Gunnersen & Anor v Henwood & Anor [2011] VSC 440 (7 September 2011)

THOROLD HARVEY GUNNERSEN and JOANNE MARGERY GUNNERSEN	Plaintiffs

v

DENISE MARGARET HENWOOD and MORNINGTON PENINSULA SHIRE COUNCIL	Defendants

JUDGE:	DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	1, 4, 7, 8, 10, 11, 14, 15, 16, 17, 21 FEBRUARY 2011 8, 9, 16 MARCH 2011
DATE OF JUDGMENT:	7 SEPTEMBER 2011
CASE MAY BE CITED AS:	GUNNERSEN v HENWOOD
MEDIUM NEUTRAL CITATION:	[2011] VSC 440	1^st Revision: 15 September 2011

NEGLIGENCE – Duty of care – Economic loss – Landslip upon an inherently fragile escarpment owned by a third party contiguous with the plaintiffs’ land – Failure of the remediation of that landslip by defendant – No physical damage to the plaintiffs’ land – Whether there was economic loss – Expenditure by plaintiffs on engineered stabilisation of the escarpment – Whether risk of future damage to plaintiffs’ land not insignificant –Whether expenditure to avoid prospective damage recoverable loss – Nature of the harm suffered – Factors relevant to determination of duty – Causation – Whether conduct of defendant a cause of claimed loss – Factors relevant to determination of cause – Whether prospective expenditure caused by conduct of defendant or naturally occurring conditions – Factors relevant to determination of breach – Whether defendant shown to have breached any duty owed – Whether defendant a concurrent wrongdoer – Whether Shire council caused the loss claimed by the plaintiffs – Wrongs Act 1958 (Vic) ss 24AH, 24AI, 43, 48, 49, 51, 52, 83.

EVIDENCE – Expert opinion – Basis rule – Whether opinions expressed from specialised knowledge – Evidence Act 2008 (Vic) ss 76, 79.

WORDS AND PHRASES – ‘harm’ – ‘insignificant risk’ – Wrongs Act 1958 (Vic) ss 43, 48.

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr PG Nash QC with Mr GB Hevey	McGuinness & Hosking Pty

For the Fourth Defendant Denise Margaret Henwood	Mr G Lewis SC with Mr P Gates	Wotton & Kearney

For the Third Defendant Mornington Peninsula Shire Council	Not represented at trial	Moray & Agnew

1 Davey’s Bay is a small, somewhat exclusive, dress circle location in Mount Eliza, within the Mornington Peninsula Shire. It is a prestigious, low density area of suburban Melbourne with large dwellings on substantial residential allotments. Many of the properties enjoy views of Port Phillip Bay and a smaller number have direct cliff top or foreshore reserve frontage.

2 This proceeding involves properties enjoying cliff top frontage above the Davey’s Bay Yacht Club. These properties are the homes of the plaintiffs (whom I shall refer to as ‘the Gunnersens’) and the fourth defendant Mrs Henwood (who resides there with her husband and to whom I shall often refer to in this judgment as ‘the Henwoods’). From their cliff top vantage, they each enjoy a panorama over the picturesque Davey’s Bay, across the broad expanse of Port Phillip Bay with distant views of the city skyline, the coastline of the bay, and the Dandenongs. The panorama is predominately to the northeast, an outlook which enjoys minimum exposure to the prevailing direction of wind and rain.

3 The escarpment at Davey’s Bay is a fragile environment, prone to landslips. It requires careful land management. Its fragile nature is understood by residents, landowners, local councils and government departments. The wider region of the Mornington Peninsula coastline of Port Phillip Bay has a long, well-documented history of landslips. There have been many expert studies and reports. This proceeding has come about to resolve disputes, essentially between neighbours with some common interest in preserving this fragile environment, arising out of circumstances following a landslip.

4 The court had the benefit of a view,[1] numerous survey and engineering drawings, and photographs. Along the northeast facing cliff top above Davey’s Bay, from Davey Point looking southeast, are properties with access from Denistoun Avenue and further to the east, properties accessible from Elm Court. The Gunnersens purchased 6 Denistoun Avenue, Mount Eliza in November 1993 as their family home. It is an older residence, a lightweight timber structure on stumps, located, at the closest point, only a couple of metres behind the edge of the escarpment. On their title is about one third of the escarpment below, a triangular shaped area to the toe. To the northwest, the escarpment is Crown land and to the southeast, it is owned by the Davey’s Bay Yacht Club. Crown land is managed either by the Victorian Department of Sustainability and Environment or by Mornington Peninsula Shire Council (‘Mornington Shire’) as the committee of management for the Mount Eliza foreshore under s 14 of the Crown Land (Reserves) Act 1978.

5 To the southeast, their original neighbour, Nigel Peck owned a large allotment of about 1.1 ha at 7 Denistoun Avenue, on which stood a stately old weatherboard residence. In the late 1990s, 7 Denistoun Avenue was subdivided. Three lots were created by the subdivision: two were prime building allotments on the cliff top, while the third consisted substantially of the face of the escarpment. The Henwoods purchased the lot next to the Gunnersens’ property, which is now known as 7 Denistoun Avenue. The other lot was also sold for residential development. The balance of mostly unusable land comprising the escarpment below the Henwoods’ land, was gifted to the Yacht Club.

6 During 1999 and 2000, the Henwoods constructed a residence at 7 Denistoun Avenue. In 2001, they moved into their home, becoming neighbours of the Gunnersens. Constructed on geotechnical advice, the footings and foundations of the Henwood residence are bored piers founded at differing depths within 12 metres of the escarpment and a stiffened raft slab beyond 12 metres from the escarpment. The residence is set further back from the edge of the escarpment than the Gunnersen residence. The title boundary of the Henwoods’ land extends only a short distance down the face of the escarpment.

7 Immediately below, between the toe of the escarpment and the bay, is the Yacht Club. The Yacht Club complex is located partly on land which it owns and partly on Crown land. To the rear (southwest) of the grassed apron, at the base of the escarpment, is a long row of lockers used by club members to store sailing equipment. The lockers are partitioned from each other with separate doors in a long narrow building about two metres high, which stands on a wooden sub-frame resting on standard concrete stumps. The escarpment rises about 15 metres, as a steep vegetated slope, immediately behind the lockers. Above the escarpment at this point is the Henwood property. On the grassed apron at the toe, commencing near the lockers behind the main club building, there was a constructed access path climbing north westerly to the top of the escarpment. The course of the path was immediately below the Gunnersens’ property and it rose to the top of the escarpment on Crown land.

8 In September 2004, two landslips occurred within days of each other. Referred to collectively as slip 1, these landslips destroyed the lower section of this path. Slip 1 occurred on Crown land above boat sheds belonging to the Yacht Club (also located on Crown land) and below the north-east corner of the Gunnersen land. The dispute does not now concern this slip. It was central to the settled claims made earlier in the proceeding against the State of Victoria and Mornington Shire.

9 In February 2005, another landslip, referred to as slip 2, occurred entirely on land owned by the Yacht Club immediately below the northeast corner of the Henwood land near its common boundary with the Gunnersen land. The slips were unrelated. Slip 2 caused damage to Yacht Club land and property, including partial demolition of the storage lockers, and gave rise to a need to remediate the surface of the escarpment. Together, these slips sharply focussed the attention of the Gunnersens on the risks to their property due to the fragile nature of the escarpment. The Gunnersens’ concerns about the management of the fragile environment by neighbouring landowners had already been excited by events occurring over a number of years.

10 The following drawing illustrates in relation to the escarpment both the location of the slips and the alignment of title boundaries.

11 Following slip 2, although there had recently been precedent heavy rainfall at Davey’s Bay, suspicion was immediately cast on a broken section of irrigation pipe immediately above slip 2 that was connected to the Henwoods’ water supply. The Henwoods moved promptly to remediate the slope, engaging geotechnical engineers, who designed and supervised works, agreed with the Yacht Club, to restore the slope to the condition it was in before slip 2. The Yacht Club accepted these works as appropriate.

12 The Gunnersens, too, engaged consultants, a solicitor with past experience in like claims in the area and a geotechnical engineer Mr Warren Peck. Although issue was not contemporaneously taken with the remediation of slip 2, much attention was focussed generally on the stability of the escarpment, on how slip 1 might be remediated and whether engineered remediation works might improve the stability of the escarpment above the Yacht Club beyond the metastable state in which it existed. In the period from 2005 to 2009, a complex investigation of cause and consequence was conducted.

13 There were negotiations for a collective solution, in a context of litigation for this proceeding was commenced in late 2006. As I will shortly note, some agreement was reached between parties. In these investigations and negotiations, the positions and objectives of the parties naturally differed. The projected costs and expenses were substantial.

14 In 2008, further slip activity occurred at the site of slip 2. This movement was confined to the escarpment on land owned by the Yacht Club. It was influential in how the geotechnical experts saw the risks of future movement on the escarpment and opinions were divided. Various proposals for engineered stability works could not be implemented by agreement. Acting on advice, the Gunnersens obtained a declaration from VCAT that a particular engineering solution, recommended to them by Mr Peck and to be carried out on Yacht Club land, was essential to alleviate soil erosion and could proceed without Mornington Shire approval.

15 In 2009, the Gunnersens carried out engineering works installing 137 soil nails into the face of the escarpment at the site of slip 2, costing, with associated work, $866,544. The work is intended by its designers to improve the safety of the escarpment against slips.

16 At this early stage it is useful to explain how agreement about slip 1 has affected the structure of the proceeding and the issues which remain to be resolved by the court. The proceeding, when commenced in December 2006, named the State of Victoria, Frankston City Council, Mornington Shire and Denise Margaret Henwood as defendants. The Frankston City Council was the first defendant to exit the proceeding with a Deed of Release in October 2009.

17 The State of Victoria is also no longer a party. In late 2010, the Gunnersens resolved their claims with each of the State of Victoria and Mornington Shire. These settlements did not release Mornington Shire from the proceeding because a proportionate liability defence was taken by the Henwoods alleging that Mornington Shire was a concurrent wrongdoer.

18 The Gunnersens now seek no relief from Mornington Shire, having settled on confidential terms, which were in evidence. Such terms included an indemnity by the Gunnersens in relation to any liability or damages that may be apportioned against the Shire, including any liability to pay contribution and a covenant by, and indemnity from, the Gunnersens not to make any further claim or demand, institute any new proceeding, or reinstate any allegation made against the Shire in the pleadings. Mornington Shire has not participated in the proceeding since late 2010.

19 Broadly speaking, the Gunnersens claim the Henwoods breached agreements between them and, further, breached a duty of care owed by them to the Gunnersens. A further cause of action, based upon an alleged easement of support for the Gunnersens’ land, was withdrawn at trial. Breach of legal obligations was alleged to have caused instability in the escarpment with consequent harm, or risk of harm, to the Gunnersens’ property. This harm, or risk, is alleged to have caused the Gunnersens to incur expense.

20 The Gunnersens allege that ‘by reason of the existence of slip 2’, their land has declined in value. They also allege they have incurred expense in investigating the stability of the escarpment and the security of their property, in developing and constructing a remedial solution involving reinforcement of the escarpment by soil nails, and in investigating alternative solutions. They further contend these expenses are compensable damages caused by the conduct of the Henwoods in breach of their legal obligations. By the time this proceeding came on for trial, the Gunnersens had expended substantial sums totalling $1,026,170. The claim is broken down as follows:

(a) $866,554 was expended on the engineering, design, supervision ($110,482) and construction ($756,072) of a reinforced engineered remediation of part of the escarpment on land below the Gunnersens’ land, owned by the Yacht Club;

(b) $32,398 was expended on investigations, including the services of an expert geotechnical consultant, and for survey work, including monitoring the plaintiffs land, between 2004 and 2008 for movement;

(d) $78,003 was spent on alternative remediation solutions: dual crib block retaining walls and, later, a secant bored pile wall, each of which was not proceeded with.

The quantum of these sums for the heads of damage described is agreed. The principal issue, globally, was whether the Gunnersens were entitled to recover this expenditure in negligence from the fourth defendant, Mrs Henwood.

21 The Henwoods, by their defence, apart from contesting factual allegations, contend that the remediation works were unnecessary or were excessive and resulted in a substantial benefit to the Gunnersens. Any risk of erosion and slippage upon the escarpment was the consequence of natural geological and environmental conditions. Defences of contributory negligence and voluntary assumption of risk were abandoned in final submissions. Further, the Gunnersens’ claims are contended to be apportionable claims.[2] Mornington Shire was an alleged concurrent wrongdoer. The Henwoods contend that their liability is limited to the proportion of the loss or damage claimed by the Gunnersens that the Court considers just, having regard to the extent of the responsibility of the Henwoods for that loss or damage.

22 The Davey’s Bay Yacht Club Inc is not alleged to be a concurrent wrongdoer and has never been a party to the proceeding. No explanation for its absence from the proceeding was proffered.

23 The remaining parties have proceeded to trial on the basis of an amended statement of claim, from which allegations against Mornington Shire were struck out, and an amended defence, in which allegations against Mornington Shire were reinstated. The plaintiffs have not filed a reply to that amended defence. Rather, the parties have, by agreement, proceeded on a statement of issues remaining between them for determination in the proceeding. The parties were content to conduct the trial on the basis of the agreed statement of issues and I will determine the proceeding on the evidence adduced rather than the pleadings.

24 It needs to be recorded at the outset that neither the pleadings nor the issues statement provide effective guidance as to the nature of the claims being made in negligence. The defendants took no issue with that state of affairs prior to or during the trial. I merely note that, in some respects at least, the lack of clear definition of an issue for determination obfuscated the extent and nature of the evidence led and the submissions made. There are legal issues, both complex and novel, arising out of this dispute, which may have been assisted by more careful pleading, including the scope and extent of the duty of care, the nature of the loss claimed and causation.

25 What is alleged is that the Henwoods, negligently and in breach of duty to the Gunnersens, took insufficient or no steps to prevent, detect or repair a leaking irrigation pipe. The escarpment also became weakened and more prone to collapse, on the one hand, by negligent failure to prevent or promptly rectify the leaking irrigation pipe and, on the other hand, by reason of actions in breach of permits and agreements in relation to the building of the Henwood residence. One such issue which arose out of disputes concerning the Peck subdivision of 7 Denistoun Avenue and the subsequent construction of the Henwood residence, concerns revegetation of the upper section of the escarpment, including both the sloping land below the cliff edge and the flat land behind it back to where the residence stood. This conduct caused slip 2 and, as a result, the Gunnersen land has developed cracks, has moved, and has otherwise shown signs of instability ‘indicating the possibility of a further cliff face collapse involving or affecting the Gunnersen land’. The consequence of slip 2 and the possibility of further slips is that the Gunnersen land has declined in value, required installation of a dewatering bore, and until the Gunnersens carried out remediation works in 2009, ‘weakened and put at risk the easement of support over the Henwood land in favour of the Gunnersen land’.

• What is the nature of the harm claimed as damages by the Gunnersens and can such damages be recovered in negligence?

• Did the Henwoods owe a duty to the Gunnersens to take care not to inflict upon them loss of the kind claimed?

• Was any duty owed by the Henwoods to the Gunnersens breached by the Henwoods?

28 I have determined that the Gunnersens’ claims fail. I have also concluded that, had the Gunnersens succeeded, the proportionate liability defence would have failed.

29 I will now state my findings, observing that in addition to the sequence of events that led directly to the engineered remediation in 2009, for which damages are claimed, the issues raised require consideration of risk inherent in the fragile natural environment and, also, of Mornington Shire’s involvement going back about 10 years, not just as an occupier of land but also as the local council.

30 The Gunnersens and the Henwoods do not appear to enjoy good relations as neighbours. So much might be thought to be obvious from their position as adversaries in litigation in this Court, but in addition, there is a history of incidents occurring on and in respect of their lands relating to building approvals and development, vegetation, objections to council, applications to VCAT, and of agreements between them to resolve particular issues, with allegations of breach of such agreements. Evidence was led about many of these matters. Some of this evidence formed background matters, irrelevant to the issues in dispute in the proceeding, but part of the history involves Mornington Shire in its role as the local council and whether its conduct in that role caused the loss and damage asserted.

31 The Gunnersens contended that the escarpment on the Yacht Club land was weakened and became more prone to collapse by reason of four matters. They were:

The Henwoods allege Mornington Shire failed to take proper steps, when discharging its functions as a public authority, to address stability issues arising from the reports in relation to the Henwood land, particularly in granting the building permit and in relation to vegetation issues. The failures of Mornington Shire have, it is alleged, weakened the cliff face on the Yacht Club land and rendered it more prone to collapse. These allegations take the inquiry back in time from the occurrence of slip 2.

32 At a much earlier, unidentified, point in time, probably prior to the Henwoods’ purchase, a flyer had been distributed by Mornington Shire providing information to residents about the care needed in, and the appropriate strategies for, management of the fragile environment on the escarpment. This document was seen by the Gunnersens but not by the Henwoods. Mr Henwood was, however, familiar with the risks, and the appropriate responses, in terms of prudent land use about the escarpment. He described the recommendations made by Mornington Shire in the flyer as commonsense, agreeing, in particular, that property owners ought avoid the uncontrolled discharge of water onto the slope of the escarpment.

33 Concerns existed, at the time of the application for planning approval for the subdivision of 7 Denistoun Avenue, about vegetation on the escarpment. For those ignorant of the fragile nature of the escarpment, the panorama improves with removal of vegetation. In the period from the initial application for approval for the subdivision through to the construction of the Henwood residence, there were justifiable concerns about protecting the existing vegetation. It was discovered that copper nails had been placed in a mature Cyprus pine, presumably to destroy it. A stand of Aspen trees died suddenly and without apparent cause. The Cyprus pine was saved by the Gunnersens’ prompt action. That tree stands just behind the edge of the escarpment, virtually directly above slip 2. Its importance to the integrity of the immediate area of the escarpment is not in doubt.

34 From at least 1999, permit conditions affected (what would become) the Henwood land, requiring the consent of the responsible authority for vegetation removal. While an application for planning permission for subdivision of 7 Denistoun Avenue was before the Mornington Shire, a further application was made for permission to demolish the existing property and clear vegetation. The permit issued required that native vegetation, other than on the land for construction of the development, must not be felled, lopped, topped, ringbarked or otherwise destroyed or removed except with the consent of the responsible authority.

35 In 2000, an obligation arose out of agreements, negotiated at the time the Henwood residence was being constructed, to revegetate both the area behind and over the edge of the escarpment, where inappropriate vegetation and noxious weeds had been removed. These areas were to be revegetated according to an agreed plan using appropriately selected and specified plants. The design was tailored to maximise the surface stability on the escarpment using appropriate vegetation. The need to exercise extreme care with water upon the escarpment was well recognised. However, the design provided that the vegetation should be carefully watered in with an appropriate irrigation system.

36 Planning Permit P981681 was issued by Mornington Shire on 22 December 1999. At that time, construction of the Henwood residence was already underway. The Gunnersens objected to the issued permit and applied for review to VCAT. The VCAT application was resolved by an agreement on 4 March 2000. The parties to this agreement were the Gunnersens, Denistoun 7 Pty Ltd, the registered proprietor of the land at 7 Denistoun Avenue being subdivided, and the Henwoods as purchasers by an uncompleted contract of sale for Lot 1 on that plan of subdivision. An amended permit was issued on 4 April 2000, following the resolution of the VCAT hearing in late March 2000.

37 A requirement of the amended permit, following on from the March 2000 agreement, was that particular restrictions on subdivision and development be recorded in an agreement pursuant to s 173 of the Planning and Environment Act 1987. Relevantly, the permit and the s 173 agreement were to provide that:

(a) Development on the cliff face or on any part of the land seawards of [the line of a stone fence] be prohibited except in accordance with development plans approved by the responsible authority.

(b) Prior to any building or works being constructed or undertaken cliff stabilisation measures must be effected to the satisfaction of the responsible authority in accordance with the said development plans.

(c) All development plans required for the purpose of the agreement must be prepared by a duly qualified geotechnical engineer (as to engineering matters) and a duly qualified arborist (as to vegetation matters) and submitted for approval to the responsible authority and the responsible authority must consult with any affected neighbouring owners prior to approving any such plans.

(d) The prohibition on the removal, destruction, felling, lopping, topping, ringbarking, poisoning or nailing of any vegetation on the land seawards of the line of the said stone fence without the consent of the responsible authority which consent must not be given without the responsible authority first consulting the owners and occupiers of adjoining lands and any requests for such consent must be accompanied by an arborist’s report.

(e) Further management of the cliff face be in accordance with management plans approved by and to the satisfaction of the responsible authority.

(f) All disturbed surfaces on the land resulting from any development must be revegetated and stabilised to the satisfaction of the responsible authority.

The s 173 agreement between Mornington Shire and Denistoun 7 Pty Ltd was duly registered at the Office of Titles.

38 Earlier, in January 2000, Jeremy Tuxen, a gardening contractor employed by the Henwoods on the recommendation of the Gunnersens, provided a quote to Mr Henwood for landscaping works, to improve what the quote described as the badly eroded face of the escarpment below the Cyprus pine. The quote covered an area measuring approximately 14 metres wide by 7 metres in gradient. Mr Tuxen recommended, by the quote, construction of a retaining wall with sleepers, star pickets and wire mesh, and a drip irrigation system to re-establish vegetation. He also recommended six-monthly inspections to monitor the health of the vegetation, levels of erosion, and vermin activity.

39 By September 2000, this proposal, in a more refined form, was submitted to Mornington Shire for approval under the s 173 agreement. However, issues had by then arisen between the Gunnersens and the Henwoods concerning alleged breaches of permits. Some of these issues concerned vegetation and cliff integrity issues. Other issues involved work in contravention of the restrictions required by the s 173 agreement. The Gunnersens had concerns about unauthorised building works with potentially detrimental impact, and raised overlooking and privacy considerations. Solicitors were corresponding, and meetings were occurring between the Gunnersens and Mr Henwood and his consultants.

40 In February 2001, agreement to resolve differences was again reached between the Henwoods and the Gunnersens. Submitted to Mornington Shire at some earlier point was a drawing prepared in November 2000 by Murphy Design Group Landscape Architects — a landscape concept plan. Whether it ever met with the approval of Mornington Shire was not revealed in evidence. This drawing was adopted as the accepted proposal for the revegetation of the upper area of the escarpment below the Henwood land and became annexure 2 to the agreement of 17 February 2001. Clause 1.3 of the February 2001 agreement obliged the Henwoods:

41 The agreement secured due performance of the Henwoods’ obligations including, as to revegetation, a $25,000 bank guarantee to be released upon conditions including certification by an independent landscape architect that the work had been satisfactorily completed.

42 It appears that the completion of the work was independently certified as satisfactory by one Allan Wyatt. In or about May 2002, the security deposit of $25,000 was returned to the Henwoods. There is a suggestion in the evidence that Mr Wyatt recommended further revegetation of the escarpment and that Mr Henwood intended to have that work done, having established with the Mornington Shire that the vegetation planting did not require a permit. As part of these revegetation works, the Henwoods caused an irrigation system to be installed but did so without approval from Mornington Shire, notwithstanding the terms of earlier agreements. Mr Henwood disingenuously suggested in evidence that the irrigation system was work which was too minor to warrant attracting the Shire’s interest by seeking approval.

43 The irrigation system was a 19 millimetre diameter, high-density polyethylene pipe drip system. It was attached to the mains by a timer, which turned the water on every second day for approximately 10 minutes at a time. The irrigation system wound in and out of the vegetation on the escarpment and was mostly buried under mulch. The tap was at the front of the house near the mains connection. The irrigation system, which was zoned, was controlled from a control box in the house. The section of the irrigation system delivering water to the escarpment area was designated as a separate zone. During 2003, Mr Henwood instructed that the escarpment zone be turned off. However, plants began to die and the system was reconnected. There was no evidence that it was thereafter turned off again. Despite the debate about the significance of vegetation for stability, and the nature of the allegations made against the Henwoods in the respect, there was insufficient evidence for any finding of any deficiency in, or complaint of deficiency about, the vegetation of the escarpment in 2003–2004 after Mr Henwood reactivated the irrigation system in 2003. As I have noted there was a contractual obligation to maintain the vegetation and keep it in good heart and condition but there is neither allegation, nor evidence, of breach in this respect.

44 What happened concerning the operation and maintenance of this irrigation piping following installation is unclear. Mr Henwood had no recollection about this matter at all. The irrigation system on the escarpment was not readily visible from the Henwood property and once the vegetation had been replanted on the escarpment nobody walked on the escarpment, partially because it was very steep, but also to avoid destabilising the slope surface.

45 Mr Henwood believed, because it was his usual practice, that he inspected the irrigation system before paying Jeremy Tuxen, who did not give evidence. Mr Henwood did not thereafter inspect or attempt to inspect the irrigation system saying, indifferently, it was a matter left to Mr Tuxen. There was no evidence that Mr Tuxen had been informed or was aware of this responsibility, was directed to act in any particular way, or that he had ever inspected or maintained the irrigation system.

46 I find that neither Mr Henwood nor Mrs Henwood knew anything about the operation of the irrigation system. Despite the recommendation of Mr Tuxen in January 2000, that future management of the cliff face include six-monthly inspections, I find there was no form of management, inspection or maintenance of the irrigation system at all. Although the Henwoods understood the need to exercise particular care about water on the escarpment, and knew that such care was vital to manage the risk of slope instability and had received advice to that effect, they did nothing to monitor, maintain or manage the risk of inappropriate or unintended discharge of water onto the escarpment from the irrigation system. There was plainly a want of care for the proper management of the risk of slope instability upon and affecting the escarpment. Clause 1.3 of the February 2001 agreement did not, in terms, create an obligation to maintain the irrigation system as opposed to the vegetation.

47 In 2005, the Commodore of the Davey’s Bay Yacht Club was Mr William Ferme, a retired engineer. On the evening of 29 January 2005, Mr Ferme was at the Davey’s Bay Yacht Club with his wife. They had stayed behind on the premises to clean up after a social function. At about 11.30 pm Mrs Ferme drew Mr Ferme’s attention to the sound of a sustained water flow on the cliff face above the lockers at the rear of the Yacht Club. Mr Ferme described distinctly hearing the sound of rushing water in a sustained flow for about four to five minutes before it abruptly stopped.

48 Mr Ferme had a particular interest in investigating this noise — he was aware of slope instability in the escarpment behind the Yacht Club. In September 2004, just days apart, two landslips (slip 1) had occurred following significant rain to the northwest of the Yacht Club, destroying the access walking path to the Club from that direction.

49 About a week later Mr Ferme and two members of the Yacht Club committee attempted to climb up the escarpment to investigate what Mr Ferme had heard. They observed the surface soils on the escarpment to be quite sodden. However, the difficulty of the scramble over saturated steep terrain resulted in an inconclusive investigation.

50 The beginning of February 2005 was marked by a period of heavy precedent rainfall. In the 24 hours before 9:00 am on 3 February 2005, heavy rainfall was indicated by the Bureau of Meteorology at Moorooduc (105mm) and Mornington (96mm). Ongoing, lighter rainfall followed that downpour for several days. In that month, Victoria experienced its wettest February since 1973 and the seventh wettest February over the preceding 106 years. Records from the Bureau of Meteorology identified an unusually intense low pressure system as the cause of this rainfall. The system brought abnormally low temperatures and severe storms with gale and storm force winds to most parts of Victoria. The centre of the low developed and deepened over Melbourne with very little movement and the continuous rainfall for about 30 hours was noted by the Bureau of Meteorology as the most significant feature produced by the low pressure system. Statistical evidence comparing the intensity of monthly precipitation from the Moorooduc station confirmed that this storm was, extrapolating to Davey’s Bay, an extreme rainfall event for the escarpment. I consider that saturation of the surface soils, broadly across the escarpment as observed by Mr Ferme, was a probable consequence of the 3 February 2005 storm.

51 On 18 February 2005, Mr Ferme went to the club and found that there had been a slip on the escarpment above the eastern end of the lockers. The soil and debris, which had slid down the slope, dislodged the six easternmost lockers approximately one metre from their foundations.

52 Many of the significant issues between the parties turned on expert geotechnical opinion. The Gunnersens and the Henwoods each employed consultant geotechnical engineers who provided advice to each of them throughout the course of events. Such advice concerned investigations of conditions or appropriate responses to developments, such as remediation proposals or perceived risks to the stability of the escarpment. Most of these experts were involved in multiple roles: investigating cause and designing and certifying remediation projects on the one hand and, on the other, reviewing and commenting upon such remediation projects. These experts were also negotiating with each other, or supervising such dealings, on behalf of their instructing parties for possible global remediation solutions. Other parties, no longer active in the proceeding, such as Mornington Shire, also retained experts who have considerable experience with both the prevailing conditions and the various proposals. One of these experts was called in the proceeding. In addition, the Henwoods instructed an expert to express an opinion independent of any active involvement in the dispute.

53 Each of the parties also called valuers, with whose evidence I shall later deal. The comments I am about to make concern the geotechnical expert evidence.

54 Of a large and under-used court book, prepared presumably at significant expense, perhaps as much as one third of it was comprised of documentary material generated by, or for, the geotechnical experts. The Court Book comprised much source material as well as significant duplication, the purpose of which, like much non-expert material, was never revealed. More than a third of the hearing time in Court was consumed by the geotechnical experts. The Court was treated to traditional cross-examination of specialist experts. Each of these matters unreasonably increased, in my view, not only the legal expenses of the parties involved in the dispute but also the resources, in terms of judicial time, needed to resolve the dispute.

55 With the introduction of the Civil Procedure Act 2010, relevant parts of which commenced operation on 1 January 2011, an overarching purpose to be achieved in the determination of proceedings by this Court has been articulated: to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute.

56 By s 10 of the Act, the overarching obligations, set forth in Part 2.3 (ss 16–27), apply to the parties, the legal practitioners and, with some exceptions, to expert witnesses in civil proceedings, in addition to, rather than in derogation of, existing duties applying to experts, for example, the Expert Code of Conduct. There are sanctions for contravening the overarching obligations set forth in Part 2.3 (ss 28–31) of the Act. The Court may make any order it considers appropriate in the interests of justice when satisfied on the balance of probabilities of a contravention of any overarching obligation. Application for such an order is ordinarily to be made in the court in which the proceeding was or is being heard, and prior to its finalisation.

