Hatzitanos & ors v Jordan

8 The contract signed by the plaintiffs was mailed by the defendant to the vendors' solicitors on Tuesday 29 February 2000. The counterpart was apparently forwarded by mail to the defendant by the vendors' solicitors on 7 March 2000, which was the date of exchange of the contracts. 9 On 12 April 2000 the plaintiffs received a tender from Domaine. The tender provided for the erection of two two-storey homes, being of Domaine's "Castlewood" design, on the land.

10 On 20 April 2000, settlement of the purchase of Lot 276 took place. 11 On 2 May 2000 the plaintiffs signed contracts with Domaine for the erection of the houses on the land. 12 On 13 June 2000 Domaine lodged a development application with the Council. The application included plans which provided for the houses to be erected with a setback of 50 metres from The Retreat. 13 On 18 July 2000 the Council required Domaine to: …provide a Heritage Impact Assessment taking into consideration Clause 73 - Restrictions on Development Near Heritage Items, of Liverpool Local Environmental Plan 1997. A suitably qualified Heritage consultant must prepare the Heritage Impact Assessment. 14 A Heritage Impact Assessment dated 9 August 2000 was obtained by the plaintiffs and provided to the Council. The location of the heritage item was described as, "From the north-western boundary (of Lot 276), the land rises approximately 11 metres to where the adjacent heritage item is located, several hundred metres away to the north-west". The assessment concluded: It is considered that the proposed new dual occupancy residence will not have any adverse impact on the heritage significance of the residence "Kelvin Park"…It is also considered that as a reasonable separation distance of several hundred metres exists, as does the vertical separation of 11 metres, all other planning issues would be satisfied with respect to the proposed dual occupancy dwellings. 15 On 26 September 2000 the Council wrote to Domaine in the following terms: …Further assessment by Council's officers has revealed that the application cannot be supported for the following reasons: 1. The proposed development obstructs significant sight lines to the Heritage item - Kelvin Park Group: The Retreat. As previously discussed, the proposed dual occupancy dwelling should be sited further back (approximately 80 metres along the east and 100 metres along the west) from the front boundary in order to provide an uninterrupted view of the entire Kelvin Park Group: The Retreat from the southern corner of the site, where it meets The Retreat. The uninterrupted views should be available to the entire frontage of the subject site indicating that no fencing above 0.9 metres is permissible along the frontage to The Retreat. 2. The Heritage Impact Assessment submitted to Council is not considered acceptable and requires further assessment. 3. The heights of the proposed dual occupancy dwellings are not considered acceptable, due to the impacts on the Heritage item - "Kelvin Park Group: The Retreat". Amended plans should be of single storey form as it is considered more sympathetic to the Heritage item and its curtilage. 16 A letter dated 18 October 2000 was forwarded by the defendant to the Council seeking, in effect, that the Council's position be reconsidered. 17 Various negotiations were entered into by the plaintiffs with the Council but by October the plaintiffs were of the view that though two storey homes could be erected on the land, there was a necessity that the setback be 80 to 100 metres, and in those circumstances they determined not to proceed with the development of the land. 18 On 14 February 2001 the Council formally refused the development application. Its stated reasons for refusal were: 1. The proposed development will diminish the heritage significance of the heritage item known as Kelvin Park Group (The Retreat) identified in Schedule 2 of Liverpool Local Environmental Plan 1997.

The proposed development is not compatible with the heritage item known as Kelvin Park Group (The Retreat) in terms of:

The proposed development will have an unacceptable adverse impact on views and vistas to and from the heritage item known as Kelvin Park Group (The Retreat).

The proposed development is inconsistent with the objectives for land to which Liverpool Local Environmental Plan 1997 applies, in particular objectives (e), (f) and (l) of Clause 2.

The proposed development is inconsistent with the objectives of Part 12 of Liverpool Local Environmental Plan 1997, in particular objectives (a) and (b) of Clause 71.

