Charben Haulage Pty Ltd v Environmental & Earth Sciences Pty Ltd

Federal Court of Australia|2004-04-08|Before: Wilcox J

REASONS FOR JUDGMENT WILCOX J: 1 This case concerns contamination of two adjoining allotments of land at Killara, a suburb of Sydney. The allotments were used for many years as sites, respectively, for a motor service station and a mechanical workshop. They were subsequently redeveloped for commercial purposes. When discussing the allotments collectively, it is convenient to refer to them as 'the Site'. 2 The commercial redeveloper, Charben Haulage Pty Limited ('Charben'), sues Caltex Petroleum Pty Limited ('Caltex', the second respondent), the owner of one allotment and lessee of the other, and Environmental and Earth Sciences Pty Limited ('EES', the first respondent), a consultant employed by Caltex to supervise remediation of the Site. 3 The case turns substantially on issues of fact and contractual interpretation. There is little dispute about legal principles. 4 These reasons are arranged as follows: Paras History of the site (i) The first report: Report 19844 5 - 8 (ii) UST removal 9 - 12 (iii) EES' validation of Lot T: Report 19844B 13 - 23 (iv) The applicant 24 - 26 (v) The Lot T contract 27 - 31 (vi) The Lot U contract 32 - 37 (vii) Validation work on Lot U 38 - 39 (viii) The Geotechnique report of March 1999 40 - 42 (ix) Charben's development application 43 - 44 (x) EES' validation of Lot U: Report 19844C 45 - 53 (xi) Council's intervention 54 - 57 (xii) The appointment of HLA 58 - 65 (xiii) HLA's draft site audit report 66 - 68 (xiv) Geotechnique's draft RAP 69 - 70 (xv) Site activities: August 2000 - February 2001 71 - 82 (xvi) The appointment of SKM 83 - 89 (xvii) Construction work: May 2001 - August 2001 90 (xviii) Work stopped: August 2001 - March 2002 91 - 92 (xix) Work completed: April 2002 - August 2002 93 - 94 The applicant's case 95 - 104 The representations allegedly made by EES and Caltex (i) Identification of the representations 105 - 106 (ii) The Site had been validated in accordance with the Guidelines 107 - 131 (iii) Significant vertical migration was unlikely 132 - 135 (iv) No down gradient impact 136 - 139 (v) Suitability for new use 140 - 149 The case against Caltex (i) The Trade Practices Act claims 150 - 156 (ii) The contract claim 157 - 177 (iii) The negligent misstatement claim 178 - 180 (iv) The negligence claim 181 - 183 (v) Conclusion concerning Charben's liability 184 - 185 The case against EES (i) The Trade Practices Act claims 186 - 197 (ii) The negligent misstatement claim 198 - 214 (iii) The negligence claim 215 - 220 (iv) EES' claim to indemnification by Charben 221 - 226 Assessment of damages: general 227 - 228 Assessment of damages: two points of principle (i) Caltex and Lot T 229 - 237 (ii) Increased costs before February 2001 238 - 242 Diminution in building value (i) Allowability 243 - 248 (ii) Quantum 249 - 258 Additional capital costs 259 - 276 Loss of rental income 277 - 286 Total damages 287 - 288 Caltex's cross-claims (i) The amended cross-claim 289 (ii) The cross-claim against Charben 290 - 293 (iii) The cross-claim against EES 294 - 303 EES' cross-claim against Caltex 304 Disposition 305 History of the Site (i) The first report: Report 19844 5 At material times, the two allotments were known as 692B Pacific Highway (also called 'Lot U') and 694 Pacific Highway, Killara (also called 'Lot T'). A service station was located on Lot U. It was owned by Caltex. Lot T was owned by other persons including, from 1991, Paul Ward-Harvey and David Clifton Ford ('the lessors'). A mechanical workshop was located there. It was used in conjunction with the service station, and leased to Caltex. 6 In early 1997, Caltex decided to close the service station and sell Lot U. However, closure was not to take place until 1998. To cover the intervening period, Caltex took a fresh lease of Lot T, which (as amended) allowed Caltex to remain in occupation until 30 August 1998. This lease, in common with its predecessor, imposed environmental obligations on Caltex, including obligations to provide to the lessors an environmental audit report, to carry out remedial works in accordance with that report and to provide the lessors with an independent validation report after remedial works had been completed. 7 On 19 March 1998, Emil Ford & Co, the lessors' solicitors, requested Caltex to provide the environmental audit report. Caltex engaged EES for this purpose. EES delivered a report to Caltex on 19 May 1998 ('Report 19844'). A covering letter included the following statement: 'In summary the investigation shows that fill material at the rear of the existing building contains total petroleum hydrocarbon (TPH) concentrations in the C10-C36 range above the NSW EPA Guidelines for the assessment of service station sites. In addition levels of lead in the fill exceed the NEHF guidelines for industrial/commercial sites and is above the residential criteria for lead and copper. The estimated volume of impacted soil is approximately 30m3. Access limitations to the rear of the property, due to the position of the building, would make remediation difficult.' 8 A copy of Report 19844 was provided to Emil Ford & Co. They complained about its failure to specify a remedial program in respect of petroleum hydrocarbon contamination that had been discovered in two boreholes by EES and required the contaminated area to be remediated. (ii) UST removal 9 At about this time, Caltex informed Ku-ring-gai Council ('Council'), the relevant local authority, of its intention to decommission and remove the fuel storage system on Lot U, prior to sale and redevelopment of that allotment. Caltex said that decommissioning and environmental assessment would be 'conducted in accordance with Workcover regulations and EPA Guidelines for remediation of sites'. The words 'EPA Guidelines' referred to a publication of the New South Wales Environment Protection Authority ('NSW EPA'), Guidelines for Assessing Service Station Sites ('the Guidelines'). 10 An application was made to Council, accompanied by a Decommissioning Plan that contemplated remediation to a residential standard. Clause 3 of the Decommissioning Plan stated: 'The site remediation is intended to validate the site as suitable for potential future land uses. Site remediation will reflect the zoning of the site. However, where viable, at sites current [sic] zoned as commercial, remediation will be to a standard that will also allow residential (ie sensitive) redevelopment. For sites remediated to a standard that will allow residential redevelopment the NSW EPA criteria for sensitive land use (soil) will be employed as the site clean up criteria. These clean up goals are presented in Table 1.' Table 1 set out the NSW EPA standards for remediating land containing various hydrocarbon contaminants. 11 Council gave development approval for the work on 27 July 1998. The approval was subject to conditions, including the following: '29. Upon removal of the storage tanks the applicant shall undertake testing to determine the level of soil contamination and extent of remediation works required. A report detailing the above shall be submitted to Council for consideration and approval prior to remediation works being undertaken. … 32. Upon completion of decontamination of the site a final report prepared by an Environmental Protection Authority Accredited Auditor declaring the site to be suitable for a specific future development shall be submitted to Council.' 12 In July 1998, the underground storage tanks ('USTs') on Lot U were removed by a contractor. EES representatives supervised the work and kept daily notes of its progress. The notes for 19 July 1998 mention 'Moderate HC [hydrocarbon] odour in backfill sands' and that 'drilling at rear of service [station] indicates HC migration occurring at interface (confined flow) in clay sand - sandy clay layer of moderate permeability. [Contamination] may extend beyond the site boundary'. (iii) EES' validation of Lot T: Report 19844B 13 By August 1998, action was being taken towards selling both allotments. On 10 August 1998, EES presented a proposal to Caltex 'to carry out validation and partial supervision of remediation' of the Site. The proposal stated: 'Once tanks are removed all tank pits will be sampled in accordance with the NSW EPA Guidelines for assessing service station sites. The remainder of the sites will be validated after remediation of fill, if any, according [sic] NEHF D criteria and NSW EPA Soil sampling guidelines.' 14 On 13 August 1998, Simon Caples of Caltex instructed Philip Mulvey, Managing Director of EES, to '[p]roceed with the decommissioning activities', presumably in accordance with EES' proposal. 15 Work commenced almost immediately. The evidence contains borehole logs, two of which ('BH 10' and 'BH 11') referred to either a strong or moderate 'HC odour' at a depth below one metre. The material above that depth was described as 'clay' or 'sandy clay'. A sectional diagram indicated that the rear of Lot U, where BH 10 and BH 11 were situated, was down gradient from the USTs. The interface between sandy loam and sandy clay stratas roughly followed the surface gradient of the land, falling from the middle of Lot U to the rear boundary. 16 Laboratory analyses of samples taken from BH 10 and BH 11 revealed elevated levels of benzene, toluene, ethyl-benzene, xylene, TPH C6-C9 and TPH C10-C14. 17 There were originally two USTs in front of the workshop building on Lot T. They were removed and samples were taken of the soil in the surrounding area. In his report of 25 August 1998, Richard Campbell of EES noted a 'strong HC odour in majority of samples'. Caltex agreed to transfer the contaminated soil to a stockpile on Lot U. 18 On 11 September 1998, Emil Ford & Co wrote to Caltex's solicitors asking 'as a matter of urgency what is happening with the remediation of the land and when we can expect to receive the validation report'. The solicitors responded that Caltex 'has finished the remediation work in the area owned by your client and … expects to have a validation report prepared by the end of the week'. 19 On 19 October 1998, EES wrote to Caltex proposing to 'undertake the removal of metal rich contaminated soil from the rear of the leased workshop portion' of Lot T and to 'provide a validation report for the leased portion of the site'. This proposal was accepted. EES brought a bobcat on to Lot T for two days and the stockpiled soil was moved from Lot T to Lot U. 20 On 22 October 1998, Council approved demolition of the service station. On the same day, commercial waste (metal shavings, car parts, glass bottles and tyres) was removed from the rear of the workshop on Lot T. However, Tracey Bauer, General Manager of EES, who was supervising this work, noted that complete removal of waste material was impossible due to possible undermining of embankments. Analyses of samples of the excavated material showed elevated levels in the higher TPH fractions. 21 Caltex retained two firms of real estate agents to act jointly in connection with the sale of Lot U. They were apparently also instructed by the owners of Lot T, and so were able to offer the two allotments together. Emil Ford & Co continued to press for a validation report. It was issued by EES on 9 November 1998 ('Report 19844B'). The report was written by Ms Bauer and audited by Mr Mulvey. Ms Bauer holds a degree of Bachelor of Engineering in Geological Engineering from the Royal Melbourne Institute of Technology and a degree of Masters of Engineering Science in Waste Management from the University of New South Wales. She has worked for EES for about ten years. 22 Report 19844B related only to Lot T. Its stated objective was 'to validate the site after remediation to confirm the site is suitable for industrial useage [sic]'. However, the Conclusion to the report went further than this, at least in relation to use-suitability. The report included these statements: 'Remedial works undertaken on the leased portion of the site at 692 Pacific Highway, Killara, Sydney, included the removal of a 10 000 L unleaded petrol UST and a 14 000 L premium unleaded petrol UST, validation of the tank excavation, removal of heavy metal contaminated insitu fill material from behind the work shop, validation of the excavation and validation of the site. The laboratory results for TPH and BTEX confirm that the tank void was validated according to the NSW EPA Guidelines for assessing service station sites - December 1994 and the area is now suitable for any landuse. Statistical analysis of lead confirms this, while all organic analyses were below the instruments levels of detection.' (emphasis added) 23 On 19 November 1998, Caltex's solicitors provided a copy of this report to Emil Ford & Co. (iv) The applicant 24 At about this time, Dimitrios (Jim) and Victoria Janakis became interested in purchasing the Site for the purpose of carrying out a redevelopment. Neither of them had previous experience in property development; they had run a dry cleaning business for 23 years. However, Mrs Janakis was the daughter of Steve Paradisis, a person who had extensive property development experience, acting through a company called Caldas Holdings Pty Limited ('Caldas'). In more recent years, Mr Steve Paradisis had operated the company with his son Theodore, a licensed builder. Caldas operated on the basis that Mr Steve Paradisis made most of the commercial decisions and Mr Theo Paradisis was responsible for organising the building work. 25 Some time previously, Mr and Mrs Janakis had told Mr Steve Paradisis they wished to acquire an investment property. In October or November 1998, Mr Steve Paradisis told Mr and Mrs Janakis about the Site. They inspected it and liked its location. They asked Mr Steve Paradisis to negotiate the purchase of the two allotments on their behalf. He did so and negotiated a total purchase price of $1,100,000. Mr and Mrs Janakis agreed to pay this amount. They were aware that the Site had previously been used as a service station and mechanical workshop and 'that contamination could be an issue'. However, Mr Janakis gave evidence that he understood 'it was for the vendor to make good all contamination before the property was transferred'. 26 Mr and Mrs Janakis left it to Mr Steve Paradisis to arrange exchange of contracts. He instructed his own solicitor, Barry Beilby of Beilby Poulden and Costello, to act on behalf of Mr and Mrs Janakis. Mr Beilby suggested they should acquire the Site in the name of a company to be controlled by them. Charben was incorporated, or acquired, for this purpose. (v) The Lot T contract 27 On 27 November 1998, Emil Ford & Co gave Mr Beilby a copy of the special conditions they proposed to insert in the contract for sale of Lot T. They also enclosed a copy of the Conclusion to Report 19844B. Shortly afterwards, Mr and Mrs Janakis attended at Mr Beilby's office. Mr Janakis gave evidence that Mr Beilby went through the special conditions with them and assured them the conditions were satisfactory. Mr Janakis said Mr Beilby informed them it was safe to sign the contract and exchange 'because of the information we were given about the state of the land'. Mr Janakis said he accepted that assurance and would not otherwise have signed the contract. Mr Steve Paradisis remembered arranging for Mr and Mrs Janakis to call on Mr Beilby and sign the contract. 28 Mr Beilby gave evidence that he recalled reading the Conclusion to Report 19844B. He made markings on the last page. Mr Beilby also recalled discussing the report with Mr Steve Paradisis. 29 Mr Beilby said he did not recall Mr and Mrs Janakis coming to his office to sign the contract. However, he said it was his standard practice to go through special conditions of contracts with clients prior to exchange, to read inspection reports associated with the relevant land and to discuss with clients anything in an inspection report that might suggest there was a risk associated with the purchase. 30 Contracts for the purchase of Lot T were exchanged on 27 November 1998. The purchase price was $400,000. The contract contained eight special conditions. Only sub-clauses (a) to (c) of special condition 8 are presently material. Those sub-clauses read: '(a) The Purchaser acknowledges that: (i) the adjoining property comprised in Folio Identifier U/391532 and known as 692B Pacific Highway, Killara ("the adjoining property") has been used for the storage and dispensing of petroleum products; (ii) the owner of the adjoining property has installed underground tanks for the storage of petroleum products on the property sold under this Contract for Sale; (iii) the Vendor has requested the owner of the adjoining property to remove the underground tanks and clean up environmental contamination on the property caused by the owner of the adjoining property to a commercial standard; (iv) the excavations resulting from clean up works or from the removal of the underground tanks have been or will be backfilled and the filling has not been and will not be compacted; and (v) in connection with the removal of the underground tanks and clean up works, water, electricity and gas services and telephone connections to the property may be disconnected. (b) The Purchaser acknowledges that the Vendor does not warrant or represent that: (i) the property is free from environmental contamination; (ii) the clean up works will be completed; (iii) if the underground tanks remain on or under the land at the Completion date, they may be or have been rendered fit for use; and (iv) soil on the property has been or will be compacted to any particular standard or that the property is suitable for construction of improvements on the property. (c) The Purchaser accepts the property as described in this special condition 8 and must not make any requisition, objection, claim for compensation or other claim or delay completion or rescind or terminate in respect of any matter arising out of any of the matters set out in this special condition.' 31 Sub-clauses (d) and (e) of special condition 8 contained a release and indemnity. (vi) The Lot U contract 32 Allen Allen and Hemsley ('Allens') acted for Caltex on the sale of Lot U. They proposed numerous special conditions of contract. Mr Beilby requested amendments to some of them. Contracts were ultimately exchanged on 4 December 1998. The purchase price was $700,000. The special conditions included cll 43 and 44. 33 Clause 43 contained an acknowledgment by Charben of the previous use of the property as a service station. Clause 44.1 required Caltex to remove all USTs known to Caltex from the property. 34 Clause 44.2 is important to the dispute between Charben and Caltex. It read: 'The Purchaser acknowledges and agrees that: (a) after the Vendor removes the tanks in accordance with clause 44.1, the Vendor will cause its environmental consultant to reduce the levels of petroleum hydrocarbon pollution of the property caused by the use of the property as a service station to a level which will permit the use of the property for the Purchaser's proposed use which the Purchaser acknowledges (the "Works") shall be in accordance with the purposes and uses permitted by the present zoning of the property; (b) upon completion of the Works, the Vendor will provide the Purchaser with an environmental report (the "Environmental Report") from its environmental consultant which indicates that the Works have been completed; (c) completion is conditional upon completion of the Works and the Vendor providing the Purchaser with the Environmental Report; (d) the Vendor is unable to determine the time required for the completion of the Works and the Purchaser shall not make any requisition, objection, claim for compensation or other claim in respect of the Works being delayed by reason of the Vendor obtaining the necessary consents from the local authorities to commence and complete the Works, adverse weather, the rate of evaporation or anything else beyond the control of the Vendor; (e) the Vendor does not represent or warrant that the Purchaser will be entitled to use the property for the Purchaser's proposed use specified in clause 44.2(a) nor that the zoning of the property permits or will permit that use and that the Purchaser has satisfied himself in relation to the use to which he will be entitled to undertake on the property.' 35 Clause 44.3 required Caltex to pay the cost of the remedial work up to $50,000, with an option to rescind the contract if the cost would be more than that amount and Charben declined to pay the excess. Clause 44.4 contained a release and indemnity in these terms: '(a) From the date of completion, the Purchaser releases and discharges the Vendor from all actions, suits, causes of action, claims and demands (including, without limitation, any claim or demand for costs or expenses) which the Purchaser: (i) now has; or (ii) may have in the future, against the Vendor arising out of or in any way connected with the Works, the Environmental Report, or any environmental contamination in, under or on the property or in, under or on land which is in the vicinity of the property. (b) From the date of completion, the Purchaser indemnifies the Vendor against any claims, liability, demands, suits, proceedings, losses, costs, penalties or damages incurred by the Vendor as a result, directly or indirectly, of the existence or otherwise of the Works, the Environmental Report or any environmental contamination in, under or on the property or in, under or on land which is in the vicinity of the property.' 36 Clause 44.5 made provision for the possibility of the purchaser not being satisfied 'that the Environmental Report indicates that the Works have been completed so as to reduce the levels of petroleum hydrocarbon pollution' to a level sufficient to permit the use referred to in cl 44.2(a). Clause 44.9 provided that cl 44 'will not merge on completion'. 37 A certificate under s 149(2) of the Environmental Planning and Assessment Act 1979 (NSW) was included in the contract. It revealed that the land was zoned BUSINESS 3(a)-(A2) RETAIL SERVICES. The primary object of that zone was to provide business and office accommodation. Dwelling houses were prohibited, unless used in conjunction with uses permitted in the zone. Residential flat buildings were permissible with Council's consent. (vii) Validation work on Lot U 38 After the exchange of contracts, work continued on Lot U, under the supervision of Ms Bauer. It is not necessary to detail all of Ms Bauer's site notes. They reveal an understanding by her that 'we are cleaning up to residential' standard. They also reveal the presence of hydrocarbon odours. A laboratory report of 17 February 1999 showed elevated TPH C6-C9 levels at a depth of two metres at location V46. 39 On 16 February 1999, Allens informed Mr Beilby of their instructions that 'all underground tanks have been removed from the site', with minimum soil impact, and that Caltex expected remediation works to be completed 'earlier than 15 April 1999'. (viii) The Geotechnique report of March 1999 40 At some stage, Mr Steve Paradisis instructed a company called Geotechnique Pty Ltd ('Geotechnique') to make a 'contamination assessment' of the Site. The circumstances of this instruction are not clear to me but it probably arose out of a requirement of a finance broker, Balmain NB Commercial Mortgages Limited. It seems that a copy of Geotechnique's report was sent to that company. A copy was also sent to Mr Steve Paradisis, at his home address, on 16 March 1999; however, Mr Steve Paradisis claimed in evidence that he had not seen the report until he was shown it by the solicitor acting for Charben in this litigation about two months before giving his evidence. 41 I do not think it is necessary to discuss the content of Geotechnique's report. The statements made in the report were not verified by the evidence of any witness. No party chose to call, as a witness, anybody associated with Geotechnique. Although the report may be in evidence, for all purposes, as a business record, under the circumstances I would not be willing to rely on anything said in that report in making factual findings as to the condition of the Site at any particular time. 42 The report is not relevant to the issue of reliance. I accept the evidence of Mr Steve Paradisis that he did not read the report in 1999. My assessment of him is that he is not a great reader of reports. I think he would be much more inclined to rely on oral information from a person he trusted. There is no evidence that Mr Beilby, Mr Theo Paradisis, or Mr or Mrs Janakis, ever saw the report. Mr Janakis denied all knowledge of the report. Neither Mr Beilby or Mr Theo Paradisis was asked about it. (ix) Charben's development application 43 Charben retained a firm of architects, Leffler Simes Pty Ltd ('Leffler Simes'), to advise it in relation to redevelopment of the Site. Initially, Mr Steve Paradisis had proposed 'a combined commercial/residential development'. However, apparently on the advice of the architects, he changed the proposal to a wholly commercial development, involving two basement car park levels, ground floor retail shops and first floor offices. Leffler Simes submitted a development application for such a building to Council on 18 March 1999. 44 On 8 April 1999, Council responded to the development application by requesting Leffler Simes to provide 'copies of the report into the potential contamination of the workshop site and any remediation required to make the site suitable for the proposed use'. Leffler Simes replied on 19 April 1999, enclosing three copies of what it called 'the Environmental Site Assessment Report for the workshop site'. Presumably, this was Report 19844B. The architects said that 'remediation of the service station site is proceeding'. (x) EES' validation of Lot U: Report 19844C 45 Charben completed the purchase of Lot T on 15 April 1999. Remediation work was continuing on Lot U, but at a slow pace. EES adopted the strategy of remediating the stockpiled soil by progressively exposing it to the elements. That took time. On 16 August 1999, Ms Bauer responded to an inquiry by Mr Caples of Caltex by saying EES was 'half way through' the job. Ms Bauer and Mr Caples discussed the possibility of speeding up progress by taking some of the soil offsite. However, they made no decision about that. At a later stage, quotes were obtained for transport and disposal of what was described as 'Contaminated Industrial Waste Type'. Samples continued to reveal elevated hydrocarbon contaminant levels in some locations. 46 On 11 February 2000, EES provided a third report to Caltex ('Report 19844C'). This report was written by Mr Mulvey. Mr Mulvey holds the degrees of Bachelor of Science in Agriculture and Masters in Applied Science (Hydrogeology). He is an accredited site auditor. Report 19844C was audited by Ms Bauer. It related solely to Lot U. 47 Allens forwarded a copy of Report 19844C to Mr Beilby and required completion of the contract on or before 29 February 2000. 48 The EES letter to Caltex enclosing the report stated that '[v]alidation of the site was undertaken in accordance with the proposed residential guidelines', apparently of NSW EPA. The Introduction to the report stated EES' understanding that Lot U 'is being sold and is proposed to be redeveloped for residential purposes'. The objective sought to be achieved during the remediation process was said to be 'to validate the site to confirm it is suitable for the proposed residential usage'. 49 Section 3 of the report dealt with 'site characteristics'. A cross-section drawing showed a fall of the land to the rear of the allotment (the west). The interface between the 'sandy loam' strata and the underlying 'sandy clay' mirrored the slope of the surface of the allotment. This was confirmed in the text of the report. Paragraph 3.4 stated: 'As indicated above the site is underlain by clay soils and shale, with minor sandstone sequences which tend to have moderate water yield. The topography of the surrounding area suggests that groundwater flow would be to the west and southwest. Any groundwater encountered during the study was likely to be the result of interface drainage, between the soil and weathered shale horizons.' 