57 To enjoy the benefit of experts giving evidence concurrently, and in aid of that process, courts direct that experts confer and prepare a joint report prior to trial. Concurrent expert evidence is now the preferred process for taking expert evidence in civil cases. Its advantages will ensure its continued use. Enhanced judicial control over privately retained experts is achieved. The experience of the courts, mostly reported through extra-judicial comment in journal articles, conferences and seminars,[3] is greater efficiency and expedition, achieved by refocussing emphasis to professional dialogue rather than cross-examination. The process allows the critical areas of disagreement between experts to be more efficiently identified and processed, both on the taking of evidence and in judicial decision making.

58 On 8 October 2010, I ordered that pursuant to r 44.06, the expert witnesses for the parties communicate with each other and confer in the absence of the parties’ lawyers, and file a joint report setting out the matters on which they agreed, the matters on which they disagreed and the reasons for disagreement. There was a point to this order. At one level, the order was capable of meeting the objects specified in s 9(a), (c), (d), (f) and (g) of the Civil Procedure Act 2010. It matters not that when the order was made, the Act was yet to commence operation. At another level, the order implements prudent contemporary trial management processes developed in recent times in the superior courts and of the type Parliament has chosen to endorse by the Act.

59 I was informed in openings that no joint report was available, although the experts had met in conference. Further, notwithstanding that the trial date had been fixed well in advance, one of the experts would not be in Australia to give his evidence during the time allocated. These factors, together with the large volume of expert material in the Court Book, most of which was unsorted in terms of its relevance to the remaining issues at trial, led me to conclude that the concurrent evidence process could be problematical. I acceded to the expressed desire of counsel to take evidence in the traditional way. As a result, the consequences I have referred to above at [54] were unavoidable. I have no doubt that concurrent evidence, or ‘hot–tubbing’, could have saved two days of hearing time. The attendant savings in reduced written material before the Court and in the processes of decision-making are not easily estimated.

60 At trial, the participating experts in the joint conference revealed the want of a facilitator as the primary reason for non-compliance with the order. Of itself, this requirement seemed capable of being readily satisfied by agreement or by court direction and seems a lame excuse. That the experts in this matter had rather a long association with their instructing parties, not just in opining on specialist issues but also in partisan negotiation of competing interests about complex and expensive solutions to technical problems, seems the probable explanation. Either way, the resultant inefficiencies will be borne by the parties and competing users of the resources of the civil justice system.

61 At an appropriate point before the proceeding is finalised, this issue can be revisited.

62 Section 76 of the Evidence Act 2008, proscribes evidence of opinion as prima facie inadmissible. There is an exception in s 79 in relation to opinions based on specialised knowledge:

There are several aspects to the statutory exception. It is not disputed that the various experts who expressed opinions to the Court have ‘specialised knowledge’ or that such knowledge is based on their training, study or experience. Rather there is an issue that some aspects of the opinions expressed cannot be said to be wholly or substantially based on specialist knowledge, usually by reference to experience, rather than training or study. Issues in this context arise concerning the evidence of most of the experts in both the geotechnical and valuation fields.

63 Expressing an opinion about an issue that may influence the decision of a willing, but not anxious, purchaser may fall within the field of expertise of a land valuer. It is not admissible opinion evidence if it is not wholly or substantially based in specialist knowledge and is merely analysis of fact.[4] A transparent process of reasoning is ordinarily necessary to demonstrate the basis of the opinion. Without it, opinions so expressed are inadmissible expressions of personal views, speculation, common sense and the like. As such, opinions expressed are dressed up with ‘a spurious appearance of authority, [subverting] the legitimate processes of fact finding’,[5] when careful evaluation of the logical steps to such opinions, including the basis for them, is needed. Opinions which do not go beyond a bare ipse dixit (I say so), fall short of being ‘intelligent, convincing and tested’.[6] There is an element of discretion in concluding that an opinion is substantially based on specialist knowledge.

64 However, a failure to demonstrate that an opinion expressed by a witness falls within the s 79 exception is a matter that goes to the admissibility of the evidence, not its weight. What is ordinarily required of an expert is reasoning demonstrating sufficient connection between the opinion expressed and relevant specialised knowledge. If such reasoning is absent, the evidence of the expert will not be admissible to found the proposition expressed by the opinion.[7]

65 I have applied these observations when making findings on the expert evidence led at trial.

66 From the expert evidence, I will make some general observations concerning the geology and geological history of the area. The area of the escarpment in issue (‘the site’) is a section of north-easterly facing cliff face approximately 15 metres in height, the slope of which is approximately 40 to 43 degrees from horizontal. The cliff is generally covered in vegetation. To the northwest of the area in question, some engineered support for the escarpment is provided by an existing pre-cast concrete crib wall constructed in or about 1983. It is below the upper intact section of the access path I have described. Beyond that, the escarpment forms Davey Point. Further around to the west of Davey Point is a small bay around to Pelican Point.

67 To the southeast, moving away from the area in question, is a private steel staircase descending from the top of the escarpment to the beach at Davey’s Bay and an access track from private land accessed via Elm St to the beach. Beyond this track, on a section of the escarpment east of a small gated lane, there was a major landslip in 1995, known colloquially as the Hosking slip. The small lane runs up to Brookwood Drive and provides access down to and across the beach to the Yacht Club. To the east beyond that lane is Kackeraboite Creek.

68 The geology of the Mount Eliza coastal foreshore generally is variable and complex. The geology of the site consists of a mantle of Tertiary age sediments comprising Baxter Sandstone, made up of ferruginous sandstone, sand and sandy clay with occasional gravel. To the east of the site, exposed in the sides of the Kackeraboite Creek bed, is Devonian granite. The presence of the Manyung Fault in the area has revealed the presence of a downwarp or fault in the vicinity of the site. To the east are clays weathered from the Tertiary Basalt prior to the Manyung Fault.

69 The main elements in the ground stratigraphy in the area of the site, as described from the surface, are:

70 The history of ground movement and slope instability was studied for the City of Frankston in the Frankston Coastline Management Study in November 1993. The study examined the area of coastline between Olivers Hill and Canadian Bay. The study collates records of ground movements in this region over the preceding 25 years. In March 1997, the lead geotechnical consultants for that report, Douglas Partners Pty Ltd, prepared a further report Davey’s Bay Stability Study for the Department of Natural Resources and Mornington Shire.

71 From the reports, I conclude that Davey’s Bay is situated in a geologically sensitive area of naturally occurring landslides, where inappropriate developments and the changing pattern of land use has, in places, reduced the overall cliff stability. The history of instability is well established. Many residential buildings have been constructed either wholly within or on the margins of active landslide zones. Severe ground movements have caused damage resulting in the demolition of some buildings along the coastline or have required remedial foundation treatments. The first geological account of slope instability in the region was in 1900 and the phenomenon has been increasingly investigated and reported on since then. The foreshore area east of the Yacht Club has been particularly noted as an area of active instability and ground movement.

72 These and other reports were either commissioned or received and considered by the Department of Natural Resources and Environment, and at local government level, including by Mornington Shire. That much is clear from what general correspondence was in evidence between those entities. However, evidence of the precise nature and extent of such consideration or consultation, and of conduct in response to the information in and recommendations made by the reports, was not led at trial. Save to the very limited extent evident throughout this judgment, and as more specifically considered below. I am unable to make findings about the conduct of Mornington Shire in response to the content of these reports.

74 Slip type A is a shallow translation debris flow within the upper silty sands. This type of landslip originates in the surficial, silty sands that form the facing of the escarpment. The sands are typically shallow with a depth generally less than one metre. It is considered that this type of landslip is triggered by times of high or sustained rainfall, such as storm events or possibly by saturation by manmade watering systems. The result is a brief increase in pore water pressure and saturation of the sands. Localised shallow arcuate or translational flow of the upper sand can occur, which is typically extremely rapid. Generally large slips of this kind are localised and contained to a maximum width of about 10 metres, with an accumulation verge that extends approximately three metres onto the flat ground in front of the toe of the cliff.

75 Slip type B is a deeper global failure within the Baxter Sandstone. This type of landslip consists of a global circular failure plane that is predominantly within the Baxter Sandstone stratum for this site. This type of failure is most likely caused by a long-term rise in groundwater levels. It is considered less likely than the earth and debris flow failure, and typically has a moderate speed. Such landslips can generally be contained to a maximum width of about 20 metres with an accumulation zone that extends approximately 10 metres into the area in front of the toe of the cliff.

76 Slip type C is a deep-seated global failure that penetrates to the Balcombe Clays. This type of landslip consists of a global, circular failure plane that penetrates to the Balcombe Clays. It typically occurs in cliff faces where the Balcombe Clays are exposed or at shallow depth. It is typically slow. At the site, Balcombe Clays are found at or below the toe of the cliff. John Piper, one of the geotechnical experts called, and whose evidence I accept, considered that there is a low risk of this type of landslip occurring, even though the computed Factor of Safety (FoS) predicted slope failure.[8] The low FoS was explained by the use of conservative, sheer strength properties which were adopted in the analysis, and the likelihood that the dip of the Balcombe Clay is not to the north. There was little evidence to show that such a slip had occurred in the past. Slip type C would be catastrophic in its impact both on the usability of the boat storage area and the path, and in its effect on the properties behind the escarpment. As will later become apparent, the low risk of a type C slip due to naturally occurring conditions is significant.

77 Slip 2 was, I find, a type A slip. It disturbed the surface soils of the escarpment over a width of four to five metres, commencing at about RL13m and it extended approximately 10 metres down the slope. The slip plane, roughly parallel to the surface, was at a depth of about one metre. The volume of material, comprising the soil and debris flow that damaged the Yacht club lockers, was approximately 50 cubic metres in volume. The head of the slip was approximately three metres below the lowest sleeper in the retaining wall, about eight metres below the edge of the escarpment and approximately 11 metres below the easternmost point of the common boundary between the Gunnersens and the Henwoods. The axis of the slip, when notionally extended up the slope, positioned it below the easternmost point of the common boundary. I am also satisfied that there was a tension crack at the head of the slip, of about two metres in length, approximately half of which ran horizontally away from the top corner of the slip to the north.

78 Studies by John Piper for the Davey’s Bay Yacht Club identified that there were risks to both persons and property from the prospect of slip activity at the site. Only slip type A poses a risk to persons because of the speed of movement of the slip debris. Identified at risk of a slip type A are people in or about the Yacht Club lockers and sheds, people on the relatively flat platform at the base of the escarpment and within three metres of it, people who are on the access path from the top of the escarpment to the Yacht Club and people who are at the top of the cliff face (within two metres of the edge of the escarpment). The risk to property includes risk of damage or destruction of the lockers and sheds of the Yacht Club, and risk to boats stored within three metres of the cliff face. Properties such as pathways and staircases could also be damaged. A slip type C, a deep-seated failure, could affect the properties at the top of the escarpment including both the Gunnersen property and the Henwood property. As I have noted, the Douglas Partners Davey’s Bay Stability Study, identified damage to buildings and building foundations consequent upon severe ground movements.

79 The experts agreed as to the factors which can destabilise a marginally stable slope and cause type A slips. They are:

(a) Introducing water to the slope. Saturation increases the weight of the slope, resulting in seepage forces and softening of the clays on the sheer plain. Slopes may be saturated by a variety of causes including:

(b) Groundwater exiting at or close to the edge of the slope. This can contribute to the effects of saturation. In addition, pore pressures are added to the other driving forces. The saturated ground has increased buoyancy, which can reduce frictional resistance to sliding along potential sliding planes submerged beneath rising groundwater levels.

(d) Removing vegetation from a slope. This has a dual impact by reducing the reinforcing effect of the root system and increasing the moisture content in the soil by reduced evapo-transpiration. The additional surcharge load from vegetation is insignificant compared to these beneficial impacts.

(e) Marginal stability and susceptibility to creep movement. The experts agreed that in its natural condition, the face of the escarpment was metastable. There was evidence in local features, such as stone walls and established trees, of slow creep movement generally, although the rate of natural regression of the escarpment in the long term had not been assessed.

80 Water is implicated in most investigated landslips. The evidence did not reveal a thorough examination of groundwater or the hydrological properties of the stratigraphy at the site. It is accepted that the impermeable layers in the stratigraphy permit both groundwater flow under pressure and perched water tables, although there are no aquifers capable of providing water for domestic or agricultural use. The experts who gave evidence in the proceeding agreed that, broadly, the 50 to 70 residential allotments, including the extensive grounds with sports ovals of Toorak College behind the coastline in the Mt Eliza area, provide a rain catchment. This catchment is in part comprised of paved areas and rooves, which drain into stormwater systems. However, sufficient areas of lawn and garden exist for rainwater to percolate into groundwater which, seeping from the higher ground at Toorak College, is under pressure at the site. Such observations are mainly relevant to seepage or perched water and do not inform any consideration of variation in the level of the permanent groundwater table, which does not alter in the short term with rainfall. The regional groundwater table is affected by long-term change in conditions such as drought.

81 It is believed that the permanent groundwater table is at a depth of approximately 15 metres below the top of the escarpment. Consistently with that belief, Mr Warren Peck gave evidence, which in this respect I accept, that he observed groundwater seepage from the base of the escarpment immediately behind the main Yacht Club buildings at about RL6m on several occasions between 1998 and 2006. He observed that the seep ceased flowing towards the end of 2006, a time of general drought conditions.

82 The formation of perched water tables (seepage water) within the slump soil deposits at the base of the escarpment, following prolonged or heavy rainfall periods, may be of greater significance. Typically the surface and subsurface drainage conditions at the base of the escarpment are relatively poor, allowing very little water to drain from the slump soil deposits. The saturating effect of a perched water table can cause a significant loss of sheer strength in the underlying Balcombe Clay and also in the slump clay deposits. The accumulation of surface run-off water and seepage water within tension cracks can result in significant hydrostatic pressures. In appropriate conditions, layers of relatively impermeable material higher up in the stratigraphy can facilitate the development of perched water tables up the escarpment, having similar effect.

83 There were investigations of slip 2. On discovering slip 2, Mr Ferme asked Mr Vaughan Carter, a building contractor periodically engaged by the Yacht Club, to investigate the landslip. Mr Carter climbed up the slope, adjacent to the disturbed soils of the slip. He described the displaced soil and vegetation. The terrain was very damp from the bottom of the escarpment right through the length of the slip to above it. At the top of the slip, Mr Carter observed a horizontal crack about 300 millimetres wide and about two metres long running from the top northern side of the slip in a northerly direction. Just above the slip he discovered a section of irrigation pipe.

84 Mr Carter saw that the irrigation pipe had separated at a join from another section of nearby irrigation pipe. The end of the upper section of the pipe, which he presumed was connected to the mains water supply, was open. Expecting that it may have been sealed, Mr Carter searched the ground looking for a ratchet clamp. He described the surface of the ground below the open pipe as showing scoring of the soil — obvious signs that a lot of water had been discharged from the irrigation pipe. Mr Carter observed that the slope surface above the irrigation pipe was not as damp as the ground below it.

85 About two weeks later on 2 March 2005, Mr Ferme, with whom Mr Carter had discussed his observations, climbed the slope to investigate the slip. He found the open end of the irrigation pipe and his observations of the ground around the top of the slip were consistent with Mr Carter’s observations. I will not repeat them. Later, in March 2005, photographs, to which I have already referred, were taken of the pipe and the surrounding ground surface by Mr Mel Palancian, a geotechnical engineer employed by Mr Peck’s firm AMC Consultants. Mr Palancian was the first geotechnical engineer on site after slip 2. These photographs also recorded the open end of the irrigation pipe and the ground conditions as observed by Messrs Ferme and Carter.

86 That evening, Mr Ferme spoke to Mrs Henwood by phone. They had not previously met. Upon being told what Mr Ferme had observed, Mrs Henwood stated that she would turn off the watering system and get her gardener to reconnect the two hoses. Mr Ferme requested Mrs Henwood confirm when this was completed.

87 Several days later, not having heard from Mrs Henwood, Mr Ferme again telephoned and on this occasion spoke to Mr Henwood. Mr Ferme told Mr Henwood that Mr Ferme considered the watering system had caused the subsidence because the pipe was immediately above the landslip. Mr Ferme then sought confirmation that Mrs Henwood had done as she had undertaken and Mr Henwood replied that she had.

88 This pipe was part of the irrigation system Mr Henwood had established some time in late 2002 in the circumstances I have already described. The failure of the irrigation system and the discharge of water onto the escarpment were matters that were never disputed by the Henwoods. For her part, Mrs Henwood knew that the irrigation system existed but she paid it no attention. It was operated by the gardener, Mr Tuxen. Mrs Henwood imagined the irrigation system operated at night because she had not seen it in action. She did not know what tap it was connected to and had no recollection of her response to Mr Ferme’s phone call.

89 Mr Henwood, when told by his wife of the matter, switched off the hose and contacted Mr Tim Holt of AS James, geotechnical engineers, seeking advice as to how best to rehabilitate the area of the escarpment where the slip had occurred.

90 By their defence, the Henwoods admitted that the watering system had been leaking for a period of approximately three weeks. No basis emerged in the evidence for any finding limiting the period of discharge of water by the watering system to approximately three weeks prior to the slip.

91 I find that water was discharged from the Henwood property by the irrigation system at mains pressure through the broken pipe for 10 minutes every second evening for a period of more than three weeks. Although it is probable that the period of discharge was much longer than three weeks, the evidence does not permit a finding as to when the period of discharge commenced or the quantity of water which may have been discharged onto the slope as a result of the failure of the irrigation system. I am satisfied that it is probable that a regular discharge of water from the irrigation pipe was occurring before the major storm experienced by the escarpment on 3 February 2005.

92 I find, upon the preponderance of expert opinion to which I now turn, that the discharge of water from the irrigation system directly above slip 2 was a necessary condition for the slip to occur. It was not the only operative condition. It was the factor which was present at the slip and not operative elsewhere. All other factors were operative on other parts of the escarpment, both at the relevant time and at other times, and slope failure has not occurred elsewhere. I conclude, on the balance of probabilities, that slip 2 would not have happened but for the failure to exercise reasonable care in maintaining and operating the irrigation system. The discharge of water from the pipe caused the slip to occur. It was a factor which made a material contribution to the risk of the slip occurring.

93 I reject the suggestion that the cause of slip 2 was a perched water table seeping from the face of the escarpment near the head of the slip. The evidence that such a perched water table existed was unconvincing. Notwithstanding this, there were many instances in the expert material in evidence, of assumptions that a perched water table was the source of seepage onto the face of the escarpment at the head of slip 2. Opinions were then based, in part, on acceptance of the assumption as fact.

94 Marcus Kalkman, a licensed surveyor, has a long association with the site. In May 2005, he surveyed the escarpment in order to accurately position each of slips 1 and 2. His survey plan dated 4 May 2005, was in evidence. It records the presence, in relation to slip 2, of a water fissure line at approximately RL12.7m running horizontally for two metres in length at the head of slip 2, with slightly more than a metre of that line extending horizontally beyond the upper northern corner of slip 2. Naturally, this survey plan has been used extensively by other experts. Reproductions from it featured in many of the experts’ reports. It appears to be the primary source of expert assumption on the point. In evidence, Mr Kalkman was unable to recall the detail of the moisture evident at this water fissure line and did not know the origin of the water.

95 Photographs taken by Melkon Palancian shortly after slip 2 happened, showed evidence of water seeping from freshly slumped soils. Mr Palancian did not form a view as to the possible origin of the seepage. His photos were taken with a zoom lens because access across the steep, saturated, freshly-slumped soil was either impossible or unsafe, preventing close investigation. Mr Palancian could not relate the seepage he photographed to the water fissure line on the plan of survey.

96 There was no other evidence about water seepage at or about that point and no evidence as to the source of the seepage. Other geotechnical experts concluded that there was a perched water table seeping onto the face of the escarpment at or about the head of slip 2, but their conclusions were based on the observations of either Kalkman or Palancian. I am not persuaded on the evidence that there probably was a perched water table seeping onto the face of the escarpment at or about the head of slip 2. There are alternative, more probable, explanations for the observations. I refer principally to the evidence of saturation of the whole face of the escarpment, with which I shall shortly deal. I consider Mr Peck’s and Mr Ervin’s opinions, that there was seepage from the face of the escarpment from a perched water table at or immediately above the head of slip 2 prior to its occurrence, to lack proper factual foundation.

97 Periods of prolonged or heavy rainfall at the site contribute to surface soil saturation on the escarpment. Survey evidence showed that the surface fall of the Henwood property was across the property in a north-westerly direction parallel to, rather than over, the edge of the escarpment. On the contour survey, a shallow gully from the top of the escarpment extending down towards the Yacht Club buildings, is evident. Mr Henwood gave evidence that his landscaping works behind the edge of the escarpment created a fall away from the edge of the escarpment and this shallow gully, and back towards stormwater drainage grates. There is no evidence to suggest any localised flow of rainwater over the edge of the escarpment and down this shallow gully during heavy or extended periods of rain. Surface saturation would likely be consequent upon direct rainfall.

98 Max Ervin, a principal of Golder Associates and a very experienced and highly respected geotechnical engineer who gave evidence for the Henwoods, rejected the notion that the irrigation system played a triggering causative role in slip 2. Both Mr Ervin and Mr Holt, a principal of AS James and also called for the Henwoods, sought to play down the causal contribution of the broken pipe. Mr Ervin speculated on the volume of water which might have been deposited on the escarpment by the 3 February storm compared to the volume of water which might have been deposited from the broken irrigation pipe. His assessment that the rainfall was about six times the flow from the pipe was not based on field testing or independent investigation — it depended upon acceptance of rather speculative assumptions. It is unhelpful and I reject it.

99 Further, Mr Ervin assumes that seepage, inferred from the water fissure line reported by the Kalkman survey of 5 May 2005 rather than from saturation of the surface layers above, was adding to the volume of water on the slope. In this respect, Mr Ervin joined Mr Peck in drawing conclusions about the source of water above the slip based on assumptions not established in evidence. Ultimately, this speculation about the relative quantities of water from alternate sources was directed to a rather pointless debate amongst the experts as to whether the water discharged from the broken irrigation pipe was the triggering cause of slip 2 or merely a contributing cause.

100 In addition to Mr Holt, another engineer from AS James Pty Ltd, Stephen Mayer, gave evidence of his specific investigation and report about slip 2. Mr Mayer inspected slip 2 on 24 March 2005. He concluded that the flow of water from the failed irrigation system was a direct cause of the slope failure. The escarpment was, he said, of marginal stability. A concentrated flow of water onto the face of the escarpment led to localised saturation of the soils resulting in a weakening of the soil profile. This softening reduced the ability of the soils to withstand the gravitational driving forces acting on the escarpment. Additionally, saturation of the soil mass generated hydrostatic pressure within the soil profile, which acted as a contributing driving force of the slope failure. Mr Mayer accepted that a prolonged or heavy rainfall event could have a significant effect on a perched water table but considered that any perched water table would not necessarily be localised to the area where the slip occurred. The earlier heavy rainfall considered on its own, absent the discharge from the irrigation pipe, did not cause any other landslides on the escarpment.

101 Mr Holt did not attend the site in 2005. The thrust of his evidence was that the alterations of the landscaping and vegetation made by the Henwoods, including the irrigation system, were of no consequence to any potential or future instability on the face of the escarpment. Mr Holt attributed the cause of slip 2 to the natural conditions prevailing at the site at the time.

102 When asked to comment upon Mr Holt’s opinion, Mr Mayer acknowledged that there had been high rainfall and that it may have contributed to the slip. However, Mr Mayer emphasised that in March 2005, he had observed a water channel extending up to a ruptured irrigation pipe directly above the head of the failure. When asked to comment upon the water fissure line evident on the survey drawing, Mr Mayer responded that he always looks for evidence of water flowing out of the ground in such a situation because it is an obvious sign of what may have contributed to the problem. However, on 24 March 2005 he made no such observation.

103 Mr Ervin also expressed his opinion about the cause of slip 2 without having himself investigated the conditions contemporaneously. He said most landslips are due to more than one factor. The discharge from the irrigation pipe would have contributed to any saturation of the slope but must be considered as a contributing factor and not the precipitator (trigger) for the failure. The cause of the slope becoming sufficiently saturated for the failure was a combination of factors including rainfall, associated run-off and seepage, and the pipe discharge. Mr Ervin accepted that the discharge from the irrigation pipe was a material contributing factor to the saturation of the ground at slip 2.

104 Mr John Piper, another highly experienced and respected geotechnical engineer, also has considerable experience of the site, having been retained by Mornington Shire in relation to slip 1. He too had not investigated the conditions of slip 2 contemporaneously. Mr Piper was not prepared to conclude that rainfall was the sole contributor to the landslip, remarking that the rainfall would be similar over the entire escarpment yet other sections of the escarpment did not fail during that extreme weather event. He also considered that seepage from a perched water table may have contributed but this conclusion is clearly based upon the notation upon the survey plan and I afford it little weight for the reasons I have discussed.

105 Mr Piper concluded that the causes of slip 2 included the geological ground conditions, the steepness of the slope, the presence of pre-existing slope failure and ground creep, and recent heavy rainfall. These features and impacts occurred along other sections of the escarpment in front of the Henwoods’ property and the Gunnersen property, yet slope failure occurred only below the leaking irrigation pipe. A broken or disconnected pipe will, Mr Piper said, concentrate the flow of water at a particular location, resulting in saturation or at least increased moisture content at this location relative to other locations on the escarpment. In Mr Piper’s view the discharge of water at a concentrated location, when combined with the other factors, could precipitate a shallow translational slope failure similar to that which occurred. He agreed with Mr Mayer that the leaking irrigation pipe was likely to be the primary cause of the failure.

106 Mr Reid, of MPA Williams and called for the Gunnersens, was contemporaneously instructed by Mr Ferme of the Yacht Club to advise it about the repair of slip 2. For that purpose Mr Reid reviewed Mr Mayer’s report and inspected the repaired slope on 30 May 2005. Mr Reid endorsed Mr Mayer’s comments about the cause of the slip and the recommended slope repair method.

107 Finally, the principal expert for the Gunnersens, Mr Peck, in a rather partisan fashion, noted Mr Henwood’s acceptance that slip 2 was caused by his watering system, prompting Mr Peck to conclude there was no current need to consider groundwater issues in respect of that slip. In a letter of advice to the solicitors for the Gunnersens in September 2006, Mr Peck, after expressing his opinion as to the cause of slip 1, stated, ‘causation for the Henwood slip is even more straightforward, from some points of view. The Henwoods simply did all the obviously wrong things and the Mornington Shire let them do it’. In a later report, Mr Peck stated that in his opinion, rainfall alone cannot be blamed for the slip since the 3 February storm was not a unique event — other extreme rainfall events have not triggered landslips at the site. Under cross-examination, Mr Peck expanded on his opinion that factors other than the unusual rainfall events were necessary conditions for the slip. The slope ought to have failed in November 2004, if not earlier. Something must have changed between the rainfall in November 2004 and the occurrence of the slip. Mr Peck identified two other factors: removal of vegetation from the vicinity of the slip and the failure of the irrigation system. In respect of the latter factor, his view was supported by Messrs Mayer, Piper and Reid.

108 I accept Mr Mayer’s opinion about the cause of slip 2. It is significant that he was the only experienced geotechnical expert who investigated the site contemporaneously. Moreover, his professional opinion, cogently expressed, was corroborated by Mr Piper who stands apart completely from the interests of the parties, and has also expressed his opinion objectively and mostly within the confines of the available evidence. Their conclusions are also endorsed by Mr Reid, on behalf of the Yacht Club, and ultimately by Mr Peck, for the Gunnersens.

109 None of the geotechnical experts attributed the construction works, which had taken place on the Henwood land, as a cause of slip 2. Primarily for that reason, issues between the parties about compliance with permits and agreements in relation to various aspects of the construction work and the role of Mornington Shire were not necessary conditions for the harm alleged by the Gunnersens. Subject to one matter requiring further consideration, I find that the Gunnersens have not made out the allegation that the escarpment on the Yacht Club land was weakened and became more prone to collapse because of the wrongful actions of the Henwoods in constructing their home in breach of, and otherwise than in accordance with, the terms of planning permit P981681, the s 173 agreement, the March 2000 agreement and the 2001 agreement. I also find that the like allegation of the Henwoods, directed at Mornington Shire, has not been made out. These matters did not make any contribution to slip 2’s occurrence with one exception — that the associated works governed by those permits and agreements did extend to matters pertaining to revegetation and water control. I have dealt with the latter issue. What of the causative role in slope stability of vegetation?

110 During the trial, the role played by vegetation above and on the face of the escarpment was more contentious than the role played by water in relation to slope stability. The important role played by vegetation in protecting the surface of the escarpment was not in debate. Rather, the significance of vegetation in assessing risk of slope instability, particularly instability affecting the land behind the edge of the escarpment rather than on the face of the escarpment, received different emphasis. The debate seemed to be generated more by counsel than the experts themselves.

111 Geotechnical engineers model slope stability to calculate FoS. It is a tool of their science, used especially in slope design but not inapplicable in assessment of the state of a natural slope. There are, I understand, different calculation methods available but a proprietary software program is commonly used, which employs limit equilibrium theory. What, in essence, is modelled is the relationship between the strength or resistance of the existing soils constituting the stratigraphy of the escarpment (the stabilizing forces) to the gravitational forces operating upon those soils.

112 Ideally, laboratory testing of sampled material from carefully located investigative bores generates the parameters for the variables used in the calculation. Such data inputs may include, for example, compressive strength (drained or undrained), effective cohesion, angle of friction, consolidation, mass, moisture content and pore water pressure of the component layers of soil, and may identify the stratigraphy and groundwater conditions found or being modelled. These variables may be assessed for assumed failure modes, for example, shear failure at 30, or say 45, degrees to axis. Assumptions can be added, such as the projected radius of a slip, the assumed failure plane, or the presence and influence of groundwater variation. The modelling program enables many calculations projecting differing circumstances or expected outcomes. For example, external loads, soil reinforcement engineering or complex pore water conditions can be modelled and analysed.

