IN THE SUPREME COURT OF VICTORIA Not Restricted AT MELBOURNE COMMON LAW DIVISION VALUATION, COMPENSATION & PLANNING LIST

No. 9776 of 2008 MATTHEW JOHN WHEELAHAN AND THERESA WHEELAHAN

Plaintiffs

- and - CITY OF CASEY Defendant - and - ENVIRONMENT PROTECTION AUTHORITY and others (according to attached schedule)

Defendants and Third Parties

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JUDGE: OSBORN J WHERE HELD: Melbourne DATE OF HEARING: 1 February 2011 DATE OF RULING: 3 February 2011 CASE MAY BE CITED AS: Wheelahan v City of Casey & Ors (No 3) MEDIUM NEUTRAL CITATION: [2011] VSC 15

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NEGLIGENCE; PRACTICE AND PROCEDURE – Strike out application with respect to alleged duties of care – Test of no real prospect of success – Characterisation of claims – Substantial dispute as to whether claims constitute claims for pure economic loss arising from negligent misstatement – Questions appropriate for trial – Questions not materially affecting the evidentiary matrix likely to be adduced at trial – Full hearing on merits appropriate - ss 63, 64 Civil Procedure Act 2010 – Spencer v The Commonwealth (2010) 241 CLR 118.

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APPEARANCES:

Counsel Solicitors

For the Plaintiff Ms L Nichols Slater and Gordon

For the First Defendant Mr C Caleo SC with Mr R Craig

Maddocks

For the Fourth Defendant Mr P Cawthorn SC with Mr B Carr

Thomsons Lawyers

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TABLE OF CONTENTS

The duties of care alleged.................................................................................................................4 The first duty of care.....................................................................................................................5 The second duty of care .............................................................................................................18

The limitation questions.................................................................................................................23

1 T0015

HIS HONOUR:

1 The plaintiffs and group members (‘the residents’) sue in respect of loss and damage

allegedly suffered as a result of the emission of landfill gas from a municipal tip in

Stevensons Road, Cranbourne.

2 The residents are the owners and occupiers of adjoining land in the Brookland Greens

Estate. The claim is brought in nuisance against the first defendant, the City of Casey

(‘Casey’), and the third defendant, SITA Australia Pty Ltd (‘SITA’). It is brought against

all the defendants in the alternative in negligence.

3 Casey makes allegations by way of a statement of claim on third party notice against the

fourth defendant, LMS Generation Pty Ltd (‘LMS’), a provider of specialist services in

respect of landfill gas extraction.

4 Casey alleges that LMS has breached duties of care owed to Casey and, in the

alternative, to the residents, in respect of services supplied by LMS to Casey relating to

the rectification of problems with landfill gas extraction at the tip in and after 2003.

5 In turn the residents have picked up and mirrored in their statement of claim Casey’s

allegations against LMS.

6 LMS now seeks to strike out those parts of the pleadings of both Casey and the residents

that are premised upon a duty of care owed by LMS to the residents in respect of actions

undertaken by LMS in 2003 and 2005.

7 The application is made by summons pursuant to rr 23.01 and 23.02 of the Supreme Court

(General Civil Procedure) Rules 2005, and alternatively by s 63 of the Civil Procedure Act

2010. It is submitted that s 63 enlarges the power of the Court to dismiss part of a claim

beyond the powers contained in the Rules. Section 63 provides:

63 Summary judgment if no real prospect of success

(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

2 T0015

(2) A court may give summary judgment in any civil proceeding under subsection (1)—

(a) on the application of a plaintiff in a civil proceeding;

(b) on the application of a defendant in a civil proceeding;

(c) on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.1

8 I accept that the test of ‘no real prospect of success’ may in some circumstances extend

to cases not regarded as sufficiently hopeless to warrant striking out under the Rules.2

9 The appropriate enquiry is in terms of the section itself. In Swain v Hillman3 the Court of

Appeal had to consider an English rule of court in similar terms. Lord Woolf MR said at

page 92:

The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … they direct the Court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.4

10 The power should be exercised in accordance with the overarching purpose of the Civil

Procedure Act 2010. 5

11 The High Court has recently addressed the background to, and differing nature of,

broadly analogous provisions in Spencer v The Commonwealth.6

12 French CJ and Gummow J emphasised that powers of this kind must be exercised with

caution:

The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process.7

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1 Civil Procedure Act 2010, s 63. 2 Cf Dey v Victorian Railways Commissioners (1948) 78 CLR 62 and see also Jefferson Ford Pty Ltd v Ford

Motor Company (2008) 167 FCR 372, 406, [124]. 3 (2001) 1 All ER 91. 4 Ibid, 92. 5 Ibid, 94. See further the discussion of Williams JA in Deputy Commissioner of Taxation v Salcedo [2005]

QCA 227, 234 and following. 6 (2010) 241 CLR 118. See French CJ and Gummow J at 128 and following and Hayne, Crennan, Kiefel

and Bell JJ at 138 and following. 7 Ibid, [24].

