 27 of the White Book.

(3) Dismiss the appeal.

(4) Order the Applicant to pay the Respondents' costs of this appeal.

(5) Reserve Reasons."

30 These are my reasons for joining in the making of those orders.

Factual Background

The Applicant's Survey and the Development

31 There is an admission on the pleadings that the contour and detailed plan that the Applicant had produced for the First and Second Respondents at the request of Capital Homes "contained the level of the benchmark at RL 2.65 AHD whereas the actual level of the benchmark is RL 1.965 AHD." In other words, the survey showed that that benchmark was 0.685m higher than it really was.

32 Capital Homes produced a fifteen page booklet of plans, bearing the date 29/06/2009, relating to job number 1340. Various of those plans identified a benchmark at the edge of the bitumen on the road that lay immediately to the south of the Land. It was the only benchmark shown on the plans. The benchmark was described as "BM paint on nail in bitumen RL 2.65 (AHD)." Sheet number three of that plan showed that benchmark, and also contained a notation, concerning both the proposed main house and the proposed cottage, that the parties accept means that the finished floor level is to be 2.910. Mr Miller explained to the primary judge that that floor level is "above the one in one hundred year flood line and there is a degree of, factor of safety that the council seems to have built into its consents." He explained to us, without objection, that the predicted maximum flood height in the area is 2.6 m AHD, and that the Council flood map required buildings to be 300 mm above that. On the information now before the Court, I would infer that the benchmark of RL 2.65 AHD shown on those plans was derived from the survey that the Applicant produced, and is the benchmark that the defence admits to be inaccurate.

33 On 18 August 2009 Port Stephens Council granted a development consent to Capital Homes for the construction of the two dwellings on the Land. The development consent included the following conditions:

"2. The development is to be carried out in accordance with the approved plans and documentation submitted with the application set out in Schedule 3, except as modified by the conditions of this development consent or as noted in red by Council on the approved plans.

...

7. Upon completion of the land filling, submit a survey plan prepared by a registered surveyor confirming that the land filling has been undertaken in accordance with the approved plans and documentation, using Virgin Excavated Natural Material.

...

53. The principal certifying authority shall only issue an occupation certificate when the building has been constructed in accordance with the approved plans, specifications and conditions of consent. No occupational use is permitted until the principal certifying authority issues an occupation certificate. Note: if an accredited certifier approves occupation of a dwelling the accredited certifier is to immediately notify council in writing."

Schedule 3 to the conditions identified the approved plans as being stamped plans number 1340/1-15 dated 29/6/2009. Thus, the approved plans were ones that incorporated the inaccurate benchmark information that the Applicant had provided.

34 On 20 November 2009, Capital Homes was placed into liquidation.

The Contracts with the Builder

35 On 25 February 2010, two separate building contracts were entered into. The builder who was party to each contract was Woody Brook Pty Ltd, which traded as G J Gardner Homes ("the Builder"). One contract, to which the other party was the First Respondent, related to the construction of the main house on the Land. The other, to which the Third and Fourth Respondents were the other party, related to the construction of the cottage on the Land. The material terms of the two contracts were identical. Schedule 3 of each contract identified the work to be carried out as being in accordance with an identified proposal and specification, and "drawings prepared by Capital Homes ref 1340 dated 29/6/09".

36 Each contract contained the following provisions:

(a) The Builder will, subject to these Conditions and the work particulars set out in Schedule 3, execute and complete the works required by the Contract.

(b) Pursuant to s18B of the Home Building Act 1989 (the "Act") the Builder warrants that:

(i) the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract; ...

(c) (i) The work done under this contract will comply with:

...

c) the conditions of any relevant development consent or complying development certificate and any construction certificate.

3. Contract Documentation

(a) The party that provides the Drawings and/or Specification, warrants their accuracy and correctness. As of the date of the contract, the work to be done is as set out in Schedule 3.

(b) Schedule 3 requires that the party responsible for having the drawings and or specifications prepared be identified. If that detail is left blank it will be presumed that the Owner supplied to the Builder all drawings and specifications relevant to the work.

37 Schedule 3 of each contract identified who had prepared the drawings (namely, Capital Homes) but did not identify the party (ie, party to the contract) responsible for having the drawings prepared. Thus, clause 3(b) would have the effect that for the purpose of clause 3(a), the party that provided the Drawings would be, concerning each building contract, the Respondent or Respondents who were parties to that contract.

The Problem is Discovered

38 The Builder commenced work on the buildings in or about March 2010. Work ceased in about June 2010. At that time, both dwellings were at lock-up stage, and approximately six weeks from completion.

39 On 21 June 2010, the accredited certifier allocated to the building job, City Plan Services, wrote to an officer of the Builder:

"As the finished floor levels (2.2 AHD) are not in accordance with the approved plans (2.91 AHD), and the requirements of the 88B instrument affecting the property, in that they have been finished lower than the required 2.5 AHD, it will be necessary for one of the following options to ... occur.

1. The dwellings will need to be demolished and the floor level raised to the required heights, or

2. The 88B affectation will need to [be] changed on the title by whomever has the power to do so. This may involve the carrying out of a new flood study and the subsequent submission of an amended application to council to vary the approved finished floor level heights.

I would advise that we will be unable to issue any occupation certificate until such time as this matter has been satisfactorily resolved.

Would you kindly advise as to the likely course of action [as] soon as possible."

40 At that stage, lawyers became involved in the matter. Various lawyers at Sparke Helmore have acted for the Respondents. Mr Kevin Gibbons of Indemnity Legal at all times has acted for the Applicant.

41 On 12 August 2010, Sparke Helmore wrote to the Applicant saying:

"We are instructed to put you on notice of our client's claim regarding defects in the surveying services provided by you to our clients at the Property.

The circumstances giving rise to the claim are set out below.

1 Background

1.1 On 24 February 2009 our clients signed a building contract with Capital Homes Pty Ltd (Licence: 193138C) to build a dual dwelling, consisting of a main home for Norman and Noleen Ballard and a cottage for James and Janet Ballard, on the Property.

1.2 A short time thereafter Rennie Golledge Pty Ltd (Rennie Golledge) was engaged to provide surveying services, including surveying the block and provided a diagram specifying Australian Height Datum (AHD) levels.

1.3 Capital Homes prepared a plan and design for the homes based on the surveying services and submitted them to Port Stephens Council (the Council) for DA approval.

1.4 On 18 August 2009 the plans were approved by the Council.

1.5 On 10 November 2009 Capital Homes went into liquidation.

1.6 On 25 February 2010 our clients signed a new building contract with [the Builder] (Licence: 203033c).

1.7 The construction of the dual dwellings proceeded to lock up stage.

1.8 On 9 June 2010, our clients went to inspect the property. They noticed that the floor level of their immediate neighbour, who had just started building, was substantially higher than theirs and started to investigate.

1.9 We understand that:

(a) the benchmark on the road level was shown as 2.65AHD on the survey instead of 1.965AHD;

(b) since [the Builder] used the 2.65AHD level to set all the other levels on the Property, the finished floor level is now 2.19AHD instead of 2.91AHD.

1.10 Since then our clients have been advised by a Private Certifier that the finished floor level is not in accordance with the approved plan and the requirements of the section 88B instrument affecting the Property.

1.11 Accordingly, the buildings may have to be demolished.

2 Claim

2.1 As the surveyor, Rennie Golledge was responsible for incorporating all surveying services into the design.

2.2 It was an implied term of the engagement that Rennie Golledge would provide and perform the services exercising the skill, care, diligence and judgment of a reasonably competent, registered surveyor.

2.3 It is clear that the surveying of the Property has been inadequate.

2.4 It appears that Rennie Golledge incorrectly specified the reference level on the survey.

2.5 The above circumstances give rise to claims against Rennie Golledge for the following:

(a) Breach of contract;

(b) Negligence arising from Rennie Golledge's failure to adequately draft the survey (and thereby failing to satisfy the standard of care required of a professional surveyor); and

(c) Misleading and deceptive conduct under section 52 of the Trade Practices Act 1974 (Cth)

2.6 We advise that the above circumstances and claims do not limit any other potential claim which may be made against Rennie Golledge.

2.7 Our client is currently undertaking further investigations and quantifying the total costs arising from Rennie Golledge's involvement in the construction of the premises and will provide a full quantification and notice of claims in due course.

2.8 However at this stage we are instructed to put you on notice of the potential claim on behalf of our clients and we recommend that you notify your professional indemnity insurer of this claim.

2.9 If you have any questions in relation to this correspondence please contact the writer."

42 On 27 August 2010, Sparke Helmore wrote to Mr Gibbons:

"We refer to your letter dated 19 August 2010.

We enclose the following documentation in response to your request, using your numbering:

Item 1

1 Contract between Mr Norman George Ballard and Mrs Noleen Ballard and Capital Homes (Hunter) Pty Ltd dated 27 February 2009.

2 Contract between Mr James Seymour Ballard and Mrs Janet Mary Ballard and Capital Homes (Hunter) Pty Ltd dated 25 February 2009.

