Lord v McMahon (No. 3)

1. [1]

   This is the Court’s third judgment in these proceedings. The Court gave its first judgment on 24 November 2015 in which the plaintiff, Mrs Lord, had some success in an action which she brought in trespass and nuisance: Lord v McMahon [2015] NSWSC 1619 (“the first judgment”). Matters were reserved for further contest at a hearing as to the form of final relief and to other consequential matters.

2. [2]

   The outcome of the proceedings was summarised at the conclusion of the first judgment (at [316] to [320]), as follows:

3. [3]

   The Court gave the parties an opportunity to agree upon the form of final relief that would follow from the Court’s determination in the first judgment. But the parties were unable to reach agreement about final relief, despite a lengthy period of negotiations between November 2015 and June 2016. As a result of this lack of agreement, in June 2016 the Court made orders for the proceedings to be set down for a final relief hearing on 31 August 2016.

4. [4]

   On 19 August 2016 the plaintiff applied to vacate the 31 August 2016 hearing on the basis that the experts engaged by each side had insufficient time to reach a consensus about the form of final relief that might be appropriate in relation to both the driveway and the dam areas requiring rectification on the parties’ properties. But the Court declined to vacate the hearing, indicating in its second judgment that the Court did not have confidence that an adjournment and a continuation of the negotiations was likely to result in any consensus between the experts as to a form of final relief: Lord v McMahon (No. 2) [2016] NSWSC 1153 (“the second judgment”).

5. [5]

   This judgment should be read together with the Court’s first judgment and the second judgment. Facts, matters and events are referred to in all three judgments in the same way. Mr Vindin of counsel continues to appear for the plaintiff and Mr Waugh of counsel for the defendant.

6. [6]

   At the hearing on 31 August 2016 the Court heard argument about the form of final relief. By the time of that hearing the experts and the parties had reached broad consensus about the drainage works to rectify the nuisance associated with the roadway leading to the defendant’s, Mr McMahon’s, property. But disputes remained about the earthworks necessary to solve the nuisance and trespass problems with the dam near the boundary between Mrs Lord’s and Mr McMahon’s properties. The relief hearing was principally concerned with this issue.

7. [7]

   The Court gave directions on 31 August 2016 for the parties to file written submissions in advance of the proceedings continuing part-heard on 15 September 2016. Those written submissions were filed. And on 15 September 2016 the parties spoke to them and called additional evidence from their respective civil engineering experts, Mr Diversi and Mr McVey. The Court then reserved judgment on issues of relief.

8. [8]

   At the relief hearing the Court reserved all issues of costs for later consideration. The parties accepted that all remaining issues of costs could only be determined once the final form of relief was ascertained through this judgment.

Rectification Works to the Table Drain

1. [9]

   The parties fully agreed on the scope of the road drainage works with one exception: namely, what works are required to deal with seepage into Lot 1 in the vicinity of the entry point to Lot 2 from its roadway. The experts have a preliminary design idea of how they will solve this seepage problem. They estimate that it will only involve a modest cost of about $1,000.

2. [10]

   The parties therefore sensibly agreed that it was better to spend the parties’ financial resources undertaking the rectification for $1,000, rather than further investigating who or what was responsible for this relatively small quantum of rectification work. Subject to that additional design matter being clarified, the parties have reached agreement that the road drainage works identified in their joint report (Exhibit J) and as drawn by Mr Diversi (in Exhibit L) including the small drain yet to be designed are to be costed and the work to be carried out with the total expenditure being borne as follows: as to 74 per cent at Mr McMahon’s cost and as to 26 per cent at Mrs Lord’s cost.

Rectification Works to the Dam

1. [11]

   But the final relief to be granted in respect of the nuisance associated with the dam remains in dispute. Supported by the expert evidence of their civil engineers, the parties advance different solutions to the nuisance from the dam, although there are common elements between them. Each of the solutions are described below, commencing with Mr McVey’s, which is advanced on behalf of Mr McMahon, followed by Mr Diversi’s, which is advanced on behalf of Mrs Lord. Then these reasons discuss the advantages and disadvantages of each solution by reference to particular issues debated between the parties.