13 They further stated in the context of the relevant Federal Court powers:

Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.8

14 Section 64 of the Civil Procedure Act 2010 makes clear that even if the discretion granted

by s 63 is enlivened it may not be appropriate to exercise it:

64 Court may allow a matter to proceed to trial

Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—

(a) it is not in the interests of justice to do so; or

(b) the dispute is of such a nature that only a full

hearing on the merits is appropriate.9

The duties of care alleged

15 In its further amended statement of claim on third party notice of 1 December 2010

(‘FASCTPN’) Casey alleges three sequential breaches of duty of care arising out of

investigations undertaken by LMS, design measures formulated by it and advice given

with respect to such measures.

16 LMS contends that the relevant pleadings with respect to the first two duties of care are

to be characterised as claims for damages for pure economic loss arising out of negligent

misstatement. Casey and the residents contend that the allegations are not to be

characterised in this way but as allegations of sequential failures to properly assess and

deal with an existing and continuing landfill gas problem by the provision of

professional services. In turn it is submitted that the first two allegations are not

8 Ibid, [25].

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9 Civil Procedure Act 2010, s 64.

reducible to the concept of negligent misstatement which LMS contends is

determinative of liability. It is submitted this is a case of negligence simpliciter not

negligent misstatement as such.

17 The third breach of duty alleged and contained in [65] is not challenged by LMS, namely

that, in breach of a duty of care both to the residents and Casey, LMS failed to take

reasonable care in the design of a landfill gas system in July 2006.

The first duty of care

18 The background to the alleged first duty of care was the retainer of LMS by Casey in

mid 2003. It is pleaded at [24]-[28]:

24. In about June 2003, LMS entered into an agreement with Casey and Energex10 pursuant to which LMS agreed to:

(a) inspect and review the Energex LFG System;

(b) provide recommendations for corrective actions that should be taken to fix the Energex LFG System;

(c) provide an estimate of the likely cost of performing any corrective action;

(First LMS Agreement).

Particulars

The First LMS Agreement was negotiated between LMS and Energex. Casey refers to a letter from Alan Brett of LMS dated 30 May 2003 (LMS.002.0133), an email from Michael Jansen of Casey dated 19 June 2003 and an emal from Greg Blake of Energex dated 19 June 2003 (LMS.013.0338). Casey also refers to the report prepared by LMS in August 2003, “Landfill Gas System Review Stevensons Road Landfill”, which, at page 3, states that “LMS were commissioned by Energex Limited and the City of Casey to undertake a review of the landfall gas extraction system and flare installed at the Stevenson’s Road Landfill” (VES.001.0005.3194). LMS subsequently issued tax invoices to Casey and Energex for the cost of services provided by LMS pursuant to the First LMS Agreement (LMS.003.0220, LMS.004.0001). Further particulars may be provided following discovery by Energex.

5 T0015

10 The gas extraction contractor at the landfill.

25. It was an implied term of the First LMS Agreement that LMS would, in conducting its review of the Energex LFG System and providing recommendations for corrective actions to fix the system, exercise the skill and care to be expected of a specialist landfill gas company.

Particulars

The term was implied by law in a contract for the provision of professional services.

26. In August 2003, pursuant to the First LMS Agreement, LMS submitted a report to Casey and Energex entitled “Landfill Gas System Review Stevensons Road Landfill”, which recorded that:

(a) LMS undertook site inspections on 23 July 2003, and 29 to 31 July 2003;

(b) LMS made initial recommendations after its first site visit on 23 July 2003, which recommendations were immediately acted upon by LMS;

(c) during its second visit to the Stevensons Road Landfill between 29 and 31 July 2003, LMS identified problems with the Energex LFG System and undertook immediate corrective actions;

(d) LMS recommended a number of further steps be taken to address the problems with the Energex LFG System.

(LMS Report).

Particulars

The LMS Report is in writing and dated August 2003 (VES.001.0005.3194).

27. Further, LMS advised that the Stevensons Road Landfill should recover, and subsequently reliably produce, the required gas flow rates.

Particulars

The advice was given by David Williams of LMS to Roger Beckers of Energex in August 2003, which advice was subsequently conveyed to Casey (VES.001.0005.4110).

28. In September 2003, LMS recognised that:

(a) to improve the flow of gas coming from the Southern Cells of the Stevensons Road Landfill, it would have to put in place a new gas collection system whilst performing remedial work on the existing header system;

(b) even if it repaired the blocked gas mains in the Energex LFG 6 T0015

System, that would have little effect on the flow of gas;

(c) the Energex LFG System needed to be totally revamped; and

(d) it might be more cost effective to install an entirely new landfill gas extraction system designed by LMS, using a combination of horizontal vertical wells.

