Jazabas v Botany Council [2000] NSWSC 58 | Case summary

Jazabas v Botany Council [2000] NSWSC 58 | Case summary | Zoe

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(b) The Industrial Complex 2 The Botany/Randwick industrial complex and Port Botany, which occupied an area of some 600 hectares, was the largest industrial area in the Sydney region and most of it was within the Council's municipality. It accommodated industrial installations and storage terminals, which were grouped adjacent to each other, and, in many cases, shared the same boundaries. The RAS stated that the nature of the industry "currently operating in that area is mostly that of chemical, petrochemical and petroleum products (processing and storage). The ICI petroleum complex is one of the largest in Australia and major petroleum storage terminals of State significance are included". A problem created by that site was the existence of a number of chlorine storage tanks and, speaking generally but adequately for present purposes, the dangers perceived as possibly arising from it were fire, explosion and the leakage of dangerous and toxic chemicals, any of which could have devastating effects on the health and lives of persons residing in the reasonably near vicinity. There existed a considerable amount of such residential development and, of course, land on which such development existed had been dealt with on the basis of the various residential zonings. 3 The report set out the various zonings in the Council's municipality, including, relevantly for present purposes, a "small stage development of 2(b) zoning allowing a density of 125 persons per hectare", which lay east of Nilsen Street, Hillsdale, and "is fully developed with semi-detached town houses". This land, generally speaking, lay only a very short distance from the industrial complex. 4 Clause 9.3 paragraph 12 of the RAS recommended:- "Pending the safety review and update as recommended above, no intensification of new residential developments should be allowed within the area indicated in Figure (5). Provisions which permit an increase in existing residential dwelling density within that area should be reviewed. New residential intensification within that area should be the subject of the Director's concurrence in principle."

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(c) The Proposed Sale of 2-10 Nilson Street, Hillsdale 5 Part of the land included in Figure 5 was 2-10 Nilson Street, ("the land"), which was only some 300 metres from the ICI chlorine storage tanks. It was owned by Amcor Limited, ("Amcor"), was vacant and had been leased from about 1980 to the Council, which had used it as a public park. An estate agent, Mr Dimitrios Kikiras, who is also known as Jim Kikiras, drew to the attention of Mr Stephen William Haigh, in about November 1993, that Amcor intended to sell the land by public auction on 16 December 1993. Amcor's property consultant was Mr G.W. Pitcher, its selling agents were Jones Lang Wootton, and its solicitor was Mr Colin Windeyer of Henry Davis York. 6 Mr Haigh had been engaged for about twenty years in the purchase and development of land, particularly in relation to small to medium density residential buildings mainly in the Municipality of Randwick. This had led to his forming a business association with Mr Kikiras and they operated through various companies, including Evenvest Pty Limited, ("Evenvest"); BAS Developments Pty Limited, ("BAS"); Permtree Pty Limited, ("Permtree"); and the plaintiff, Jazabas Pty Limited, ("Jazabas"), for which Mr B.W. Rayment of Queen's Counsel and Mr P.E. King of Counsel appeared. Mr and Mrs Haigh and Mr and Mrs Kikiras were the directors of Jazabas, the issued shares in which were held as to one half by Permtree, which Mr Haigh controlled, and as to the other half by Kikiras Real Estate Pty Limited, ("Kikiras"), which Mr Kikiras controlled. Evenvest was, at all material times until 28 June 1994, a company which acted as trustee for Permtree, Mr Kikiras and his wife and of which Mr and Mrs Haigh and Mr and Mrs Kikiras were directors and equal shareholders. Mr Haigh and Mr Kikiras, generally speaking, controlled Evenvest and Jazabas. 7 The roles of Mr Kikiras and Mr Haigh in Evenvest and Jazabas were that the former would locate possible development sites, and the latter would investigate the viability of redevelopment. The purchase would then be discussed based on Mr Haigh's recommendations, whereafter their wives would be advised of the proposed purchase, if that was the decision, and they generally accepted such recommendations. Mr Haigh investigated the development potential of the land and, after discussing the purchase with Mr Kikiras, they decided that Evenvest would make an offer prior to the auction. This was done and the offer was accepted on 9 December 1993, although contracts were not exchanged until 21 December 1993. Amcor agreed that settlement would be delayed until 28 June 1994 and, pursuant to special condition 31, it would, in the meantime, consent to Evenvest's lodging a Development Application and a Building Application, although the special condition made it clear that completion was in no way dependent on the success of either. 8 Mr Pitcher advised the Council of Amcor's intention to sell, which he confirmed in a letter of 23 November 1993. On 7 December 1993, he wrote to the Council stating that as a private sale had been negotiated, being the sale to Evenvest, the auction would not be proceeding. 9 On or about 8 December 1993 the Mayor, Mr Hoenig, requested Mrs Cuthbert, the Council's Director of Planning and Environment, to report on the preparation of a Development Control Plan for the land. This was apparently because as the land had been used for open space purposes for a long time it was foreseen that there may well be resident opposition to any change in that use. Mrs Cuthbert reported to the Mayor on 8 December 1993 suggesting floor space ratios and a building footprint, which she considered would, inter alia, recognise both the predominant character in the locality and the longstanding recreational use of the land. The report made no reference to the RAS or the land being in the Risk Reduction Zone. She recommended that the Council resolve to prepare a Development Control Plan incorporating her suggested criteria. On 10 December 1993, the Mayor, pursuant to delegated authority, approved and adopted the recommendation. 10 After it was decided that Evenvest would purchase and before it was resolved to prepare the Development Control Plan, Mr Haigh attended at the Council and obtained an extract from the draft 1993 Botany Local Environment Plan relating to the proposed Residential B zoning. 11 Mr Windeyer had been instructed to prepare a contract in contemplation of the auction by the latest in early November 1993 and, on or about 5 November 1993, he applied to the Council for a certificate under s.149 of the Environmental Planning and Assessment Act 1979, ("the Act"), and paid a fee of $100 for it. It seemed to be common ground that that fee covered the furnishing of the information the Council was obliged to provide pursuant to s.149(2), and such additional information as the Council may provide pursuant to s.149(5).

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(d) Which Section 149 Certificate Was Attached? 12 On 11 November 1993 the Council issued a certificate number 931605 under s.149, which stated that it was the owner recorded by the Council. A copy of a three page certificate furnishing information purportedly in compliance with s.149(2), to which I shall refer as the certificate pages, together with further pages of annexures, was incorporated in the contract, which was entered into by Amcor and Evenvest. That was seen and considered by Mr Haigh well before the contract was exchanged. There was a dispute as to whether the certificate issued on 11 November 1993, which Mr Haigh saw and perused carefully in circumstances to which I shall refer, was the totality of the certificate issued on that date, Mr Tobias contending that that certificate comprised four certificate pages. I shall refer to the significance of that dispute in a moment. 13 On 17 November 1993 Mr Windeyer sent a memorandum to a member of his staff stating that the s.149 certificate in the file was wrong in that it showed the Council rather than Amcor as the owner and the street number as 2 rather than 4. In this latter regard the certificate does not appear to have been in error. The memorandum asked the employee to telephone the Council for confirmation that its records showed the owner to be Amcor, or its parent, and to ask the Council "to correctly issue the certificate ASAP". The employee was also directed to obtain an explanation for the numbering discrepancy. 14 On 17 November 1993 the employee made enquiries of an officer of the Council and, on the same date, Mr Windeyer wrote to the Council, stating:- "We refer to our telephone conversation and enclose the 149 Certificate which shows the incorrect registered proprietor. Kindly alter those details and forward us a new 149 Certificate as soon as possible." 15 On the same date he wrote to Mr Pitcher and enclosed for his approval the contract which he proposed for use at the auction. He dealt with several matters and, in the paragraph numbered 4, stated:- "You will note that the copy s.149 certificate which is presently attached shows the council as the owner. We have returned the original certificate to the council for correction. Provided the corrected certificate is returned to us quickly we will insert copies of that in the contracts for use at the auction." 16 On 23 November 1993 the Council wrote to Mr Windeyer referring, at least impliedly, to the letter of 17 November 1993, and advising that if there were any further enquiries Mr Windeyer was not to hesitate to communicate with it during normal office hours. 17 A copy of the letter, which was tendered from the files of Henry Davis York, showed a note from Mr Windeyer to his employee asking her to "chase up new s.149 cert" and a further note, dated 29 November 1993, in which the employee advised Mr Windeyer that the certificate would be placed in the "DX tomorrow". The various documents to which I have been referring were tendered by the Council and are Exhibit 10. 18 Exhibit 9 is a further certificate under s.149 issued on 29 November 1993, which bears the same number as that issued on 11 November 1993. It shows the correct owner and comprises four certificate pages, the first three being in the same terms as those issued on 11 November 1993, and the fourth providing information pursuant to s.149(5). There were further annexures. 19 It was not in issue that the only certificate Mr Haigh saw before contracts were exchanged was that annexed to the contract, namely the three page certificate together with attachments issued on 11 November 1993. However, Mr Tobias submitted that that certificate must have incorporated the fourth page dealing with information pursuant to s.149(5). The significance of this submission, from his point of view, is that a substantial part of the plaintiff's case is that the s.149 certificate, which Mr Haigh read, comprising the three certificate pages annexed to the contract, constituted representations including that the land was suitable for use for building purposes, and that it was not affected by any Council policy to restrict development by reason of "any other risk". These conclusions were said to flow from the Council's having answered in the negative question 10 namely:- "Whether or not the land is affected by any council policy to restrict development by reason of land slip, bush fire, flooding, tidal inundation, subsidence or any other risk." 20 The plaintiff's primary case was that this question should have been answered in the affirmative and referred to the RAS and the Risk Reduction Zone, and that had it done so Evenvest, being put on notice of that problem and, at least impliedly, the unsuitability of the land for development, would not have entered into the contract. Mr Tobias submitted that if the certificate constituted the making of a representation by the Council, then it could only have any operation as such and the nature of the representation could only be judged having regard to the totality of the certificate issued by the Council. Thus, he submitted, the fact that Mr Windeyer had only annexed three rather than four certificate pages, was neither the fault of the Council nor could the representation, allegedly made by the three certificate pages, be visited upon the Council, if otherwise they could, because the fourth certificate page, on his submission, was exculpatory of the Council. In this regard he relied particularly upon the note on that page:- "When information pursuant to s.149(5) is requested the Council is under no obligation to furnish any of the information supplied herein pursuant to that section. Council draws your attention to s.149(6) which states that a council shall not incur any liability in respect of any advice provided in good faith pursuant to sub-section (5). The absence of any reference to any matter affecting the land shall not imply that the land is not affected by any matter not referred to in this certificate." 21 Mr Tobias placed special reliance upon the concluding sentence which, in his submission, governed all the information in the certificate and not merely that on the fourth certificate page. 22 Mr Tobias submitted that the certificate issued on 11 November 1993 must have incorporated the fourth certificate page, i.e. the fourth page appearing in the certificate issued on 29 November 1993. His reasons were that Mr Windeyer had applied for a certificate in respect of ss.149(2) and (5), as evidenced by the amount paid when the application was made, and that when complaining about the certificate issued on 11 November 1993 he did not state that the information requested pursuant to s.149(5) was not furnished. 23 Mr Rayment responded that if the Council wished to rely upon the assertion that the certificate issued on 11 November 1993 included the fourth page, the onus was on it to show that that was so as it was relying on material on that page. He submitted that there was no reason to suppose that the certificate annexed to the contract was not the whole of the certificate issued, and that if Mr Tobias wished to suggest that there had been a failure by Mr Windeyer to annex the fourth page there was an onus on him to call Mr Windeyer to give whatever evidence he could about this matter. Secondly, Mr Rayment submitted that there was no reason to think that as the Council had made a mistake in relation to the owner of the land, it could not also make a mistake by failing to send the fourth page. Thirdly, he submitted that the evidence was that the original certificate had been returned to the Council, which failed to call evidence as to what happened to it on its return or of any Council practice as to the steps it would have taken upon the return, such as destroying it. In these circumstances Mr Rayment submitted that as the Council's evidence was that the certificate was returned to it, if it wished to make good its submission that it comprised four certificate pages, rather than three, the onus was on it either to show that this was so either by producing the certificate or by showing that it had been destroyed or that there was a practice that it would have been. The absence of any such evidence left one to conjecture, in circumstances where the Council was obliged to establish the terms of the certificate or, if unable to do so, at least to provide evidence from which the inference could be drawn that it had been destroyed, what it comprised. Finally, it is to be noted that whilst s.149(2) imposes an obligation on the Council to furnish certain information, s.149(5) imposes no such obligation and, for all one knows, Mr Windeyer may have taken the view that the Council had declined to furnish that information. 24 In my opinion, the Council has not established that the certificate issued on 11 November 1993 comprised four certificate pages rather than three as were annexed to the contract. I am not prepared to infer that Mr Windeyer made a mistake by only annexing three pages rather than four to the contract, particularly as the receipt and all the other annexures to the certificate pages are present, in the absence of evidence from the Council of the type to which I have referred. 25 This finding does not involve any question of credibility. It may be that others will form the view that the Council established that the certificate issued on 11 November 1993 did include four certificate pages rather than three. However, even if I had come to that conclusion, I am not satisfied that the concluding sentence of the note on the fourth certificate page, on which Mr Tobias placed such reliance, applies to information furnished pursuant to s.149(2) or, if it does, that it applied to the particular answer in controversy in these proceedings. I shall state my reasons in due course.

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A letter in the same terms, save for the omission of the penultimate paragraph, was sent to Amcor. 28 On 13 December 1993 a copy of that letter was sent by facsimile transmission to either Mr Kikiras or Mr Haigh and, on or about that day, it came to Mr Haigh's attention. He said that he read and considered it. The letter was relied upon as constituting a representation by the Council that the land was suitable for residential development, special emphasis being placed upon the penultimate paragraph as showing that the Council intended the agents to disseminate the information by drawing it to the attention of potential bidders. It may well be that this letter was written because in answer to question 1, namely whether a Development Control Plan or a draft Development Control Plan applied to the land, the answer was "No". The letter, being the version addressed to Amcor, was annexed to the contract. 29 Mr Haigh's evidence was, paragraph 13 Exhibit A1, that if the letter had made any reference to the fact that the land was in a Risk Reduction Zone:- "..which had the effect of restricting any residential intensification neither I or any company that I was involved in would have purchased the land." 30 He continued, in paragraph 14, that after receiving the letter he telephoned Mrs Cuthbert and told her that he was interested in purchasing the land and that he had observed the floor space ratio and footprint site coverage, and asked:- "If we comply with these issues, would we have any problem in obtaining Council's development approval?" 31 He said that Mrs Cuthbert replied that she did not believe so, and that she may also have said that it would be necessary to have regard to the various planning instruments affecting the property. Paragraph 14 continued:- "Di Cuthbert was chief town planner at the time of this conversation and a person on whose advice I believed I could rely upon. As a result of receiving the letter from Dunhill Madden & Butler dated 13th December 1993 and hearing the statement of Di Cuthbert I believed the land had good development potential and in reliance thereon I decided that the Company should proceed further with the purchase and subsequent development of the land." 32 In paragraph 15 he said he considered further the size and type of development having regard to the matters set out in the letter of 10 December 1993, that he had discussions with Mr Kikiras "and determined to continue with the purchase of the land". Contracts were exchanged on 21 December 1993.

[10]

(f) The Plaintiff's Case 33 The three representations upon which the plaintiff relies are those allegedly contained in the s.149 certificate, the letter of 10 December 1993 and the conversation with Mrs Cuthbert. The plaintiff's case is that both documents and the conversation contained representations which were negligent and/or false, although its case is not that it has to rely on all three, but rather that if any one is established as having been made negligently or untruthfully that would be sufficient. Its primary case is that it relied on the representations as stating that the land was suitable for development and there was no other risk, whereas it was not by reason of the RAS and the Risk Reduction Zone of which the Council was aware, but which it did not disclose. If it had been aware that the land was in the Risk Reduction Zone, and thus not suitable for building purposes, or if it had been aware that the land was within the Risk Reduction Zone, Evenvest would not have entered into the contract, the alleged representations having been made before that occurred on 21 December 1993. Its secondary case is that in the circumstances which existed, the Council should never have acceded to its Development Application, which it made on 1 April 1996, on 4 June 1996 and of which it gave notice to the plaintiff on 6 June 1996. On its primary case the plaintiff claims damages for the economic loss it suffered because by purchasing the land it tied up available funds and the time of Mr Haigh, which would have been utilised in pursuing other business ventures. The economic loss claimed is, accordingly, for the loss of opportunity. This case proceeds on the hypotheses that Evenvest would not have entered into the contract, that, therefore, Jazabas would not have novated it, and that Jazabas would have proceeded with other developments, which would have been profitable. On its secondary case, it claimed that had the Development Application been refused in June 1996, as it submits it should have been, the plaintiff would have sold the land and proceeded with its usual development business. Because the Development Application was approved it failed to mitigate its loss earlier by selling the land and lost the opportunity, albeit later, of pursuing other profitable developments. I shall deal with the way in which the case is pleaded in greater detail subsequently. 34 It is convenient, at this stage, to deal with one aspect of the alleged conversation with Mrs Cuthbert. Although the Council put in issue its occurrence, it did not call Mrs Cuthbert to deny it, and it obtained no concession from Mr Haigh that a conversation, essentially in the terms to which he referred, had not taken place. In these circumstances, I accept Mr Haigh's evidence that such a conversation did take place. Not only is Mr Haigh's evidence uncontradicted but having regard to the invitation to communicate with Mrs Cuthbert, the interest Mr Haigh had in acquiring the type of information he sought from her, and his general experience in such matters, it is inherently probable that it did.

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(g) What Happened After The Exchange Of Contracts 35 It was not in issue that neither Mr Haigh, nor anyone else acting on the plaintiff's behalf, learnt about the RAS or the Risk Reduction Zone until late 1997 notwithstanding what transpired after the exchange of contracts. 36 On 25 January 1994 the solicitors for the plaintiff applied for a s.149 certificate. It issued in the same terms as those of 11 and 29 November 1993 so far as the answer to question 10 was concerned, but it made reference, in response to question 1, to the Development Control Plan. 37 On 31 January 1994 Mr Haigh, on behalf of Evenvest, wrote to the Council setting out the proposed development of the site and referred to the receipt of the letter from Dunhill Madden Butler on 13 December 1993. The letter put forward proposals for the development and advanced reasons why the Council should accept them. On the final page it stated:- "This company negotiated the purchase of this site based on information contained in certificate under Section 149 issued by council on 11/11/93 and had our offer to purchase formally accepted on 9/12/93. At this stage we were considering a significantly larger development than proposed in this submission. Council was notified of this acceptance in writing by Graham W. Pitcher on 7/12/93 and subsequently resolved to implement a DCP on 10/12/93. Council was originally advised of the impending sale of the site on 17th December 1992 and given the opportunity to purchase the site. We have been advised that council did not respond to the offer. The site being leased as park lands for a relatively short period since 1980 and has clearly been under utilised. Had council intended the site to be permanently a park, many opportunities have passed for the land to be resumed or acquired and rezoned to Public Open Space." 38 Mr Haigh was cross-examined about the opening sentence of this paragraph to seek to establish that reliance had only been placed on the s.149 certificate and not on the letter from Dunhill Madden Butler or the conversation with Mrs Cuthbert, which Mr Haigh did not accept. In the second paragraph, he had referred to receipt of the letter and its contents, in the context of advising the Council of the way in which the development was intended. He enclosed correspondence with the Water Board, which had an easement over the land, a floor plan and a garage footpath plan. The letter referred to surrounding areas and the proposal and, in the paragraph immediately before that which I have quoted, said:- "This company has given considerable consideration to all matters affecting the development of this site and with a view to alleviating a protracted dispute with residents and council, we have planned in a manner to not only comply with the proposed DCP but to give residents in the area an open space park land that could be designed to give comparable usage to the existing facilities at present in the park. With the proposed relocation of the amplification of the stormwater easement and a single block development, the significant setbacks and extensive landscaped areas will provide extensive buffers to the adjoining residences and blend with the predominate development of the area. The building has been designed with large balconies and broken building lines to present an attractive appearance to the development."

