Alec Finlayson Pty Limited v Armidale City Council and Basia Holdings Pty Limited [1994] FCA 1198;

Alec Finlayson Pty Limited v Armidale City Council and Basia Holdings Pty Limited [1994] FCA 1198; - FCA 1994 case summary — Zoe

[81]

33. Because the issues to be determined at the hearing were confined to those relating to liability, the scientific evidence identifying the extent of the contamination and discussing the measures which might be taken to alleviate it was not fully explored. However, a number of things were made clear. Contamination of the site is patchy, and is particularly heavy at various places in the vicinity of where the cylinder was, and where it is assumed sumps were located. There are also patches of contamination corresponding with areas where the dumping of the contents of 44 gallon drums filled with waste creosote and Tanalith may have occurred. It is probable that some of these patches of contamination were in fact caused in this way. Arsenic and PAH are present, in the main, in the upper layer of gravelly ground, which could have been removed and replaced before the land was subdivided. Once houses were erected, the problem was magnified. Arsenic and PAH are carcinogenic as well as toxic, and where both are involved there may be a synergistic effect, presenting a particular hazard in areas in which young children may play. It is known that some young children eat significant quantities of dirt (the phenomenon has a name - it is called pica, from the Latin word for a magpie); young children generally absorb dirt to an extent which was estimated in one scientific paper tendered in evidence at 100 mg. per day (but an elaborate study by John K. Hawley, of the Bureau of Toxic Substance Assessment, New York State Department of Health, put the figure at 160 mg. per day for children aged 2 1/2 years - and that is in the harsh climate of New York, where children might be expected to be outdoors less than in Australia); and vegetables grown in backyard gardens may take up substances from the soil. Of course, in sufficient quantities, pollutants may inhibit the growth of plants, and there was evidence that in some of the areas in question here grass and trees would not grow, or the grass was patchy and the trees were stunted. As I have said, there is also evidence that turning over of the soil has revealed visible creosote, and the offensive smell of creosote has invaded homes on the land. One of the problems for any remediation is that the contamination varies greatly in intensity from spot to spot, so without removal of the entire upper layer of the ground in the area, it would be difficult to be confident that strong concentrations of PAH or arsenic or both had not been bypassed. Grid pattern testing may not be adequate to exclude the existence of such concentrations.

[96]

40. In very general terms, the nature of the previous use of the land, including the fact that it had involved the application of creosote to timber, was known to the director of the applicant, Mr Finlayson, but the details were not known to him, and he had no reason to suspect that the site itself had been contaminated. Development of this land for residential purposes had already been the subject of final development approval, so far as the nine lots of the first stage, which fronted Martin Street, were concerned, and tacitly the development of the whole area, subject to a suitable subdivisional plan, had already been approved, before Mr Finlayson was introduced to the site. On the basis of his evidence, it is clear that he assumed the land was suitable for residential use, that is, suitable for human habitation, because Council had approved of its development as a residential subdivision and subsequently approved the subdivisional plans and the building plans. Each of these approvals, coming on top of the zoning as residential land, successively confirmed to him that, subject to ordinary building and engineering problems, the land was suitable for the erection of houses. It did not occur to him there could be any doubt about that. As a builder of considerable experience, who had also done a certain amount of development work, he was aware that such applications were referred to all sections of the Council before approval. In buying the land, he had the purpose of erection of cottages in mind, and relied on the development approval which Basia Holdings Pty Limited had obtained as demonstrating that this was a feasible and appropriate use of the land. His knowledge that the land had previously been used for a timber treatment works did not contradict this, since he had no knowledge of the details of that use, and he was unaware of the contaminating properties of creosote. I accept his evidence to this effect and, indeed, having heard him cross-examined, I accept his evidence generally.

[108]

51. As a matter of inference from these circumstances, and in the light of the evidence which provides their setting, it seems to me overwhelmingly probable that the officers of the Council knew that the substances used in the treatment of the poles and other timber regularly escaped from the supposedly closed system involving the cylinder; they knew that the operations were not being conducted with appropriate care to avoid the escape of contaminants; and they knew that waste materials were disposed of on the site. As to the last matter, the evidence is that Hasell was instructed by Mr Crawford to skim off creosote from the pond regularly, and that it in fact did so from time to time. The scum of creosote and water must have been disposed of somewhere. Similarly, the sumps were designed to be skimmed off. It must have been obvious that either the scum from the sumps also required to be disposed of or, if the work was not being done, as I believe it was not, creosote was accumulating in the area of the site in and about the sumps. Mr Crawford must have known that the waste was not being dumped at the Council's dump. There was really only one other likely mode of disposal. Its likelihood was not diminished by any consideration that it may have infringed some regulation; the Council specifically submitted (and I agree, subject to any possible question of nuisance which may have arisen) that: "If Hasell did dump materials on site that conduct was not unlawful." Mr Hegarty, in cross-examination, suggested waste creosote may have been sold off as weed killer or for some other domestic or industrial purpose; but that did not happen in fact, so Mr Crawford would have been aware, being in Armidale over those many years, that such sales were not being advertised. In any case, Hasell's carelessness about the constant flow of spillages out of the site would have been a clear indication that it was not preserving the substances for some form of recycling. The suggestion is fanciful, but the fact that it was made indicates an appreciation by Mr Hegarty that, without some such explanation, the situation must have forced upon Mr Crawford and himself a knowledge of the pollution of the site.