Particulars

Casey refers to emails between Mark Maple, David Williams and David Bevan-Lewis of LMS dated 23 and 24 September 2003 (LMS.029.0220 at .0221, and LMS.029.0222).11

19 It is then pleaded by [29] that LMS breached the First LMS Agreement by failing to

exercise reasonable skill and care in inspecting and reviewing the Energex landfill gas

system and providing recommendations to Casey as to the corrective actions that

should be undertaken to fix the system.

20 In turn [30]-[34] allege the following circumstances bearing on the relationship between

LMS and the residents:

30. At the time of the First LMS Agreement, or alternatively at around the time of the LMS Report, LMS know or ought to have known that:

(a) the Stevensons Road Landfill:

(i) shared a boundary with the Brookland Greens Estate;

(ii) sat at a depth below the level of the local water table;

(iii) was sited on relatively porous and permeable Brighton Group sediments;

(b) the Stevensons Road Landfill did not have side and/or basal liners;

(c) if unlined, the Stevensons Road Landfill would, or was likely to, generate gas, including methane gas, that might migrate, subsurface, into the Brookland Greens Estate;

(d) in order to contain landfill gas within at least the Southern Cells of the Stevensons Road Landfill, an effective landfill gas extraction system would need to be designed and installed in that part of the landfill site;

7 T0015

11 Further Amended Statement of Claim on Third Party Notice filed by the first defendant, 1 December

2010, [24]-[28].

(e) failure to exercise reasonable skill and care in inspecting and reviewing the Energex LFG System and providing recommendations to Casey as to the corrective actions that should be undertaken to fix the Energex LFG System would or was likely to have the consequence that:

(i) the Energex LFG System would not be fixed or replaced so as to ensure that it reliably produced the required landfill gas flow rates;

(ii) landfill gas would travel beyond the Stevensons Road Landfill and was likely to travel to adjoining and neighbouring land, including the Brooklands Green Estate;

(f) methane gas, an element of landfill gas, is a substance capable of causing explosion in circumstances when it is present in the air in the range of 5% to 15% (by volume) and an ignition source has been introduced;

(g) consequently, if landfill gas was not contained within the Stevensons Road Landfill, then it posed or could pose a health and safety risk to persons present or residing on the Brookland Greens Estate, which risk could become publicly known.

31. By reason of the First LMS Agreement, LMS had the power and the duty to advise Casey as to the corrective actions that should be undertaken to fix the Energex LFG System, so that landfill gas could be reliably extracted from the Southern Cells of the Stevensons Road Landfill at required flow rates.

32. The plaintiffs and group members were vulnerable to any failure by LMS to take reasonable care in inspecting and reviewing the Energex LFG System and providing recommendations to Casey as to the corrective actions that should be undertaken to fix the Energex LFG System.

33. Casey was vulnerable to any failure by LMS to take reasonable care in inspecting and reviewing the Energex LFG System and providing recommendations to Casey as to the corrective actions that should be undertaken to fix the Energex LFG System.

34. Further, it was reasonably foreseeable at the time of the First LMS Agrement, or alternatively at around the time of the LMS Report, that if LMS failed to take reasonable care in inspecting and reviewing the Energex LFG System and providing recommendations to Casey as to the corrective actions that should be undertaken to fix the Energex LFG System:

(a) the plaintiffs and group members may suffer economic loss as a consequence of the environmental impact of the Stevensons

8 T0015

Road Landfill …12

21 Paragraph 35(a) then alleges that by reason of the foregoing, LMS owed the residents a

duty to take reasonable care ‘in inspecting and reviewing the Energex LFG system and

providing recommendations to Casey as to the corrective actions that should be

undertaken to fix the Energex LFG system, so as to protect the plaintiffs and group

members from suffering economic loss as a consequence of the environmental impact of

the Stevensons Road landfill (First Duty to Residents)’.13

22 LMS emphasises that the duty is expressly pleaded as one with respect to economic loss.

23 Paragraph 36 alleges that this duty was breached by failure to take reasonable care ‘in

inspecting and reviewing the Energex LFG system and providing recommendations to

Casey as to the corrective actions that should be undertaken to fix the Energex LFG

system.’14

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24 The particulars under this paragraph mirror the particulars given in [29] with respect to

breach of the First LMS Agreement for specialist services between Casey and LMS.

They allege omissions to properly advise.

Particulars

Neither in the LMS Report itself, or within a reasonable time after LMS provided Casey with the LMS Report:

(a) did LMS inform Casey, that:

(i) to improve the flow of gas coming from the Southern Cells of the Stevensons Road Landfill, LMS would have to put in place a new gas collection system whilst performing remedial work on the existing header system;

(ii) even if LMS repaired the blocked gas mains in the Energex LFG System, such repairs may have little effect on the flow of gas;

(b) did LMS advise Casey, that:

(i) the Energex LFG System needed to be totally

12 Ibid, [30-[34]. 13 Ibid, [35]. 14 Ibid, [36]

revamped;

(ii) it might be more cost effective to install an entirely new landfill gas extraction system designed by LMS, using a combination of horizontal vertical wells.