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The letter stated that the draft DCP would be advertised publicly "shortly", and that it would set out "Council's aims and objectives and performance criteria for this site", the writer inviting Mr Haigh, should he wish to discuss any of the matters in the letter, to communicate with Ms Walsh. 42 On 23 May 1994, Evenvest wrote to the Council stating that in the light of its response of 28 February 1994, amendments had been made to the proposed plan, referring to a number of matters and seeking a response from the Council on them. 43 On 28 June 1994, pursuant to an agreement between Amcor, Evenvest and Jazabas, Evenvest gave a notice rescinding the contract and a Deed was entered into between Amcor, Evenvest, Mr and Mrs Haigh and Mr Mrs Kikiras, which recited the entry into the contract on 21 December 1993 and the agreement of Amcor to rescind it and to enter into a contract of sale "with an associated company" Jazabas. The Deed effected that purpose and, on the same date, a contract was entered into and settled between Amcor and Jazabas. The s.149 certificate annexed to that contract was a copy of the one issued on 11 November 1993. It comprised three certificate pages, which is hardly surprising in view of the fact that Mr Windeyer, who was still acting as the solicitor for Amcor, had returned the original certificate to the Council. On the other hand, by that time he had received the certificate issued on 29 November 1993 and the inference may be open that if he had been mistaken in what he had annexed to the original contract, he may have sought to correct that situation when he prepared the subsequent contract. This point adds some further weight to the conclusion to which I came on that matter. 44 On 24 October 1994, Mrs Cuthbert wrote to Evenvest advising that the Council had prepared a Development Control Plan for the land, the aims of which were to recognise the longstanding recreational use of it and to retain portion for public open spaces; to take account of medium rise residential as the predominant development in the locality; to outline the Council's controls and guidelines for the residential development; and to form the basis for consideration of residential development of the land. On 25 October 1994, she wrote again to Evenvest stating, inter alia:- "It appears from a preliminary examination of your plans that many of the issues raised by Mr Carmichael in the past now have been addressed in terms of the design, access and the like. However, you should have regard to the provisions of the Interim Development Order No 19 and the Draft Development Control Plan in developing a formal proposal for submission to Council in the form of a Development Application." 45 Thereafter Mr Haigh negotiated with the Council in relation to the proposed Development Application but, for some reason, one was not submitted until 1 April 1996. Mr Haigh had enlisted the assistance of Neustein & Associates in relation to the preparation and finalisation of that application. The Development Application was approved on 4 June 1996 and the plaintiff was notified on 6 June 1996. Notwithstanding all the discussion and correspondence the Council did not disclose the existence of the RAS or the Risk Reduction Zone. 46 Thereafter, and no doubt because a certain dispute arose between Mr Haigh and Mr Kikiras to which it will be necessary to refer in due course, no Building Application was lodged for some time. However, it was not in issue that notwithstanding Council's awareness of and reliance upon the RAS and land being within the Risk Reduction Zone from time to time, the Council did not refer Mr Haigh to these matters and no suggestion was made that he, or anyone else connected with Evenvest or Jazabas, was made or became aware of them until, at the earliest, late 1997. As I have said the second way in which Jazabas puts its case is that the Development Application should have been disapproved because of those matters and, if it had been, Jazabas would then have been in a position to sell the land and devote itself to other projects. 47 It appears that a Building Application was lodged on 17 July 1996 but, for the reasons to which I have referred, it was not pursued. 48 The development was significantly larger than BAS had undertaken previously and Mr Haigh considered it would be in Jazabas' interests to employ a project builder as the construction costs would be lower. BAS put this alternative to the plaintiff and sought payment of 5 per cent of the total costs of the development in relation to obtaining the Development Consent and Building Approval, doing works ancillary thereto and all matters up to the sale of the units, including arranging finance and negotiating the building contract and with the Water Board. 49 Mr Haigh stated that Mr Kikiras did not consider such payment was warranted and that an internal dispute between the directors occurred that delayed the Building Application and building contract process, which dispute was subsequently resolved and, in about June 1996, two tenders were called for the construction of the building in accordance with the Development Approval. In June 1997 these tenders were updated and a third was obtained, the best being from Metra for $1,049,900, being a fixed price with a 26 week construction period on a turnkey basis including all costs. On 4 September 1997, Metway Bank approved the plaintiff's finance application for $1.7m to fund the whole development, which amount included an initial pay out of $380,000 to discharge the existing mortgage debt to the National Australia Bank and to provide working funds and cover costs of the loan. The loan was formally accepted on 15 September 1997. On 30 September 1997, the plaintiff accepted an amended tender from Metra of $1,053,500, whereupon Metra took control of all aspects of the development and had new Building Application plans prepared and lodged with the Council.

[16]

Thus, even in November 1997, the Council was asserting that the RAS may not affect the development. 52 Mr Haigh said he was left with the impression that the problem would be resolved, but he advised Metra that there would be a delay in gaining Building Application approval and, accordingly, pre-sales, which he had intended to commence in November 1997, were put on hold. 53 In early December 1997 Mr Dowsett told Mr Haigh that the meeting with the Department had not taken place and that the Building Application was in limbo. He said there were avenues for the plaintiff to proceed, and referred to a similar matter being listed before the Court and that he was hopeful the matter would resolve itself. He also told Mr Haigh that the Council was not aware of the RAS, that the matter of risk and risk assessment lay with the Department and that discussions with it were taking place with a view to resolving the problem and obtaining the grant of building approval. Mr Dowsett told Mr Haigh that the Council "now" had a copy of the 1985 RAS and he attended its offices and looked through the report and obtained copies of the pages containing the introduction and conclusion. 54 On 19 November 1997 the Manager, Building Control, submitted a "Members Only" report to the Development Committee, which recommended that the plaintiff's Building Application be deferred and other measures put in train to address the issue of hazard, a special issue being that the site was within a Risk Reduction Zone established by DUAP. Reference was made to the Development Consent and it was stated:- "However it has come to the notice of the Manager - Planning and Environment that the site is within the boundaries of a risk reduction zone and given this situation, the knowledge of which surfaced after the granting of Consent, that the building application should not be determined or, if determined, refused by reason of potential hazard implications. It is also the position of the Manager, that had this information been known when the Development Application was lodged, the application would have been recommended to Council for refusal. There is perhaps no need to dwell on what has happened, but the liability that is now likely to arise cannot be understated. The likely hazard to the site apparently arises from the Chlorine Plant at ICI, although the availability of information pinpointing the potential source or sources of identified hazards, and the subsequent consequences thereof, remains with the Department of Urban Affairs and Planning."

[20]

(i) Obtaining Building Approval 57 On 23 December 1997 the plaintiff commenced proceedings in the Land and Environment Court against the Council's deemed refusal of the Building Application and, on 6 January 1998, Mr Haigh spoke to Mr Bert Houston, the solicitor then appearing for the Council, who told him that he wanted the matter stood over for 21 days to give him the opportunity to seek to resolve it. Shortly thereafter Mr Haigh spoke to Mr Dowsett, who told him that the Building Application should go to a meeting of the Council towards the end of February 1998 "as it is recommended for approval". Mr Haigh told Mr Dowsett that the notation on the s.149 certificate would affect future sales to which Mr Dowsett replied that in his report "one issue should resolve the other". Mr Haigh's statement was somewhat inconsistent with the letter from his solicitors of 26 November 1997, although it may be understandable that it was seeking to put the best complexion on matters to the Bank. Perhaps, more significantly, it was inconsistent with a stance taken at the hearing that for moral reasons, viz exposing future occupants to hazards, the plaintiff would not proceed with the buildings and sell them. 58 Thereafter the plaintiff continued with its plans on the basis that the Building Application would be approved but, in early March 1998, Mr Dowsett informed Mr Haigh that the Council would be defending the Court action "on the basis of new information; that you would need to construct the various safety standards as embodied in the first Statement of Issues". 59 The Council's Statement of Issues relied on the fact that the land was within the Risk Reduction Zone established by the RAS and that the building did not demonstrate a structural sufficiency to withstand possible explosion from existing external risk sources, nor to protect the inhabitants from a possible release of toxic gas such as chlorine and, in particular, that the plans did not provide for appropriate sealing arrangements for windows or doorway entrances, or the provision of air locks, or of mechanical ventilation and air conditioning by a system which did not require the intake of air from outside the buildings. Further, it was stated they did not include the physical means to warn occupants or visitors of contamination from the sources described in the RAS. In essence, the Council was requiring the plaintiff to construct a building which would be impervious to the known dangers. 60 An Amended Statement of Issues was provided, which basically repeated what was said, but concluded:- "The deficiencies referred to in (a) above are incapable of being remedied in that there are no reasonable or practical measures available that could make the proposed buildings and their curtilages safe for occupants in the event of a substantial release of toxic chlorine gas from the Orica Australia Pty Limited Chlorine Plant."

[21]

This was an acceptance by the Council that no building could be constructed, which would overcome the risks, and, not surprisingly, the plaintiff's appeal was dismissed. The Council called evidence from the Department in support of its opposition to the appeal. However, thereafter the Council had second thoughts about the position, the reasonable inference being that they were stimulated by the realisation that the opposition to the Building Application was totally at odds with the granting of Development Approval. The reasons which supported this attitude to the Building Application would have been equally applicable in a consideration of the Development Application. Obviously, the granting of Development Approval was of little use to the plaintiff if it could not obtain building approval. 61 On 12 January 1999, the Council lodged a Notice of Motion in the Land and Environment Court seeking an order to extend the time for appealing against the judgment and orders of the Assessor of 23 April 1998, being the declining of the Building Application, which the Council had refused in the first instance, which refusal it supported before the Assessor. The submissions of the Council stated that it was seeking to overturn the result, in contradiction of the position taken by it before the Assessor, and asserted that the evidence filed and relied on by the plaintiff was itself supportive of the refusal of the grant of approval for the Building Application. It was submitted that it was not relevant that a contradictory approach was being taken, but rather that the judgment of the Assessor was vitiated by error of law, that being asserted to be the relevance of and reliance on the RAS, which the Council had relied on so heavily, and, in particular, that part of it "which purported to exclude" intensification of residential development so as not to increase the number of people exposed to risk. 62 The Council conceded, in its submissions, that not only was the land within the Risk Reduction Area, but that the effect of the development, if constructed and occupied, would be to increase the number of people in that area, and:- "However, the appeal challenges the refusal of the grant of approval for the Building Application on the basis that as a matter of law the certain matters which are required to be taken into account by the Commissioner do not include the Study; and by having taken the Study into account the Commissioner misdirected himself, that is he failed to define according to law the question of fact which he had to answer."

[25]

His Honour then recited that the plaintiff had commenced proceedings in the Federal Court, which have now been remitted to this Court. At paragraph 9 he noted that the principal submission of the Council was that the taking into account of the 1985 RAS was an irrelevant consideration. 66 At paragraph 22 of his reasons, Lloyd J observed that whilst the study contained recommendations, it was prepared in 1985, but the Botany Local Environmental Plan 1995, which was made by the Minister on 18 June 1995, had not taken up the recommendations in the Study. Nor had any Regional Environmental Plan. He considered there was no provision in the Local Environmental Plan and in any Regional Environmental Plan applying to the land relating to other external hazards, and he referred to the fact that the Minister, advised by his Department, had decided not to adopt or implement the recommendations of the Study. He considered there was some force in that submission, but did not accept the conclusion that since the recommendations of the Study had not been implemented the Minister must be taken to have a contrary view to those recommendations. Rather, his Honour considered that it was at least open to the Assessor to depart from the findings of the Study, whereas he had stated in his judgment:- "Consequently, having considered the evidence of the respondent Council which as I have said is unrefuted and having considered the submissions in relation to this matter, I cannot do anything other than dismiss the appeal." 67 His Honour was of the view that the Assessor appeared to have fettered his discretion by holding that he could not do anything other than dismiss the appeal, although he then continued that he was not inclined to construe the Assessor's words as amounting to a fetter on the exercise of the discretion. He said that the Assessor may have been doing no more than expressing a conclusion based upon his consideration of the whole of the evidence and the submissions in the case. However, his Honour was of the view that in considering the study and the evidence relating thereto, and in determining the case on that material, the Assessor had committed an error of law, which caused his Honour to allow the appeal and to remit the matter to the Assessor to be determined according to law. The Building Approval was then granted. 68 Thus, at the end of the day, the plaintiff had both Development and Building Approval. After the latter was granted, the plaintiff sold the land for reasons to which I shall return. At Tp.9, the following appeared:- "HIS HONOUR: You don't challenge that the plaintiff acted properly in mitigating its damages by selling the property without seeking to develop it? TOBIAS: No, no. HIS HONOUR: I would have thought inherent in that was you don't challenge the reasons for that having happened, which was that the study was still on foot. TOBIAS: No. I don't challenge so much of the reasons as relate to their alleged impecuniosity and their desire to get rid of the property. It hadn't been a happy purchase, I accept, but the question of their moral feelings will be an issue. I don't think ultimately that will matter much because even on commercial considerations, if they had obviously been told that this land could not be developed for residential at all, then I couldn't challenge the proposition they wouldn't have bought the property. It would have been nonsensical to suggest otherwise and I don't and will not."

[26]

The Plaintiff's Pleaded Case 69 By its Third Further Amended Points of Claim, which were filed on 5 November 1999, Jazabas alleged its incorporation, and that its shareholders were, at all material times, Kikiras and Permtree. 70 It was pleaded that the Council is a corporation duly incorporated pursuant to the provisions of the Local Government Act, and is a "corporation" as defined by s.4 of the Trade Practices Act 1974 and the Fair Trading Act 1986. This latter allegation was in issue. It was pleaded that at all material times the Council was under a duty, pursuant to s.149, to issue, in accordance with the requirements of that section, certificates in relation to land within its local government area:- "… including areas contained within a General Risk Reduction Zone ('the Zone') identified in the Department of Planning's report entitled 'A Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany' ('the Risk Study') issued to the defendant in 1985 or as otherwise affected by Botany Bay Regional Policy guidelines." 71 It was pleaded that the Council has been, at all material times, the consent authority vested with the statutory duty, to consider and determine applications for development and building consent for developments proposed within its local government area. 72 The pleading continued that Evenvest was, at all material times until 28 June 1994, a company which acted as trustee for Permtree and Mr and Mrs Kikaris; that Mr Haigh was a director of Evenvest and the plaintiff; that Evenvest's and the plaintiff's business was that of acting as a developer and builder of small to medium density residential buildings; that in or about November 1993 the land was to be offered for public auction by Amcor, such auction to be held on 16 December 1993; that the land was vacant; and that it was within the Council's local government area. 73 It was pleaded that on 21 December 1993 Evenvest entered into a contract to purchase the land; that pursuant to an arrangement made on 28 June 1994 between Amcor and Evenvest that contract was rescinded and a new contract was entered into for the same consideration with the plaintiff as purchaser and the transfer was effected on that date. 74 The pleading continued that on 11 November 1993 and 25 January 1994 the Council issued certificates under s.149 in relation to the land, and that in doing so it owed to the plaintiff as a potential purchaser "and then purchaser of" the land a duty to exercise reasonable care and diligence in making representations to the plaintiff in respect of those certificates, to ensure that they were true and accurate in accordance with the knowledge and information of the Council, and to correct any misrepresentations made by the Council in relation to the land. 75 The first basis on which the plaintiff sued the Council is contained under the heading "Negligent Misstatement". 76 It was pleaded, in paragraph 10, that by letter dated 10 December 1993 the Council represented in writing that certain restrictions applicable to development would apply to the land in relation to floor space ratio, site coverage and incorporation of an area for, inter alia, private open space. The letter was particularised as that from Dunhill Madden Butler of 10 December 1993. Critically, for present purposes, it was submitted by Mr Rayment that the letter represented, in the clearest possible terms, that the land could be used for residential purposes, subject to compliance with the terms of the proposed Development Control Plan, and that the Council was requesting Jones Lang Wootton to draw these matters to the attention of potential buyers and, thereby, making a representation that the land could be so used. 77 It was pleaded, in paragraph 8, that pursuant to the invitation in the final paragraph Mr Haigh communicated with Mrs Cuthbert, and that it was represented that the letter of 10 December 1993 contained the only restrictions applicable to development on the land:- ".. and that there were no other constraints upon development of the subject land and no planning impediment and no other planning consideration relevant to development on the subject land."

[28]

The allegation was based on the answering of question 10 in the negative. 79 The certificate was identified as numbered 931605 and, in paragraph 10, it was pleaded that by its issue the Council expressly or impliedly represented that the land was not affected by any Council policy, including any draft policy, environmental planning instrument or exhibited draft environmental planning instrument "to restrict development on the subject land for any of the reasons other than set out in the Certificate". 80 In paragraph 11 it was pleaded that "in the premises aforesaid" the Council represented by its silence that there were no planning impediments, other than those already notified, to the development of the land by a potential or actual purchaser, by means of any building or development application prepared in conformity with the restrictions as notified; that there was no planning consideration relevant to the unfettered development of the land and marketing of any development upon it; that the land was not within any zone identified by any responsible authority and the Council in particular, which zone sought to curtail or restrict residential development on it; and that there was no risk to development of or habitation upon the land. 81 In paragraph 12 it was pleaded that each of the representations in paragraphs 7 to 11 were continuing, the particulars being the oral representations allegedly made by Mrs Cuthbert on 13 December 1993; the issue of the s.149 certificate dated 25 January 1994; the letter from Evenvest to the Council dated 31 January 1994; the letter from the Council to Evenvest dated 28 February 1994; the letter from Evenvest to the Council dated 23 May 1994; the representations set out in paragraph 11; and the 1993 draft LEP, which was inspected by Mr Haigh at the Council's premises on or about 13 December 1993. 82 In paragraph 12A it was pleaded that the representations were false and inaccurate in that as from 1985 the Council had a copy of the RAS and was aware of its contents, including that the land was within the general Risk Reduction Zone and affected by potential risk of hazard and danger as assessed in the RAS; that the Association of South Sydney Regional Councils, ("SSROC"), of which the Council was a member, accepted that the policy in the RAS should be implemented; that the Council was aware in 1991 of hazardous spills in and about the Botany Industrial Complex and viewed the potential hazard as a major concern to development within the zone; that the Council in 1991 endorsed the views of the various Councils in relation to implementing the policy as later incorporated into the Hazardous Industry Planning Advisory Paper No 4 (1991) and the Botany Bay Regional Policy Guidelines issued in 1992 by the Department of Planning; that the RAS was relevant to the determination of development consents by the Council for any residential development within the zone; and that, in the premises, the land was affected by a Council policy or draft policy, restricting development by reason of a risk to residential development on the land of which the Council was aware. 83 It was pleaded that in the premises there were planning impediments and considerations relevant to the development of the land, including risk of hazard and danger to habitation on it, with resultant detriment to the commercial viability of proposed residential developments; that at all material times the Council was aware of those matters or, it was reasonably foreseeable that the matters were relevant to the decision of Evenvest and the plaintiff to purchase and develop the land, such that the representations would be, or were likely to be, communicated to and relied on by the plaintiff or persons or entities in its position in purchasing and seeking to develop the land; "and that unless the information, policies or risks known to the defendant were disclosed to Evenvest or the plaintiff they would suffer loss and damage". 84 In paragraph 12D it was pleaded that to the extent that responsibility for the representations was not imposed on the Council by statute, it assumed responsibility for them. 85 In paragraph 13 it was pleaded that acting on the truth of the representations "and induced thereby", Evenvest and the plaintiff decided to purchase the land and caused the contracts to be entered into and completed. 86 It was pleaded in paragraph 16 that in breach of its duty of care pleaded in paragraph 6E the Council made the representations; failed to disclose to Evenvest or the plaintiff the matters pleaded in paragraphs 12A and 12B; and failed to correct the representations; and, in paragraph 17, that as a consequence the plaintiff suffered loss and damage. 87 The pleading continued that in 1996 the plaintiff lodged Development Application 96/0569 for the construction of ten two-storey townhouses on the land; that on 4 June 1996 the Council granted development consent; that in making that determination or, alternatively, in notifying the plaintiff of it, the Council "by implication represented to the plaintiff that there were no risks or matters of public interest relevant to development of the" land; and that at all material times the Council was aware, or it was reasonably foreseeable, that a decision by it to grant development consent for the land would be, or was likely to be, relied on by the plaintiff in incurring expense and liabilities in relation to its development. The pleading asserted that the representations pleaded in paragraph 18A were false because there were risks and matters of public interest relevant to the development of the subject land and particulars of that were repeated. 88 In paragraph 19 it was pleaded that in reliance on the representations pleaded as having been made by the Council, including the approval of the Development Application, the plaintiff applied for building consent:- ".. and entered upon financial arrangements and incurred liability with the financier for the purpose of proceeding with the re-financing and construction proposed upon the subject lands."