2. [12]

   Mr McVey put a proposal for the rectification of the dam, which was set out in Mr McMahon’s Outline of Issues dated 31 August 2016, and which became Exhibit 11. Mr McVey’s proposal involved the following principal features of a new dam to be constructed on Lot 3, as follows:

3. [13]

   Mr Diversi also put a proposal for the rectification of the dam which was set out in his plans and reports, specifically Exhibit L. The relevant exhibits are detailed below. Mr Diversi’s proposal involved the following principal features of a new dam to be constructed:

4. [14]

   It is clear that there is considerable common ground between Mr Diversi and Mr McVey about their engineering solutions in relation to the dam: the offsets from Lot 3’s northern and eastern boundaries are agreed; the need for a trickle flow pipe is agreed; the requirement of a clay liner to the dam is agreed; the dam cross-section and slopes are agreed but the height is dependent upon spillage design; the spillway width is agreed at 5 metres; and the need for the spillway to convey flows up to ARI 100 is agreed.

5. [15]

   Mrs Lord asks the Court to grant a mandatory quia timet restorative injunction. The Court has already decided in the first judgment (at [224]) that she is entitled to some such injunction, based on the Court’s nuisance findings. But the issue for this hearing is what kind of injunction.

6. [16]

   The considerations which must guide the Court in deciding whether or not to grant such an injunction are stated in Morris v Redlands Bricks Ltd (1970) AC 652 at 665B to 666H:

7. [17]

   It was not in dispute that these are the applicable principles. In the first judgment the Court made findings relevant to the third of Lord Upjohn’s general principles (at 666A – 666E). In the first judgment the Court found (at [224]) that “Mr McMahon has not behaved wantonly or unreasonably in his actions with respect to the dam”. The Court further considered in the first judgment (at [185]) on the issue of the removal of earth from Lot 2 in the context of the need for a mandatory restorative injunction within Morris v Redlands Bricks principles, that “Mr McMahon would be treated as having behaved reasonably but wrongfully”.

8. [18]

   Mr McMahon submits that the cost of works to prevent or lessen the occurrence of a further nuisance is a relevant consideration here. The Court’s task in considering this application for a mandatory injunction, Mr McMahon submits, is that the Court should only impose an obligation to do certain works that will “lessen the likelihood of further injury” rather than entirely eradicate the risk of future injury. Mrs Lord takes issue with this and says that her land must be protected from all likely risk of nuisance.

9. [19]

   This analysis means that the Court must first consider the nature of the nuisance which has been found and needs to be addressed, before the Court considers the appropriate remedy. And when considering the appropriate remedy the Court should examine the cost of the competing remedies. The Court now returns to the findings in the first judgment as to the extent of the nuisance that needs to be addressed.

10. [20]

    The Court’s findings as to the scope of the nuisance are set out in the first judgment (at [203] – [222]). These findings indicate a real and recurrent nuisance problem which must be addressed. In summary, the Court accepted Mrs Lord’s evidence on this subject in the first judgment (at [203]) that since the construction of the dam on Lot 3, to use her words, it “often overflows at its northern end onto my property bringing with it clay sediment, which then forms a film of clay over the pasture which has eventually formed a crust of clay over the soil thereby preventing good quality pasture from growing and also causing deep erosion gullies to develop. As a consequence, significant portions of my property have become silted and remain sodden and unusable for long periods after any rain. In addition the eroded materials are spread from the dam wall through my paddocks and depositing silt in the small dam near my house.”

11. [21]

    In subsequent paragraphs of the first judgment the Court made more detailed findings as to the water nuisance problem Mrs Lord faces. These do not need to be repeated in full but can be conveniently summarised. Very substantial volumes of water emerge from the dam during rainfall, come over the spillway and are concentrated into a substantial flow across Lot 2 (at [204] and [205]). The concentrated nature of the overflows from the dam at its northern end cause a torrent of water to flow down the watercourse bringing some mud and debris from inside the dam with the water (at [208]). And the evidence on the ground indicates “large volumes of water bringing material onto Lot 2” and “the concentrated strength of the torrent” across Lot 2 “cannot be denied” (at [210]). The “large body of water of the dam does spill in a concentrated way onto Lot 2 in contrast to the behaviour of a fully grassed catchment” (at [211]). There is “a substantial and unreasonable concentrated inundation of water from the dam and spillway on Lot 3” (at [212]). Similar findings are made about concentration of water flow from Lot 3 over the spillway (at [213]) and that a water nuisance emanates from the spillway the northern end of the dam (at [217]).