(c) did LMS recommend to Casey that for gas to be reliably extracted from the Southern Cells of the Stevensons Road Landfill by a landfill gas collection system, such a system would need to be, and could be, designed and installed in such a way to take account of the distinctive landfill profile, including elevated water levels.15

25 LMS submits that the allegations made are ones not of negligent conduct but of

negligent advice. Such advice it is submitted is commonly preceded either by a failure

to properly investigate or properly analyse evidence. It is also apparent that the

pleading does not allege reliance by the residents upon the advice given by LMS.16

26 In San Sebastian Proprietary Limited v The Minister,17 the joint judgment discussed the

special problems associated with defining the circumstances in which a duty of care

arises in the context of statements.

Since Hedley Byrne there has been a tendency, discernible in the judgments of the Court of Appeal in this case, to regard liability for negligent misstatement as standing apart from the general principles expressed in Donoghue v. Stevenson with respect to the duty of care. There is a special problem in defining the circumstances in which a duty of care arises in the context of statements. One facet of this problem is that it is more difficult to apply the standard of reasonable foreseeability to the consequences which flow from the making of a statement than it is to apply that standard to the consequences which flow from acts. This is because damage flows, not immediately from the defendant's act in making the statement, but from the plaintiff's reliance on the statement and his action or inaction which produces consequential loss. A second facet of the problem arises from the propensity of negligent statements to generate loss which is purely economic. The recovery of economic loss has traditionally excited an apprehension that it will give rise to indeterminate liability. And there is also an apprehension that the application of the standard of reasonable foreseeability may allow recovery of economic loss of such magnitude and in such circumstances as to provoke doubts about the justice of imposing liability for it on the

10 T0015

15 Ibid, [36] 16 Cf Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 188 CLR 241, 249, 252; Tepko Pty Ltd &

Ors v Water Board (2001) 206 CLR 1, 22. 17 (1986) 162 CLR 340, 353.

defendant.18

27 Further, in Perre v Apand Pty Ltd19 Gaudron J stated at pages 198 and 199:

It seems to me that much judicial effort has been devoted to, but little gained by, criticising the approaches that have been advanced or theories propounded in this area of the law. Rather, it seems likely that, in time, there will develop a sufficient body of case law from which it is possible to discern different categories for which the special circumstances that call a duty of care into existence can be articulated. That is what Stephen J predicted in Caltex Oil (Australia) Pty Ltd v The Dredge ‘‘Willemstad’’.

So far as concerns the category of negligent misstatement — more accurately, the failure to provide information or advice or, usually, the failure to provide accurate information or advice — the prediction of Stephen J in Caltex Oil has largely been borne out. That category was impliedly recognised as a discrete category in San Sebastian Pty Ltd v The Minister , and expressly recognised as such by Brennan CJ and, also, by Dawson J in Hill v Van Erp.

So far as concerns negligent misstatement, the circumstances which attract a duty of care are ‘‘known reliance (or dependence) or the assumption of responsibility or a combination of the two’’, the word ‘‘known’’ including circumstances in which reliance or dependence ought to be known. And in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords, it was not pleaded that the auditors in question knew or ought to have known that a finance provider would rely on their audited statement of accounts and, thus, it was held, on the pleadings, that no duty of care was owed by the auditors to the finance provider.20

28 LMS relies on the judgment of Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd21

as relevantly identifying the elements of a duty of care in negligent misstatement for

pure economic loss as being :

(1) the advice is required for a purpose which is known to the advisor when the advice is given;

(2) the plaintiff relied upon the statement made by the defendant;

(3) the advisor knows the advice will be communicated to the plaintiff either specifically or as a member of an ascertainable class in order to be used for the purpose;

(4) that the advisor, expressly or impliedly, undertook the responsibility of exercising reasonable care in making the statement;

(5) it is expressly or impliedly known that the advice is likely to be acted

11 T0015

18 Ibid, 353-4. Citations omitted. 19 (1999) 198 CLR 180, 198-9; [28]-[30]. 20 Ibid. Citations omitted. 21 (2003) Aust Torts Reports ¶81-692, 716.

upon without independent enquiry; and

(6) that the plaintiff in reliance on that statement, suffered loss.22

29 It is common ground that the case pleaded is not such a case.

30 Casey and the residents however contend that the salient features of the case

nevertheless give rise to a duty of care. Counsel for the residents referred to the

statement of principle by Ormiston and Ashley JJA in Moorabool Shire Council and

Another v Taitapanui and Others:23

The categories of case in which a duty of care with respect to pure economic loss is to be found are properly to be seen as special. Foreseeability of loss, and an unbroken chain of causation, are necessary elements, but by themselves are not sufficient. An additional element which must be present has been variously described as involving one or more of known reliance or dependence of the plaintiff; the assumption of responsibility by the defendant; or the control exercised, or exercisable, by the defendant over the circumstances affecting the plaintiffs interests. What ultimately determines whether a duty of care arises is the character of the relationship between the plaintiff and the defendant. Matters such as those which we have just mentioned, and others, bear upon the resolution of that question in the particular circumstances of particular cases; though not all of those matters will be at the forefront in every case. The question to be answered is whether, having regard to the salient features of the particular case, the connection between the parties is sufficiently close — though not necessarily physically close — as to give rise to a duty of care. When the defendants acts or omissions arise in connection with the discharge of statutory duties or the performance of statutory functions, the statutory framework is itself a salient feature to which consideration must be given.