50 The report said groundwater and/or interface drainage 'was not encountered during the investigation thus relevant groundwater criteria have not been consulted'. 51 The concluding section of the report summarised the work done by EES and ended: 'Given the above, the validation results for potential contaminants associated with a former service station site, show that this site is suitable for residential landuse in accordance with the relevant guidelines.' (emphasis added) 52 After he received Report 19844C from Allens, Mr Beilby telephoned Mr Steve Paradisis. Mr Steve Paradisis went to Mr Beilby's office. Mr Beilby read to him extracts from the report and told him it concluded, so far as he could see, 'that the site is clean'. Mr Steve Paradisis accepted this information and relayed it to Mr and Mrs Janakis. They agreed to proceed to settlement. 53 After some dispute between the solicitors as to the date of settlement, the contract between Caltex and Charben for the purchase of Lot U was completed on 16 March 2000. (xi) Council's intervention 54 On 10 April 2000, Council provided to Leffler Simes a copy of an internal memo relating to Council's approval in July 1998 of removal of the USTs and site remediation: see para 11 above. The memo said that there had not been compliance with condition 32. This condition required Caltex to submit to Council a report prepared by a NSW EPA accredited auditor. 55 Mr Beilby was not previously aware of condition 32. His requisitions on the purchase of Lot U had included a question whether there was 'any currently applicable development approval or consent to the use of the premises'. Allens (seemingly wrongly) had answered this question in the negative. 56 Upon receipt of Council's letter, Mr Beilby raised the matter with Allens. In a letter of 17 April 2000, he said that Council had rejected Report 19844C because the person who had certified it, on behalf of EES, was not a NSW EPA approved person. He asked that the report be amended to contain such a certification. He also said that Council required copies of the two earlier reports, Report 19844 and Report 19844B. He asked for copies of each of them. 57 Allens responded on 19 April 2000. They stated they had been 'instructed to advise that the Vendor has complied with its obligations under the completed contract'. (xii) The appointment of HLA 58 At about the time of completion of the contract for the purchase of Lot U, Mr Steve Paradisis retained the services of Peter Taylor, of Prominent Projects Pty Limited, to assist him in executing the development. When he became aware of the problem about Report 19844C, Mr Taylor recommended the employment of another consultant, HLA Envirosciences Pty Limited ('HLA'). The Managing Director of that company, Chris Kidd, was a NSW EPA accredited site auditor. 59 On 5 May 2000, after Allens' response to Mr Beilby's letter of 17 April 2000, Mr Taylor retained HLA to carry out a statutory site audit of contamination of the Site. 60 On 9, 10 and 12 May 2000, HLA sent faxes to EES requesting clarification of aspects of its reports. Ms Bauer responded on 15 May 2000. She said EES 'would be happy to provide information and assistance' relevant to the reports but could not do so until EES was commissioned by Caltex to undertake the work. Ms Bauer sent a copy of her response to Mr Caples. 61 On 17 May 2000, Mr Steve Paradisis telephoned Ms Bauer to ask her to respond to HLA's questions so that he could obtain the site audit report requested by Council and commence building. It is common ground that Ms Bauer replied that someone would have to pay for the time involved in supplying answers and that Mr Steve Paradisis said he would do so. Ms Bauer said she estimated the total cost at $400 and told Mr Paradisis she would fax a document for him to sign. 62 However, Ms Bauer did not immediately send this fax. She decided she would first need Caltex's approval and Mr Caples wanted to be provided with information about the 'purpose of the audit and the nature of the queries regarding prior remedial work'. 63 While this standoff was continuing, on 23 May 2000, Council granted approval of Charben's application for commercial development on the Site, but subject to a condition that the consent 'shall not operate until evidence of the decontamination of the site is submitted to the satisfaction of the Acting Director Environment and Regulatory Services and any additional conditions that may arise as a result of consideration of relevant reports'. 64 On 30 May 2000, Ms Bauer sent a fax to Mr Steve Paradisis. EES now argues it released any claim that Charben might otherwise have had against EES. The fax said: 'I have spoken briefly to Simon Caples at Caltex Australia Petroleum (Caltex) regarding your previous discussions with me per 692 Pacific Highway, Killara. He has been provided with a copy of the questions from the Auditor and has provided approval for Environmental & Earth Sciences to answer these where possible and pertinent. Environmental & Earth Sciences Pty Ltd undertook the work according to a brief set with Caltex, which did not involve an Auditor in the investigation or remediation process. We will provide information and answers to the queries put forward as long as you return this letter signed, agreeing that the indemnity in the contract of sale covering Caltex and their consultants undertaking environmental work on the site prior to sale still abides. Should the Auditor require additional work to meet the brief of the Auditor then this work will be the responsibility of the current owner, not that of Caltex. It will take approximately 6 hours of time to answer the Auditor's queries at a cost of $480.00. An hourly rate of $80/hour will be charged for any additional queries made by the Auditor. If you agree with the costs above and that the indemnity clause still holds, Environmental & Earth Sciences can have answers to the Auditor by Thursday 1 June 2000 (this week).' 65 Mr Steve Paradisis signed and returned the fax. Thereafter, EES supplied information to HLA. (xiii) HLA's draft site audit report 66 On 21 June 2000, HLA sent to Mr Taylor a draft site audit report. The draft report was prepared by Mr Kidd. It identified a number of deficiencies in the work done by EES, notably the absence of 'groundwater investigation to confirm the contamination status of groundwater at [Lot U]', '[i]nsufficient investigation to confirm the potential for offsite migration of contamination through groundwater', and insufficient investigation to determine the extent of potential soil contamination. In a covering letter (and referring to himself as 'the Auditor'), Mr Kidd stated: 'The Auditor notes that as a result of these deficiencies, significant uncertainty exists in the Auditor's opinion as to the potential for contamination with respect to deeper soils than those investigated, and the potential for offsite migration of contamination through groundwater. Due to these uncertainties the Auditor is unable to issue a Site Audit Statement at this stage. However, it is noted that proposed deep excavation for the basement carpark should remove any suspect material and may resolve the uncertainties. The Auditor is of the opinion that additional validation works are required to confirm the contamination status of the site. The Auditor requests that a suitably qualified environmental consultant be engaged to conduct the additional validation works, and these works should comply with the relevant NSW EPA guidelines.' 67 Mr Kidd said the additional validation works could be conducted either prior to the commencement of development earthworks or during the course of the earthworks. He explained the practical consequences of each of these alternatives. 68 Charben (apparently by Mr Steve Paradisis) chose the second option, which Mr Kidd had described in this way: 'This methodology would require that an Environmental Management Plan (EMP) be developed that addresses the identification, handling and disposal of any contaminated soil and groundwater encountered during the development excavation works for the basement carpark. The EMP, which must be approved by the Auditor, should also state a suitable soil validation sampling programme for the base and walls of the development excavation. If hydrocarbon contaminated soils are encountered in the excavation, three groundwater monitoring wells along the down gradient site boundary should be installed to a depth of at least 1.5m below the water table in the shale rock. Groundwater samples should be collected and analysed from these wells. This option may involve some additional costs and delay with any contaminated materials encountered during the excavation.' (xiv) Geotechnique's draft RAP 69 Mr Steve Paradisis retained Geotechnique to prepare a remediation action plan ('RAP'). A draft RAP was sent to Mr Kidd. He commented on it. A copy was provided to Council. 70 On 9 August 2000, and on the basis of the draft RAP, the Council allowed demolition and earthworks to proceed, subject to conditions. Council emphasised it would not issue a Construction Certificate, permitting construction of the new building, until it received a Site Audit Statement saying the Site was suitable for the proposed land use. (xv) Site activities: August 2000 - February 2001 71 Caldas was engaged to manage site operations on behalf of Charben. Mr Theo Paradisis acted on behalf of Caldas. Glencoe (NSW) Pty Ltd, a contractor engaged by Caldas, demolished the buildings on the Site. In the course of doing this, it found and removed five additional USTs. 72 On 6 September 2000, Geotechnique issued a revised RAP that took account of Mr Kidd's comments on the earlier draft. The revised document required the drilling of boreholes across the rear of the Site, from which samples were to be taken at various depths. Mr Kidd approved this approach, and agreed to excavation of the Site, but only on the basis that excavation would be in lifts of one metre at a time, with the soil removed in each lift being tested for evidence of hydrocarbon contamination prior to removal from the Site and prior to the next lift being excavated. 73 The system of work required by Mr Kidd was adopted. Some of the excavated material was classified as 'industrial' waste; other material was accepted to be clean landfill. Because of the need to stop excavation after each one metre lift, and wait for a test of the samples, progress was slow. Excavation extended over several months. 74 On 6 November 2000, Mr Kidd carried out an inspection of the Site. He noted strong hydrocarbon odours. A photoionisation detector ('PID') returned high hydrocarbon readings. Mr Kidd recommended that Caldas obtain advice from Geotechnique about additional testing, remediation excavation and stockpile options. 75 Geotechnique carried out further testing. The tests showed that contamination in some locations exceeded acceptable limits. Geotechnique recommended additional aeration of the stockpile. 76 On 18 January 2001, Geotechnique informed Mr Theo Paradisis that the Site was 'suitable for the proposed commercial/retail development'. It said a validation report was being prepared and would be sent to Mr Kidd for review within one week. 77 A validation report was issued on 22 January 2001. It led the Council's delegate, a private certifier, Dix Gardner Pty Limited, to issue a Construction Certificate for the new building on 25 January 2001. Mr Theo Paradisis immediately poured a large concrete slab at the back of the Site. This was intended to be the lower level carpark floor. 78 However, on 30 January 2001, Mr Kidd inspected the Site in company with Mr Theo Paradisis. Mr Kidd was dissatisfied. He took samples from locations at the southeast corner of the Site and detected unacceptable PID readings, and strong hydrocarbon odours, in three of them. Basing himself on information given to him by Mr Theo Paradisis about the location of the water table, Mr Kidd formed the opinion that 'hydrocarbons from the former underground tanks have penetrated to at least 8 m below the street level and have probably reached the water table'. Accordingly, he directed additional investigation, including testing of the groundwater below the relevant part of the Site. 79 Geotechnique undertook the further tests required by Mr Kidd. On 7 February 2001, Geotechnique reported to Mr Kidd that they revealed 'elevated TPH (C6-C9) and BTEX' in all the soil samples, and also the one water sample, that had been taken. Paul Gorman of Geotechnique expressed the view that the water sample was 'more likely to be groundwater', in which case 'it is clear that there has been some leaching of the contaminants into the groundwater'. He proposed installation of monitoring wells. 80 Mr Kidd passed Geotechnique's results on to Mr Theo Paradisis, with a direction that the area of contamination be delineated and an assessment made of the offsite migration of contamination in both soil and groundwater. He required preparation of a new RAP in relation to this work. 81 On 26 February 2001, Geotechnique wrote a letter to Mr Kidd reporting on further water analyses. Mr Gorman commented 'there appears to be migration of BTEX and hydrocarbons off site, towards the west'. He said he had not yet considered notifying NSW EPA as he was awaiting the outcome of risk assessment. Apparently, Mr Gorman had already advised Mr Theo Paradisis to retain a Melbourne company, Contaminated Land and Water Environmental Risk Assessment Pty Ltd ('CLW'), for this purpose. 82 Mr Kidd wrote to Mr Theo Paradisis on 28 February 2001 recommending 'that the offsite migration of contaminated groundwater be reported to the NSW EPA for its assessment of whether the contamination poses a Significant Risk of Harm'. Mr Kidd requested that the direction of the groundwater flow be determined and noted it may be necessary to carry out further investigation to delineate the extent of the contaminated groundwater. At about this time, Mr Kidd requested Mr Theo Paradisis to cease building work. He did so. (xvi) The appointment of SKM 83 On 1 March 2001, Philip Walker of CLW wrote a letter to Mr Theo Paradisis in which he suggested 'it may be more cost effective to design an Environmental Management Plan (EMP) to deal with the issues and risks that the contamination presents'. He indicated issues that an EMP should address. 84 In the meantime, however, Mr Theo Paradisis had been in contact with another consultant, Ian Swane of Sinclair Knight Merz ('SKM'). Dr Swane had also been recommended by Geotechnique. Mr Theo Paradisis preferred to retain Dr Swane, with whom he felt comfortable and who was located in Sydney. Dr Swane took a different approach to Mr Walker. He did not recommend creating yet another plan but, rather, favoured immediate remedial action. 85 On 5 March 2001, Brad May of SKM sent Mr Theo Paradisis a quotation for design of a vapour extraction (bio-venting) system. His letter explained: 'Sinclair Knight Merz has completed a number of similar projects in the past including the design of a vapour design system at Sydney Park. This system covers 1,600m2 and extracts volatile methane from the subsurface. Dr Ian Swane, Sinclair Knight Merz NSW EPA accredited Site Auditor has undertaken the design of the AGL Oyster Cover vapour extraction system. This project had a total value of 15 million dollars.' 86 Two days later, Mr Kidd wrote to Mr Theo Paradisis saying: 'Testing of soils and groundwater during excavation of the former Caltex Service Station at 692B Pacific Highway, Killara has identified: • Elevated concentrations of petroleum hydrocarbons particularly C6-C9 fractions and benzene toluene, ethlybenzene and xylene (BTEX) in fractured shale down to below the floor level of the proposed basement. • Elevated photoionisation detector (PID) readings in most test holes indicate volatile organics are present down to the water table and occur behind the shot-creted wall on the Pacific Highway side of the site. • The water table is about 7 m below the upper basement floor level (116.85 m) and about 6 m below the lower based floor level (115.6 m). • Concentrations of BTEX in groundwater immediately outside the down gradient side of the site exceed the groundwater guidelines in NSWEPA (1994) Guidelines for Assessing Service Station Sites and the ANZECC (1992) freshwater quality guidelines. • Lower concentrations of TPH and BTEX occur in groundwater below the upper basement level. • No testing has occurred below the lower basement level due to the concrete slab being poured. In the Auditor's opinion the site presents a significant risk of harm because: • the groundwater is contaminated; • there is evidence of off-site migration of elevated levels of BTEX and TPH in the groundwater; • residential units exist on the neighbouring property immediately downslope; • there is a potential for build up of vapours to explosive levels immediately below the basement. Remediation works are required to: a. Address the issue of organic vapours below the basement slabs both upper and lower levels and behind the walls of the excavation particularly on the Pacific Highway side of the site. b. Reduce concentrations of residual hydrocarbons in the vadose zone by bio-venting or other approved methods to remove ongoing sources of contamination of the groundwater. c. Reduce concentration of hydrocarbons particularly BTEX in groundwater under and leaving the site to acceptable concentrations. d. All systems shall be designed so as to operate with minimal maintenance below the basement concrete slabs of the building. e. Monitoring installations shall be provided to monitor effectiveness of the system in reducing vapour concentrations in groundwater concentrations. It will be necessary to demonstrate by appropriate testing that the design spacing of venting wells is adequate. It will also be necessary to determine whether bio-venting is required under the lower basement level slab. The extent of groundwater contamination under the site, particularly the lower basement levels, and off-site needs to be defined to select and design appropriate remediation works. The off-site groundwater contamination issues may not be the responsibility of the present land owner/developer, but may be of concern to the NSW Environmental Protection Authority under the Contaminated Land Management Act 1997.' 87 Mr Theo Paradisis immediately reported the situation to NSW EPA. 88 On 13 March 2001, Mr May gave Mr Theo Paradisis a further quotation for an extended design that included ground remediation. This quotation was apparently accepted. SKM carried out the design, modifying it to reflect suggestions made by Mr Kidd. 89 It seems that a pilot bio-venting system was first installed. Mr Kidd was satisfied with its performance and approved installation of the full system. Initially, Mr Kidd required that installation be completed before work resumed on construction of the building. However, he subsequently modified this requirement, at Mr Theo Paradisis' request, to permit installation of the bio-venting system in conjunction with construction work. (xvii) Construction work: May 2001 - August 2001 90 Construction work resumed in early May 2001. Installation of the bio-venting system took about six weeks. By August 2001, the roof structure was in place. (xviii) Work stopped: August 2001 - March 2002 91 On 13 August 2001, Council instituted a proceeding in the Land and Environment Court of New South Wales seeking to restrain construction work on the Site, on the basis that this was not permitted, under its development consent, until all contamination had been remediated and the Site validated by an accredited site auditor. Caldas stopped construction work and Charben applied to Council to vary the relevant condition of approval, so as to allow construction work to continue while remediation work was being undertaken. Council refused to deal with this application until the site auditor's certificate was received; so work remained suspended for another seven months. 92 On 26 March 2002, Brad Eismen of HLA (who had taken over responsibility for the site audit from Mr Kidd), certified the Site to be suitable for 'commercial/industrial use'. The certificate was subject to implementation of the RAP developed by SKM, including ongoing monitoring of the installed bio-venting system. (xviii) Work completed: April 2002 - August 2002 93 After Mr Eismen issued this certificate, Caldas was able to resume building work. Construction recommenced in April 2002. The building was completed early in August 2002. Council's delegate issued an occupancy certificate on 9 August 2002. 94 Mr Theo Paradisis said in his affidavit that he had programmed construction to take 30 weeks and had actually planned to complete it in only 24 weeks. He said the additional construction time was solely due to contamination of the Site. The applicant's case 95 This proceeding was instituted on 28 June 2002. The Application (as amended prior to the trial) includes claims under ss 52, 53, 75B, 82 and 87 of the Trade Practices Act 1974 (Cth) ('the Act'), in negligence and for breach of contract. 96 These claims are spelled out in a Further Amended Statement of Claim dated 11 April 2003 ('the FASC'). In their closing written submissions, counsel for Charben, Mr Frank Corsaro SC and Mr Philip Taylor, summarised in this way the primary causes of action alleged in the FASC: 'A. A claim against both Caltex and EES for damages for misleading conduct under the [Act] arising from the provision of the extract from [Report 19884B]. B. A claim against both Caltex and EES for damages for misleading conduct under the [Act] arising from the provision of [Report 19884C]. C. A claim against Caltex for breach of contract, in failing to carry out the works specified in clause 44 of the Contract. D. A claim against both Caltex and EES in negligent misstatement arising from the provision of [Report 19884B], and separately [Report 19884C]. E. A claim against both Caltex and EES in negligence, arising from the failure to take sufficient care in carrying out the remediation works on the Site. F. A claim to set aside a purported agreement to indemnify EES.' 97 In relation to Lot T, the FASC alleges that EES provided Report 19844B to Caltex under circumstances in which it knew, or ought to have known, that Caltex would provide a copy to prospective purchasers of Lot T from the lessors and that a copy was in fact provided to Charben. The FASC alleges that, by Report 19844B, EES and Caltex represented that remedial works had been carried out on Lot T, and this work had been validated to such a standard as to make the allotment suitable for any landuse. The FASC claims that Charben relied on these representations in agreeing to purchase Lot T from the lessors. 98 In relation to Lot U, the applicant's primary case against Caltex is for alleged breaches of the covenants contained in cl 44 of the sale agreement. In particular, it is said that Caltex failed to cause its environmental consultant to reduce the levels of petroleum hydrocarbon pollution to a level that would permit use of the allotment for Charben's proposed use. 99 Charben claims EES also supplied Report 19844C under circumstances in which it knew, or ought to have known, that Caltex would provide a copy to prospective purchasers, and that Caltex in fact provided a copy to Charben. Charben says the report contained significant misrepresentations, including the statement that Lot U had been remediated to a standard suitable for residential land use. These misrepresentations are said to constitute misleading conduct by both EES and Caltex. Charben says it relied on the representations in the report in deciding to purchase Lot U. 100 I need not detail all the allegations in the FASC. I will consider separately each of the principal pleaded causes of action, as summarised by counsel at para 96 above. However, it is convenient immediately to make a finding about reliance. 101 There is no doubt in my mind that, in deciding to purchase each of the allotments, Charben relied on the statements made in the respective reports, especially the statement in the Conclusion of each report as to the suitability of the land 'for any landuse' or 'for residential landuse': see paras 22 and 51 above. 102 The applicant's witnesses on reliance, Mr Janakis, Mr Steve Paradisis and Mr Beilby, were all impressive people. Mr Beilby not only is an experienced solicitor, but also appears to be a cautious person who takes care to protect his clients' interests. It is common ground that he received at least the Conclusions to Reports 19844B and 19844C. I have no doubt that he read them and discussed their contents with both Mr Steve Paradisis and Mr and Mrs Janakis. As I have said, I do not think Mr Steve Paradisis is a great reader of reports. However, he was aware of the possibility that the Site would be affected by hydrocarbon pollution. He regarded that possibility as a matter of concern. He knew these reports dealt with that matter. I have no doubt that he listened carefully to Mr Beilby's summaries of the Conclusions and that he passed on the essence of them to his daughter and son-in-law. I am satisfied that Mr and Mrs Janakis placed total trust in Mr Steve Paradisis and would have accepted his assurance that the reports were satisfactory. This belief would only have been confirmed by what they were told by Mr Beilby. 103 It seems Emil Ford & Co sent to Mr Beilby only a copy of the Conclusion to Report 19844B, not the whole document. However, it was effectively conceded this made no difference. Under cross-examination by Mr Corsaro, Mr Mulvey agreed that a conclusion to a report is 'a very important part of a document'. He said it 'is the amalgamation of everything done', taking everything in the report in to account. This exchange followed: 'If someone wanted to come to the guts of your belief based on what you did, you go to a conclusion, correct? --- Yes. And that's what you intended, didn't you, when you audited this report, the conclusion to be, the guts setting out the final position of EES, having regard to everything described above, correct? --- Yes.' This is not a case in which a statement in the Conclusion was clarified or contradicted by something said in the body of the report. 104 To the extent that reliance is an issue in relation to any cause of action, that issue should be resolved in the applicant's favour. In fact, although reliance was not admitted at trial, it was not a major issue. The dominant factual issue at the trial was the correctness of the statements made in Report 19844B and Report 19844C. It is desirable to go immediately to that issue. The representations allegedly made by EES and Caltex (i) Identification of the representations 105 Counsel for the applicants argued, in their written submissions, that the two substantive reports issued by EES (Report 19844B and Report 19844C), and used by Caltex for its own purposes, contained four significant misleading representations. They were: '(i) the Site had been validated in accordance with the relevant guidelines. (ii) significant vertical migration of contaminants was unlikely. (iii) the former service station activities had not impacted on the Site down gradient of the fuel storage facilities. (iv) the Site was suitable for residential land use in accordance with the relevant guidelines.' 106 All of these representations were made in Report 19844C in relation to Lot U. The first and fourth representations were also made, in relation to Lot T, in the Conclusion to Report 19844B; but perhaps the fourth should be read as being limited to 'the tank void' on that allotment.