[29]

It was alleged that a building application was lodged and a loan facility of $1.7m was obtained from Metway Bank. Also the plaintiff entered into a contract for the construction of the proposed development with Metra. 89 In paragraph 24 it was pleaded that the Council declined the Building Application, and, on 12 December 1997, the plaintiff lodged an appeal against the deemed refusal of that application to the Land and Environment Court, which appeal the Council opposed:- ".. upon the grounds that the subject land was located within a general risk reduction zone identified in the Department of Planning's Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany published in 1985." 90 It was pleaded in paragraph 26 that on 23 April 1998 the Court dismissed the appeal on the ground that such land could not be developed in view of those matters and, in paragraph 26A, that after the institution of these proceedings, viz on 2 December 1998, the Council lodged an appeal against the Land and Environment Court decision, which was that of an Assessor, and that such appeal was allowed by a Judge of that Court on 16 April 1999. 91 Breaches, essentially in the same terms, of the Trade Practices and Fair Trading Acts were pleaded and, commencing at paragraph 29, so also was negligent exercise of statutory powers. It was pleaded that "in the premises" the Council owed the plaintiff a duty of care to act reasonably in exercising its powers under the Act when issuing certificates pursuant to s.149; that the plaintiff was, at all material times, within the class of persons who generally relied on the Council to exercise its powers under s.149(5) with due care, diligence and reasonableness; that in the alternative the Council, as the consent authority, owed a public law duty to the plaintiff to exercise its powers under s.149(5) with care and diligence; and that it breached those duties in that it failed:- (a) to properly search its records; (b) to properly inquire of its relevant officers; (c) to consider or to properly consider records and information known to it as set out in paragraphs 12A and 12B; (d) to make proper inquiry of the Department of Planning; (e) to act consistently in its determination of Development Applications in light of the matters pleaded in paragraphs 12A and 12B; (f) to take all reasonable steps to ensure that potential or actual purchasers of land within the Risk Reduction Zone or adjacent to the Botany Industrial Complex were notified of relevant risks to residential development in response to inquiries pursuant to "the procedure provided for by s.149"; (g) to have in place procedures to ensure that particulars (a) to (f) did not occur and that the Council could properly discharge its duties under s.149(5); and (h) to notify the plaintiff in the s.149 certificates of the existence of the Risk Study, the Hazardous Industry Planning Advisory Paper No 4 and the Botany Bay Regional Policy Guidelines, or otherwise warn the plaintiff of them. 92 Further basically repetitive breaches were set out, and, in paragraph 35, the plaintiff claimed declaratory relief in consequence of the provision of and in relation to information provided to it; an order that the Council is liable to pay damages to it in such sum as is assessed pursuant to s.82 of the Trade Practices Act and s.68 of the Fair Trading Act; alternatively a declaration that the Council has breached the duty of care owed to it to provide information concerning the land; damages for breach of the duties owed including "damages on the Hungerford v Walker principle"; costs; exemplary damages and damages for vexation.

[31]

The Council's Defence 94 The Council's Defence, in addition to various admissions, denials and statements of non-admission, admitted that it was duly incorporated, but denied that it is a corporation within the meaning of the Trade Practices Act; admitted that it had a duty to issue certificates pursuant to s.149(2) in respect of land within its municipality; admitted that the land is, and was at December 1993, within its municipality, and that Dunhill Madden Butler sent a letter on its behalf to Australian Paper Manufacturers dated 10 December 1993 in relation to the land; and admitted that the s.149 certificates said that it answered in the negative the question whether or not the subject land was, as at 11 November 1993 and 25 January 1994, affected by any policy of the Council to restrict development by reason of land slip, bush fire, flooding, tidal inundation, subsidence or any other risk. It further pleaded, in paragraph 9, that as and from the end of November 1993 the plaintiff knew, or ought to have known, that it accepted no responsibility whatsoever for the accuracy of oral information and that none of its employees was authorised to bind it by the giving of such information. This assertion does not sit comfortably with the final paragraph of Dunhill Madden Butler's letter, which is quite general in relation to the Development Control Plan. 95 The Council admitted that it did not approve or refuse to approve the Building Application from which deemed refusal the plaintiff appealed; that it opposed the appeal "for the reasons indicated in its Defence to the said Application"; and that the Land and Environment Court dismissed the plaintiff's appeal for the reasons indicated in its reasons. 96 The Council denied that it was, or has been at any time, a trading or financial corporation within the meaning of the Trade Practices Act or the Fair Trading Act. 97 In answer to the whole of the Third Further Amended Points of Claim, the Council pleaded that if the plaintiff relied on it as alleged, such reliance was unreasonable for the following reasons:-

[32]

(a) From in or about late November 1993 when Evenvest received the contract to purchase the land, it knew that the Council accepted no responsibility for the accuracy of any oral information given to the plaintiff, its servants or agents or any other person. This assertion flowed from the concluding sentence on the fourth certificate page. (b) If Evenvest and/or Mr Haigh was involved in land development and building small to medium residential buildings, then it and he knew that the land was near to a major operating industrial complex of long duration, and the plaintiff thereby knew, or ought to have known, that the Council was not likely to be the sole approval authority in relation to land development in the municipality, nor the sole repository of information relevant to land in and around the nearby industrial complex, such that the plaintiff acting prudently knew or ought to have known that it should have made inquiries of DUAP. The Defence continued that had the plaintiff done so at any time prior to 28 June 1994, 4 June 1996 or 17 July 1996 it would have been informed that the land was referred to in that Department's Risk Assessment Study. This is a strange allegation, which proceeds on the basis that notwithstanding that the Council was aware of the RAS and the existence of the Risk Reduction Zone, it was under no obligation to advise a potential purchaser of those matters even though it had previously relied on them for its own purposes. Rather, the assertion was that the potential purchaser should have sought the information elsewhere, notwithstanding that for a fee it was supplying detailed information about, inter alia, risks which may restrict development on the land. (c) That the plaintiff ought not to have completed the purchase without making due search and inquiry, which if it had been carried out would have revealed the existence of the RAS and the risk that the plaintiff would be unable to develop the land for residential purposes. I assume this allegation flows from the matters pleaded in sub-paragraph (b) and, at least at a pleading level, it was an acceptance by the Council that the RAS, and, perhaps, the Risk Reduction Zone, constituted a "risk" that the plaintiff would not be able to develop the land for residential purposes, which was the only development permitted by the zoning. (d) Given the effluxion of time it was unreasonable for the plaintiff to rely on the information provided in 1993 "given its consent to exchange contracts and settle the contract on 28 June 1994 or to do the things it did in 1996 and 1997". (e) Given the effluxion of time it was unreasonable for the plaintiff to rely on the information provided in 1993 for essentially the same purposes.

[33]

What the Council appears to be asserting is that whilst it was aware of matters, which could cause problems in relation to development and which constituted a "risk", it was not obliged to advise the plaintiff it being the obligation of the plaintiff to go to other sources. No reason is suggested why the Council did not alert the plaintiff to the need to seek such information, other than that the plaintiff knew of the matters in paragraph (b) above. However, when the certificate was issued the Council was not aware of the actual or imputed knowledge of those who may rely on it. 98 In paragraph 17 it was pleaded that the Council asserted that the s.149 certificates were "in all relevant respects true and accurate and in the premises the plaintiff is not entitled to the relief so sought" and, in paragraph 18, it was pleaded that if, which was denied, the plaintiff suffered loss or damage, that was caused or contributed to by the negligence of the plaintiff by itself, its servants and agents in failing to make, prior to 17 July 1996, any or any adequate inquiries as to impediments which might arise in respect of the future development of the land for any residential purposes, and in entering into financial arrangements for that development prior to the determination of its Building Application dated 17 July 1996. In the end no submissions were made based on an allegation of contributory negligence, nor, in my opinion, could they have been. The Council did not attempt to establish the facts on which it relied. The Plaintiff's Reply 99 The plaintiff filed a Reply in which it alleged that the Council is estopped from denying the existence of "a policy referred to in question 10 of" the certificates. The particulars of this involved statements in some later certificates that there existed a policy with respect to the land and certain other land in the Risk Reduction Zone; the Council's conduct in resolving to seek and obtain exemption in respect of SEPP 28 by letter dated 21 December 1989; Council's conduct in adopting the 1992 Botany Bay Regional Guidelines; the Council's conduct in adopting the 1985 RAS as from 1985; the Council's conduct in refusing or amending other Development Applications with reference to the 1985 RAS; the Council's Defence of the Building Application in the Land and Environment Court; and the plaintiff's reliance in that Court on the Council's conduct in asserting the existence of the policy leading the plaintiff, to its detriment, not to prosecute in its Application for Building Approval the submission that no such policy existed. 100 The Reply also pleaded that in further reliance on the Council's conduct, the plaintiff sold the land in August 1999 and disclosed the policy in the contract.

[36]

Sub-section (6) provides that a council shall not incur any liability in respect of any advice provided in good faith pursuant to sub-s.(5). There is a proviso concerning contaminated land, which the parties agreed had no relevance to this case. 102 It was agreed that the matters prescribed at the relevant time were those appearing in the Environmental Planning and Assessment Regulations 1980 reprinted as at 5 April 1993. Regulations 68(1) and (2) prescribed the fee for a certificate as $40 and, if information was required pursuant to sub-s.(5) "and the council includes any of that advice in the certificate" the Council was empowered to charge an additional $60. Regulation 68(3) provided that for the purposes of s.149(2), relevantly for present purposes, the prescribed matters were those set forth in Schedule 2. Schedule 2 required a disclosure of planning instruments relevant to the land and the purposes for which development could be carried out or was prohibited. A number of other sub-regulations underscored these requirements and added the disclosure of various ways in which the land may be otherwise affected, such as by the terms of the Coastal Protection Act 1979, the Mine Subsidence Compensation Act 1961 and various road widening and aligning circumstances. Sub-regulation (3)(k) stated:- "(k) Whether or not the council has by resolution adopted a policy to restrict the development of the land by reason of the likelihood of land slip, bushfire, flooding, tidal inundation, subsidence or any other risk." 103 The s.149 certificate annexed to the contract had three certificate pages on the second of which was question 10, which was answered in the negative. It was, obviously enough, derived from sub-regulation (3)(k) although, unlike it, it did not include a reference to the adoption of a policy by resolution, but rather whether the land was "affected" by "any council policy" to restrict development by reason, inter alia, of any other risk. 104 Mr Rayment did not suggest that the Council had by resolution, which both parties accepted meant a formal resolution, adopted a policy because of the likelihood of the risk identified in the RAS or the land's being in the Risk Reduction Zone. His submission was that question 10, which was formulated by the Council, was not directed to that point but rather to the issue whether the land was affected by any Council policy, i.e. any course of conduct whereby the Council, in deciding whether development should be restricted, had regard to either of those matters, and that a proper consideration of the evidence showed that there was a de facto policy in relation to land in the Risk Reduction Zone, which should have been disclosed having regard to the terms of the question. 105 Mr Tobias' principal submission was that there was no policy in relation to land zoned as the land was and that, in any event, even if the answer to question 10 was in the negative, the Council was not affected by it because of the concluding sentence on the fourth certificate page:- "The absence of any reference to any matter affecting the land shall not imply that the land is not affected by any matter not referred to in this certificate."

[38]

(a) Section 149 provides that Council shall issue a certificate pursuant to s.149(2) and the first three certificate pages are obviously directed to the information required by that section. There is no obligation on an applicant for a certificate to require further information pursuant to s.149(5). Thus, if an applicant did not seek that information the fourth certificate page would not issue and, accordingly, the concluding sentence would not be included. The Council proffered no evidence that if information was not sought pursuant to s.149(5) a sentence in the terms of the last sentence on the fourth certificate page would have been added to the note on the third certificate page. That note is obviously intended to exclude the responsibility of the Council for certain information and, in my opinion, if it was the intention to also exclude it from responsibility in terms of the last sentence on the fourth certificate page, one would have expected to see that sentence on the third certificate page. The only inference is that the Council did not follow such a practice. Accordingly, the last sentence on the fourth certificate page only applied to information on that page. (b) As a matter of English the concluding sentence on the fourth certificate page only relates to the matters referred to in the note at the conclusion of that page. It is, of course, important to bear in mind that the first three certificate pages obviously deal with matters under s.149(2), whereas the fourth certificate page deals with a matter under s.149(5). However at the conclusion of each "section" of the certificate there is a note. It seems to me that as one need not apply for both elements of the certificate each note is to apply to the particular part of the certificate, which it immediately follows. In other words the first three certificate pages together with the note at the conclusion stand alone and separate from the fourth certificate page, which is dealing with a different subject matter. Further, there is no obligation on the Council to furnish the information requested by s.149(5). There was no evidence that if the Council decided not to do so the final sentence of the fourth certificate page would have appeared in the note at the conclusion of the third certificate page. Thus there were several circumstances in which the note on which the Council placed so much reliance may not appear, and an absence of evidence from it that in those circumstances the note, as a matter of practice, would appear elsewhere. 108 For these reasons I am of the opinion that the concluding sentence on the fourth certificate page does not affect or relate to the matters referred to on the first three certificate pages, which are dealing with information the Council is basically obliged to furnish pursuant to s.149(2). Further, Mr Tobias conceded, as I understood it, that the Council could not rely, even if it was otherwise entitled to do so, on the last sentence of the fourth certificate page if an answer was incorrect to its knowledge. In other words the Council, having given consideration to question 10 and answered it in the negative, could not rely on the last sentence on the fourth certificate page if that answer was incorrect to its knowledge. Rather, he submitted, that the last sentence on the fourth certificate page would only work favourably to the Council in the event of its not being aware of a matter. 109 For the reasons I have given, and notwithstanding the concession Mr Tobias made, I have come to the conclusion that the last sentence on the fourth certificate page does not govern the first three certificate pages, and that even if contrary to that view the original certificate annexed to the contract contained the fourth certificate page, the concluding sentence would not have assisted the Council in the circumstances of this case.

[39]

Did Council Have A Policy? 110 It is not necessary for a policy to be formalised by resolution. The Council could have, without difficulty, repeated in question 10 the words used in sub-regulation (3)(k). It chose not to and thereby omitted any reference to a resolution. 111 The Shorter Oxford English Dictionary defines "policy", where fifthly appearing, as:- "A course of action adopted and pursued by a government, party, ruler, statesman etc … a course of action adopted as advantageous and expedient." 112 The Macquarie Dictionary defines it, where secondly appearing, in the same terms and, where firstly appearing, as "a definite course of action adopted as expedient or from other considerations". 113 In Leppington Pastoral Company Pty Limited v Department of Administrative Services (1990) 23 FCR 148, a special case for the decision of the Court was stated under s.45(1) of certain legislation:- ".. referring the questions as to whether the words purporting to identify government policy in the declaration in fact defined a 'policy' within the meaning of s.22(5) the words being 'that land at Badgerys Creek (identified in a particular map) has been selected as the site for Sydney's new major airport', and if so whether or not the Tribunal erred in excluding from review the matters contained in s.31(1) of the Act." 114 At p.156 the Full Court of the Federal Court referred to the government policy as identified by a witness and identified the issue raised by the first question in the special case as whether those words defined a "policy" within the meaning of s.22(5). After referring to the definitions in the Shorter Oxford English Dictionary and the Macquarie Dictionary, their Honours continued, p.156:- "However, the dictionary definitions all leave open the degree of specificity inherent in the word. In their submissions to us, counsel for the respondents emphasised the flexibility of 'policy'. As an example of the use of the word 'policy' to describe an attitude upon a specific issue, they referred to a letter from the Director General of Civil Aviation which was quoted by Kitto J in R v Anderson; ex parte IPEC-Air Pty Limited (1965) 113 CLR 177 at 191. Counsel contended that the meaning of the word was wide enough to include a proposal to acquire a particular parcel of land. They described this as a 'site-specific' policy, arguing that s.22(5) permitted the inclusion in a pre-acquisition declaration of a statement that the relevant policy was to acquire a particular parcel of land."