Item 2

3 Rennie Golledge Pty Ltd, Invoice No. 199.08/1 dated 21 July 2008 to Mr and Mrs Ballard in the amount of $715 (incl GST).

4 Netbank Commonwealth Bank direct transfer (receipt number N072583600812) dated 25 July 2008 in the amount of $715 from N & N Ballard into Rennie Golledge Pty Ltd account.

Item 3 and 7

5 Rennie Golledge Pty Ltd drawing titled 'Contour and detail plan, [title reference], [street address] dated 17 July 2008. We note the client is referred to as 'Mr & Mrs Ballard.'

Item 4

6 Fourteen building plans of the homes (Job No. 1340) as sent to Council for approval.

Item 5

7 Fifteen building plans of the homes (Job No. 1340) as approved by Council.

Item 6

8 Building contract between Norman Ballard and [the Builder] dated 25 February 2010.

9 Building contract between James Seymour Ballard, Janet Mary Ballard and [the Builder] dated 25 February 2010.

Item 8

10 Council Committee report dated 24 August 2010 which our clients received from Ken Solman, acting manager, development and building, group sustainable planning.

11 Letter from City Plan Services dated 21 June 2010 to [the Builder].

12 Echo Beach Estate surveys are also enclosed for your information.

13 88B Instrument. We refer you to page 8 of 11, part 2a.

Options considered by our client

Our client initially considered asking the Council to approve the existing faulty levels. However, Council strongly advised against this and we note the contents of their report and recommendation referred to at paragraph 10 above. To that end, our client has been advised that:

There is a real risk of flood to the property at the current levels.

There is a potential risk due to sea level rise and storm surge.

Our client's would be the lowest home at the lowest point on the road and would therefore receive all storm water off the road.

Our client's may not be able to get insurance on the property.

The home would be significantly lower than neighbours and would appear to be in a 'hole'.

Our client's would have to retain the neighbours' soil.

Resale value of the properties will be significantly impacted.

The only other option is to rectify the problem by raising the homes.

Our client's have asked [the Builder] to quote on rectifying the homes by raising them. Our client's have received a preliminary estimate of $297,000 to raise both homes. However, this is an estimate only at this stage.

Our client's have also incurred the following additional expenses as a result of the defects which include, but may not be limited to:

Section 96 Application with Port Stephens Council - $500.

Rent for Janet and James Ballard at $310 per week and for Norman and Noleen Ballard at $350 per week. We note that construction stopped on 9 June 2010. Therefore each additional week of delay will result in a further cost to us of $310+$350 = $660.

Legal costs.

Costs for the builder's additional insurance, administration and site costs including, fencing, toilet hire.

Our client's have also paid deposits on tiles, light fittings and other materials which are currently being stored at the suppliers' premises which may be incurring storage fees.

Our client's want the homes that they believed they would be getting and do not want any rectification works to affect the quality of the home or to compromise the overall look and feel of the home.

Our clients would like to settle the matter as quickly as possible and will work with your client to achieve an appropriate settlement.

We are instructed that our client is amenable to meet on a without prejudice basis to discuss settlement of the matter. We suggest after you have reviewed the attached material you contact our office to organise a suitable time for that meeting.

We look forward to hearing from you."

43 The evidence is silent about what happened concerning any settlement discussions until 14 June 2011, when an informal settlement conference was held between the solicitor for the Applicant and the two male Respondents. The matter did not settle at that conference.

44 On 2 March 2011 the contracts between the Builder and the various contracting Respondents were terminated. The Builder's letter of termination dated 2 March 2011 concerning each contract said:

"Due to the unfortunate circumstances of there being a dimensional error with the Bench Mark provided on the Architectural Drawings prepared by Capital Homes, reference No 1340, dated 29/06/09 for your new dwelling at [address], [the Builder] hereby in agreeance with yourself terminates our Head Contract dated 25 February 2010."

The Original Pleadings

45 On 14 July 2011, the Respondents began proceedings in the District Court against the Applicant. They sued contending a contract between the Respondents and the Applicant entered in July 2008:

"... to provide contour and detail land surveying services of the Property (the Agreement), including, inter alia, providing a diagram specifying Reduced Levels (RL) of Australian Height Datum (AHD) on the Property (the Services)."

46 The Applicant's defence admitted that such a contract was entered with the First and Second Respondents.

47 Though there were various implied terms alleged to exist in the contract, and whose existence was not admitted, the defence contained an admission that there was an implied warranty that the services would be provided with reasonable skill and care. As mentioned earlier, there was also an admission that:

"... the services were not provided with reasonable skill and care in that the contour and detailed plan contained the level of the benchmark at RL 2.65 AHD whereas the actual level of the benchmark is RL 1.965 AHD."

48 There was an admission that as a result of that breach "the plaintiffs have suffered some loss and damage".

49 The statement of claim also pleaded a claim for the tort of negligence. To an allegation of a duty of care existing between the Applicant and the Respondents, the defence admitted:

"... that by operation of the things admitted in this defence, there were circumstances such as to give rise to a duty of care owed by the defendant to the plaintiffs to take reasonable care in relation to the provision of the services which are admitted."

In other words, a duty of care to all four Respondents was admitted.

50 The statement of claim also pleaded that conduct of the Applicant concerning the survey was misleading and deceptive in contravention of s 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth). That portion of the pleading was not relied on in argument in the court below or in this Court, so I shall give it no further consideration here.

51 The particulars of damage that the statement of claim identified were:

"Further particulars of loss and damage to be supplied, but presently includes:

(a) Demolition and re-construction of the main house of $263,660.11;

(b) Demolition and re-construction of cottage of $229,826.07;

(c) Loss of 2 approved the [sic] First Home Owners Grant of $24,000 each, which totals $48,000;

(d) Additional rent incurred to date of $34,320. For each additional week, the plaintiffs currently incur rent of $660 per week.

(e) Additional temporary fencing costs of $1,826 for approximately 9 months."

52 The defence making the admissions to which I have referred was filed on 9 September 2011. It followed the filing by the Applicant, on 3 August 2011, of an Appearance in which it said it: "submits to the making of all orders sought, and the giving or entry of judgment in respect of all claims made, save as to costs." That Appearance was evidently a mistake.

The Entering of the Consent Judgment

53 On 26 August 2011, Sparke Helmore wrote to Mr Gibbons saying:

"We would appreciate your urgent written advice as to what your client's instructions are in relation to its Appearance and any Defence in this matter. We note that your client is now out of time to file and serve any Defence in the proceedings pursuant to UCPR 2005 Reg 6.10 and our client reserves its rights in this regard, given the length of time your client has been aware of the issues in the claim."

54 Mr Gibbons' reply, sent the same day, said:

"I have dictated a letter to you, sent off to the Court an amended Appearance, and sent to the defendant a defence for verification.

The letter when you get it, I suspect on Monday, (I have an external typist) will give a relatively clear indication of how the matter may procedurally progress to resolve the core issue in this case. As will be obvious from what you are about to receive the defendant does not concede as the proper measure of damages the measure of damage particularised in the Statement of Claim.

It represents the same issue which has separated the parties for a long time."

55 Counsel explained to us that that issue concerned the proper application of the principles in Bellgrove v Eldridge (1954) 90 CLR 613, which concerned whether the cost of rebuilding was the proper measure of damages when a breach of contract or negligence had caused defective building work to be constructed. We were informed that there was an issue, which came to be the subject of expert evidence filed in the District Court, about whether a sufficient way of protecting the houses from flooding was to surround them with a bund or levee.

56 On 1 September 2011, Mr Gibbon wrote to Sparke Helmore referring to the defence, and saying:

"While it does not concede all of the liability matters contended, it does admit certain things which would entitle the plaintiffs to a declaration that the defendant has been negligent.

Accordingly, the matter going forward remains the same matter which has been in existence for a considerable period of time namely, the proper measure of the plaintiff's damages.

Our client has instructed us to approach the builder to discuss the basis upon which the builder would be prepared to undertake the whole of the building work including demolition and reconstruction to the current stage and the basis upon which the builder will accept payment from our client to see if that might create an opportunity for resolution of the principal component of the claim.

If the matter is to be confined to damages and notwithstanding the legal issues which will arise, the assessment of damages would seem to be an appropriate matter for referral to an appropriate expert for determination.

In our opinion, the only appropriate referee would be a senior barrister experienced in building and construction.

The appropriate time for a reference would be after service of all of the documentary evidence."

57 On 14 September 2011 Sparke Helmore wrote to Mr Gibbons saying:

"On the basis of the concessions in your client's defence and the 5th paragraph of your letter dated 1 September 2011 we consider it is appropriate for an order for judgment to be made in favour of the plaintiffs and for the proceedings to be set down for hearing for the assessment of damages. On that basis we enclose a copy of our proposed orders for the purpose of the pre-trial conference on 16 September."

58 Mr Gibbons replied on the same day:

"Thank you for your letter and proposed timetable.

The overall intention to move forward solely as to damages is what I earlier proposed. In general terms that is what the short minutes ought to indicate.