113 Where the stabilizing forces within the slope equal the opposing gravitational forces, the model produces a FoS of 1. Where the stabilising/gravitational force analysis result is less than 1:1, the modelled design can be expected to fail or will, within the adopted parameters, explain slope failure. Conversely, where that result is greater than 1:1 a designed or actual slope is expected to be stable. The higher the FoS the greater the extent to which the stabilising forces exceed the gravitational forces on the assumed failure plane. A slope modelled at a FoS at or only slightly above 1 is described as metastable and failure is being indicated, particularly in the event of a deterioration in any of the conditions that contribute to the destabilising forces. An obvious example of a factor causing deterioration is water, whether through saturation of surface layers or the impact of rising groundwater on subsurface layers. Experienced geotechnical engineers can assess the likely range of the FoS of a slope without necessarily conducting investigations.

114 The presence or absence of vegetation upon a slope is not a relevant variable or assumption in computer modelling of the stability of a slope. Designed engineered slopes may not be vegetated, as vegetation cannot be reduced to a number for input into the program. Vegetation can impact upon the variables that are used, for example, moisture content and the reinforcing effect of root structures may increase the strength or cohesion of soil layers. The presence of appropriate vegetation may permit greater confidence in the stability of a slope modelled with an acceptable FoS. On the other hand, appropriate vegetation may explain why a slope, modelled as metastable, has not failed when natural conditions vary.

115 The precise conditions in 2005 at the site of slip 2 were not investigated for this purpose. Its FoS at that point was not modelled, although the remediation works in 2009 were modelled by Mr Reid. The consensus of the geotechnical engineers is that the slope was metastable prior to the slip. The slope’s FoS would have been about 1.1 or 1.2 when modelling for the assumed failure planes of shallow type A slips.

116 I find that there were no issues about vegetation relevant to the cause of slip 2. Only Mr Peck identified devegetation of the Henwood land as a cause of slip 2. He did so on the assumption that evidence would be presented at trial to that effect. Mr Peck postulated that a cause of slip 2 was a change in the vegetation conditions between September 2004, when slip 1 happened, and February 2005. There was no evidence of any change in the state of vegetation on the relevant part of the escarpment either at this specific time or over an earlier extended time frame, such as the 2004 calendar year.

117 I find that the allegation that wrongful devegetation of the Henwood land, contrary to the conditions attaching to permit and agreements, has not been made out and cannot have played any causative role in the occurrence of slip 2.[9] I also reject the notion that the fact of installation of the irrigation system, of itself, was a necessary condition for the occurrence of slip 2. What was necessary was the discharge of water from the broken irrigation pipe, not the existence of articulated water systems. It was not suggested that the discharge of water from the irrigation system, when properly maintained and operating correctly on the basis described, could have been a necessary condition for the occurrence of slip 2.

118 The Henwoods were negligent in permitting that discharge to occur. They never contended otherwise. Their knowledge of the risks to the escarpment from the irrigation system and their lack of attention to and interest in the irrigation system to avoid or minimise such risk have been discussed. The question of what harm, if any, was caused to the Gunnersens by that negligence is more complex.

119 I can only draw very limited conclusions, as at, say 1 March 2005. In theory, slip 2 had then compromised the FoS of the escarpment below the Gunnersen land. Slip 2 did not cause actual damage to the Gunnersen property. The FoS was not modelled at this time. Neither the assumptions to be adopted nor the material properties or other inputs into the calculation of FoS are identified. My inability to find the extent of compromise of the FoS so arises in part from the prompt remediation of the failure area by the Henwoods and in part from the fact that the parties did not call evidence directed to the specific time prior to remediation. I can, and do, find that slip 2’s occurrence caused harm in the form of physical damage on the Yacht Club land and weakened the escarpment rendering it prone to further slips, an issue to which I shall later return. Consequently the slope required remediation.

120 The need for remediation was immediately recognised. Mr Henwood instructed AS James, and Stephen Mayer inspected the slip and prepared a report. He described his task as providing recommendations for remedial works to ensure that ‘the long-term stability of the escarpment is not adversely’ affected by the recent failure. Mr Mayer estimated the FoS against slope failure of the subject escarpment was in the range of 1.1-1.25, considering it to be marginally stable. In his report, Mr Mayer stressed the importance of managing the escarpment to ensure ongoing stability, referring particularly to uncontrolled discharge of concentrated flows of water, removal of vegetation and earthworks on or adjacent to the face of the escarpment.

121 Mr Mayer recommended removing the slumped soil mass from the slip and from the area at the base of the escarpment, supervised by a geotechnical engineer to ensure no further destabilisation of the escarpment. To protect the exposed clay against further erosion and to enhance revegetation, he recommended a product called Ecocell®. Ecocell may be described as an open-ended grillage of high-density polyethylene (HDPE) forming diamond-shaped pockets, restrained upon the slope using proprietary j-pins driven into the undisturbed clay. Topsoil is placed into the Ecocell pockets, providing a stabilised, suitable surface for re-establishing appropriate vegetation. Jute mat is placed over the Ecocells to prevent soil scouring. To complete the task, appropriate native vegetation, ranging from dense ground cover to shrubs and small trees with extensive root systems, is planted in the diamond-shaped pockets. Mr Mayer expected that maturity in the root systems of the vegetation would, within approximately two years, succeed the Ecocells as the source of stability to the surface layer of soil on the embankment.

123 Mr Henwood, who is a builder and developer, arranged for access to the Yacht Club and instructed subcontractors to remove the sheds at the bottom of the escarpment and carry out the recommended Ecocell remediation and proposed revegetation. This project was completed.

124 There is no direct evidence of consultation with the Yacht Club about the remediation of the slope although clearly, from the instructions given to Mr Reid of MPA Williams by Mr Ferme, some consultation had occurred. Mr Reid presented a report dated 30 June 2005, the purpose of which was to independently review the slope failure, the AS James report, inspect the repair, and provide comments upon the remedial action taken. Mr Reid reported that the Ecocells appeared to have been securely fastened to the slope with the proprietary pins in accordance with the manufacturer’s instructions. More than 60 native shrubs had been planted and a protective cover of biodegradable Hessian material had been placed over the repaired area to limit erosion. He considered that the repair had essentially been carried out in accordance with the AS James report and the work carried out was well done.

125 Nevertheless, Mr Reid identified some deficiencies. First, the placement of the Ecocells had resulted in a dish shaped repair area because the topsoil backfill had not replaced the full thickness of the original face of the prior-slip slope. However, he concluded that the repair was reasonable and that placing multiple layers of Ecocell with additional topsoil, to avoid a dish shape, was inappropriate. Second, a large tension crack at the top and to the right of the slip had not been repaired. Third, there was an exposed face near the centre and to the right of the slip that had not been repaired. Mr Reid considered that each of these repairs should have been carried out by placing additional topsoil fill and planting more shrubs. The limited placement of more Ecocells could have been required. Repairing the tension crack should have prevented water collecting in the crack. Fourth, the topsoil appeared not to have been sown with grass. Mr Reid recommended maintaining the repair works, replacing shrubs that died or were in a poor condition and sowing topsoil areas with grass. Mr Reid made further recommendations concerning irrigation systems, stormwater drainage systems, surface rainwater drainage systems, and testing the mains water supply and other drainage systems operated by utility companies.

126 Mr Reid concluded his report with a caution. Noting that the area had experienced significant failures in the past and would continue to experience ongoing creep movement and minor failures, he predicted future failures unless preventative measures of the type he recommended were actively carried out. Mr Reid confirmed that the repair works carried out had only reconstructed the slope to a condition the same as or slightly better than it was prior to the landslip, warning that wet weather conditions could create serious risk, possibly requiring the area between the toe of the escarpment and the rear of the lockers to be deemed a restricted area.

127 Mr Peck stated he was not primarily engaged in respect of slip 2. He did not give evidence of having investigated the slip himself when first on site yet he made various comments about it. In 2008, when recommending the use of Ecocell in rectification works proposed for a global fix of the stability issues generally, Mr Peck also observed that Ecocell technology had already produced good results in the slip 2 area. In cross-examination, Mr Peck chose to characterise the 2005 remediation as a bargain-basement job. Explaining his opinion, Mr Peck stated that this solution did not address the problem that the hillside was not secured by either a retaining wall or soil nails or some combination of each — it was merely a superficial fix. Confronted with evidence that he had earlier told a VCAT hearing that the works carried out by Mr Henwood following slip 2 restored the contour of the slope to what it had been prior to the slip, Mr Peck stated that he now realised his prior statement was incorrect.

128 This was one of a number of errors acknowledged by Mr Peck. His acknowledged errors, which I will note in the context of the particular issue under discussion, are one matter that has led me to prefer the opinions of other experts to those expressed by Mr Peck when there is disagreement.

129 There was no evidence of further consideration or review of Mr Reid’s report, nor was there any evidence that the further repairs suggested by Mr Reid had been carried out. There was no evidence that, thereafter, the Yacht Club or any person on its behalf, conducted regular maintenance or inspection of the escarpment, particularly of the remediation of slip 2. It was not suggested that Mr Henwood had agreed to, or otherwise accepted, any obligation of ongoing inspection and maintenance of the Yacht Club land. The failed irrigation system had ceased to be a problem.

130 I am content to rest my findings about slip 2 in 2005 on the evidence of Mr Mayer and Mr Reid. I can add that I did not detect any disagreement amongst the various geotechnical experts about the adequacy of the remediation work, provided one accepts that its purpose was to return the slope to the metastable state that existed prior to the occurrence of the slip. Two comments can be noted.

131 First, Mr Peck’s contemporaneous views, which I set out below,[10] although not his evidence, conform with the broader balance of geotechnical opinion when viewed in this context. Second, the reports and recommendations of Messrs Mayer and Reid were reviewed by Mr Ervin in a report prepared shortly prior to trial. At that time no evidence of Ecocell remediation works remained. Mr Ervin’s review was therefore confined to his critical analysis of these reports. Mr Ervin’s conclusion that the 2005 works could reasonably have been expected to reinstate the area directly affected by slip 2 to a condition which approximated or improved the pre-slip condition depended on his assumption that the reinforcing effect of Ecocells on the layer of reinstated topsoil would enhance its ability to support the in situ mass of soil above. This assumption required that the mass of reinforced top soil extended to the headscarp of slip 2. Mr Reid confirmed in evidence that the Ecocells had been placed so as to provide a buttressing effect supporting the non-slipped mass of soil above. Mr Ervin further commented that for the remediated area to approximate or improve upon the pre-slip condition assumes that the slope was effectively revegetated, that good drainage practices were implemented and that the slope was appropriately maintained.

132 On the basis of the evidence of Mr Mayer and Mr Reid, I am satisfied that the remediation works carried out on slip 2 were a reasonable response by the Henwoods. The area was returned to a metastable condition approximating its condition prior to slip 2. I am unable to conclude that the works properly remediated the effects of slip 2. Deficiencies remained, as identified by Mr Reid. Each of Mr Mayer and Mr Reid expressed caution. Events to occur later in 2008 at slip 2 showed such cautions to be prescient foresight.

133 I find that Mr Henwood accepted, reasonably, advice from AS James that the remediation works had been satisfactorily completed. I find also that the Yacht Club accepted the broad thrust of Mr Reid’s conclusion that the repair work had been carried out in accordance with the reasonable recommendations of AS James and that the work was well done. Notwithstanding these perceptions, the fact was that the deficiencies identified by Mr Reid, which I find to be conditions on the slope changed by the occurrence of slip 2, were not addressed. An increased risk of slope instability consequent upon slip 2, for which the failed irrigation system was a necessary condition, remained. The existence, and extent, of this risk warrants further consideration.

134 The pleaded allegation, that the escarpment on the Yacht Club land was weakened and became more prone to collapse by reason of negligent failure by the Henwoods to prevent or promptly rectify the leaking of the reticulation system into the cliff face, is not the essential issue. The leak was promptly stopped and the Henwoods, prudently acting on expert opinion, undertook the remediation recommended to the apparent satisfaction of all. At trial, the issue was defined in different terms. Did the conduct alleged against the Henwoods compromise the FoS of the escarpment below the Gunnersen land or otherwise threaten the stability of their property? Did it cause any damage to the Gunnersen property or a decrease in its value?

135 I consider that the FoS of the escarpment below the Gunnersen land, if modelled for a shallow type A slip, would be compromised to some extent by slip 2. However, the remediation work restored the slope to the pre-existing metastable condition for at least several years. It can reasonably be expected that the FoS of the escarpment below the Gunnersen land, modelled for a type A slip, would have been returned after the remediation work to a number appropriate for a metastable slope, for example, 1.1–1.25. I will explain below why I do not find that any actual damage, whether physical or economic, was caused to the Gunnersens’ property by reason of slip 2 and its subsequent remediation. To evaluate in terms of legal liability for the harm claimed, the consequences of the deficiencies remaining at the site of slip 2 following the remediation work, it is necessary to carefully examine what occurred from this point through to the completion of the soil nailing — the expense of which the Gunnersens claim as damages.

136 The Gunnersens focused sharply on issues of slope instability following slip 1. They consulted their solicitors. In October 2004, the Gunnersens engaged Mr Warren Peck of AMC Consultants. Initially, Mr Peck was not asked to conduct a detailed geotechnical investigation of the exact causes and mechanisms causing slip 1 or to advise about potential remedial measures. Rather, he accepted a retainer to generally inspect the Gunnersen property and the adjoining properties, establish geotechnical survey monitoring points on the Gunnersen property, and provide ongoing geotechnical advice and consultation. Survey monitoring was arranged and the surveyor, Mr Kalkman, was engaged. Mr Peck did not personally take an active interest at the site until April 2005.

137 The Gunnersens were, not unreasonably, most concerned about the stability and integrity of the escarpment and the effect any risk to slope stability might have upon their land and residence. I accept that they have at all times acted to protect the integrity of their property as best they are able and with genuine intention. To this end they have acted reasonably in reposing their confidence in, and reliance upon, their chosen experts.

138 Mr Kalkman, on 28 October 2004, conducted an initial survey. He marked out 14 monitoring points to measure any movement over time in the Gunnersen land. Mr Kalkman was familiar with the escarpment and the adjoining properties. In 1997, he had been engaged by Nigel Peck as a consultant surveyor in relation to the proposed subdivision of 7 Denistoun Avenue. The subdivision proposal had, at one point, included an access road down the face of the escarpment to the Yacht Club. For the purposes of that proposal a detailed topographical survey of the escarpment had been carried out. In April/May 2005, Mr Kalkman also surveyed and recorded the locations and dimensions of the slips. His detailed survey work, relied upon by the various experts, was not subject to challenge at trial. However, as I will later note, the design of the remediation work ultimately undertaken proved to be based on an apparent misconception, at least for Mr Reid as designer, of the width of the slip. Notwithstanding Mr Reid’s later variation of the scope of the remediation works, I find the position and dimensions of slip 2 in 2005, which I have already described at [77] to be as surveyed by Mr Kalkman. At the request of Mr Peck, Mr Kalkman returned to the site on numerous occasions to resurvey the monitoring points: 4 May 2005, 11 July 2005, 10 August 2005, 10 January 2006, 17 May 2006, 11 March 2008, 8 December 2008, 27 July 2009 and 31 July 2009.

139 Mr Kalkman’s surveys in May and July 2005 appeared to indicate no significant change from the initial control co-ordinates surveyed in October 2004, after allowing for equipment tolerance. This survey period is contemporaneous with Mr Henwood’s remediation works in the area of slip 2.

140 By July 2005, Mr Peck was interpreting the monitoring data from the May survey to show lateral movement towards Davey’s Bay of the ground behind the escarpment. This observation seems to have been influential in Mr Peck’s initial recommendation to install a dewatering bore. The purpose of the bore was to depressurise the groundwater in the vicinity of the escarpment. It required approval from Southern Rural Water. Contemporaneous correspondence and reports refer to this objective of groundwater depressurisation to improve the security of the escarpment. There is no mention of slip 2 or whether remediation work was completed satisfactorily. At that time, the bore was not justified as a response to slip 2.

141 In July 2005, Mr Peck advised the Gunnersens that the survey data indicated few significant ground movements since the May survey. Mr Peck described the ground near the two landslips as slightly more relaxed. Although he interpreted the data as indicating the possible risk of a further landslip, any such landslip was not imminent. Mr Peck suggested a watch be kept for tension cracks at the top of the slope and saw no reason to expedite the bore approval process.

142 In evidence, Mr Peck explained that his assessment of the monitoring data and the risk to the escarpment at that point in time had nothing to do with the remediation of slip 2. He agreed that the installation of the dewatering bore was prudent practice for improved long-term security from the risk of damage through escarpment instability. Depressurising groundwater was, he said, part of a strategy to minimize the risk of further slips or further movement on existing slips — not because of the failure of the Henwood irrigation system.

143 A dewatering bore and two monitoring bores were installed by March 2006 and thereafter the level and quality of the groundwater was monitored. These investigations showed that the direction of groundwater flow on the Gunnersen land is northerly across the Gunnersens’ property towards slip 1, not slip 2. The evidence suggested that the dewatering bore did play a role in reducing groundwater pressure on the Gunnersen property. During 2007, there was a sharp decline in the volume of water pumped out, which correlated with the generally prevailing drought conditions.

144 At this stage, instability issues and the attendant geotechnical advice were not confined to slip 2. Care is needed in evaluating the evidence of such advice when slip 1 was a live issue. There was then, quite sensibly, an ongoing attempt to involve various parties: Mornington Shire, City of Frankston, the Department of Sustainability and Environment, the Davey’s Bay Yacht Club and the Henwoods, in a global solution for the benefit of all. Mr Peck regarded the depressurisation bore as a more attractive alternative than building a massive retaining wall or, alternatively, running the risk of slope instability.

145 I consider that the bore was an appropriate and prudent response for the Gunnersens to take in response to the risk of escarpment instability arising from the natural conditions, particularly in the context of slip 1. I reject any suggestion that the Gunnersens incurred the expense of the bore as a necessary condition for harm suffered due to the occurrence of slip 2.

146 The evidence about the significance of the observations from the surveys was both contested and confused. Mr Kalkman concluded there was very little movement evident on comparing the initial survey to the final survey. On the other hand, Mr Peck found evidence of movement from one survey to the next. Mr Peck’s evidence was difficult to follow due to his admitted transpositional errors in his reports regarding the direction of movement.

147 In March 2006, around the time the dewatering bore was installed, Mr Peck next reported on monitoring results. He concluded that the survey points in the vicinity of slip 2 showed the ground had relaxed, attributing the likely reason for this relaxation to be the remediation of slip 2 during 2005. In Court, Mr Peck resiled from this statement, saying the remediation works did nothing ‘to bolster the slope’ because several years growth of the vegetation is needed to affect stability through the development of root systems.

148 Having listened carefully to Mr Peck’s evidence about the effect of the remediation of slip 2 and of his analysis of monitoring data, I was not satisfied that the Court could rely upon some of his conclusions. His investigative and analytical work appears to lack a sound basis. I so find primarily because Mr Peck stated the technique of using survey markers as an early warning system to detect ground movements was a technique that he was pioneering. It was not accepted practice amongst his peers. It was, apparently, only in that context that any of the other geotechnical experts showed any interest in the monitoring data. It is unnecessary, indeed unhelpful, for opinion to be expressed on a basis which does not enjoy professional acceptance. None of the other experts engaged with conclusions drawn from monitoring survey data.

149 There are further reasons. Mr Peck’s evidence withdrawing his statement that the remediation of slip 2 in 2005 had been a benefit to the stability of the slope seemed partisan. Notwithstanding his acknowledgement of the Experts’ Code of Conduct, his preparation of evidence for trial, and his participation in the failed joint conference of experts ordered by the Court, this error was not corrected at any earlier stage. He explained that he was resiling from that statement with the benefit of hindsight and three years thinking about the issue. Yet no clear statement of alternative reasons why evidence of relaxation of the tension in the ground was evident was proffered.

150 Also adding to confusion surrounding Mr Peck’s opinions from survey data were errors, which only came to light in cross-examination, in transposition of the direction of lateral movement of monitoring points when reporting on survey results in 2008. Mr Peck conceded these errors, which had been overlooked. The transposition was, he said, insignificant. Mr Peck informed the Court that the monitoring data has nothing to say on the question of what caused any reactivation of slip 2. It is unclear to what extent the monitoring data played any useful role at all, although Mr Peck gave it a role to which I will refer in due course, in advocating to the Gunnersens the final engineering solution.

151 Throughout 2007, a global solution to instability in the escarpment was being debated among the various interested parties. The first proposal involved the construction of two retaining walls. One wall was to be an extension to the east across the site of the existing concrete block crib wall on Crown land, with a second retaining concrete block crib wall located below slip 2 and the Gunnersen land, partly on Yacht Club land and partly on Gunnersen land. The second wall would run behind the extension of the existing wall. The access path, destroyed in slip 1, would come down between the two walls. The walls were intended to provide some support to the toe of the escarpment. A margin of improvement in slope stability, modelled on an assumption of global failure, was anticipated. The indicative costing of this proposal was approximately $775,000.

152 By March 2008, added to the remediation proposal being considered were some rows of close spaced soil nails above the crib walls to reduce the likelihood of type A failure. Mr Peck recommended that the final stage of the retaining wall option would involve the use of Ecocell technology to re-establish native vegetation. On the basis of a report prepared by MPA Williams & Associates in May 2007 and a plan of survey by Mr Kalkman, this proposal was placed with Tattersall Engineering Consultants Pty Ltd for an indicative price estimate, for which the Gunnersens paid a fee. Whether the obligation to pay Tattersall’s fee is properly included as loss and damage is in issue.

153 The crib wall remediation required a permit from Mornington Shire. There were additional difficulties in securing agreement for funding that work as it involved benefit for various other parties including the State of Victoria, Mornington Shire and the Yacht Club. There were difficult questions of access to the site. The litigation involving the Hosking slip, which had been settled, caused the parties concerns about their legal exposure.

154 The debate between the parties about the method and cost sharing arrangements for an engineered solution to slope instability was not aided by a lack of clarity from the experts. An expensive engineered solution could hardly be agreed, absent accepted design criteria or acceptance by parties of financial responsibility for achieving the proposed level of security against risk. I can mention several matters.

(a) One matter was Mr Peck’s erroneous conclusions on monitoring analysis, which he put to other experts during the debate about whether the crib wall remediation might be adopted, to advocate the need for major remediation work on the escarpment. Mr Peck contended there was survey evidence of consistent movement at the closest monitoring points towards slip 2, which was significant as it was occurring during a drought when little or no movement would be expected to occur. He argued an urgent need for major engineering against global instability on the basis of an experimental technique not accepted by his peers, which was later shown to contain transpositional error.

(b) Another matter was the juxtaposition of the lack of agreement about fault assertion and exposure to legal risk, driven by the solicitors, with proper design parameters for any engineered solution, a matter for the experts. Despite no agreement as to the underlying design objective for the works, the question about bearing the cost and expense of engineering works was related to the issue of legal responsibility for the risks associated with, not solutions to avoid, expected future slope failure.

(c) The experts did not agree on a proper assessment, in technical terms, of risks of instability. The question of responsibility to minimise the risk of major or global instability, as opposed to shallow localised instability, was never resolved. Another matter was the geotechnical assessment of the risks inherent in inaction or superficial remediation works. While Mr Peck advocated a situation of emergency, counselling against waiting for the period apparently needed to obtain a permit for constructing the retaining wall solution, others, including Mr Piper, advised the Mornington Shire take a different view, an issue I will return to in due course.

155 It became apparent that an agreed solution was unlikely. There was also a question of delay in obtaining approval for construction of the crib wall solution if Mornington Shire declined, as it did, to expedite that permit. However, a permit would not be needed if the proposed engineering works were ‘emergency works’. These matters came together during 2008 and resulted in the Gunnersens considering alternatives on their own initiative, at their own expense and in seeking orders from VCAT.

156 In connection with this question of the delay in obtaining a permit for the crib retaining wall construction proposal, I received evidence from a town planning consultant, David Alexander Hansen, who professed to extensive experience in dealing with applications to Mornington Shire. Instructed to assume detail about this proposal, Mr Hansen said that such works were construction works, which would require a permit. His opinion was that it was likely that it would take between 48 to 68 weeks to obtain such a permit. There were many variables involved in the detailed assessment of this timeline, some of which were explored in cross-examination. I do not consider that it was possible, on the evidence, to make any finding about the extent of delay that may have been involved in this process. Equally, I am not satisfied that the prospect of delay in obtaining a permit explains why the retention wall remediation system was ultimately not pursued.

157 Two other options were considered by the Gunnersens, one of which was the soil nails engineering solution ultimately adopted by the Gunnersens. The other option was to install a secant bored pile wall with a capped beam anchored back into the slope along the northwest boundary of the property at the top of the escarpment. Mr Peck explained that this option was being explored as an ’on site’ solution in the event that the Gunnersens were unable to gain access or obtain permission to stabilise the two landslips by installing the engineered retaining walls. The secant bored pile wall would isolate the Gunnersen land to protect it, in particular, from the risk of global instability. The remaining surrounding escarpment could have collapsed, with all its associated damage, but the Gunnersen house and pool would have been protected.

158 For the Gunnersens, the secant bored pile wall option was attractive as discrete, entirely on their land and entirely for the security of the escarpment where it supported their land. The Gunnersens did not, however, regard the option as viable, fearing that its construction would cause substantial damage to their land along the eastern boundary at the top of the escarpment, their pool and patio. Introducing the necessary earthmoving equipment and materials was also likely to cause substantial damage to other parts of their property.

159 The engineering solution ultimately recommended to and implemented by the Gunnersens, for which they paid and which represents their claim in the proceeding, was driven by the developments on the escarpment in 2008.

160 In March 2008, Mr Peck actually inspected slip 2. He saw an open tension fissure at the back of slip 2 plus a lateral fissure running down the full length of the slip on its eastern side. He described relatively recent vertical displacements averaging about 200mm along each fissure. I find these observed fissures to be evidence of the deterioration expected by Mr Reid’s caution in June 2005, consequent on a want of attention to completing the repair of slip 2 and the lack of maintenance of the slope thereafter.

161 Shortly after this inspection, Mr Peck observed that Ecocell technology had already produced good results in the slip 2 area commenting that ‘Ecocells on their own do not provide a complete answer to deep-seated instability and hence the need for the retaining walls and the soil nailing’. When pressed in cross-examination about the inconsistency between his concerns that slip 2 had reactivated in March 2008 and his enthusiasm for the Ecocell result at slip 2 in April 2008, Mr Peck declared that Ecocells were inappropriate for shallow translational stability, an opinion that he either did not express or form after he observed that the slope at the site of slip 2 was showing signs of distress in March 2008. This evidence provides further confirmation that the design objective of the engineered solution was now being driven by the natural conditions, rather than the negligently maintained irrigation pipe. On 21 December 2008 when reporting to the Gunnersens, Mr Peck stated ‘slip 2 has failed on a previous occasion in 2005 and it was then rehabilitated back to its original profile using Ecocells filled with imported sand and appropriate native plants’. Mr Peck is not critical of the 2005 remediation works in his correspondence.

162 Mr Peck communicated his observations of the evident stress in the slope in March 2008, yet it appears no action was taken in respect of it. Mr Holt said he informed Mr Henwood in May 2008 of a need for maintenance of the Ecocells, although Mr Henwood was not questioned about that. Rather, the negotiations for the global retaining wall solution continued, with rows of soil nails added. The failure to follow up with regular inspection and maintenance of the escarpment is a consistent theme from at least the time of the warnings and cautions given by Mr Mayer and Mr Reid in 2005.

163 On instructions at that time from the Department of Natural Resources and Environment and Mornington Shire, Mr Piper recommended prompt action to stabilise the escarpment at slip 2 regarding the shallow translational failure that was occurring. At this time, there had been no concertina movement of the Ecocells down the slope. In Mr Piper’s opinion, if the escarpment had been stabilised promptly, there would have been no further slippage. He described his recommendation as Ecocells with enhancements: to install a reinforced concrete strip footing along the base of the stabilisation works to buttress the Ecocells, then to stabilise the Ecocells using both long j-pins (2–3m long) and horizontal and vertical soil nails (at 2m centres within the area of the Ecocell, 2–3m long and driven in), and backfilling the gap between the top of the Ecocells and the upper surface of the escarpment to revive buttress support and re-plant with suitable vegetation.

164 At the time, on the request of solicitors for the Department, an indicative costing of this work was obtained from Tattersalls Engineering. The work was costed at $50,000 (with a $25,000 contingency allowance). The quote, dated 5 May 2008, was, as far as Mr Piper knew, forwarded to the solicitors but nothing happened with that proposal. In May 2008, this was a reasoned, professional response which warranted, I consider, not just consideration but implementation as part of prudent management of the escarpment. It may well have worked, or at least been effective in avoiding the situation which later developed. I can only infer, if I needed to make a finding about it, that it was lost; firstly in the push to implement a global solution, not just a slip 2 solution, and secondly, in the quagmire of legal responsibility.

165 Mr Peck returned to the escarpment on 7 December 2008. On inspecting slip 2, he observed significant ground movements of about one metre had occurred since May 2008. The open tension crack, visible in May 2008 at the head of slip 2, had developed into an extension of slip 2 involving ground movement with a vertical displacement of about one metre. Additionally, a section of the hillside had been left unsupported by this ground movement. The slip plane along which the ground had moved was exposed. Upslope from slip 2 and the previously existing tension crack, the ground showed clear signs of instability, including rotation of the nearest upslope timber retaining wall.

166 On 8 December 2008, Mr Peck reported his observations to the Gunnersens. Mr Peck described what was occurring as a reactivation of slip 2. His report represented diagrammatically the activity on the slope. Of some significance was that at the top of the slip plane he described an overhang, about 400mm deep and about a metre tall, extending along the slip plane. Photographs of Mr Peck’s observations were included in his report. Upon examining them the overhang which he describes is not readily apparent, possibly obscured by dense dead vegetation. I was unable to reconcile the photographs to Mr Peck’s diagram and textual description of his observations.

167 Mr Peck opined that further ground failure in the vicinity of slip 2 could occur at any time, particularly should a soaking rain event occur. There was, he said, a distinct possibility that a landslip could result in large lumps of hard clay rolling down the slope and across the foreshore damaging the Yacht Club buildings as well as seriously, perhaps fatally, injuring any member of the general public who happened to be walking along the foreshore below slip 2. Mr Peck likened this possibility to what had occurred in 1995 in the Hosking slip when large lumps of clay, estimated to weigh several tonnes, were seen to roll down the slope, across the beach and into the water with significant momentum.