[40]

By this reasoning their Honours concluded that the Tribunal should have confined itself to the policy identified in the declaration, and should not have attempted to construct for itself, from the whole of the declaration, what it believed must have been the government policy which caused the making of the declaration: see headnote. 115 In Professional Promotions & Services Limited v Attorney-General [1990] 1 NZLR 501 the New Zealand Minister of Broadcasting made a major policy statement outlining details of proposed changes to commercial broadcasting in that country. 116 At pp.509-510 Jeffries J said:- "The intention was to give notice of its" (the government's) "'policy'. The word policy in its natural and ordinary meaning in this context represents the course of action adopted or to be adopted by a government on a stated issue . For governments it is a public proclamation of principle, usually about a future course of action which is meant to embody its judgment on the most appropriate line of action to be taken. A public policy statement should strive to inform, disclose, clarify, illuminate, make certain (within reason and the Court qualifies to avoid the charge of absolutism) and overall remove doubt. The same thing more simply stated is that interested persons should know from a significant policy statement, on a major issue, where they stand so as to be able to make their decisions." (My emphasis.) 117 The importance of this decision is not that Council made a statement of its policy but rather, as Mr Rayment submitted, that there was an obligation on the Council, when answering a question whether land was affected by any Council policy relating to, inter alia, "any other risk" to answer that question in the affirmative if the Council had implemented a course dictated by certain circumstances in considering whether land was affected by restriction of development. Of significance is his Honour's reference to the course of action "adopted or to be adopted", presumably on the basis that the first instance of the implementation of a policy may be sufficient to indicate the existence of a policy. 118 In Auckland Regional Council v North Shore City Council [1995] 3 NZLR 18 it was necessary for the New Zealand Court of Appeal to consider the words "policy" and "policies". Cooke P, who delivered the judgment of the Court, considered those words must bear their natural and ordinary meaning in the context of the Act: p.23. He referred to the definition in the Oxford English Dictionary in the terms of the Shorter Oxford English Dictionary to which I have referred, and noted that the definition "a course of action" is also given by other dictionaries. His Honour continued:- "It is obvious that in ordinary present-day speech a policy may be either flexible or inflexible, either broad or narrow. Honesty is said to be the best policy. Most people would prefer to take some discretion in implementing it, but if applied remorselessly it would not cease to be a policy. Counsel for the defendants are on unsound ground in suggesting that, in everyday New Zealand speech or in parliamentary drafting or in etymology, policy cannot include something highly specific." 119 The question then is whether there is evidence from which it can be demonstrated that the Council had a policy whereby the land was affected, the relevant affectation being, as Mr Tobias stressed, to restrict development by reason of either the RAS or the existence of the Risk Reduction Zone. In my opinion, as at November 1993, this question must be answered in the affirmative. 120 It was not in issue that the Council, in considering a Development Application, was obliged to take into account risk elements associated with the land. 121 Mr Rayment stressed that the RAS recommended limitation on any intensification of new residential development in the Risk Reduction Zone. Whilst he seemed to concede that the Council was not necessarily obliged to follow that recommendation and whilst, as Mr Tobias pointed out, DUAP, notwithstanding its preference for the implementation of that plan, basically left the matter to the final determination of the Council, there can be no doubt that by late 1993 the Council had, on several occasions, followed a course which demonstrated its approval with such limitation. Submissions were put in relation to an application by a sports club for development approval, albeit on land zoned for industrial purposes in the Risk Reduction Zone. In my opinion, the zoning difference does not affect the ultimate conclusion in the present case, which was that by dint of the land being in the Risk Reduction Zone it was inappropriate to allow further development. Quite detailed submissions were put in relation to the degree of hazard in various areas around the industrial site but, in my opinion, these differences are not determinative. The important feature is that all the land was in the Risk Reduction Zone because it was perceived that that land, whatever its zoning, would be affected by a risk coming to fruition on the industrial site. The question is what course the Council took in relation to its obvious and undisputed awareness of the RAS and the Risk Reduction Zone as from 1985. 122 On 13 June 1985 the Council was advised that the Minister had revoked a direction under s.101 of the Act in relation to the ICI land and replaced it with another direction, which required the Council to refer all Development Applications to the Secretary of the Department for determination by the Minister in relation to that part of the land commonly known as the Botany/Randwick Industrial Complex, which lay within the municipality of the Council. It was stated that in giving the direction, the Minister considered that due to the hazardous nature of certain developments in the industrial complex and port areas, an ongoing comprehensive assessment was required to ensure that the overall cumulative hazard and risk situation relating to those and surrounding areas was kept within limits. The Council did not agree, at least entirely, with this approach and, on 11 September 1985, the Minister advised the Mayor that the RAS had established an overall comprehensive land use safety strategy aimed at resolving potential conflicts, and that the Minister was determined to ensure that the strategy was implemented to achieve a continuous improvement in safety in the area:- ".. to the benefit of the community, consistent with the latest standards of land use safety planning." 123 In 1989 the State Environmental Planning Policy No 28, ("SEPP 28"), was promulgated. On 12 December 1989 Mrs Cuthbert produced a detailed report in which she noted that the main purposes of the new policy was for the development of town or villa houses in suitable residential areas, notwithstanding the zonings of individual Councils. In considering that she drew attention to the RAS, the potential risks from the industrial sites "and their overall risk implications on the nearby residential land uses". She referred to a risk zone, which included the land, and concluded by recommending that Council make a submission to the Department of Planning proposing that the municipality of the Council be excluded from the policy for the reasons stated in the report, which included the increase or potential increase in housing in the Risk Reduction Zone. On 12 December 1989 the Council resolved to adopt that recommendation and, on 21 December 1989, Mrs Cuthbert wrote to the Regional Manager of the Department of Planning seeking exclusion of the Council from the policy. She referred to environmental factors, including hazard risk and the indication of "a zone where risk reduction is necessary". After dealing with aircraft noise and air pollution, she returned to the effect of industry and to traffic, air and noise pollution. She stated that whilst it was considered that medium-high density development was unsatisfactory within the municipality because of severe environmental constraints, it was appropriate to note that there was provision within land zoned Residential 2(b) and Residential 2(c1) "enabling town house/villa and residential flat building development". She concluded:- "Although a Policy that aims to reduce urban sprawl and maximise efficient use of existing infrastructure is desirable, it is important that urban consolidation occurs in conditions that are appropriate for a potential increase in densities and population. In the case of Botany Municipality, it is pertinent that the Policy lists criteria under which a request for exclusion of land may be based. Botany Municipal Council is affected by severe environmental and physical constraints which inevitably place a stringent limit upon increased development that will lead to increased residential populations and density. It is proposed that the whole of the Botany Municipality be excluded from the Policy. In summary, Botany Municipality is affected by significant aircraft noise levels, the risks associated with hazardous development, high air pollution levels and unacceptable traffic and industrial noise levels. Notwithstanding the environmental constraints, it also is considered that Council already has a relatively high gross residential density and there is scope through the zonings under the Interim Development Order No 19 for the development of a significant number of additional dwelling units." 124 Thus the major impact of SEPP 28, namely to enable development for the purposes of town houses and villa houses to be carried out on suitable residential land and certain special uses land, which over-ruled any local environmental plan or deemed environmental planning instrument, was opposed on the basis, inter alia, of land being within the Risk Reduction Zone. Mr Rayment submitted, in my view correctly, that it was difficult to imagine a clearer instance of the Council's adopting a course of action based, at least in substantial part, on restricting development because the land was subject to the risk from the Risk Reduction Zone. 125 Mr Rayment turned nextly to the sports club application, it being clear that the premises in which the developer wished to establish it were within the Risk Reduction Zone. 126 On 15 January 1990 the Department of Planning wrote to the Council in relation to the proposed development stating that its Hazard Unit did not favour the establishment of a sports club, and:- "The site is exposed to risk levels in excess of the Department's fatality risk criteria for commercial development. Approval of the subject proposal would increase the number of people at risk and increase the difficulty of evacuation in the event of a hazardous incident on adjoining lands. Further, it is considered that such a use would constrain future industrial development in the area."

[43]

The Council adopted the recommendation. 130 Thus, by the time the Council came to consider the Development Application in respect of the land it had relied upon the RAS, and perhaps more particularly the existence of the Risk Reduction Zone, to support its exemption from the provisions of SEPP 28 and its refusal of the sports club development. 131 Notwithstanding that the land was clearly within the Risk Reduction Zone, this matter was not drawn to the attention of Mr Haigh. However, for present purposes, that is not the relevant consideration. The question is whether the Council had formed a policy to restrict development on the land such that the land was affected by such policy. In my view that question must be answered in the affirmative based on the basis of what had transpired. A course of action must have its starting point at some stage and, for the purposes of the present course of action which, in my opinion, constituted a policy, that starting point was the reliance on the RAS and the Risk Reduction Zone for exclusion from SEPP 28 and the refusal of the sports club application. It was a course also adopted in relation to subsequent applications for development in the Risk Reduction Zone, and it was a policy directly applied in opposing the plaintiff's appeal against its refusal to grant the Building Application. Accordingly, there can be no suggestion that the first two instances were in some special category and not consistent with the view taken by the Council thereafter. However, for present purposes I must be satisfied that the policy existed as at November 1993 and, for the reasons to which I have referred, I am. 132 In the result there is no doubt in my mind that question 10 was answered inaccurately. If I am satisfied that had it been answered accurately Evenvest would not have entered into the contract on 21 December 1993, the further questions arise as to whether the Council was under a duty to answer it accurately and, if it had done so, whether Evenvest would have entered into the contract. 133 In considering the present situation it is necessary to bear in mind that I am not concerned with a policy which brought about a prohibition on development, but rather a policy which restricted it. Mr Rayment did not contend that the policy was one of prohibition. Rather, it was one applied by the Council, in circumstances it thought appropriate, to restrict development. Whilst the plaintiff's secondary case was that the Council should have refused the Development Application, the evidence is that once the s.101 direction ceased to have effect whether the Council allowed development was regarded by the Department as a matter for the Council. There is no doubt that the Department continued to oppose development but, as Mr Tobias submitted, Council was not prohibited from permitting development within the Risk Reduction Zone. However, for the reasons to which I have referred, there is no doubt that Council had a policy to restrict development on land in that area, which may have amounted to a complete prohibition depending on the circumstances, and, accordingly, it had an obligation to advise applicants for certificates under s.149(2) of that. There is a difference between a policy to restrict and a policy to prohibit. Although total prohibition obviously covers restriction, it is not necessary to have total prohibition to amount to restriction. On the other hand, if the Council's argument goes to the extent of saying that there was a prohibition then, clearly, there was restriction calling for disclosure.

[45]

It was put to Mr Haigh that that evidence was given with the benefit of hindsight with which he said he disagreed. 137 It was put by Mr Tobias that I should not accept Mr Haigh's evidence on this issue and that he would have gone ahead, no doubt through Evenvest, and purchased the land irrespective of any such difficulties. The principal reason advanced by Mr Tobias was that this was a relatively large parcel of land from which Mr Haigh could see the opportunity of a reasonably substantial profit. 138 I have no hesitation in accepting Mr Haigh's evidence on this point. He was an experienced land developer at that time. He appreciated the difficulties in developing land. He had, to that time, engaged in many developments and, so far as he was concerned, the land was stock in trade. There was no evidence to contradict his that there was sufficient other land available for him to continue to carry on his commercial enterprises. What he wanted to acquire was land which could be developed with the minimum of fuss, rather than to purchase land in respect of which there would be major difficulties as transpired in this case. Had he been made aware of those potential difficulties as, in my opinion, he should have been by the answer to question 10, and had he not been led to believe that the land was "suitable", in the sense to which I have referred, for development by the letter of 10 December 19993 and Mrs Cuthbert's comments, there is no doubt, in my opinion, that he would not have allowed Evenvest to purchase the land. 139 Not only was Mr Haigh's evidence inherently probable and confirmatory of the contemporaneous conversations and correspondence, but also in giving it he satisfied me that he was being truthful. 140 On the basis of the conclusions to which I have come the Council should, had it answered question 10 properly, have answered it in the affirmative. Had that occurred there would have been a sufficient disclosure and I am satisfied that Mr Haigh would have obtained a copy of the RAS and would not, having considered it, allowed Evenvest to proceed with the purchase of the land. The failure to answer question 10 properly was exacerbated by the letter and Mrs Cuthbert's answers. The situation, which then arises, is whether the Council owed a duty of care to Evenvest and, to Jazabas, to have answered the question correctly. 141 At one stage in his submissions, Mr Tobias said that he did not submit that I should disbelieve Mr Haigh when he said that had he been aware of the RAS, Evenvest would not have entered into the contract. His submission then was that Jazabas would have entered into the contract in any event, although, as I understood it, this submission was withdrawn when it was pointed out that there would have been no requirement for Jazabas to enter into the contract but for the fact that Evenvest had done so. Subsequently, Mr Tobias said that he accepted that had Mr Haigh been told that because of the RAS, the Council would not approve a Development Application to erect a residential development, he would not have caused Evenvest to enter into the contract. These concessions, whilst not going to the length of the finding I have made, are to close to it and show that the Council accepted that knowledge of the RAS and Risk Reduction Zone would have had a relevant impact on the decision to purchase. 142 It is convenient at this point to refer to the reason why the contract was novated to Jazabas. Evenvest ran into difficulties with a development, there being complaints from at least one purchaser. The decision was taken to dissolve Evenvest and substitute Jazabas as the purchaser. There is no reason to think, and none was suggested to Mr Haigh, that the same people who controlled Evenvest would not, in allowing Jazabas to enter into the contract, have taken any different attitude to that which they took in having Evenvest enter into the contract. Indeed, there is every reason to think that Jazabas would have taken the same course to relieve Evenvest of the particular situation in which it found itself in circumstances where its directors were unaware of the RAS and the Risk Reduction Zone, but aware of the representations. The significant point, so far as I am concerned, is that no suggestion was made that Mr Haigh and Mr Kikiras, or anyone else connected with either Evenvest or Jazabas, were in possession of any more information at the time the contract was novated, or would have received any further information had an approach been made to the Council at the time the contract was novated, than Evenvest had at the time it contracted to purchase the land. Therefore, so Mr Rayment's submission ran, the representations upon which reliance was placed were continuing and would have been as applicable on 28 or 30 June 1994 as they were on 21 December 1993. None-the-less, what transpired has raised a question as to whether the Council owed a duty of care to Evenvest and/or Jazabas. 143 The second way in which the plaintiff put its case was that the Council should have refused the Development Approval on the basis of the RAS and the land being within the Risk Reduction Zone and, had that been done, it would have resulted in Mr Haigh's becoming aware of those matters and he then would have had Jazabas sell the land and mitigate its damages. There are a number of difficulties with this approach. Firstly, Mr Haigh caused the Development Application to be made, albeit in ignorance of the RAS and the Risk Reduction Zone, and it was approved. This led, eventually, to the lodging of a Building Application and, ultimately and in circumstances to which I have referred, this was approved. Therefore, at that point the plaintiff had all necessary approvals to carry out building work and to derive whatever profit was available from the land. Mr Rayment disclaimed any reliance on a case for damages based on the failure by the Council to deal expeditiously with either form of approval. His case was that because of certain financial difficulties confronting Jazabas and, perhaps more significantly, because of the moral dilemma confronting Mr Haigh in that he did not wish to build and sell within the Risk Reduction Zone, neither of the approvals were what was required in the particular circumstances. However that may be, the fact remains that Mr Haigh was content to have Jazabas sell the land with the benefit of the approvals and to take the profit derived, no doubt in some small part, by virtue of the land having the approvals. 144 I have great difficulty, having regard to the basis upon which damages were sought on the secondary basis, in coming to the view that there is any compensable loss to the plaintiff. Ultimately it obtained what it sought, although perhaps subject to some modification. However, there is no claim for damages based upon that modification, nor on the Council's delay. Thus in the absence of claims for damages based on either the delay in the Council's approving or upon the nature of the approval given, it seems to me that the plaintiff ended up with that which it sought and with which it could then deal on whatever commercial basis it considered appropriate. It chose to sell the land to take a profit, albeit, perhaps, a relatively modest one.

[48]

At p.235 his Honour said:- "From the standpoint of principle there is no difference between a person who carries on the business of supplying information and a public body which in the exercise of its public functions follows the practice of supplying information which is available to it more readily than to other persons, whether or not it has a statutory duty to do so. In either case, the person giving the information to another whom he knows will rely upon it in circumstances in which it is reasonable for him to do so, is under a duty to exercise reasonable care that the information given is correct. A public body, by following the practice of supplying information upon which the recipients are likely to rely for serious purposes, lets it be known that it is willing to exercise reasonable skill and diligence in ensuring that the information supplied is accurate. In the circumstances, diligence might be more important than skill, although competence in searching for and transmitting the information must play a part. However, even if diligence only and not skill were required, a public body might be specially competent to supply material which it had in its possession for the purposes of its public functions." 147 In the present case the Court is completely unaware, because the Council did not call any evidence, of the procedures it adopted in ascertaining and verifying the information it supplied. Therefore, the proper inference is that officers or former officers would not have assisted the Council's case in this regard. 148 At p.247 Mason J propounded the question, based on the verbal and written mis-statements made by the Council to the appellants, that it is necessary to consider whether the Council owed a duty of care in supplying answers either by telephone and/or the 342AS certificate. His Honour said that if it did, the next question was whether the mis-statements breached the duty and, if so, the amount of damages. 149 Mr Rayment submitted that this is a stronger case than Shaddock because the suitability of the land for residential development was inconsistent with the s.149 certificate, the letter from Dunhill Madden Butler, and the telephone conversation. The submission continued that a clearer case of voluntary assumption of risk "is hard to imagine", and that the case is analogous to and stronger than Finlayson v Armidale City Council (1994) 123 ALR 155, in which the land was contaminated to the knowledge of the council's officers and in respect of which, for that reason alone, Development Approval should never have been given. In the present case the land was subject to the RAS and within the Risk Reduction Zone to the Council's officers' knowledge, and the Council relied on those matters, inter alia, in determining how to regulate development. This, in my opinion, clearly called for a positive answer to question 10, or to compelling evidence from the Council as to why no such answer was given. Similarly, the statements in the letter of 10 December 1993 and of Mrs Cuthbert called for a qualification as to the "suitability" of the land for development. 150 Mr Rayment's submission that the land was unsuitable for residential development, did not, or did not at all times, extend to the proposition that it could not in any circumstances be built on, but that the RAS and Risk Reduction Zone constituted an impediment to that, which should have been disclosed. There was no inherent defect in the land, as in Finlayson, rather the land was in the Risk Reduction Zone, which meant that Council could restrict development on it for that reason. As matters transpired that did not happen in the present case. However, the potential purchaser was entitled to expect and the Council was obliged to furnish information relevant to that known potential impediment. No submission was put that as Evenvest was not the applicant for the certificate it could not rely on it, nor, in my opinion, could it have been in the circumstances of this case where the Council was giving information without restricting the use to which it may be put and where the Council knew that the land was being sold. 151 In Perre v Apand Pty Limited (1999) 73 ALJR 1190, Gleeson CJ, at paragraphs 5 and 6, referred to three considerations, which would restrain the existence of a breach of duty in economic loss cases where there was no physical injury. In paragraph 7, his Honour noted that in so far as there may have been a clear dividing line, which had previously prevented recovery of damages where there was no physical damage and only economic loss, it had given way to circumstances in which there were negligent mis-statements upon which reliance had been placed causing damage, and his Honour could find no "convincing reason" why that should be a "solitary exception to an otherwise absolute exclusionary rule". In paragraph 10 his Honour referred to "questions of reliance and actual foreseeability of the possibility of harm" as being closely related, and continued:- "Moreover, knowledge (actual, or that which a reasonable person would have) of an individual, or an ascertainable class of persons, who is or are reliant, and therefore vulnerable, is a significant factor in establishing a duty or care."

[49]

In paragraph 15 his Honour drew attention to attaining justice between various injured persons by not casting "the net of potential liability too wide". 152 In the present case, I do not think it can be argued that the duty of care did not extend to Evenvest which became the purchaser. The Council was unaware of the identity of the purchaser and, in furnishing the information it did not suggest that knowledge of the identity of the purchaser would have been relevant to the information it provided. 153 As the various judgments make clear, the policy is to ensure that liability is not imposed for an indeterminate amount, for an indeterminate time on an indeterminate class. I do not think that it can be said that that situation applied to the facts of this case. One looks for some special factor in the relationship between the parties: per Gaudron J, paragraph 37, which may be one of control over the exercise or enjoyment of a legal right: paragraph 38. The relevant relationship, which is a very common one, was that of the local authority with knowledge of zoning and other such matters and a purchaser of land within its municipality, which purchaser was obviously seeking information on those matters. That, in the light of Shaddock and a general appreciation of the circumstances brings about, in my opinion, a special relationship. At paragraph 42, her Honour said:- "In my view, where a person knows or ought to know that his or her acts or omissions may cause the loss or impairment of legal rights possessed, enjoyed or exercised by another, whether as an individual or as a member of a class, and that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty of care on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss or impairment of those rights." 154 In my opinion, the Council must be taken as knowing that its failure to provide information of the type now under consideration could have the effect to which her Honour referred by diminishing the value of the land in the purchaser's hands. 155 At paragraph 100 McHugh J said that in determining whether there is a duty of care owed:- "… the ultimate issue is always whether the defendant in pursuing a course of conduct which would have prevented injury to the plaintiff, or failing to pursue a course of conduct that caused injury to the plaintiff, should have had the interest or interests of the plaintiff in contemplation before he or she pursued or failed to pursue that course of conduct."