(ii) The Site had been validated in accordance with the Guidelines 107 Two witnesses gave evidence on behalf of the applicant in relation to this representation: Dr Swane and Mr Kidd. 108 Dr Swane holds graduate and post-graduate degrees in geotechnical engineering from the University of Sydney. He has practised as an engineer for about 30 years and is currently Manager of SKM's Contaminated Sites and Geotechnical Engineering Groups. Dr Swane has been involved in numerous remediation and rehabilitation projects, both in Australia and overseas, mainly for government and semi-governmental instrumentalities. He is an accredited environmental site auditor in both New South Wales and Victoria. 109 Dr Swane is well-qualified and highly experienced. He gave evidence in a careful and thoughtful way. He seemed always ready to concede a point that he thought to be valid. I would have had no hesitation in relying on his advice if I had found myself in the position of Charben in March 2001. 110 In a report in which he reviewed reports prepared by the respondents' expert witnesses, Dr Swane opined that '[i]nsufficient soil samples were collected below the elevation of the storage tank in the area outside the tank pit, so that no proper assessment could be made of the migration potential for petroleum hydrocarbons down the site'. Paragraph 2.2.4 of the Guidelines requires sampling of the soil of a former service station site to be taken at a minimum of three depths, one of which must be below the estimated depth of the former tanks. It is common ground that EES did not do this, either on Lot T or Lot U. 111 Paragraph 2.3 of the Guidelines requires that, '[i]f any groundwater is found at a site, it should be collected and submitted for laboratory analysis'. The paragraph also says that, where groundwater is present, 'the site assessor should drill at least one monitoring well on the site to assess groundwater quality'. 112 Report 19844B drew no distinction between 'groundwater' and 'interface drainage'. At para 3.4, Ms Bauer wrote: 'Any groundwater encountered during the study was interface drainage, between the soil and weathered shale horizons.' The report went on to speak of backfill sand which was 'found to be wet due to water trapped in the tank pits or interface drainage between the backfill sand and natural soil profile'. 113 Mr Mulvey conceded in cross-examination that, 'if groundwater or interface drainage was intercepted', a well should be installed and testing undertaken of the water in the well. He also conceded that, on a fair reading, Report 19844B indicated that 'groundwater and/or interface drainage' was encountered in the tank pit on Lot T; yet it was not submitted for laboratory analysis and no well was installed. Mr Mulvey's evidence went on: 'You say to his Honour you just failed to follow the guidelines in putting in the well, correct? That's what you would say, wouldn't you? --- In terms of the way you've put it, yes, but how the judgment was made at the time was that the site operator made a professional judgment --- That the well wasn't needed? --- The well wasn't needed because it wasn't interface drainage or groundwater, it was contained pit water.' The basis of the claimed 'professional judgment' is inconsistent with references to interface drainage in the report itself. 114 Mr Kidd's draft site audit report of 21 June 2000 concerned both Report 19844B (Lot T) and Report 19844C (Lot U). Mr Kidd noted a number of deficiencies in the reports. In particular, he criticised the absence of information on groundwater. He wrote: 'The Auditor notes that the level of reporting on groundwater is unsatisfactory. The Auditor notes that the depth of investigation of the bores was not deep enough to investigate potential groundwater. Given the presence of a number of USTs at the site, and the exceedances in the TPHs noted at depth in some investigation samples along the boundary, the Auditor considers that groundwater investigations at the site are necessary in accordance with the NSW EPA (1994) Guidelines for Assessing Service Station Sites.' 115 At a later point in the report, he commented: 'The Auditor notes that the investigation of Lots T & U does not strictly comply with the NSW EPA (1994) Service Station Guidelines, in that groundwater was not investigated at the site. The Auditor notes EES did not conduct a specific investigation into the contamination or extent of contamination associated with the USTs and associated bowsers and pipework in the ESA. Therefore, the Auditor notes that the investigation works does [sic] not fully determine the contamination status of the site.' 116 Early in the hearing, I raised with counsel a question of the use that ought to be made of statements in the HLA draft site audit report. This report had been included in the agreed bundle of documents, all of which were admitted into evidence. However, the report had not been verified. It was accepted by all parties that the report was a business record and admissible to prove the accuracy of statements contained within it. However, I was concerned that it might be dangerous to put weight on statements contained in the report without them being verified on oath or affirmation and tested by cross-examination. 117 Possibly as a result of this discussion, Mr Corsaro called Mr Kidd as a witness. Mr Kidd's curriculum vitae was tendered. It revealed that he had a Bachelor of Science (Geology) Honours degree from the University of Canterbury and 29 years practical experience in water supply, dewatering, water management, solid waste management, site contamination assessment and cleanup, environmental impact assessment and environmental risk management. Mr Kidd had conducted environmental audits at over 80 former industrial and commercial sites in New South Wales. He also had extensive experience of investigation and remediation of sites, including former service station sites. Plainly, Mr Kidd is both well qualified and highly experienced in relation to the remediation of contaminated sites. In his case, also, I was impressed with him as a witness. He gave his evidence carefully and with apparent fairness. It is possible that some people who were concerned with the Site might, at the time, have thought Mr Kidd's requirements excessive. However, the fact that evidence of hydrocarbon contamination continued to be found, as investigations were undertaken, suggests his requirements were only those of a cautious man who worked to high standards. 118 Mr Kidd explained that a site audit report is normally referred to as a 'draft' report until the audit process is complete. This occurs when the auditor is satisfied that the relevant site is suitable for its proposed new use. 119 Mr Kidd told Mr Corsaro that, in writing his draft site audit report, his main concern was that the EES reports had not addressed contamination of the groundwater. Mr Kidd said the deepest test boreholes drilled by EES were about 1 to 1.5 metres, but some of the excavation pits had gone down lower than that, to about three metres. He explained: 'my concern as from that was that there were high levels of hydrocarbons encountered at depth and particularly in one bore, BH10 which was on the lower side of the site, and given that was a service station with a lot of petrol on site and a long history an [sic] old service station, then I was concerned that there would be a ground water issue and required it to be tested so I did not complete the report until there was some ground water testing done.' 120 Mr Kidd then gave this evidence: 'With your knowledge of the guidelines and relevant statutory prescriptions at the time that the first respondent conducted its remediation and validation exercise and prepared the reports which you subsequently came to assess, in your opinion were there some guidelines or prescriptions that required in the remediation and validation of a contaminated site the assessment of ground water? --- Yes, there was a [sic] service station guidelines assessing service stations issued by the EPA in 1994 which described the types of investigations and the issues about contaminants on service station sites. And so far as you are concerned would it have been possible for an environmental consultant at the time that these reports were being prepared, the reports that you subsequently came to review, to state that a site had been remediated and validated without doing testing in order to establish what was happening in the ground water on the site? --- It would be possible, but given on a site such as this where there was petrol, in particular, and given its general hydro-geological position or situation, in my view it was a good practice to investigate the groundwater, and given that the guidelines indicates [sic] that there is a suggestion of deep penetration then one should test the groundwater. And just to make it clear, when you were auditing the reports, you did so with an independent mind and without any connection - or interest and connection with the matter generally, is that right? --- That's correct.' 121 In assessing Mr Kidd's evidence on the point, it is relevant to note that he has been concerned about EES' lack of groundwater testing for a long time. He said so at the time of his first involvement with the Site, in his draft site audit report of 21 June 2000 (see para 66 above). Nobody at that time argued he was wrong or excessively cautious. On the contrary, it was subsequently clearly established, and it is now common ground, that the groundwater below the Site is contaminated. 122 When Ms Bauer gave evidence, she agreed that, 'because no groundwater investigations were conducted by EES at the Site, the auditor was not in a position to be able to assess the level of contamination in the groundwater on the Site'. 123 Ms Bauer was taken by Mr Michael Green, who appeared with Mr John Webster SC for EES, to the comment of Mr Kidd about the failure of EES to test groundwater samples. Apparently drawing a distinction between interface drainage and the underlying water table, Ms Bauer said that 'groundwater' was not intercepted on the Site; she expected it to be below 10 metres depth. She added: 'We also were working on a specific scope of works at the time the assessment was undertaken'. Ms Bauer explained: 'We were employed by the second respondent to assess the soils across the site. If there was no groundwater intercepted during the assessment or there was no significant contamination identified during the assessment we were not requested to drill, there was given no cause to drill to groundwater.' I think this evidence reveals the reason why EES did not investigate the condition of the groundwater; namely, EES had not been instructed to do so by Caltex. 124 Ms Bauer did not dispute the evidence of Dr Swane and Mr Kidd as to the need to undertake a more extensive investigation if the Guidelines were to be satisfied. In cross-examination, Ms Bauer accepted that, based on the data it had accumulated, EES was not in a position to rule out the risk of offsite migration of contamination; indeed, on the basis of Mr Campbell's site notes, there was a 'potential' for off-site migration. Mr Corsaro drew Ms Bauer's attention to BH 10 and proceeded: 'Now, you would have to concede, wouldn't you, that if the bore log which you've put forward as being correct in the report that you audited as true, you had all the evidence that you needed that there was migration of heavy contamination across this site which could have spread anywhere and which could have gone through moderately permeable stone located at various locations on this site, correct?' --- I don't agree. It's certainly a reasonable proposition I put to you, isn't it? --- It's a reasonable proposition.' 125 Roger John Parker was an expert witness called to give evidence on behalf of Caltex. Mr Parker is also well-credentialed and experienced. He holds the degrees of Bachelor of Engineering and Master of Engineering Science from Monash University. Since 1986, he has been Principal and National Manager for Environmental Services for Golder Associates Pty Ltd. In that role, he has been involved in numerous projects involving contaminated land. He is approved as a site auditor by the Victorian Environment Protection Authority. 126 I was favourably impressed by Mr Parker. However, in assessing the weight to be given to his evidence, where it is in conflict with that of Dr Swane or Mr Kidd, it is necessary to bear in mind Mr Parker's lesser degree of contact with the Site. He inspected it before preparing his affidavit. However, at that stage, the building had been completed. Mr Parker read the various reports to which I have referred, but he was not involved in carrying out any of the inspections, tests or remedial work to which they referred. 127 In fact, there is considerable common ground between Dr Swane and Mr Kidd, on the one hand, and Mr Parker, on the other. In particular, Mr Parker agreed the Site was affected by groundwater contamination and this warranted a remediation strategy. Mr Parker accepted that the Site had not been remediated to a standard suitable for residential use in accordance with all the 'relevant EPA endorsed guidelines'. He agreed there was a possibility of 'migration of contaminants along some pathway'. Mr Parker said it was not known whether any migration was over moderately permeable rock; '[w]e don't know how deep that goes'. Mr Parker's evidence went on: 'If you had that information when you were carrying out a validation and an assessment of this site, would you stop there or would you do something else? --- I have said in my evidence that EES could have gone deeper in their investigation. Could have or should have? --- They made a judgment at that point. I hope I would have made a different judgment.' 128 Mr Parker said that, with the information he now had, 'it would have been good to install some wells'. His evidence continued: 'You would have done that, do you not agree? If you had this result, at that time, it is likely you would have instructed the testing of the groundwater on this site, do you agree? --- No, I would have drilled deeper first here, and then made that decision. Eventually tested the groundwater, do you agree? --- No, I would have drilled deeper here and then made an assessment as to whether or not I've [sic] … drilled to assess groundwater.' 129 Mr Corsaro drew Mr Parker's attention to a passage in Report 19844B in which Ms Bauer reported that 'groundwater and/or interface drainage was not encountered during validation sampling except in the tank pit'. He suggested this meant that water had been encountered at that point. Mr Parker agreed this water 'should have been tested … in accordance with the guideline'. He said: 'If you really didn't know what it was, the guidelines would suggest you should put in a well'. 130 I am satisfied that the work carried out by EES in relation to validation of both allotments, prior to the delivery of the respective reports, was insufficient to satisfy the Guidelines. 131 Counsel for the applicants argued another non-compliance with the Guidelines. They said the Guidelines required that 'groundwater monitoring wells be installed unless migration of contaminants could be positively excluded'. They referred to pages 8 and 9 of the Guidelines. However, the relevant sentence is: 'If the excavation and chemical testing of the tank pits and other areas of elevated contaminant concentrations shows that there has been no migration of contaminants, there may be no need to drill monitoring wells'. Dr Swane interpreted this sentence as requiring that 'if you can't demonstrate that there has been no migration then you should drill'. I can understand his view that this is good practice. But this goes beyond what is stated at pages 8 and 9 of the Guidelines. The relevant sentence does not impose the positive obligation suggested by counsel for the applicants. I do not accept that EES failed to comply with the Guidelines in this regard.