168 Mr Peck pressed upon the Gunnersens a strong recommendation that in view of the fact that an actual landslip had recently occurred at the site of slip 2, and that further slips were imminent, the planned remediation measures involving a retaining wall and soil nails should be implemented immediately. This would, he said, provide protection for the general public using a very popular section of the foreshore for recreational activities, as well as the Gunnersen family occupying the adjoining property located above slip 2. The perceived risk was that these lumps of clay would be of sufficient mass (approximately one tonne) and cohesive strength to remain intact as they came down the slope, thereby posing a significantly greater risk of damage to property or threat of personal injury.

169 Mr Piper, then advising the Shire, did not accept the situation to be one of emergency. In his view, there was no overhang and there was no appreciable risk of lumps of clay coming down the escarpment whether at all or sufficiently intact to cause damage in the manner being foreshadowed by Mr Peck.

170 I prefer the opinion of Mr Piper as to whether there was an emergency situation created by the risk of lumps of clay breaking away and coming down the escarpment. I do not accept that by December 2008 the translational slip evident through 2008 exposed an appreciable risk of large lumps or balls of compacted clay breaking free from an overhang at the head of the reactivated slip 2 or even possibly from further up the slope.

171 This new risk depended firstly on the conclusion that there was an overhang of well-solidified clay, exposed by the creep of the reactivated slip 2 in 2008. The contemporaneous photographic evidence does not show this overhang, notwithstanding that the purpose of including the photographs in the report was, in fact, to demonstrate its existence. Secondly, to conclude that these lumps of clay would be of sufficient mass and cohesive strength analogous to the Hosking slip, the expert opinion needed to be based on a more thorough process of investigation, sampling and testing than that offered. Thirdly, in the context of the misgivings I have already expressed concerning Mr Peck’s evidence, the language of this report is altogether too emotive and alarmist, when what was required were conclusions and recommendations based on properly documented scientific observations.

172 There appear to be at least two further versions of Mr Peck’s report dated 18 and 21 December 2008, perhaps prepared for the urgent application which was made to VCAT. Although not the subject of direct evidence, I infer that at some time in late 2008, possibly prior to 7 December 2008, the Gunnersens determined to proceed with the soil nailing option for an engineered solution to slope instability and prepared an application for VCAT for an order that a planning permit was not required for such works. Referred to in an undated application to VCAT, but not in evidence, is the existence of an affidavit of Mr Gunnersen dated 8 December 2008, which was the basis of this application.

173 VCAT declared that the proposed works were necessary to prevent soil erosion and were exempt from any requirement for a planning permit. VCAT took evidence from both Mr Peck and Mr Piper. The proposed works considered by VCAT were those which were ultimately constructed, which I describe below. The reasoning of the VCAT members turned upon findings that what had occurred on the escarpment constituted soil erosion and that the proposed works were necessary to prevent further soil erosion. The members of VCAT expressed no reliance upon characterisation of the works as ‘emergency works’.

174 With the need for a planning permit now relieved, the Gunnersens were keen to press ahead and the Yacht Club confirmed its previously communicated consent to permitting engineering works upon its land.

175 Between late May and late August 2009, these remediation works, as advised by Mr Peck and designed by Mr Reid, were undertaken. The work involved the installation of 137 soil nails into the face of the escarpment at the site of slip 2. Carried out under a construction agreement between Mr Gunnersen and Delta Pty Ltd, the work was supervised by Mr Reid.

176 The original contract was for the installation of 83 soil nails, according to Mr Reid’s design. It is now said that when the vegetation on the face of the escarpment was removed in the course of construction, the width of slip 2 was larger than had been assumed in the design. Delta’s scope of works was based, I expect, on the Kalkman survey.

177 Soil nails are long bars, which can range in length from 5 metres to more than 18 metres. Briefly, each soil nail comprised a 20mm nominal diameter high strength GEWI® Bar centralised within a corrugated HDPE sheath, in turn centralised within a bored hole. In each case, the nail within the sheath and the sheath within the bored hole was fixed by cement grouting. An end cap was placed on the end of the embedded nail. The bearing plates, comprised of two treated pine prefabricated 250mm diameter logs of approximately 1-1.2m in length, bolted together, are used to transfer the soil nail load to the soil surface. Ultimately, the length of soil nail installed was dictated by construction conditions. A mix of longer soil nails (up to 7.8 metres installed by a conventional drilling rig at 1.5 metre spacing) and shorter nails (up to 5.2 metres installed by a drilling rig suspended from a crane at one metre spacing) was installed. The soil nails were designed to intersect either with the Baxter Sandstone present throughout most of the exposed slope or, towards the toe of the slope, the Balcombe Clay.

178 ATC Williams certified that the construction of the soil nails was in accordance with, and met, the design intent. Mr Reid explained that the design process involved geotechnical modelling, initially developed to simulate the existing metastable conditions, both in dry and wet conditions simulating both saturation and rising groundwater. Once satisfied that the model reasonably simulated such conditions, modelling of the reinforcement of the escarpment using soil nails was undertaken. The number used, spacing, positioning, length and other relevant factors were modelled by the design engineer to assess whether an appropriate FoS could be achieved by the remediation works.

179 Mr Reid estimated the FoS of the slope after the remediation using the geotechnical modelling. It was his opinion that the overall improvement in the FoS was from approximately 1.0 to approximately 1.5. The design aimed to achieve a suitable improvement in the slope stability FoS, not only for shallow translational failures but also for more deep-seated global slope stability failures of a kind that might affect the house immediately above the slope.

180 The Gunnersens claimed $756,072 for the costs of the soil nail engineering works and an additional $110,482 for the cost of geotechnical supervision of that work — a total of $866,554. The quantum of the costs of the remediation work was largely agreed between the parties, save that the Henwoods disputed Mr Kalkman’s fees of $7,276 (relevant to the remediation of slip 2 survey work) should be included as part of the remediation costs. The Henwoods also disputed that the Gunnersens were entitled to the costs of supervision of the remediation works.

181 It is desirable that I say something about how the Gunnersens arrived at soil nails as the adopted solution.

182 I formed the view that throughout his involvement with the Gunnersen land, Mr Peck was concerned about the risk of a deep-seated or global failure of the escarpment immediately below the Gunnersen property. There is nothing inappropriate in this perspective. Mr Peck conceded that his purpose in going to inspect the escarpment in May 2005 was to assess the possibility of future movement, not to assess the repair that had been done. I have already noted that his concern when recommending the dewatering bore was directed to major failure which might threaten the Gunnersen land or the security of the residence. I have also noted that the design objectives he communicated to Mr Reid were consistently to engineer improvement in the FoS against the risk of a deep-seated or global failure of the escarpment immediately below the Gunnersen property. However, I am not satisfied that the occurrence of slip 2 was a necessary condition for any change in the risk of a deep-seated or global failure of the escarpment immediately below the Gunnersen property. The expert evidence does not support that conclusion.

183 Mr Peck agreed that the tension crack observed in 2008 was not a new failure of the slope. Rather, the Ecocells failed to hold their position, probably due to the inadequate length of the retaining nails. He agreed that such maintenance work may have helped in early 2008. Mr Piper was of the same view. As I have noted, nobody seemed to accept any responsibility for that more modest, relatively inexpensive, task. For his part, Mr Peck preferred to continue to advocate for a more substantial global solution.

184 It also became clear that Mr Peck added to his scope of works, an ethical duty to advise in relation to the risk to public safety, particularly associated with use of the foreshore and the Yacht Club. At issue in this regard was his opinion, which I do not accept, that by December 2008, the translational slip evident through 2008 exposed an appreciable risk of large lumps or balls of compacted clay breaking free from an overhang at the head of the reactivated slip 2, even possibly from further up the slope.

185 Based on the contemporary reports of Mr Peck, Mr Holt and Mr Piper during 2008, Mr Ervin concluded that after 2005 there had been general ongoing instability on the slope above the Yacht Club, not specifically in the area of slip 2. References to a tension crack at the head of the reinforced soil mass, constructed to rehabilitate slip 2, suggested some downward movement of this soil mass was then evident. In Mr Ervin’s opinion, this did not in itself imply that slip 2 had reactivated but rather that the replacement soil mass had crept down the slope, or compacted, and took expression in the form of a tension crack.

186 Mr Ervin considered the soil movement described by Mr Peck in December 2008 to be more significant, as it suggested that the reinforced soil mass had in fact slid down the slope. Mr Ervin was critical of the lack of investigative detail in Mr Peck’s reporting of his observations. Seeking to understand the mechanism involved, Mr Ervin noted that the original debris from slip 2 had been removed and the Ecocell reinforced soil mass was the replacement of this slumped material. It was likely he said, from observations in these reports, that stormwater saturation had led to this more general instability in the area of slip 2 in 2008.

187 Analysing Mr Peck’s December 2008 reports, Mr Ervin concluded that Mr Peck’s observations clearly suggested the downslope movement of the Ecocell reinforced soil mass along or parallel to the original slip surface. Mr Ervin concluded:

I adopt Mr Ervin’s description of the movement, or slope failure mechanism, which occurred during 2008, noting that it is generally consistent with the views of the geotechnical experts about the ground movement in 2008.

188 In respect of the triggering mechanism of water flow, two further comments can be made. First, there was no evidence of any specific storm or rainwater event prior to the reactivation of slip 2, and comment in the contemporaneous reports about stormwater runoff amounts to no more than general inference. There was no evidence of other slip activity, either at slip 1 or elsewhere on the escarpment in 2008. There was no failure on the slope above slip 2, notwithstanding that the buttressing support from the Ecocell reinforced soil mass to the upper slope must have failed from at least early 2008. Second, and perhaps more importantly, the instability which occurred in 2008 at slip 2 may well be a consequence of a lack of inspection and maintenance of the 2005 remediation work in 2006 and 2007. The weight of expert opinion, accepting the 2005 remediation work was reasonable and appropriate, also clearly establishes that the remediation design intent is not achieved unless it is carefully maintained and the vegetation’s root systems are properly established. Until that occurred, the remediated site of slip 2 remained susceptible to further type A translational slips, particularly along the slip plane of the original slip by the operation of natural forces, such as water.

189 Another possible explanation emerged in evidence. Mr Reid suggested that Ecocells may have been unsuitable because of the steepness of the slope exceeding 30 degrees (although I note that Mr Piper stated that Ecocells could be used on slopes with an incline of up to 45 degrees). In Mr Reid’s view, the failure of the 2005 work in 2008 was due, not to the matters he had earlier adverted to, but to the pins at the top of the slope being unable to hold the Ecocell on the steeper section. It appeared that the 300mm j-pins used to fix the Ecocells were in accordance with the manufacturer’s recommendations. This explanation is consistent with Mr Ervin’s analysis, including as to the triggering mechanism of water flow. It appears that the relatively new product in 2005, Ecocells, may have in fact been inappropriate, a conclusion based on hindsight, rather than what was reasonable geotechnical practice in 2005. Further, it would seem that the upper section of the Ecocell reinforced soil was really clinging to the escarpment by inadequate j-pins and in all probability provided little buttressing support to the upper section of the escarpment above slip 2.

190 I find that the occurrence of slip 2 in 2005 was a necessary condition for what occurred at the site of slip 2 in 2008, whether that is described as a reactivation or a new slip is no more than a question of semantics. The relevant earth movement was that of the added reinforced soil mass on the slip plane of slip 2, which was not bonded to the underlying clays by vegetation roots. The negligent introduction of excessive water in 2005, which was a necessary condition for the occurrence of slip 2, remains causally active. But for the occurrence of slip 2, there would not have been a reinforced soil mass on that slip plane, a necessary condition of the occurrence of the ground movement in 2008. The occurrence of the 2005 slip was a condition that materially contributed to the occurrence of the 2008 movement, albeit the lack of attention to deficiencies of the 2005 remediation works, lack of proper inspection and maintenance of the remediated slope in 2006 and 2007, failure to respond to Mr Piper’s suggestions as costed by Tattersall in May 2008, and possible unsuitability of Ecocells on such a steep slope were other factors which may have contributed to the 2008 ground movement. Such finding, of itself, does little to advance the plaintiffs’ claim but is a necessary step. I say this because the slope movement is all occurring on Yacht Club land.

191 The question remains. What, on the evidence, is the impact upon the Gunnersens of this movement upon the escarpment, for what remains in issue is the nature of the particular harm for which the Gunnersens seek compensation. Section 43 of Part X of the Wrongs Act 1958 defines ‘harm’ to mean ‘harm of any kind including damage to property and economic loss’.

192 Was there physical damage to the Gunnersens’ land by reason of the ground movement upon the escarpment in 2008? The answer is no. The movement and slumping of soil and vegetation upon the escarpment was confined to the Yacht Club land. I was urged to accept that physical damage was evident from a hairline crack in stone tiles on the patio above the general area of slip 2, a crack in a moulded concrete balustrade wall noticed by Mr Kalkman and raised tiles by the pool. These latter observations were of places located away from slip 2. There was a rather speculative debate about the theoretical extension of the axis of slip 2 in 2008, drawn by Mr Ervin in an upwards direction towards the common boundary of the properties of the parties.[11] Even accepting this speculative theoretical extension as representing the direction of a possible future slip plane, I am unable to conclude on this evidence that the theoretical extension of the axis of slip 2 shows any causal relationship between the movement on the slope at slip 2 and the crack in the tiles outside the corner of the dayroom at the Gunnersens’ residence. The axis does not run to that point. More significantly, there was no evidence from any expert identifying any crack or other observable sign of ground movement as damage caused by slip 2 or the 2008 ground movement, particularly from Mr Peck who, as I have noted, engaged in extensive monitoring of the Gunnersen land for signs of movement.

193 Reserving for the moment whether it constitutes harm, the next issue is to consider the impact upon the Gunnersen land in terms of risk of the 2008 ground movement. I have set out the views of Mr Peck and Mr Piper, which were advanced to VCAT above.[12] Mr Reid agreed that the downward movement of the Ecocell reinforced soil mass from the original remediation deprived the upper section of the slope above slip 2 of buttressing support, rendering it more susceptible to failure in a period of heavy or prolonged rainfall. Mr Reid is identifying a risk of future damage through instability. However, his evidence was not specific as to the damage which was possible in the future.

194 Mr Ervin expressed similar views. Slip 2, in his opinion, did not cause actual damage to the Gunnersen land. It was reasonable to expect that it may have increased the prospect of a risk of damage in the future because of the decreased buttressing support provided by the escarpment to the Gunnersen land. Removal of some support to a small part of the escarpment above slip 2 made that particular area more vulnerable to future slip activity, which could be translational or deep-seated. In either case, Mr Ervin considered the risk to the Gunnersen land, while being minimal, was not fanciful. His explanation was that a translational type A slip, while more likely than a type C slip, carries a very slight risk of impact to Gunnersen land. A deep-seated type C slip, while more likely to damage the Gunnersen land, is not only much less likely to occur but, importantly, could not be attributable to the loss of buttressing support from the Ecocell reinforced soil mass.

195 I find that it is probable that the risk of instability to the escarpment on Yacht Club or Henwood land immediately above slip 2, was increased by reason of the 2008 ground movement. The change in the risk of damage to the Gunnersen land was marginal, insignificant. I cannot say it was nonexistent or fanciful but damage to the Gunnersen land, attributable to this cause, is remote. I reject the contention that the situation was one of urgency or emergency, preferring the opinions of Mr Ervin and Mr Piper as to the magnitude of the risk of future damage to the integrity of the Gunnersen land. Whatever the position in respect of the prospect of damage from lumps of clay cannoning down the slope, it is clear that such material would come from Yacht Club land and, if it did, would create a risk on and beyond Yacht Club land, towards the sea. However, the Gunnersens did not merely anticipate a risk of physical damage, they also anticipated a risk of economic loss. Economic loss was said to be constituted by a diminution in the market value of their land.

196 I find that the expenditure on the 2009 works was incurred to improve the stability of the escarpment and to lessen the risk of damage, whether physical or economic, to the Gunnersens in the future.

197 Each party called an expert valuer to express an opinion as to the current market value of the property. For the Gunnersens, Mr Kevin Connolly concluded that, unaffected by any particular issues relating to escarpment instability, the value of the property is $6 million. He considered that a prudent purchaser would mark the value of the property down by between 10-15% due to the uncertainty of possible future landslips. Adopting a median figure, Mr Connolly discounted his valuation to arrive at a current market value of $5.25 million.

198 For the Henwoods, a valuation opinion was expressed by Mr Adam Takacs. Mr Takacs’ valuation was compiled without the benefit of an inspection of the property. He considered its market value to be $5 million, although he agreed that that value was conservatively estimated. He preferred to estimate the value of the property to be in the range of $5-5.5 million. Mr Takacs considered that the current market value of the Gunnersen land would be unaffected by slip 2 because of the soil nailing remediation works in 2009.

199 Each of the valuers agreed that the residence upon the Gunnersen land made a relatively marginal contribution (about 10%) to its capital value. Each of the valuers agreed that the property description and the comparable sales to which the other had made reference were appropriate. The differences between the valuations reflected differing subjective assessments of those comparable values. Having regard to the inexact nature of land valuation there is no need to analyse points of fine distinction. It is unnecessary that I make a finding as to the current market value of the property but I consider it lies within the range of $5.5 million plus or minus 10%.

200 It is significant that the valuers agreed that the location and outlook of the property was the significant factor in determining its value. They agreed that instability on the escarpment generally was well understood by local real estate agents. They each expected it was a factor which prudent purchasers at this high end of the market would consider. They each went further, expressing opinions about the disclosure of slips and remediation in 2009 in a vendor’s section 32 statement.

201 I am not satisfied that what a vendor may, or may not, disclose in a vendor’s statement is a matter upon which it is appropriate to accept the opinion of a land valuer, particularly where that opinion is not transparently reasoned or supported by research. Significantly, much of what has been said by the expert valuers about the value of the Gunnersen land is dependent on propositions about a vendor’s disclosure of matters affecting the Yacht Club land. These are significant limitations on accepting the opinions of the valuers as admissible evidence on which I might rely in the fact-finding process.

202 Beyond the statutory obligations under the Sale of Land Act 1962, the duty of a vendor is to disclose to a purchaser defects in title in respect of the land being offered for sale. Every fact material to the validity of the title known, or which ought to have been known, to the vendor and not discoverable in inspection by a careful purchaser must be disclosed. An example of a defect in the physical condition of the land clearly affecting the title might be a public drain running from the road through the property and discharging onto the escarpment, a patent defect if visible to the eye or by necessary implication from something visible to the eye on an inspection of the land, but one which could be a latent defect. Defects in the quality of, rather than title to, land are a different matter but the distinction between latent and patent defects remains apposite. Provided a vendor does not offend any other principle of law, for example the principles concerning the making of representations, caveat emptor applies.[13]

203 Neither valuer reported on the impact of slip 2 and its remediation on the value of the Gunnersen land in 2005. I do not consider that a prudent vendor of the Gunnersen land in 2005 is obliged to, or would, disclose in a vendor’s statement the happening of slip 2 or its remediation by agreement between the Yacht Club and the Henwoods. What a prudent purchaser may have observed upon inspection in 2005 was not the subject of evidence.

204 I was urged to accept that the slip in February 2005 would have adversely impacted on the value of the Gunnersen land as ‘almost commonsense’ based on two matters in evidence. First, a generic affirmative response by the valuers in evidence to the question ‘Is market value different if a slip had occurred but nothing done about it?’. Second, the valuers’ evidence that market value would be written down by the costs of remediating the slip, this being the valuers’ explanation of the effect of remediation on market value. What the reasonable costs of remediation were, is a central issue in dispute in the proceeding but it was urged upon me that the quantum did not matter. Whatever that sum was did not affect the principle that market value would fall to some extent.

205 I do not accept these submissions for these reasons. I do not consider it likely that slip 2 would affect any sale in 2005 because I do not find it probable that it would have been disclosed or discovered on inspection by the willing but not anxious purchaser. Neither the Gunnersens nor any purchaser from them had any obligation to undertake remediation work. That obligation rested between the Yacht Club and the Henwoods. The cost was never to be paid by the Gunnersens. There was no evidence of any recommendation to the Gunnersens in 2005 that their land was specifically endangered by slip 2, requiring them to act or expend money in relation to slip 2. Slip 2 was remediated by June 2005. The debate as to whether it was properly fixed did not emerge until 2008. The stability of the slope was apparently restored to, or slightly better than, its previous metastable state. There was no need for market value to be discounted by a reasonable cost of remediation, unless I conclude the Gunnersen land was stigmatised by the mere occurrence of slip 2, irrespective of its remediation. I do not accept this aspect of the valuers’ opinions to go beyond a bare ipse dixit, falling short of being intelligent, convincing and tested.

206 It was on this point of stigma, in their discussion of current market value, that the valuers parted company. In the first place, the debate about stigma was irrelevant because it was conducted in the context of current value after the 2009 works were completed, but I am not disposed to find that the Gunnersen land specifically has been stigmatised in any event. Both valuers accepted that the fragility of the escarpment generally and the occurrence of landslips in the area is well known and understood.

207 Mr Connolly, when maintaining that a purchaser would mark down the value of the property due to the uncertainty of possible future landslips, contended that a stigma would attach to the property because there had been a slip on the escarpment below. His contention, which I reject, was that such stigma could not be washed away by remediation works certified by an engineer. This was founded on his proposition that the prudent purchaser would discount the property or purchase elsewhere, irrespective of whether the engineering works restored or improved the security of the escarpment and whether the purchase elsewhere might involve a cliff top property in similar conditions of natural fragility. Mr Connolly’s suggestion of a stigma attaching to the property was not based upon any market-based evidence of other properties being stigmatised in like circumstances, and his suggestion of a 10-15% detrimental impact on value was nothing more than a guess. Mr Connolly did not demonstrate, by a process of transparent reasoning, why I should accept his propositions as being based in his specialist knowledge rather than speculation, common sense or an inadmissible expressions of his personal view.

208 On the other hand, I accept Mr Takacs’ expressed view, that remediation works have not affected the usable area of the property and, further, that its location and aspect would be positively regarded as, having ensured that there was at least the same level of stability as on other properties, or improved stability with a lesser risk of future landslips.

209 These musings by the valuers, for that is all they were, were ultimately of marginal value. The valuers agreed a property like the Gunnersen land coming onto the market would attract considerable interest from wealthy, discerning purchasers interested in redevelopment. The value of the property to a prudent purchaser, plainly, will substantially depend upon geotechnical advice received by that purchaser. If it be considered relevant, contrary to my view, by reference to the geotechnical assessments I have heard I consider that the soil nailing works in 2009 would not be regarded as a stigma for a purchaser properly informed of all relevant geotechnical matters. The valuers did not raise nor consider that the engineering works might constitute a benefit in the nature of a capital improvement.

210 The assumed effect of a type A slip on the slope in 2005 on the value of the Gunnersen land may also be irrelevant, if one considers the valuers’ shared view that the residence added little to the value of the property. The valuers agreed that it was likely that a potential purchaser may acquire the property for redevelopment. Since the construction of the Gunnersen residence, building regulations have changed. It is likely that any redevelopment would require stabilising footings and a foundation of the type constructed by the Henwoods in 1999–2000, which I have described above. On the evidence, it is unclear whether such construction requirements would, for cliff top redevelopment in the area, be generally required or be required in the specific case of this property, having regard to its history.

211 I find that the value of the Gunnersen land was, as at 30 June 2005 or any later time, unaffected by the occurrence of slip 2 or its remediation. In so concluding, I draw on my finding that the overall stability and security of the Gunnersen land was not appreciably affected by the occurrence of slip 2 and its subsequent remediation. The slight risk that the remediation might fail, causing a further type A slip to occur above the upper part of the escarpment that might impact directly on the Gunnersen land, does no more than mirror the inherently fragile nature of the escarpment. I have discussed elsewhere the geotechnical assessment of risk to the Gunnersen land through the relevant periods. Alternatively, if I am wrong in that view, I consider that any detrimental effect on the value of the Gunnersen land from 30 June 2005, even if caused by the conduct of the Henwoods whether negligent or otherwise, was not the result of any breach of a relevant duty.

212 It is trite to state that damage is the gist of negligence. One can be carelessly indifferent to risk if one’s activities do not inflict loss, save in respect of those few torts which are actionable per se. In the vernacular, the ‘wrongdoer’ gets away with it, or is lucky. The law’s approach in tort can be contrasted with criminal law, which punishes attempt, and contract law which compensates nominally at least for breach.

213 To identify duty, it is necessary to identify the nature of the loss and damage asserted by the Gunnersens. The High Court has traditionally treated liability for pure economic loss differently from the development of the general law of negligence: see for example, Caltex Oil (Australia) v The Dredge Willemstad;[14] Bryan v Maloney;[15] Hill v Van Erp;[16] Esanda Finance Corporation Ltd v Peat Marwick Hungerfords.[17] The form and expression of the factors, which determine the existence of a duty, has been controversial and is developing on a case-by-case basis. I have not been taken to any authority for the existence of a duty of care to avoid loss in the particular circumstances here identified.

214 The requirements for the existence of a duty of care are different depending upon whether the loss suffered by the plaintiff ―

215 As I have found that the Gunnersens have not suffered property damage or any loss consequential upon property damage, two issues arise. Have the Gunnersens suffered any loss, and if so, what is the nature of the loss they claim?

216 The categories of loss claimed include a claim of diminution in value, although that claim is not quantified. I have not found any loss constituted by a diminution in value. The Gunnersens seek to recover loss constituted by expenditure they have incurred in improving the stability of the escarpment below and providing some support to their land. Counsel put it as expenditure in mitigation of the loss represented by diminution in value. Such expenditure, if held to be loss in law, could only be pure economic loss. Moreover, as the claim of diminution in value of the land fails, then at its highest it might be contended that the Gunnersens claim is for purely preventive damages; that is, the cost of dealing with the risk of future physical damage to the land and buildings of the Gunnersens or possible liability to third parties, or the risk of future economic loss, which risk has been increased by reason of the conduct of the Henwoods.

217 The meaning of the expression ‘pure economic loss’ has been the subject of extended discussion at ultimate appeal level both in the UK and in the High Court,[18] mostly in the context of claims based upon the discovery of the defective state of a building. Before me, the parties did not characterise the loss being claimed as anything other than economic loss, save as I have noted the Gunnersens also contended there was actual physical damage to their land.

218 In Woolcock Street Investments v CDG,[19] the builder of a commercial building and the engineer it engaged to design the foundations were both sued by a subsequent purchaser. There was structural distress after the purchase. The subsequent purchaser made the concession that its costs of demolishing and reconstructing the building were pure economic loss. The joint majority judgment in the High Court (Gleeson CJ, Gummow, Hayne and Heydon JJ) described the damage as ‘economic loss’.[20] Later in that judgment they referred to Heyman, Bryan v Maloney and Murphy and said there was no reason to re-open the debate as to whether the loss was physical damage or economic loss and confirmed that the loss claimed was pure economic loss.[21] However, Kirby J, in dissent on the key issue, said the appellants’ concession that its claim was for pure economic loss may have been unnecessary and incorrect.[22] Kirby J considered there was property damage to the foundations.[23] McHugh J, who was a member of the majority on the key issue of whether a duty was owed, said Woolcock sued for damages for ‘economic loss’.[24] McHugh J, discussing the issue in detail, endorsed the concession made when he said the view of Deane J in Heyman had prevailed and that the losses claimed were economic loss not physical damage.[25]

219 The weight of authority, apparently endorsed by the majority in Woolcock, is that all the damage to a structure and cost of remediation is pure economic loss. Only Kirby J, in his dissenting judgment in Woolcock, viewed defective foundations as property damage. That view was rejected by all other members of the Court in Woolcock and therefore cannot be regarded as the law in Australia.

220 In this case, if it matters, there is no physical damage to the Gunnersen land. I do not find that the cracks and displaced tiles, or the monitored movement in survey points, constitutes physical damage. The Gunnersens’ claim in negligence is either wholly for losses comprising expense incurred to minimise or restore a perceived diminution in value or wholly expenditure incurred to mitigate a risk of future damage. This is a novel cause of action.

221 There is one material distinction in principle between this unstable escarpment, assuming it may cause damage to property or increase the prospect of damage to property, and the building foundation cases such as Woolcock. It is that the instability in the escarpment presenting risk to the Gunnersens is inherent, naturally occurring irrespective of any actionable wrongful conduct which might exacerbate that risk or contribute to any loss. The inadequate foundations, or the fact that the claimant is now suffering losses from them, will usually be consequent on a prior human failing, for which courts might have been asked to attribute responsibility. Such risk can be managed commercially. Having noted that distinction, in this case the Gunnersens appear to assert that the natural fragility of the escarpment was manageable and it was the actions of the Henwoods, not nature, which caused the increased risk of instability against which precautions have been taken. I consider that the principles discussed in the building foundation cases provide analogous assistance. The loss claimed in the proceeding by the Gunnersens, if it be reasonable loss, is pure economic loss. But is it loss at all?

222 Leaving aside the equitable quia timet jurisdiction, the situations in which the common law accepts a duty to prevent injury or loss are limited; the duty to mitigate is one example. Expenses incurred in reasonable mitigation of loss may be recovered from a tortfeasor. The prior occurrence of some damage seems logically assumed by the concept of the duty to mitigate. An award of damages for the cost of abating a nuisance, another tort where damage is the gist, may be another example where the real likelihood of imminent damage may be sufficient to ground the action, thus including the risk of future damage.[26]

223 Professor Fleming argues that the primary obstacle to preventive damages is the objection of the common law to speculative damages.[27] The mirror image of the proposition that mitigation of an exposure to risk is compensable in tort may be a loss of a chance claim. However, there are distinctions to be drawn between such claims, starting with the observation that the chance lost is commonly a commercial opportunity, something of value.[28] Here, there was no opportunity of value lost to the Gunnersens to undertake expenditure to improve the stability of the escarpment.