[51]

158 Mr Rayment relied upon the representations in the certificate, the letter of 10 December 1993 and the representations over the telephone from Mrs Cuthbert. It is to each of these representations to which I have been referring. Whatsoever may be said about the applicant for the certificate, the letter was intended for use by purchasers and the statement by Mrs Cuthbert was made to a known prospective purchaser. His reliance, particularly upon the latter two matters, was based on the submission as to the suitability of the land for development purposes, in the sense to which I have just referred. Viewed in that way I have come to the conclusion that the letter from Dunhill Madden Butler and the telephone conversation with Mrs Cuthbert were capable of constituting representations that the land was suitable, because there was no qualification in either by reference to the RAS or the land being in the Risk Reduction Zone. Whilst I am satisfied that the letter was written for the purpose of overcoming the negative answer to question 10 which, in the circumstances that prevailed after the issue of the certificate, needed correction, I agree that it indicated that the land was suitable, in the sense to which Mr Rayment referred, for development. Once again, so far as the telephone conversation with Mrs Cuthbert was concerned, that made the same type of unqualified statements, although they may have been the more misleading in the context of the very questions asked by Mr Haigh. Although it was a short conversation, Mr Haigh made it clear that he was seeking to know about impediments to obtaining Development Approval. No one was in as good a position in the Council as Mrs Cuthbert to know and advise about the RAS and the Risk Reduction Zone, yet she said nothing in answer to a general question. She was not called to offer explanations of the type for which Mr Tobias contended in submissions. 159 Mr Rayment submitted that the action is not defeated by the change in the purchaser, as Jazabas had the same directors and solicitor, and that the letter from Dunhill Madden Butler was addressed to a class of persons including, potentially, Jazabas. The substantial question to which this point gave rise was whether the Council owed a duty of care to Jazabas, which had neither applied for a certificate, nor been a party to which the letter was expressly addressed, nor been the initial purchaser. The Council's submissions did not approach the question of duty of care on this basis. Mr Tobias argued that there was no duty of care to the purchaser, which purchased the land with the intention of developing and on-selling it, whoever that purchaser may have been. He submitted that if, which he did not concede, the Council owed any duty of care that was to purchasers of premises within the development on the land if and when they were injured by virtue of any hazard from the industrial site. This submission is made clear in paragraph 2.70 of his original written submissions. He returned to the same theme in paragraph 4.2 of his written submissions in reply, which he concluded thus:- "It may be that the Council would owe a duty of care to no-one: see paragraph 4.1.2. Without conceding the point, at worst it owed a duty to future occupants not to the developer in respect of the risk of harm contemplated by the Study." (My emphasis.)

[52]

The submission did not draw a distinction between Evenvest and Jazabas as "the developer". 160 In my opinion, in the way in which the plaintiff ran its primary case, the question of duty must be viewed differently. For the reasons given I have come to the conclusion that the Council was obliged to answer question 10 in the affirmative, if it was to answer it correctly, and to qualify the letter of 10 December 1993 and Mrs Cuthbert's statements. The duty it owed was to the prospective purchasers, of whose identity it was not aware, so that they could determine whether, in the light of the information the Council was obliged to provide or did provide voluntarily, whether they or, relevantly for present purposes, Evenvest, would enter into a contract to purchase the land. I am satisfied that if that duty had not been breached by the giving of an incorrect answer in the certificate and the unqualified statements in the letter and by Mrs Cuthbert, Evenvest would not have purchased the land. Thus, in furnishing that information the Council breached the duty of care to Evenvest. I am equally satisfied that Evenvest relied on the information in entering into the contract. 161 Although no submissions were put as to foreseeability, in my opinion it must have been obvious to Council that the recipients of such information would rely on it, as Evenvest did. It must also have been foreseeable that as the land was being purchased for commercial purposes, i.e. the development of residences, there may have been between the time contracts were entered into and settled a change in the purchaser and, as the representations were continuing, the ultimate purchaser may well rely on the same material. As I have said on several occasions the Council was not concerned, so far as the evidence disclosed, with the identity of the purchaser. The identity in no way affected the information it provided. Therefore, there seems little substance in saying that a change in the purchaser removes the duty of care. Although the purchaser was not the applicant I do not consider, for the reasons given, that removes the duty of care. The clear inference is, and the Council called no evidence to refute it, that the certificate would be used by a purchaser as the letter of 10 December 1993 implied. As matters eventuated the novation was to another company controlled by Mr Haigh and Mr Kikiras and, the representations being of a continuing nature and there being no suggestion that the Council would have responded differently up to and including June 1994, there was a duty to Jazabas, breach of which had the foreseeable consequences to which I have referred. The Council proffered no evidence that this was not the position as it understood it. The continuing nature of the representation in the certificate was shown by the terms of the one issued in January 1994 to Evenvest and the conversations with Mr Haigh.

[53]

The Council's Submissions 162 Mr Tobias submitted that there was no duty of care owed to the plaintiff, even if one may have been owed to the ultimate occupants of any development on the land. He said the hazard or risk implication issue concerned not the safety of the applicant for Development Consent, namely the plaintiff, but that of the ultimate occupants and, in these circumstances, any relevant duty of care to determine the application in a manner which took into account the future safety of those occupants could only have been owed to them and not to the plaintiff. In his oral submissions he suggested that it is easy to miss the point that because the Council failed to take into account the risk, it was in breach of a duty to the present plaintiff. He continued that if at a future time the occupants were injured they may have an action against the Council in respect of the Development Consent, and that if a duty of care was owed to anyone at the Development Application stage that duty was owed to the future occupants. Accordingly, on this formulation there was no argument that a duty of care was not owed to Jazabas. So far as Jazabas was concerned it was submitted there was no duty of care to it because any such duty has to be related to the harm or loss caused by the act or omission, viz harm or loss which would be suffered by the future occupants. Thus, his oral submissions conformed to his written submissions. However, they did not address the plaintiff's primary case that but for the negligence it would not have been a party to the contract. 163 Subsequently he posed the question rhetorically as to who is likely to suffer harm by the exercise of the Council of its power to grant consent, this essentially dealing with Mr Rayment's secondary case, to which he responded that it is not the plaintiff, but it may be the occupants of the land for the plaintiff would never suffer damage. The plaintiff did not mount a case that any units it built would be of a lesser value, thus diminishing the plaintiff's profits. He continued that the claim for lost opportunity and holding costs could not flow from this breach, i.e. the granting of Development Approval on which the secondary case was founded. 164 In dealing with the primary case, Mr Tobias submitted that there could only be liability for any negligent mis-statement if there was reliance, a matter different from the breach of a duty of care, which reliance presupposes, and, to the extent to which there was any, it was Evenvest and not the plaintiff, which placed reliance on the statements. He submitted that Mr Kikiras gave no evidence of reliance and that that was fatal as both directors had to be shown to have relied, as either could have vetoed the purchase. He continued that if Evenvest relied, the plaintiff must show that the contract into which it entered would not have been entered into but for reliance on the s.149 certificate, the letter and the conversation, and that Jazabas entered into the contract because it had no choice and that, in any event, the letter was addressed only to potential bidders at the auction and not to subsequent purchasers of the land. 165 Mr Rayment responded that the reasonable inference from the evidence was that Mr Kikiras, having found the land, then relied upon Mr Haigh's advice as to its development potential, such advice stemming from Mr Haigh's reliance on the s.149 certificate, the letter of 10 December 1993 and the conversation with Mrs Cuthbert. He referred to the evidence of the roles of Mr Haigh and Mr Kikiras and to the fact that none of this had been challenged in cross-examination. In my opinion the proper inference to draw is that, having found what he thought may be suitable land, Mr Kikiras then relied upon Mr Haigh in relation to development matters. In the light of the uncontradicted evidence as to how Evenvest operated, this is the obvious inference which I have no difficulty in drawing. 166 There was no evidence to support the submission that Jazabas had no choice but to enter into the contract. Firstly, on the basis of the plaintiff's primary case there never would have been a contract but for the breach of duty by the Council. Secondly, the contract having been entered into there was no reason for Jazabas not to novate the contract as the representations were continuing and as, relevantly for present purposes, they had been made to the persons who controlled both companies and would not have been varied, (Council offering no evidence that they would have been), had Jazabas made its own enquiries. 167 In relation to the claim for negligent mis-statement, Mr Tobias traced the certificate which was annexed to the contract of 21 December 1993. He submitted, although I have rejected this submission, that page 4 of the certificate was furnished at that time, but not annexed to the contract. He also submitted, and once again I have rejected this submission, that the concluding sentence on the fourth certificate page related back to all information in the certificate. In the result I reject the submission that the certificate was a four page certificate and, even if it were, that the last sentence on its fourth page would have affected the first three certificate pages. 168 Mr Tobias submitted that there is no evidence that the absence of any reference to the RAS gave rise to any particular presumption by the plaintiff or any person acting for it. The submission continued that neither the plaintiff nor Evenvest were aware, when they entered into the contracts, of any particular practice of the Council to annotate s.149 certificates with reference to the RAS or, for that matter, any other risk, matter or thing. The difficulty I have with this submission, and the reason I reject it, is that both Evenvest and the plaintiff had before them a certificate denying the existence of any other risk which, in the context of the question asked, could only mean that no such risk restricting development applied. The obvious presumption arising from the evidence at Tp.116, was that the contract was entered into because there was no other risk disclosed. Had there been it would not have been entered into by Evenvest. 169 However, Mr Tobias sought to compare the situation with Shaddock where the solicitor was aware of a usual practice as to the annotation of certificates. 170 I do not, with respect to the careful submission made, see the distinction sought to be drawn. In Shaddock the plaintiff had the benefit of the solicitor's knowledge, which was attributed to it, concerning the form of the certificates. In the present case the plaintiff had the benefit of a positive negation of any other risk restricting development. In Shaddock it was necessary for the solicitor to be able to say that he was aware of the practice of noting certain matters on the certificate, because, on its face, the certificate did not negate the existence of such matters. In the present case there was no such need, because the certificate, on its face, purported to state what did not exist. 171 Nextly, Mr Tobias submitted that the negative answer to question 10 "was in all respects accurate" because the Council had no policy, whether adopted by resolution or otherwise, on 23 November 1993. He also placed reliance on a circular issued by the Department in a circular dated 7 November 1986. It is by no means clear to me that this document is in evidence but if it is it purports to set forth that "prescribed matter" for the purposes of s.149(2) was to encompass only those risks on which the Council had a policy restricting development which had been adopted by resolution. To this extent the circular did nothing more than set forth the terms of the regulations. The difficulty the Council has, however, is that that was not the way in which the relevant question was formulated in the s.149 certificate. 172 If the Council had followed the Department's advice it may not have encountered the difficulties which, in my opinion, it now does. 173 Mr Tobias also referred to the reliance by the plaintiff upon the certificate of 25 January 1994, which only sought information pursuant to s.149(2). He submitted that certificate was irrelevant as Evenvest had committed itself to a binding contract prior to its issue, although there was a suggestion in the evidence that had Evenvest then ascertained the existence of the RAS, Mr Haigh would have sought legal advice as to whether the contract could be rescinded. This certificate showed the continuing nature of the representation and while the better view may be that the contract could not have been rescinded having regard to the terms of special condition 31, Evenvest was deprived of the opportunity of seeking rescission or considering its position in the light of the true facts. At that stage Evenvest may have had a good case for rescission based on its reliance on the information furnished by Amcor, albeit in good faith. This matter need not be taken further as the submissions did not elaborate on the point. Suffice to say that Evenvest was deprived of an opportunity. 174 Mr Tobias dealt nextly with the letter of 10 December 1993. He submitted that even if it was accepted that it was received before Mr Haigh sent Jones Lang Wootton the facsimile transmission of 13 December 1993, it did not contain any information that was inaccurate, but simply summarised the content of the Council resolution of 10 December 1993. There are several points which, in my opinion, answer this. Firstly, the letter certainly confirmed the view that there was no other impediment to development. Secondly, had it not done so that would have occurred prior to the exchange of contracts and, on the evidence of Mr Haigh I accept, Evenvest would never have entered into the contract on 21 December 1993. 175 Mr Tobias also submitted that the letter contained no representation that there was no other relevant information. The vice in the letter is that it held out that the land could be developed conformably with the Development Control Plan without directing attention to other problems of which the Council was well aware. It left the impression, which was reinforced by the conversation with Mrs Cuthbert, that provided its requirements were met then, in all probability, development approval would be granted. 176 The real problem with this submission by Mr Tobias appears in paragraph 3.2.3. It reads:- "The letter was provided otherwise than in response to an inquiry although clearly it was intended to be relied upon by prospective purchasers at the auction on 16 December. But it did no more than inform as to proposed controls on any medium density developments which a purchaser might be contemplating. It did nothing more than that." 177 Firstly, any reasonable reading of the letter would indicate that there were certain controls over the land with which a developer would have to comply. It may be that had the s.149 certificate referred to the risk created by the Risk Reduction Zone that would have been sufficient. But neither document referred to that and each document gave the clear impression that subject to compliance with the zoning requirements, including the Development Control Plan, development could go ahead. The plaintiff's complaint is that there was no disclosure of the risk of going ahead created by the RAS and Risk Reduction Zone. 178 Mr Tobias then submitted that Mr Haigh did not assert that he relied on the letter as a representation that there were no other restrictions which would impact upon the development potential of the land. That, if I may say so with respect, gives an unreal reading to paragraph 14 of Exhibit A1, which I have quoted and in which Mr Haigh made it clear that he relied on that letter. The reliance was not on what was said, but what was not said, notwithstanding the facts of which Council was well aware. 179 Mr Tobias then turned to the conversation with Mrs Cuthbert. There was some debate as to when it took place, but there can be no argument that it was before exchange on 21 December 1993. Mr Tobias obtained the concession that Mr Haigh could not swear that he had the conversation before he "decided that the company should proceed" with the purchase. However, this overlooks the critical fact that Evenvest was not obliged to proceed with the purchase until contracts were exchanged, which did not happen until 21 December 1993. Once again the plaintiff's case is that Mr Haigh relied upon Mrs Cuthbert's failure to tell him anything which would affect the use to which the land could be put in the context of the very general question he asked and which she answered. 180 Mr Tobias also placed reliance upon the written statement by Mr Haigh to Jones Lang Wootton:- "As we have completed our enquiries and are in a position to proceed with the purchase"

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which was made on 13 December 1993. It is clear that Mr Haigh had completed his inquiries. However, his complaint is that having made all necessary and proper inquiries, the Council had failed to answer them properly. Contrary to Mr Tobias' submission there was no need for the conversation with Mrs Cuthbert to have taken place before that facsimile transmission was sent to Jones Lang Wootton. The essential point was that it took place before contracts were exchanged and, so far as the present matter is concerned, that it contained no reference to the RAS or the Risk Reduction Zone. 181 It was submitted that Mrs Cuthbert was given no opportunity to consider the impact of the RAS or to ascertain whether the land fell within the Risk Reduction Zone, although it seems to me that from her intimate knowledge of those two matters, which is confirmed by many documents which were tendered, she would have been aware of both circumstances. It cannot be said that when she was called upon to prepare the Development Control Plan on or about 8 December 1993, that she did not realise that the land was within the Risk Reduction Zone. If that was sought to be made good it would have been necessary, in my opinion, to call Mrs Cuthbert, which did not happen. Further, if she was in any doubt she could have reserved her position by stating, for example, that specific questions should be put, perhaps in writing, and would be answered after due inquiry. She was a very senior officer of the Council and the person to whom the Council had decided at least certain questions about the land should be directed. As I have said, she was not called to give evidence to support any of those submissions. 182 It was further submitted that Mr Haigh only telephoned Mrs Cuthbert because of problems envisaged with local residents. However, it is clear from the conversation that he asked her whether if there was compliance with "these issues" any problem would be encountered in obtaining Development Consent. As I have suggested that question opened up for consideration all other relevant issues. Mrs Cuthbert's response that she did not believe so paid no regard to her close knowledge of the RAS or the Risk Reduction Zone and their effect. Once again this is a case where the representation is one by silence. 183 Mr Tobias nextly considered reliance generally. He referred to the letter of 31 January 1994, which, in his submission, showed that reliance had only been placed on the certificate under s.149, and that no reliance on the letter of 10 December 1993 was asserted. He also relied on the evidence of Mr Haigh at Tp.113 that Evenvest would have proceeded with the purchase even if the Dunhill Madden Butler letter had not been received and there had been no conversation with Mrs Cuthbert. 184 I think it is necessary to examine this evidence with some care. At Tp.113 Mr Haigh agreed that even if he had not seen the letter of 10 December 1993, he had decided to proceed with the purchase. He was then asked:- "Q. May we take it that if you had been told, at that time, that because of the risk study, development consent for residential development on this land would not have been approved by the Council, you would have recommended that Evenvest not proceed with the sale? A. Yes - purchase, sorry. Q. * May we also take it that at that time nothing short of that information would have prevented the purchase proceeding? Objection; allowed; last question marked * read. A. Is that the information about the risk reduction zone and that Council would not have approved a development? Q. I will put it to you again. You have told his Honour that if you had been informed, prior to 21 December 1993, that because the land was affected by the risk study Council would not approve a development application to erect a residential flat building on the land, you would have proceeded with the purchase? A. Yes. Q. May his Honour take it that nothing short of that information would have persuaded you to that course? A. No. HIS HONOUR: Q. Do you mean by that you disagree with Mr Tobias' proposition? A. I disagree with the proposition nothing short of the study and the evidence of the risk reduction zone." (My emphasis.) 185 The witness was then asked to make certain further assumptions and, towards the foot of Tp.114, he said:- "A. What I am saying, if the Council had advised us to that extent, well, I would expect the Council to have had a policy in place and such a policy would have restricted development of the land. I would have thought the whole development would have stopped there." 186 He then confirmed, Tp.115, that if question 10 had been answered in the affirmative he would have made further inquiries, which would have consisted, firstly, of his finding out the Council policy "which would have detailed no residential intensification". He said Evenvest would not have proceeded if his inquiries had revealed that the Council had a policy of no residential development. The point Mr Haigh made, quite clearly so far as I am concerned on the pages to which I am now making reference, is that the land was purchased in the circumstances as he understood them to exist. This then led to the cross-examination at Tp.116 to which I have referred. 187 In my view whatever may have happened before 21 December 1993, the failure to advise Mr Haigh of the RAS and the Risk Reduction Zone were critical matters and essential failures on the part of the Council. As I have said, I am satisfied that had he been told of them he would have recommended that Evenvest not enter into the contract. 188 Mr Tobias also relied on an answer he received at Tp.108. Mr Haigh agreed he had his discussion with Mrs Cuthbert. He continued:- "Q. Do you remember I was asking you some questions about the circumstances in which Jazabas entered into the contract at the end of June 1998? (sic) A. Yes. Q. And you told his Honour that the decision that was taken in relation to the acquisition of this property was taken by Evenvest back in November/December 1993. Correct? A. Yes. Q. To the extent to which anyone relied on the s.149 certificate, the letter of 10 December and the Cuthbert conversation, it was Evenvest, wasn't it; not Jazabas? A. Yes, Evenvest." 189 Mr Tobias has submitted that this answer meant that there was no reliance by Jazabas on those matters. I disagree with that interpretation of the evidence. Leaving aside, for the moment, the incorrect reference to "June 1998", that to which Mr Haigh's attention was being directed was the acquisition in "November/December 1993". It was in that context that he gave the answer that it was Evenvest and not Jazabas that relied on the certificate, the letter and the conversation with Mrs Cuthbert. It is, in my view, quite unreal having referred a witness to what was happening in the context of events of November/December 1993, when Jazabas was not operating or interested in the land and without drawing the clearest demarcation between the two companies, to make the suggestion that Jazabas never relied on the continuing representations. As Mr Tobias wrote at paragraph 3.4.5:- "Furthermore, Evenvest was the only company in the 'group' interested in purchasing the subject land as at December 1993."