The matter seems perfectly suitable to be determined by a referee experienced in the assessment of these sorts of damages which are akin to a building case with a bit of law attached."

The email also mentioned some other procedural steps, that were subsequently not thought necessary.

59 On 14 September 2001 Sparke Helmore sent to Mr Gibbons some revised draft orders:

"1. Judgment for the plaintiffs for damages to be assessed.

2 Plaintiffs to provide discovery of documents relevant to the assessment of damages on or before 14 October 2011.

3 Plaintiffs to serve evidence as to quantum on which they intend to rely on or before 14 October 2011.

4 Defendant to serve evidence as to quantum on which it intends to rely on or before 11 November.

5 Plaintiffs to serve any further evidence in reply on which they intend to rely on or before 24 November 2011.

6 Matter stood over for further directions on 25 November 2011.

7 Liberty to restore on 7 days notice.

8 Costs reserved."

60 Mr Gibbons agreed to those orders on 15 September 2011. An order in those terms was made and entered by consent on 16 September 2011. The judgment is for all four Respondents.

Preparation for the Assessment of Damages

61 Thereafter, preparation of the case proceeded. The Respondents' list of documents for discovery and their lay evidence was served on 25 and 26 October 2011.

62 The Builder was subpoenaed to produce:

"...its records as to services provided, and the expenses it incurred, in relation to the works it had performed on the subject land."

63 The Builder's documents were produced to the court in late November 2011. The assistant to Mr Gibbons attended at the court on 20 December 2011 to copy the documents.

64 Amongst the records that the Builder produced pursuant to the subpoena are invoices from a surveyor, David R Walpole Pty Ltd ("Walpole") to the Builder. One such invoice, dated 26 February 2010, relates to the setting out of the dwellings. A later one, dated 13 April 2010, relates to "certifying position of form work of" the two dwellings.

65 The Registrar made some directions on 25 November 2011 concerning the further interlocutory steps. The directions made no mention of any amendment to pleadings. Rather, they set a timetable for the filing of further evidence. The Applicant served an affidavit of a Mr David Mepstead, a planner/surveyor, on 9 December 2011, and an affidavit of a Mr Douglas Reed, a quantity surveyor, on 13 December 2011.

66 On 3 February 2012, the proceedings were listed for hearing on 22 May 2012, with a time estimate of three days. Those three days were to be the first three days of the Newcastle sittings. The listing was ordered over the objection of the Applicant.

67 On 6 February 2012, the Respondents provided an unsealed copy of an affidavit of Stephen Madden, a quantity surveyor.

68 On 29 March 2012, the Respondents served an affidavit of a Mr Garry Warnes, a planner.

69 On 8 May 2012, the Respondents served a report of Mr Reed that replied to the report of Mr Madden.

The Proposal to Amend the Defence

70 On 14 May 2012, Mr Gibbons wrote to Sparke Helmore notifying an intention to seek leave to amend the defence. It attached a copy of the proposed amended defence, and an unsealed copy of the notice of motion that was later filed. The letter foreshadowed that an affidavit in support of the Motion and an affidavit of Mr Golledge would be produced "within the next 24 hours". The proposed affidavit of Mr Golledge was said to be "to the effect that except for the survey in connection with the erroneous plan the Defendant performed no other services in respect of the land for the plaintiffs, Capital Homes or [the Builder] or its contractors".

71 The notice of motion was filed on 14 May 2012. The orders it sought were:

"1. The Defendant is granted leave to file its amended defence in the form of the copy annexed to this Notice of Motion.

2. The Defendant is granted leave to serve in chief the affidavit of Geoffrey Golledge.

3. Such further or other Order as this Honourable Court thinks fit."

72 It appears that there had been some discussion about a proposed amendment between counsel on 11 May 2012, but the evidence does not disclose the degree of detail involved in that discussion. It was the first time there had been any suggestion that the defence filed on 9 September 2011 might be amended.

73 The "24 hours" prediction proved inaccurate. Mr Gibbons swore an affidavit in support of the motion on 16 May 2012. The affidavit of Mr Golledge that was referred to in the notice of motion was sworn on 17 May 2012.

The Proposed Amended Defence

74 The draft amended defence added paragraphs [10]-[45] to the defence. On the appeal, though not in the court below, the Applicant accepted that it could not support the addition of [45]. Thus, henceforth I will leave [45] out of consideration.

75 Paragraphs [10]-[44] raised a contention that the Builder is a concurrent wrongdoer with the Applicant whose acts or omissions caused the loss or damage that is the subject of the claim, and that the First, Third and Fourth Respondents are also such concurrent wrongdoers. It contends that, pursuant to s 35 Civil Liability Act, the liability of the Applicant with respect to the claims the subject of the proceedings should be limited to an amount or amounts reflecting that proportion of the damage that is just having regard to the extent of its responsibility for the damage or loss.

The Basis on which the Builder is Contended to be a Concurrent Wrongdoer

76 The pleading recites the entering of the contract between the Applicant and the First and Second Respondents for carrying out the survey. It pleads that the Applicant did not know of the existence of the Third or Fourth Respondents, did not know of "the details" of any building works that might be undertaken on the Land, and did not know of any prospect that the Third or Fourth Respondents might use the survey that was prepared. It pleads that at no time have the Second, Third or Fourth Respondents been registered proprietors of the Land. It pleads that the Applicant never had a contract with the Third and Fourth Respondents. It pleads that the Applicant knew nothing about the building plans that Capital Homes prepared, and gave no advice concerning the building plans or the adequacy of the proposed final building plans and finished floor levels for flood protection. Nor did the Applicant advise concerning any building contract between the Respondents and Capital Homes, or carry out any works concerning any such building contract.

77 It pleads the granting of the development consent, and condition 2 and Schedule 3 of that consent ([33] above). It pleads that the Respondents always knew that the Land was flood-prone.

78 It pleads the entering into of the two contracts with the Builder, and says that the Applicant did not know of the existence of those contracts or their terms until after the building work was stopped in or around June 2010. It refers to the contractual obligation of the Builder under those contracts to erect the dwellings at levels no lower than the specified finished floor levels and finished building levels shown on the plans. It pleads that at no time was the Applicant requested to carry out any survey or inspection of any of the work of the Builder. It pleads the failure of the Builder to construct the house in accordance with the plans and specifications, insofar as the finished floor level and finished building levels were concerned. (It inaccurately asserts that the building contract required the finished floor level of the main house and cottage to be not less than 2.60m AHD, rather than the 2.91m AHD that the evidence shows was actually the required finished floor level, but that error is not material to these reasons for judgment.)

79 It pleads the requirements of conditions 7 and 53 of the development consent ([33] above), and it pleads that the Builder engaged a registered surveyor, Mr Muldoon, who set out the dwellings relative to the boundaries and certified the position of the formwork for the slabs.

80 A critical paragraph in the pleading is:

"32. During or after April / May 2010, [the Builder] completed the building platforms for each dwelling and laid each slab, but failed to:

(a) engage Mr Muldoon of David R Walpole Pty Ltd, or any surveyor, to check, confirm or verify the finished building levels or finished floor (slab) levels;

(b) achieve the specified finished building levels or finished floor (slab) levels as required by the development consent; and

(c) verify, through a licensed surveyor or otherwise, that the finished floor levels of the dwelling slabs were in accordance with the development consent requirements (which matter was known, or ought to have been known, to the first, third and fourth plaintiffs)."

81 It pleads that the Builder kept on building after April/May 2010, until the error was discovered. It contends that the Builder owed tortious duties of care to the First, Third and Fourth Respondents ("the Contracting Respondents") to carry out its building work in accordance with the requirements of the development consent and the building contract, and to do so with reasonable care and skill; that the Builder breached those duties of care; and that thereby the Contracting Respondents have suffered economic loss and damage. It pleads that the loss and damage that the Respondents claim from the Applicant is the same loss or damage that the Contracting Respondents suffered by reason of the failure of the Builder to take reasonable care, which failure was "the cause of all, or the majority of, their loss" ([37]).

The Pleaded Claim Against the Respondents

82 The pleading repeats the matters that I have already adverted to, articulating the claim that the Builder was a concurrent wrongdoer. It asserts that at June 2010 the Contracting Respondents had accrued rights under their building contracts with the Builder to require it to rectify the works to achieve the finished floor levels required by the development consent and the contracts. It pleads that on 2 March 2011, the Contracting Respondents terminated their respective contracts with the Builder "and released or discharged [the Builder] from the liability that it then had". It pleads that the giving of those releases or discharges was without consideration, and constituted a failure to take reasonable care. It pleads that the loss or damage claimed by the Respondents from the Applicant in these proceedings is the same loss or damage that the Contracting Respondents were entitled to seek relief for from the Builder.