To those considerations should be added the following: Three policy considerations are pertinent in every case. First, that the effect of a decision should not lay a defendant open to claims which are indeterminate as to the class or number of potential claimants, time or amount. Second, that the effect of a decision should not be to unduly hinder ordinary commercial transactions (or, be inconsistent with normal business standards). Third, that a decision should not have the effect of intruding into another area of the law.

Also to be borne in mind is the fact that the pertinent law has been developed cautiously, incrementally, and by analogy. So, for example, in Perre v Apand Pty Ltd McHugh J said this:

… We have the established categories, a considerable body of case law and the useful concept of reasonable foreseeability. If a case falls outside an established category, but the defendant should reasonably have foreseen that its conduct would cause harm to the plaintiff, we have only to ask whether

12 T0015

22 Ibid. 23 (2006) 14 VR 55, 73, [71]-[73].

the reasons that called for or denied a duty in other (usually similar) cases require the imposition of a duty in the instant case.24

31 In Caltex Refineries (Queensland) Pty Ltd v Stavar,25 Allsop P wrote of the concept of

salient features as follows:

This rejection of any particular formula or methodology or test the application of which will yield an answer to the question whether there exists in any given circumstance a duty of care, and if so, its scope or content, has been accompanied by the identification of an approach to be used to assist in drawing the conclusion whether in novel circumstances the law imputes a duty and, if so, in identifying its scope or content. If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the “salient features” or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.

These salient features include:

(a) the foreseeability of harm;

(b) the nature of the harm alleged;

(c) the degree and nature of control able to be exercised by the defendant to avoid harm;

(d) the degree of vulnerability of the plaintiff to harm from the defendant's conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself;

(e) the degree of reliance by the plaintiff upon the defendant;

(f) any assumption of responsibility by the defendant;

(g) the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant;

(h) the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff;

(i) the nature of the activity undertaken by the defendant;

(j) the nature or the degree of the hazard or danger liable to be caused by the defendant's conduct or the activity or substance controlled by the defendant;

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24 Ibid. Citations omitted. 25 (2009) 75 NSWLR 649. See also Graham Barclay Oysters v Ryan (2002) 211 CLR 540, [149] per Gummow

and Hayne JJ and [321] and following per Callinan J.

(k) knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff;

(l) any potential indeterminacy of liability;

(m) the nature and consequences of any action that can be taken to avoid the harm to the plaintiff;

(n) the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one's own interests;

(o) the existence of conflicting duties arising from other principles of law or statute;

(p) consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and

(q) the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law.

There is no suggestion in the cases that it is compulsory in any given case to make findings about all of these features. Nor should the list be seen as exhaustive. Rather, it provides a non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content.26

32 It is not appropriate to analyse the pleading at [30] – [34] of the FASCTPN which I have

set out above in terms of these concepts on an application of this type. The real question

is simply whether such an analysis should be permitted to go to trial.

33 Counsel for Casey emphasise that the relationships giving rise to the alleged duties of

care in issue arose prior to the giving of any advice by LMS and the fundamental

complaint made is with respect to the failure to exercise appropriate professional skill

within that relationship. Counsel for the residents emphasises that the relationship of

physical proximity and vulnerability alleged in the pleading resolves any issues of

indeterminacy.

34 The residents’ statement of claim alleges by [66] and [67] that between 25 June 2005 and

18 September 2008:

(a) pollution to the air and land environments of the Brookland Greens Estate was occurring;

(b) levels of methane within houses on the Estate posed an immediate

14 T0015

26 Ibid, [102] - [104].

threat to residents and persons present;

(c) an environmental hazard was present within the Estate posed by the migration of landfill gas from the [tip].27

35 In turn, the economic loss which the residents are alleged to have suffered occurred as a

consequence of the physical effects of continuing landfill gas escape from the tip into the

adjoining Brookland Greens Estate in which the residents resided. The contextual

circumstances raise issues of fact which in my view should go to trial before the

questions of duty of care are resolved. It is alleged the escape of landfill gas impacted

on the ability of the residents to use their land, it impacted on the value of that land, and

it generated requirements to undertake physical works upon that land. The factual

matrix in which this loss crystallised is pleaded at [92]-[95] of the residents’ statement of

claim.