(iii) Significant vertical migration was unlikely 132 The second representation relied on by the applicant is that 'significant vertical migrations of hydrocarbons was unlikely'. Mr Kidd did not agree with that view of the situation when he prepared his draft site audit report of 21 June 2000. He said in evidence that he thought 'assessment of the groundwater was necessary' and 'given it was a steep site and … there was no groundwater investigations done at that stage … it was good judgment to say, in my opinion, that there was a potential for offsite migration down the slope'. 133 There may be room here for argument about degrees of probability. However, whether or not the evidence expressly negatives the representation in the report, the expert evidence clearly shows that EES was not in a position responsibly to make that representation. 134 Mr Kidd had noted in his draft site audit report of 21 June 2000, speaking of both Report 19844B and Report 19844C, that 'no groundwater samples were collected from beneath the site for testing and therefore the contamination status of the groundwater beneath the site is largely unknown'. As mentioned, Ms Bauer agreed in cross-examination that, because EES had made no groundwater investigations, Mr Kidd (as auditor) was not in a position to assess the level of groundwater contamination on the Site. 135 During the course of her evidence, Ms Bauer hypothesised that any groundwater flow would take place (roughly laterally) along the seam between the sandy loam strata and the sandy clay. It was pointed out to her that this seam was intersected at its western point by a retaining wall. Ms Bauer was asked how she could be confident that contaminated groundwater, that flowed along the seam, had not reached the retaining wall and then been directed vertically. Ms Bauer responded that, 'to be correct', she could not be confident that this had not occurred.

(iv) No down gradient impact 136 The third representation relied on by counsel for the applicant is that the former service station activities had not impacted on the Site down gradient of the fuel storage activities. It follows from what I have said about EES' failure to delineate the migration of contaminants that it was not in a position, responsibly, to make this statement. 137 At the trial, it was common ground that two monitoring wells at the rear of the Site (MWs 2 and 3) were (and still are) significantly contaminated by hydrocarbons. With some support from Rodney Clifford Harwood, a hydrogeologist called by counsel for EES, Mr Mulvey advanced some fanciful theories as to the source of that contamination. There was some inconsistency between the theories; their major common characteristic was that all attributed the conceded groundwater pollution to activities away from the Site. This is difficult to reconcile with EES' discovery of hydrocarbon migration at the interface between the sandy loam and sandy clay stratas (see para 12 above) and hydrocarbon odour in BH 10 and BH 11 below a depth of one metre (see para 15 above). 138 I do not find it necessary to detail Mr Mulvey's theories. None of them is supported by hard evidence. Even Mr Harwood was not prepared to say the source of the contamination was 'definitely offsite'. 139 More importantly, even if one or more of the theories had a foundation, the fact would remain that EES made no attempt to investigate the groundwater under the Site. Accordingly, it was in no position to assert that the former service station activities had not impacted down-gradient. Nor was it in a position to assert that the allotments that constituted the Site were suitable for 'any landuse' or 'residential use'. Such an assertion implies that EES had investigated, and negatived, the possibility that there was groundwater pollution, at least from onsite sources. EES had not done this.