Solicitors' Correspondence Before the Hearing

83 Sparke Helmore responded to Mr Gibbons on 15 May, contending that the amendment could not be made without the judgment first being set aside, and that the Applicant was seeking to raise matters of liability that could not be raised on the hearing of an assessment of damages. It reminded Mr Gibbons that it was necessary for him to provide reasons for the delay in seeking the leave of the court. It made various contentions about the prejudice likely to be suffered by the Respondents that could not be adequately compensated by a costs order. One of those matters was that the hearing date would inevitably be vacated, and all work involved in preparing the case thrown away. It contended that the affidavit that Mr Gibbons' client would need to have filed for the purposes of the motion would need to be from the person who gave instructions on behalf of the insurer to consent to the entry of judgment. It foreshadowed that that person would be required for cross-examination.

84 By his reply, Mr Gibbons denied that he was seeking to set aside the judgment that had been entered, and did not accept the various factual assertions that Sparke Helmore had made concerning prejudice their clients would suffer (including that adjournment would be necessary). His reply said that there would be no affidavit from anyone giving instructions on behalf of the insurer.

The Evidence

85 Part of the evidence before the court on the hearing of the application was an affidavit of Mr Gibbons sworn 16 May 2012. It set out various aspects of the history of the matter. Concerning the invoices from Walpole that the Builder produced on subpoena, the affidavit said:

"8 That surveyor's invoices record that it set out the works in relation to the boundaries, and also surveyed the slab formwork. Those invoices record nothing of any services being provided to [the Builder] in the nature of surveying the vertical level at which the works were being constructed prior to the discovery that the finished floor slabs were below the level approved (and required) by the Council.

9 Annexed and marked "B" are copies of the David R Walpole invoices, and the development consent."

86 Mr Gibbons' affidavit annexes the building contracts with the Builder, and says that the plaintiffs' case, as he understands it, is that the finished floor levels required by the contract and the development consent were not achieved. It continues:

"11 Annexed and marked "C" are copies of the two building contracts entered into by some of the plaintiffs (the second plaintiff does not appear to have entered into any building contract) and [the Builder]. By those contracts, [the Builder] was contractually obliged (on my reading) to construct the two dwellings, that are the subject of these proceedings, on the land at particular levels that had been approved by the Council. The land is flood prone land. The effect of condition 53 of the Development Consent, in my opinion required the certifier prior to issue of an occupation certificate to be satisfied by surveyor's certificate or report that the finished floor levels were in accordance with the approved plans. The plaintiff's [sic] case is, as I understand it, that those levels were not achieved. It [sic] seeks damages for such from the defendant surveyor. No evidence has been served, to my knowledge, to suggest that that defendant surveyor had any site role during the construction of the buildings. Nor has the plaintiff served any affidavit or statement by [the Builder]."

87 The affidavit asserts:

"12 Further, and for reasons that have never been articulated by the plaintiffs, or their solicitors, the plaintiffs on 2 March 2011 appear to have terminated their building contracts with [the Builder], rather than enforce the rights that they had under those contracts to have the builder construct the dwellings at the required levels under those building contracts. Annexed and marked "D" is a copy of two letters dated 2 March 2011, from [the Builder] to three of the plaintiffs terminating those building contracts."

It annexes the two letters dated 2 March 2011 ([44] above).

88 Other parts of his affidavit were:

"14 In preparation of the matter for hearing over the last 7 days, I came to appreciate that for the hearing as regards the quantum of any damages to which the Defendant may be liable to all or any of the plaintiffs, that the defence be amended in the form indicated in the document attached to the Notice of Motion [sic]. By the amendments, my client seeks to invoke a proportionate liability defence pursuant to Part 4 of the Civil Liability Act 2002. I repeat, by this my client does not seek to have the judgment set aside, or to withdraw any admissions."

"17 The vast majority of the factual matters raised in the proposed Amended Defence concerning the proposed apportionable claim defence have been identified by me from the [the Builder's] subpoenaed documents, and the affidavits served on behalf of the plaintiffs by Messrs Norman and James Ballard. To the extent that they are not, they are addressed in the proposed affidavit of Mr Golledge, that my client seeks leave to rely on in chief in this damages hearing. In saying that, I am not aware of anything in Mr Golledge's affidavit that would likely seriously be the subject of factual dispute by the plaintiffs with him."

"22 In saying that, neither I or my client accept at this point, absent seeing any affidavits from the plaintiffs or their solicitor, that if the Motion were to be granted the hearing would need to be adjourned, or would need to be adjourned part-heard.

23 I repeat, it was only as I focused on completing my review of the defendant's evidence in reply, and considered the quantum evidence and records (both of which post-dated the entry of judgment) in detail, that the acts and omissions of [the Builder] were fully appreciated by me.

24 As regards recent events that led me to have the facts at hand necessary to form the view that the proposed amendments were necessary I say that:

a. The [Builder's] documents were produced in late November 2011. My assistant attended at the Court 20 December 2011 to copy the documents.

b. The plaintiffs' affidavits by Norman and James Ballard were served in late October 2011.

c. The plaintiffs' planner's report (Mr Warnes) in support of its quantum case was served in late March 2012.

d. The plaintiffs' quantum report by its quantity surveyor, Mr Madden, was served in February 2012.

It was for the purpose of finalising reply material to the Warnes and Madden reports, and analysing it, that I had cause to focus more closely on the [Builder's] subpoenaed materials, and the materials relevant to it annexed to the affidavits of the two Messrs Ballard." (emphasis added)

89 An affidavit of Lachlan Wilson, a solicitor who then had carriage of the matter at Sparke Helmore, gave additional details concerning the history of the matter. It also gave Mr Wilson's view that allowing the amendment would introduce to the proceedings questions of causation of damage and significance of the respective breaches, that would not arise in the proceedings as then constituted. As well, it would be necessary to consider whether to join the Builder, and to obtain both expert building and surveying evidence. An adjournment of the proceedings was, in his view, inevitable.

90 Mr Norman Ballard filed an affidavit made on 19 May 2012. Omitting portions that were rejected, it included:

"8 If the defendant's motion to file an amended defence is granted by the court and the hearing is delayed by a further 12 to 18 months as a result, it is likely that completion of the dwellings would not occur until early 2014 and the second, third and fourth plaintiffs and I would not be able to move into our new homes until approximately 4 years after the original completion date. The delay in moving into our homes incurred to date has been distressing enough let alone any additional stress which may be occasioned by any further delay.

9 Due to the delay in the completion of the dwellings, each of the plaintiffs has been incurring the ongoing cost of rental accommodation as well as dealing with real estate agents and landlords. Should this matter be delayed each of the plaintiffs would be put to the additional expense of ongoing rental payments until the matter is determined.

10 By way of a notice dated 23 March 2012 I was informed that the landlord of the rental premises I currently rent with the second plaintiff is intending to sell our rental premises. As a result, the second plaintiff and I may be forced to find new rental premises and enter into a new rental agreement as well as incur the stress, hassle and costs of moving. Annexed hereto and marked "A" is a true copy of the Notice of Intention to Sell Premises received from the managing agent for our rental premises.

11 The ongoing costs and the uncertainty involved in these proceedings have distracted the second plaintiff and me from investing in and expanding our business.

12 These proceedings have taken a heavy physical, mental and emotional toll on all of the plaintiffs as we each attempt to deal with the significant stress, anxiety and uncertainty caused by these proceedings. We first tried to resolve this issue without resorting to legal proceedings as early as August 2010, but instead we have had to embark on costly and lengthy legal proceedings which may now be delayed even further if this Honourable Court grants the orders sought by the defendant.

13 It is truly distressing to each of us to have our 'dream homes' sit incomplete and abandoned while these proceedings continue.

14 The second, third and fourth plaintiffs and I do not have the financial capacity to fund the demolition and re-construction of the dwellings ourselves and must therefore wait for the resolution of these proceedings. The financial, physical, mental and emotional toll on all of the Plaintiffs is growing daily."

91 In cross-examination Mr Ballard explained that the business to which he had referred in his affidavit was that of a company that made electronic products, and had a staff of eight including himself.

92 Another affidavit that was before her Honour on the hearing of the motion was an affidavit from Mr Geoffrey Golledge sworn 17 May 2012. That affidavit gave evidence that he was a registered surveyor and a director of the Applicant. It set out the history of the Applicant conducting the survey of the Land for Capital Homes. It continued:

"9 Except for those survey services Rennie Golledge has not been requested to perform any other survey services at the site in connection with the building works and has not performed any services in connection with the building works.

10 Rennie Golledge was not provided with any information that Capital Homes and Mr and Mrs Ballard of Singleton entered into a building contract when Rennie Golledge performed its survey services. It was not in possession of any building plans or information as to what Capital Homes may construct on the land.

11 After I sent the plan to Capital Homes and the invoice to Mr and Mrs Ballard of Singleton I had no communication from Capital Homes, Mr and Mrs Ballard or any person involved in building work at the site until after I learned of the levels issue in mid 2010. Nor did I return to the site in that period for any purpose whatsoever. Having made enquiries I am not aware that there was any contact with any other person at Rennie Golledge either.

12 I was not provided with any development plans or conditions of approval for the works at the site.

13 Except for the names of Mr and Mrs Ballard in the email from Capital Homes I had no knowledge of who they were and so far as I can recall I had no contact with them.

14 While I came to be aware in mid 2010 that [the Builder] had constructed works for 2 dwellings on the site I was not aware of what was intended prior to the work commencing or that the works were to be performed by [the Builder].