12. [22]

    These findings represent a significant water nuisance occasioned to Mrs Lord’s land, Lot 2, during periods of significant rainfall by the current configuration of the dam on Lot 3.

13. [23]

    Resolution of the contest between the McVey solution and the Diversi solution requires focus upon several principal considerations, which were debated between the parties at the hearing. Each of those principal considerations is dealt with below.

14. [24]

    But three preliminary matters need consideration. The first preliminary matter is setting out a summary of the additional expert evidence tendered in relation to the relief hearing. There were difficulties coordinating the expert evidence to meet the deadline of the hearing fixed for 31 August 2016. But each expert was given an opportunity to fully review the material that the other expert had produced. Indeed an adjournment was allowed on 31 August to permit Mr Diversi to absorb some material which had only been served shortly before that hearing day.

15. [25]

    The additional expert evidence was, first for Mrs Lord: a joint report of the experts dated 26 August 2016 (Exhibit J); a letter from Mr Diversi dated 29 August 2016 describing his solution for reconstructing the dam (Exhibit K); Mr Diversi’s drawings (00 to 08) with his red handwritten markings on them, setting out the point of disagreement that emerged between Mr Diversi and Mr McVey at their site meeting (Exhibit L); a letter from Mr McVey to Mr McMahon dated 4 February 2016 (Exhibit M); an agreed expert’s agenda (Exhibit N); Mr McVey’s site plan (Exhibit P); Mr Diversi’s Dam Stormwater Calculations (Exhibit Q); and Mr Diversi’s further Stormwater Calculations (Exhibit R).

16. [26]

    The additional expert and related evidence tendered for Mr McMahon on the relief hearing was as follows: material entitled “Defendant’s Outline of Issues (Exhibit 11); Mr McVey’s report of 30 August 26 (Exhibit 12); and, Mr McVey’s report on his further investigation of the dam catchment on 5 September 2016 (Exhibit 13).

17. [27]

    The second preliminary matter is that some of the evidence at the relief hearing related to the question whether Mr McVey had at one point agreed with Mr Diversi’s solution that the spillway should exit the new dam to the south, not the north, and that Mr McVey subsequently changed his mind and ultimately propounded the solution attributed in this judgment: with the spillway at the northern end of the dam. But Mr McVey’s alleged change of position, said to be evidenced in Exhibit P, Mr McVey’s diagrammatic notes, was not clear, despite Mr Vindin’s contention for Mrs Lord contended that it was. I accept Mr McVey’s evidence that his notes on Exhibit P do not indicate his agreement with Mr Diversi’s proposal of a spillway on the southern end of the dam and that he, Mr McVey, always favoured a spillway at the northern end. The Court ultimately concentrated on the logic behind the positions that each party finally presented to it. Mr McVey was able to defend his final position logically and, in my view, he did not change his position in a way that did him any professional discredit.

18. [28]

    The third preliminary matter is the question whether the Court should even become involved in considering the detail of these two competing solutions. The Court usually neither prescribes nor supervises the execution of particular engineering solutions to nuisance problems but express its orders in general language. A common standard form of injunction in a nuisance case consists of an order forbidding the defendant from the acts complained of “in such a manner as to constitute a nuisance to the plaintiff”: Thompson – Schwab v Costaki [1956] 1 WLR 335 at 340 and mandatory injunctions are commonly couched in language to take “all steps necessary” to bring about a certain result: Kennard v Cory Brothers & Co Ltd [1922] 1 Ch 265.

19. [29]

    But there are limits on the use of general language in mandatory injunctions. First, as Meagher, Gummow and Lehane explain, there is a danger in couching an injunction in excessively wide language which will thereby prohibit activities which there is no right to prohibit, as well as those with respect to which there is such a right: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed 2014, LexisNexis Butterworths) at 21-485 and Tobacco Institute (Aust) Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1. Secondly, this is a case where the two parties’ different engineering solutions are so different that a decision needs to be made in order to set parties on one or other of two inconsistent paths. Thirdly, these reasons do not prescribe the detail of a particular engineering solution. But rather they indicate which of the two approaches of the experts that the Court prefers. The engineering details for execution of the task are still left to the experts, Mr McVey and Mr Diversi, who have both demonstrated themselves to be very competent professional witnesses throughout these proceedings. These reasons take the approach of setting out the higher-level differences of principle between the experts, rather than examining the engineering detail of their solutions. Indeed it is not possible to address their engineering detail whilst keeping these reasons within a reasonable compass.