92. On or shortly after 10 September 2008:

(a) some of the residents of the Brookland Greens Estate vacated their homes;

(b) some residents partially vacated their homes in the Brookland Greens Estate, for example, with one adult family member vacating accompanied by children and the other family member remaining:

(c) there was widespread publicity:

i) in relation to the very real risk of asphyxiation and explosion within the Brookland Greens Estate;

ii) of the presence of escaping methane gas within the Brookland Greens Estate;

iii) of the risk to public health and safety within the Brookland Greens Estate and of the evacuation advice;

iv) of the impact of the risk upon residents and the dilemma facing residents as to whether to leave in accordance with the evacuation advice or to stay in their homes.

93. Of residents who vacated their homes:

(a) some took up short term accommodation;

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27 Ibid, [66].

(b) some stayed with family or friends;

(c) some received financial assistance from the State of Victoria.

94. Following public notice of 10 September 2008:

(a) there was a complete cessation of demand for rental accommodation within the Brookland Greens Estate;

(b) some of the group members who were in the process of constructing homes on their land:

i) ceased building activity;

ii) suspended construction contracts;

(c) some of the group members have been unable to continue operating businesses from their homes;

(d) some of the group members have been unable to obtain or renew policies of insurance for their houses and property on the Brookland Greens Estate;

(e) by approximately 31 October 2008, at least 277 houses dispersed across the Brookland Greens Estate had landfill gas/methane gas in-house monitoring installed;

(f) such monitors regularly recorded:

i) the presence of landfill gas;

ii) the presence of methane gas;

(g) such monitors, as with those earlier installed:

i) required house visits by persons for or on behalf of Casey for monitoring purpose;

ii) were in fact monitors with visits occurring between every few days to once every 2 weeks and when alarms on monitors sounded;

iii) remain in a large number of houses as at December 2009 as does the monitoring;

(h) physical works were carried out to at least 252 houses dispersed across the Brookland Greens Estate for the purposes of seeking to mitigate the migration of landfill gas;

(i) physical works including the construction of a bentonite diaphragm wall on the perimeter of the landfill were carried out by Casey;

i) construction of the main works for the wall was completed shortly prior to 10 September 2009;

16 T0015

ii) additional works continued thereafter and were continuing as at December 2009.

95. As a consequence of the public notice of the presence of escaping landfill gas within the Estate, the risk of asphyxiation and explosion and the evacuation advice and the matters in paragraph 94 (e) to (g):

(a) the:

i) rental value; and

ii) capital value;

of the land in the Brookland Greens Estate was and remains substantially less than it would have been had there been no escape of landfill gas from the Casey Council land;

(b) the allotments of land in the Brookland Greens Estate, whether improved or unimproved, have been permanently blighted.28

36 It is in this context that Casey and the residents submit that the breaches of duty alleged

are not merely to be characterised as misstatements giving rise to claims for pure

economic loss, but as a failure to properly assess and respond to potential

environmental impacts giving rise to consequential economic loss flowing from the

continuing escape of landfill gas.

37 In Wickstead v Browne29 Kirby P observed:

Common experience teaches that is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principles. That is why leave is usually required for an appeal from interlocutory orders. Appellate courts, including this Court, will usually require evidence to be adduced and a trial concluded before considering the application of the law to that evidence. Out of the detail of the evidence ultimately proved, affecting the relationship of the respondent and the appellant, may arise a finding of duty of care which the common law of negligence would uphold.30

38 I am not persuaded that the pleading with respect to the first duty of care should be

struck out. The question of whether LMS owed the residents a duty of care should be

resolved in the light of the facts established at trial.

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28 Third Further Amended Statement of Claim filed by plaintiffs, 21 December 2010, [92]-[95]. 29 (1992) 30 NSWLR 1, 5-6. 30 Applied in State of Victoria & Ors v Teresa Richards [2010] VSCA 113.

39 On one view the first, second and third duties alleged relate to a continuum of design

advice given with respect to an existing and continuing problem. Once it is conceded

that the breach of the third duty alleged is arguable, this encourages the view that the

alleged breaches of the alleged first and second duties should also go to trial.

40 Having reached this conclusion it is inappropriate to analyse the issues relating to the

first duty of care further on a provisional basis at this stage.

The second duty of care

41 The second duty of care is said to have arisen after advice was given in March and May

2005 by LMS to SITA (the then operator of the tip) concerning management of landfill

gas at the tip and further advice was given to Casey by LMS in April 2005.31

42 It is then alleged by [41] that in June 2005 LMS provided proposals to Energex (the gas

extraction contractor at the landfill) to conduct landfill gas installation works at the

landfill. Casey alleges that:

42. LMS’s revised proposal of 21 June 2005, stated that:

(a) LMS had been requested to provide a proposal to conduct landfill gas installation works at the Stevensons Road Landfill (pg 3);

(b) the primary objective was to control and effectively manage landfill gas emissions so optimum landfill gas recovery could be achieved (pp 3, 7).