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As well as referring to Exhibit A1 paragraph 13, he also referred to Tp.112 where the sole attention was being paid to Evenvest. That with which Mr Tobias had to grapple, in my opinion, were the matters which caused Jazabas to enter into the contract some six months later when, on any view, the same representations were operative. 190 Mr Tobias' submissions then turned to the second cause of action, namely the grant of Development Consent. He submitted that this argument required me to find that the discharge of the Council's statutory duties with respect to its consideration and determination of the plaintiff's Development Application would necessarily have led to the refusal of such application because the Council had a statutory duty to consider the safety issue and, therefore, the study and failed to do so. He submitted that this involved the Council's owing the plaintiff a duty of care in determining the Development Application and, assuming that duty was owed, a breach by the Council of it by granting consent to the very development which the plaintiff sought. 191 At the forefront of this argument was the submission that Mr Rayment accepted that there was no prohibition upon building on land within the Risk Reduction Zone. Therefore, save in the circumstances where the Council may have acted in an irrational or entirely improper manner, it was open to it to grant that consent and, in my view, it was not negligent in doing so. The Council's negligence was anterior, namely its failure to advise Evenvest of the problems and, had it done so when, in my opinion, it should have, the plaintiff never would have purchased the land. In the circumstances, and essentially for the reasons to which I have already referred, the plaintiff must fail on its secondary claim. 192 The next matter considered by Mr Tobias was whether the Council's conduct was misleading and deceptive pursuant to ss.52(1) and 53A of the Trade Practices Act 1974 and the equivalents of the Fair Trading Act 1987, reliance being placed upon s.51A of the Trade Practices Act and s.41(1) of the Fair Trading Act. 193 For the purposes of the former Act, and relevantly for present purposes, a "corporation" is defined as "a trading corporation". A "trading corporation" is defined as meaning a trading corporation within the meaning of paragraph 51(xx) of the Constitution. 194 In Mid Density Development Pty Limited v Rockdale Municipal Council (1992) 79 LGERA 30 the applicant developer sought damages from the Council based primarily upon false statements contained in three certificates issued pursuant to s.149. The claim relied upon the common law causes of action of negligence and deceit and upon ss.42 and 52 of the Fair Trading Act and the Trade Practices Act respectively. The Council issued a certificate answering in the negative the question whether it had information, which would indicate that the land was subject to the risk of flooding or tidal inundation. 195 When an application for development approval was made the Council required an elevated floor level because of potential flood levels. 196 At p.35 Davies J applied the test as to whether a corporation is a trading or financial corporation stated in R v Judges of Federal Court of Australia; ex parte Western Australian National Football League (Inc) (Adamson's case) (1979) 143 CLR 190 and State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282. 197 His Honour adopted the majority judgment of Mason, Murphy and Deane JJ, in the latter case, at p.304:- "Secondly, the judgments of the majority in Adamson make it clear that, in having regard to the activities of a corporation for the purpose of ascertaining its trading character, the Court looks beyond its 'predominant and characteristic activity' (cf p.213 per Gibbs J). Barwick CJ spoke of making a judgment 'after an overview of all the corporation's current activities', the conclusion being open that it is a trading corporation once it is found that 'trading is a substantial and not a merely peripheral activity'. Mason J said that it 'is very much a matter of fact and degree' having earlier stated that the expression is essentially 'a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation'. Murphy J said 'As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation'. Indeed, it was essential to the majority's approach and to the rejection of St George that a corporation whose trading activities take place so that it may carry on its primary or dominant undertaking, e.g., as a sporting club, may nevertheless be a trading corporation. The point is that the corporation engages in trading activities and these activities do not cease to be trading activities because they are entered into in the course of, or for the purpose of, carrying on a primary or dominant undertaking not described by reference to trade. As the carrying on of that undertaking requires or involves engagement in trading activities, there is no difficulty in categorising the corporation as a trading corporation when it engages in the activities. Indeed, we would go on to say that there is nothing in Adamson which lends support to the view that the fact that a corporation carries on independent trading activities on a significant scale will not result in its being properly categorised as a trading corporation if other more extensive non-trading activities properly warrant its being also categorised as a corporation of some other type." 198 At p.305 their Honours considered the words "financial corporation", noting that they were not "a term of art" and that they did not have "a special or settled legal meaning". 199 Davies J then considered whether the Council's trading or financial activities formed a sufficiently significant proportion of its overall activities to justify its description as a trading or financial corporation. His Honour compared the relationship between the activities relied on and the overall activities of the corporation "and the extent of those activities in comparison to the extent of the corporation's activities overall are relevant". He considered that the Council was typical of municipal councils, in that it concerned itself with matters of local government; that there was no evidence that it carried on trading activities under Part XVII of the Local Government Act; and that most of its revenue was derived from rates, garbage levies and the rent from properties which it owned. He assumed that fees may be charged at its lending libraries, its tip and the like and he set out the income as disclosed in the 1990 Annual Report. 200 His Honour referred to the fact that many of the fees were derived from activities other than business or trading activities, such as for s.149 certificates, which he said did not constitute a trading activity but the performance of a statutory duty in respect of which the Act permitted the charging of fees. 201 After considering various submissions as to its trading activities, his Honour concluded that he "would not describe Rockdale as a trading corporation. Its trading activities as a whole seem to me to be too insignificant in relation to the totality of Rockdale's activities to confer the requisite character". 202 He then turned to consider the submission that the Council was a financial corporation. He concluded that such activities as could be so described:- ".. are too minor and too much an integral part of local government to confer upon Rockdale the character of a financial corporation." 203 He was also of the opinion that the Council did not engage in trade or commerce, the purposes and activities in furnishing certificates under s.149 conferring:- ".. no character upon the conduct of Rockdale in performing its statutory duty: see Concrete Constructions (NSW)Pty Limited v Nelson (1990) 169 CLR 594." 204 His Honour also came to the view that as s.42 of the Fair Trading Act required that the challenged action be conduct in trade or commerce, that section did not apply. 205 In J.S. McMillan Pty Limited & Ors v Commonwealth of Australia (1997) 147 ALR 419 at p.436-437 Emmett J said:- "The Commonwealth contended that, in providing those services, AGPS was undertaking functions which are inherently functions of government such that they cannot be considered a trading activity, much less carrying on of a business: see eg Mid Density … Clearly, there is a distinction between those functions of a government which are purely governmental or regulatory and those functions which entail the carrying on of a business. However, that contention appears to confuse the two aspects of the Commonwealth's involvement in the package 3 services. In so far as the Commonwealth, in the guise of the Department of the Senate, the Department of the House of Representatives and other departments, utilises the services provided or procured by AGPS, it does so in the carrying out of governmental functions. It could not be said that the Commonwealth in those guises is carrying on a business. It is acquiring the services systematically and regularly, but only for the purposes of governing." 206 In an attempt to establish that the Council was carrying on a business Mr Rayment tendered Exhibit AC, which showed that in 1993 and 1994 respectively the Council derived income from total rates and extra charges of $13,690,000 and $6,578,000 respectively and from user chargers of $2,951,000 and $2,110,000 respectively. The $2,951,000 being from an item headed "Other" and the $2,110,000 being from $519,000 for waste management charges and $1,591,000 from "Other". 207 There was no evidence as to what "Other" related to. It was not established that the Council was acting in a way which would constitute it a trading or financial corporation, or that it was engaging in trade or commerce. 208 The evidence does not satisfy that the activities were sufficiently significant or substantial as to confer the character of either trading or financial upon the corporation and, essentially for the reasons to which his Honour referred, I am not satisfied that the issue of the certificates, the writing of the letter of 10 December 1993 or the statements by Mrs Cuthbert were matters conducted in trade or commerce. In these circumstances I am of the view that the claims under the Trade Practices Act and the Fair Trading Act must fail. 209 In the result I am satisfied that the s.149 certificate, the letter of 10 December 1993 and the conversation with Mrs Cuthbert each constituted negligent mis-statements in breach of the Council's duty of care, that in consequence Evenvest and Jazabas entered into the contracts, and that they would not have done so but for those mis-statements.

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Damages 210 The plaintiff's primary case, which, in my opinion, is the only one on which it can succeed, is that had the Council advised it of the RAS and the Risk Reduction Zone, as it should have, it would not have purchased the land. Rather it would have pursued other development operations and utilised capital, which it could have acquired, and the time of its directors in the pursuit of those operations from which it would have derived profits. This was the course which Mr Haigh and Mr Kikiras had followed over a number of years and, it was submitted, they would have continued to pursue it through the plaintiff and the plaintiff would have derived profits therefrom. However, because of the Council's negligent statements, the plaintiff entered into the contract, and, by doing so, tied up loan funds and the time of Mr Haigh. That deprived the plaintiff of those funds and that time, which otherwise would have been used on othere projects. 211 The submission was that there was a large amount of suitable land available for the development of dual occupancies; that this would have been availed of by the plaintiff; and that the plaintiff would have had the opportunity of deriving profits from these activities, which it lost by entering into the contract. Mr Rayment accepted that as a profit was made from the eventual sale of the land, the more accurate way of putting the case was that the plaintiff would have achieved greater profits, and he accepted that the profit made on the sale of the land had to be deducted from any damages for loss of opportunity to which the plaintiff is entitled. 212 There were large areas of dispute as to the extent to which these other developments would have gone forward particularly having regard to the arising of extremely strained relationships between Mr Haigh and Mr Kikiras and the inability, at a later stage in respect of land bought after 31 March 1998, to develop subdivided dual occupancies in the Municipality of Randwick. There was also a dispute as to the type of development which could be used as a model or benchmark for the developments the plaintiff would have undertaken. Finally, there was a very real issue as to the accuracy and veracity of the profit figures, which were essentially prepared by Mr Haigh. Mr Hughes, the plaintiff's accounting expert, did not audit these figures, but assumed their correctness and, on that assumption, constructed his asserted measure of damages. 213 The plaintiff, therefore, asked the Court to hypothesise on what it would have done, but for the Council's negligence and, further, as to what profit it would have derived by so acting, and thus to follow the principles laid down in cases such as Malec v J.C. Hutton Pty Limited (1990) 169 CLR 638, Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 and Tszyu v Fightvision Pty Limited & Anor (1999) NSWCA 323. The submission was that the negligent mis-statement had led to the entry into the contract which otherwise would not have been entered into, of which I am satisfied, and this was causative of the type of loss for which the plaintiff now sues it being reasonably foreseeable that if a commercial developer, as it must have been obvious to the Council the plaintiff was, would, if not bound by this contract, have acquired and developed other land. 214 The Council sought to meet, in its written submissions this claim for damages thus:- "6.1.1 The plaintiff claims damages for the loss, said to arise out of the negligence of the Council, of the opportunity to apply funds and its borrowing capacity, for projects other than the subject property. In essence, the claim is based upon the assumption that, but for the purchase of the subject land, the plaintiff could, and would, have directed its business activities to other property development ventures which would have resulted in the plaintiff earning profits it was otherwise deprived of. 6.1.2 Such damages were only available to the plaintiff if it can successfully demonstrate that, but for the Council's negligence, it could and would have entered into a contract or contracts for which it would have received a material benefit or profit: see Gates v City Mutual Life Assurance Society Limited (1985) 160 CLR at 13; and see also Sellars … at 350 to 353. 6.1.3 Moreover, it is clear that the plaintiff's claim for damages is centred upon the loss of a chance to apply its funds, borrowing capacity and the efforts of its directors to projects other than the development of the subject land to which it was committed until at least August 1999. In assessing that loss of a chance, whilst the Court's role is not directed to establishing with precision the extent of that chance as a quantum of probability, it is nonetheless to take into account the uncertainty of future events and the prospect that the chance would not have been realised at all, or only in part: see Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 at 92, 104-105, 118-119. 6.1.4 Whilst, in the normal course of that assessment, the Court is entitled to take into account exigencies of business practice affecting the quantum of the 'chance', in the circumstances of the present case certain, important, elements exist to demonstrate that the chance claimed by the plaintiff was slight. These factors also serve to reduce the quantum of the 'profits' referable to the Council's alleged negligence even if the Court is of the view that the chance claimed by the plaintiff was otherwise than slight."

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The submissions then proceeded to consider the extent of the chance. 215 In the submissions in reply the Council adopted the same posture, it not being suggested in those submissions that if it was found guilty of negligence that was not causative of the loss it sought to claim, nor that the loss was not foreseeable. 216 The plaintiff accepted that it could not recover the full amount of what it "probably" lost, as the Court must reduce that, consistently with the decisions to which I have referred, to take account of vicissitudes "and the like". 217 In the light of the way in which the submissions were presented, I think it desirable to re-visit certain of the authorities. 218 In Gates Mason, Wilson and Dawson JJ said, at p.13:- "Because the object of damages in tort is to place the plaintiff in the position in which he would have been but for commission of the tort, it is necessary to determine what the plaintiff would have done had he not relied on the representation. If that reliance has deprived him of the opportunity of entering into a different contract for the purchase of goods on which he would have made a profit then he may recover that profit on the footing that it is part of the loss which he has suffered in consequence of altering his position under the inducement of the representation. This may well be so if the plaintiff can establish that he could and would have entered into the different contract and that it would have yielded the benefit claimed: cf Esso Petroleum Co Limited v Mardon ; Doyle v Olby (Ironmongers) Limited . The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation. In this respect the measure of damages in tort begins to resemble the expectation element in the measure of damages in contract save that it is for the plaintiff to establish that he could and would have entered into the different contract." 219 If I may adapt the words to the present case, the question is whether the plaintiff's reliance on the misrepresentation deprived it of the opportunity of entering into other development contracts from which it would have made a profit, such loss being referable "to opportunities foregone" by reason of such reliance. 220 At p.15, after considering the particular position of the appellant, their Honours said:- "This conclusion involves no element of injustice to a plaintiff who is entitled to damages reflecting the loss of benefits he would have obtained under a contract which he could and would have entered into but for his reliance on the contravening conduct of the defendant. Of course he must prove such loss but there is nothing unfair in requiring him to do so." 221 In Malec the Court drew particular attention to the manner in which damages should be assessed, once liability was established, in respect of events:- ".. that allegedly would have occurred, but cannot now occur, or that allegedly might occur ..": per Deane, Gaudron and McHugh JJ at p.642.

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Their Honours distinguished the approach to that from the approach to events "which allegedly have occurred" and, at pp.642-643, continued:- "A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9% - or very low - 0.1%. But unless the chance is so low as to be regarded as speculative - say less than 1% - or so high as to be practically certain - say over 99% - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51% probability of occurring, but to ignore altogether a prediction which has a 49% probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded. See Mallett v McMonagle ; Davies v Taylor ; McIntosh v Williams . The approach is the same whether it is alleged that the event would have occurred before or might occur after the assessment of damages takes place." 222 The present case is one in which it is alleged that, but for the negligent mis-statement events "would or would not have occurred", namely the contract to purchase the land would not have been entered into and other contracts would have been. Once I am satisfied that the probability of this occurring is not as high or as low as their Honours suggested, and where the proof is necessarily unattainable, because the actions were and were not taken, the duty is to assess the degree of probability as to what would have occurred and to adjust the award of damages to reflect that. 223 In Sellars, Mason CJ, Dawson, Toohey and Gaudron JJ noted that the primary question was whether, in the circumstances of that case, loss of an opportunity to obtain a commercial advantage or benefit amounted to loss or damage within s.82(1) of the Trade Practices Act. Having stated that question at p.339 their Honours continued, pp.339-340:- "Is it necessary for the applicant to prove on the balance of probabilities that a benefit would have been derived from the opportunity had it not been lost and, if so, the extent of that benefit? Or is it sufficient for the applicant to show, not on the balance of probabilities but by reference to the degree of possibilities and probabilities, that there were some prospects of deriving a benefit from the opportunity had it not been lost and, if so, then to ascertain the value of the opportunity or benefit by reference to such possibilities and probabilities? The question whether the applicant has sustained loss or damage is necessarily related to the ascertainment or measurement of that loss or damage." 224 At p.343 their Honours referred to the loss pleaded and particularised, save for one exception, as being the loss of an opportunity and to the decision in Gates and, at p.348, they said:- "In the context of contraventions of s.52(1) in the form of misleading conduct constituted by misrepresentations, acts done by the representee in reliance upon the misrepresentations amount to a sufficient connection to satisfy the concept of causation and, if those acts result in economic or financial loss, it will ordinarily be recoverable under s.82(1). So, in a case such as the present, the applicant is entitled to recover 'a sum representing the prejudice or disadvantage [the applicant] has suffered in consequence of his altering his position under the inducement'. The prejudice or disadvantage which the respondents suffered in the present case was the loss of the opportunity or chance of securing commercial benefits which entry into the Pagini agreement and completion of it would have brought. The lost opportunity or chance, assuming it to have value, is a form of economic loss. The question, is: how is the value of that lost opportunity or chance to be measured?"

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That conclusion followed from an earlier passage on p.355:- "Notwithstanding the observations of this Court in Norwest , we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s.52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognised in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and post hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind." 228 At p.368 Brennan J said:- "Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities. A constant standard of proof applies to the finding that a loss has been suffered and to the finding that that loss was caused by the defendant's conduct, whether those findings depend on evidence of historical facts or on evidence giving rise to competing hypotheses. In any event, the standard is proof on the balance of probabilities. Although the issue of a loss caused by the defendant's conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation." 229 In Tszyu the Court of Appeal, albeit in a case involving breach of contract, applied the principles referred to in Malec, Amann and Sellars and, at paragraphs 140 and 141, where they were considering the future boxing potential of Mr Tszyu, their Honours said:- "140. It would have been erroneous to apply a balance of probabilities test for the programme and the earnings, treating as certain the past hypothetical events of promotion or co-operation by Fightvision of bouts in which Mr Tszyu participated and earnings from those bouts as put forward in the evidence of Mr Mordey if satisfied on the balance of probabilities that those events would have occurred. That would have then been unfair to the defendants, because it would have treated as certain a prediction of events with a 51% probability of occurring. It would equally have been unfair to Fightvision to have ignored the events altogether, and so awarded no damages, if the prediction of their occurrence was given only a 49% probability. The correct approach, given the causation of loss was not in issue and the task was to assess the damages for loss of a commercial opportunity of promoting or co-promoting fights in which Mr Tszyu participated, was according to the degree of possibility or probability of such bouts occurring and bringing earnings as claimed. 141. It is not essential, however, in making an assessment of damages of this kind to express a percentage possibility or probability of the occurrence of the events necessary for the claimed lost profits, here the number of fights and the amounts of earnings." 230 In Hungry Jack's Pty Limited v Burger King Corporation & Anor (1999) NSWSC 1029, having quoted and adopted those passages, I said, at the conclusion of paragraph 613:- "Paragraph 141 was said in the context of the findings by the trial Judge in that case. Their Honours were not suggesting, as I understand it, that such an approach was not permissible. Indeed, in many cases, it is the test traditionally applied."