(v) Suitability for new use 140 As indicated, Report 19844B and Report 19844C both made statements about the suitability for other uses of the areas with which they were concerned. The Conclusion to Report 19844B said Lot T (or at least its former tank area) was 'now suitable for any landuse'. Report 19844C stated Lot U was 'suitable for residential landuse'. These statements can only be read as statements about the position at the date of the respective reports, without the necessity for future remedial work. 141 Having regard to its failure to delineate the extent of hydrocarbon contamination, EES was in no position to make either of these statements. In her oral evidence, Ms Bauer effectively conceded as much. Speaking of Report 19844C, she agreed 'we could have had clearer limitations in that report'. The problem is that neither report stated any limitation; in both cases, the statement as to suitability was unqualified. 142 Counsel for Caltex attempted to draw a distinction between the suitability of the Site itself for development and the presence of contamination in the underlying groundwater that might cause the Site to be regarded as posing a significant risk of harm to neighbouring properties. However, the expert evidence does not support such a distinction. The presence of contaminated groundwater impinges upon the suitability of the Site for development. 143 Well before this litigation was commenced, both Dr Swane and Mr Kidd were adamant that the Site would not be suitable, even for the proposed commercial development, unless remedial works were undertaken. As late as March 2001, Mr Kidd noted elevated concentrations of petroleum hydrocarbons in soil samples taken during excavation of the Site: see para 86 above. He thought the Site represented a significant risk of harm because of groundwater contamination, offsite migration of elevated levels of BTEX and TPH in the groundwater and the 'potential for build up of vapours to explosive levels immediately below the basement'. In order to counter the first of those problems, Dr Swane's design proposed pumping, and subsequent decontamination, of the groundwater. In order to deal with the second problem, he proposed a vapour extraction (bio-venting) system. 144 During the course of his evidence, Mr Parker argued that, notwithstanding the presence of contaminated groundwater, the Site was suitable for 'high density' residential use, although not 'any landuse' or 'residential landuse' simpliciter. He said that, whether or not there was a health risk, 'the thing that concerns me more would be the odours in terms of standard residential use, the aesthetic conditions based on the data that was available'. 145 It seems to me this evidence tends to vindicate the applicant's complaint about the statements as to suitability made in Reports 19844B and 19844C. The terms 'any landuse' and 'residential landuse' are both wider than 'high density' residential use, whatever that may mean. Moreover, Mr Parker gave a reason for the Site's unsuitability for residential landuse. Hydrocarbon odours were apparent to me, at the lower carpark level and the rear of the Site, at the time of my inspection of the Site in the company of counsel and representatives of the parties. 146 Mr Parker suggested it might not have been necessary to undertake all the remedial work advised by SKM. He said: 'it is possible that a view could have been formed that no particular remedial measures were required, other than the slab over the base. There may have been a need for some groundwater control measures, or there could have been a need for some other control measures - I think I indicated possibly some vapour drainage under the slab could be an outcome. In other words, there wasn't enough information - through further assessment, other alternatives could have been developed.' 147 However, Mr Parker was not prepared to criticise the opinions as to remedial work of either Mr Kidd or Dr Swane. Mr Parker also conceded it was necessary to take into account the approval process. He gave this evidence: 'When we talk about use in the context of the use of land, another way one can look at that is to speak about that by reference to what has to be done to get approval and get on to the site that is required to establish the use following approval, correct? --- Yes, we can talk that way. And if the ability to establish the use of a site depends on the need to remediate soils and groundwaters or whatever system, then it is appropriate to say that the use to which the land is able to be put is restricted or limited by that condition, correct? --- If there is an addition [sic - condition] placed on it, yes. Therefore, would you agree, that the suitability for use of land subject to conditions which relate to its management and remediation of contamination, restrict or limit the use? --- Well, no, I think it permits the use, but there can be conditions on statements, for example, that allow use but these conditions have to be implemented. So its use is qualified or limited or conditional? --- Its use is conditional.' 148 Even Mr Harwood, who tended to see his role as an advocate for EES, rather than as an independent expert witness, conceded that 'work needs to be done to ensure there is no off site migration of groundwater on the site'. He said the reason that this remedial work was required was everybody's ignorance of the impact of the groundwater on surrounding properties. 149 Charben has made good its claim that both EES reports contained significant misrepresentations. And, as I have already said, I entertain no doubt that the contents of the reports were critical in causing Mr and Mrs Janakis (guided by Mr Steve Paradisis and Mr Beilby) to purchase the two allotments that constitute the Site. The case against Caltex (i) The Trade Practices Act claims 150 I can shortly dispose of these claims. As is argued by counsel for Caltex (Mr S Robb QC and Mr M Henry), Reports 19844B and 19844C were plainly prepared by EES. Both reports, and their covering letters, were printed on EES stationery and signed by EES personnel. There is no evidence, and nothing in either report, to suggest that any Caltex representative played a part in their formulation. 151 Although Caltex passed on each report to a firm of solicitors concerned with the relevant allotment, and under circumstances from which it may be inferred that Caltex would have expected the report to reach any prospective purchaser of the allotment, nothing was said or done by Caltex that might reasonably have conveyed the impression that it was adopting the contents of either report. Put simply, neither report constituted a representation made by Caltex, as distinct from a representation made by EES, that Caltex passed on to another person in ignorance of its misleading nature. 152 I agree with counsel for Caltex that the situation in the present case is similar to that discussed by Hill J in Argy v Blunts Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 132, in relation to the distribution by a real estate agent of a contract prepared by a solicitor. It is also similar to the situation postulated by Mason ACJ, Wilson, Deane and Dawson JJ in Yorke v Lucas (1985) 158 CLR 661 at 666, when their Honours said: 'It is, of course, established that contravention of that section does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive … That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.' (citations omitted) 153 In the present case, it cannot be said that Caltex expressly disclaimed belief in the truth of either report; but it certainly did not claim to have such a belief. Each report was passed on, pursuant to a contractual obligation to do so, without any indication that it was adopted by Caltex; I think for what it was worth. 154 Counsel for the applicant pointed out that, under its lease of Lot T, Caltex was obliged to furnish an environmental audit report identifying all environmental damage, contamination and pollution and specifying a remedial program; then to take all necessary steps to ensure that the remedial program was put into effect; and, finally, to provide a validation report certifying that the remedial program had been complied with to a standard acceptable to the lessors. Counsel argued these obligations imposed on Caltex a need to satisfy the lessors that the remediation work was satisfactory. Consequently, they said, rather than passing on Report 19884B 'for what it was worth', Caltex used this report to discharge its lease obligations. Further, counsel noted that it was not the case that Caltex played no role in the remediation process; 'Caltex gave instructions and directions on several occasions as to the remediation work on Lot T, and was given information about the progress of the works'. 155 I appreciate the force of these points. However, they do not justify a conclusion that Caltex adopted the contents of either of the reports, passing them on as representations made by Caltex itself. They were obviously technical reports made by an apparently appropriate independent consultant. Although Caltex commissioned the reports, and gave directions from time to time about remediation work, any reader would understand the statements in the report to be assertions by EES, not Caltex. 156 In relation to the applicant's claim that Caltex is liable on an ancillary basis, under s 75B of the Act, I note there is no evidence that any Caltex officer knew either report contained misleading information. Accordingly, there is no basis for suggesting that Caltex, or any officer of Caltex, was knowingly concerned in making the misleading statements contained in the reports. The claims made against Caltex under the Act must fail. (ii) The contract claim 157 As noted above, Charben's contractual claim against Caltex depends on cl 44.2(a) of the contract of sale. Caltex there covenanted that, after its removal of the USTs, it would 'cause its environmental consultant to reduce the levels of petroleum hydrocarbon pollution of the property caused by the use of the property as a service station to a level which will permit the use of the property for [Charben's] proposed use', being a use in accordance with the zoning. 158 Caltex's environmental consultant, EES, did not reduce the level of petroleum hydrocarbon contamination of Lot U to a level that would permit its use for a combined residential/commercial building (as then proposed by Charben) or even for a wholly commercial building (as later proposed and implemented). However, counsel for Caltex argue that this does not mean their client breached cl 44.2(a) of the contract for sale. They put a number of arguments. 159 First, counsel draw attention to para (c) of cl 32 of the contract. This paragraph excludes any claim, objection, rescission or termination by Charben in respect of 'any environmental hazard or contamination'. However, counsel accept the paragraph does not nullify cl 44; rather, they say that 'Charben took the risk of the presence of such contamination, subject to the other terms of the contract'. Counsel for Charben do not dispute that analysis. 160 Second, counsel for Caltex point out that cl 44.1(a) required Caltex to remove from Lot U only those USTs whose existence 'is known to [Caltex], or becomes known to [Caltex] prior to completion'. Counsel say Charben took the risk that USTs would remain on the allotment, provided that Caltex did not become aware of their presence before completion. 161 Once again, counsel for Charben do not dispute the analysis. It is obviously correct. However, it has little relevance to the present case. The basis of Charben's contractual claim is not that it discovered USTs after completion, but that Caltex did not cause EES to reduce the hydrocarbon pollution levels to the requisite standard. Counsel for Charben argue that cl 44.2(a) imposes such an obligation on Caltex; counsel for Caltex dispute this. The latter's argument is encapsulated in their final written submissions as follows: 'A crucial distinction must be made here between whether on the one hand Caltex made a promise to cause its environmental consultant to successfully carry out the works (so that Caltex warranted that success), and whether on the other hand Caltex promised to take steps to retain an environmental consultant to carry out work as described in clause 44.2(a), and provide an environmental report to Caltex, so that Caltex could deliver that report to Charben. Notwithstanding that clause 44.2 commences with the words "The Purchaser acknowledges and agrees that …", it may be in all of the circumstances that it could be implied that Caltex actually undertook to cause those steps to be carried out, in the sense that the environmental consultant would be retained to do work and provide a report. It is not a justifiable construction of clause 44.2 to read it as if those words were replaced by: "The Vendor warrants and agrees that …", if by that means the provisions of clause 44.2(a) are turned into a warranty by which Caltex makes itself responsible for the success of the work carried out by the environmental consultant.' 162 In elaboration, counsel for Caltex point out that cl 44.2(a) makes it clear that the relevant work is to be done by Caltex's environmental consultant, not by Caltex itself, and that cl 44.5 provides a right of objection to the consultant's environmental report. Counsel for Caltex put a lengthy argument about the operation of cl 44.5; but it seems to me this sub-clause is immaterial. Clause 44.5 was not invoked by Charben. It could not have been invoked. It will be remembered that cl 44.5 applies where 'the Purchaser is not satisfied … that the Environmental Report indicates that'. Charben's grievance does not relate to the contents of Report 19844C. The contents of the report were entirely satisfactory. The report stated that Lot U 'is now suitable for any landuse'. Even if Charben had known, at the time, that this statement was false, this knowledge would not have enabled it to invoke cl 44.5. 163 I accept the concession of counsel for Caltex (see para 161 above) that, notwithstanding the opening words of cl 44.2, 'it could be implied that Caltex actually undertook to cause' the environmental consultant to do the necessary work. Any other interpretation would lead to the absurd position that, despite the elaborate provisions of cl 44, Charben obtained no protection at all in relation to the suitability of the property for its proposed use. Caltex would only have to remove the USTs under cl 44.1; sub-cll 2 to 6 of cl 44 would all be otiose. 164 The argument of counsel for Caltex seems to be that it was sufficient for their client to instruct EES to reduce the levels of hydrocarbon pollution to the requisite level; if Caltex gave the appropriate instruction, Caltex 'caused' EES to do this; so is not responsible for any failure by EES properly to implement that instruction. 165 I do not read cl 44.2(a) in this way. First, the argument overlooks the significance of the word 'cause'. The primary meaning of that word, according to the Macquarie Dictionary, whether used as a noun or verb, is 'that which produces an effect'. Another meaning is 'to be the cause of; bring about'. Applying those meanings to cl 44.2(a), it is apparent that Caltex's obligation was to produce the effect that its environmental consultant reduced the pollution level to the requisite degree; or to be the cause of that happening. The clause required more than an ineffective instruction. 166 Secondly, the context strongly suggests the parties intended more than a possibly ineffective instruction. Caltex's obligation to provide the environmental report (the subject of sub-cll 44.5 and 44.6) took effect upon 'completion of the Works' (para (b)). Completion was made conditional upon 'completion of the Works' (para (c)). In other words, the parties contemplated that the Works would be satisfactorily completed. This could only be ensured if Caltex took ultimate responsibility for achieving that result. The terms of paras (b) and (c) support the conclusion that para (a) placed ultimate responsibility on Caltex for reduction of the pollution level. 167 Counsel for Caltex noted that, at the date of Report 19844C (February 2000), Charben had not finally decided the use to which it would put the land, still less the final design of any building. Nobody knew the depth of the necessary excavation. Counsel permitted themselves the observation: 'It is plainly absurd that EES would be obliged to remediate the property to the centre of the earth to cover any possibility of excavation which Charben might undertake'. However, the absurdity lies in the observation. Nobody has suggested going to the centre of the earth, only that sufficient bores ought to have been drilled to delineate the extent of the contamination; in particular, to determine whether it reached groundwater. As the expert evidence makes clear, there was no technical problem about drilling down to groundwater and taking samples; it was just a matter of somebody incurring the necessary expense. 168 Counsel for Caltex also relied on cl 44.4(a). It will be recalled that this paragraph contained a release by Charben of Caltex from all actions etc 'arising out of or in any way connected with the Works, the Environmental Report, or any environmental contamination in, under or on the property'. Counsel stated this provision 'reflects the commercial reality that a vendor would be unwise in the extreme to sell potentially contaminated property on a basis which would expose the vendor to unpredictable liabilities based upon the unknown way the purchaser may try to use the property'. 169 I do not think the last observation improves counsel's argument. The operation of cl 44.2(a) was not entirely dependent on Charben's proposed use of the allotment. The relevant use had to be one permitted by the current zoning. The evidence shows that contamination evaluations are made by reference to broadly-stated uses - for example, 'commercial', 'residential' or 'open space' - rather than by reference to the design of any particular building. 170 The real question that arises under cl 44.4(a) is whether it should be interpreted as a release from an action for breach of cl 44.2(a). Read literally, it has that effect. Charben's right of action for breach of cl 44.2(a) is a right of action that Charben argues it acquired after the contract date ('may have in the future') against Caltex 'arising out of' or 'connected with' environmental contamination in, under, or on Lot U. However, it is necessary to read cl 44.2(a) in the context of the special conditions as a whole, in order to determine whether the paragraph should be interpreted in this way. 171 Counsel for Charben note the contract contains no express provision governing which of cll 44.2 and 44.4 should prevail. However, they invoke the maxim of interpretation 'generalia specialibus non derogant' (when in conflict, provisions of general application do not override specific provisions). This principle is most often applied in relation to interpretation of statutes: see D C Pearce and R S Geddes, Statutory Interpretation in Australia, 5th ed, Butterworths, Australia, 2001 at para 4.3. However, as those learned authors note, the principle is based on 'commonsense that the drafter will have intended the general provisions to give way should they be applicable to the same subject matter as is dealt with specifically'. Therefore, it is not irrelevant to apply the maxim to the interpretation of a contract, where the court's task is to divine, from the language they have used, the apparent intention of the parties. 172 In their written submissions, counsel for Charben said: 'Clauses 44.2 and 44.3 set out, in some detail, procedures and obligations in relation to the contamination. If clause 44.4 were read as prevailing over the former clause, notwithstanding the absence of any express words to that effect, it would render clauses 44.2 and 44.3 otiose. If Caltex were released from all obligations connected with the Works, it would not be obliged to do any remediation work, nor even to remove the USTs notwithstanding the express words of clause 44.1(a). Moreover, Clause 44.9 provides that the obligations in, inter alia, clause 44.2, do not merge on completion.' 173 Counsel went on to say: 'The proper interpretation of clause 44.4 is that it does not release Caltex from obligations specified in the contract. A breach of clause 44.2 would entitle rescission, because of the terms of clause 44.2(c). The right to claim damages for breach also remains available. The appropriate construction of clause 44.4 is that, upon completion of the Works to the contractually imposed standard, Caltex is then released from all claims in respect of the Works. The release and indemnity clauses still have work to do under the contract, but they do not override the other provisions imposing obligations on Caltex.' 174 Counsel for Caltex responded to those submissions by saying: 'Charben's first argument is in substance that the obligations on Caltex in clause 44.2(a) should prevail over the release and indemnity in clause 44.4. That argument assumes that clause 44.2(a) imposed upon Caltex an absolute obligation to ensure that the environmental consultant successfully reduced the level of contamination to permit Charben's proposed use. For reasons which have already been given, that argument is inconsistent with the wording of clause 44.2(a), and also inconsistent with the whole scheme of clause 44. Charben's argument also ignores the provisions of the contract which gave Charben a right to object to the Environment Report, which would have given Caltex a right to rescind the contract, or implement the provisions which would have led to an independent determination of the issue by a certified contaminated site auditor. That is, Charben did not contract on the basis of an absolute warranty from Caltex, but rather contracted on the basis of a regime which involved the undertaking of environmental work and the revision of that work by an independent expert. The essential reality of the present case is that Charben did not avail itself of the right to have the work of the environmental consultant, EES, reviewed in the context of the contract. Rather, Charben asserts contractual rights which ignore the terms of the contract. Charben also seeks to hold Caltex directly liable for the terms of the EES February 2000 report. In so doing Charben has ignored the terms of the contract into which it entered, and is attempting to deny Caltex the reasonable protections that were included in the contract to adjust the risks as between vendor and purchaser.' 175 I have already rejected the interpretation inherent in the first paragraph of this response. I have also held that Charben's right to object to an unsatisfactory environment report, under cl 44.5, is irrelevant to this issue; there was nothing wrong with the terms of the report, only with its accuracy and the sufficiency of the remediation works that were required to be undertaken under cl 44.2(a). As it seems to me, the preferable submission on this issue is that of counsel for Charben. 176 In relation to breach of the covenant, counsel for Charben argued: 'Caltex has not remediated the land sufficiently to permit the proposed use without the need for further remediation. The events that have transpired demonstrate this. There has been no relevant change in the proposed use, yet bioremediation of the soil was undertaken during the excavation process, and, more substantially, the SKM system was installed to remove harmful vapours and remediate the groundwater. These remediation works were required by Council in order that the development be permitted to proceed. In addition, the Site Audit Statement was unable to be obtained because of the residual contamination. The Site Auditor found that the Site was not suitable for residential land use because of the contaminated groundwater and contaminated soils at depth. Finally, Charben was obliged to enter a voluntary remediation agreement or face the prospect of the EPA issuing a remediation order. In these circumstances, it is clear that the Site was not remediated so as to permit the use of the Site for Charben's proposed use without further remediation of the petroleum hydrocarbon pollution at the Site. It follows that Caltex is in breach of clause 44.2 and is liable in damages for that breach.' 177 Counsel for Caltex did not put rebutting submissions on this point. I accept Charben's argument on breach. Charben's breach of contract claim against Caltex must succeed.

(iii) The negligent misstatement claim 178 By para 24 of the FASC, the applicant alleges that Caltex knew, or ought to have known, that Charben would rely on any representation made by it concerning remediation of the Site; accordingly, Caltex owed Charben a duty to take reasonable care in making any representation to Charben upon that subject. By para 26, Charben charges that, in the circumstances, Caltex made representations negligently. 179 I agree with counsel that there is no doubt that Caltex knew that Charben would rely on Report 19844C, for which both parties had been waiting for some 12 months. I also accept that Caltex ought to have been aware that Charben would rely on Report 19844B. That report was given to the lessors to facilitate their sale of Lot T, so it would be natural to expect them to pass it on to any prospective purchaser and for any actual purchaser to rely upon it. 180 However, the problem about this cause of action, as against Caltex, is the same as the problem in relation to the claims under the Act; in my judgment, it is not possible to treat either report as a statement by Caltex. There might be a basis for a negligent misstatement claim if it were shown that Caltex passed on, even without adopting, an EES report which it knew to be misleading. But there is no evidence that Caltex knew either report to be incorrect or misleading.

(iv) The negligence claim 181 Charben also pleads that Caltex owed Charben 'a duty to take reasonable care in carrying out remediation works on the Site', or alternatively on either allotment, to reduce the levels of petroleum hydrocarbon pollution to a level that would permit Charben's proposed use. Charben then says that, in the circumstances, 'Caltex … carried out remediation works negligently'. 182 I am prepared to assume, without deciding, that Caltex owed Charben a duty of care along the lines pleaded by Charben. However, it seems to me erroneous to say that Caltex breached this duty. It is clear that the investigations undertaken by EES were inadequate. It appears from Ms Bauer's evidence that a primary reason for this inadequacy was that the brief given by Caltex to EES was insufficiently demanding. If there was evidence to suggest that this insufficiency arose out of a decision by Caltex to skimp necessary work, there would be a substantial argument that Caltex had breached the assumed duty of care. On this basis, it could be said that Caltex knowingly put at risk the proper remediation of the Site. 183 However, it was EES, not Caltex, which specified the ambit of the required works: see para 13 above. There is no evidence that anybody representing Caltex knew that the work proposed by EES, in relation to either allotment, would be insufficient to enable EES properly to certify that the allotment was fit for Charben's proposed use. The negligence claim must also be rejected. (v) Conclusion concerning Caltex's liability 184 In the result, I hold that Charben is entitled to succeed against Caltex, but only in relation to its breach of contract claim. The other three causes of action pleaded by Charben against Caltex all fail. 185 I propose to enter judgment in favour of Charben against Caltex.