The proposed development is not in the public interest. 19 The plaintiffs exchanged contracts for the sale of Lot 276 on 11 October 2001 and settlement took place on 26 November 2001. The plaintiffs purchased a five acre property at Lot 315 Kelvin Park Drive, Kelvin Park. Settlement took place on 28 June 2001. The plaintiffs claimed they sustained certain losses as a result of the defendant's alleged negligence. 20 By amended statement of claim filed in this Court on 17 April 2002, the plaintiffs sought to recover their alleged losses from the defendant.

21 I accept the facts set out above which were either common ground or not the subject of dispute. The Plaintiffs' case 22 The plaintiffs' case was essentially that the Council would not permit the erection of the houses with a 50 metre setback from the road as planned, but required a setback of 80 - 100 metres. This was because of Council's decision that the properties, if built as planned, would obstruct significant site lines to the heritage item "Kelvin Park Group: The Retreat". The Council's requirement as to the setback was greater than the plaintiffs were prepared to accept and led to them selling the property and purchasing another with resultant loss. The plaintiffs were unaware of any heritage problem until notified by the Council. The defendant had not warned them of any potential heritage problem or of any need to seek advice from an architect, town planner or the Council as to what could be achieved on the land. It was the defendant's duty, as the solicitor retained to act for the plaintiffs on the purchase, to warn them of the risk and of the need to seek advice from an architect, town planner or the Council as to what could be achieved on the land. The plaintiffs would not have entered into the contract to purchase Lot 276 had they been advised there was some heritage associated problem attached to it. The Defendant's case 23 The defendant's case was essentially that his retainer was to investigate the title, prepare and complete the conveyance and the transfer of the property into the plaintiffs' names and to peruse and complete any mortgage documents. He accepted it was his job to bring to the plaintiffs' attention that which was in the contract. He was never instructed or retained to investigate and/or advise as to all possible affectations in relation to the development of the property. Although he had some knowledge of Local Government planning he was not trained in planning or development considerations. He had not made any representations to the plaintiffs to the contrary. He told them at the start of the meeting that he could only go through the legal parts of the contract and that he couldn't tell them what they could build. 24 He asked the plaintiffs if they had an architect or planner because he couldn't give them advice as to what they could achieve on the site. This was in accordance with his usual practice. He was answered in the affirmative by the plaintiffs. Throughout the meeting he referred the plaintiffs to the contents of the Certificate under s 149 of the Environmental Planning and Assessment Act 1979 which was attached to the contract and Local Environment Plan (LEP) and Development Control Plans contained within the information section of the Certificate. He told the plaintiffs those referred to what could be achieved but they should talk to an architect or planner about them. He had never been to the site and had no personal knowledge of the area. He was not aware of, and the contract did not refer to, any heritage affectation item on the land. He did not ask the plaintiffs about the surroundings. He did not tell them to get a copy of the LEP. He accepted that even though there was not a heritage item on Lot 276, that lot could still be affected by the heritage provisions of the LEP because of proximity to a heritage item.

The duty of care 25 As plaintiffs' counsel confirmed in his submissions, the plaintiffs' claim was based in tort, not contract. 26 In tort, the standard to be applied is that which may reasonably be expected of practitioners - Heydon v NRMA (2001) 51 NSWLR 1 at [146]. Generally speaking, the test is what the reasonably competent practitioner would do having regard to the standards normally adopted in his/her profession - Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] 1 Ch 384 at 402-3. 27 If the solicitor professes to have a special skill in a particular area of the law, the standard required of him/her is that of the ordinary skilled person exercising and professing to have that special skill - Heydon v NRMA at [146]. 28 In my opinion, the defendant did not have, or profess to have, a special skill. He did not represent himself to be an accredited specialist conveyancer or as having town planning skills.

29 I am not satisfied on the evidence that there was any conversation or communication whereby some particular reliance was placed upon the defendant which was made known to, and accepted by him. The fact that the defendant had been a Mayor of Kogarah for a period did not provide a basis to attribute to him special skills as a conveyancer or town planner. 30 The plaintiffs did not produce any plans to the defendant, nor did they inform him where the houses were to be sited on the land. The plaintiffs conceded it was no part of the defendant's responsibility to advise on the setback of the houses. 31 Mr Moses, the expert conveyancer called on behalf of the plaintiffs, accepted that the standard required of the defendant was that of the ordinary prudent and competent solicitor and that it was no part of the defendant's function to advise in relation to planning and development matters. 32 In my opinion, the duty owned by the defendant to the plaintiffs was to conform to the usual practice of prudent and competent solicitors in the circumstances which arose.

