WESTCONNEX PROPERTY & BUSINESS DAMAGE UPDATE

A guide to as to what to do if you’ve experienced damage from WestConnex tunnelling or construction or are worried about damage from Stage 3, the M4-M5 Link tunnel The Rozelle Interchange.

 

Recent Developments

New  independent process for assessing property damage claims

The Approval conditions for Stages 1 and 2 (M4 East and New M5) permitted the  contractor itself to determine if they caused damage done to properties as a result of tunneling or construction, with no formal appeal process to either the RMS or an independent arbiter. Unsurprisingly this led to the contractors denying liability for damage as a matter of course, blaming other causes such as the drought or a dripping garden tap.

As a direct result of community groups advocating for changes to the process for assessing damage, the Stage 3 Approval conditions require that the RMS 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. 

Also as a result of community pressure, the RMS have now agreed that the Panel will also determine all disputed property damage claims from Stages 1 and 2. 

The Panel was appointed on 1 June 2019 and we understand is now reviewing disputed property claims from M4 East and New M5 construction. 

Before Construction - Stage 3 M4 - M5 Link Tunnel & Rozelle Interchange

Is your property impacted?

Check the position of your property on the tunnel route map on the WestConnex website: https://westconnex.com.au/tunnelling by zooming down to the street level of the route. The map specifies the properties directly above the tunnel and within 50m of the tunnel edges. Hovering your mouse above a specified address will show you the depth of the tunnel beneath that address.


 

Sub-Stratum Acquisitions and Property Acquisition Notices

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 begins 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 lodge a claim for 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.

Dilapidation Reports

If your home directly above the tunnel or within 50m of the edges of the tunnel or construction site, owners are entitled to the pre and post dilapidation reports.  These are required to 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 50m cut-off distance for the provision of the free condition reports is only a Govt specified distance which it considers to be the “zone of influence” of the tunnelling where damage is most likely to occur from tunnelling. However, we know from satellite ground movement images and from damage done to properties along the M4 East and New M5 routes that damage can occur much further from the tunnel edges. 

Despite this mandated zone of influence, the Planning Approval conditions for each stage make it clear that RMS, as the Proponent of the project, is responsible for repairing ANY damage caused, whether inside or outside this zone.

The free reports are done by contractors working for WestConnex. If you can afford it, it’s a good idea to also get an independent report done that you can rely on if you need to dispute the WestConnex inspection report or if any damage is subsequently denied.  If you’re outside the 50m cut-off zone, but worried about possible damage, you should also get an independent report done. 

The Inner West Council is also offering a free dilapidation report service, but these can’t be later relied on for any claims. https://www.innerwest.nsw.gov.au/develop/major-projects/state-projects/westconnex/westconnex-impacts-in-your-area

Satellite Ground Movement Imaging Reports

The purpose of the dilapidation reports is to document the condition of each property before and after construction. However, they do not prove the cause of any damage done and 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. Contractors for the M4 East and New M5 have routinely denied that damage done is as a result of WestConnex construction, and have blamed other factors such as the drought or dripping garden taps! Properties outside the zone not eligible for a report will find it even harder to argue damage in the future, with their claim rejected on this basis.

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.  

Satellite Imaging reports for individual properties can be purchased from Otus Technology. Further information on the reports and how to purchase them are on the Otus website: https://www.otusintel.com/projects/pa-report/ 

Property Damage during and after Construction

Property damage can occur from tunnelling vibration, ground excavations, changes in soil moisture content and soil settlement, causing ground movement underneath your property.  

Although the Planning Approval conditions for each stage make it clear that RMS, as the Proponent of the project, is responsible for repairing ANY damage caused, the Government has transferred that liability to the contractors in their construction contracts. However, this only affects the responsibility 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.  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.

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, and the Otus satellite ground movement reports may assist in proving causation to the contractor, RMS or the Panel.

Business Interruption Damage

Road closures and diversions have caused significant losses to businesses along the WestConnex routes. However there are no provisions in the Approval Conditions for compensation to businesses, and to date claims from businesses have been denied by the Contractors and Government.

Legal Action - class action, what does it cover and how does it work?

If the contractors, RMS or the Property Assessment Panel do not accept responsibility for damage caused, residents and businesses 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

Legal action can be taken by individuals or businesses or by groups of individuals and businesses as a class action.

An individual action is focussed only on that 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. Contact Dentons at westconnex@dentons.com 

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.

Those concerned about possible damage from Stage can also contact Dentons to alert them of a possible claim.

WestCONnex Action Group

August 2019


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