15 In my experience it is usual that a residential builder who is required to conform to particular finished floor levels organises a check survey prior to the concrete pour so that if adjustments need to be made they occur at that time.

16 In my experience it is usual that the surveyor who does the set out for boundaries and the final identification survey would be requested to perform the levels survey."

93 At the hearing in the District Court, Mr Miller identified that affidavit as being the one referred to in the second order in the notice of motion. The following exchange occurred:

"MILLER: Your Honour should have also Mr Golledge's proposed affidavit which I'll get a copy of, it's the second order in the motion.

I'm sorry I didn't do that. It hasn't really been the main game. I hand a copy of that up.

HER HONOUR: I'm sorry, is that in your case?

MILLER: Well, the second order of the motion seeks leave to rely on a particular affidavit. That is the affidavit.

HER HONOUR: I see, the affidavit. Yes, all right. Are there any objections to that?

MILLER: Well, that's an affidavit I want to read in the case if and when - if and when we run the case.

HER HONOUR: Yes, all right. So I'll defer that."

94 Mr Golledge's affidavit was placed before the judge, somewhat in the nature of an exhibit, but was never filed in the proceedings. It was never read for the purposes of the motion. After the primary judge had concluded that she would not permit the amendment, her judgment concluded:

"It follows that I decline to give the defendant leave to file and serve the affidavit of evidence in chief of Geoffrey Golledge."

Relevant Provisions of Civil Liability Act 2002

95 The following provisions of the Civil Liability Act 2002 are of central importance:

"34 Application of Part

(1) This Part applies to the following claims (apportionable claims):

(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,

(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law.

(1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

(2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

(3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).

(3A) This Part does not apply to a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the Home Building Act 1989 and brought by a person having the benefit of the statutory warranty.

(4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.

...

35 Proportionate liability for apportionable claims

(1) In any proceedings involving an apportionable claim:

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and

(b) the court may give judgment against the defendant for not more than that amount.

(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3) In apportioning responsibility between defendants in the proceedings:

(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and

(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.

...

36 Contribution not recoverable from defendant

A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim:

(a) cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant), and

(b) cannot be required to indemnify any such wrongdoer."

The Judgment Below

96 There were two bases upon which the primary judge dismissed the notice of motion. The first was that the consent judgment that had been entered precluded the Applicant from later contending that the claim that the Respondents brought against it was an apportionable claim. In her Honour's view, it would be open to the Applicant to contend that the claim was apportionable only if the judgment was set aside, yet the Applicant expressly disavowed any application to set that judgment aside.

97 The second basis upon which the application was rejected was as an exercise of the court's discretion taking into account the stage of the proceedings at which the application was made. In broad terms, her Honour held that there had not been an adequate explanation for the delay in seeking the amendment; the plaintiffs would suffer prejudice that could not be remedied by an order for costs; and that in any event the claim sought to be raised had poor prospects of success. Her Honour's decision in the lastmentioned respect was to some extent influenced by her view that the defence could not succeed without the judgment also being set aside. However, as I read her judgment, she also took the view that, independently of that consideration, the defence had poor prospects of success.

Consideration

98 The Applicant challenged the correctness of both bases upon which the primary judge reached her decision. On the day of the hearing of the application I reached the conclusion that her Honour was correct in the conclusion to which she came concerning discretion. I do not intend to delay production of these reasons by deciding whether her Honour's first basis for rejecting the notice of motion was also correct, except in one narrow sense.

99 The narrow sense in which the primary judge's first basis is correct is that [37] of the proposed pleading contended that the Builder's breaches "were the cause of all, or the majority of" the loss of the Contracting Respondents, and a claim against those Respondents is in substance that they have deprived themselves of the opportunity of recovering from the Builder. Insofar as that draft pleading seeks to sheet home to the Builder and the Contracting Respondents responsibility for all the loss that has been suffered, it is inconsistent with damages being the gist of an action in negligence, and judgment having been entered in favour of all Respondents. However, if that inconsistency were the only problem with the proposed pleading being allowed, the appropriate remedy would be to permit it with the excision of "all, or" in [37]. The first basis on which the primary judge dismissed the notice of motion saw a much more extensive inconsistency than that between the proposed pleading and the consent judgment. I will not examine whether that more extensive inconsistency was correctly identified.

100 In circumstances where her Honour's view that the proposed defence could not succeed without the judgment also being set aside was one of the factors that entered into her reasoning concerning exercise of discretion, and I have declined to decide whether that factor was correct, it is necessary for this Court to approach the discretionary question by assuming, without deciding, that her Honour was wrong in that aspect of her reasoning, and consider the discretionary question afresh for itself.

Principles Concerning Amendment of Pleadings

101 Various provisions of the Civil Procedure Act bear upon the Court's exercise of its power to permit an amendment of pleadings:

"56 Overriding purpose

(1) The overriding purpose of this Act and of rules of court, in their application to a civil dispute or civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

...

57 Objects of case management

(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).

58 Court to follow dictates of justice

(1) In deciding:

(a) whether to make any order or direction for the management of proceedings, including:

(i) any order for the amendment of a document, and

(ii) any order granting an adjournment or stay of proceedings, and

(iii) any other order of a procedural nature, and

(iv) any direction under Division 2, and

(b) the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of justice.

(2) For the purpose of determining what are the dictates of justice in a particular case, the court:

(a) must have regard to the provisions of sections 56 and 57, and

(b) may have regard to the following matters to the extent to which it considers them relevant:

(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56(3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case.

...

64 Amendment of documents generally

(1) At any stage of proceedings, the court may order:

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.

(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings."

102 Section 64(2) is derived from a provision that has been a common feature of legislation governing court procedure since the Supreme Court of Judicature Act 1873 (Eng). Such provisions commonly followed the form of Rule 501 of the Court Procedures Rules (ACT), that the High Court considered in Aon Risk Services Aust Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175:

"All necessary amendments of a document must be made for the purpose of -

(a) deciding the real issues in the proceeding; or

(b) correcting any defect or error in the proceeding; or

(c) avoiding multiple proceedings."

103 However, s 64(2) differs from the ACT Rule 501 in two respects. The whole provision is expressed to be "subject to section 58", and the "real questions" concerning which an amendment must be permitted are not only those "raised by" the proceedings, but also those "otherwise depending on" the proceedings. The questions "raised by" the proceedings are ones that exist at the time of the application for amendment: Aon at [31], [71], [119]. It is apparent from the facts in Aon that "at the time of the application" is to be understood in the sense of "before an issue arose about whether the amendment should be permitted", not "on the very day when the judge is considering whether to grant the amendment" - for by the latter time there is a live question about whether the amendment should be allowed, and it has been raised by an application in the proceedings. The "real questions otherwise depending on the proceedings" appear to be ones that are the consequence of the questions that are raised by the proceedings. The allegations of apportionment that the amended defence seeks to agitate were neither "raised by" the proceedings, nor "otherwise depending on" the proceedings, at the time the amendment was sought.

104 It is not submitted that there is any "defect or error in the proceedings" that the proposed amendment would cure. Nor was it submitted that the amendment was desirable for "avoiding multiplicity of proceedings". Thus, whether the amendment should be permitted depends upon the considerations of justice, as referred to in s 58.

105 It was not disputed that the factors that the primary judge had taken into account - adequacy of explanation for delay, that the proposed pleading is bona fide and has sufficient merit to warrant being allowed, and that any prejudice to the opposite side can be overcome - were proper matters for her to take into account in applying those provisions.

Explanation for Delay

106 The defence in the matter had been filed, as mentioned earlier, on 9 September 2011. Quite how that happened is unclear, as even that date was outside the 28 days that UCPR 14.3 permits. Thus, the application to amend was made some eight months after the original defence had been filed.

107 The explanation for the delay is quite unsatisfactory. From soon after 12 August 2010, the Applicant was aware of the type of claim that the Respondents wished to make against it ([41] above). From 27 August 2010, the Applicant had all the documents that Sparke Helmore then sent to it ([42] above). These included the plans prepared by Capital Homes, the building contracts with the Builder, and the letter from City Plan Services dated 21 June 2010. Relevant officers of the Applicant would inevitably have known that the Applicant did not provide any surveying services concerning the Land after it provided the contour and detail plan of 17 July 2008. The only new material that it is suggested emerged from the documents produced on subpoena by the Builder are the letters of termination of the contract of 2 March 2011, and the two invoices from Walpole.

108 The evidence does not establish that that new material cast a significantly different light on the facts of the case, as previously known. While Mr Gibbons asserts that the records produced did not include any records that confirm that any surveyor provided services concerning the height of the floor slabs installed prior to discovery that the slabs were below the approved level, the evidence provided no explanation of what is involved in the task of "certifying position of formwork", that Walpole charged for. If that task includes checking the height to which the formwork reaches, it might be closely related to the level that the slabs would have once the formwork was filled with cement. Further, production of the letters of termination of the building contracts is unlikely to have revealed any radically new aspect of the factual situation, because before their production it would have been clear that the Respondents were taking no steps to require the Builder to rebuild the houses so that the slabs were at the required levels.