Breach of duty 33 Mr Moses gave evidence that the usual practice of prudent and competent solicitors in the circumstances which had arisen ("standard practice") would be for the solicitor (unless he or she was already aware of the client's background in that regard) to ascertain whether the clients had experience as developers or otherwise. If the client was not experienced in this field, it was standard practice for the solicitor to ascertain as far as possible from the material attached to the contract for sale, what development of the property was permissible under its zoning and also any limitations on that development imposed by any easement, restriction on user or the like which had been registered against the title. 34 However, in Mr Moses' opinion, the material attached to the contract in this case did not give any clue that Lot 276 was affected by heritage issues. It did no more than indicate that within Council boundaries there were heritage buildings. I accept that evidence and that of the defendant in preference to the Council's letter dated 22 March 2001 which states the s 149 Certificate would have brought to attention the heritage impacts on the land. In Mr Moses' opinion, the practice of solicitors having read the s 149 Certificate attached to the contract would be not to take any particular action vis a vis their clients. 35 I accept that evidence and conclude the defendant was not in breach of his duty in not ascertaining and informing the plaintiffs that the development of the land could be affected by heritage considerations arising from the presence of a heritage item in the vicinity. 36 However, it was common ground between the experts that there were many potential reasons which could lead to the rejection of a development application and many things which could affect the setback required by Council. Mr Moses gave evidence that whilst the defendant did not owe a duty to advise on planning matters, the standard practice was that the solicitor should ensure a purchaser (who was not experienced) was aware there was a risk the development application could be rejected or made subject to unacceptable conditions, and that he or she should seek information as to the nature and extent of those risks from the Council or an architect or town planner. 37 Whilst it would, in my opinion, be altogether too onerous to impose a duty on solicitors to warn of every theoretical possibility that may affect a proposed plan, it would be appropriate to require a solicitor to inform the would-be purchaser (who was not known to be experienced in these matters) of the general risk and to suggest he or she seek the advice of an architect, town planner, or the Council. I accept Mr Moses' evidence to that effect. 38 Indeed, the defendant gave evidence that it was his practice to inform purchasers for whom he was acting that he could not advise them as to planning considerations and that they should consult an architect or planner in this regard. He stated he recalled so advising the plaintiffs at the meeting and that in response to a question by him they indicated they had an architect or planner, although they did not nominate who it was. 39 The first, third and fourth plaintiffs deny the defendant gave that warning and deny that they had an architect or planner. It is not possible, in my opinion, to satisfactorily resolve this conflict in the evidence. Defendant's counsel has submitted the plaintiffs were not honest witnesses and pointed to various aspects of the evidence of the male plaintiffs in support of that submission. Whilst I agree that at times in giving their evidence the male plaintiffs appeared reluctant to make concessions which may have been against their interest and there were some inconsistencies, I am not prepared to conclude they were dishonest, nor would I make such a finding against the defendant. It appears to me the probability is that neither the plaintiffs nor the defendant had a clear recollection of all that was said at the meeting and each has attempted, at least in part, to reconstruct the conversation, coloured to some extent by the events which subsequently occurred (save for the second plaintiff, who had no recollection whatsoever). 40 I accept it can be argued that, as the plaintiffs had not in fact retained a planner or architect, it was less likely the defendant's account of the conversation was accurate. However, an affirmation by the plaintiffs may merely have meant that they considered Domaine was fulfilling the role of adviser so far as they were concerned. On the other hand, the defendant is a solicitor of many years experience. His evidence of his general practice in matters of this nature and his evidence of conforming with that practice renders it not unlikely he gave warning to the plaintiffs and received a positive response. The fact that the plaintiffs made no further inquiry is not inconsistent with the defendant having given them the advice which he claims he did. The plaintiffs believed the Council would not give information to purchasers without plans, did not make any inquires of Council before contracting to purchase the replacement property at Lot 315 and may well have been content to rely upon their own observations of the area. 41 The plaintiffs bear the onus of proving that the warning was not given. I am not satisfied, on the balance of probabilities, that such warning was not given and answered affirmatively by the plaintiffs. 42 The plaintiffs had had various dealings with local authorities. The first and second plaintiffs had obtained approval in respect of an in ground swimming pool, a carport, and additions to their home; the third and fourth defendants in respect of a vehicular crossing and the demolition of an old building and construction of a project home at the place. The plaintiffs knew plans would have to be drawn up and submitted to the Council for approval and that the Council had power to restrict or place conditions upon the development of the site. 43 I find the plaintiffs were aware that there was a risk that a development application may not be approved, and they gave instructions to the defendant at the meeting to exchange contracts with that knowledge. Mr Moses, in his evidence, opined that a day or two was insufficient for a purchaser to obtain information from the Council, his or her architect or planner, and that up to a week may be required for such information to be obtained. As the exchange of contracts was effected 6 working days after the meeting and the plaintiffs were aware of the general risk, I conclude there was no breach of duty by the defendant in exchanging contracts and I accept the evidence of Mr Boland, the expert retained by the defendant, to that effect.