The case against EES (i) The Trade Practices Act claims 186 Charben claims the publication by EES of each of Reports 19844B and 19844C constituted conduct contravening ss 52(1) and 53A of the Act. 187 Section 52(1) of the Act provides: 'A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.' 188 Charben's argument is that the false and/or unjustified assertions in each of the reports constituted misleading conduct or conduct likely to mislead. 189 Section 53A of the Act is concerned with conduct in connection with the sale or grant of an interest in land. As I understand the situation, Charben relies on sub-s (1). That sub-section reads: 'A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land or in connexion with the promotion by any means of the sale or grant of an interest in land: (a) represent that the corporation has a sponsorship, approval or affiliation it does not have; (b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; or (c) offer gifts, prizes or other free items with the intention of not providing them or of not providing them as offered.' 190 I do not think s 53A(1) is available against EES. No doubt Charben's complaint can be characterised as an allegation that EES made a false or misleading representation concerning 'the characteristics of the [Site]' and the use to which it was capable of being put. However, EES did not make the representations set out in the report in connection with the sale or grant of land. Although EES was no doubt aware that each allotment was being put on the market, EES was not itself involved in either sale. Its task was simply to remediate and validate the Site on behalf of Caltex. 191 The s 52 claim is not linked to the sale or grant of land. That section is couched in wide terms. It covers any conduct by a corporation, in trade or commerce, that is misleading or deceptive or is likely to mislead or deceive. EES is, of course, a corporation, within the definition of that term in s 4(1) of the Act. Contrary to a submission put by its counsel, in providing each of the reports, EES was acting in trade or commerce. It was part of its business for EES to validate sites and report what had been done. And I have already held that there was material in each of the reports that was false or, at least, unjustified. The publication of false or unjustified representations will ordinarily be regarded as conduct that is misleading or, at least, likely to mislead. 192 However, counsel for EES argue their client cannot be held liable to Charben in respect of the s 52 claim. They say Charben has the 'fundamental difficulty' that the 'reports were not addressed by EES to Charben'. Counsel say: 'They were reports for a specific and narrow purpose: to inform Caltex of EES's opinion in relation to the status of the particular lot in relation to the scope of work for which they had been commissioned.' 193 These statements are correct. However, I do not think it follows that EES cannot be made liable. There is no direct evidence that EES was aware that Report 19844B (or any extract of it) would probably be made available to prospective purchasers; however, there is such evidence in relation to Report 19844C. Ms Bauer said she was aware that Caltex was 'looking at selling' Lot U. Her evidence went on: 'Were you also aware that Caltex wanted a report as to validation in order to use it in the marketing of the site? --- I was not aware of the sale of contract. I was aware that they wanted it to show that the levels of hydrocarbons had been reduced on the site. In other words, you were aware when you audited this report that the report was going to go to Caltex and that Caltex was going to use that report to demonstrate to potential purchasers that the site in the past contaminated by petro chemical products had been remediated and validated and was suitable for someone to buy for residential land use, correct? --- I was not aware if they would give that report to anyone else. I was aware that they would use it to make their opinion. You thought perhaps that they [sic] might be likely that they would use it in that way, do you agree? --- I would think that they would show it to someone, yes. The someone to whom they were likely to show it was someone coming to the site with an interest in buying it, correct? --- Potentially.' 194 In relation to Report 19844B, it seems to me that EES' awareness, in itself, is not a necessary element in Charben's s 52 cause of action against EES. The critical question is whether Charben is able to demonstrate the causal connection required by s 82(1) of the Act. That sub-section says: 'A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.' 195 The evidence supports the conclusion that Charben decided to purchase each allotment only after being made aware of EES' conclusions in relation to the remediation of that allotment: see paras 101-103 above. Charben relied on those conclusions in deciding to purchase the allotments. Charben has suffered loss or damage because the two reports issued by EES misled Charben into believing that it was purchasing allotments that were suitable for 'any landuse', or 'residential landuse', when they were not. In order to make the Site suitable even for commercial use, Charben had to incur expenditure that it would not otherwise have incurred; and, even then, it suffers ongoing expenses and losses. 196 The submissions of EES emphasise, as I have accepted at para 193 above, that there is no evidence that EES was aware that Report 19844B (or any extract of it) would probably be made available to prospective purchasers. It might be possible to infer such knowledge from the circumstances in which the report was prepared. However, I need not decide that point. I accept the submission of Charben that it really does not matter whether EES is held to have engaged in misleading conduct in relation to Report 19844B; it is enough that it engaged in such conduct in relation to Report 19844C. Counsel for Charben expressed the point in this way: 'it should be noted that if, contrary to the submissions above, the purchase of Lot T (but not Lot U) was not caused by the misleading conduct of Caltex or EES, it produces no material impact on the damages that Charben is entitled to recover. This is because the uncontested evidence of Mr S Paradisis to [sic] the effect that his intention was to purchase and develop both lots as the one Site, and that if Lot U was not able to be purchased, then Lot T would simply be resold, presumably at about the same price of $400,000 at which it was purchased, so that Charben would be able to "get its money back".' 197 I accept the evidence referred to by counsel and their reasoning. Charben has made good its s 52 claim against EES. (ii) The negligent misstatement claim 198 By paras 24-25 of the FASC, Charben pleaded that EES knew, or ought to have known, that Charben would rely on any representation made by EES concerning remediation of the Site, or alternatively each of the constituent allotments, in determining whether to complete the purchase of each allotment and to develop the Site. Under those circumstances, it is claimed that EES 'owed Charben a duty to take reasonable care in making any representation to Charben concerning the remediation works carried out on the Site', or alternatively carried out on each of the constituent allotments. 199 By para 26, Charben pleaded that EES made these representations negligently. 200 It follows from my earlier findings that the representations made by EES in both Report 19844B and Report 19844C were made negligently. The issue in relation to this cause of action is whether Charben has a right of action against EES in relation to those negligent statements; it being remembered that the reports were delivered by EES to Caltex, not to Charben. 201 Counsel for the applicant referred to the statement of principle made by Barwick CJ in the seminal negligent misstatement case, Mutual Life & Citizens' Assurance Company Limited v Evatt (1968) 122 CLR 556 ('MLC v Evatt') at 569-570. The Chief Justice's formulation included the following: 'The information or advice will be sought or accepted by a person on his own behalf or on behalf of another identified or identifiable person or on behalf of an identified or identifiable class of persons. The person giving the information or advice must do so willingly and knowingly in the sense that he is aware of the circumstances which create the relevant relationship. He must give the information or advice to some identified or identifiable person in the given circumstances of the implications of which he is, or ought to be, aware. The identity and position of the recipient of the utterance form part of the relevant circumstances.' 202 Counsel said that EES was aware that each of the allotments was to be sold; EES knew, or ought to have known, that the information contained in the relevant report would be communicated to a prospective purchaser of either allotment and that any purchaser would rely on the report in deciding to purchase the allotment; and so would risk incurring economic loss if the statements in the report were untrue. They referred to Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 188 CLR 241 ('Esanda'). 203 I should say at once that I do not think it is possible for Charben to make out a negligent misstatement claim in relation to Report 19844B. As I indicated at para 193 above, there is no direct evidence that EES knew that this report, or any extract from it, would probably be made available to prospective purchasers. No doubt Ms Bauer and Mr Mulvey were aware that the lease of Lot T was coming to an end and that Caltex wanted the report in order to enable it to demonstrate to the lessors that it had fulfilled its remediation obligations under the lease. They may have known that the lease itself required such a report. Ms Bauer and Mr Mulvey may have speculated that, once the lease came to an end, the lessors might seek to sell Lot T. However, so far as I can see, nothing in the evidence puts this possibility above the level of speculation. That would not be enough to satisfy the test laid down in MLC v Evatt and succeeding cases. 204 However, I do not think it matters that Charben is not entitled to succeed on this cause of action in relation specifically to Lot T. As I accepted at para 196 above, Charben's critical decisions were to proceed with the purchase of Lot U and to develop the two allotments as one site. Those decisions were made in reliance on Report 19844C, which contained negligent misstatements. 205 In Esanda, the High Court upheld a decision of the Supreme Court of South Australia to strike out allegations made in a statement of claim. The question was whether the allegations disclosed a cause of action in negligence. As the alleged negligence related to the auditing of the accounts of a corporation, their Honours had regard to the MLC v Evatt line of authority. All six members of the High Court affirmed the Supreme Court decision. However, they differed in their formulation of the necessary elements of the cause of action for negligent misstatement. 206 At 252, Brennan CJ said: 'The uniform course of authority shows that mere foreseeability of the possibility that a statement made or advice given by A to B might be communicated to a class of which C is a member and that C might enter into some transaction as the result thereof and suffer financial loss in that transaction is not sufficient to impose on A a duty of care owed to C in the making of the statement or the giving of the advice. In some situations, a plaintiff who has suffered pure economic loss by entering into a transaction in reliance on a statement made or advice given by a defendant may be entitled to recover without proving that the plaintiff sought the information and advice. But, in every case, it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound. If any of these elements be wanting, the plaintiff fails to establish that the defendant owed the plaintiff a duty to use reasonable care in making the statement or giving the advice.' 207 Dawson J spoke of the need for a relationship of proximity. He pointed out that the statements of the auditors were not made at the request of Esanda, but he accepted that such a request was not essential. At 256, his Honour referred to a passage in San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 ('San Sebastian')at 357: 'The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.' 208 Toohey and Gaudron JJ also quoted this passage at 262. They went on at 263 to distinguish 'between reliance as an indicator of proximity and reliance as an element of a cause of action for the negligent provision of information or advice'. At 264, their Honours said: 'reliance is to be understood, in the context of the provision of information or advice, as an expectation, which is reasonable in the circumstances, that due care will be exercised in relation to that provision. Similarly, we consider that, in that same context, assumption of responsibility should be understood in the way explained by Barwick CJ in Evatt. More precisely, it should be understood as the assumption of responsibility for providing information or advice in circumstances where it is known, or ought reasonably be known, that it will or may be acted upon for a serious purpose, and loss may be suffered if it proves to be inaccurate. 209 At 275, McHugh J summarised the current position in Australia, as he saw it, in this way: 'absent a statement to a particular person in response to a particular request for information or advice or an assumption of responsibility to the plaintiff for that statement, it will be difficult to establish the requisite duty of care unless there is an intention to induce the recipient of the information or advice, or a class to which the recipient belongs, to act or refrain from acting on it. Mere knowledge by a defendant that the information or advice will be communicated to the plaintiff is not enough.' 210 Gummow J, at 310, also quoted the San Sebastian passage set out above. He thought the appeal should be dismissed 'on a limited basis'; 'as it stands, the pleading is deficient for want of anything more than that which is put forward to found the duty of care'. He thought, '[o]nce that conclusion is reached, it is inappropriate, on a strike-out application and with the law in its somewhat uncertain state, for the Court to identify to the pleader that which would remedy the deficiency which has lead to the striking out of the pleading'. 211 A reader of the judgments in Esanda might be forgiven for regretting that the High Court missed the opportunity of reducing the 'uncertain state' of the relevant law. It is not easy to extract any principle from the case. Although the fact that a statement in suit was made at the request of the recipient is an important indicator of the existence of a sufficient relationship, the judgments made clear that absence of a request (as in the present case) is not fatal to a claim. Intention to cause the recipient to act in reliance upon the statement is also an important indicator but its absence, also, is not necessarily fatal to a claim. 212 The test enunciated by Brennan CJ might be thought to cover the present claim. Charben suffered pure economic loss by entering into a transaction (the purchase of Lot U) in reliance upon a statement made by EES (Report 19844C). EES knew, or ought reasonably to have known, that the statement would be communicated to members of an identifiable class (prospective purchasers of Lot U) for the purpose of inducing them to enter into the type of transaction (purchase of Lot U) that Charben did in fact enter into. EES also knew that it would be very likely that any purchaser would enter into that transaction in reliance on the statement and thereby risk incurring economic loss if the statement should be untrue. 213 However, it is not clear to me that the other members of the Court would have regarded the facts of the present case as sufficient to impose upon EES a duty of care to Charben. Importantly, Report 19844C was neither produced at Charben's request or produced by EES with the intention of causing Charben to act in reliance upon it. All that can be said is that this is a case in which a person has produced a report on a technical matter for a client, knowing the report would be likely to be passed on to someone else, who might rely upon it in making a decision to purchase the allotment. I think cases such as San Sebastian and Esanda indicate that is not sufficient. 214 The negligent misstatement claim must be rejected. (iii) The negligence claim 215 In their written submissions, counsel for the applicant expressed this claim in the following way: 'A claim is also maintained in negligence against EES … in respect of the remediation works. This claim is grounded on the same facts as establish that Caltex did not fulfil it [sic] contractual obligation to remediate the Site. One aspect of that negligence is a failure to test the groundwater. Had the groundwater been tested, the contamination would have been revealed and would either have been remediated, or the misleading representations in the reports would not have occurred. In either case, Charben would not have continued with the purchase and development of contaminated land. In any event, EES … knew both sites were for sale, and that a failure to remediate the Sites appropriately would result in the incoming purchaser suffering substantial loss. The duty is equivalent to the duty owed by a builder to future owners of the home or building: Bryan v Maloney (1995) 182 CLR 609, since the remediation is work which permanently impacts on the quality of the site, there is no realistic opportunity to discover the defective remediation and there is no relevant exclusion clause in the agreement between Caltex and EES or in either of the reports.' 216 Counsel for EES responded to this argument by disputing that their client owed a duty of care to Charben. They sought to distinguish Bryan v Maloney as having been decided on the basis, expressed by Mason CJ, Deane and Gaudron JJ at 624, that the necessary relationship of proximity existed between Bryan (the builder of the house) and each subsequent purchaser 'who might sustain physical injury to person or property as a consequence of a collapse' of the house. At 627-628, their Honours referred to 'persuasive policy reasons' supporting the recognition of a relationship of proximity in such a case. At 628, their Honours said: 'They include the consideration that, by virtue of superior knowledge, skill and experience in the construction of houses, it is likely that a builder will be better qualified and positioned to avoid, evaluate and guard against the financial risk posed by latent defect in the structure of a house. In all the circumstances, the relationship between builder and subsequent owner as regards the particular kind of economic loss should be accepted as possessing a comparable degree of proximity to that possessed by the relationship between builder and first owner and as giving rise to a duty to take reasonable care on the part of the builder to avoid such loss.' 217 Counsel for EES say that there is no similarity between that situation and that in the present case: 'The evidence does not establish that EES knew or ought to have known that Charben would rely upon an extract from the report concerning Lot T. In particular, it would not have been reasonable for Charben to rely upon the extract for the purpose of deciding to enter into the contract for the purchase of Lot T in order to construct a commercial or combined residential/commercial development.' 218 Counsel listed eight factors which, they submitted, tell against the existence of a duty of care: '(a) EES's activities in the present case was [sic] limited to the production of a report for Caltex's purposes and limited to the scope of work set by Caltex for that report; (b) EES was not exercising any statutory function in carrying out the work requested by Caltex, such statutory [sic] role was to be performed by the site auditor and through the preparation of a site audit statement; (c) EES was not subject to any statutory requirement, the "guidelines" did not require any certification in the circumstances of EES's retainer by Caltex; (d) As the evidence demonstrates it so did, Charben was in a position to protect itself through contractual means and to limit its risks; (e) As the evidence also demonstrates it so did, Charben was able to obtain its own expert advisers, (Geotechnique and Mr Kidd) which advisers were given free access to the site for the purpose of conducting their own confidential inquiries; (f) EES had no control over the disposition of the site or the extent to which the site was to be remediated or the particular quality requirements if any of any approval authority or private certifier with statutory authority; (g) EES was not a party to Caltex's dealings with Charben or the lessor, or with any dealings with Council - EES worked as directed by Caltex; and (h) EES did not have control of the risks which might emerge if Lot T was not properly remediated or construction took place on the site which affected the remediation or validation works which had been undertaken or the risk profile of the site or of lot U.' 219 The High Court has considered disputes as to the existence of a duty of care on a number of occasions since Bryan v Maloney. The recent trend has been towards restricting the ambit of the duty: compare Pyrenees Shire Council v Day (1998) 192 CLR 330, Perre v Apand Pty Limited (1999) 198 CLR 180 and Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 with Brodie v Singleton Shire Council [2001] HCA 29; 206 CLR 512 and Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540. While I do not suggest the High Court today would overrule Bryan v Maloney, I believe it would not countenance its extension. And it seems to me that it would require an extension of the principles adopted in that case to impose a duty of care on EES in relation to Charben. This is apparent from the factors identified by counsel for EES. 220 Charben's negligence claim against EES fails for lack of the requisite duty of care. It is not necessary to determine the issue of breach of duty or EES' claim that Charben was guilty of contributory negligence. EES' claim to indemnification by Charben 221 By paras 26-27 of its Defence, EES pleaded: 'Further and in answer to the whole of the Statement of Claim EES says that on or about 31 May 2000 the Applicant by its servant and agent entered into an agreement in writing (the Charben Agreement) to provide to Charben assistance in assessing the condition of the Property. It was a term and condition of the Charben Agreement that the indemnity clauses contained within the agreement with Caltex would apply to Charben and that Charben would hold EES free from all actions or liability in respect of the EES Report.' 