109 In any event, the documents produced by the Builder were not dealt with promptly - nearly a month went by before they were copied, and it appears that no serious consideration was given to the documents until early May 2012. During the period from entry of the consent orders on 16 September 2011 the case was made completely ready for trial on the basis, encouraged by an correspondence of Mr Gibbons from 26 August 2011 onwards ([54] above), that all that remained in issue was "the core issue" of the proper measure of damages. There was no hint that the Applicant might later take the stance that it was possible, on a hearing confined to assessment of damages, to raise issues of whether a claim was apportionable, and to use those issues as a way of limiting the damages that would otherwise be payable. The need for a cogent explanation for delay in putting forward an amendment is much greater when the amendment is first sought when a hearing is imminent, as it was here, rather than when a hearing is still a considerable time away.

110 Mr Miller says, correctly, that the Respondents were not speedy in issuing the Statement of Claim. However, once they realised that the houses had been constructed defectively they acted promptly to notify the Applicant that they had a claim, provided documentation promptly after Mr Gibbons requested it, and sought settlement discussions. While the evidence does not identify any particular dates other than 14 June 2011 on which settlement discussions took place, by 26 August 2011 Mr Gibbons could say that the proper measure of damages was the "the issue which has separated the parties for a long time" ([54] above), and by 1 September 2011 he could say that the proper measure of the plaintiffs' damages was "the same matter which has been in existence for a considerable period of time" ([56] above). On the basis of those statements I would infer that there had been settlement discussions well before 14 June 2011. As the content of those discussions would inevitably be privileged, it is not particularly surprising that their dates were not identified.

111 While the passage of time before a statement of claim was issued must be taken into account, it does not have the same significance for the exercise of the discretion whether to grant the amendment as the lack of cogent explanation for the amendment being sought so long after the defence was filed, and virtually on the eve of the trial. I would not draw the conclusion that Mr Miller's submissions to us presupposed, that the time between the defect in the houses being revealed and the statement of claim being filed involved unacceptable delay on the part of the Respondents, that counterbalanced the delay of the Applicant in seeking the amendment. Cross-examination of Mr Wilson failed to establish that such departures as there had been on the part of the Respondents from the directions for filing evidence had delayed the hearing date.

Prospects of Success

112 The evidence before the primary judge did not justify a conclusion that the amendments had any reasonable prospects of success. It is necessary to consider separately whether the Applicant had shown that the amendment had reasonable prospects of success insofar as it is contended that the Builder was a concurrent wrongdoer, and insofar as it contended that the Contracting Respondents themselves were concurrent wrongdoers.

Was the Builder a Concurrent Wrongdoer?

113 The amended pleading refers to conditions 7 and 53 of the development consent ([33] above). However, it does not allege any failure to comply with condition 7. Further, there is no evidentiary basis for believing that there was any land filling on the part of the Land on which the houses were to be located (though it is possible that there might have been some filling elsewhere on the site). Thus, there is no basis for concluding that condition 7 of the development consent bears in any way upon the houses being constructed with floor levels at the wrong height, or upon the Builder having a liability to any of the Respondents.

114 The pleading also made mention of condition 53 of the development consent. That does not identify any obligation to build in accordance with the approved plans. Rather, clause 53 states that a consequence of failure to do so will be that an occupation certificate will be refused. It is only clause 2 that creates the obligation to build in accordance with the approved plans, that the Builder is alleged to have breached.

115 While the proposed amended defence contains an assertion, in [27], that the Builder breached the building contracts by failing to achieve the specified finished floor levels and building levels, it does not assert that that breach of contract is, in itself, a cause of the same loss or damage for which the Applicant is sued. Rather, it pleads that the loss and damage that the First, Third and Fourth Respondents have suffered is a consequence of a failure on the part of the Builder to take reasonable care. That approach to the pleading is consistent with Mr Miller accepting in the course of argument in this Court that a mere breach of contract on the part of the Builder, as opposed to a negligent breach or a breach of a contractual obligation to take reasonable care, did not give rise to a claim for apportionment.

116 The only failure to take reasonable care that the proposed pleading alleges the Builder engaged in is that pleaded in [32] ([80] above). However, there was no evidence before the judge on the hearing of the notice of motion that suggested there was a viable case that for the Builder to take reasonable care in building required it to engage a surveyor, or adopt any other method of checking, to check or verify the finished building levels or finished floor levels. Though the affidavit of Mr Golledge was before the primary judge, it was not read in support of the notice of motion.

117 On the hearing in this Court, Mr Miller relied on Mr Golledge's affidavit. I will assume, without deciding, that on a re-exercise of the discretion in this Court it is legitimate to take that affidavit into consideration.

118 When the Applicant contended at the hearing of the notice of motion that allowing the amendment would not occasion any adjournment, and that the only additional evidence that it wished to file if the amendment was permitted was the affidavit of Mr Golledge, the trial judge would have been justified in assessing the prospects of the amendments succeeding on that evidentiary basis. Even in this Court, when it is known that the trial date has been lost, it is not submitted that there is any identifiable evidence apart from that which was read before the primary judge, the cross-examination on that evidence, and the affidavit of Mr Golledge that should be taken into account for the purpose of re-exercising the discretion. It was submitted that some additional evidence about surveying practice, or building practice, might be called if the amendment were allowed, but no submission was made about what it would show, if permitted. Thus, the prospects must be assessed by reference to such evidence as is before us.

119 Mr Golledge's affidavit does not provide sufficient support for the case that had been pleaded. If paragraphs 15 and 16 of that affidavit are put forward as expert evidence, all that Mr Golledge says about himself is that he is a "registered surveyor and Director of the Defendant". That does not show him to have the requisite degree of specialised knowledge or experience to be able to express opinions concerning what is required for the taking of reasonable care in the construction of houses. He says nothing about the extent to which his experience as a surveyor concerns the construction of houses, as opposed to other types of surveying work. If the paragraphs are not put forward as expert evidence, it is hard to see the relevance of Mr Golledge's personal experience.

120 Quite apart from that, those paragraphs talk about it being usual to have a check survey prior to the concrete pour. The pleading does not allege a failure to take care through not having a check survey prior to the concrete pour. Rather, it contends that it was the finished floor levels or finished building levels that should have been checked. Thus, even if it were admissible, the evidence does not support the pleaded breach. As well, in at least some circumstances it is possible to fail to do what is usual without thereby being negligent, and the evidence does not negative that this is such a situation.

121 Further, there is no evidentiary basis for concluding that the surveying task that Mr Walpole performed, of "certifying position of formwork" did not in substance amount to "a check survey prior to the concrete pour".

122 Finally, even if one took [32] of the pleading at face value, and it was negligent of the Builder to fail to engage a surveyor to check the finished building levels or finished slab levels, there was no evidence of how such a check survey would be carried out. It is not shown that a surveyor engaged to perform that task would not start by assuming the accuracy of the datum point that the Applicant had surveyed and measure the height difference between the datum point and the finished slab levels or finished building levels. If a surveyor would proceed in that way, it would not reveal the error in the finished building levels or the finished slab levels. In that situation the assumed negligence would not be the cause of the Respondent's loss.

123 For these reasons, the Applicant has not shown that it has a seriously arguable case that the Builder was a concurrent wrongdoer.

124 At the hearing in this Court there was some discussion of whether, even if it had been possible to argue that the Builder had failed to take reasonable care in building the houses, any such action brought against the Respondents would fail because the Contracting Respondents would have an equitable set off. The argument being considered was that the set off would arise because the Contracting Respondents would be in breach of the warranty contained in clause 3(a) of the contract (para [36] above), because they had supplied the survey drawing which was inaccurate. I will not take that argument into account, because since the hearing it has occurred to me that there might be an argument that it is an effect of s 18G Home Building Act 1989 (which says that a provision of an agreement that purports to restrict or remove the rights of a person in respect of any statutory warranties is void) that clause 3 of the contract is itself void. Rather than delay the production of these reasons by seeking additional submissions concerning that argument, I will simply not rely on the possibility of the Builder having an equitable set-off for my conclusion that the Applicant has not shown that it has a seriously arguable case that the Builder was a concurrent wrongdoer. My mention of the argument about clause 3 being void does not involve even a tentative expression of opinion about whether the argument is one that should succeed.

Were the Contracting Respondents Concurrent Wrongdoers?

125 There was no factual basis for the contention in the proposed amended defence that the Contracting Respondents had not only terminated the contracts with the Builder, but had also released the Builder. No express release has been shown to exist.