Causation 44 If the plaintiffs had consulted an architect or planner, I infer they may have been informed that there was a potential for the land to be affected by the presence of a heritage item in the vicinity. However there was no oral evidence as to what the plaintiffs may have been told by an architect or planner if consulted, beyond that there was always a risk that the Council may reject a development application until the application has been approved. I am unable, with certainty, to assess the degree of risk which would have been forecast at the time had the plaintiffs consulted an architect or planner. However, the Heritage Impact Assessment dated 9 August 2000 suggests such advice may well have been that there was little or no risk in respect of the heritage issue. 45 The extent to which a Council will provide information as to the prospects of obtaining an approval varies from Council to Council. Mr Moses had no particular experience with the Council in this case and concluded that all that could be said was that a purchaser on inquiry of a Council may be made aware that there could be a problem, but no definitive decision would be given at that point of time. Mr Boland said it was most unlikely that an over the counter inquiry of the Council would have resulted in any advice other than the land was zoned so as to permit the proposed development but the actual consent, if any, and its conditions could only be determined after a development application was lodged, objections considered and the application assessed by the relevant planning officers of the Council. This process would normally take at least two months, and at some Councils, much longer. 46 Accordingly, if resort had been had to the Council, I infer that at the highest, the plaintiffs would have been informed there was a possible risk the development application may be refused, but that nothing more definite could be advised in the absence of plans and the full consideration of the matter as it involved the exercise of a discretion by Council. 47 Whilst the plaintiffs' evidence is clear that in the events that occurred, they did not wish to proceed to retain and develop the land, it is less clear what they would have done if they had sought and obtained advice from an architect, town planner or the Council prior to the exchange of contracts. They were attracted to the block and wished to buy in the Kelvin Park area. There was apparently a shortage of properties in that area. Much, presumably, would have depended upon the degree of risk of which they were informed at the time. The only alternative put forward in the event the plaintiffs could not obtain a clear answer from the Council, their architect or planner was that they should negotiate a contract with the vendor conditional upon the approval of a development application. However, the evidence of Mr Moses, which I accept, was that it very rarely happens that a non-developer (there is no evidence the vendors of Lot 276 were developers) will agree to a conditional contract. In the circumstances, I am not satisfied the plaintiffs have established that had they obtained the advice of an architect or planner or the Council they would not have signed and exchanged an unconditional contract as in fact they did.

Other allegations 48 The plaintiffs, in their amended statement of claim, alleged, "The defendant had been negligent in that he had failed to obtain an up to date planning certificate". 49 Mr Moses gave evidence that in view of the plaintiffs' proposed development of the land, he would have expected that the defendant would have obtained, between exchange of contracts and completion, an up to date zoning certificate in respect of the land to ensure there had been no change of zoning in the period between the date of the certificate and the date the contract was exchanged. The evidence of Mr Boland and the defendant was that reasonable care did not require a certificate to be obtained as the certificate attached to the contract dated 9 November 1999 was current, being less than 6 months old. 50 However, as was conceded by plaintiffs' counsel, there was no evidence a fresh certificate would have disclosed anything different to the certificate which was attached to the contract. Mr Moses accepted it was very likely that an updated certificate would have shown no change from that contained in the contract. Accordingly, even if the defendant should have obtained such a certificate, a point which I do not need to decide, it would have made no difference. It was suggested, in submissions by plaintiffs' counsel, that it would have caused the defendant to reconsider the certificate and change his opinion as to its effect. However when the defendant reviewed the certificate before writing the letter dated 18 October 2000, he did not change his opinion. This submission cannot be accepted.