20. [30]

    The McVey Northern Spillway Solution Preferred. Mr McVey’s design involves moving the existing dam and constructing another one 10 metres away from the northern boundary, so that water flow out of the spillway would play northwards towards the natural drainage line. This will have the effect that water coming out of the spillway in a storm event would mix with the normal stormwater flowing down the natural watercourse from the higher ground to the north of Mr McMahon’s Lot 3. Mr McVey is firmly of the view that during rain the water coming out of the northern spillway would be almost “immeasurable”, in comparison to the water coming down the natural drainage line from the higher land from the north-west. By this he means that it cannot be measured because it is absorbed into the well-grassed 5 metre spillway.

21. [31]

    The Court prefers Mr McVey’s solution for several reasons. First it is the cheaper solution. Both experts were of the view that the Diversi solution may cost $30,000 more than the McVey solution. But even that difference is uncertain. At one stage Mr McVey said, and I accept, that there is a real risk, depending on conditions, that the Diversi solution could be $40,000 to $50,000 more expensive than his solution. Relative cost is an important factor in the Court’s consideration of the appropriate solution.

22. [32]

    Secondly, many of Mrs Lord’s submissions and Mr Diversi’s engineering design were predicated on the assumption that the nuisance had to be eliminated completely. In my view, a correct application of the principles in Morris v Redland Bricks Ltd set out above indicates on the basis of the Court’s findings in the first judgment that the proper approach here is to lessen the likelihood of further injury. But that does not necessarily mean that the possibility of some further injury is completely eliminated. If it is not fully eliminated Mrs Lord has her remedies at law.

23. [33]

    Thirdly, Mr Diversi raised issues about Mr McVey’s proposal because his 150 millimetre trickle pipe potentially would block up with silt. Mr McVey has a solution to this issue. He proposes putting a “T” piece at the dam end of the trickle pipe, below the waterline. His opinion is that this “T” piece would not capture grass or floating material within the new dam and therefore the trickle pipe would not block up in the dam. Mr McVey says that a small trickle pipe such as this with a “T” piece is commonly used in agricultural situations.

24. [34]

    I accept Mr McVey’s evidence about the reliability of the “T” piece. He has suggested that multiple “T” piece entrances could be used to prevent blockage. He points out that if blockage does occur that it would be obvious, because there would be no water flowing through the pipe. His greater familiarity with “T” piece techniques does not put Mr Diversi in a strong position to dispute his opinion. In my view a “T” piece with a 150 millimetre trickle pipe would be satisfactory. A wider trickle pipe is not needed. Of course that does not preclude Mr McMahon, if he wants to ensure he does not face further common law action from Mrs Lord in the future, from investing in a pipe, possible 375 millimetres wide. But that is a choice for him.

25. [35]

    Fourthly, one of Mr McVey’s principal issues with Mr Diversi’s solution is that during heavy rain such a southern spillway would potentially divert large volumes of water in the direction of and down Mr McMahon’s driveway on Lot 3, thereby creating a different kind of nuisance in the form of a walking and driving hazard during wet weather and erosion in the vicinity of the very steep part of Mr McMahon’s road on Lot 3. The parties disagreed whether Mr Diversi’s proposed water flows presented a genuine risk of nuisance to Lot 3. But I accept Mr McVey’s evidence and find that they do and that risk weighs against the Diversi solution.

26. [36]

    Fifthly, one of Mrs Lord’s concerns is that the flows of water out of northern spillway would be so substantial that they would re-create the erosion and the dispersal of debris on her land that she has seen in the past. But the quantity of those flows largely depends upon the catchment area of the new dam. There were substantial differences between the experts on the catchment area: Mr Diversi saying it could be as much as 9,000 square metres and Mr McVey saying it would be as little as 4,000-6,000 square metres. But I accept Mr McVey’s evidence, which was ultimately not strongly disagreed with by Mr Diversi, that by the careful construction of swales it is possible to limit the catchment area of the new dam to perhaps no more than about 4,000-6,000 square metres, thereby significantly reducing the quantity of water that would have to be managed through the dam in heavier storm events.

