Class Action and Property Damage Community Information Meeting

Marrickville Town Hall, 17 April 2019

For those who missed the packed community information meeting, which discussed WestCONnex property damage and the possibility of a class action, or have asked for more info, here is a summary of the issues covered by the meeting.

 

 

 

Presentations were given by:

  • Kathy Calman, a Beverly Hills resident, whose home has been severely structurally damaged, denied by the WestConnex contractor and NSW Planning
  • Community representative (lawyer and co-founder of Leichhardt Against WestConnex (LAW)), on the Planning Approval conditions, responsibility for damage, dilapidation reports, sub-stratum compulsory acquisitions, and how satellite imaging technology can show ground movement and assist in proving causation of damage
  • John Dalzell and Ben Allan, litigation partners of Dentons, international law firm, on the possibility of a class action for damage from WestConnex

 

Experience of damage caused by WestCONnex works

Property damage can occur from tunnelling vibration, changes in soil moisture content and soil settlement, causing ground movement underneath your property.  Kathy Calman and her neighbours in Beverly Hills have a extensive structural damage to their homes from the extension of the M5 King Georges Interchange, with virtually every wall and ceiling having major cracks. Window frames are no so distorted that the glass has cracked.

Kathy’s home is 30m from the expansion cut for the motorway, and the excavation has led to significant changes in the subsoil and drying out of soil moisture leading to differential settlement and extensive property damage. Her complaints to the contractors have been denied, with them blaming dry weather and a dripping garden tap!  Despite many complaints and appeals, including a meeting with the then Minister for WestConnex, RMS have refused to assist. The Dept of Planning have also refused to help, and have “closed” her case. Kathy has had to hire an experienced engineer to assess their property, however RMS denied them access to geotechnical documents for 'security' reasons.  Kathy’s home will require major repairs, with foundations requiring re-pinning, and is expected to cost around $200,000.

Similar damage has been reported by residents in Haberfield, North Strathfield, Concord and St Peters from tunnelling beneath homes. Again, the WestConnex contractors have denied that the tunnelling works caused these damages.

 

Who is responsible for damage?   

Despite Roads and Maritime Services (RMS) and the Government publicly stating that the obligation to repair damage from construction or tunnelling is with the WestC onnex contractors, the Planning Approval conditions for each stage make it clear that RMS, as the Proponent of the project, is responsible for repairing ANY damaged caused. The Government has transferred that liability to the contractors in their construction contracts, but this is between the Government and the contractors, and does not affect RMS’s principal liability under the Approval Conditions. The RMS must be held accountable for any damage caused. One concerning issue is that the Approval Conditions expire 12 months after completion of construction, but it is very possible that damage will occur later than that as soil settles.

 

How do you make a claim and prove causation?

For Stages 1 and 2 (M4 East and New M5) the Planning Conditions provide that the contractors themselves determine in the first instance whether there has been damage caused by the works. However, to date contractors have refused to accept liability for any damage, blaming the drought or dripping taps.  The RMS only becomes involved in some instances when the property owner has been unable to reach agreement with the contractor.  A number of residents have taken their claim to RMS, and RMS has conducted further inspections of their properties, but to date has not accepted or agreed to repair any damage. RMS has advised the residents that their claims will be assessed by the Independent Property Assessment Panel set up for Stage 3 (see below), but there is no legal requirement for them to do so.

It is an Approval condition that the contractors are obliged to provide pre and post construction dilapidation reports for properties that may be adversely affected by their works, recording the condition of the property before and after works.  The Government and contractors have also determined that eligibility for these reports is generally limited to properties within 50m of the construction or tunnel.  Even when damage is evident from the post dilapidation report, the burden of proving that the damage was caused by WestConnex remains with the resident and this can be very difficult to establish without geotech data. In addition, properties outside the zone are not eligible for a report and may find it even harder to argue damage in the future, with their claim rejected on this basis.

 

What is the new process for assessing property damage for the M4-M5 Link?

A condition of the Approval of the M4-M5 Link is that the RMS must establish an Independent Property Impact Assessment Panel (Panel) before any works that have the potential to result in property impacts commence. The Panel must comprise geotechnical and engineering experts independent of the design and construction team, and is responsible for independently reviewing condition survey reports, the resolution of property damage disputes and the establishment of ongoing settlement and vibration monitoring requirements. Either party can refer the dispute to the Panel with all costs borne by the RMS. The RMS advises that the Panel is expected to be in operation very shortly.

The creation of the independent Panel for Stage 3 is a direct result of community groups advocating for changes to the process for assessing damage from that allowed for Stages 1 and 2, where it is the contractor itself that determines if they caused the damage. It is hoped that the Panel will result in a fairer process. However, the issues with proving causation will remain.

 

How can the satellite ground movement imagery help?

The satellite imaging recently revealed by Otus Technology can accurately show ground movement before, during and after WestConnex works, which enables an alignment in timing between the works and damage to be established, and potentially assists in establishing causation.  Residents wishing to register their interest in a satellite ground movement report for their property can contact Otus Intelligence (register@otusintel.com). It should be noted that a satellite report is one piece of information in the process of establishing causation, alongside other evidence such as geotech reports, which will involve an overall analysis of the property site and conditions to determine causation of damage for each property.

 

What is a class action, what does it cover and how does it work?

Individuals who’ve suffered damage as a result of WestConnex works may have a legal claim against RMS. Damage suffered covers property damage, but can also include damage to business and health impacts under various possible legal heads, including common law claims for:

  • Negligence
  • Nuisance
  • Inconvenience, stress and vexation

An individual action is focussed only on that individual’s claim and damage, and allows the claimant to control the proceedings, but the costs of proceedings and the need to provide a surety for the other party’s costs if the claim is lost usually means that an individual claim is not economically viable or affordable unless the claim is for a very large amount and the claimant can afford the costs.