126 Even if there is no express release, the premise on which the proposed amended pleading against the contracting Respondents proceeds is that by the termination of the contracts the contracting Respondents lost rights that they otherwise would have had against the Builder, and for that reason the act of the Contracting Respondents in agreeing to the termination of the contracts is a cause of the same loss and damage as that for which the Applicant is being sued. A termination of a contract following a breach has the effect that both parties are thenceforth excused from performing the contract, but does not prevent any party from suing another for damages for a breach that has occurred before the termination: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-7; Johnson v Agnew [1980] AC 367 at 396. There is no necessity that the same result should follow when a contract is terminated by agreement or by abandonment: the consequences of termination in those circumstances depend on the intention of the parties (JW Carter, Breach of Contract, 2nd ed (2011) LexisNexis Butterworths at [12-18]). However, nothing has been proved to show that there is a case that when the Contracting Respondents agreed to the termination of the building contracts they lost any rights that they might have had to sue the Builder for any past breach of contract. When no basis is shown for believing that any rights that the contracting Respondents might have had against the Builder has been lost because of the termination, there is no basis for the pleading proposed to be brought against the Contracting Respondents.

127 A further reason why the case that the Respondents were themselves concurrent wrongdoers was not shown to have real prospects of success is that, even if the Respondents had released the Builder from any claims under the contract, that release did not involve the giving up of anything of substance. I have already explained why it was not shown that the Respondents had an "apportionable claim" against the Builder.

128 There is a more fundamental problem concerning the contention that the contracting Respondents are "concurrent wrongdoers". On the proper construction of Part 4 Civil Liability Act as a whole, a plaintiff whose own acts or omissions have been a cause of his own loss or damage is not a "concurrent wrongdoer". This construction highlights the distinction between contributory negligence and proportionate liability.

129 I accept that, on a literal reading of s 34(2) Civil Liability Act a plaintiff whose acts or omissions have been a cause of the damage or loss that is the subject of the claim fits within the definition of "concurrent wrongdoer". However, on its proper construction s 34(2) should not be read in that literal fashion. If there is a statutory definition of a term that has an ordinary English meaning, the ordinary English meaning can influence the operation of that definition. In Manly Council v Malouf t/as Fusion Point [2004] NSWCA 299; (2004) 61 NSWLR 394, Handley JA (Mason P agreeing) said at [8] and [9]:

The word defined in a statute may properly influence the interpretation of the definition. See Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522 at 525; [1982] 2 All ER 1 at 4, per Lawton LJ (CA). As F A R Bennion states (Statutory Interpretation, 3rd ed (1997) London, Butterworths, at 434):

'Whatever meaning may be expressly attached to a term, it is important to realise that its dictionary meaning is likely to exercise some influence over the way the definition will be understood by the court'.

The citations to this passage include Delaney v Staples [1992] 1 AC 687 at 692 where Lord Browne-Wilkinson said: '... The proper answer to this case turns on the special definition of 'wages' in section 7 of the Act. But it is important to approach such definition bearing in mind the normal meaning of that word'."

See similarly Hastings Co-operative Ltd v Port Macquarie Hastings Council [2009] NSWCA 400; (2009) 171 LGERA 152 at [17] per Basten JA (Allsop P agreeing).

130 Reading s 34(2) with that principle in mind, it is not ordinary English for a person to be a "wrongdoer", of any kind, insofar as he causes harm to himself. In ordinary English, when there is a wrongdoer there is some other, different, person who has been wronged. That shade of meaning continues to apply in the definition of "concurrent wrongdoer".

131 Further, in Kelly v The Queen [2004] HCA 12; (2004) 218 CLR 216, McHugh J said, at [103]:

"As I earlier pointed out, the function of a definition is not to enact substantive law. It is to provide aid in construing the statute. Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment. There is, of course, always a question whether the definition is expressly or impliedly excluded. But once it is clear that the definition applies, the better - I think the only proper - course is to read the words of the definition into the substantive enactment and then construe the substantive enactment - in its extended or confined sense - in its context and bearing in mind its purpose and the mischief that it was designed to overcome."

132 If one considers the application of the definition in s 34(2) to the other provisions in Part 4, no purpose of the legislation is served by regarding the meaning of "concurrent wrongdoer" as extending to a person who fails to take reasonable care of his own interests.

133 Section 35 is the central provision in Part 4. It sets out the manner in which a limit is imposed on the liability of a "defendant" who is a concurrent wrongdoer and who is not an excluded concurrent wrongdoer. There is no suggestion in the present case that anyone involved in it is an excluded concurrent wrongdoer. There is an extended definition of "defendant" in s 35(5), which would extend to, for example, someone who a plaintiff had not joined as a defendant in proceedings, but who became a party to the proceedings as a cross-defendant. However, s 35(5) expressly excludes a plaintiff from that extended definition.

134 Section 35(1) enables the liability of a "defendant" in that extended sense to be limited. Further, s 35(a) proceeds on the basis that a concurrent wrongdoer has a "liability". A person who fails to take reasonable care of his own interests does not have a liability to himself, or anyone else, by virtue only of that failure to take care. Thus, such a person has no liability that is capable of being limited. For these reasons s 35(a) has no work to do concerning a plaintiff.

135 Section 35(3)(a) makes specific mention of what is to happen in the situation where there is more than one defendant (in the extended s 35(5) sense) and a plaintiff is contributorily negligent. Section 35(3)(a) requires that when a plaintiff is contributorily negligent a "proportion of the loss or damage" is first excluded under "any relevant law", and only after that proportion has been excluded is responsibility apportioned between the defendants in the proceedings. When s 35 was first enacted there was another "relevant law" under which a plaintiff who is contributorily negligent could be required to bear a portion of the damage or loss that was the subject of an apportionable claim, namely s 9 Law Reform (Miscellaneous Provisions) Act 1965 ("the 1965 Act"). In the situation where there are two defendants, and a plaintiff's failure to take reasonable care of his own interests has caused the same loss or damage as that for which the defendants are sued, s 35(3)(a) requires that there be an exclusion of the proportion of the loss or damage in relation to which the plaintiff is contributorily negligent.

136 The test by reference to which a plaintiff's damages are reduced under s 9 1965 Act is "such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage". That is indistinguishable from the test by which the limitation of the liability of a defendant is to take place under s 35(1)(b) Civil Liability Act. When that legislation was already in existence at the time of enactment of the Civil Liability Act 2002, there would have been no need for "concurrent wrongdoer", in Part 4 Civil Liability Act, to extend to a person who fails to take reasonable care of his own interests.

137 However, a similar situation to that which s 35(3)(a) expressly requires also arises where there is only one defendant. The only liability that s 35(1)(a) limits is that of a defendant (in the extended sense). The "proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage", referred to in s 35(1)(a), is a proportion that is ascertained taking into account the extent to which it is just that a plaintiff, by virtue of being contributorily negligent, should share in the responsibility for the damage, and the extent to which a concurrent wrongdoer who is not party to the proceedings should also share in the responsibility for the damage. In that way the policy is effected that each defendant be liable for no more than the proportion of the total damage that is his responsibility, taking into account the extent to which the plaintiff by virtue of being contributorily negligent, other defendants (in the extended sense), and concurrent wrongdoers who are not parties to the proceedings also bear responsibility for that damage. That policy is effected without any need for a plaintiff careless of his or her own interests to be classified as a "concurrent wrongdoer". Of course, before the contributory negligence of a plaintiff entered into the ascertainment of the appropriate proportions, it would be necessary for contributory negligence to be explicitly alleged in the defence of the defendant who sought to have its liability limited.

138 At the time s 34 first came into operation on 1 December 2004, it included in the definition of "apportionable claim" a "claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act". Section 42 is closely based on s 52 Trade Practices Act 1974. At one time contributory negligence was not a defence to an action for damages under s 82 Trade Practices Act for breach of (inter alia) s 52 of that Act: I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 at [33], [60]-[61], [112], [122], [211]. However, effective from 26 July 2004, s 82 Trade Practices Act was amended to add sub-s (1B), which allowed damages for contravention of the relevant provisions of the Trade Practices Act to be reduced by reason of the contributory negligence of the applicant. No analogue of s 82(1B) Trade Practices Act has been incorporated into the Fair Trading Act 1987, so contributory negligence cannot reduce the plaintiff's damages for a contravention of s 42 Fair Trading Act: Perpetual Trustee Company Ltd v Milanex Pty Ltd (in liquidation) [2011] NSWCA 367 at [86]-[88]. In deciding what one should regard as "the extent of the defendant's responsibility for the loss or damage", in s 35, it is appropriate to give effect to the legislative policy that contributory negligence should not provide a defence to an action for breach of s 42 Fair Trading Act, and not reduce the "extent of the defendant's responsibility for the loss or damage" by reason of the plaintiff having been careless of his own interests.

139 The Fair Trading Amendment (Australian Consumer Law) Act 2010 ("the 2010 Amending Act") came into operation on 1 January 2011. It repealed many provisions of the Fair Trading Act, including s 42 and the provision that empowered a court to award damages for breach of s 42. In their place it adopted the Australian Consumer Law, the text of which is defined by s 27 of the 2010 Amending Act to consist of:

"(a) Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth, and

(b) the regulations under section 139G of that Act."

140 In particular, cl 18 of the Australian Consumer Law is an analogue of the former s 42 of the Fair Trading Act. The 2010 Amending Act also adopted some of the provisions of the Competition and Consumer Act concerning remedies, but not all of them. Schedule 3 cl 2 of the 2010 Amending Act amended the definition of "apportionable claim" in the Civil Liability Act so that para (b) read:

"... a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law."