27. [37]

    Sixthly, the parties did disagree about how they were to deal with minor flows that resulted from seepage for 3-5 year rain flow events, as distinct from a 100 ARI. But in my view, Mr Diversi’s solution of building a southern spillway 5 metres wide and 50 metres long as distinct from Mr McVey’s solution of a 5 metre wide spillway which is 5-10 metres long, is an excessive response to this aspect of the nuisance problem. In order for the southern spillway to work satisfactorily to deal with major and minor events and avoid leakage of water down into Lot 2, it needs to be 50 metres long and to interfere with a natural flow of water down from Lot 3 to Lot 2 across its length. In my view, the trickle pipe as proposed by Mr McVey is a satisfactory solution for concerns about minor flows as well as the major flows.

28. [38]

    The Court made clear in the first judgment (at [218] –[219]) that any relief granted to the plaintiff for nuisance must be conditional, because of her attempts at abatement of the nuisance in the dam area, that had actually made the nuisance worse. Formulating a way to give effect to that conditional relief was the subject of much debate between the parties.

29. [39]

    Several things are clear from that debate. First, the experts were of the view that it could not be determined in advance exactly how much dam-related earthworks would need to be done on Lot 2, Mrs Lord’s land, as the decision to undertake such earthworks was partly an economic one. Second, it was difficult therefore to ascertain in advance what proportion of the earthworks that would be ordered should be undertaken at Mrs Lord’s expense. Thirdly, part of the area which may have to be regraded and re-grassed on Mr McVey’s solution on Lot 2 is area that Mrs Lord herself has interfered with in the past and is responsible for repairing in accordance with the reasons expressed in the first judgment.

30. [40]

    The best the Court can do in this situation, is to apply an interim formula which gives effect to the first judgment and does not create an unfair burden on either Mrs Lord or Mr McMahon. In my view, on an interim basis only, Mrs Lord should be required to pay 50 per cent of the cost of all earthworks on her own land and Mr McMahon the other 50 per cent. Mr McMahon will bear all the expense of works on his land. Mrs Lord will have an immediate liability to make these payments. But she will have liberty to put on submissions after the works are done if she wishes to contend that this produces an unjust result for her.

31. [41]

    This is therefore only an interim working solution. Hopefully however it may produce a result which is essentially fair between the parties. The figure is reached on the basis of the Court’s assessment of the photographs of previous damage to the topsoil for which Mrs Lord is responsible and the fact that she would have to repair this damage in any event, together with the fact that the extent of the dam earthworks on her land which will have to take place is quite uncertain.

32. [42]

    This expenditure will be a charge over Mrs Lord’s land and Mr McMahon’s land modelled on the charges the Court has formulated for the road drainage works. To create greater certainty in the implementation of this scheme photographs will need to be taken before the dam works commence.

33. [43]

    The Court will make the orders set out below. If the parties want greater definition as to those orders or to vary them they should apply with their draft further orders within 3 working days of today. The orders in relation to the road drainage can be used as models for the dam works.

    1. (1)

       The Court orders that to remedy the nuisance arising from inadequate road drainage on the parties’ respective roadways on Lots 2 and 3 that road drainage works (“the roadway works”) are to be carried out by the defendant substantially in conformity with the agreed expert evidence contained in Exhibits J and L and the defendant will pay seventy-four per cent (74%) and the plaintiff will pay twenty-six per cent (26%) of the total cost of such road drainage work.

    2. (2)

       Order that each party will be jointly and severally liable to pay all expenses to complete the roadway works and is liable to indemnify the other party, so that each party pays its correct proportion of this expenditure in accordance with Order 1 hereof and that such liability will be a charge on each party’s respective interest in Lot 2 and Lot 3.

    3. (3)

       Order that photographs be taken of the dam area as a present record of that area by the solicitors for the parties or otherwise by agreement within 14 days of these orders.

    4. (4)

       Order that within 3 working days the parties bring in Short Minutes of Order to give effect to these reasons for the execution of the dam works, which Short Minutes will be modeled on Orders 1 and 2 above in relation to the roadway works.

    5. (5)

       Reserve for further consideration all issues of costs arising out of the principal hearing and the relief hearing.