43. As part of its revised proposal, LMS recommended that, after capping at the Stevensons Road Landfill was completed:

(a) five vertical gas wells and connecting pipe infrastructure be installed in the Northern Cells at a cost of $113,940 ex GST (pp 3,6);

(b) a six month monitoring program then be undertaken to provide date on the wells installed and the effects of water levels on gas extraction, at a cost of $15,000 ex GST (p 6);

(c) consideration then be given to designing and installing a landfill gas extraction system for the Stevensons Road Landfill;

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31 See Further Amended Statement of Claim on Third Party Notice filed by the first defendant, 1

December 2010, [37]-[40].

(LMS Design Advice)

Particulars

The fact that the gas wells were only to be installed after capping had been completed is stated in an email from David Williams of LMS to Evan Kyriakopoulos of SITA dated 26 May 2005 (LMS.002.0182).32

43 It is further alleged that this advice resulted in material delay in the installation of

rectification works.

44. On 10 April 2006, David Williams of LMS informed Michael Jansen of Casey that:

(a) recent inspection of the Stevensons Road Landfill indicated that capping works were not complete;

(b) LMS were still waiting for capping works to be completed to allow installation of the five test gas well in the Northern Cells.

Particulars

The information was conveyed by email (VES.006.0001.0417).

45. In consequence of the LMS Design Advice, no effective landfill gas extraction system had been installed in the Southern Cells or Northern Cells of the Stevensons Road Landfill by June 2006, despite it being:

(a) 12 months since LMS was requested to provide recommendations as to how to improve landfill gas extraction from the Stevensons Road Landfill;

(b) three years since LMS entered into the First LMS Agreement to provide recommendations for corrective actions that should be taken to fix the Energex LFG System.33

44 It is alleged that a duty of care to the residents arose in the following circumstances:

46. At the time it provided the LMS Design Advice in June 2005, LMS knew or ought reasonably to have known:

(a) of each of the matters alleged in paragraph 30, above;

(b) that on 6 May 2004, the Victorian Civil and Administrative Tribunal made an interim decision in favour of Peet & Co Casey Land Syndicate Limited (Peet) in relation to Casey’s

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32 Further Amended Statement of Claim on Third Party Notice filed by the first defendant, 21 December

2010, [42] and [43]. 33 Ibid, [44] and [45].

refusal to issue it planning approval for the subdivision of land in Brookland Greens Estate within a 200 metre zone of the western boundary of the Stevensons Road Landfill;

(c) that Peet would or was likely to construct residential properties abutting the western boundary of the Stevensons Road Landfill;

(d) if residential development occurred on or near the western boundary of the Stevensons Road Landfill, this would create pathways of least resistence and thereby significantly heighten the existing risk of gas migration into the Brookland Greens Estate;

(e) capping of the Stevensons Road Landfill was not likely to be completed until mid 2006.

…

52. Further, at the time the LMS Design Advice was provided to Energex and Casey:

(a) LMS had the power and the duty to ensure reasonable care was taken in providing the LMS Design Advice so as to prevent or control the risk of harm present by any environmental impact of the Stevensons Road Landfill;

(b) the plaintiffs and group members were vulnerable to any failure by LMS to take reasonable care in providing the LMS Design Advice;

(c) it was reasonably foreseeable that if LMS failed to take reasonable care in providing the LMS Design Advice, the plaintiffs and group members may suffer economic loss as a consequence of the environment impact of the Stevensons Road landfill.

53. Consequently, LMS owed the plaintiffs and group members a duty to take reasonable care in providing the LMS Design Advice so as to protect the plaintiffs and group member from suffering economic loss as a consequence of the environmental impact of the Stevensons Road Landfill (Second Duty to Residents).34

45 In turn, it is alleged that in breach of the second duty to the residents, LMS failed to take

reasonable care in providing the LMS design advice (as defined). Once again, this is

particularised as a failure to advise of relevant matters:

54. In breach of the Second Duty to Casey and the Second Duty to Residents, LMS failed to take reasonable care in providing the LMS Design Advice.

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34 Ibid, [46], [52] and [53].

Particulars

LMS failed to advise that:

(a) a comprehensive site assessment of the landfill should be immediately conducted so that it could independently ascertain, among other things:

(i) pre and post landfill contours to provide a landfill depth profile;

(ii) the nature of the waste deposited at the site including usage of daily cover;

(iii) the composition and nature of the landfill waste profile;

(iv) the presence of any hazardous wastes deposited at the site;

(v) whether there were perched conditions at the site;

(vi) conditions at depth, by drilling preliminary test holes;

(vii) whether there was or may be landfill gas migration by taking measurements on the site’s perimeter;

(viii) the permeability of the waste at the landfill and the surrounding soil strata;

(b) following a comprehensive site assessment, LMS would be in the best possible position to provide innovative solutions to the specific problems of the Stevensons Road Landfill, in preparation for the time at which any trial, or fully-functioning, gas extraction system, was able to be designed, constructed and implemented.35

46 Once again, when the pleading is read as a whole, I am not satisfied that the allegations

should necessarily be characterised as LMS contends.