224 It is necessary to determine whether preventive expenditure in the absence of existing damage, as claimed here, is harm sufficient to found a cause of action in negligence. The concept of harm is pivotal in several respects. Firstly, it is relevant to whether the loss claimed is compensable damage in negligence at common law and whether any duty is owed which might found such recovery. Secondly, is preventive expenditure part of the concept of ‘harm’ defined by s 43 of the Wrongs Act 1958? Thirdly, when determining causation, has particular harm, expenditure to avoid a prospective loss, been caused by the breach of duty.

225 The High Court said in Wardley Australia Ltd v Western Australia,[29] that with economic loss, as with other forms of damage, there has to be some actual damage. Prospective loss is not enough. Mason CJ, Dawson Gaudron and McHugh JJ stated:

The High Court was primarily addressing the issue of when it can be said that the plaintiff has sustained actual damage in the context of misrepresentations inducing a contract exposing the plaintiff to a contingent loss or liability. There was no issue of preventive expenditure.

226 That risk of loss is not itself a category of loss, as required for the concept of loss and damage in a claim under s 82 of the Trade Practices Act 1974 (Cth) was again considered in Murphy v Overton Investments.[30] In that case the Full High Court referred with apparent approval to the observations of the majority in Wardley. The Court said:

227 A cause of action in negligence for pure economic loss requires proof of actual damage. Analogies with the statutory remedies for deceptive and misleading conduct must be drawn with care. The scope of statutory remedies under the Trade Practices Act is greater than for any particular form of common law claim. Counsel for each party referred me to authority on the question of whether the Gunnersens’ preventive expenses were actual damages in the common law sense in their circumstances. The answer is determined by the Wrongs Act as I shall explain before discussing the submissions put by the parties.

228 In claims such as those in this proceeding where the harm is alleged to result from negligence, whether the cause of action in negligence is made out, is now determined by reference to Part X of the Wrongs Act 1958. In Adeels Palace Pty Ltd v Moubarak,[31] the High Court stated ‘[i]t is sufficient to observe that, in cases where the Civil Liability Act or equivalent statutes are engaged, it is the applicable statutory provision that must be applied’. Although invited to make submissions concerning the statute, save for the provisions of Part IVAA, very little attention was directed to its terms by either party in final submissions. Part X applies where any claim is instituted for damages after 3 December 2003, including any form of monetary compensation resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise.[32] Further, the Part extends to negligence arising before, on or after the commencement day.[33] ‘Harm’ is defined in s 43. It includes damage to property and economic loss. I have already concluded that the damages claimed are not included in the definition of harm by recourse to those concepts.

229 The Part employs concepts of ‘harm’ and ‘risk’. A question that arises is whether the preventive expenditure sought as damages is ‘harm’ within the terms of the statute.

230 Preventive expenditure, by definition, occurs where harm is anticipated but not actually experienced. Spending to avoid harm is not to suffer harm, it is to incur expense. If the effect of the relevant acts or omissions is not to cause harm to be suffered but rather to change the prospect that harm will at some future time be suffered or experienced, is that change in probability harm under the statute? The High Court in Wardley, it will be recalled, rejected the statement of the trial judge French J (as he then was) that ‘risk of loss is in itself a category of loss’. Does the statute broaden the concept sufficiently to assist the Gunnersens?

The definition includes injury, loss or damage and is intended, I consider, to be a wide concept. It is not extended, in terms, to any expense incurred by a plaintiff and one can imagine good reason for that. Thus, prima facie, the definition of harm is not extended to include preventive expenditure in order to reduce risk and therefore avoid suffering harm. Preventive expenditure could have been, but was not, explicitly included in the concept of harm.

232 Is such expenditure inherent in the term? I do not consider that it is. The Oxford English Dictionary defines ‘harm’ as a concept of wide import:

Suffering circumstances which alter the probability of hurt, injury, damage or mischief occurring at a future time, and which may reasonably warrant preventive expenditure, is not suffering harm. What has been suffered is a change in risk: a variation in the chance of suffering harm.

233 The distinction between risk and harm, apparent in etymological terms, is clear on a broad reading of the terms of the statute.[34] ‘Harm’ is not equated with ‘risk’. In the Part, the concepts are distinct. Section 48 speaks of a ‘risk of harm’, of the ‘probability that harm would occur’, ‘precautions to avoid the risk of harm’ and ‘activity that creates the risk of harm’. Section 51 speaks of the ‘particular harm’ caused by negligence, ‘occurrence of harm’, of liability extending to the ‘harm so caused’, of ‘the person who suffered harm’, and the attribution of ‘responsibility for the harm’. Section 53 speaks of ‘risk to a person who suffers harm’. The section states a risk can be an ‘obvious risk even though it has a low probability of occurring’. Section 55 excludes liability for harm suffered as a result of the materialisation of an inherent risk. Section 56 speaks of failing to give a warning about risk to a person who has ‘suffered harm’.

234 I consider that, in the context of Part X of the Act, the concept of harm occurring does not extend to suffering circumstances that vary the probability of hurt, injury, damage or mischief occurring at a future time, and which may reasonably warrant preventive expenditure to avoid death, injury, damage or loss being sustained at some future time. A change in the risk that a particular outcome may occur in the future is just that, a change in the hazard, chance or exposure. It is not harm. I consider ‘harm’ is required by the statute to be actual, not prospective. I do not consider that Part X extends to preventive expenditure or that the concept of economic loss included in the definition of harm by the statute extends to expenditure to avoid prospective harm yet to be suffered. Parliament could have simply so stated, had this outcome have been intended. Thus, any conclusion which might on the cases have reached that preventive expenditure loss may be, at common law, economic loss, would be inconsistent with the statutory regime applicable.

235 Counsel for the Henwoods, contended that as with the Trade Practices Act, risk of loss is not actual damage at common law. Counsel identified as apposite the common law remedy in nuisance where conduct on property, such as excavation work, may affect the stability of a contiguous property.

236 The 1992 decision of the English Court of Appeal in Midland Bank Plc v Bardgrove Property Services Ltd [35] focuses attention on the nature of the plaintiff’s interest being infringed and the nature of the interference to which it is subjected. The plaintiff bank shared a common boundary with the defendant developer. On the development site the defendant excavated at the common boundary with the bank’s land, exposing a vertical earth face. Temporary shoring works were erected, but the bank’s land subsided, causing physical damage. The defendant modified the temporary shoring works and repaired the damage. Later, the temporary shoring was replaced with a permanent retaining wall assumed to be inadequate to the extent that, although it had for the time being arrested any subsidence in the bank’s land, there was a probability of rotational collapse occurring within a period of up to 10 to 20 years after its construction. However, there was no further movement in the bank’s land before the bank carried out sheet piling works to prevent further subsidence and restore their land to its former state of stability. The issue in the proceeding was whether the cost of the sheet piling work, incurred by the bank, was recoverable from the defendant as damages for interference with the bank’s natural right to support, enjoyed by them as occupier of the land.

237 Delivering the leading judgment, Purchas LJ identified the question on appeal as being whether the occurrence of actual physical damage is a necessary ingredient of the tort of interference with a neighbour’s right to the support of his land; or, is the future potential of damage sufficient. The Court characterised the right of action asserted by the plaintiff as the tort of interference with the bank’s right of the support to their land, a right to the undisturbed enjoyment of the property.[36] It is not enough to say that the value of the plaintiff’s property has been diminished by the withdrawal of the support. It is not the diminished value of the property that makes the withdrawal of the support wrongful. Rather, it was only when, and so far as, that enjoyment was interfered with that the plaintiff sustained a wrong. The wrong consists in causing another property owner damage for which he may recover as and when it occurs.

238 Sir Christopher Slade described as settled law, the proposition that the owner of land may excavate and remove that land so long as he does so in a manner which does not interfere with the adjacent owner’s right to enjoy his land in its natural and undamaged state; the adjacent owner’s cause of action does not arise unless and until damage actually results from the excavation. To give damages for depreciation in the market value of land due to apprehended future injury by a subsidence is to give damages for a wrong that has never been committed, since it is the damage caused by subsidence and not the removal of support that gives the right of action.

239 The Court rejected a submission put for the bank that it was offensive to common sense that the bank was not entitled to compensation for the cost of preventive works. The bank acted voluntarily. It would have been open to it to seek a quia timet injunction compelling the works, provided the likelihood of future damage was sufficiently proved and the injunction was in terms clear enough to give adequate indication of the work that had to be done. The Court also observed that if the claim for preventive damage proceeded to trial, the costs of such works would have to be compared with the amount of the future damage which the bank would have been likely to suffer if the works had not been carried out, an assessment which would present formidable difficulties exposing the Court and the parties to the inconvenience of a wholly speculative inquiry.

240 Reference was also made in the judgments in Bardgrove to Redland Bricks Ltd v Morris.[37] Morris owned land used as a strawberry farm. On its northern boundary, Redland Bricks used their land to dig for clay for their brick-making business. Excavations for clay created a large pit and the Morris land began to slip towards it. Following some ineffectual remedial work, it appeared that the only sure way of restoring support to the Morris land was to backfill the brick company’s pit, an extremely expensive operation. Morris brought an action for damages and at first instance was also successful in obtaining injunctions, which were discharged on appeal. Lord Upjohn, in a speech with which the other Law Lords concurred, stated:

241 I may observe that in Wardley,[38] in the reasoning of the plurality, the Court observed of Darley Main Colliery Co that, properly understood, the decision emphasises the need for actual damage to have been suffered before any prospective damages can be included in an award.

242 Perhaps the Gunnersens have a remedy against the Yacht Club on Redland Bricks principles. I cannot say: the issue was not explored before me. However, it is not in nuisance by interference with the right to the undisturbed enjoyment of property, by withdrawal of support to the plaintiff’s land that the Gunnersens maintain their claim for damages.

243 Applying these principles to the present case could lead me to conclude that, had the plaintiffs pursued such a claim, they could not demonstrate a cause of action in nuisance, as they would fail to demonstrate that they have suffered actual damage, whether economic or physical. For the reasons advanced by Sir Christopher Slade in Bardgrove, the Henwoods contended it would not be unjust to decline the Gunnersens’ recovery of preventive expenses as damages in negligence.

244 So, not having or pursuing a nuisance action, are the Gunnersens nonetheless entitled to damages in negligence for preventive expenditure? The cases to which I have just referred do not directly determine this question but suggest that a cause of action for damages for pure economic loss will require proof of some actual damage. Prospective loss is not enough. The matter is not free of doubt.

245 In this Court, in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd,[39] Gillard J expressed the opinion that the law in this country does not classify financial expenses incurred to avoid damage to property or person as property damage. His Honour qualified his statement with the observation that he was not saying such expenses were unrecoverable.[40] However, that is a different question.

246 Counsel for the Gunnersens relied on the Full Federal Court decision in 2000 in Dovuro Pty Ltd v Wilkins,[41] in support of the proposition that preventive expenditure can constitute actual economic loss sufficient to found a cause of action in negligence. However a successful High Court appeal, and the course of that litigation, dictate careful assessment of the obiter dicta at the intermediate appellate level. The observations upon which counsel relied were principally those of Finkelstein J who was in dissent in the result, although not the reasoning, on all issues.

247 The majority, Branson and Gyles JJ, dismissed the appeal against the trial judge’s finding of breach of duty. The proceeding was complicated, firstly by a split trial with no consideration of damages and secondly, by concessions at trial in respect of the existence of a duty of care, which concessions were in issue on appeal. Each of the justices reasoned differently about the issues of duty and foreseeability. On appeal to the High Court,[42] the findings of negligence were overturned, but the High Court did so on the issue of breach, not duty or damage. The question of preventive expenditure as relevant damage, when considering the existence of a duty to avoid inflicting pure economic loss, was not considered. Wardley was not referred to. Nonetheless, the Full Court’s decision, with respect, merits careful consideration.

248 Dovuro carried on business as a producer and distributor of agricultural seed. It obtained supplies of a particular strain of canola seed (Karoo) from New Zealand, produced by Cropmark, some of which was supplied to merchants in Western Australia for resale to users. Wilkins was the lead plaintiff of a class of users who conducted a farming and grazing business. Agriculture Western Australia (‘Ag West’), the West Australian Government department responsible for agricultural issues, became concerned about weed seed being mixed in the Karoo seed. Later, after the sale, the weeds likely to germinate from the seeds found in the Karoo seed were declared as prohibited plants pursuant to relevant Western Australian legislation, effectively prohibiting their introduction or spread, and requiring eradication measures. Ag West recommended that all growers who had acquired Karoo seed take action to eradicate the weeds. This course, followed by Wilkins, necessarily incurred costs and expenses. It was to recover damages to reimburse them for such costs and losses that Wilkins brought the proceeding. There was no claim arising out of the emergence of any of the prohibited weed species. Further, there was no evidence that any such plant germinated anywhere in Australia from seeds supplied by Dovuro. Thus, one question for the Court was whether the cost of taking reasonable steps to protect property from physical damage can be recovered from a negligent defendant, that is, a defendant in breach of a duty of care to avoid inflicting pure economic loss upon the plaintiff. Incurring the eradication expense had been recommended by Ag West, however, the risk of damage to property or of economic loss from the weeds was not established in evidence.

250 Finkelstein J surveyed the discussion of this issue by courts in the UK and Canada and in the High Court. He concluded, dealing with pure economic loss caused by a defective product which posed an actual threat of physical harm:[44]

251 His Honour then posed a further question, one which is closer to the issue in this case. What if the defective product was not in fact a threat, but it was believed on reasonable grounds that the product would cause physical harm? Is the expense incurred to avoid the perceived risk recoverable? Finkelstein J concluded that if it is foreseeable that a plaintiff may take action to prevent actual harm to person or property, it is no less foreseeable that the plaintiff will take the same or similar action if a threat of harm is reasonably suspected. To hold otherwise would bring an unprincipled distinction into this area of the law.

252 With respect, although the conclusion has some apparent intellectual attraction, I do not find his Honour’s reasoning on this further question to be helpful when considering the threat of instability upon the escarpment at Davey’s Bay, given his Honour’s reasoning is unsupported by authority, was advanced by analogy with a threat from an advancing fire and was expressed in the context of the quite different facts of Dovuro. I say that for a number of reasons. First, it must be borne in mind that the High Court held that the trial judge had erred in concluding that Dovuro should have reasonably foreseen the events of the kind which ultimately played out. Second, the threat of damage, from fire in Finkelstein J’s example, is not just a slight risk like the risk of future damage by reason of slip 2. It was assumed to be real and substantial. Branson J considered that the absence of evidence about the risk was not relevant, saying that the issue was whether the preventive expenditure was reasonable.

253 While that observation may be appropriate on the facts of Dovuro, I consider that it is inapplicable here because, applying her Honour’s reasoning, the reasonableness of the preventive expenditure is a matter to be assessed on the evidence of the risk of damage to the Gunnersen land. Risk and reasonableness are interdependent concepts in this context. The expenditure is not required by a directive from a public authority. A further consideration is that particular care is needed in extrapolating from product liability to negligence, particularly in the context of an existing entitlement in nuisance for wrongful interference with enjoyment of land by withdrawal of support.

254 Gyles J was more circumspect. He declined to find a duty of care and commented:[45]

255 The recent decision of the High Court in Tabet v Gett,[46] was a medical negligence case in which the plaintiff recovered at trial, damages for the loss of the chance to have avoided part of the injury resulting from a brain tumour. The chance was lost by a doctor failing to arrange a timely brain scan. The Court declined the appellant’s invitation to reformulate the law of torts to permit recovery for physical injury not shown to be caused or contributed to by a negligent party, where such negligence has deprived the victim of the possibility (but not the probability) of a better outcome. It was recognised that to permit recovery for personal injury by reference to an assessment of increased risk of harm, reformulated into loss of a chance or opportunity, was to potentially revolutionise the law of recovery for personal injury. Gummow A-CJ noted that acceptance in absolute terms is not required of a general proposition that loss of the chance of obtaining a benefit or avoiding a harm can never be regarded as supplying that damage, which is the gist of an action in negligence.[47] His Honour stressed that where the act or omission complained of does not amount to interference with or impairment of an existing right, some care is needed in identifying the interest said to have been harmed by the defendant and said to be sufficient to attract the protection of the law in this field. That process of identification requires a sense of the existing and inherent principles of the law, including the development of the tort of negligence in a coherent fashion.

256 As a claim for lost opportunity, albeit in the context of personal injury, reference was made to Sellars v Adelaide Petroleum NL [48] and the existence in commerce of a coherent notion of loss of a right of a chance of financial benefit. Gummow A-CJ reminds us of the significant statement of principle by Brennan J in that case:[49]

257 For Gummow A-CJ, characterising damage as the loss of a chance of avoiding harm (or gaining a benefit) relieves the plaintiff of the burden of proving that the harm (or lost benefit) occurred, as it is usually easier to prove that the defendant created a risk of harm (or a risk of loss of benefit) than to prove that defendant caused actual harm (or actual loss of benefit). Gummow ACJ was not prepared to countenance weakening the requirement for proving causation, such that the plaintiff should have the benefit and the defendant the detriment of an easier proof of actionable damage or, put another way, a re-balancing of the competing interests of parties in personal injury actions by substituting of the loss of a chance as the actionable damage.[50]

258 Hayne and Bell JJ referred generally to a concept of damage as a detrimental difference:[51]

Their Honours expressed concern about the language of loss of chance and its implications for causation. The language of possibilities (the language that underlies the notion of loss of chance) should not be permitted to obscure the need to consider whether the possible adverse outcome has in fact come home or will probably do so.[52]

259 Kiefel J, with whom Hayne, Crennan and Bell JJ agreed, restated the fundamental proposition that damage is an essential ingredient in an action for negligence; it is the gist of the action. While the common law has adapted to recognise different kinds of harm, nowhere is it suggested that the requirement for damage itself can be dispensed with. Liability based upon breach of duty of care without proven loss or harm will not suffice.[53] A central question was whether in cases where medical negligence has been found, the loss of a chance of a better outcome is an actionable kind of harm. Kiefel J was not persuaded by the reference to the Sellars line of authority for loss of a chance of a commercial opportunity. Such opportunities, unlike the chance of a better medical outcome, usually provide a substantial, not merely a speculative, prospect of acquiring a benefit. Such a chance, having a value, can be regarded as an item of property. Although noting the discussion among academic commentators as to whether increase in the risk of injury, a type of lost chance, might be considered an independent head of damage, Kiefel J did not find it necessary to further consider this question. However, her Honour was clearly not attracted to a theory of damage by which a defendant might be obliged to compensate a plaintiff, even if the lost chance did not result in actual injury. For Kiefel J, expressing the loss in the circumstances of the appeal as the loss of a chance, diverts attention from the proper connection between fault and damage. The factors present in the chance play out when physical injury or death occurs. The characterisation is artificial and breaks the causal link. Her Honour concluded that it would require strong policy considerations to alter the present requirement of proof of causation and none are evident.

260 Whether the cause of action for negligently causing pure economic loss requires, on the authorities, proof of actual loss by the plaintiff, or whether the prospect of such loss will suffice, appears not to have been directly decided. It seems that the question must be resolved from first principles.

261 I am not concerned with personal injury or medical negligence. The claim in this proceeding does not concern the loss of a valuable commercial opportunity. I consider that in an appropriate case reasonable expenditure to prevent a foreseeable risk of future loss from an actual threat of physical harm could constitute an actual loss suffered when that expenditure is made. However, this is not that case. I do not understand such a concept of loss to be absolutely excluded by the observations in Tabet. The court did not express in absolute terms a general proposition that the expense of avoiding a harm can never be regarded as damage which is the gist of an action in negligence. Such preventive expenditure is conceptually different from the prospective loss identified in Wardley. If it is not, it will not constitute recoverable economic loss.

262 Generally I agree, with respect, with the observations of Branson and Finkelstein JJ. Like Dovuro, this is not a case of indeterminate claimants bringing action for indeterminate damage. The court can assess what has been expended and why. There is no obvious reason why a person facing an actual foreseeable threat of physical harm, who can avoid that harm by expending, might not recover the reasonable cost occasioned when a person who suffers actual damage from that same cause is entitled to recover his losses. There are sound policy reasons for encouraging reasonable attempts to avoid or mitigate losses.

263 Having said that, there are equally sound policy reasons for disallowing the recovery of all expenses actually incurred by a plaintiff. Control mechanisms, or special circumstances, governing the recoverability of preventive expenditure would need to be identified. Such mechanisms may be found in the concepts employed throughout the cause of action in negligence, foreseeability, reasonableness, remoteness and causation. In Dovuro, the test for Branson J of whether preventive expenditure is recoverable economic loss, was reasonableness. For Finkelstein J, it was foreseeability and reasonableness.

264 In Wardley,[54] the High Court directed the inquiry to identifying such factors towards the applicable measure of damages. Bearing in mind the basic principle governing the calculation of damages in tort is the sum that places the plaintiff in the position he would have been in but for the commission of the tort,[55] the type of expenditure to ameliorate risk of future damage, which might constitute economic loss if allowed at all, must correlate with the reasonable expenses of returning the escarpment to its metastable state. It is not the cost of protecting the plaintiff from naturally occurring physical forces. It might be the cost of maintaining the escarpment in its metastable state.

265 The expenditure so identified in this case would be the cost of restoring buttressing support to that part of the escarpment above slip 2. That expense was not incurred by the Gunnersens and is not a loss suffered or claimed by them. If the Gunnersens had no reasonable prospect of obtaining quia timet relief from the Yacht Club under the principles in Redland Bricks Ltd v Morris, yet chose to expend their own money to protect their rights to an ‘easement of support’, would that expenditure be reasonable? I need say no more about that matter. It was not an issue in the proceeding.

266 It might be thought that in 2008 the remediation failed. The buttressing support to the escarpment above slip 2 was again compromised. The reasonable expenses of again returning the escarpment to its metastable state was the subject of some evidence from Mr Piper, suggesting that the Yacht Club needed to expend no more than $75,000 [56] to do so. A loss so assessed also might, subject to causation and assuming preventive expenditure to be recoverable, be thought referable to the applicable measure of damages in negligence. However, the cost of that type of work, as done in 2005 or suggested in 2009, was not undertaken by the Gunnersens. Such expense is not the basis of the loss claimed by them.

267 I am unable to find in Dovuro support for the submission that the Gunnersens suffered economic loss by incurring the expense of the engineered soil nailing remediation of the escarpment to prevent, or at least ameliorate, a risk of future damage through instability. I consider that the Gunnersens benefited from that expenditure because the escarpment was rendered more stable. The engineered remediation of the escarpment in 2009 was not a response by the Gunnersens to a tort but a response to the geological circumstances. A limited response, such as maintaining the slip 2 area in its metastable state as it was prior to 2005, was not recommended by geotechnical advisers to the Gunnersens. An appropriate increase in the protection of the escarpment from instability generally would not thereby have been achieved and that was the benefit which was desired.

268 The damages claimed by the Gunnersens are not ‘harm’ as defined by the Wrongs Act. At common law, expenditure constituting remediation works on the property of a third party in order to abate a general risk of future damage to the plaintiffs’ land (the actual preventive expenditure claimed by the Gunnersens) would not be, if the Wrongs Act did not apply, loss or damage recoverable in negligence in Victoria. If that analysis is not accepted, whether such expenditure is permitted to be recovered depends primarily upon foreseeability (or remoteness) and reasonableness of the sort or type of expenditure actually undertaken, and upon the relationship between the plaintiff’s expenditure and the loss that the plaintiff would sustain if the risk eventuated. As I will explain below, I do not find that the 2009 works were a reasonably foreseeable expenditure, or a reasonable response, to the wrongful conduct alleged in 2005 against the Henwoods.

269 Although my conclusion in respect of loss is sufficient to decide the proceeding, I will consider whether the Henwoods owed a duty of care to avoid inflicting pure economic loss upon the Gunnersens. I will then consider whether breach of any such duty could be made out.

270 Notwithstanding the headings used in Part X of the Wrongs Act, it is clear that it is not a code and stands in the context of the common law tort of negligence operating within that context. For example, the sections under Division 2 – Duty of Care are evidently directed to questions of breach.[57] I will return to a discussion of that Division when dealing with breach. Division 3 – Causation is discussed below. Division 4 – Awareness of Risk is directed to aspects of foreseeability and to defences to negligence.

271 A plaintiff must identify ‘a risk of harm’ against which he (or she) alleges a defendant would be negligent for failing to take precautions. It is essential to carefully identify the ‘particular’ risk of harm for the inquiry. It is sufficient if the risk of harm is described as a class of injury, as distinct from the particular injury actually suffered by the plaintiff.

272 Notwithstanding the pleadings, because the Gunnersens’ claim must be for pure economic loss, in order for the Henwoods to owe the Gunnersens a duty of care:

• it must have been reasonably foreseeable that a want of care by the Henwoods could cause economic loss to the Gunnersens arising from the Henwoods’ conduct in and about the escarpment adjacent to and below the land of the Gunnersens; and

273 The more difficult question is to identify the other factors that must also be present for the Henwoods to owe the Gunnersens a duty of care to avoid economic loss, and the extent and content of that duty, there having been no relevant pleading. The applicable principles are being developed on a case-by-case basis.

274 The law relating to when a duty of care is owed by a person making a statement to avoid economic loss to a person who receives and acts upon the statement, is a relatively well-developed branch of the law relating to the recovery of economic losses in tort.[58] However, the present circumstances are significantly different from representation cases and, although novel in context, are closest by analogy to defective foundation or contamination cases.

275 From the mid 1980’s to the late 1990’s, a concept of proximity found favour with the majority of the High Court. Deane J’s formulation of the principle, as first expressed in Jaensch v Coffey,[59] required regard to be had to physical proximity (in the sense of time and space) between the person or property of the plaintiff and the defendant, circumstantial proximity (such as an overriding relationship like employer and employee), and causal proximity (in the sense of the closeness or directness of the relationship between the particular act or cause of action and the injury).

276 In Perre v Apand Pty Ltd,[60] the High Court moved away from ‘proximity’, enunciating a number of ‘salient features’ that provide a guide to answering the question of whether the plaintiff and defendant are in proximity or in a special relationship, such that it is reasonable to require the defendant to avoid causing the plaintiff pure economic loss. Members of the Court described the limits on the imposition of a duty of care to avoid pure economic loss slightly differently, using terminology such as ‘control mechanisms’, ‘factors of special significance’, and ‘special relationship’ or ‘special circumstances’.

277 Despite the different terminology used in each of the judgments in Perre v Apand, for the purposes of identifying a new or different principle applying in respect of negligence (other than misstatement) causing pure economic loss, there may be little practical difference between the members of the High Court in either methodology or end result. For my purposes, common themes emerge across all the tests suggested by each member of the Court, namely:

(b) The relationship and connection between the plaintiff and the defendant, with attention to the particular connections between the parties, in determining the existence of a relationship of ‘proximity’ or ‘neighbourhood’;^[62]

(d) The defendant’s knowledge of an ascertainable class of vulnerable persons;^[64]

(e) The control exercised by the defendant over the plaintiff’s right, interest or expectation;^[65]

(f) The vulnerability of the plaintiff to the defendant’s conduct and the plaintiff’s dependence upon the defendant;^[66] and

(g) The extent to which it was reasonably open to the plaintiff to take steps to protect themselves.^[67]

278 In addition, two broad policy factors are accepted by all members of the Court as being relevant in respect of economic loss cases:

(a) The need to avoid imposition of liability ‘in an indeterminate amount for an indeterminate time to an indeterminate class’;^[68] and

(b) The need to avoid liability for what is ordinarily legitimate in the pursuit of personal advantage — avoiding unreasonable burdens on the autonomy of individuals.^[69]

279 These broad policy factors do not assist me. I have noted the first of these factors has no role to play. As to the second factor, the question of the Henwoods pursuing personal advantage does not arise.

280 In cases where there is no contractual relationship between any relevant parties, the initial question is usually whether the parties have come into circumstantial proximity with one another, such that the defendant ought reasonably to have had the plaintiff in contemplation when engaging in the relevant activity. This category encompasses a diverse range of factual circumstances, such as the running down and driving cases,[70] many of the nervous shock cases,[71] occupiers’ liability cases,[72] manufacture or supply of goods,[73] and cases concerning the exercise of statutory powers and duties.[74]

281 Other cases involve a direct contractual relationship between plaintiff and defendant. This category includes professional negligence cases, product liability cases (where the plaintiff is the direct purchaser of the goods) and some personal injury cases (for example, in employment situations). In such cases, it is invariably the contract itself that has created or formed the background to the requisite relationship or proximity between the parties.

282 In cases where the plaintiff and defendant are not in a contractual relationship, but other relevant parties or persons are, the existence of a contractual framework may be a relevant, but not decisive, factor when considering whether the relationship between the plaintiff and the defendant involves a duty of care. In such cases, it has been held that the existence of a duty of care may be precluded where the plaintiff has a reasonable and realistic opportunity to obtain contractual warranties to protect itself from the risk to which it was exposed by the defendant’s conduct.[75] Mason CJ, Deane and Gaudron JJ in Bryan v Maloney,[76] stated the proposition I have just expressed in the following terms:[77]

283 Counsel for the Henwoods submitted that circumstantial proximity between the parties was governed by contract, relying on the agreements entered into to resolve disputes which had arisen when the Henwoods constructed their new residence. I shall return to this contention below.

284 In Woolcock,[78] the plaintiff had purchased a commercial property from the original owner who had overseen the construction. The defendant consulting engineers had designed the foundations for the building for the original owner. Some time after the property was sold to the plaintiff, it became apparent that the foundations were defective. The subsequent purchaser (Woolcock) alleged that the consulting engineers owed it a duty to take reasonable care in designing the foundations. The contract for sale of the land did not include any warranty that the building was free from defect and there was no assignment by the vendor of any rights the vendor may have had against others in respect of such defects.

285 Gleeson CJ, Gummow, Hayne and Heydon JJ noted that since the decision in Perre, the vulnerability of the plaintiff has emerged as an important requirement in cases where it is held that a duty of care to avoid economic loss is owed. Their Honours explained that, in context, vulnerability is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Vulnerability refers to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of the loss on the defendant.