[119]

59. In the applicant's case, evidence was given by a Mr F.J. Hanson, who was a most impressive witness. Mr Hanson is now retired, but continues to work as a part time town planning consultant. He is a civil engineer, certificated town and country planner, and building surveyor. From 1952 until 1973 he worked with the Sydney City Council, eventually becoming Deputy Head of the City Building Surveyor's Department. From 1973 to 1986, when he returned to the Sydney City Council as Director of Planning, he was a member of the Local Government Appeals Tribunal and its successor the Land and Environment Court, of which he became a senior assessor. Mr Hanson gave evidence concerning his own knowledge and experience before 1973, while he was working with the Sydney City Council. His evidence was that "where a non-industrial use was proposed of industrial land or quasi-industrial land, such as an ex garbage tip, questions of contamination were well known and considered". He said that "Council officers were well aware because of the original of those controls (he was speaking of a 19th century provision referring to material from a cess pit) of the need to look at pollution and contamination." He was also "aware that the question of pollution or contamination of sites had arisen in other Council areas." Afterwards, during his period with the Tribunal and the Court, he was aware of two cases prior to 1984, one in the mid 1970s, where the question of contamination of a site proposed to be redeveloped required specific consideration. Part of one site "was specifically excluded by consent from the application because it had been contaminated with asbestos". Referring to earlier periods, back to the 1950s and 1960s, he said: "(O)ur knowledge of what contaminates has certainly increased but the concern about contamination would have been there." Asked about the practice of competent town planners, as at 1984, when required to make a recommendation to a Council on a development application to subdivide land for residential use, the previous use of the land having been for an industrial purpose involving the use of chemicals, he said:

[140]

67. So far as relevant knowledge was concerned, the Council was in a position of dominating advantage compared with the persons to whom it is alleged to have owed a duty of care. The Council also had a statutory duty under s. 90, to which I have referred, to take into consideration "whether the land to which that development application relates is unsuitable for that development by reason of its being, or being likely to be, subject to ... any other risk". In considering whether the Council stood in the appropriate relationship of proximity to persons such as the applicant, so as to raise a duty of care, it is relevant to bear in mind that it was the Council upon which that statutory duty was imposed in relation to the development application. Additionally, of course, the requirements of professional practice, of which Mr Hanson gave evidence, lay upon its town planner, for whom it was responsible in negligence: Voli v. Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 at 100. When Mr Finlayson gave the evidence, which I have accepted, of his reliance upon the Council's approval as indicating that the land was appropriate to be built upon for residential purposes, it seems to me he was justified by the Council's statutory obligation. He could not quote the provision of the statute, any more than many people who justifiably rely upon the performance by others of their legal obligations can formulate those obligations as accurate propositions of law, but I think the basis of his reliance really lay in the practice of councils and those who deal with them, which was itself firmly grounded in legal obligations. Finally, it is an important feature of the situation that the Council took an active part in the creation of the situation from which the applicant's losses came. It was the Council which insisted upon the re-zoning of the land as residential, despite the initial opposition of the State Planning Authority; but if that matter be set to one side, it was still a positive decision of the Council to approve the development application originally submitted by Basia Holdings Pty Limited, and tacitly to approve the proposed further development application foreshadowed in it, which made the subdivision possible, and made the land available to purchasers including the applicant for the purpose of residential construction upon it.

[196]

92. There remain some further issues with respect to the first development approval. The hearing of this matter commenced as a hearing of three proceedings against the Council together, of which the applicant's application was one. The other two proceedings were actions brought by two couples who had purchased lots in the first subdivision, upon which they had had homes erected. The applicant was joined as a respondent in one of those cases. During the course of the hearing, the other two actions were settled. While all three actions were still being heard together, on the afternoon of the first day of the hearing, I was informed by senior counsel appearing for the Armidale City Council, Mr McClellan QC, that he wished to amend the statement of defence filed in the present application to plead a bar under the Limitation Act 1969 (NSW). Counsel for the applicant objected that he had only received the proposed amended statement of defence that morning, and I deferred the question of allowing the amendment until the next day. In the discussion, counsel for the applicant claimed that allowance of the amendment would involve an adjournment. In fact, the matter was not raised again on the following day, as I understand because, the question of adjournment having been aired, those advising the Council were seeking instructions as to whether the matter should be pressed. Just before lunch on the third day of the hearing, counsel for the applicant was advised that the application to amend would be pressed. He informed me, immediately after the luncheon adjournment, that the application would be opposed, and that his client submitted that, if the amendment were allowed, there would need to be an adjournment to enable it to join another party. Mr McClellan QC indicated that, in the circumstances, he would have an affidavit prepared for the purposes of his application to amend, which he would wish to deal with on the next hearing day, the following Monday. In fact, the application got under way on the following Tuesday, when the hearing was already well advanced.

At a glance

Court

Decision date

Before

Source

Judgment (205 paragraphs)

Alec Finlayson Pty Limited v Armidale City Council and Basia Holdings Pty Limited [1994] FCA 1198; (1994) 123 ALR 155 (1994) 51 FCR 378, (13 July 1994)

Parties

Legislation Cited (2)

Cases Cited (22)