47 In turn, I am not satisfied the claim has no real prospect of success.

48 I should add that the allegations made with respect to the first and second duties owed

by LMS to the residents do not on their face materially expand the evidentiary matrix

which will be in issue at the trial. Casey will ventilate the underlying factual matters in

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35 Ibid, [54].

issue by reference to the duties alleged to be owed to it. The claim by both Casey and

the residents with respect to the third duty of care alleged, will also necessarily traverse

much of the evidence bearing on the alleged first and second duties. This is a further

consideration which encourages the leaving of the matters raised by LMS until trial. As

best I can judge there is no significant potential practical advantage inherent in the

course urged by LMS.

49 If the issues as to duty of care are considered in the context of the case as a whole I am of

the view the dispute is of such a nature that a full hearing as to merits is appropriate.36

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50 It is further submitted that the pleading in the FASCTPN is deficient in that it does not

allege that any act or omission by LMS caused loss or damage to the plaintiffs. The

pleading alleges:

66. If the Allegations are true (which is denied), then the plaintiffs’ and group members’ loss and damage occurred as a result of, alternatively was contributed to by, the breach by LMS of its:

(a) First Duty to Residents;

(b) Second Duty to Residents; and/or

(c) Third Duty to Residents.

Particulars

Had LMS discharged its First Duty to Residents, it would have ascertained and advised that the Energex LFG System was defective and needed to be totally revamped or replaced with a new gas collection system. Had such a recommendation be made, it would have been accepted by Energex, SITA and/or Casey, and consequently the subsurface migration of landfill gas from the Southern Cells into the Brookland Greens Estate would have been prevented or significantly retarded.

Had LMS discharged its Second Duty to Residents and advised that a comprehensive assessment of the landfill site should be immediately conducted, Energex, SITA and/or Casey would have accepted such advice. An inspection would have revealed the site specific conditions and complexity of the landfill and of the need to design and install a trial gas extraction system,

36 Cf Civil Procedure Act 2010, s 64(b).

and a complete gas extraction system, that was suited to the Stevensons Road Landfill, having particular regard to its depth, its history of issues with groundwater and leachate management, the heterogeneity of its waste profile, the compartmentalisation of waste, and the perching of water within the landfill. A landfill gas extraction system designed, constructed and installed in 2005/2006, that was suited to the Stevensons Road Landfill, would have maximised the prospect of landfill gas being effectively extracted from the site, with the effect of preventing or significantly retarding the subsurface migration of landfill gas from the Stevensons Road Landfill into the Brookland Greens Estate.

Had LMS discharged it Third Duty to Residents, it would have designed a landfill gas extraction system that was suited to the Stevensons Road Landfill, and which would have maximised the prospect of landfill gas being effectively extracted from the site, with the effect of preventing or significantly retarding the subsurface migration of landfill gas from the Stevensons Road Landfill into the Brookland Greens Estate.37

51 I am not persuaded this pleading is defective. The opening words pick up the plaintiffs’

claim for loss particularised elsewhere.

The limitation questions

52 Casey and LMS agree that the relief sought by [2] of the summons of 19 January 2001 be

referred to the trial of the proceeding, namely an application for an order that:

…for the purposes of the accrual of causes of action within the meaning of the Limitations Act 1958, pursuant to order 36.01 of the Rules (and in the inherent jurisdiction) the date from which the amendments introduced by the Further Amended Statement of Claim on Third Party Notice shall commence shall be 1 December 2010.

53 The summonses will otherwise be dismissed.

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37 Ibid,[66].

S C H E D U L E O F P A R T I E S No. 9776 of 2008 BETWEEN: MATTHEW JOHN WHEELAHAN and THERESA WHEELAHAN

Plaintiffs

- and - CITY OF CASEY First Defendant - and - ENVIRONMENT PROTECTION AUTHORITY Second Defendant/First

Third Party - and - SITA AUSTRALIA PTY LTD (ACN 002 902 650)

Third Defendant/Second Third Party

- and - LMS GENERATION PTY LTD (ACN 059 428 474)

Fourth Defendant/Third Third Party

- and - MUNICIPAL ASSOCIATION OF VICTORIA Fourth Third Party - and - GROSVENOR LODGE PTY LTD Fifth Defendant/Fifth Third

Party - and - METROPOLITAN WASTE MANAGEMENT GROUP

Sixth Defendant/Sixth Third Party

- and - ENSR AUSTRALIA PTY LTD Seventh Defendant/Seventh

Third Party - and -

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STUART HERCULES Eighth Defendant/Eighth Third Party

- and - MARTIN AYLWARD & ASSOCIATES PTY LTD Ninth Defendant/Ninth

Third Party - and - ENERGEX LIMITED Tenth Defendant/Tenth

Third Party - and - PEET & CO CASEY LAND SYNDICATE LTD Eleventh

Defendant/Eleventh Third Party

25 T0015