51 A further allegation of negligence was that following receipt of the Council's letter dated 18 July 2000, the defendant wrongly advised the plaintiffs that the Council was mistaken in asserting that the property was heritage affected. The defendant has submitted no evidence has been led suggesting negligence, causation or damage and that accordingly this allegation must fail. Although plaintiffs' counsel in submissions did refer to the defendant's advice, he did not deal with the questions of negligence, causation or damage in relation thereto, and my impression was that the ground was implicitly abandoned. However, even if it was not, I accept the defendant's submissions, with the result that this allegation of negligence fails. 52 A submission also was made that a problem may have been encountered by reason of a restriction on title prohibiting dual occupancy on Lot 276. However the evidence did not establish that appropriate consents would not have been forthcoming or that there was any practical problem in this regard. Conclusion 53 As a consequence of the findings set out above, I have concluded the plaintiffs have not established there was a breach by the defendant of a duty of care or, if there was, that such breach was causative of any loss sustained by the plaintiffs. Accordingly, in my opinion, the plaintiffs' claim must be dismissed with costs. Damages 54 The defendant also asserted the claim must fail as the plaintiffs had not proved they suffered any net loss as a result of the defendant's alleged negligence. 55 The claim ultimately pressed by the plaintiffs, using the numbering in the plaintiffs' amended Scott Schedule was as follows: 1. Stamp duties on Lot 276 $8,994.00 2. Legal costs on Lot 276 $806.00 3. Stamp duties on loan $1,322.00 4. Legal costs for sale of Lot 276 $990.00 5. Deposit to Domaine $3,900.00 6. (Not pressed) 7. Domaine holding fee $100.00 8. (Not pressed) 9. Surveyor for Lot 276 $850.00 10. Heritage consultant Lot 276 $600.00 11. Orthophoto maps and mail - Lot 276 $52.00 12. Photographs Lot 276 $14.00 13. Rates on Lot 276 $922.00 14. Grass slashing Lot 276 $250 15. (Not pressed) 16. (Not pressed) 17. (Not pressed) 18. Storage fee for third and fourth defendants $1,771.00 19. Removalist $420.00 20. Cost of paint - 8 Grevillea Crescent $620.63 21. Blinds - Grevillea Crescent $900.00 22. Stamp duty for Grevillea Crescent $7, 891.50 23. Legal fees for purchase Grevillea Crescent $2,750.80 24. Rental for first and second defendants $7,540.00 25. Rental for third and fourth defendants $12,404.59 26. Legal fees for Lot 315 Kelvin Park Drive $1,600.00 27. (Not pressed) 28. Cost to obtain new LEP $15.00 29. Broker fee for loan $650.00 30. (Not pressed) 31. Interest on loan for Lot 276 to 28 November 2001 $13,772.00 32. Stamp duty Lot 315 Kelvin Park Drive $22,944.00 33. Stamp duty on loan and other loan fees $2,227.00 34. Interest on borrowed money $47,346.98 35. Difference in property $200,000.00 36. Broker fees for new loan $950.00 37. (Not pressed) 38. (Not pressed) 39. Loss of capital from sale by first and second plaintiff of Craig Avenue, Moorebank $205,000.00