286 Their Honours went on to note that in Perre, the plaintiffs were unable to protect themselves against the economic consequences to them of the defendant’s negligence in sowing a crop that caused the quarantining of the plaintiff’s land.[79] Similarly, in Hill v Van Erp,[80] the intended beneficiary of the will was entirely dependant upon the solicitor performing the client’s retainer properly. In contrast, their Honours noted in Esanda that the financier could have made inquiries about the financial position of the company to which it intended to lend money, rather than depending upon on the auditor’s certification of the accounts of the company.[81]

287 Having noted the conceptual importance of vulnerability, their Honours then assessed vulnerability in factual context, concluding that the facts did not suggest that Woolcock was, in any relevant sense, vulnerable to the economic consequences of any negligence in the engineer’s design of the building foundations.[82] The facts did not show that Woolcock was unable to protect itself against the economic loss it had suffered. It was clear that there was no warranty of freedom from defects in the contract by which Woolcock had bought the land and Woolcock was not assigned any rights which the vendor may have had against third parties in respect of a claim for defects in the building.

288 McHugh J agreed with the reasoning of the majority. His Honour noted that where there is a contract between the first owner and those involved in the design or construction of the building, notions of assumption of responsibility and reliance may be sufficient to create a duty in tort as well as obligations in contract.[83] His Honour concentrated on the criterion of vulnerability to risk.[84] He noted that vulnerability to risk does not mean that the plaintiff was exposed to risk, but that by reason of ignorance or social, political or economic constraints, the plaintiff was unable to protect him or herself from the risk of injury.[85] His Honour noted that subject to the express terms of the contract, the first owner had extensive contractual remedies open in respect of negligence in construction.[86]

289 McHugh J noted that a subsequent purchaser of a commercial building has means of securing protection against economic loss arising from the condition of the building.[87] The purchaser can obtain warranties from the vendor or can have the building examined by relevant experts. His Honour did note that although subsequent owners may take steps to protect themselves contractually, contractual remedies may not always be sufficient protection against pure economic loss. In those cases the owner will only be compensated for economic loss if the law of torts provides a cause of action.[88] In his Honour’s view, the most powerful factor tending against the imposition of a duty of care was that the first owner of a commercial building is ordinarily in a position to protect itself from most losses from construction and design defects.[89] Further, there are means of protection open to first and subsequent purchasers of commercial buildings against latent defects. An owner can contract with those involved in the construction, and subsequent purchasers can take an assignment of the vendor’s rights against designers and builders. A subsequent purchaser can also minimise the risk of loss from physical defects by obtaining expert investigations of the building.[90]

290 In Moorabool Shire Council v Taitapanui,[91] economic loss was claimed against a building surveyor by the subsequent purchaser of a house where the surveyor had erroneously granted a building permit to the original owner builder. Three years after granting of the permit (by which time the house had twice been sold), damage to the property became evident. An essential feature of the reasoning of the Court of Appeal in this case is the nature of the statutory obligations imposed upon a surveyor in granting building permits.

291 Ormiston and Ashley JJA found the respondents to be clearly vulnerable. Ormiston and Ashley JJA said that ‘[w]hat ultimately determines whether a duty of care arises is the character of the relationship between the plaintiff and the defendant’.[92] Their Honours noted the statutory framework as a salient circumstance. In addition, they emphasised three policy considerations:

292 Maxwell P identified the fundamental point, when analysing duty of care, is the character of the relationship between plaintiff and defendant. The President regarded both the statutory framework and the concept of vulnerability as central considerations. Maxwell P suggested known or likely reliance may best be understood as constituting or signifying vulnerability. His Honour noted that it might be for this reason that a comparable duty of care may not be held to arise in relation to owners of a commercial building because, as Woolcock had demonstrated, a commercial party involved with the buying and selling of such property may be assumed to be self-reliant.

293 In the Federal Court, the Full Court decision in Caltex Australia Petroleum Pty Ltd v Charben Haulage Pty Ltd,[93] a contamination case, demonstrates a like approach. Charben purchased two adjoining parcels of land (‘the site’) from Caltex. Caltex had owned Lot U and leased Lot T, operating a service station and workshop on the two lots. After purchase, Charben discovered that the site was affected by hydrocarbon pollution, following Lot U being used as a service station over many years. As a result, Charben brought several claims against Caltex and another party, EES (environmental engineers who had provided certain specialist reports in relation to the remediation of the site). Charben’s claims, based on misleading conduct and negligent misstatement, included a claim against Caltex and EES for negligence arising from failure to take sufficient care in carrying out the remediation works on the site. Wilcox J rejected the claims against Caltex.

294 On appeal, the Full Court considered whether EES owed a duty of care to Charben to take care in carrying out the work of reducing the levels of petroleum hydrocarbons pollution of Lot U to a level that would permit use of Lot U in accordance with the purposes and uses permitted by the then zoning of the Lot. Charben alleged that EES had carried out that work negligently, including by failing to validate the Lot in accordance with relevant Guidelines. In this context, the Court noted that:[94]

295 The Court, noting the contractual arrangement between Caltex and EES, concluded that EES knew it had been commissioned in connection with the proposed sale of Lot U, and was aware that Caltex was considering selling Lot U and wanted Lot U remediated as suitable for residential land use.[95] The Court then noted that Charben was in a position where it had no contractual or other right after it entered into the Caltex Contract to ascertain whether the hydrocarbon pollution of Lot U had been reduced to the relevant level. It was dependent on the terms of the contract.[96] But, their Honours went on to note, Charben was under no compulsion to enter into the contract into which it entered. It could, for example, have stipulated for its own consultant to supervise and oversee the works and to provide a report indicating that the pollution had been reduced to the relevant level.

296 Thus, the Court concluded that while the effect of the contract was to put Charben in a position of economic dependency in relation to the work EES was instructed to perform for Caltex, it was Charben’s choice to be in that position. It could have put itself in a direct relationship with EES, such that EES was under an express contractual obligation to itself to carry out the works in a non-negligent fashion.[97] Accordingly,

297 Alternatively, noted the Court, EES may have had a common law liability to Charben in tort for economic loss if it knew that Charben was relying or depending upon EES to carry out the Works in a competent and non-negligent fashion, or if EES assumed a responsibility to Charben to do so. There was certainly no assumption by EES of any responsibility to Charben. While EES knew that there may be a sale of Lot U, it had had no knowledge of Charben or its intentions for the development of Lot U.[99] While the Court accepted that EES must be taken to have known that a prospective purchaser would have an interest in ensuring that any remediation works to be carried out on Lot U would be carried out competently and without negligence, it cannot be said that ESS knew that any purchaser would rely on EES for the purpose of completing the purchase of Lot U.[100]

298 Caltex Refineries (Qld) Pty Ltd v Stavar [101] did not involve a claim in negligence between contiguous landowners or vendor/purchaser, arise out of land management issues, or concern economic loss. It is, however, a recent appellate decision concerning the imposition of a duty of care in a novel case: whether a wife who now suffers from malignant mesothelioma, contracted as a result of coming into contact with asbestos dust and fibres on her husband’s work clothes in the family home and car, was owed a duty of care. The damage to the plaintiff was personal injury, not economic loss. After a comprehensive survey of the authorities, Allsop P with Simpson J agreeing, identified the salient features of relationships giving rise to a duty of care in a novel situation in the following way:[102]

299 The existence of a duty of care remains an aspect of a cause of action in negligence to be determined by common law principle. Section 53 of the Wrongs Act defines an obvious risk, but does so for the purposes of s 54 which applies where a defence of voluntary assumption of risk is raised in a proceeding on a claim for damages for negligence. Section 54(2)(b) creates an exception for a proceeding on a claim for damages in respect of risks associated with work done by one person for another. On such a proceeding, without limiting s 47, the common law continues to apply. Voluntary assumption of risk was not an issue at trial. No submission was made to me concerning s 54.

300 Another section which I need not address for the same reason is s 55, which provides that a person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk — a risk of something occurring that cannot be avoided by exercising reasonable care. For the sake of completeness, although at this part of the judgment it is out of context, I will record that as the defence of contributory negligence was abandoned, there is no need to look at Division 7 of Part X.

301 Bearing all of these considerations in mind, I will now discuss the evidence in respect of those considerations that I consider determine whether a duty can be found to be owed by the Henwoods to the Gunnersens and if so, its scope and content.

302 I am conscious, having already examined at some length the nature of the harm alleged in this case, of statements of justices of the High Court about starting the inquiry at damage. In Vairy v Wyong Shire Council,[103] Gummow J states that the determination of the existence and content of a duty is not assisted by looking first to the damage sustained by the plaintiff and the alleged want of care in that regard by the defendant. The particular danger in so doing may be that a focus on damage is necessarily upon the fate that befell the particular plaintiff and will commonly generate consideration of the issue of breach. If the analysis is retrospective rather than prospective, an examination of the causes of the event may confuse the assessment of what the reasonable person ought to have done to discharge the anterior duty of care. An assessment of what ought to have been, but was not, done critical to the breach issue, might be transmuted into an answer to the question of what, if anything, had to be done — a duty of care issue. The context of this observation is, I consider, one of concern being expressed by the High Court about mixing questions of duty with questions of breach. Factors relevant in determining the existence of duty may also be relevant to questions of breach and causation of loss. The three concepts are inter-related[104] but must be separately considered.

303 In Cole v South Tweed Heads Rugby League Football Club Ltd,[105] the issue was whether a licensed club owed a general duty to take reasonable care to protect patrons against risks of physical injury resulting from the consumption of alcohol. The plaintiff was seriously injured when struck by a car after leaving the club premises, having been asked to leave on account of drunken and indecent behaviour. Gleeson CJ considered the direction to be obtained from having regard to the nature of the damage and the circumstances in which it was suffered may be of particular value where the connection between the acts complained of and the damage suffered is indirect. Gummow and Hayne JJ concluded that even if there was a duty, there would not, in the circumstances, be breach of it nor could any breach be causative of the plaintiff’s damage. Their Honours then stated:[106]

In Graham Barclay Oysters Pty Ltd v Ryan,[107] McHugh J observed that ordinarily, the common law does not impose a duty of care on a person to protect another from the risk of harm unless that person has created the risk.

304 Notwithstanding that I have already examined the nature of the harm, I do not consider that any duty identified can be articulated in a form divorced from facts said to enliven it or can be a duty to avoid damage in some abstract or uninformed sense. In the present case, it is necessary to have regard to the harm suffered in identifying the existence, and considering the nature and scope, of any relevant duty.

305 As the High Court made clear in Dovuro,[108] for a relevant duty of care to arise it is necessary for the particular sort of loss claimed by the plaintiff to be reasonably foreseeable by the defendant. This is not an easy question because, on my findings, it is hypothetical. Hence, the difficulties adverted to by Gummow and Hayne JJ in Cole. The conceptual difficulties arising on the plaintiff’s claim mostly arise from the nature of the ‘loss’ alleged. I am assuming, as this analysis proceeds, that the loss alleged is harm. For this analysis, I will assume expenditure on, and in relation to, geotechnical investigation and engineering work to improve slope stability as a particular recoverable loss. Whether harm may be foreseeable will vary according to the type of harm being anticipated. The nature of the acts or omissions of the defendant must create a risk that the type of harm anticipated will be suffered.

306 The general principle is that to establish liability for a particular injury, the class of injury must be foreseeable, not the particular injury sustained by the plaintiff. Equally, if the kind of injury suffered by the plaintiff was foreseeable, it matters not that the extent of the loss suffered by the plaintiff was not reasonably foreseeable.[109] Foreseeability must relate to the circumstances under consideration in this proceeding and to a risk created by the defendant.

307 In a simple case of actual physical injury, the question is: ought the defendant, when acting or failing to act, foresee that the plaintiff, by reason of the defendant’s negligence, risks suffering loss of the type of damage suffered? Where the harm is pure economic loss, the precise extent of the risk created by the activity (or by failure to act) of the defendant is, again, not ordinarily a relevant consideration in determining whether the type of loss is a foreseeable consequence of the defendant’s conduct. Additional considerations become relevant before the conclusion can be reached that the defendant engaging in the harmful conduct owes a duty of care to the plaintiff. Because I am not dealing with actual damage, rather with preventive expenditure, not only must the risk to be mitigated by expenditure necessarily be a component of the type of harm which is foreseeable, but additionally expenditure to ameliorate risk of future loss, in the absence of actual damage, needs to be a foreseeable response by those exposed to that change in risk. For the purpose of considering foreseeability of loss, the type of harm may essentially be of a different character from one case to the next because of this latter consideration.

308 What then of the distinction between type and extent of injury? Where the harm is physical damage or economic loss, the precise extent of the damage created by the defendant’s activity (or failure to act) is not ordinarily a relevant consideration. The sort or type of loss, when examining foreseeability, is a general concept. To take an example: the foreseeable sort or type of injury to others from the negligent use of a bicycle on a public road may be materially different from the negligent use of a fully laden semi-trailer. In each case, a negligent defendant ought reasonably foresee physical injury to persons or property. That a negligently managed semi-trailer may foreseeably demolish a building used commercially, for example, a service station, causing economic loss where the same consequence from a negligently managed bicycle is not foreseeable does not alter the fact that road users owe a duty of care because economic loss consequent on property damage is a foreseeable consequence of negligent conduct. The extent of loss of that type is immaterial when considering foreseeability. Thus the negligent cyclist who crashes into a petrol bowser while smoking, causing a fire which destroys the service station causes foreseeable loss as much as the negligently driven semi-trailer that demolishes the same service station.

309 Where the loss is expenditure to minimise a risk of future harm, is the extent of the expenditure irrelevant for foreseeability considerations? If it is foreseeable that a party at risk is likely to spend to mitigate that risk before actual harm is suffered, can it be said that the type of loss is mitigatory expenditure to minimise a risk of future harm and the extent of the mitigatory expenditure is irrelevant to foreseeability considerations? Although the extent of loss is ordinarily immaterial to foreseeability considerations, the answer to this question may depend on the particular circumstances. In this context, the extent of mitigatory expenditure might be thought to be an overreaction to the risk. On the facts of Dovuro, this issue could have arisen but the existence of a duty had been conceded. The principle that the extent of the damage or the precise way in which it was suffered is not a relevant foreseeability consideration is not based on any case where mitigatory or preventive expenditure was claimed.

310 There must, at least, be a reasonable connection between risk and reaction. It is not the relationship between the negligent conduct and the extent of the plaintiff’s mitigatory expenditure that forms the connection. As the High Court said in Chapman v Hearse:[110]

Rather, I consider for the expense of a mitigatory response to negligent conduct to be reasonably foreseeable, there must be a reasonable connection between the class of mitigatory response and the type of negligent conduct. Thus, returning to my example, if the negligent cyclist has crashed into a petrol bowser and the owner, foreseeing a risk that such an accident could cause a fire which might destroy his service station, constructs an engineered solution sufficient to restrain a fully laden semi-trailer from demolishing his service station, when a guard around the bowser would suffice, there is no sufficient connection between the conduct — negligent management of a bicycle — and the response of the service station owner. That response is not reasonably foreseeable by a cyclist. The analogy is not an exact one. In these circumstances, could the defendant have reasonably foreseen, generally, an expenditure in mitigation of a risk of future loss might follow on negligent conduct in and about the escarpment in connection with vegetation and water management issues.?

311 I find that the Henwoods ought reasonably to, and in fact did foresee, that their want of care in managing and maintaining that part of their land comprising the escarpment, in connection with vegetation and water management issues, could lead to weakening of the escarpment, rendering it more prone to landslips, and that such physical damage could cause economic loss to adjoining landowners. The Henwoods’ foresight reasonably extended to any conduct by them involving management, and maintenance, of any part of the escarpment contiguous with their land. It extended to their conduct on the Yacht Club land. Thus, starting with the obvious case, the Henwoods ought reasonably have foreseen damage to the Yacht Club land from their negligent management of the escarpment on and immediately below their land.

312 Foreseeability of physical damage is not limited to physical damage to the land comprising, or situated below, the escarpment. It is reasonably foreseeable by landowners of cliff top properties in this area that a lack of care in managing the fragile escarpment below their properties carries a risk of weakening the escarpment and rendering it more prone to landslips, which is likely to cause damage to the land immediately above the escarpment, such as an adjacent cliff top property. The unfashionable concept of proximity may be called in aid of the observation that the Gunnersens and the Henwoods are neighbours in the legal sense. Thus, the Henwoods ought reasonably have foreseen damage to the Gunnersens land from their negligent management of the escarpment on and immediately below their own land.

313 Next, I consider that it is reasonably foreseeable that such physical damage could cause economic loss to adjoining landowners.

314 However, none of these scenarios correspond to this case because the Yacht Club is not the defendant, there was no physical damage to the Gunnersen land and there was no economic loss in sense of harm as defined in the Wrongs Act, for example, diminution of value.

315 The Henwoods not could have reasonably foreseen, generally, that expenditure on an engineered slope stability solution of the type now claimed against them might follow on from their negligent conduct in and about the escarpment in connection with vegetation and water management issues.

316 One reason for this lies in the fact that it cannot be reasonably foreseen that the Gunnersens would seek to ameliorate a risk that was not created by the negligent conduct of the Henwoods. It is a risk created by naturally occurring conditions. The engineered slope stability solution was not a response to slip 2. I have expressed above my findings concerning its design intention. The causes of the kind of slip that might damage the Gunnersens’ land, now protected by the engineered solution, are not reasonably foreseeable consequences of the negligent activity engaged in by the Henwoods.

317 Want of foreseeability of the expenditure is also demonstrable on the geotechnical expert evidence. It is common ground that the issues of probability of occurrence, cause, expense of remediation and preventive measures are materially different between type A slips and other types of slips. So too, the consequences of a want of care in various different activities that may be undertaken on the escarpment. I have discussed these issues above. These considerations are relevant to the issue of foreseeability. The geotechnical evidence provides an objective assessment of the relationship between activity and risk. Where a type A slip is reasonably foreseeable from conduct of a general type — negligent conduct in and about the escarpment in connection with vegetation and water management issues — a type C slip is not foreseeable as a consequence of the same type of conduct. A type C slip may occur as a consequence of other activities. If conduct on the escarpment is of a different type, for example cutting an access road across the escarpment onto the beach or engaging in major construction works causing significant vibration to and impact upon the Balcombe clay strata or conduct which materially raises the groundwater level, the type of slip that may occur and is a foreseeable consequence of those activities is different. Thus a defendant engaging in that type of conduct might reasonably foresee that a want of care may cause a type C slip. In such a case, not this case, the defendant might reasonably foresee that his neighbour might expend money on an engineered slope stability solution that is a response to the risk of a type C slip.

318 There is a risk in this analysis of slipping to a level of abstraction which is too high, contrary to the High Court’s warning, when considering the foreseeability of harm for conduct other than management and maintenance of the escarpment. Foreseeable harm might not be confined to shallow localised instability in respect of any activity but the extent of harm which might be foreseen would clearly be related to the extent and nature of the conduct being undertaken. If there is insufficient connection between the kind of response and the risk perceived, or between the type of risk perceived and the type of negligent conduct engaged in, the type of mitigatory expenditure adopted by the Gunnersens cannot be reasonably foreseeable by the Henwoods as a possible consequence of their conduct, if performed negligently.

319 So far, I have confined my analysis to what the Henwoods ought reasonably have foreseen. Turning to what they knew, I find that the Henwoods knew of and understood the risk of physical damage to the escarpment from a want of care by them in managing and maintaining the escarpment, at least in connection with vegetation and water management issues. They understood the need to avoid weakening the escarpment and rendering it more prone to landslips. Mr Henwood called it commonsense. The Henwoods plainly foresaw a risk of damage to the Yacht Club land.

320 The Henwoods knew the lay of the escarpment, its features, and of the location and orientation of their neighbour’s residence to it. These were matters for observation. When giving evidence, Mr Henwood was not specifically asked about these matters but they can be inferred. I also draw an inference that a prudent person in Mr Henwood’s position and with his experience who had, on detailed geotechnical advice, installed bored pile footings when constructing his own residence) would foresee the risk of damage to the Gunnersen land. He could see a cliff top property with an older style of residence constructed of a lightweight timber structure on stumps, and at the closest point, located only a couple of metres behind the edge of the escarpment, from instability on the escarpment.

321 Mr Holt’s geotechnical advice to Mr Henwood in 1999, when the design of the foundations for the Henwoods’ new house was the issue, is a clear source of Mr Henwood’s ‘geotechnical’ knowledge. Mr Holt described in detail the geological conditions prevailing on the escarpment generally above the Yacht Club, including that part of it immediately below the Gunnersen property. Mr Holt discussed the significance of water as a triggering mechanism for the majority of instabilities that occur. His report informed Mr Henwood that the general area is known to be potentially subject to two types of slope instability. Mr Holt described a deep-seated movement as being a risk to the general area — one about which little, if anything, could be done to offset its effects. He also identified shallow movements associated with localised instability in respect of which much can be done to minimise the effects. Mr Holt’s report stressed the importance of controlling water through drainage systems, cautioning strongly that under no circumstances should any water be allowed to discharge onto the escarpment. He also recommended that interference with vegetation on the escarpment be minimised and recommended additional planting of vegetation.

322 It is important to observe the distinction being drawn by Mr Holt between type A slips and other deep-seated more destructive slips. I find that on receiving the specialist geotechnical advice given by Mr Holt, a reasonable person with the knowledge and experience of Mr Henwood would foresee a risk of shallow localised instability (type A slips) from a failure to exercise care in managing and maintaining the escarpment in the manner recommended by Mr Holt. It is reasonably foreseeable that conduct, or omissions, on or about the escarpment resulting in a landslip may cause damage to the escarpment itself/and land and property below. Further, associated or related economic loss in connection with such harm being suffered by the Gunnersens is also reasonably foreseeable. As natural occurrences, landslips are unpredictable both in terms of precisely where and when they may occur.

323 In my view, a reasonable person would also anticipate a risk of harm, and of damage upon the escarpment and the land above and below it, through natural occurring environmental forces, even where care is being taken. Informed as the Henwoods were by Mr Holt, a reasonable person would, I consider, anticipate that any instability in or on the escarpment could likely be attributed to natural causes as much as, or in conjunction with, actionable human fault. The Henwoods had constructed their home partially on bored pile foundations, a requirement directed to minimising risks to the structure from naturally occurring instability.

324 Thus, the critical distinction is this: I find the Henwoods could reasonably foresee a risk of damage to the Gunnersen property due to the Henwoods’ negligent conduct in managing and maintaining the escarpment, particularly in relation to water and vegetation management issues. However, in my view, that foresight cannot reasonably extend to foreseeing that the Gunnersens might, as a result of such negligent conduct, undertake major engineering work on Yacht Club land or their own land in order to prevent future harm. That decision can be reached without considering negligent conduct in the repair of such damage. However, when considering whether further engineering work was foreseeable as a consequence of the repair of slip 2, further expenditure to minimise risk from naturally occurring conditions, is not reasonably foreseeable as a consequence of either negligent conduct or a failure to properly remediate the damage.

325 The Gunnersens’ 2009 works clearly extend beyond restoring the stability of the escarpment to the position that it would have been in had there been no negligent discharge of water. Those works were born in a far more complex set of circumstances that a reasonable person in the position of the Henwoods would foresee. This is clear from the recent history. At least four different landowners have had to consider the following: the effects of the natural forces operating upon escarpment stability, the particular causes of slip 1, the particular causes of slip 2, the effectiveness of the remedial work at slip 2 undertaken in 2005, and the risk profile for occupiers or users of different parts of the escarpment. I doubt that this list of considerations is exhaustive. The causes of a future failure on the escarpment are likely to be multiple, with complex interaction.

326 I can put this essential distinction another way. It would be reasonable for the Henwoods to foresee the expenditure of money upon remedial works to restore the stability of the escarpment, that is, the Yacht Club land, to the condition it would have been in but for their wrongful conduct. It is not reasonably foreseeable that the Gunnersens would expend money to avoid a risk of physical damage or economic loss, not arising in any proximate, material way from the Henwoods’ wrongful conduct but rather as a product of the naturally occurring conditions affecting stability upon the escarpment. While the risks for the Yacht Club of failing to restore the slope to its previous metastable state were obvious to the Henwoods, the continuing risks for the Gunnersens, following remediation to restore the slope to its previous metastable state without doing any more, were, to the Henwoods quite obscure or remote. It was extremely unlikely on the expert opinion, which I have accepted, that this risk would later materialise into damage to the Gunnersen land. If that is the proper view of experts, this risk cannot be said to be reasonably foreseeable.

327 Harm occurring to the escarpment, such as would warrant the expenditure on the engineered soil nailing solution that was ultimately constructed in 2009, was not reasonably foreseeable as a consequence of negligently causing shallow, localised instability in 2005 by carelessness in relation water or vegetation management issues on the escarpment.

328 While acknowledging that the circumstances concern the residences of the parties and that the litigants are not commercial parties, they are plainly sophisticated property owners at the top end of the market, experienced in property development and contractual negotiations, and assisted at all material times by their lawyers and expert geotechnical consultants. The Gunnersens must be regarded as ‘self-reliant’ in the relevant sense.

329 The vulnerability of the plaintiff to the defendant’s conduct is a question of fact. As McHugh J stated in Perre:[111]

330 When considering control of the risk, the critical focus is upon the risk of loss to which the claimed preventive expenditure was directed. Control in the relevant sense, is control over the material risk, the source of danger. In Sutradhar (FC) v Natural Environment Research Council,[112] the question for the House of Lords was whether the claimant, who lived in Bangladesh, had a reasonable prospect of success in an action in negligence against the Natural Environment Research Council. The claimant asserted the Council issued a geological report that induced the Bangladesh health authorities to take steps which would have ensured that his drinking water was not contaminated by arsenic.

(a) First, the source of danger to the Gunnersen property is identified by the experts as the risk of deep-seated, global instability, a type C failure. In an indirect way, the possibility of further type A slips on the escarpment contributed to the perception of a risk of future damage to the Gunnersen land. The identified source of real danger, which caused the expenditure claimed as the loss, is the risk of deep-seated global instability. This is evident from the evidence of Messrs Peck and Reid about their recommended response for the Gunnersens in their circumstances, and in the design parameters they adopted and implemented for the engineered remediation solution for which damages are claimed.

(b) Second, the risk of deep-seated global failure, as might threaten the integrity of the Gunnersen land and their residence, lay primarily between the owner of the land behind the escarpment, and the owner of the land comprising and below the escarpment, that is, the Yacht Club. There was no evidence of any contribution to that risk, in causal terms, of the Henwoods’ conduct in managing their land or the escarpment after 2005. As I have stated, I do not find that the discharge of water from the faulty irrigation pipe materially increased the risk of deep-seated global failure.

(c) Third, the risk of deep-seated global failure arose from the natural conditions of fragility and instability inherent in the escarpment. While it is a manageable risk, as many reports state, the Henwoods did not and were not asked to, or assumed by the Gunnersens, to have accepted any responsibility in this regard when arranging for the remediation of slip 2. The warnings and cautions of both AS James and MPA Williams about the limitations of the slip remediation, merely restoring the slope to a metastable state, in terms of overall slope stability bear this out.

(d) Finally, control over the scope of the remediation works for slip 2 was in the hands of the Yacht Club as much as the Henwoods. They each had control of the scope of that work, and they limited the work to restoring the slope to, in general terms, the same metastable state as it was in prior to slip 2. The Yacht Club might have, but did not, seek to allocate the ongoing management of the escarpment to the Henwoods who might have, but did not, accept that obligation. However, I find that the Gunnersens were aware, by reason of their expert advisers being aware, of the limited scope of the remediation work.

332 No party had appropriated control from the Gunnersens of the material risk or source of danger that caused the adoption of the engineered solution — broader global stability of the escarpment. The Gunnersens, exposed to a risk of damage from global slope instability by owning an older style house with light footings located close to the edge of the escarpment, in fact, remained in control of the material risk to their property.

333 I find that the Gunnersens not only had ample means of protecting themselves, but did protect themselves. They had advisers assisting them, both lawyers and geotechnical engineers, and the means of negotiating for (or bargaining away) contractual protections. From the early stages, when permits were granted for the sub-division, and later, for construction of the Henwoods’ home, the Gunnersens took advice, negotiated agreements, took proceeding in VCAT and generally acted to safeguard the integrity of the escarpment in its natural state. The sense in which the Gunnersens might be said to be vulnerable is limited. There was no evidence in 2005 of specific vulnerability to physical damage from the irrigation system to their land, as opposed to the Yacht Club land, particularly from type B or C slips. The type A slip — slip 2 — caused damage to the Yacht Club land only. It did not physically damage the Gunnersen land nor cause the Gunnersens economic loss. A variation in the risk of future damage to the Gunnersen land was not identified by any expert witness as a consequence of the occurrence of slip 2, as distinct from the inherent natural risks of instability. At its highest, what was suggested was that failure to properly remediate slip 2 might contribute to the ongoing general risk of instability, in the form of future type A slips. It is the control of this risk that is relevant to considerations of vulnerability.

334 On his assessment of the remediation, Mr Reid identified a risk of future damage to the escarpment, and more remotely the Gunnersen land, as a consequence of the failure of future management of the escarpment. That risk had always been present; it was not a consequence of the Henwoods’ past conduct. Mr Holt had identified such a risk to the Henwoods in 1999. The risk was identified in the Report and the Study on a wider, regional basis. Mr Piper stated, and I accept, that small type 2 slips were a regular occurrence on the escarpment, going largely unnoticed because of the thick bush cover and relative inaccessibility of the slope.

335 A contribution to risk to the Gunnersen land in 2008 from the reactivated slip 2 was not thought far-fetched or fanciful, but that fact, properly understood, was not influential in the decisions made by the experts about further management of the escarpment. I have rejected Mr Peck’s evidence that the reactivated slip 2 created a risk from dislodged compacted clay balls. While that matter may have been influential in the decisions made by the Gunnersens, they were not vulnerable to damage in 2008 from the reactivated slip 2. I have found that the motivating influences for the experts advising the Gunnersens were to protect the property from general naturally occurring instability. This is significant because the nature of the economic loss, in respect of which vulnerability is being considered, is not the expense of repairing physical damage to land at the slip 2 site, which might have prevented the compacted clay from dislodging.

336 As the preventive expenditure was made in respect of global instability generally, the plaintiffs are demonstrably able, independently of the defendant, to assess the risk of slope instability to their property and design and implement a preventative works schedule. Such circumstances do not suggest vulnerability to risk from negligent conduct by the Henwoods, nor do they evidence a want of capacity to exercise control over risk.