[61]

I then referred to their Honours' consideration of Norris v Blake (No 2) (1997) 41 NSWLR 49 in which percentages were adopted. It is my understanding that their Honours approved what was said in that case. 231 In Marks v GIO Australia Holdings Limited (1998) 73 ALJR 12 at paragraph 48 in the joint judgment of McHugh, Hayne and Callinan JJ, their Honours said:- "A party that is misled suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted. Thus, the party that is misled will have suffered loss if a chose in action which was acquired was worth less than the amount paid for it. There may well be other ways in which it might suffer loss or damage. For example, consequential loss may be suffered. But no loss of that kind was alleged in this case and, putting that kind of loss to one side, we focus only on loss said to be suffered by the making of the contract." 232 The Council did not advance a case, for reasons which I think are clear, to the effect that the plaintiff took a business decision to purchase the land and, thereafter, without knowledge of the RAS and the Risk Reduction Zone until late 1997, or at the latest March 1998, continued to develop the land by obtaining Development Approval. Subsequently, having learned of the RAS and the Risk Reduction Zone, the plaintiff retained the land, sought to obtain Building Approval and, having failed to do so, still retained the land. It was only at the behest of the Council that Building Approval was granted and, thereafter, the plaintiff sold the land. It occurred to me that the Council may have asserted that the plaintiff decided to proceed with this development and, ultimately, to sell the land at a profit so that it could not now say that it would have undertaken other projects. The reason, I assume, why no such case was put was that the plaintiff's basic allegation was that it would never have entered into the contract to purchase the land but for the negligent representations. 233 The plaintiff also claimed exemplary damages on the basis that it has demonstrated that the Council acted consciously in contumelious disregard of its rights by failing to advise in 1993 of the true position and, thereafter, by not rectifying the matter. It was submitted that the Council "strung along" the plaintiff and "apparently desired not to rock the boat by telling the plaintiff the truth". 234 The plaintiff has pointed to the remarks of the Mayor in 1998 showing that the Council was merely waiting for another excuse to put an end to the development proposed by the plaintiff; to the failure by the Council to call any evidence to explain its conduct in terms which would militate against an award of exemplary damages; and to the extraordinary behaviour of the Council in appealing from its own successful determination of the Building Approval:- "And procuring a different result from a Judge of the Land & Environment Court while exposing potential purchasers of the land to severe health risks …"

[63]

Damages For Lost Opportunity 235 The parties' approach to the assessment of damages for loss of opportunity, at least so far as the appropriate legal principles are concerned, showed little difference. However, the Council submitted that in the circumstances of this case certain important elements existed to demonstrate that the chance claimed by the plaintiff was slight, so as to reduce the quantum of the profits referable to the Council's alleged negligence "even if the Court is of the view that the chance claimed by the plaintiff was otherwise than slight". 236 The Council identified the following factors as militating against the claim for damages, namely the commencing and ending of the loss period; the nature of the future developments; the proportion of the plaintiff's role to that of the "group"; the conservative approach to development; the falling out between Mr Haigh and Mr Kikiras and the possible winding up of the plaintiff; the worth and liquidity of the plaintiff; the validity of the losses claimed; the proper project benchmark; the plaintiff's profit loss; and the reduction of losses by the sale of the land. In relation to the last mentioned point, Mr Rayment's written submission of 11 February 2000 said:- "The plaintiff will not, of course, seek to recover the amounts in Schedule 3 to Mr Hughes' Report as part of its damages, to the extent to which they are taken into account in establishing the credit to be given to the net amount received from the sale of the property, as submitted in paragraphs 33-35 of the plaintiff's further reply to the defendant's written submissions." 237 The Council also submitted that, notwithstanding the matters to which I have referred, a barrier to the plaintiff's claim in its entirety is the credibility of its case based, in the main, on the evidence of Mr Haigh. The submission continued that all calculations of loss are referable to schedules of costs, expenses and profit assessments with respect to completed projects prepared by Mr Haigh, and claims by him as to the conduct of a dual occupancy property development business in the alternative to the carrying out of the proposed development project on the land. It was submitted that Mr Haigh's credibility, in so far as he asserted the capacity to develop projects as an alternative to that proposed for the land, was seriously affected by various evidence he gave. 238 Firstly, reference was made to a development at 52 Carnegie Circuit. In paragraph (g) on page 9 of Exhibit AB, which was a statement by Mr Haigh in response to that of Mr G.C.A. Gower, the expert accountant called by the Council, Mr Haigh said that this development was not a fair representation of the plaintiff's future trading activity because it was done before he ascertained a method of dual occupancies by which two separate houses would be built on the same building alignment and subdivided into two lots; because the property was in the form of a battleaxe development; and because the houses were single storey brick veneer developments, whereas other developments by the plaintiff were double brick and two storey. 239 Mr Haigh conceded, Tp.123, that the reason that he had given in sub-paragraph (g) on page 9 did not include the absence of a sufficient street frontage and that there was no doubt that the reason given in sub-paragraph (g)(i) was false. He sought, subsequently, Tp.124, to say that it was inaccurate. He said also on Tp.124 that he had not done an exercise as to the profit, if any, made from that site and that had a profit been made ".. it would not have been in the parameters of the profits that we made at 32 Menin Road ..". 240 The significance of 32 Menin Road is that it was the benchmark against which the plaintiff sought to assess damages. 241 Mr Tobias submitted that 52 Carnegie Circuit was deliberately excluded by Mr Haigh from his schedule of properties in Exhibit AD notwithstanding that he did not exclude from that schedule 5 Wassell Street and 8 and 10 Nyan Avenue, each of which, as with 52 Carnegie Circuit, were attached dual occupancies and, therefore, not subdivisible due to the land being less than 600 square metres in total size. 242 Mr Tobias nextly referred to 10 Nyam Street, which was referred to by Mr Haigh in Exhibits AB and AD, and, notwithstanding its purchase in April 1995, for the purpose of calculating its profit Mr Haigh adopted a March 1999 valuation. He agreed, however, that the property was developed by about Christmas 1995 and that if it had been put on the market then it would have sold early in 1996 and would not have had the valuation of $730,000 ascribed to it three years later: Tp.138. Mr Haigh said he had not done an exercise in relation to that property upon the assumption that it was sold in January 1996 and that had he it would have shown a significantly less profit than that shown at paragraph 175 of Exhibit AD. 243 At Tp.139, Mr Haigh agreed that he referred to 10 Nyam Street as an example of a dual occupancy that would have given an approximate net profit of $279,000, and:- "Q. Which you have withdrawn because you accept that that would be quite misleading? A. When I looked at it on Monday it was just too broad - yes, misleading. Q. Yet you have, of course, in the document which is the schedule to Exhibit AD, you have included as examples of the sorts of profits that you might make, had you not acquired Nilson Road, you have put in there properties that you have acquired but not developed; correct? A. It is the just the 8 Nyam." 244 At Tp.145 Mr Haigh was referred to his evidence that 52 Carnegie Circuit was not a fair representation because, inter alia, the houses were a single storey brick veneer development, whereas other developments by the company were double brick and two storey. 245 Mr Haigh's evidence became somewhat confused when he was confronted with the question as to what steps the plaintiff would have taken but for the purchase of the land. At Tp.147 he said:- "If we hadn't bought Nilson Avenue who is to say that we would have done Austral Street. What if we hadn't bought Nilson Avenue and gone on to the scenario that we are putting forward all of these developments. Most - there is only three developments that we have done that would have been done with any certainty and that is obviously 32 Menin Road; 34 Menin Road we would have definitely done; plus our property at Mawson Parade. What I put forward here is that this is an example. These are examples of dual occupancies and displaying that we went out and we did. And where we were going to do. A lot of dual occupancy. This is the market we were looking at. As our financial constraints got worse and got worse, we just had to pick the best we could. That's why I would not agree that everything hereafter is typical or a good example in place of Menin Road as to what we could have done. Q. Are you suggesting that if you hadn't bought Nilson Avenue you would not have bought 34 Austral Street Malabar? A. I have no idea. Q. You are not suggesting that, are you? A. Yes, I am, absolutely. Q. So, the answer to my question is that you are suggesting that if you hadn't bought Nilson Avenue you would not have acquired 34 Austral Street? A. Had the timing been right and that particular property at the time in your financial scenario, whatever we were at the time, we would have most definitely considered the purchase of 34 Austral Street."

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Thereafter his evidence became somewhat more disjointed as to what would have happened, but, significantly for present purposes, is the evidence that there were only three developments which would have been done "with any certainty", namely 32 and 34 Menin Road and Mawson Parade. The premises at Mawson Parade are the residence of Mr and Mrs Haigh. 246 Mr Tobias drew attention nextly to the statement in paragraph 170 of Exhibit A1 that the escalating holding costs had been met from increased borrowing and directors' resources "as well as absorbing the following gross trading profits of Jazabas", which were for the financial years ended 30 June 1995, 1996 and 1997, $50,291, $9,180 and $101,788 respectively. However, at Tp.136, Mr Haigh agreed, after being shown the accounts, that for the financial year ended 30 June 1996 there was an operating loss of $72,290.76 and for the financial year ended 30 June 1997 a pre-tax operating profit of $42,153.23, no tax being payable as that was absorbed by the loss from the previous year. 247 In his written submissions Mr Tobias referred to a number of matters in which he suggested that Mr Haigh's evidence was contradictory, inherently inconsistent, comprised unresponsive answers and evasion, and was contrary to the objective facts. Mr Tobias drew particular attention to his evidence, which he submitted was unsatisfactory, in relation to the reasons for the dissolution of Evenvest. 248 Whilst I accept Mr Haigh's evidence in relation to the reliance placed upon the representations in leading to the purchase of the land, on the issue of damages, combined with certain other evidence such as the reasons for the dissolution of Evenvest, his evidence was less satisfactory. The main corroboration it received was from the objective facts of the activities Mr Haigh had carried out before the land was purchased and from the time of purchase to the date of the hearing. 249 Mr Tobias then turned to the commencement of the loss period. For the reasons I have given I consider that that arose at the time the settlement of the land was concluded in late June 1994, although what happened in 1994 and 1995 operates to reduce the loss. 250 It is also convenient, at this point, to deal with the further question, namely that Mr Haigh sold the land, rather than developed it, for "moral" reasons. These reasons were that he thought it inappropriate that the plaintiff should develop the land if, by doing so, it was creating housing, which may cause serious injury or loss of life to future occupants. In my view, whilst this reason has obvious attraction, it does not accord with the facts or the probabilities. Firstly, Mr Haigh was aware of the RAS and the Risk Reduction Zone by late 1997, although he did not have a full awareness of it until March 1998. If the moral issues had been of such significance to him, it seems to me that he would then have sold the land. He attempted to overcome this problem in several ways. He asserted that he wanted to sell the land to the Council and that letters offering to do so were written. There is no evidence of any such correspondence and, certainly, there is no evidence of the matter being pursued with any vigour. He asserted that by March 1998 the appeal against the deemed refusal of the building application was about to be heard. He decided that the plaintiff should pursue that appeal, in which it was unsuccessful. However, there was no attempt to sell the land at that stage, i.e. after the dismissal of the appeal, and no satisfactory explanation was advanced for this failure. It was not until Building Approval had been granted that the land was sold, the obvious inference being that it was sold at a time when the plaintiff had maximised its value in its hands and after it had taken a commercial decision to sell it with the benefit of the various approvals. This was consistent with his solicitor's letter to Metway Bank to which I have referred. 251 I do not say this critically of the plaintiff and, indeed, there was an obligation on it to mitigate its damages, a point which had been made very forcefully to it by the legal representatives for the Council. None-the-less, this course sits uncomfortably with the suggestion that moral considerations operated on the decision-making process. In my opinion the more plausible explanation is that the decision was taken to maximise the value of the land, although one must not overlook the fact that the land was held from the time the appeal against the deemed refusal of the Building Application was dismissed until the Council initiated the proceedings which overturned that decision, there being no suggestion that Mr Haigh was involved in or acquiesced in the taking of that decision. In other words the land was simply held, perhaps in the hope that something would happen which increased its worth. Alternatively, it may be that by this time the decision to start legal proceedings had been taken. 252 In my view, the real reason was that the land was held for as long as possible in the hope that in some way it could be developed or disposed of most advantageously to the plaintiff. Ultimately, it was sold because of the financial difficulties the plaintiff was experiencing, such as to make that the only reasonable decision to take. However, having said that, it is to be borne in mind that the plaintiff is not claiming damages, and Mr Rayment expressly disclaimed any such basis for the award of damages, for the delay in the Council's obtaining the various approvals. 253 Mr Tobias referred nextly to the end of the loss period, noting that the plaintiff's claim to damages is focused upon SEPP 25-type dual occupancies which could be subdivided "and not otherwise". 254 Such developments could only be achieved on parcels of land in excess of 600 square metres in area with a street frontage of not less than 60 feet. As I have said the benchmark property used by Mr Haigh was 32 Menin Road and development of the type to which I have just referred was not permitted in respect of land for which a Development Application was not lodged on or prior to 31 March 1998 within the Municipality of Randwick. In paragraph 178 of Exhibit A1 Mr Haigh said he searched the Development Application Register of Randwick Council for all dual occupancies lodged from June 1993 to 31 March 1998:- ".. when Randwick ceased to accept Dual Occupancy development applications that would allow any form of subdivision of the development." 255 At Tpp.125-126 Mr Haigh was referred to this paragraph, which he said precluded subdivided dual occupancies, although he then said that he was interested in dual occupancies, which could not be subdivided. He continued:- "Q. Listen to my question. Nowhere in your evidence or in your claim for damages have you sought to claim damages based upon dual occupancies other than of the 32 Menin Road variety. That's correct, isn't it? A. That is correct, yes. Q. The date 31 March 1998 required that if you were going to do a dual occupancy of the type that you say would have been done had you not acquired Nilson Road, the development application had to be lodged with the Council on or prior to that date? A. That's correct." 256 At Tp.127 he agreed that if the land had not been acquired and advantage was to be taken of the dual occupancy, which formed the basis of the claim for damages, he would, at least, have had to have entered into contracts to acquire relevant properties prior to 31 March 1998. 257 The difficulty with this evidence, from the plaintiff's point of view, is that the plaintiff sought to restrict the area of its damages to developments of the type carried out at 32 Menin Road. Realistically, it seems to me, that had that type of development not been available the plaintiff would, as a matter of probability, have undertaken other types of development. Mr Haigh gave such evidence, but the problem for the plaintiff is that it has not sought to quantify damages on any other basis either to 31 March 1998 or thereafter. 258 Mr Tobias nextly submitted that I could not confidently assume that the plaintiff would not have ventured beyond subdivisible dual occupancies from mid-1994 onwards. The submission was based on the fairly simple proposition that the purchase of the land indicated that if some other form of development presented itself, which appealed to both Mr Kikiras and Mr Haigh, it may well have been pursued as the proposed development on the land was. Therefore, even if the land had not been purchased other land with the potential for the development of medium density residences may have been and, if it had been, this could have led to other problems both in relation to obtaining Development and Building Approval and in respect of the amount of finance needed to carry out the development. The thrust of this submission, as I understand it, is that in looking at the vicissitudes the Court must take into account the prospect that the plaintiff would have diverted from its fairly well established method of development into something more adventuresome with the prospect that that would not have proved profitable. The matter was put by Mr Tobias in submission thus:- "In other words, the plaintiff's case that it would only have acquired and developed subdivisible dual occupancy properties needs to be discounted by the possibility that it may have found and acquired and pursued another Nilson Avenue type project." (Mr Tobias' emphasis.) 259 Mr Tobias made submissions concerning the proportion of the plaintiff's role to that of the Group, submitting that the evidence on the quantum of damages ignored the plaintiff's corporate veil and looked rather at the group of companies as a whole. He pointed out that the plaintiff is the only party entitled to an award of damages, that it does not sue on behalf of any other person or entity, and that the Court's role is to assess properly what proportion, if any, of the total damages claimed by the plaintiff is "truly referable to the loss suffered by" it. 260 He set out the various entities and parties in the Group and referred to the fact, as I am satisfied it was, that the choice of the purchaser for any particular development was a commercial one made by Mr Haigh from time to time. Therefore, he submitted, it could not be assumed in the plaintiff's favour that it would be the developer in every instance of a subdivisible dual occupancy. 261 Mr Tobias pointed to the fact that Mr Haigh, whom he said was the cornerstone of all developments, adopted a conservative approach and was adverse to risk-taking. Obviously Mr Haigh was central to the operation of the various entities. Mr Haigh agreed he was a careful and conservative man: Tp.178, and there was evidence that, generally speaking, one development was done at a time with little overlapping. 262 In my opinion this indicates the general basis on which Mr Haigh allowed the developments to go forward and was consistent with both a careful and conservative approach and with his not overstretching, through whatever vehicle was used, the financial position. 263 In considering damages Mr Tobias referred to the falling out between Mr Haigh and Mr Kikiras, which led to an application being made to wind up the plaintiff. This, obviously enough, would have impeded the operations of the plaintiff, and, if the dispute had not been resolved, terminated them. The dispute commenced in about September 1995 and continued for a substantial period. On 24 December 1996 Mr Haigh swore an affidavit in the winding up proceedings of Jazabas which arose, apparently, because of a dispute between Mr Haigh and Mr Kikiras' brother with respect to a project undertaken for him by BAS. Mr Tobias submitted that for several reasons the problems between the two would have arisen irrespective of the difficulty being experienced with the land. He submitted that in truth the dispute had nothing to do with the land but with proposed dual occupancies and, accordingly, it would have applied to the assumed or actual trading activities of the plaintiff "with the consequence that their relationship would have been fractured at least by June to August 1996 and they would have gone their separate ways". 264 Mr Tobias dealt at some length with the worth and liquidity of the plaintiff. He pointed out that it had no material worth, but was reliant upon the provision of funds from elsewhere to support its purchases of land and building activities. This necessitated security being given not only over the property being developed but also by way of directors' guarantees, although Mr Tobias submitted there was no evidence from Mr Kikiras that he would have continued to provide his house as security for his personal guarantee or that he would have continued to provide that guarantee on which the borrowing capacity of the plaintiff depended. He also relied on the absence of any evidence from any bank officer or any officer of another financial institution to support the assumption that the finance contemplated by the plaintiff's expert, Mr Hughes, would have been available to the extent required or at all, and as to the terms thereof, and he pointed to the unavailability of Mr Haigh's personal residence to secure guarantees presumed by Mr Hughes to be available. He referred to the fact that the plaintiff operated at a loss for several financial years and questioned the validity of certain losses claimed as the "Schedule 3" amounts. 265 At paragraph 6.12 of his written submissions Mr Tobias considered the proper project benchmark, which he said was not 32 Menin Road. He compared the profit level of that project with other profit levels on other properties and said that it would therefore be inappropriate for the Court to assume that all projects undertaken by the plaintiff would have been at a level of profit generated by 32 Menin Road. He submitted the proper benchmark was 47 Mawson Parade, which an expert valuer, Mr Stamoulis, said was reasonably equal in terms of the market to 32 Menin Road. Mr Haigh also accepted it could have been used as a benchmark and in paragraph 187 of Exhibit A1, to which Mr Tobias originally objected and which I rejected, but upon which he now seeks to rely in part, Mr Haigh referred to various properties that would have been of interest to the plaintiff for two-block developments "similar to 32 Menin Road and 47 Mawson Parade ..". At Tp.155 Mr Tobias read portion of paragraph 187 to Mr Haigh and obtained his agreement to his equating those two properties, and:- "Q. That means, does it not, that it is just as valid to take your assessment of the profit for Mawson Parade as a benchmark as 32 Menin Road. Correct? A. Well, I don't agree with that and I believe that I have explained it earlier." 266 In fact Mr Haigh had not explained it earlier, having stated at Tp.142 that Mawson Parade was just as typical as 32 Menin Road, and:- "Q. It was just as valid a benchmark as 32 Menin Road for the purpose of the exercise Mr Hughes undertook, correct? A. Well, it has been included, yes. Q. Mr Hughes hasn't included it, has he? A. He hasn't used it. He has only used one benchmark."