56 The plaintiffs submitted they were entitled to recover for all items subject to a setoff of the gross profits on the sale of Lot 276 (taken into account in item 35) and another property. 57 The defendant conceded that if the plaintiffs established there was a breach by the defendant of a duty of care and that such breach was causative of loss, he, prima facie, would be liable for the items in the Scott Schedule numbered 1-5, 7, 9-14, 18-19, 25 (which liability he limited to $1,160) and 31 totalling $35,923. However, he submitted, the gross profit on the sale of Lot 276 ($110,000) should be set off against those items, producing a net gain to the plaintiffs of $74,077, thus entitling the defendant to judgment. The defendant conceded the amounts claimed for the remaining items were correct as a matter of calculation, but submitted he was not liable for any of them. 58 The remaining items claimed by the plaintiffs may be grouped as follows:

a) Items 20-23. These were claims in respect of the purchase of a property at 8 Grevillea Crescent on 5 December 2000 by the third and fourth plaintiffs to provide accommodation for themselves. The items were claimed on the basis it was necessary to provide accommodation for the third and fourth plaintiffs because, in the normal course, their house would have been built on Lot 276 by December 2000 and would have provided accommodation, but due to the defendant's negligence, this did not occur and there was a further delay until their residence was built on Lot 315. b) Items 26, 28, 29, 32, 33, 34 and 36. These were items relating to the purchase of Lot 315.

c) Item 35. This was a claim for the difference between the sale price of Lot 276 and the purchase price of Lot 315.

d) Item 39. This was a claim for the difference between the price obtained by the first and second plaintiffs on the sale of a property at Craig Avenue, Moorebank, and the price the purchaser from them obtained on a later sale of the property. The first and second plaintiffs had owned this property prior to the decision to buy Lot 276. There was evidence that the property was sold to provide additional funds used for the purchase of Lot 315.

e) Items 24 and 25. These were claims for rental costs for provision of accommodation. I am somewhat uncertain as to the defendant's position in relation to these items, but as their total value is less than the net gain on the sale of Lot 276 it is unnecessary to consider them further. 59 The defendant submits the relevant principle is that the plaintiffs' entitlement to damages was for such sum of money as would put them in the position that they would have been in had the defendant not been negligent. Such damages are calculated prima facie by reference to the loss in value, if any, between the price paid for the land and its value on resale, plus the cost of reselling. In addition, incidental losses arising from delay or the like may be allowed - Thomas v Adam [2000] NSWCA 127 at [20]. 60 The defendant submits that the remaining items claimed by the plaintiffs were not recoverable. This was because they were claimed on the false premise that but for the alleged negligence of the defendant, the plaintiffs would have been able to develop Lot 276 as originally intended, whereas the only available claim was that, but for the defendant's alleged negligence, the plaintiffs would not have purchased Lot 276. Accordingly, the damages were limited to the matters referred to in Adam's case. I accept that submission. 61 Further reasons were advanced as to why the remaining items were not recoverable, namely:

a) the sale of Grevillea Crescent produced a gross profit of $79,000. It was conceded that sum should be set off. The total of items 20-23 was $12,162.

b) The plaintiffs would presumably have purchased an alternative 5 acre property had they not purchased Lot 276. They would have incurred costs associated with that purchase generally of the nature claimed in items 26, 28, 29, 32, 33, 34 and 36.

c) Although there was evidence that Lots 276 and 315 were in many respects similar, they were sold on 26 November 2001 and 28 June 2001 respectively and market forces valued Lot 315 at $200,000 more than Lot 276. This may, in part, have been because there was already an established residence upon Lot 315. The difference was not occasioned by a default on the part of the defendant. The plaintiffs retain Lot 315. They have suffered no loss in this regard.

d) There was evidence the third and fourth plaintiffs intended to retain Craig Avenue, Moorebank as an investment property, but sold it to purchase land in lieu of Lot 276. Thus they have made their investment in Lot 315 in place of Craig Avenue. The evidence does not establish any loss has resulted from the change in the form of the investment. The date of calculation of the loss is random.

e) Whilst the purchase of Lot 276 may have delayed the purchase of an alternative 5 acre property, the plaintiffs have not established that such delay resulted in any loss, or that if there was a loss, it exceeded the set off on the resale of Lots 276 and/or Grevillea Crescent. 62 I therefore conclude that had the plaintiffs established a relevant breach of duty, they nevertheless would have failed to establish that a net loss resulted from that breach. Accordingly, the claim would also fail on this ground.

Orders 63 The orders of the Court are: 1. Judgment for the defendant. 2. The plaintiffs to pay the defendant's costs. **********

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