222 The Defence went on to plead that Charben's Application and the Statement of Claim in this proceeding constitutes a 'claim' so that any liability of EES falls within the terms of the indemnity clause. 223 Counsel for EES did not put submissions in support of this contention. However, it has not been abandoned. 224 In my opinion, the defence has no substance. The circumstances upon which it depends are set out at paras 61-65 above. It will be recalled that Mr Steve Paradisis was anxious to have EES provide answers to HLA's questions about the two reports, but Ms Bauer wanted EES to be paid for the time of its personnel in providing the answers. Mr Paradisis offered to pay and Ms Bauer said she would fax a document for him to sign. When she did send a fax, two weeks later, she slipped into it, without previously notifying Mr Paradisis, a sentence reading: 'We will provide information and answers to the queries put forward as long as you return this letter signed, agreeing that the indemnity in the contract of sale covering Caltex and their consultants undertaking environmental work on the site prior to sale still abides'. Mr Paradisis signed and returned the fax. 225 Having regard to the lack of discussion about this sentence, it is questionable whether it can be regarded as part of any agreement between Charben and EES. However, assuming it was, the substance does no more than acknowledge the continued application, as between Charben and Caltex, of the special conditions in the contract of sale signed by those two companies. It did not confer on EES any right of indemnity. 226 On the basis of its s 52 claim, Charben is entitled to recover judgment against EES. Assessment of damages: general 227 There are differences between the legal principles governing the assessment of damages for breach of contract, in tort and for contravention of the Act. It is not necessary to go into these differences. As I understand the parties, they agree the outcome, in relation to contested items of Charben's damages claim, would be the same, irrespective of the basis of recovery of damages. I think they are correct. Consequently, there will be no difference between the amount of damages Charben is entitled to recover against EES and its entitlement against Caltex. 228 Each of the parties retained an accountant, an engineering consultant and a real estate valuer to assist it, and to provide evidence to the Court, in relation to the computation of damages. At my request, each group of experts conferred, both before and during the hearing, in an endeavour to reduce their differences of opinion. There was, in the end, a considerable degree of common ground in relation to the assessment of damages. Assessment of damages: two points of principle (i) Caltex and Lot T 229 Before embarking upon computation of damages, it is desirable to consider two matters of principle advanced in submissions by counsel for Caltex. 230 First, counsel submit that Charben is not entitled to recover from Caltex damages in relation to the cost of remediating Lot T (694 Pacific Highway). This allotment was purchased by Charben from the lessors, not from Caltex; accordingly, counsel say, any entitlement to damages for breach of contract by Caltex could not extend to its remediation. They say: 'Charben's case is that No 694 as well as No 692B was excessively contaminated. If No 692B had been remediated to the requisite standard, that would have left No 694 contaminated. … As a matter of commonsense, residual, excessive contamination of one property does not cause any loss in respect of an adjoining property, where that adjoining property is itself excessively contaminated, and is consolidated with the first property. Alternatively, a claim that Charben suffered loss in respect of the development of No. 694, as a result of consolidating No. 694 with No. 692B, and then developing the both together, is too remote.' 231 Counsel for Charben offer a number of responses to this submission. First, they set out what would have happened if Caltex had carried out its obligation, under cl 44.2 of the contract, to remediate Lot U. They say that if, during the course of this work, Caltex had decided that the remediation works were so extensive that it should rescind under cl 44.3 of the contract, then Lot T would have been sold by Charben. They say: 'In this event Charben would not have incurred any of the items of damage it now claims. The only question would be whether Charben would have made a profit or a loss on the resale of Lot 694. As there is no evidence of value other than the arm's length purchase by Charben, the Court should assume that neither a profit nor a loss would be made on the resale of Lot [T]. It follows that the damages calculation by Charben is appropriate. All of the heads of damage would have been avoided had the project not proceeded.' 232 Counsel for Charben go on: 'If, contrary to the likely scenario set out above, Caltex proceeded to remediate the site appropriately, including remediating the groundwater, then again Charben would have avoided the same costs. The site would be worth the same as if it had never been contaminated. Notably, there would have been no reason for Chris Kidd to delay the issue of a Site Audit Statement, because the works and Report would have dealt with soil contamination and groundwater appropriately. It is noteworthy that Mr Kidd's concerns all arose out of the work on No 692B. This is unsurprising, since this was the service station site, and was correctly assessed as likely to be the cause of any continuing problems. It appears undeniable that if the remediation works were done properly on Lot 692B, the Site Audit Statement enabling the development to proceed, would have been issued in about May 2000, rather than March 2002 when it was issued after all the remediation works were completed.' 233 Counsel seem to be correct in asserting that Mr Kidd's concerns all arose out of the work on 692B Pacific Highway; not 694. In their submissions in reply to the quoted submissions of Charben, counsel for Caltex did not contend otherwise. 234 I think the critical element in Charben's submission is its reference to remediating the groundwater. The failure to remediate the groundwater is at the heart of this case. The borehole reports strongly suggest that the groundwater problem was focussed on, if not limited to, Lot U. 235 In the alternative, counsel for Charben submit that their client is entitled to recover the cost of remediation work on Lot T as the lessors' successor in title to the freehold of that allotment. They say this entitlement arises because of the covenant to remediate that allotment, which was included in the lease, between the lessors and Caltex, to which Charben acquired the benefit when it purchased Lot T from the lessors. 236 There is a question whether such a claim has been effectively pleaded in this case. However, it is not necessary to determine that point. There was no contract between Charben and Caltex in relation to Lot T. Nor was there any privity of estate between them. The lease over Lot T from the lessors to Caltex terminated at the end of October 1998; Caltex apparently having held over from month to month since the expiry of the last written lease on 30 August 1998: see para 6 above. Charben acquired Lot T pursuant to a contract dated 27 November 1998. Caltex was not then lessee of the allotment. It follows that counsel's alternative argument in respect of Lot T must be rejected. 237 However, it appears to me that counsel's first argument is correct. It seems to me that, if Caltex had complied with cl 44.2 of the contract of sale of Lot U to Charben, the loss subsequently suffered by Charben would have been avoided, whether or not Caltex chose to avail itself of cl 44.3 of the contract. (ii) Increased costs before February 2001 238 Caltex contends that Charben is not entitled to recover damages for increased costs incurred by it 'in the period before the excessive contamination was discovered in February 2001 after the completion of the excavation works'. Counsel say the inclusion of these costs 'is based upon an unwarranted assumption that, had No 692B been remediated to within the requisite threshold, the additional "remediation" costs incurred during that period would not have been paid'. Counsel listed the costs which they claimed to fall into this category. The largest item was $178,995, paid to Glencoe for removal of contaminated soils. The remaining items were site audit fees paid to HLA, testing fees paid to Geotechnique, and fees paid to companies who received contaminated waste. 239 Counsel for Caltex point to the paucity of site records of the work performed before February 2001. They also note that Charben did not call any witness from the contractors to prove that payments made to them were caused or increased by any excessive contamination of Lot U. They said this proposition depends entirely upon the oral evidence of Mr Theo Paradisis. They branded that evidence as 'false'. Counsel made the important point that the obligation of their client, under cl 44.2(a) of the contract, was to remediate Lot U 'to a level which will permit the use of the property for [Charben's] proposed use'; not wholly to eradicate contamination. 240 Counsel for Charben responded by saying: 'This argument of Caltex must assume that if Caltex had properly remediated the Lot 692B, then the excavation works on the site would have been no different in the period July 2000 to February 2001. If Caltex's breach required more expensive excavation works, then the additional expense is plainly damages attributable to the breach. The laborious testing and excavation process arose because Caltex had not remediated the site properly. Had it done so, Mr Kidd's queries about the lack of testing of the groundwater and the likely migration of contaminants would have been quickly answered and resolved. Instead, because he was not satisfied (and his lack of satisfaction proved to be well founded) he required (as the cheaper of two alternatives) the expensive metre by metre excavation regime. February 2001 was the date the breach by Caltex was discovered, but the discovery of the breach does not determine the date from which damages are recoverable. Accordingly, Caltex's assertion that the expensive regime "would have happened whether or not any excessive contamination was ever discovered at a later time" is inapposite.' 241 I agree with the logic of Charben's response. At the same time, I think counsel for Caltex were justified in criticising the quality of the evidence adduced in relation to those costs. As they said, in many respects the only relevant evidence was Mr Theo Paradisis' uncorroborated oral evidence. Contrary to the suggestion of counsel for Caltex, I do not think Mr Theo Paradisis set out consciously to mislead the Court. However, it is clear his recollection was incorrect in relation to some matters of detail; not surprisingly, given the lapse of time between the relevant events and the date of his giving evidence. However, nothing seems to turn on those matters of detail. The critical matter, for the purpose of this submission, was what Mr Theo Paradisis meant in evidence by the term 'clean fill', in relation to dumping waste. I do not accept that Mr Theo Paradisis' reference to how he would have been able to dispose of 'clean fill' was a reference to soil that had never been contaminated at all. Mr Theo Paradisis had previous experience with service station sites. He knew that a former service station was unlikely ever to be in pristine condition. I think he used the term 'clean fill' to refer to fill that was able to be accepted at any regular dump; that is, fill that posed no hazard to a normal urban environment. The reason why an additional $178,995 had to be paid to Glencoe for removal of soil from the Site was because the material was not disposable at a regular dump; it had to be carted to a specialised facility. Accordingly, I should allow the disputed items related to removal of contaminated material from the Site. 242 On the other hand, I think Caltex has a point in relation to the HLA and Geotechnique fees. Whether or not the Site had been properly remediated, the Council would have required a site audit to establish that fact. Fees would have been incurred. A site audit would presumably have involved testing, and expenditure on testing fees. It is not possible for me to determine what these fees would have been. I think the fair course is to deduct from the sums to be subsequently allowed the sum of $10,000. Diminution in building value (i) Allowability 243 Caltex also contends that Charben is not entitled to calculate any component of its loss by reference to the difference at any time between the hypothetical value of the completed development, if it had not been contaminated, and its actual value as completed i.e. on the supposition that it was in fact contaminated. 244 Counsel's argument is put this way: 'Charben has not actually suffered such a loss, because it has not sold the completed development and realised any loss. The evidence is that Charben never intended to sell the development on completion, but rather intended to hold it as a long-term investment. That is what has happened. Charben has therefore not actually suffered any monetary loss related to the sale of the property. It may never do so. On the evidence, once the bioventing system has completed its work, the excessive contamination problem will be resolved. Charben will then, if it wishes, be able to sell the development for its full market value. None of the expert valuers in their determinations of the present value of the completed development expressed any opinion that the passing rents paid by the tenants were less than market rent. That is, the evidence does not show that as long as Charben retains ownership of the development it will actually receive less rental income than it would had the contamination not been present. The long-term nature of the leases shows that Charben should not receive less than market rent during any likely period of operation of the remediation system.' 245 Counsel argue that, if Caltex breached cl 44.2 of the contract, the natural measure of Charben's damages would be the amount of money that Charben would have had to expend to decontaminate Lot U following completion. Counsel concede this cost must be calculated in the context of the development that was under construction when the contamination was discovered, and should extend to increased development costs directly caused by the contamination of Lot U. 246 Counsel for Charben remark that, depending on the selected discount percentage, the approach argued by their opponents might yield higher damages than those claimed by their client. However, they submit Caltex's approach is wrong in principle; it is open to the Court, and is the usual course, to assess loss of value as at the date of breach or date of trial. They refer to Johnson v Perez (1988) 166 CLR 351. 247 In that case, at 355, Mason CJ referred to 'a general rule that damages for torts or breach of contract are assessed as at the date of breach or when the cause of action arises'. The Chief Justice acknowledged this rule is not inflexible. He said at 356: 'courts depart from the general rule whenever it is necessary to do so in the interests of justice'. He instanced cases of fluctuating foreign currencies or goods for which there is not an established market. Those examples are remote from the present case. It is common ground that there is an established market for commercial properties, values being usually determined by capitalising the present or likely future rental yield. 248 Mr and Mrs Janakis might be content to have Charben continue to hold the Site for such time as it may take for the remediation process to be completed and any diminution in value to be eliminated. However, they might not; to assess damages on the basis that they will definitely take that course would be to expose them to an uncompensated loss if they chose, or needed, to sell at an earlier date. Effectively, Charben would lose the option (possessed by every other commercial property owner) of deciding for itself whether to continue to hold its property. I think Charben is entitled to have the Court take into account the diminution in value of the Site, caused by the contamination, assessed as at the date of trial. (ii) Quantum 249 For the purpose of their valuations, all the valuers assumed the Site is in fact contaminated and that the bio-venting and ground remediation works installed by SKM were necessary, in order to impose acceptable limits on groundwater contamination and polluting odours. 250 However, the three valuers adopted different assumptions as to both the period during which it would be necessary to operate the bio-venting system and the annual cost of doing so. Choice between those assumptions does not depend on real estate valuation expertise. The choice has to be made by me, having regard to other evidence; especially that of the engineers. 251 The three valuers agreed that the market value of the Site, at the date of trial and as developed with the existing buildings, but free of any hydrocarbon contamination, would be $3,800,000. For the purposes of calculating the market value of the affected site (as developed), they agreed it was necessary to deduct from this figure a sum representing the likely future annualised cost of running the bio-venting system. The annual cost is currently $110,000. The valuers agreed that, if one assumed an operating period of ten years at $110,000, the current market value of the developed site would be $2,700,000. However, against the possibility that the Court did not accept either a ten year operating period or that costs would continue to be incurred at the rate of $110,000 per annum, they also made calculations in respect of ten other possibilities. 252 Six of the ten possibilities assume an operating period of either three years or five years. I immediately set them aside; even five years is too short. 253 In a report dated 5 March 2003, Dr Swane said 'it is likely that the system will need to operate for a minimum of 2-5 years'. He said the environmental monitoring system may 'need to continue for some years after the bio-venting system has been removed in order to verify the long-term water quality'. He thought it might be '10 years or more' before the NSW EPA was prepared to remove its 'significant risk of harm' notification on the site and adjoining residences. Having regard to the fact that Dr Swane spoke of a monitoring period of '10 years or more', counsel for Charben argue that the Court should assess value on the basis that the bio-venting system may need to operate for 10 years. They refer to evidence given by Ernest Craig Miller, the valuer retained on behalf of Charben, that he would advise a prospective purchaser 'to make an allowance equivalent to 20 years being 10 years plus a risk factor of 100% to allow for the fact that the operation of the bio-venting system may have to be extended for an indefinite period and also to allow for a discount in the future sale price due to the contamination history of the site'. 254 The valuers retained on behalf of the respondents took a more sanguine view than this; but they were each willing to adopt a 10 year operation period. Neither of the respondents have contended I ought not to do this. Consequently, I disregard the six calculations that assume an operating period of less than 10 years. 255 The difference between the remaining four values arises out of differing assumptions relating to annual operating costs. These costs comprise fees paid to SKM and costs incurred by Caldas on Charben's behalf. As I have noted, currently they run at $110,000 per annum. However, Dr Swane accepted that costs are likely gradually to reduce. He agreed the annual costs would probably not exceed $87,000 (in today's dollars) by the end of the 10 years. 256 There are major uncertainties about the future operation of the bio-venting system, including its likely cost of operation. I accept Mr Miller's point about any prospective purchaser taking a cautious approach. Nonetheless, an allowance of $110,000 per year for 10 years seems excessive. 257 The other annual operating costs figures considered by the valuers were $86,184, $55,000 and $15,000. $15,000 is clearly too low. There is room for debate as between $86,184 and $55,000. Perhaps by the end of the 10 year period, the annual cost will not exceed $55,000. However, at the beginning of the period it is running at twice that rate, so it seems wrong to adopt $55,000 as the average throughout. I think the appropriate course is to assume operating costs of $86,184 per annum over the 10 year period. On that assumption, the present value of the building is $2,850,000. This figure is $950,000 less than the agreed value of the same building on an uncontaminated site. Accordingly, I adopt $950,000 as the value of the first element in Charben's claim, the diminution in building value. 