Class actions are for situations where there is a sufficient commonality amongst claims. Legislation allows multiple claims to be grouped, with a lead claimant or claimants representing a class of people with common claims. This means that claims can be aggregated to achieve efficiencies (e.g. lower costs and faster progress of claims) and strategic advantages (e.g. greater bargaining power), costs advantages and protections for group members.

Class actions are to recover compensation for economic losses only:

  • Diminution in property value
  • Reduced profitability of businesses
  • Stress, inconvenience and vexation

Class actions will not:

  • Provide you with damages for personal injuries
  • Require the offending party to remediate the problem
  • Prevent future losses from occurring
  • Set a new Government policy going forward

Class actions can encompass a number of sub-classes of claimants. For example, there would be sub-classes for damage from construction and tunnelling, as both will require different evidence. Similarly claims by businesses for loss of profit would be another sub-class.

 

Who pays for a class action?

Class actions are funded by specialist litigation funders. The funders pay for the lawyers and all proceedings, evidence gathering, and provide the surety for costs, so the individual claimants don’t have to bear these costs. If the class action is unsuccessful, this is at the risk of the litigation funders. However, if the action is successful, then the funders are repaid their costs plus and fees, from the total amount of the damages awarded. After paying for the costs, the rest of damages awarded is divided between the claimants, according to complex formulas.

 

Next steps in a class action

The first step is to collect data on how many people have suffered damage and the extent of that damage, to determine if there is a large enough body of claimants and damages for a class action to be worthwhile.

Dentons have prepared a questionnaire for people to confidentially provide this data. If your property has been damaged, or your business has suffered, or you have had health impacts as a result of WestConnex works, please complete this questionnaire and return it to Dentons at westconnex@dentons.com  

Click here to download the questionnaire.

 

This data gathering is critical, as it is only if there is sufficient number of claimants and damage that the matter can move to the next step

Lawyers will then provide advice on the prospects of success in any claims, and if this is positive, litigation funders are brought on board.

Before any litigation is commenced, the class will demand a resolution from the Government. If this is not forthcoming, proceedings are started.

 

Does a class action cover possible damage from Stage 3 construction or tunnelling?

Class actions can only be commenced if there is existing damage, and cannot be used to injunct potential damage. However, construction, demolition and tunnelling is starting now, and the class action process is slow and people who suffer from Stage 3 damage can be added to the class action at any time before the suit gets to court.

It is expected that a much larger number of property damage claims will arise from the Stage 3 tunnelling, as the tunnel is significantly shallower and wider than the M4 East or New M5 tunnels, and is to run underneath very old densely built suburbs with very old properties, which are much more vulnerable.

 

Stage 3 – Substratum compulsory acquisitions and dilapidation reports

If your home is directly above the tunnel route, the Government is required to compulsorily acquire the land underneath your home through which they will be tunnelling.  Property owners along the route will be sent Property Acquisition Notices (PAN) for the compulsory acquisition of substratum under the Land Acquisition (Just Terms Compensation) Act 1991. The process is similar as the compulsory acquisition of homes, except that the Government does not pay any compensation for the land, on the assumption that the home owner is not economically damaged by the works.

RMS is sending PANs to owners along the route as tunnelling begins in that part. Construction cannot begin until all the substratum along that part of the route has been acquired. Owners in Haberfield and St Peters have already been issued PANs, as the contractor plans to begin tunnelling at those ends.

The PANs are complex legal documents and home owners should read them very carefully or get legal advice if they don’t fully understand the document. Owners have 90 days from the date of the PAN to appeal. If no appeal is lodged, the acquisition goes ahead with no compensation.

  1. 62 of the Land Acquisition (Just Terms Compensation) Act 1991 states that:

If the land under the surface is compulsorily acquired for the purpose of constructing a tunnel. Compensation is not payable unless:

(a) the surface of the overlying soil is disturbed, or

(b) the support of that surface is destroyed or injuriously affected by the construction of the tunnel; or

(c) any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.

As we are now aware of the potential damage to the surface of land (and the homes on that land) under which tunnelling is done, it is possible that homeowners may have a claim for compensation for the substratum acquisition. Claims are made under s. 39 of the Act, which sets out a process where compensation is determined by the Valuer General, based on:

  • Severance
  • Disturbance
  • Any increase or decrease in the value of the land...by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired

A Section 39 compensation form can be completed as part of the compulsory acquisition process. With this form it is possible to seek compensation for potential future loss of property market value and other costs such as legal and valuation fees. Although the Government has historically denied any compensation for substratum acquisition because it is of the view that the restrictions to compensation in s 62 of the Act 1991, the ability of satellite imagery to show ground movement may open up the possibility of such claims. It is likely the Government will continue to deny any such compensation but there is value in residents pushing for this, on the basis that the tunnelling, contrary to assumptions, may in fact result in damage and loss of market value and ought to be properly compensated.

If your home is not directly above the tunnel, but within 50m of the edges of the tunnel or construction site, owners are entitled to the pre and post dilapidation reports as with Stages 1 and 2. These will be offered to residents by the contractors along the route as construction progresses. They are offered after the substratum acquisitions have been completed, and must be done before construction commences in that area.

The WestConnex website contains a tunnelling map for each Stage, showing the route and the homes entitled to dilapidation reports (see link to the maps for the M4-M5 Link tunnel below).

 

Useful links for further information

www.stage3a.anzgeo.com - Look up property address for tunnel route and depths

Council dilapidation report service - Inner West Council - https://www.innerwest.nsw.gov.au/develop/major-projects/state-projects/westconnex/council-dilapidation-report-service

Email RMS at info.westconnex@rms.nsw.gov.au


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