337 In the context of duty to not inflict loss, extending loss conceptually beyond actual loss to preventive expenditure may not allow the ‘control mechanism’ of vulnerability to and control of, risk of harm any effective field of operation in defining the existence of a duty of care. Rather, what may be demonstrated by preventive expenditure is that the plaintiff is actually controlling the risk of slope stability, in order to control vulnerability to naturally occurring forces on the escarpment. There is no contribution from the negligently maintained irrigation system to the risk under management. No duty of care as postulated could arise. Management of the risk from an impending bushfire, the example given by Finkelstein J in Dovuro, is far removed from the risk of slope instability being considered here.

338 The question of whether the Gunnersens were vulnerable to the conduct of the Henwoods can also be examined by asking whether the Gunnersens relied on the Henwoods assuming responsibility to them, and whether any such assumption of reliance was reasonable.[114] In Esanda,[115] it was held that it was not reasonable for Esanda to rely upon the auditors in circumstances where the auditors had not assumed any responsibility to Esanda, and where Esanda could have made its own enquiries and assessment of the credit worthiness of its borrower. In Esanda, all members of the Court agreed that the auditors did not owe a duty of care to the financiers. There could be no reasonable expectation that the plaintiffs would rely on the advice provided by the defendants for a particular purpose in the circumstances in which the advice was given, principally for reasons connected with the absence of assumption of responsibility on the part of the defendants. From another perspective, the auditor did not exercise control of risk in the relevant sense and thus Esanda was not vulnerable to the auditor’s actions. Esanda was in a position where it could have made its own inquiries and made its own assessment as to credit worthiness.

339 The Henwoods assumed no responsibility to the Gunnersens in respect of the instability risk on the escarpment, in contrast to their relations with the Yacht Club. The Henwoods could have been asked to do so by the Gunnersens, but were not. The Henwoods may or may not have agreed to assume responsibility. Had such a negotiation occurred about and after slip 2, as it had in 2000–2001, the factors defining the proximate features of the relationship between the parties might have been different. The Gunnersens’ response to the risk of instability threatening the integrity of their land, once negotiations for a global solution involving all affected parties broke down, was to personally accept responsibility for the stability of the escarpment.

340 I cannot identify in the evidence that as a consequence of slip 2, the Gunnersens held a reasonable expectation that they were vulnerable to the Henwoods’ conduct, as distinct from the Yacht Club’s conduct. Undoubtedly, the Gunnersens considered their property vulnerable to naturally occurring instability, whether or not exacerbated by slope use and management issues. The Gunnersens did not assume, whether reasonably or otherwise, that the Henwoods accepted any responsibility to manage risks of slope instability possibly affecting the Gunnersen land, and the Henwoods did not do so. The history of dealings between the parties, could reasonably have the Henwoods assuming the Gunnersens were aware of escarpment instability issues, taking measures to protect their own property. It is fanciful to suggest the Gunnersens had a reasonable reliance on the Henwoods, not just to repair the damage caused by slip 2 but to also take measures to improve the overall stability of the escarpment.

341 In fact, as I have found, the Gunnersens had engaged lawyers and geotechnical consultants in late 2004 after slip 1. The Gunnersen property was being surveyed for signs of movement. The Henwoods acted promptly and reasonably to repair the slip caused by the leaking irrigation pipe. Even had the Henwoods not drawn an inference from earlier dealings, they were aware from about the time of slip 2 that the Gunnersens were focussed on issues of slope instability in the escarpment and had engaged their own consultants: surveyors, geotechnical experts and legal advisors. As far as the Henwoods were aware, the Yacht Club accepted the repair of slip 2 in 2005. No complaint was voiced by the Gunnersens about the remediation work at slip 2. The Henwoods were not required to make ongoing inspections nor maintain the site of the slip. The Gunnersens’ consultants continued to actively monitor the escarpment and implement measures designed to relieve ground tension from naturally occurring conditions.

342 In summary, I find that at all times, at least from the discovery of slip 1, the Gunnersens through their own efforts, and in particular by engaging specialist consultants, were actively in control of the risk of damage to their property from slope instability. But that risk did not come from the failed irrigation system, rather it came from the natural conditions of instability I have described. That the Gunnersens were in control of their exposure to risk is demonstrated by the fact that they were able to withdraw from negotiations with adjoining landowners for a joint solution when advised that damage may be imminent, and were able to implement their own remedial works program as a matter of urgency with the Yacht Club’s consent .

343 The Henwoods submitted that the relationship between the parties was regulated by contract and the obligations of the Henwoods towards the Gunnersens in and about the escarpment were contractually defined. Thus, the Henwoods were entitled to place the irrigation system on the escarpment to assist in revegetation. I reject this submission. The agreement that is relied on, relating to events surrounding the construction of the Henwood residence in 2000–2001, is not relevant to the events in 2005 or later. In addition, I have found that the only matter of relevant negligent conduct concerns the irrigation pipe. The vegetation allegations have not been established. As to the irrigation system itself, its existence and use was not the problem. The problem was the Henwoods’ failure to maintain it.

344 That the remediation of slip 2 was undertaken by the Henwoods is irrelevant to considerations of contractual proximity to the Gunnersens. I make two observations. First, this was a matter between the Henwoods and the Yacht Club. The Yacht Club was in control of that process. Second, Mr Reid, who reported critically on the adequacy of that work for the Yacht Club, was later retained for the Gunnersens. His concerns about the deficiencies in the slip 2 repair, if they remained, were subsumed into the broader design objective of increasing the safety of the slope from the risk of type B or C slips. Mr Reid appears to have been retained principally as a sub-consultant to Mr Peck and his scope of works did not, on the evidence, extend to advising the Gunnersens on issues arising out of local instability at the remediation of slip 2.

345 Finding a duty of care to avoid economic loss constituted by preventive expenditure to avoid a risk of damage to property or interference with enjoyment of property rights may, I consider, intrude upon the province of established equitable principle. Equity will allow a remedy where imminent harm is sufficiently certain on appropriate conditions. The Court’s discretionary relief is moulded to the particular circumstances established.

346 Since I reserved my decision, the High Court in Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board,[116] considered issues arising under the Mine Subsidence Compensation Act 1961 (NSW). Section 12A(1)(b) provides for compensation to be paid out of the Fund by the Board to the owners of improvements on land for expense incurred in preventing or mitigating damage from subsidence caused by mining. It was common ground that damage would be caused by subsidence unless some preventative or mitigatory works were undertaken. The question of whether an owner was entitled to compensation, only if subsidence caused by mining occurred before expense was incurred in preventing or mitigating damage, was resolved on the proper construction of the statute and is not relevant to the issues before me. Not only is the language of the statute quite different from that of the Wrongs Act, but the context and purpose of the statute is far removed from present circumstances.

347 What is significant for my purposes is the following observation in the judgment of the majority:[117]

348 The High Court accepts the statements of principle, which it has drawn from these cases, as the law of Australia and in terms which do not admit a common law remedy in damages for nuisance prior to actual injury to land. Interference with enjoyment of land, the gist of the tort of nuisance, is not disturbed if damage is prevented rather than suffered. So too with negligence. Damage is the gist of each tort. Tension arises as a plaintiff landowner will, in anticipating actual injury, expect interference with enjoyment of property (in nuisance) or damage (in negligence) and feel vulnerable to an impending loss. Such expenditure is conceptually different from the loss of opportunity claimed in Tabet. A desire to control and mitigate the anticipated damage might be thought to be a reasonable response. For the reasons set out above when discussing Dovuro, there is an intellectually unsatisfying aspect to denying recovery of the mitigatory expenditure when the actual loss, if later suffered, could be compensated.

349 Permitting such recovery seems to me to cause the greater offence to underlying principle. Neither the common law of nuisance, nor of negligence, is conditioned upon the anticipation or expectation of the plaintiff that damage will be suffered in the future. If the concept of the nature of the harm, which may give rise to a duty of care to avoid inflicting pure economic loss, is extended to preventive loss, the perspective of the plaintiff must necessarily be introduced as a relevant matter. If intervention by a court is necessary, that is the province of equity. By the Redland Bricks principle, if it is unconscionable not to intervene before the common law cause of action is complete, an equitable remedy may be available. Finding a common law duty to award a preventive loss in such circumstances is not appropriate. Common law damages are not appropriate. The proper course is to require satisfaction of the requirements, which I need not analyse here, for quia timet intervention by a court of equity employing equitable remedies such as injunction.

350 To do otherwise directly confronts the common law’s well established objection to speculative damages and moves, inappropriately, towards a concept of an attempted tort: one where duty might be said to be breached but damage is yet to be suffered. Having regard to the scope of presently available remedies in negligence, nuisance and in equity, I do not consider it appropriate in these circumstances to extend the reach of the common law by imposing a duty of care to avoid pure economic loss constituted by wholly preventive expenditure of the kind claimed by the Gunnersens.

351 I find that the Henwoods did not owe the Gunnersens a duty to exercise care in inspecting and managing the escarpment so as to avoid inflicting upon the Gunnersens economic loss of the type constituted by the loss and damage claimed.

352 I would not dismiss the possibility that a more limited duty may have been owed by the Henwoods, to avoid inflicting upon the Gunnersens a different harm to that claimed, constituted by the circumstances surrounding the faulty irrigation pipe. Bearing in mind the expert evidence that the risk of physical damage to the Gunnersen land from inadequate remediation of slip 2 although slight, was not fanciful; it was foreseeable. This Yacht Club controlled the slight risk from slip 2 while, from late 2004, the Gunnersens were exercising control over the general risk of slope instability. The foreseeable consequence, or risk, of type A slips was remediation to restore the stability of the localised area to what it was prior to the negligent discharge of water. Even if the Gunnersens had required the proper completion (the Reid concerns) of the 2005 remediation work or the work recommended by Mr Piper as the appropriate response to the 2008 movement, for the reasons I have given, I do not consider that damage calculated by reference to the value of such work can complete a cause of action in negligence at common law for the Gunnersens against the Henwoods. In any event, that is not the case advanced by the Gunnersens.

353 In respect of economic loss of the type constituted by the cost of the engineered stability works undertaken in 2009 to improve the safety of the escarpment against the risk of type B or C slips impacting upon the Gunnersen land, the Henwoods did not owe the Gunnersens a duty to exercise care generally in inspecting and managing the escarpment, particularly that part comprising land owned by the Yacht Club or the Gunnersens, so as to avoid inflicting upon the Gunnersens loss of that kind or type.

354 However, if this conclusion later turns out to be incorrect, then assuming the Henwoods owed a duty to the Gunnersens to take reasonable care to avoid inflicting pure economic loss in the form of the preventive expenditure actually incurred upon them, and assuming causation, I find that the Henwoods did not breach that duty.

355 I have set out above my findings of the conduct of the Henwoods in response to learning of the occurrence of slip 2.

356 The Henwoods would only be in breach of the assumed duty if they failed to do that which a reasonable land owner in their circumstances would have done. The standard is objective and must be considered in the light of the circumstances of the case. In Wyong Shire Council v Shirt, Mason J (as his Honour then was) stated, after determining that a duty of care was owed:[118]

357 The first observation that can be made is that the magnitude of the risk, the probability of its occurrence, and the appropriate alleviating action are all matters for expert assessment. The risk of injury, which was plainly foreseeable, was to the Yacht Club, not just because the slip was on its land but, more importantly, because of the actual damage sustained. However, it is not the standard of care owed to the Yacht Club which is in issue. When these questions are applied to the position of the Gunnersens, the risks are far more remote and the consequences of no or inappropriate alleviating action may be obscure, at least to one not educated in geotechnical engineering. The reasonable landowner would, I consider, seek professional guidance in dealing with the circumstances of slip 2. The Henwoods did so, and there was no challenge to the manner in which they retained geotechnical experts or their response to advice from such experts.

358 An analysis of the legal requirements for a plaintiff to establish breach of a duty of care must now commence with Part X of the Wrongs Act 1958 (Vic). Sections 48 and 49 are in these terms:

These sections are evidently directed to questions of breach, notwithstanding the heading Division 2 – Duty of Care.[119]

359 In New South Wales, the application of the Civil Liability Act 2002 (NSW) to the legal requirements for a plaintiff to establish breach of a duty of care was considered in Benic v New South Wales.[120] The NSW statutory provision is in the same terms as s 49 of the Wrongs Act 1958 (Vic), save for the inclusion in the Victorian statute of definitions in subsection (3). Benic concerned a claim by a police officer suffering post traumatic stress disorder. An issue in the proceeding was whether superior officers knew or ought to have known of the risk of the plaintiff suffering psychiatric injury and, having regard to s 5B of the Act, whether the risk was not insignificant.

360 Garling J in Benic [121] identified a number of separate steps that must be taken to establish a breach of duty under the Civil Liability Act 2002 and, with respect, I consider his Honour’s observations are apposite when undertaking the same task by reference to Part X of the Wrongs Act 1958 (Vic). I have drawn upon his Honour’s reasoning in setting out these steps in a Victorian context.

361 The first step is that a plaintiff must identify a ‘risk of harm’ against which he (or she) alleges a defendant would be negligent for failing to take precautions. The particular risk of harm may be sufficiently described as a class of injury, as distinct from the particular injury actually suffered by the plaintiff. This accords with the traditional common law approach but needs precise and careful identification.

362 The next step is to address the three elements in s 48(1). That section presupposes the existence of the law of negligence and operates against its background. The three separate elements represent the concepts of foreseeability, probability and reasonableness of precautions — each a common law concept often conflated in the term ‘reasonable foreseeability’. The statute now makes it clear that each must be separately addressed:

In Victoria, s 48(3) must be borne in mind. Insignificant risks are not limited to risks which are far-fetched or fanciful. It would seem that the bar has been raised. The Ipp Report at paragraph 7.15 described the recommended change in this way:^[124]

In his Second Reading Speech on the amending Bill in the Legislative Assembly, the Treasurer said:^[125]

Subsection (3) has no counterpart in the NSW Act and although a number of decisions of the Court of Appeal in that State have considered the phrase ‘not insignificant’, it has not yet been the subject of any comprehensive, detailed analysis. From these decisions, the Ipp Report, and the second reading speech in the debate of the Civil Liability Bill in the NSW parliament, Garling J suggested the following approach as appropriate:^[126]

363 What of that slight, but not fanciful, risk of damage to the Gunnersen land through the weakening of the buttressing support above the head of slip 2? Adopting the steps I have set out, and working through the considerations as they apply to the evidence in this matter, I have concluded that such risk was an insignificant risk for the following reasons.

364 I have already stated that the reasonable person in the position of the Henwoods would reasonably foresee, if negligent in and about the management of the escarpment, the risk of expense to remediate the kind or type of physical damage which occurred at slip 2. That reasonable person would not reasonably foresee the risk that the Gunnersens might need to incur expense for substantial engineered solutions to avoid future damage resulting from any of the types of slips identified as possible on the escarpment. In respect of the kind or type of damage being contemplated for the design of the 2009 works, such preventive expenditure is not foreseeable as a consequence of negligent conduct in and about the management of the escarpment.

365 The basis for this distinction lies in the evaluation of the magnitude of the risk of each consequence, the degree of probability of its occurrence, and in the expense difficulty and inconvenience of alternative outcomes. The different types of slips cause materially different types of damage. It is not merely a question of extent. Type A slip damage is foreseeable, even probable, where there is negligent conduct involving a risk of water saturation and perhaps vegetation degradation of the face of the escarpment. The risk factors for other types of slip are related to naturally occurring conditions, such as a rising groundwater table, or due to conditions created on or in the vicinity of the escarpment from human activity of a type not alleged against the Henwoods, for example, mechanically introduced tremor or vibration from construction activities.

367 The reasonable defendant would move promptly to desist in the wrongful conduct and repair the damage. With the knowledge possessed by the Henwoods of the fragile nature of the escarpment, a prudent defendant would seek expert assistance and provide a scope of work for the repair designed by a geotechnical engineer. The prudent defendant would accept that his contractor’s work might be independently checked and expect that, if it was accepted, his responsibility was discharged. All of this is what the Henwoods did. Counsel for the Gunnersens was critical, in final address, of the decision to have the work carried out by Mr Tuxen. I have found that this criticism did not lead to any relevant consequence because Mr Tuxen’s remediation work and AS James’ scope of the design of that work was assessed for the Yacht Club by Mr Reid in his report of 30 June 2005. There was no issue of the cost of the works raised; it was not suggested that the Henwoods undertook a cheap fix. They arranged for the work to be done as recommended to them by AS James. The problem is that, ultimately, the later inaction of the Yacht Club was not reasonable.

368 Counsel for the Gunnersens relied on the fact that, objectively assessed, the 2005 remediation work failed. I agree and have found that to be the case; slip 2 was not successfully remediated. As I have noted, Mr Reid in evidence identified the failure of the 2005 remediation to be caused by the inadequate length of the j-pins securing the Ecocells to the slope. He did not attribute as the cause the failure to fix the deficiencies he identified in his 2005 report. This was a matter of expert opinion about the use of a relatively new product. Other experts identified the failure of the vegetation to effectively bind the escarpment surface to be the critical factor in the unsuccessful remediation, but they did not suggest that the remedial work specified was inappropriate. Counsel for the Gunnersens contended that in early 2008, when it was evident that the Ecocell reinforced soil mass installed as the 2005 work was slipping, a response from the Henwoods was then expected. The difficulty I have with this submission is firstly that the Gunnersens do not sue in contract — they have not bargained with the Henwoods for an outcome. Secondly, it was not established in evidence that the Henwoods were aware of Mr Reid’s qualifications in his report to the Yacht Club in 2005 or, for that matter, of the ground movement in early 2008.

369 I have concluded that the causes of the 2008 slip include the failure of the 2005 remediation work. I have also concluded that the 2005 remediation work failed, not because the Henwoods did not attend to the deficiencies identified by Mr Reid, but rather because no-one accepted responsibility to complete the remediation task. By this, I mean that a key feature of that remediation design was to establish mature vegetation on the slope. Until that objective had been achieved, the work could fail on its own design assumptions. The slight risk of damage to the Gunnersen land from inadequate buttressing of the head of slip 2 was real and foreseeable. That risk would remain if the remediation failed. A repair based on these design assumptions implies an ongoing obligation to inspect and maintain the vegetation.

370 The Yacht Club did not bargain with the Henwoods for them to take ongoing responsibility for the condition of the slope. The Yacht Club accepted both the scope of works and the performance of that work by the Henwoods’ contractor. Notwithstanding the fact of failure of the work in 2008, if the Henwoods were tortfeasors, their response was adequate in the circumstances. The Henwoods’ dealings with the Yacht Club had effectively discharged them from ongoing responsibility. The work was on the Yacht Club land and inspection and maintenance of it was the Yacht Club’s ongoing responsibility.

371 For these reasons, I find that when viewed in prospect from the perspective of the Henwoods, the risk of damage to the Gunnersen land from inadequate buttressing of the head of slip 2 was an insignificant risk and, the Henwoods did not breach any assumed duty of care to the extent that they failed to take precautions against the prospect of such damage.

372 I have noted elsewhere, whether the tort of negligence has been made out must be decided in accordance with Part X of the Wrongs Act 1958 (Vic).

374 I must follow the statutory prescription. What does it require? Whether the common law approach to causation has been changed by the statute, following the reforms recommended by the Ipp Report, was soon identified by academic commentators to be not free of doubt.[128]

375 The common law approach to causation is oversimplified by describing it as a matter of common sense. The seminal decision is that of the High Court in March v E & MH Stramare Pty Ltd,[129] particularly, the judgment of Mason CJ (with which Toohey and Gaudron JJ agreed). The Chief Justice articulates the now well accepted propositions that where negligence is in issue, causation is essentially a question of fact to be answered by reference to common sense and experience, one into which considerations of policy and value judgments necessarily enter, and that the ‘but for’ test is not a definitive test of causation. The Court observed that notions and terminology such as ‘direct’, ‘natural and probable’, ‘direct and natural’, ‘proximate cause’, ‘real effective cause’ and foreseeability can be seen to play mixed roles, and these expressions concealed value judgments and unexpressed policy.[130] Relevantly, his Honour also recognised that causation was a part of attribution of responsibility, not scientific enquiry.[131] Where concurrent and successive causes are in issue, such causes can be proved by establishing the material contribution of the relevant wrongful conduct.[132] The ‘but for’ test plays an important role in causation issues, although its inadequacy is evident when the issue concerns concurrent and successive causes.

376 Deane J approached causation by identifying the scope of the duty of care.[133] Generally applied, his Honour’s approach is to identify the relevant rule of responsibility. Once that issue is correctly identified, causation is determined, not exclusively upon a ‘but for’ test, which his Honour rejected, but upon a factual inquiry undertaken by an analysis like that of Mason CJ.

377 McHugh J expressed a different approach.[134] His Honour adopted the ‘but for’ test for causal involvement following with a second step (a ‘scope of risk’ analysis) to enable the relevant policy factors to be articulated and justified.

378 The High Court’s analysis has been repeatedly affirmed.[135] There are, however, strands of reasoning critical of the utility of the ‘commonsense’ approach.[136] It is not necessary that this Court undertake any reconciliation of these latter observations.

379 At the level of practical application of the principles derived from the cases, commonsense defines the approach to evaluating the evidence, not a test to be applied to it. Starting with the negative proposition, the court postulates that a factor is not sufficiently causal if the Court cannot conclude that the harm would not have happened but for the negligence or, put positively, a factor is sufficiently causal if the Court can conclude but for the negligent act or omission, the harm would not have occurred. Recognising the qualifications and limitations of this approach across all circumstances,[137] recourse is had to the question: having regard to the scope of the relevant rule of responsibility, did the impugned act or omission materially contribute to the risk of injury? Material contribution refers to increased risk, a contribution that is not de minimis. Does the factor add to the outcome? When the risk eventuates, causation follows from the inference of a link between conduct and loss from that contribution.

380 A further observation, relevant in considering expenditure in amelioration of risk, can be drawn from the ‘failure to warn’ medical negligence cases. In Rosenberg v Percival,[138] Gummow J identified the importance of precisely identifying the nature of the risk in determining whether a failure to warn was causative of harm. His Honour discussed the methodology of determining risk.[139] The Court must define the circumstances in which the damage can occur, the likelihood of the damage occurring and the extent or severity of the damage if the circumstances eventuate. These matters are to be considered from the perspective of the reasonable or prudent defendant. In the context of a failure to warn, his Honour’s observation was ‘this approach directs attention to the content of any warning that could have been given at the time’. In the case of preventive expenditure and slope instability, attention is directed to the design intent of the engineered solution to the perceived risk.

381 The relevant provisions of the Wrongs Act are yet to attract significant judicial analysis in Victoria.[140] The Ipp Report reforms have been considered in the High Court and the New South Wales Court of Appeal in the context of the Civil Liability Act 2002 (NSW), which is in substantially similar terms to the Wrongs Act.

382 It can be noted that s 51 addresses ‘particular harm’, that is, the harm that the plaintiff has suffered and for which the plaintiff seeks damages. In this proceeding, there are particular considerations arising from the ‘harm’ alleged to which I have referred. It can also be observed that the words ‘caused’ and ‘causation’, the subject of much spilt judicial ink, are used in the section. Cause in relation to landslips is complex. Both concurrent and successive acts or omissions or events are under consideration. As I have noted, in such circumstances the limits of ‘but for’ causation can be exposed.

383 Dealing firstly with the primary test for causation (s 51(1)), in Adeels Palace Pty Ltd v Moubarak,[141] on appeal from the Supreme Court of New South Wales, the High Court examined causation where a proprietor of a restaurant and catering business had been held liable in damages to two patrons shot on the premises by a gunman. The proprietor’s negligence was in failing to provide sufficient or any security during a function on New Year’s Eve. French CJ, Gummow, Hayne, Heydon and Crennan JJ, stated (omitting citations):[142]

384 The plurality’s reasoning, when it turned to the circumstances of the matter on appeal, emphasises several important considerations with factual causation. Recognising that changing any of the circumstances in which the liability events occurred might have made a difference, if circumstances had been different, does not prove factual causation. Describing the plaintiff’s injury as ‘the very kind of thing’ which was the subject of the duty must not be permitted, as it obscures the need to prove factual causation in cases where the evidence does not demonstrate that taking reasonable care would probably have prevented the injury. Section 5D(1) is not satisfied if the absence of care being exercised was not a necessary condition of the occurrence of the harm to the plaintiff. Thus, this appeal primarily concerns s 5D(2), and I will discuss it further in that context.

385 In Woolworths Limited v Strong,[144] the NSW Court of Appeal considered s 5D of the Civil Liability Act 2002. The Court affirmed that whether the tort of negligence has been made out must be decided in accordance with the Civil Liability Act 2002. The case was a slipping case. Having slipped because of foodstuff on the floor, the plaintiff had to show the conduct of the occupier caused that condition to exist. Unable to show when or how the food came to be there, the plaintiff could not show whether any prudent response to such a risk by the occupier would have mattered. The Court of Appeal stated that s 5D(1) sets out what must be established to conclude that negligence caused particular harm. There are two elements that must usually be proved. First, ‘that the negligence was a necessary condition of the occurrence of the harm.’ ‘Negligence’ has its defined meaning. In Victoria under s 43 of the Wrongs Act 1958, negligence is defined in different terms and means ‘failure to exercise reasonable care’. The statutory test for causation thus usually requires a decision about whether failure to exercise reasonable care and skill, that is the specific breach of a duty of care that had occurred, was a necessary condition of the occurrence of the harm.[145]

386 The Court, referring to the words ‘comprises the following elements’, held that while the test for causation under s 5D(1)(a) has some measure of continuity with the previous common law, material contribution and notions of increase in risk have no role to play in s 5D(1). It well may be that many actions or omissions that the common law would have recognised as making a material contribution to the harm suffered, the ‘particular harm’ caused, will constitute factual causation within s 5D(1). Nonetheless, the concepts of material contribution and increase in risk have no role to play in deciding whether s 5D(1) is satisfied in any particular case. There can be causation within the section only if the ‘necessary condition’ test in s 5D(1)(a) is satisfied and, because s 5D(1)(b) poses a further test (that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused), the further test is to be applied even if the ‘necessary condition’ test is satisfied. Section 5D(1)(b) may operate to deny causation even if the ‘necessary condition’ test of s 5D(1)(a) were to be satisfied. At trial, it had not been proved that any failing in the maintenance and cleaning systems of the occupier was a necessary condition for the occurrence of the particular harm.

387 In Zanner v Zanner,[146] a motor vehicle accident case, the NSW Court of Appeal again revisited s 5D of the Civil Liability Act 2002. In this appeal, the ‘scope of liability’ requirement (s 5D(1)(b)) was considered, factual causation having been acknowledged. Tobias JA, who delivered the leading judgment, drew upon the Ipp Report.[147] The report recommended that in determining liability for the harmful consequences of negligence it is relevant to consider whether (and why) the responsibility for the harm should be imposed on a negligent party, and whether (and why) the harm should be left to lie where it fell. His Honour acknowledged that when addressing the second aspect, the thrust of the recommendation[148] was that the ultimate question to be answered is a normative one, namely that the question of whether the defendant ought to be held liable to pay damages for that harm is a normative decision based on policy considerations.[149] Turning to the particular issues arising on that appeal, his Honour stated (omitting citations):[150]

Agreeing with Tobias JA, Allsop P commented that while the statutory content of s 5D and the extent of any continuity with developing common law concepts awaits judicial elucidation, there is no suggestion that the application of common sense is in any way foreign to the task in ss 5D(1)(b), (2) and (4). Allsop P appeared to confine the rejection of notions of material contribution and increases in risk in Strong to circumstances where factual causation is found, and suggested it would be an odd interpretation of a law of the parliament that excluded such a consideration from an evaluation of this kind against the background of the common law, particularly in light of the Ipp Report.

388 What is meant by the concept ‘appropriate’ in s 51(1)(b), for it is that consideration which enlivens the scope of liability consideration. Does it mean any more than: is it suitable or proper for the scope of liability to be extended? The statute is silent not only as to what is to be considered, but also as to how such considerations are to be suitably or properly evaluated. With respect, I agree with the NSW Court of Appeal in Zanner, that a normative question is posed and must be answered on policy considerations. Not having provided specific guidance about such policy considerations or as to how they are to be regarded as appropriate, parliament can hardly be thought to be encouraging a wholesale disregard for the accumulated learning on how a trial judge ought approach the normative decision. To the contrary, the provisions recognise the existing common law of negligence. Subsection 51(2) of the Act opens with the statement ‘In determining in an appropriate case, in accordance with established principles ...’. In Zanner, the Court of Appeal adopted a common sense analysis when dealing with distinct, but concurrent, causes, that is it adopted a March v Stramare approach.

389 In Benic v New South Wales,[151] Garling J was dealing with a more causally complex personal injury claim. There, the plaintiff claimed that as a consequence of a threat he received to his life, he developed post traumatic stress disorder, and associated anxiety and depression spectrum conditions. The plaintiff claimed that with early intervention, he would not have developed this condition and would not have lost his capacity for work. There was no issue that harm had been suffered by the plaintiff. Causation of the particular harm alleged was in issue. His Honour boldly commented:[152]

Thus, it appears that the scope of the causation test under the NSW Act is a matter of some judicial controversy and awaits further elucidation from the High Court.