141 It is unnecessary to decide whether contributory negligence is now a means of reducing the damages for a contravention of s 18 of the Australian Consumer Law, as adopted in NSW. All that it is necessary to say is that if it is, then that could be taken into account in deciding whether a plaintiff's carelessness provided a reason for reducing the extent to which it was just that a defendant's liability be reduced, under s 35 Civil Liability Act, when the defendant is sued for a breach of s 18 Australian Consumer Law. However, if contributory negligence is not now a means of reducing the damages for a contravention of s 18 of the Australian Consumer Law as adopted in NSW (as would be the case if s 137B Competition and Consumer Act 2010, which makes contributory negligence a defence to certain actions for damages under the Australian Consumer Law, had not been adopted as part of the NSW law) it could not be taken into account in deciding whether a plaintiff's carelessness provided a reason for reducing the extent to which it was just that the defendants liability be reduced under s 35 Civil Liability Act when the defendant is sued for breach of s 18 Australian Consumer Law.

142 Contributory negligence is not available as a defence to action for breach of statutory duty that accrued prior to 6 December 2002, but is available as a defence to actions for breach of statutory duty that accrued after that date: Transfield Construction v Peers [2008] NSWCA 215 at [82]. As explained in Transfield v Peers, that situation arises as a consequence of the transitional provisions of the Civil Liability (Personal Responsibility) Act 2002, the legislation introduced the proportional liability provisions into the Civil Liability Act. It is by giving effect to the policy of the law concerning whether contributory negligence provides a defence to an action for breach of statutory duty, as applicable at the time the cause of action accrued, that one decides whether the liability of a defendant who is sued for breach of statutory duty should be reduced by reason of the contributory negligence of the plaintiff. That decision is not made by reference to construing "concurrent wrongdoer" as including a plaintiff who was contributorily negligent.

143 For these reasons, s 35 operates to achieve its intended purpose when a plaintiff who is contributorily negligent is not a "concurrent wrongdoer". Likewise, the provisions of s 35A, 36, 37, 38 and 39 have no scope to operate, in relation to a 'concurrent wrongdoer" who was one of the causes of harm to himself or herself.

Prejudice

144 Mr Wilson's opinion about the extra work that would be needed in preparation of the case if the amendment were permitted, and the inevitability of an adjournment ([89] above), is clearly correct. Deciding the relative extents of responsibility of concurrent wrongdoers for particular items of damage and loss would require a considerably wider scope of both lay and expert evidence than would be required if the case proceeded on its original defence. It would also be likely to require some additional subpoenas to be issued or discovery sought from any additional alleged concurrent wrongdoer. There is a real likelihood that it would be necessary to join the Builder to the proceedings. Joining an additional party to proceedings is likely to cause delay as that additional party makes itself ready for trial.

145 Mr Wilson also expressed the opinion that all the preparation in the case so far would be wasted. It is not clear, on the evidence before the primary judge on the notice of motion, that all the preparation in the case so far would be wasted, but at least some of the evidence would need to be reconsidered and brought up to date.

146 Insofar as allowing the amendment would require extra cost to be incurred in preparing the case, it would be capable of being remedied by an order for payment of any wasted costs if the amendment were allowed, and by the order for costs ultimately made in the proceedings. Thus, the extra cost occasioned by the amendment is not a reason for refusing it.

147 However, the delay that the amendment would cause must also be considered. There is uncontested evidence that the Respondents cannot afford to rebuild the houses unless they receive an award of damages. Thus, the delay in the hearing that would be occasioned by the granting of the amendment, would prevent the Respondents from occupying what they had intended to be their homes for that period of delay. It would bring with it the extra stress to which Mr Ballard deposes. The delay would prevent the First and Second Respondents from implementing, during the period of the delay, the plan that they had developed to care for the Third and Fourth Respondents. Those items are of very real significance. As well, there are some additional effects of delay to which Mr Ballard deposes, namely the additional cost of rental accommodation, and the interruption to what would otherwise have been the course of development of the business of the First and Second Respondent.

148 Mr Miller submitted to us that it would be possible for any damages eventually awarded to include a solatium for stress, and compensation for the other items of prejudice to which the Respondents point. I do not accept that that submission provides a sufficient answer to the Respondents' case concerning prejudice.

149 First, while Mr Miller might be right in saying that those items "may sound in damages in due course" (tp 24), that is hardly an unequivocal concession. We have heard no argument about whether such damages could in principle be awarded, beyond his bare assertion and some reference to Coshott v Fewings Joinery Pty Ltd (NSWCA, 15 July 1996, unreported). At the least, for the Respondents to recover damages for the effects of delay consequent upon the granting the amendment would require the Respondents to run, and succeed in, the argument that such heads of damage were recoverable. At least to the extent that the Respondents have had extra stress and upset as a consequence of the last-minute application to amend the defence, and the consequential delay in obtaining a hearing date, there would be scope for an argument (about whose prospects of success I say nothing) about whether Fewings extended so far, or whether such damages were too remote. Even if such damages could in principle be awarded, a claim for loss of profits would require complex evidence on the part of the Respondents, and would inevitably complicate and lengthen the trial itself, and increase the time required to get the matter ready for trial on this expanded basis.

150 Further, an award of damages for stress or upset or years of disruption to one's plans, is the only remedy that the common law can provide, after the event, when a breach of a common law right has led to such damage. Very importantly, in my view, such damages are a very poor substitute for not being exposed to the heads of damage in the first place. When a court is considering whether to grant the amendment, it is in a position to prevent those heads of damage from arising for any greater time than has already passed.

151 Mr Miller submits, correctly, that any prejudice that the Applicant would suffer by not being permitted to make the amendment must also be taken into account. For the reasons already given, the evidence that has been presented on the motion does not show that there is a real prospect of the Applicant succeeding in any claim it wished to bring against either the Respondents or the Builder. Even if it were the case that, by reason of evidence not placed before the primary judge or this Court, there were to be a realistic prospect of the Applicant being able to recover contribution from the Builder, the apportionment provisions in the Civil Liability Act do not prevent the Applicant from bringing such an action for contribution in separate proceedings: Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208; (2008) 21 VR 84. In the abstract one can say that it would impose an additional burden on the applicant to bring separate proceedings seeking contribution, by comparison with what would be involved in litigating the claim in the present proceedings. However, when the Applicant has not shown that it has rights of any substance against any alleged concurrent wrongdoer it is difficult to accord any significant weight to that consideration. The Applicant has not shown that refusal of the amendment would cause it any significant prejudice.

The Orders Made

152 It was because the question of whether a person who was contributorily negligent was a "concurrent wrongdoer" was of some general importance that I joined in the order granting leave to appeal. For the reasons I have set out, as an exercise of the court's discretion consistently with s 138 Civil Procedure Act I joined in the order dismissing the appeal. There was no occasion to depart from the principle that costs follow the event.

153 BARRETT JA: The reasons prepared by Basten JA and by Campbell JA enable me to be brief in stating why I joined in the making of the orders of 10 October 2012.

154 The consent judgment against the applicant (sole defendant in the District Court) for "damages to be assessed" entailed an admission by the applicant that it is liable for the whole of the respondents' loss or damage as ultimately quantified. The applicant cannot, consistently with that admission, maintain that it is liable for only such part of that whole as might be produced by apportionment under Part 4 of the Civil Liability Act 2002 in consequence of a finding of "concurrent wrongdoer" status of the builder: see the discussion in Suncorp-Metway Ltd v Anagiotidis [2009] VSC 126 at [63], [64].

155 With the consent judgment in place and no application having been made by the applicant to have it varied or set aside, it was a correct exercise of the primary judge's discretion to refuse the amendment application by which the applicant sought to agitate the concurrent wrongdoer status of the builder and the proposition that liability of the builder to the respondents operated to make the applicant liable for part only of the respondents' total loss or damage.

156 The same objection would not have arisen had the situation been one of "solidary liability" of the kind that Part 4 has abolished in the class of cases to which it applies. Where there is "solidary liability", a plaintiff may obtain judgment against all of several defendants without apportionment or discrimination and choose how and against whom it seeks to enforce the judgment, with the defendants then left to rely on such rights of contribution and indemnity as may exist among them in order to determine how much of the quantified loss or damage each bears (assuming all to be solvent). In those circumstances, in contrast to those of the present case (where Part 4, if operative in relation to the applicant and the builder, would make each independently and separately liable to the respondents for a portion only of the total loss), an admission by one defendant of liability for that total would not be inconsistent with the existence of concurrent liability for that whole on the part of one or more other defendants.

157 The admission by the applicant of liability for the whole loss also precludes any allegation by it of contributory negligence of the respondents. This is because it would be inconsistent with the admission for the applicant to contend that the damages awarded against it in respect of the admitted liability should be "reduced to such extent as the court thinks just and equitable having regard to the [respondents'] share in the responsibility for the damage": Law Reform (Miscellaneous Provisions) Act 1965, s 9(1)(b).

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Decision last updated: 20 November 2012