[65]

Mr Haigh estimated the net profit from 32 Menin Road at $151,153, and that from 47 Mawson Parade at $86,550. Accordingly, if 47 Mawson Parade had been accepted the starting point for the calculation of damages would have been much less. 267 Mr Tobias referred to the plaintiff's approach to the loss being based upon lost profits rather than a cash flow approach, and submitted that such an approach is an inappropriate method of determining damages based on the lost opportunity to undertake projects. He cited two decisions of mine in Hungry Jack's Pty Limited v Burger King Corporation (1999) NSWSC 1029 and Global Network Services Pty Limited v Legion Telecall Pty Limited (1999) NSWSC 1090, in which, on the evidence presented, I adopted the cash flow approach. He submitted that the lost profit approach did not fully map the cash flow constraints and needs of a business and, in following it, no consideration was taken of borrowing capacity, which would fluctuate with respect to each property during the course of the project and the period. He submitted that the lost profit approach looks at the end profit, but does not reflect the cash flow needs of the project as it progresses, the fundamental difference between the cash flow approach, on the one hand, and the profit and loss approach, on the other, being that the former seeks to work out the funding capability. He submitted that the cash flow approach is appropriate when it is seen that Mr Haigh was able to conduct other business activities notwithstanding the purchase of the land, it appearing that other buildings were constructed after the purchase of the land. 268 Mr Tobias attacked a number of the assumptions made by Mr Hughes on the basis that they were unsupported by evidence. 269 Mr Rayment has dealt in detail, in his written submissions, with a number of the matters raised by Mr Tobias. He has submitted, firstly, that although subdivided dual occupancies were not possible after March 1998, other forms of dual occupancies were. In my view Mr Rayment is correct in submitting that the plaintiff would have continued, subject to some other matters to which I will have to refer, to carry on business notwithstanding the change in March 1998. 270 Mr Rayment drew a distinction between Menin Road and Carnegie Circuit. I think that is a valid distinction, but it does not necessarily meet the equation between Menin Road and Mawson Avenue. 271 Mr Rayment submitted that the corporate vehicle of choice for dual occupancy developments would have been the plaintiff and that the evidence of Mr Gower suggested that the basis upon which it has submitted that damages should be calculated is quite conservative. As I understand it Mr Gower did not dispute that notwithstanding the purchase of the land, Mr Haigh was still able to carry out three to four dual occupancy developments each year. At Tp.356 Mr Gower said:- "The capacity of Mr Haigh to conduct business activities generally is somewhat outside the scope of the quantum of loss that we have looked at here. What I have sought to determine is the quantum of loss as a consequence of not being able to complete Nilson Avenue and despite the problems with Nilson Avenue it is quite clear that Mr Haigh was able to conduct other business activities. Those do not go toward the question of how much resource was tied up, how much money was tied up, in Nilson Avenue, which could otherwise have been applied to conducting other activities." 272 On the same page he recalled that three properties, namely 20 Woomera Road, 5 Wassell Street and 34 Menin Road were developed in 1995. The return from 5 Wassell Street was estimated at a loss of $17,100 and the net profit from 34 Menin Road was estimated at $75,000. 273 Mr Rayment responded to the problems between Mr Haigh and Mr Kikiras by stating that they should be attributed to the purchase of the land and that there was no reason for thinking that there would have been any falling out but for that. I think that this submission is only partly correct. Certainly the pressures upon Mr Haigh and Mr Kikiras would not have been as great but for the purchase of the land. None-the-less, I consider that there was some tension there by reason of other matters to which Mr Tobias referred, and the extent to which the parties went, in seeking to have the plaintiff wound up, demonstrated a fragility in the overall relationship. It seems to me that I should approach this problem in part in assessing the vicissitudes, viz that partners do fall out from time to time, and in part by only allowing for the one development which occurred in 1996. In taking these approaches I must, however, as a matter of judgment, bear in mind that there are two financial penalties to the plaintiff. In doing so I do not propose to place as much weight upon the matter as Mr Tobias sought nor as little as Mr Rayment submitted. 274 In response to the submission that there was no evidence that Mr Kikiras would continue to provide the necessary security, Mr Rayment said that there was no need for such evidence because the hypothesis underlying Mr Hughes' calculations was that the plaintiff would have been building profitably about four projects a year. Had this occurred, he submitted, the logical conclusion would be that Mr Kikiras would, consistently with his own financial interests, have continued to guarantee the borrowing of money. 275 In response to the Council's submission as to the state of the plaintiff's balance sheet, Mr Rayment pointed, with substantial justification in my view, to the fact that it would have been different but for the plaintiff's having bought the land. At the moment damages are being assessed on the hypothesis that this would not have occurred. 276 In response to section 6.11 of the Council's submissions, Mr Rayment referred to the fact that at Tp.307 a handwritten schedule prepared by Mr Haigh was tendered and became Exhibit X. Mr Rayment then said that he offered to tender "that which appears on the Bar Table". Exhibit X was tendered without objection and Mr Rayment's invitation or offer to tender the documentation was not taken up. In these circumstances Mr Rayment has submitted, correctly in my view, that it is not open to the Council to make the submissions in section 6.11. 277 In paragraph 15, Mr Rayment dealt with paragraph 6.12.2 and noted that whilst 47 Mawson Parade may be comparable it has never been sold, so that the market has never been tested. Further, it is Mr Haigh's residence and was built differently for his occupation than it would have been if it had been bought and developed for sale. Mr Rayment submitted that the difference between Mr Gower's notional figure of $125,000 and the plaintiff's preferred figure of $151,000 came about from the inclusion in eight typical properties of 47 Mawson Parade by Mr Gower. 278 Mr Rayment responded to the submission that Mr Haigh had bid unsuccessfully for properties with a similar potential to 32 Menin Road, by submitting that this was in the context of the straitened financial circumstances in which the plaintiff found itself by virtue of its having purchased the land. I consider there is validity in this submission. 279 In answering paragraphs 6.13.1 to 6.13.3, in which Mr Tobias dealt with the loss of profits approach as distinct from the cash flow approach, Mr Rayment drew attention to the evidence of Mr Gower at Tpp.347-348. At Tp.348 Mr Gower said:- "A. Well I think that there are two issues, I mean if you say you don't need to get into the question of whether it is a profit question or a cash flow question, I think there are two issues. I think in terms of quantifying the loss of profits, profits will get you there, it will get you the same answer more or less as cash flow will get in this situation. I think where cash flow is quite significant in this particular case is trying to work out what the funding capability would have been and that is I think, the key distinction between the two in this situation."

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Mr Gower said that was not the view he was expressing and:- "No, what I say is the resources, if they are applied to Nilson Avenue, if they had been applied elsewhere, he could have developed one property a year out of those resources. I express no opinion about the resources which he applied to these other developments which had no bearing on the matter in question." 281 Mr Rayment agreed that the gross selling price of the land was $886,000. There were adjustments on settlement for rates, interest and discharge of mortgage costs totalling $2,560.33 giving a net sale price of $883,439.67. Additional costs incurred on settlement by the plaintiff amounted to $41,116.25, and an adjustment for the purchase and purchase costs including stamp duty and solicitor's costs gave a total of $353,727.40. Mr Rayment then referred to a number of adjustments and holding costs giving a total surplus on sale after adjustments of $54,296.95, and acknowledged that this should be deducted from the amount contained in the conclusions of Mr Hughes in Parts 1 and 2 of Exhibit M5. Mr Tobias had initially contended for a higher figure. However, there was no final submission challenging that for which Mr Rayment contended and, subject to leave to re-open, that is the amount I propose to deduct. 282 In Exhibit AE Mr Haigh deposed to the fact that in 1994 three new dual occupancy projects were commenced at 32 Menin Road, 52 Carnegie Circuit and 47 Mawson Parade. All were completed, the latest being in February 1995. In 1995 three new dual occupancy projects were commenced at 29 Woomera Road, 5 Wassell Street and 34 Menin Road, being completed in September and November 1995 and June 1996 respectively. In 1996 one new dual occupancy was commenced in October. In 1997 two new dual occupancy projects were commenced at 55 Hastings Parade, which was completed in October 1997, and at 10 Nyam Street, which was completed in December 1997. In 1998 one new dual occupancy project was commenced at 34 Austral Street and it was completed in March 1999. No new dual occupancy projects were commenced in 1999. 283 It was Mr Haigh's evidence that if the land had not been acquired in 1994 a fourth dual occupancy project would have been undertaken in that year, 29 Woomera Road would not have been built for Mr Kikiras' brother, but rather a total of four new dual occupancy projects would have been commenced in 1995, in addition to the one commenced in 1996 three other dual occupancy projects would have been commenced, and in the years 1997, 1998 and 1999 the plaintiff would have been in a position to commence and would have commenced four new dual occupancy projects in each year. When one has regard to the history of the building activities of Mr Haigh and his associated companies and to the evidence that there was ample land available, even for the building of dual occupancies other than sub-divided ones after March 1998, it seems to me reasonable to assess damages on the basis that Jazabas would have achieved four dual occupancies per year, save for 1996 during which the dispute between Mr Haigh and Mr Kikiras was on foot. For the reasons to which I have referred, it does not seem to matter whether one utilises the cash flow or loss of profits approach. 284 On the approach to which I have just referred there would have been an additional 1 in 1994, 1 in 1995, none in 1996, 2 in 1997, 3 in 1998 and 4 in 1999, making a total of 9 additional developments. 285 Mr Hughes submitted a number of reports, the latest being on 6 December 1999, by which time the issues had been refined. 286 Mr Hughes gave his evidence on 14 and 15 December 1999. He agreed, Tp.239, that the starting point was a net profit of $151,563 per development. 287 In his report of 6 December 1999, Exhibit M3, Mr Hughes summarised the loss as loss of profits on other developments as appearing in Schedule 1 at $2,247,930 and additional costs incurred after September 1999 in accordance with Schedule 1 at $215,836 giving a total of $2,463,766. Overnight he re-worked the figures conformably with Exhibit M5, which produced a total net development profit lost to 31 December 1999 of $3,371,501. This figure was based on a maximum of four projects per year. It was also based on what was said to be a typical dual occupancy, namely 32 Menin Road, Matraville. A second part of the exhibit was based on a total of twenty four projects and showed a total net development profit lost to 31 December 1999 of $4,267,513. These figures are based on the financial years ended 30 June 1995 to 30 June 2000, although Mr Hughes deducted half of the profits for the last mentioned year and calculated the loss to 31 December 1999. 288 Mr Hughes' figures can be tested in a somewhat rough and ready way. He has proceeded on the basis of lost profits of $151,563 for each of four developments per year over a five year period, which produces a figure of some $3.03m. There is no exact correlation, but there is a sufficient coincidence between the figures to show that those adopted by Mr Hughes, assuming for the moment that his starting point of $151,563 is correct, have some reasonable equivalence. However, I consider that in lieu of twenty the preferable figure is nine, which, multiplied by $151,563, gives $1,364,067. 289 Mr Gower, in his first report of 27 July 1999, dealt, essentially, with an earlier report of Mr Hughes and, without putting forward any positive figures on his own part, criticised Mr Hughes' methodology and some of his assumptions. In his second report of 9 December 1999, Mr Gower dealt with three matters to which he was required to give attention being calculations of consequential loss detailed in Schedule 4 of Mr Hughes' report of 9 March 1999; Mr Hughes' report of 6 December 1999; and costs attributed to the Nilson Avenue project detailed in Schedule 3 to Mr Hughes' report dated 9 March 1999. In paragraph 5.1.9 he asserted that based on Mr Hughes' methodology, adjusted only for the appropriate level of borrowing capacity, the total lost profit during the period 1994-1999 was $931,017. Mr Gower dealt with certain other matters with which he had the difficulties to which he referred and then with consequential loss, which he assessed at $319,263. The sum of those figures is $1,250,280, which, as a figure, bears a close but probably coincidental relationship to $1,364,067. 290 Commencing at paragraph 10 Mr Gower dealt with what he described as changed methodology assumptions from those adopted by Mr Hughes in his 9 March 1999 report. After dealing with various matters he came to the conclusion that the net profit after tax from the sale of the land was $172,142. As I have said, it is not clear that Mr Tobias has adopted this figure. He has made no submissions in reply to Mr Rayment's detailed ones, which produced the net profit figure on the sale of the land to which I have referred. 291 In his evidence in chief he was asked to comment upon Exhibit M5, which he said he did not consider to be an appropriate approach to determine the ability to carry out the number of projects that Mr Hughes included in his schedule, because it did not fully map the cash flow constraints and needs which the business faced over a period, and it calculated it on a basis, which did not have regard to the cash flow needs during the construction period of each individual project. He said he carried out the exercise, although using some different starting points, in Exhibit 2B, but he noted that the cash flow statement was prepared "under somewhat different assumptions". 292 At Tp.326 he stated why he preferred the cash flow approach and, at Tp.327, he said that the profit and loss approach did not always show the progression of a project over a period of time. Mr Gower also was not content to adopt a borrowing of one hundred per cent of the value of the project. 293 In cross-examination Mr Gower agreed, Tp.328, that Exhibit 2A, being his statement of 27 July 1999, was the form of expert evidence from him right up until the commencement of the trial, and that, apart from making a number of criticisms of the assumptions in Mr Hughes' report, it "contained no information of any alternative basis upon which you would put forward the plaintiff's damages calculations". He said that was not done pursuant to any specific instructions, but was a decision of his own in responding to his instructions, which did not include an instruction to prepare an alternative basis upon which damages ought to be calculated. He said he was asked to provide a critique of Mr Hughes' report and that is what he did. He agreed that Exhibits 2B and 2C, consistently with his instructions, contained his version of damages and a re-working of them. 294 Mr Gower was attacked and, if I may say so with respect with great effect, as to a number of portions of his initial report on the basis that he was commenting on matters which were not the subject of his expertise. However, as I have said, he did not seek to put forward any alternative method for calculating damages. 295 At Tp.341 he was taken to Exhibits 2B and 2C and he agreed that he had reached the conclusion that if the plaintiff had not bought the land it would have been able to complete one project a year and no more. In other words he said that but for the purchases of the land one additional property could have been developed, but he made no comment on how many others may have been. 296 At Tp.343 Mr Gower was asked to assume that the properties built as referred to in Exhibit AE were built, and he gave an answer to which I have referred. He also said, and I have also referred to this evidence at Tp.344, that he did not express a view that Mr Haigh and his associates could not produce more than one development a year. 297 He said, Tp.345, that he had not made an assumption that over twenty five years Mr Haigh as a builder or as a developer had built about one hundred dwellings, but he agreed that the position as at 1994 was suggestive of Mr Haigh's being able, in ordinary times, "to conduct four dual occupancies a year". He said that was confirmed by noticing that in 1995 three further dual occupancy projects were commenced, two were completed and one was completed the following year. 298 He described what he had done in Exhibit 2B at Tpp.345-346:- "RAYMENT: Q. In your Exhibit 2B do we understand this: you have not sought in any way to analyse the total position of Jazabas or the total assumed position of Jazabas, rather you have asked yourself a question about a state of affairs that, as it were, is treated as an island? That is, the question you have asked yourself is, as you I think told us a moment ago, what, stemming only from the use of the funds that were known to have been devoted in June of 1994 to Nilson Avenue, could Jazabas have done with that money? Is that right? A. That's correct, yes. Q. And I think you have assumed, haven't you, that it had no other business, the company had no other business and no other money? A. I have tried to deal with this question in isolation from other business activities which Haigh or his group of companies may have continued to undertake. Q. But have you? Because what you have done is to take out the capital withdrawal, have you not, from this, from the money that you envisaged would have been made from your one project? A. That's correct, yes. Q. And that would assume that there are no other projects which can provide a source of living expenses wouldn't it? A. No, not necessarily. Q. Not necessarily? A. I have - I made an assumption that you wouldn't conduct these sort of activities unless you generated ongoing living funds of $60,000 is the assumption I adopted."

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Mr Gower then accepted that if all projects were proceeding he would not work on the basis of a withdrawal of approximately $240,000, but would reduce that figure. 299 At Tp.347, Mr Gower agreed that so far as Mr Haigh is concerned it would seem that from the properties that Mr Gower listed, his company had $300,000 over five years from those projects alone. 300 On the following page Mr Gower agreed that cash flow would give the same answer "more or less" as the profit analysis. 301 At Tp.354 Mr Gower explained how he had reached a figure of $99,376 being the average approximate net profit in respect of dual occupancy subdivisions. The average net profit he assessed for each building based on all buildings was $125,650. He said he had removed the Mawson Parade property because it was not a sale figure but a valuation and he had some reservations about the valuation where there are actual prices, which can be determined by the market. I do not consider that there is any justification for not adopting Mr Hughes' profit figure which, of course, will be reduced by a discounting factor to take account of such of the matters raised by Mr Tobias as I consider, as a matter of judgment, should be regarded. 302 In so far as there is a substantial discrepancy in approach between the experts I have come to the conclusion that the evidence of Mr Hughes is to be preferred. I have done so for the following reasons:- (a) Mr Hughes made a valuation based on the figures furnished to him well before the hearing. Mr Gower, for reasons best known to those instructing him, was not asked to consider the correctness of that valuation or those figures until very shortly before the hearing. (b) There is agreement by Mr Gower that, in the particular circumstances of this case, no difference is to be drawn between the profit approach adopted by Mr Hughes and the cash flow approach favoured by him. (c) Mr Gower prepared his reports on the very narrow basis of only taking into account the effect of the purchase of the land preventing one development per year being carried out. There is, in my opinion, no justification for so restrictive an approach, it being clear that the plaintiff was carrying on other business activities. 303 In these circumstances I do not consider that Mr Gower's approach correctly mirrors what was happening in the circumstances of this particular case and, as I have tried to point out, it seems to me that Mr Hughes' approach does. His starting point of $151,536, whilst higher than Mr Gower's, is justified by taking into account the properties to which he referred, and I am prepared to accept this figure even though it depends on Mr Haigh's figures and essentially uncorroborated evidence of them. However, it is supported to some degree by his building record. On this aspect the plaintiff has satisfied me of these figures, notwithstanding the matters to which I have just referred. 304 In concluding that Mr Hughes' approach, or perhaps more accurately his calculations, are to be preferred I have had regard to the reliance he placed upon the primary figures furnished to him by Mr Haigh. Whilst Mr Tobias criticised those figures, I do not consider that they warrant criticism to the extent to which Mr Tobias went, nor do I consider that they evidenced sufficient unreliability for Mr Hughes not to base his calculations on them. 305 However, for the reasons I have given, I consider that Mr Hughes' starting figure of $3,371,501 should be reduced to $1,364,067. Of necessity the reduction for the vicissitudes, to many of which I have referred, must be somewhat arbitrary and depend upon the assessment of what had and was likely to happen so far as the plaintiff was concerned in the future. Notwithstanding the various matters to which Mr Tobias has referred and to which I give full weight, I must also have regard to the fact that Mr Haigh had been engaged in this business for many years, apparently with some success, and that is a matter which must weigh heavily against any unnecessarily heavy discount for the various vicissitudes which, after all, were matters arising essentially after the contract to purchase the land was entered into and completed and in consequence of that fact. I have also reduced the number of building operations I consider would have been completed. In the result I have formed the opinion that the appropriate amount to discount is thirty per cent, which reduces the figure of $1,364,067 to, rounding the figure off to the nearest dollar, $954,847. From that must be deducted the figure of $54,296.95, which I will round to $54,297, which leaves a figure of $900,550. 306 That leaves outstanding, I think, two matters. Firstly, there is the matter referred to in Mr Rayment's document headed "Postscript on Damages" of 11 February 2000 and, secondly, there is the question of interest. Interest was claimed on the basis of Hungerfords v Walker. I have not been favoured with any submissions on how the interest is to be calculated and, of course, it is necessary to bear in mind that the damages reflect amounts from various periods, i.e. the losses occurred over a period. 307 Further, it is not clear whether there are any other specific items which are required to be deducted. By taking the discounting figure of thirty per cent, I have sought to overcome any minor discrepancies, but it may be that in the plethora of submissions about specific figures I have overlooked some.

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Exemplary Damages 308 Mr Rayment submitted that the plaintiff is entitled, in all the circumstances of this case, to exemplary damages. The rare cases and circumstances in which such damages will be awarded were considered by the High Court in Gray v Motor Accident Commission (1998) 73 ALJR 45. At paragraph 22 in the joint judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ, their Honours said:- "First, exemplary damages could not properly be awarded in a case of alleged negligence in which there was no conscious wrongdoing by the defendant. Ordinarily, then, questions of exemplary damages will not arise in most negligence cases be they motor accident or other kinds of case. But there can be cases, framed in negligence, in which the defendant can be shown to have acted consciously in contumelious disregard of the rights of the plaintiff or persons in the position of the plaintiff." 309 Exemplary damages are, of course, awarded to punish the wrongdoer and deter others from like conduct. Thus, as their Honours pointed out in paragraph 15, if they are awarded they are paid in addition to compensatory damages and, in that sense, constitute a windfall in the hands of the party wronged. 310 In the present case I am satisfied that the Council was negligent in failing to advise the plaintiff of its policy in relation to the RAS and the Risk Reduction Zone. Had that advice been given the contract would never have been entered into. However, in the particular circumstances of this case, the failure to give notice of it does not go beyond negligence or, perhaps more accurately, does not call for the characterisation that the Council acted consciously in contumelious disregard of the plaintiff's interests. Once the plaintiff had elected to become bound by the contract in June 1994 there was nothing further which could be done to relieve it from the contract, the loss it has sustained flowing from the fact, as I have found, that but for the various misrepresentations it would not have entered into it. None of the findings I have made lead me to the conclusion that this is a case in which it is appropriate to award exemplary damages and, on this claim, the plaintiff must fail.

Jazabas v Botany Council

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Judgment (71 paragraphs)

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