390 The statute envisages that liability in negligence for the occurrence of particular harm may be imposed where factual causation under s 51(1) has not been established. The statute admits the prospect, nonetheless, of establishing legal causation in an appropriate case in accordance with established principles. There is a point of difference between the Wrongs Act and the Civil Liability Act in that while the former permits resort to s 51(2) in an ‘appropriate’ case, the latter refers to an ‘exceptional’ case. In Adeels Palace, the Court having found there was not causation under s 5D(1) turned to whether s 5D(2) then applied. The plurality observed:[153]

391 This observation, when applied in Victoria, might become ‘But as s 52(1) shows, the ‘but for’ test is now to be (and has hitherto been seen to be) a necessary test of causation in all but the undefined group of appropriate cases contemplated by s 51(2)’. Importantly, the High Court noted that whether and how s 5D(2) would be engaged, what is an exceptional case, did not need to be decided on that appeal. In a case where the necessary test of causation under s 51 cannot establish that the negligence caused the particular harm, it may be that all a Victorian court need consider, on the question whether s 51(2) is engaged, is whether it is determining an appropriate case in accordance with established principles. Where s 51(2) is engaged, the court is to consider ‘amongst other relevant things’ whether or not and why responsibility for the particular harm should be imposed. Thus the Court is again directed to a normative question to be answered on policy considerations. I do not consider that in an appropriate case, in accordance with established principles, there is any inconsistency in approach to causation between the common law and the statute. The relevant policy considerations are not fixed or even settled.[154]

392 The plurality, in the circumstances of Adeels Palace, rejected the notion that examination of what might have happened will not be reason enough to conclude that this is an ‘exceptional case’ such that responsibility for the harm suffered by the plaintiff should be imposed on the defendant. It was sufficient in disposing of the appeal to reason that it would be contrary to established principles to hold the defendant responsible in negligence if failure to provide security was not a necessary condition of the occurrence of the harm but providing security might have deterred or prevented its occurrence, or might have resulted in harm being suffered by someone other than, or in addition to, the plaintiffs. It should not be accepted that negligence, which was not a necessary condition of the injury that resulted from a third person’s criminal wrongdoing, was a cause of that injury.

393 Drawing on these cases, I consider the following principles to be appropriate in applying s 51 of the Wrongs Act 1958 (Vic) to determine whether negligence caused particular harm.

(a) In determining whether the tort of negligence has been made out, causation of the particular harm resulting in the claim for damages must be decided in accordance with Part X of the Act.

(b) The determination of whether negligence caused particular harm is divided into two limbs: factual causation s 51(1)(a) and scope of liability s 51(1)(b).

(c) The particular harm being claimed by the plaintiff may need to be carefully analysed. Causation is directed to why particular harm has occurred, as distinct from whether a risk of harm occurring has changed.

(d) Factual causation usually requires that the defendant’s specific failure to exercise reasonable care was a necessary condition of the occurrence of the particular harm alleged by the plaintiff. The question may be posed as ‘but for the specific failure to exercise reasonable care, would the particular harm have occurred?’ Put as a negative stipulation, if on the balance of probabilities one could not conclude that the particular harm alleged by the plaintiff would not have happened but for the defendant’s failure to exercise reasonable care, causation may not be established, subject to scope of liability considerations.

(e) In many cases the necessary condition test will provide the answer. It will be clear whether it is appropriate for the scope of the liability to extend to the harm so caused.

(f) If the ‘necessary condition’ test is satisfied, there can be s 51(1) causation, and that finding is subject to the second limb the scope of liability consideration. With the second limb of the test, the ultimate question to be answered is a normative one, namely, whether the defendant ought to be held liable to pay damages for that harm. It is in this context that the concept of causation as a matter of commonsense is most often expressed, and there is no suggestion that the application of common sense is in any way foreign to the statutory task. The appropriateness of the scope of liability extended from the relevant causal connection is determined according to common sense ideas, taking into account any relevant policy considerations.

(g) Whether concepts of ‘material contribution’ and notions of increase in risk have no role to play in the s 51(1) assessment, appears controversial. Depending on the circumstances such concepts may have a role in this assessment and ought not be lightly dismissed. A circumstance that ‘materially contributed to’ harm could satisfy the ‘but for’ test. On the other hand, it may be nonsensical to accept a circumstance that satisfies the ‘but for’ test as being causal, for example merely by placing the plaintiff in geographical or temporal proximity with another causal circumstance. Particularly in circumstances of multiple causal possibilities, whether concurrent or successive, some factors that materially contribute to the occurrence of harm may produce a negative ‘but for’ answer and other factors that contribute to the occurrence of harm in a literal, nonsensical way may give a positive ‘but for’ answer. It is not at all clear that these concepts are mutually exclusive with the statutory causation test. In the absence of binding authority, I am not persuaded that, as a matter of construction of the statute, such concepts are excluded from consideration in appropriate cases.

(h) The categories of relevant policy considerations to be sensibly taken into account is not a closed list. To the contrary, the statutory language in very broad terms requires the Court to consider policy considerations that might assist in determining whether and why responsibility for harm to the plaintiff should be imposed upon the defendant. An instance where liability might justifiably be denied might be where the connection between the relevant harm and the defendant’s conduct is remote. Another instance is where an unacceptable shift in the balance struck between claimants and defendants results, as identified in Tabet.

(i) The statutory content of s 51 and the extent of continuity with established and developing common law concepts is receiving continuing judicial elucidation at appellate level and is far from settled.

(a) If I may be forgiven the pun, the causal circumstances at play in this slipping case are far removed from the causal circumstances of the slip in Strong. The circumstances alleged to have causal effect are multiple, both concurrent and successive, with complex interaction.

(b) The causation inquiry, where there is no actual harm but rather expenditure to prevent future harm, is centrally one about what might happen. Unlike Adeels Palace, where the inquiry was what might have happened but for the omission to act, here the inquiry is what might happen in the future, as a necessary consequence of a negligent act. It is not an inquiry into what caused harm — it is an inquiry into what changed risk.

(c) While the occurrence of slip 2 can be said to be a necessary condition for the occurrence of the physical damage suffered by the Yacht Club, and even a necessary condition for the change in the perception of risk of future harm to the Gunnersen land, whether physical or economic, the inquiry on causation is directed by the statute to why particular harm has occurred, as distinct from whether a risk of harm occurring has changed.

(d) The particular harm being claimed by the Gunnersens has been analysed already. For the reasons I have stated, the Henwoods’ negligence was not a necessary condition for that harm to occur. The Gunnersens’ expenditure on the soil nail engineered slope stability solution was not caused by slip 2 or the reactivation of slippage on the escarpment at the site of slip 2 in 2008.

(e) As the Henwoods’ negligence cannot be established as a necessary condition for the Gunnersens to incur the expenditure they claim as damages, I need to determine whether and why responsibility for the harm to the Gunnersens should be causally imposed upon the Henwoods.

395 I find that this is an appropriate case to apply established causation principles. I will not hold that the Henwoods’ negligence caused the Gunnersens to expend the amounts claimed as damages. For the reasons I have expressed, there in no proper connection between the cause of slip 2, the cause of the later slip activity at the site of slip 2 and the effect intended to be achieved by the engineered soil nail works. The latter is quite remote from the former. The necessary condition for the engineered soil nail works was the naturally occurring condition that rendered the escarpment fragile. The Henwoods’ negligent conduct made no contribution to the risk of slope failure that the engineered soil nail works were designed to mitigate. Nor did the occurrence of slip 2 influence the professional consideration and advice on which the Gunnersens relied. I can see no issue of policy, and none was put to me by counsel, as to why responsibility for the cost of the engineered soil nail works on the Yacht Club land, which provided the benefit of an improved FoS in respect of the stability of the escarpment for the Gunnersen land above, ought be imposed on the Henwoods.

396 For these reasons, the Gunnersens’ claims in the proceeding fail. There will be judgment for the fourth defendant accordingly.

397 I have noted that a defence of proportionate liability was taken by the Henwoods. In view of the conclusion I have reached, this defence cannot arise. The Henwoods have succeeded on other grounds. Proportionate liability is inapplicable as the Henwoods are not liable to the Gunnersens for the loss and damage claimed. There is no liability to apportion, and no judgment to be limited to such proportion of the loss and damage claimed as the Court considers just.

398 Assuming, contrary to my findings, that the Gunnersens are entitled to a judgment for the loss and damage claimed, I will briefly state why I consider the proportionate liability defence would have failed, had it come to be considered.

399 On the findings I have made, the Henwoods did not cause the loss that is the subject of the Gunnersens’ claim. The Henwoods cannot be a concurrent wrongdoer. It is only the liability of a defendant who is a concurrent wrongdoer, which may be so limited. What would be involved in a consideration of such a defence, having regard to s 24AI(1) of the Wrongs Act is an assessment of the extent or proportion of the liability of the Henwoods as a concurrent wrongdoer for the loss and damage claimed as is considered just, having regard to the extent of their responsibility. In making that comparative assessment I can only have regard to the comparative responsibility of another party to the proceeding, namely Mornington Shire.

400 It ought be recalled that Mornington Shire, having settled with the Gunnersens, did not appear at trial to contest any allegation made by the Henwoods against the Gunnersens in relation to any act or omission of Mornington Shire. The extent to which the allegations concerning Mornington Shire’s conduct were contradicted was limited to the Gunnersens’ response to those allegations, which was broadly one of bare denial. In summary, the allegations were that Mornington Shire owed to the Gunnersens a duty to take reasonable care to minimise the risks of instability on the escarpment threatening the Gunnersen property. Counsel for the Henwoods submitted, on the basis of the criteria articulated in the joint judgment of Gummow and Hayne JJ in Graham Barclay Oysters Pty Ltd v Ryan [155] firstly, that Mornington Shire has the power to act in a relevant way. Secondly, that Mornington Shire had direct control over vegetation issues arising from the development of the Henwood property, the construction of the home. Thirdly, that Mornington Shire had entered the field and exercised its powers, imposing permit conditions and requiring adoption of s 173 covenants.

401 Further, counsel submitted, Mornington Shire ought reasonably to have foreseen that failure to properly apply its power could lead to damage, of the type alleged by the Gunnersens in the proceeding, being suffered by property owners adjacent to the escarpment. Such property owners were vulnerable to risk of loss because they did not have the power to act as Mornington Shire could act. There were no supervening policy reasons to deny that Mornington Shire owed a duty to the Gunnersens.

402 I refer to my findings as to the causes of the activities upon the escarpment that the Gunnersens asserted led to their expenditure upon the soil nail engineering works; in particular that the only relevant act or omission, from the circumstances prior to 2005, was the Henwoods’ failure to inspect and maintain the irrigation system that they installed to establish the vegetation as required. The allegations about vegetation issues raised prior to 2005 were not made out. On my findings, the only vegetation issue of any relevance, is the failure of the vegetation planted in the Ecocells in 2005 to become sufficiently mature by 2008, so that the root system might adequately bind the surface of the slope at slip 2 and provide buttressing support to the soil above the head of the slip. That had nothing to do with the exercise of any powers by Mornington Shire.

403 Accepting, without deciding, as correct the legal basis for the Henwoods’ contentions as to when a public authority will be found to owe a duty of care, it is not to the point whether Mornington Shire had direct control over vegetation issues arising from the development of the Henwood property. Nor is it to the point that Mornington Shire had power to act in a relevant way by virtue of s 60 of the Planning and Environment Act 1987 and entered the field when it granted building and other permits, and required the adoption of covenants by agreements under s 173 of the Planning and Environment Act 1987. Assuming such allegations had been established, none of these matters bears any causal relationship to the loss and damage that is the subject of the Gunnersens’ claim.

404 Mornington Shire is a public authority as defined by s 79 of the Wrongs Act 1958. This ground of defence, that Mornington Shire is a concurrent wrongdoer, is not a claim for damages as such. A question which would have arisen, had it been necessary to determine the proportionate liability defence, is whether the provisions of Part XII of the Wrongs Act 1958 apply. That part prescribes matters a court is to consider in determining whether a public authority has breached a duty of care.[156]

406 In order to prove that Mornington Shire is a concurrent wrongdoer, it is necessary that the defendant establish that the plaintiffs have an enforceable cause of action against it. In my view, the effect of the statute cannot be to reduce the plaintiffs’ judgment on account of the conduct or omissions of another against whom that plaintiff could never have had legal recourse. It is misconceived to suggest that the concept of a concurrent wrongdoer under s 24AH may extend to third parties who are causally linked to the claimed loss but ‘innocent’ in the sense that they have committed no legal wrong. That this is so is demonstrable from the statute itself.

407 In construing the statute it is helpful to recall what Gleeson CJ said of the concept of causation encompassed in s 82 of the Trade Practices Act in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd:[157]

408 Section 24AH speaks ‘in relation to a claim’ and of the cause of ‘the loss and damage that is the subject of the claim’. Section 24AI speaks of apportioning responsibility, not cause, and of the ‘comparative responsibility’ of the defendant and other concurrent wrongdoers. This focus on responsibility — the attribution of blame, not just factual cause — demonstrates that s 24AH requires legal responsibility in the same way as Gleeson CJ explained s 82 of the Trade Practices Act.

409 Further, in defining the applicability of Part XII in relation to public authorities, s 80 is not limited in a literal sense to the plaintiff’s claim for damages. In the relevant sense, the proportionate liability defence is applied to a ‘claim for damages resulting from negligence’. It is advanced by the defendant against the plaintiff, as if made directly by the plaintiff against the concurrent wrongdoer, save that a defendant does not seek a judgment for the plaintiff for recovery of the loss caused. Rather, the ‘relief’ claimed by the defendant is that a judgment against that defendant be limited by reference to the comparative responsibility of the concurrent wrongdoer. In the majority of cases, the defence will mirror a like claim made directly for damages by the plaintiff against that concurrent wrongdoer. Until that claim was settled, that was the case in this proceeding. For the purposes of s 80, the nature of the proceeding does not lose that character either because the plaintiff’s claims against the concurrent wrongdoer are settled or because the plaintiff chooses not to prosecute such claims. The nature of a claim against a public authority and the applicability of the statute to such claims is not affected by events such as settlement or a plaintiff’s choice. In determining whether a public authority has a duty of care to a plaintiff or has breached that duty of care, a court is required to have regard to Part XII of the Wrongs Act 1958.

410 Further, for a person involved causally in the claim to be a concurrent wrongdoer, there is authority that the plaintiff must prove an enforceable cause of action.[158]

411 The inadequacy in the evidence before the Court is exacerbated by a failure to have regard to the provisions of Part XII of the Wrongs Act 1958. No evidence was led as to the matters to which s 83 of the Act is directed. The High Court has held that for a statutory authority to justify its conduct in failing to take measures which the plaintiff contends would show the exercise of reasonable care, the authority has an evidentiary onus to show that matters such as the availability of resources and their prioritisation in allocation to a broad range of functions justify its conduct in not taking measures which the plaintiff contends for.[159] Here the ‘defendant’, Mornington Shire, does not contest the allegations. Neither are such matters raised by the Gunnersens in reply to the defence, the Gunnersens being the party contradicting the allegation that Mornington Shire is a concurrent wrongdoer. The principle articulated in s 83 comes directly into consideration on the allegations made against Mornington in the defence, which I will summarise below. The better view is, I think, that s 83 and the material facts enlivening it should have been pleaded. Evidence might then have been led to establish pleaded allegations. The consequence is that there is no adequate evidentiary basis in respect of matters that the Court is to consider in determining whether Mornington Shire owed or breached a duty of care owed to the Gunnersens. There may be a question of whether the defence fails for a want of proof.

412 The scope and content of the duty of care, contended as owed by Mornington Shire to the Gunnersens, was not articulated in the statement of issues on which the trial proceeded nor identified in final addresses. How it is put that it is open on the evidence for the Henwoods to contend for the existence of a duty of care owed to the Gunnersens arising out of the powers enjoyed by the Mornington Shire under s 60 of the Planning and Environment Act 1987, is too obscure to admit of sensible legal analysis. The evidence at trial, touching on the issue, was quite limited and before turning to it I will summarise the allegations made on the pleadings.

413 In their defence, the Henwoods allege that since no later than 13 February 1999, Mornington Shire has been and does owe a duty of care to the Gunnersens to take cognisance of and act on the recommendations contained in the November 1993 Frankston Coastline Management Study Final Report and the 1997 Douglas Partners Study, as owners of land likely to be affected by the weakening of the cliff face by any awakening of the dormant slip behind the Davey’s Bay Yacht Club or by any onset of any further slips. The Henwoods allege that Mornington Shire has known of the contents of these documents since about 13 February 1999.

• To conduct geotechnical investigations to characterise and establish the depth and distribution of the Balcombe Clay at the foot of the cliff face on the Yacht Club land;

• Not to permit without careful geotechnical investigation any further building along the cliff top adjacent to the Gunnersen land;[160]

• Not to permit any activity at or near the cliff face or cliff top which might affect the stability of the Gunnersen land;

• To duly consider the recommendations contained in the Report and Study, and to address such recommendations as were within its statutory and budgetary powers to establish a plan of action and implement such recommendations as were consistent with its powers and duties;

• Not to grant any building or planning permit or approval for the construction of any building or works on the Henwood land without first taking into account the content and recommendations of the Report and Study; and

In the context of such duties, the Henwoods allege that Mornington Shire negligently issued the building permit for the Henwood residence and negligently ‘granted the necessary permits’ required by the 2001 agreement.^[161]

415 Mornington Shire is alleged to have breached these duties by failing to take proper steps to address the issues referred to in the Report and the Study in relation to the actions it has taken concerning the Henwood land, particularly in granting the building permit and in relation to vegetation issues. The pleading concludes that these Mornington Shire failures have weakened the cliff face on the Yacht Club land and rendered it more prone to collapse.

416 The Henwoods sought to develop these allegations from two evidentiary sources. Firstly, through cross-examination of Christopher John Wallis, the Risk and Premium Coordinator for Mornington Shire, who was called for the Gunnersens. Secondly, there was in evidence a report prepared by Mr John Piper in 2002 for Mornington Shire, which recommended inspection of identified probable and possible slip areas in the Shire, including upon private land, and development of a hazard prediction model. It is unnecessary to summarise this largely unchallenged evidence.

417 The evidence from these two sources, even if accepted in full, falls well short of establishing a sufficient basis to find that Mornington Shire might owe a duty of care as alleged. Further, if such a duty was found, it would be necessary to precisely define its scope and extent, a task which cannot be undertaken on the meagre evidentiary base presented by the Henwoods. Precisely how the scope and extent of Mornington Shire’s duty of care might be defined is not pleaded. The difficulty arising from the nature of the preventive expenditure claimed by the Gunnersens and whether such expenditure could be claimed as pure economic loss in negligence would again arise, and how the court ought deal with that issue in this context was never addressed.

418 In their defence, the Henwoods did not distinctly allege causation. That is, the material facts which, if proved, establish that in relation to the loss and damage claimed by the Gunnersens, Mornington Shire’s acts or omissions, either independently of or jointly with the Henwoods’ acts or omissions, caused that loss. This pleading defect appears to have infected the proofs offered at trial. Causation in this context was not addressed in evidence. I reject the assertion that the cliff face on the Yacht Club land was weakened and rendered more prone to collapse by acts or omissions of Mornington Shire. No such finding can be made. There was no evidence that any of the allegations in the defence against Mornington Shire was a cause of slip 2 or a cause of any of the characteristics of the escarpment that persuaded Mr Peck to recommend the soil nail engineered remediation of the escarpment.[162] In any event, on the facts as I have found them, the Henwoods could not establish that any act or omission of Mornington Shire caused the expenditure claimed in the proceeding.

419 The identification, at common law, of the principles to be considered and the matters to be assessed when determining a cause of action in negligence against a public authority have been much discussed in the cases. I do not consider that the evidence before me provides any proper basis to embark upon a detailed consideration of such matters.

420 Had it become necessary to consider the matter, I would reject the proportionate liability defence on the ground that Mornington Shire is not a concurrent wrongdoer for two reasons. First, the evidence before me falls well short of providing a basis to make any finding whether Mornington Shire owed a duty of care to the Gunnersens of the scope and extent I presume to be alleged. Secondly, assuming that the Henwoods could prove a breach of the duty by Mornington Shire, as they have alleged it, none of the acts or omissions that might found the breach are a necessary condition for the Gunnersens incurring the expense claimed as their loss and damage. Having failed to prove the existence of a relevant duty or that any act or omission in breach of such duty caused the loss or damage that is the subject of the Gunnersens’ claim, the Henwoods cannot establish that Mornington Shire is a concurrent wrongdoer. There was no prospect, had it become necessary to determine the question, that a proportionate liability defence could have been established on the evidence led at trial.

I certify that this and the 159 preceding pages are a true copy of the reasons for judgment of Dixon J of the Supreme Court of Victoria delivered on 7 September 2011.


	Associate

^[3] For access to such comment, see the Supreme Court of Victoria, Commercial Court Seminar, 27 October 2010 including, in addition to the presentations of the Honourable Justice Kim Hargrave and NJ Young QC, the selected bibliography at http://www.commercialcourt.com.au/Pages/Publications.aspx.

^[7] Dasreef Pty Ltd v Hawchair [2011] HCA 21 (22 June 2011), 620–623 [30]–[42].

^[13] Kadissi v Jankovic [[1987] VicRp 20; 1987] VR 255, 260; Woolcock St Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515, 523, 592 [227]; Eighth SRJ Pty Ltd v Merity (Unreported, Supreme Court of New South Wales, Young J, 25 March 1997) 10–11; Walker v Masillamani [2007] VSC 172 (28 May 2007).

In the High Court, Anns was not followed in Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424. See also Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609; Woolcock Street Investments v CDG [2004] HCA 16; (2004) 216 CLR 515. That there was some uncertainty around the concept, particularly before Woolcock, was evident. See for example, Fangrove Pty Ltd v Tod Group Holdings Pty Ltd [1998] QCA 404; [1999] 2 QdR 236; De Pasquale Bros Pty Ltd v Cavanagh Biggs & Partners Pty Ltd [1999] QSC 171; [2000] 2 QdR 461.

^[26] In Grasso v Love [1980] VicRp 20; [1980] VR 163, the Full Court granted an injunction in a quia timet action where no actual harm had occurred. Arguably, the statutory power to give damages in lieu of an injunction applies to a quia timet action, even though damages could not have been awarded at common law: cf Barbagello v J & F Catelan Pty Ltd [1986] 1 QdR 245 and York Bros (Trading) Pty Ltd v Commissioner for Main Roads [1983] 1 NSWLR 391. This proposition, as a remedy independent of equitable relief, remains controversial.

^[27] I acknowledge assistance from the learned and illuminating discussion by Professor JG Fleming, ‘Preventive Damages’ in Nicholas J Mullany (ed), Torts in the Nineties (LBC Information Services, 1997) 68.

^[36] The relevant cause of action is nuisance, liability for which ordinarily attaches to the occupier: see Pantalone v Alaouie (1989) 18 NSWLR 119.

^[40] Gillard J referred to the observations of Finkelstein J in Dovuro. He did not have the benefit of the judgment of the High Court on appeal in Dovuro. He also referred to Morrison Steamship Co Ltd v Greystoke Castle (Cargo Owners) [1947] AC 265, 280 (Lord Roche).

^[61] Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, 194 [13] (Gleeson CJ); 207–8 [67]–[69], 220 [104], 229 [129], 230–1 [131]–[133] (McHugh J); 258 [213] (Gummow J); 298 [325], 304 [341]–[342], 308 [353] (Hayne J); 286–7 [289]–[290], 288 [294] (Kirby J); 326 [409] (Callinan J).

^[62] Ibid at 253 [198], 254 [201] (Gummow J); 326 [406] (Callinan J); McMullin v ICI Australia Operations Pty Ltd (No 7) [1999] FCA 1814 (23 December 1999) [34]–[35]; Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317, 331 [13] (Gleeson CJ); 355–6 [104]–[107] (McHugh J).

^[63] Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, 194 [13] (Gleeson CJ); 207–8 [67]–[69], 220 [104], 229 [129], 230–1 [131]–[133] (McHugh J); 258 [213] (Gummow J); 298 [325], 304 [341]–[342], 308 [353] (Hayne J); 286–7 [289]–[290], 288 [294] (Kirby J); 326 [409] (Callinan J).

^[66] Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, 194 [11] (Gleeson CJ); 201 [38] (Gaudron J); 220 [104], 225 [118]–[119], 228 [125]–[126], 229 [129], 231 [133] (McHugh J); 259 [216] (Gummow J); 289 [296] (Kirby J); 328 [416] (Callinan J); Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317, 332 [15] (Gleeson CJ).

^[67] Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, 194 [11] (Gleeson CJ); 201 [38] (Gaudron J); 207–8 [67]–[69], 220 [104], 225 [118]–[119], 228 [125]–[126], 229 [129], 231 [133] (McHugh J); 259 [216] (Gummow J); 289 [296] (Kirby J); 328 [416] (Callinan J).

^[68] Ibid 195 [15] (Gleeson CJ); 199 [32] (Gaudron J); 219 [101]–[102], 220 [104], 220–1 [106]–[108] (McHugh J); 254 [202] (Gummow J); 299 [329], 303–4 [336]–[340] (Hayne J); 289 [298] (Kirby J); 326 [406], [409], 328 [420] (Callinan J).

^[69] Ibid 200 [33] (Gleeson CJ); 200 [33] (Gaudron J); 246–7 [181]–[183] (Gummow J); 299 [329], 305–7 [346]–[350] (Hayne J); 219–20 [102]–[105], 223 [114], 224 [115], 290 [300] (McHugh J); 287 [291] (Kirby J); 328 [419], [421] (Callinan J).

^[75] Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, 226 [120], 227 [123] (McHugh J). See also Aquatec-Maxcon Pty Ltd v Barwon Regional Water Authority (No 2) [2006] VSC 117 (31 March 2006) [267]; Premier Building & Consulting Pty Ltd v Spotless Group Ltd [2007] VSC 377 (5 October 2007).

^[113] Perrett v Collins [1998] 2 Lloyd’s Rep 255 (22 May 1998) (compare also Clay v AJ Crump & Sons Ltd [1964] 1 QB 533 in which an architect had complete control over whether a dangerous wall was left standing, and Watson v British Boxing Board of Control Ltd [2001] EWCA Civ 184; [2001] QB 1134 in which the Board had control over the medical services provided at boxing matches).

^[117] Ibid [32]–[33] (French CJ, Gummow, Hayne, Heydon, Crennan and Kiefel JJ). Bell J dissented on the construction issue but did not express any view about the statements of principle to which I refer.

^[124] David A Ipp, Peter Crane, Don Sheldon, Ian Mcintosh, Submission to Minister for Revenue & Assistant Treasurer, Review of the Law of Negligence, 30 September 2002, 105 [7.15].

^[125] Victoria, Parliamentary Debates, Legislative Assembly, 30 October 2003, 1422–3 (John Brumby, Treasurer).

^[135] See, for example, Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408, 412–413 (Mason CJ, Deane and Toohey JJ); 418–419 (Gaudron J); 428 (McHugh J); Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 525 (Mason CJ, Dawson, Gaudron and McHugh JJ); Medlin v State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1, 6–7 (Deane, Dawson, Toohey and Gaudron JJ); 20 (McHugh J); Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603, 612 [22] (McHugh J); Chappel v Hart (1998) 195 CLR 232, 238 [6] (Gaudron J); 242 [23]–[24] (McHugh J); 255 [62] (Gummow J); 268 [93] (Kirby J); 281 [111], 290 [148] (Hayne J); Marks v GIO Australia [1998] HCA 69; (1998) 196 CLR 494, 512 [42] (McHugh, Hayne and Callinan JJ); 531 [106] (Gummow J); Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413, 426 [19] (Gaudron J); 456–457 [118] (Kirby and Callinan JJ); Henville v Walker [2001] HCA 52; (2001) 206 CLR 459, 480 [61] (Gaudron J); 489 [95] (McHugh J); Roads and Traffic Authority v Royal [2008] HCA 19; (2008) 82 ALJR 870, 878 [32] (Gummow, Hayne and Heydon JJ); 896 [135] (Kiefel J); Tabet v Gett [2010] HCA 12; (2010) 240 CLR 537.

^[137] Where there are two or more acts or events which would each be sufficient to bring about the injury, the ‘but for’ test could mean that none of the acts was a cause. Novus actus interveniens was also a problematical circumstance for ‘but for’ causation.

^[140] Note South East Water Ltd v Transpacific Cleanaway Pty Ltd [2010] VSC 46 (24 February 2010), which is a judicial review proceeding in a particular statutory context.

^[144] [2010] NSWCA 282 (2 November 2010); see also Allianz Australia Insurance Ltd v Roads and Traffic Authority of New South Wales; Kelly v Roads and Traffic Authority of New South Wales [2010] NSWCA 328 (9 December 2010). On 13 May 2011, the High Court of Australia granted special leave to appeal in Woolworths Limited v Strong: see Strong v Woolworths Limited [2011] HCATrans 131 (13 May 2011).

^[145] Section 5D(2) recognises that there can be an ‘exceptional case’ in which negligence that cannot be established as a necessary condition of the occurrence of the harm should nonetheless be accepted as establishing factual causation.

^[147] David A Ipp, Peter Crane, Don Sheldon, Ian Mcintosh, Submission to Minister for Revenue & Assistant Treasurer, Review of the law of negligence, 30 September 2002, 114 [7.41].

^[148] His Honour also acknowledged the theoretical work that has illuminated the recommendation. See Jane Stapleton, ‘Cause-in-Fact and the Scope of Liability for Consequences’ (2003) 119 Law Quarterly Review 388: see also the judgment of McHugh J in March v Stramare [1991] HCA 12; (1991) 171 CLR 506.

^[154] The state of the cases in respect of causation in asbestos litigation can be noted as, perhaps, the cutting edge of the debate. Compare the recent approach of the House of Lords/Supreme Court of the United Kingdom in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32; Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572; and Seinkiewicz v Greif (UK) Ltd [2011] UKSC 10 (9 March 2011) with Amaca Pty Ltd v Ellis [2010] HCA 5; (2010) 240 CLR 111. The High Court has granted special leave in Amaca Pty Ltd (Under NSW administered winding up) v Booth [2011] HCATrans 152 (10 June 2011) where causation, for a mesothelioma sufferer is a ground of the grant of leave.

^[156] Compare South East Water Ltd v Transpacific Cleanaway Pty Ltd [2010] VSC 46 (24 February 2010) [63].

^[158] Chandra v Perpetual Trustees Ltd [2007] NSWSC 694 (6 July 2007) [110] (Bryson AJ); Shrimp v Landmark Operations Ltd [2007] FCA 1468; (2007) 163 FCR 510, 520–1 [53]–[58] (Besanko J); S Sali & Sons Pty Ltd v Metzke [2009] VSC 48 (19 February 2009) [280]–[282] (Whelan J) (upheld on appeal: Metzke and Allen v Sali [2010] VSCA 267 (15 October 2010)) and St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666, 681 [57]–[60], 684 [64].

^[160] As I have discussed above at [321], the development of the Henwood property was based on detailed geotechnical assessment by Mr Holt, a principal of AS James.