258 As this element is being assessed by reference to values at the date of trial, it is not appropriate to award pre-judgment interest. Additional capital costs 259 The next matter for consideration is the extra capital costs incurred by Charben as a result of the contamination. Here again, there is a substantial degree of agreement. After discussions between all three engineering consultants, two (Peter Franklyn Loveday, of Hinds Blunden Pty Limited representing Charben, and Craig Anthony Walsh, of Evans and Peek representing Caltex) met in a 'conclave' with Mr Theo Paradisis, the idea being to question him about disputed items. 260 After the conclave, Mr Loveday and Mr Walsh produced a document containing 31 items. They agreed to allow 22 of these items at specific figures, and to disallow two of them. I need not detail the agreed items. Subject to some later qualifications, I adopt their figures. 261 To the 22 agreed figures, I add item 27 concerning the fees of SKM. The experts agreed this item was supported by invoices but they felt unqualified to assess the reasonable cost of services related to the bio-venting system. I understand their reticence. However, having regard to the evidence now before the Court, the claimed figure should be allowed. The 23 items just mentioned total $247,979. 262 The two disallowed items involved legal expenses. The experts agreed the value of the relevant invoices but omitted them from their calculation, on the basis that recoverability was a matter for the Court. Nothing has been put before me to suggest these expenses ought to be included in my assessment of damages. 263 This leaves four disputed items. 264 Item 10 is a claim for $12,136 paid to Caps Australia Pty Ltd for the hire of air blower equipment. The experts sighted invoices for the hire charges but Mr Walsh thought Charben should have purchased a pump, rather than incur hiring charges. However, it seems Mr Theo Paradisis told the conclave that Dr Swane was unsure whether the originally selected equipment would turn out to be suitable in the long term; Dr Swane wished to review the position after twelve months' operation. Under those circumstances, it was reasonable for Mr Theo Paradisis to decide to hire, rather than purchase, the equipment. 265 Item 18 is a claim for $41,393 paid to Geotechnique. The claim was divided into two parts: $24,823 for services rendered prior to 14 February 2001 and $16,275 for services rendered after that date in connection with the bio-venting system. Mr Walsh conceded the reasonableness of the second part and he acknowledged that the earlier $24,823 was paid. However, he thought the amount excessive for preparation of the RAP, sampling and reporting. He gave no reason for that opinion. As counsel for Charben point out, the fees are the total of hourly or small item charges, so I would not disallow them on the basis that they were excessive. However, as indicated at para 242 above, I think it is reasonable to deduct $10,000 from the agreed figures in relation to Geotechnique and HLA to cover what Charben would have needed to pay by way of fees in any event. 266 Adding the value of items 10 and 18 ($53,529) to the agreed $247,979, and deducting $10,000, takes the running total to $291,508. 267 This leaves two major items: the site management charges made by Caldas (item 9) and the excavation costs claimed by Glencoe (item 19). Even here, there are elements of agreement, but differences remain. 268 The total claim in relation to Caldas' charges is $122,310. Two items, totalling $34,830, are agreed. One item of $11,340 relates to time spent by Mr Theo Paradisis dealing with solicitors. There has been no evidence about that matter. In the absence of evidence, this item is not recoverable. The remainder of the claim, items of $27,000 and $49,140, are contentious. Both items concern Mr Theo Paradisis' time as supervisor on the projects. No objection is taken to the claimed $90 hourly rate. However, there are no detailed invoices or site records and Mr Walsh thought the claimed number of hours to be excessive. 269 Mr Walsh gave reasons for his opinion in a report on the conclave. However, Mr Theo Paradisis gave evidence as to the hours that he worked. He was cross-examined on the subject and I see no reason to disbelieve him. There is no doubt that, during the relevant period, this project was Mr Theo Paradisis' absorbing interest, so far as his work was concerned. I propose to allow both disputed items, making the total value of item 9 $110,970 ($122,310-$11,340). This takes the running total to $402,478. 270 The final item (item 19) concerns the cost of carting and disposing of excavated material; being the extra cost incurred because the material was contaminated. 271 Mr Loveday adopted a figure, for the extra cost, of $178,995. However, he noted 'an unexplained anomaly whereby invoiced truck loads appear to give rise to a quantity of material in excess of that expected by about 20%'. If the total cost of carting and disposal of excavated material ($318,845) is reduced by 20%, the adjustment on account of contamination becomes $145,076. 272 Mr Walsh argued the rates charged by Glencoe were excessive. As I follow his argument, the total charge of $318,845 was excessive to the tune of $142,525, meaning that the total charge should have been only $176,320. Although this is not spelled out in the joint report, I gather that Mr Walsh would deduct $110,000 from this figure ($318,845-$208,845), thereby valuing the item at $66,320. 273 Mr Walsh's position in relation to this item is based on quotations that he received from three haulage companies whilst he was preparing his initial report and on his own inquiries as to possible alternative tipping sites. He also referred to gaps in Caldas' written records about tips. 274 Mr Theo Paradisis was cross-examined about the haulage and tipping expenses Caldas incurred. In the course of that evidence, he dealt with the gaps in written records; I thought satisfactorily. There appears to be no doubt that the charges made by Glencoe were paid by Caldas. There is no suggestion that the relationship between Glencoe and Caldas was other than an arms-length relationship. In that situation, I think it would be wrong for me to reduce the amount recoverable by Charben simply because three other haulage companies now assert they would have offered cheaper rates. Similarly, it would be wrong to substitute Mr Walsh's conjectures as to alternative tipping locations for those found and used by Caldas at the time. In relation to item 19, I propose to adopt Mr Loveday's adjusted figure, $145,076. 275 Three of the items in the schedule compiled by Mr Loveday and Mr Walsh (items 21, 23 and 30) were referred to at pages 15 to 17 of a further report of Mr Loveday dated 2 June 2003. Mr Loveday there gave reasons for increasing item 21 from $14,800 to $25,998, item 23 from nil to $1,887 and item 30 from nil to $9,615. There does not appear to be any contention about those reasons. They total $22,700. I add this figure to the earlier figure of $145,076, making a total sum allowed in relation to extra capital costs of $570,254. 276 It is reasonable to allow pre-judgment interest on this sum. The extra capital costs were incurred over a two-year construction period that ran from September 2000 to August 2002. It would be tedious, even if it were possible, to put a date against each item of expenditure. I think it would be fair to allow interest for the period of 31 months that has elapsed since the mid-point of the construction period, early September 2001. Adopting a rate of 9% per annum, I allow $132,584 for interest. The second element of the claim is therefore assessed at $702,838. Loss of rental income 277 The accountant representing Charben, Goodwin Gower, calculated his client's loss of rental income at $477,293. At a meeting on 16 May 2004 with Darryl Dorfan and Paul Mentzalis, the accountants representing the respondents, Mr Gower acknowledged an error in the tax rate used over one period. He agreed this sum ought therefore be reduced by $3,000. However, Mr Gower resisted other suggested adjustments. 278 In a report dated 28 March 2003, Mr Gower explained how he calculated the sum of $477,293. He assumed that, but for the contamination, Charben would have received $26,771 net rent for each of the 18 months between February 2001 and July 2002, a total of $481,883. He deducted tax of $147,777, leaving a net rent after tax of $334,105. However, Mr Gower assumed that any damages awarded in respect of loss of rental income would be taxable, so he 'grossed up' the figure of $334,105 to take account of the tax that would be levied on this sum at current rates. 279 Counsel for Caltex submit that the delay in receiving rental income is something that 'would have occurred in any event because of the contamination of No 694, which is a matter for which Caltex was not responsible'. I think this submission is covered by what I have said in paras 230 to 234 above. 280 Counsel for Caltex further submit that it is erroneous to assume that, absent the contamination, the building would have been ready for leasing on 27 February 2001. They point out that Mr Gower assumed that, absent the contamination, construction would have commenced about 1 August 2000 and taken 30 weeks. This takes the completion date to the end of February 2001. However, counsel note the assumption makes no allowance for breaks in construction activity. 281 I agree with counsel that leasing at the end of February 2001 is an unrealistic assumption. I do not overlook the fact that Mr Theo Paradisis said he had planned to complete construction in 24 weeks, as opposed to the programmed 30 weeks. Although I accept Mr Theo Paradisis as a credible witness, I regard the 24 weeks plan as an aspiration rather than a probability. I think I should work on the basis of the programmed 30 weeks. Moreover, allowance must be made for the stoppage of work that occurred generally in Sydney over the period of the September 2000 Olympic Games and the Christmas break. 282 To make those allowances, I think I should assume an additional six weeks, taking the completion date to mid-April 2001. This should be compared with the actual date of completion, 9 August 2002. The difference amounts to about 16 months. On this basis, Mr Gower's allowance of 18 months' loss of rental income seems excessive. Although to do so involves a 'broad brush' approach that ignores slight variations in tax rates, I will reduce Mr Gower's figure of $474,293 ($477,293 - $3,000) by one-ninth, to $421,594. 283 Mr Mentzalis, the accountant representing Caltex, thought Mr Gower should have made three further deductions from his assessed loss of rental income figure. First, Mr Mentzalis said the assumed rental for the early months of occupancy should be reduced by $28,000 to take account of the movement in inflation between February 2001 to March 2003, the date as at which the monthly net rent was calculated. However, Mr Gower thought the movement in inflation made no difference; the rental assumed by Mr Miller would have been available at the earlier date. 284 The evidence does not enable me satisfactorily to resolve this issue. I am influenced by Mr Miller's apparent opinion that his assumed rental would have been available at the earlier date but there must be something in Mr Mentzalis' point about inflation. I propose to cover the matter by deducting $10,000 from the figure of $421,594. 285 Mr Mentzalis also argued for a deduction representing the time needed for obtaining tenants and the value of concessions given to tenants by Charben in relation to outgoings. However, it seems to me these incidents of leasing a property would apply regardless of the date of commencement of the lease. I will not make any further reduction on that account. 286 I allow the sum of $411,594 for loss of rental income. This loss occurred during the period April 2001 to August 2002. Taking a date at the middle of that period, December 2001, and allowing pre-judgment interest at 9% for 27 months, I add $83,348 for interest. This takes the total for loss of rental income to $494,942. Total damages 287 I summarise my calculation of damages as follows: (a) Diminution in building value $ 950,000 (b) Additional capital costs $ 702,838 (c) Loss of rental income $ 494,942 Total damages $2,147,780 288 I propose to enter judgment in favour of Charben for this amount as against both respondents. Caltex's cross-claims (i) The amended cross-claim 289 Caltex filed a cross-claim in which it named both Charben and EES as cross-respondents. This document was amended, most recently by a Further Amended Cross-Claim filed on 28 April 2003. I will refer to it as 'the cross-claim'. (ii) The cross-claim against Charben 290 The cross-claim against Charben is based on cl 44.4 of the contract of sale between Caltex and Charben in relation to Lot U. It claims an indemnity 'against any claims, liability, demands, suits, proceedings, losses, costs, penalties or damages incurred by Caltex as a result, directly or indirectly of the existence or otherwise of the Works (as defined in clause 44.2(a) of the Contract for Sale), the Environmental Report (as defined in clause 44.2(b) of the Contract for Sale) or any environmental contamination in, under or on the property or in, under or on land which is in the vicinity of the property'. 291 I set out the terms of cl 44.4 at para 35 above. The relief sought by Caltex against Charben is as follows: '(a) Indemnity from Charben in respect of any liability Caltex has in these proceedings. (b) Indemnity from Charben in respect of any loss and/or damage incurred by Caltex (on an indemnity basis) in and about these proceedings. (c) A declaration that clause 44.4 of the Contract for Sale continues to bind Charben and that Charben is obliged to comply with the clause. (d) A declaration that any loss or damage (including legal costs) incurred by Caltex in responding to the EPA notification and/or responding to and complying with the EPA declaration are amounts which Charben is liable to indemnify Caltex pursuant to clause 44 of the Contract for Sale. (e) A declaration that pursuant to clause 44 of the Contract for Sale Charben is to indemnify, and to keep Caltex indemnified, from any and all losses and damages incurred as the result of any environmental contamination being present in, under, on or in the vicinity of the property. (f) An order that the assessment of the quantum of the indemnity to be provided to Caltex by Charben is to be referred to a Judicial Registrar pursuant to Order 38 for assessment from time to time upon applicant [sic] by Caltex as loss and damage is suffered by Caltex, until such time as 90 days after the EPA declares the land to be free from contamination. (g) Indemnity. (h) Damages. (i) Such other or further order as may be deemed appropriate by the Court. (j) Costs.' 292 Counsel for Caltex put only a short submission in relation to these claims. They say: 'Caltex submits that clause 44.4 is as a matter of law effective according to its terms, and it follows that Caltex is entitled to the relief claimed'. 293 At paras 168-175 above, I discussed the relationship between cl 44.4 and cl 44.2. I accepted the submission of counsel for Charben that cl 44.4 does not release Caltex from the obligations specified in the contract, including those specified under cl 44.2. If that is correct, Caltex's cross-claim against Charben must fail. (iii) The cross-claim against EES 294 Caltex's cross-claim against EES is based upon several causes of action: breach of contract, 'breach of duty of care', and contraventions of ss 52 and 53A(1) of the Act. Caltex claims damages, an order under s 87 of the Act that EES indemnify Caltex for all loss and damage incurred by it in the proceedings and as a result of NSW EPA's significant risk of harm notification, and indemnification and/or contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or s 87 of the Act. 295 Clause 10 of the cross-claim (which is admitted by EES) refers to the making of an agreement between Caltex and EES in August 1998 'under which [EES] agreed to carry out validation and supervision of remediation (excluding supervision of tank removal) of' the Site. Clause 11, which is also admitted, alleges the following terms of this agreement: '(a) The fill on the property and the land would be investigated to ensure compliance with the medium density residential criteria (NEHF D Criteria). (b) If the fill proves to be contaminated removal will be supervised and then validated. (c) Once tanks are removed, all tank pits will be sampled in accordance with the NSWEPA guidelines for assessing service station sites. The remainder of the property and the land will be validated after remediation of fill, if any, according to NEHF D Criteria and NSW EPA soil sampling guidelines. (d) The property and the land would be remediated to ensure compliance with the medium density residential criteria (NEHF D Criteria). (e) Upon completion of the work, Environmental Earth Sciences would issue an environmental assessment/validation report.' 296 Caltex also alleges certain implied terms, including a term implied by s 74(2) of the Act. EES disputes the existence of these implied terms. It is not necessary to resolve that dispute. Although EES denies the fact, it seems to me clear that EES failed to comply with each of para (a), (c) and (d) of the terms alleged in cl 11 of the cross-claim. 297 It is also clear that EES contravened s 52 (but not s 53A) of the Act when it supplied Caltex with Reports 19844B and 19844C. Caltex relied on the latter report, at least, in completing its contract of sale of Lot U to Charben. It thereby exposed itself to the action that Charben has successfully brought against it. 298 In answer to the cross-claim brought by Caltex against EES. EES pleads that Charben is bound by cl 44.4 of the contract for sale between Caltex and Charben; and, therefore, Caltex is indemnified against the loss that it asserts. For reasons already given, that answer must be rejected. 299 Although the matter was not pleaded, EES referred in its written submissions to a condition of its contract with Caltex whereby its liability would be limited to the value of the fee for its services, up to a maximum of $50,000. It was said this condition was included in EES' standard terms and conditions, which were incorporated by reference into its contracts with Caltex in relation to each of the three reports. However, as the written submissions concede, the relevant clause is not in evidence. 300 Although the written submission foreshadowed an application to tender the standard terms and conditions, and there has been ample opportunity for such an application to be made, no such application has been made. Accordingly, it seems to me I have no option but to disregard this response to Caltex's cross-claim. It is not necessary for me to determine whether, as Caltex contends, the limiting condition would, in any event, be overborne by ss 68(1) and 74(2) of the Act. 301 The difficulty about Caltex's invocation of s 5 of the Law Reform (Miscellaneous Provisions) Act is that this provision applies only to a case where damage is suffered by a person as a result of a tort. It enables a 'tort-feasor' to seek contribution. Because I have held Caltex to be liable to Charben on the basis of breach of contract, not of commission of a tort, the provision is inapplicable to this case. 302 Caltex's contribution claim arguably falls under s 87 of the Act, but only if it be concluded that the damage suffered by Caltex arose out of the conduct of EES that fell within s 52 of the Act. In one sense it did, but more fundamentally it arose out of EES' failure to fulfil the contractual terms set out in para 295 above. For this reason, I have some hesitation about using s 87 as a basis for making a contribution or indemnification order in favour of Caltex against EES. 303 However, it seems to me unnecessary for Caltex to bring itself within either of these statutory provisions. By its cross-claim, Caltex has made a claim for damages for breach of contract. I see no difficulty in entering judgment for Caltex against EES for the same sum as the judgment entered in favour of Charben against Caltex and EES, subject to deduction from the judgment any part of the sum that may be paid by EES to Charben. EES' cross-claim against Caltex 304 The cross-claim made by EES against Caltex is based entirely upon the general terms and conditions already incorporated into the agreement between EES and Caltex. As indicated, these are not in evidence. Accordingly, I must dismiss EES' cross-claim. Disposition 305 In the result, I propose to enter judgment for Charben against Caltex and EES in the sum of $2,147,800. Caltex and EES must pay Charben's costs. I will enter judgment in favour of Caltex against EES in the same sum ($2,147,800), subject to deduction from the judgment debt of any part of the sum that may have been paid by EES directly to Charben. EES must pay Caltex's costs, including any costs paid by Caltex to Charben. I certify that the preceding three hundred and five (305) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate: Dated: 8 April 2004 Counsel for the Applicant: Mr F Corsaro Sc, Mr P Taylor

Solicitor for the Applicant: Pricewaterhouse Coopers Legal

Counsel for the First Respondent: Mr J Webster SC, Mr M Green

Solicitor for the First Respondent: Colin Biggers & Paisley

Counsel for the Second Respondent: Mr S Robb QC, Mr M Henry

Date of Hearing: 6 - 9 May 2003, 12 - 16 May 2003, 21 May 2003 (last submissions filed on 17 October 2003)

ASSESSMENT OF DAMAGES Trade Practices Act 1974(Cth)ss 52, 53A(1), 75B, 82(1), 87

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (12)