(1962) 108 CLR 12
Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193
Kenny & Good Pty Ltd v MGICA [1999] HCA 25
199 CLR 413
L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) [1981] HCA 59
Source
Original judgment source is linked above.
Catchwords
(1962) 108 CLR 12
Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193
Kenny & Good Pty Ltd v MGICA [1999] HCA 25199 CLR 413
L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) [1981] HCA 59
Judgment (94 paragraphs)
[1]
(NSW)
Local Government Act 1906 (NSW)(rep)
Local Government Act 1919 (NSW)(rep)
Local Government Act 1993 (NSW)
Municipalities Act 1867 (NSW)(rep)
Municipalities Act 1897 (NSW)(rep)
Roads Act 1993 (NSW)
Cases Cited: Alison Cobden-Jones v Woollahra Municipal Council [2002] NSWCA 382
Allen v Gulf Oil Refining Ltd (1981) AC 1001
Bankstown City Council v Alamdo Holdings Pty Ltd [2005] HCA 46; (2005) 223 CLR 660
Batey v Gifford (1997) 42 NSWLR 710
Bonaccorso v Strathfield Municipal Council [2003] NSWSC 408
Boland v Yates Property Corp Pty Ltd [1999] HCA 64
Cobden-Jones v Woollahra Municipal Council [2002] NSWLEC 2; (2002) 118 LEGRA 41
Curtis v Harden Shire Council [2014] NSWCA 314
Derry v Peek (1889) 14 App Cas 337
Flight v Booth (1834) 1 Bing (NC) 370; (1834) 131 ER 1160
Hawthorn Corporation v Kannuluik [1906] AC 105
Gales Holdings Pty Limited v Tweed Shire Council [2013] NSWCA 382
Gartner v Kidman [1962] HCA 27; (1962) 108 CLR 12
Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193
Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413
L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) [1981] HCA 59; (1981) 150 CLR 225
Marcic v Thames Water Utilities Ltd [2002] QB 929
Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31
Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) FCR 290
Owners Corporation SP 46510 v Tan [2020] NSWSC 1564
Raphael Shin Enterprises Pty Limited v Waterpoint Shepherds Bay Pty Limited [2014] NSWSC 743
Re Drake and the Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Rickard v Allianz Australia Insurance Ltd [2009] NSWSC 1115
Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373
Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418
Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205
Vale v Sutherland [2009] HCA 26
Category: Principal judgment
Parties: Elisa Lorenzato (plaintiff)
Burwood Council (first defendant)
Michael Della-Franca (second defendant)
John Lukas (cross-defendant)
Representation: Counsel:
R Carey (plaintiff)
M L Wright SC with D Robertson (first defendant)
J A Trebeck (second defendant)
J Gooley (cross-defendant)
The plaintiff brings an action against Burwood Council for negligent misstatement in a planning certificate issued under s 149 of the Environmental Planning and Assessment Act 1979 (NSW). The certificate was issued on 9 August 2010 in respect of a property at No 13 Appian Way, Burwood. It did not disclose the existence of a 400mm diameter pipe owned by Council that had been laid beneath the property in the early 1900s. A residence had been built over the pipe in about 1911 and a pool was built over it in 1969. Those improvements remained on the land at times relevant to these proceedings. The pipe carried stormwater run-off from a 5.2ha catchment of long established residential development. The certificate did not disclose a resolution that Council had adopted in 2002 for the acquisition of an easement over the pipe and for the later establishment of a drainage easement along the property's western boundary.
In March 2011 the plaintiff purchased No 13 for $3 million under a contract to which Council's planning certificate was attached. The second defendant was the vendor. The plaintiff brings an action against him for negligent misstatement in the answers he gave to requisitions that were raised prior to completion. Those answers failed to disclose the existence of the pipe or Council's statutory rights and claims over it or Council's resolution for the acquisition of easements.
After the plaintiff moved into possession of the property it was flooded by overland flows of stormwater from Appian Way on nine occasions between 7 November 2011 and 11 October 2012. The flooding occurred when the pipe through the property became blocked, causing stormwater to back up on Appian Way and then pour down the plaintiff's driveway. The plaintiff claims damages from Council for the nuisance constituted by the escape across her land of stormwater from the street.
The subject property is within the local government area administered by the first defendant (referred to herein as "Council"). The southern boundary of the property fronts onto Appian Way and is 18m wide. The block is rectangular and extends northward to a depth of approximately 86m. The land slopes downward from the street frontage to the rear boundary at the north. The fall from the front to the back of the block is approximately 5m. The stormwater pipe is of vitrified clay. It runs through the entire length of the property roughly down the centre.
Stormwater run-off from roofs and paved surfaces in the 5.2ha catchment accumulates in a junction pit at the kerb of Appian Way directly in front of No 13. The pit was constructed in about 2005 and the pre-existing pipe through No 13 was connected to the bottom of it. The catchment comprises all of the residential lots along the southwest side of Appian Way, being about 10 in number, and approximately five lots to the east of Appian Way. It also includes the surface of Appian Way itself; a small reserve midway along the length of the street and approximately 12 residential lots on the north side of Liverpool Road.
The plaintiff inspected the property before she contracted to buy it. The existence of the pipe was not ascertainable from a reasonable inspection. The plaintiff was unaware of it until Council engineers told her about it in November 2011, three months after she had completed the purchase, when the pipe blocked and caused flooding as earlier described. Council claims the right to enter the plaintiff's land for the purpose of maintaining it.
[4]
Action against Council for negligent misstatement
When Council issued the planning certificate in August 2010 the relevant subsections of s 149 of the Environmental Planning and Assessment Act were in these terms:
149 Planning certificates
(1) A person may, on payment of the prescribed fee, apply to a council for a certificate under this section (a planning certificate) with respect to any land within the area of the council.
(2) On application made to it under subsection (1), the council shall, as soon as practicable, issue a planning certificate specifying such matters relating to the land to which the certificate relates as may be prescribed (whether arising under or connected with this or any other Act or otherwise).
(4) The regulations may provide that information to be furnished in a planning certificate shall be set out in the prescribed form and manner.
(5) A council may, in a planning certificate, include advice on such other relevant matters affecting the land of which it may be aware.
(6) A council shall not incur any liability in respect of any advice provided in good faith pursuant to subsection (5). […].
Council's common law duty to exercise reasonable care to provide correct information in a planning certificate is established by L. Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) [1981] HCA 59; (1981) 150 CLR 225. In Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) FCR 290 the Full Court of the Federal Court described as follows the class of persons to whom a Council owes this duty:
[39] The relevant class of persons to be considered in the present situation included potential purchasers of the property the subject of the certificate. It is sufficient if the misstatement is made to members of a limited class of persons, including the plaintiff, with the intention that those persons should rely thereon in deciding whether to commit themselves financially; see San Sebastian Pty Ltd v Minister Administering The Environmental Planning and Assessment Act 1979 [1986] HCA 68; (1986) 162 CLR 340 at 357, per Gibbs CJ, Mason, Wilson, Dawson JJ.
The operative pleading is the plaintiff's third further amended statement of claim ("the statement of claim"). This was amended to its present form, by leave, on the fifth day of the hearing, 14 August 2020. In her action against Council for negligent misstatement the plaintiff alleges that in breach of its duty of care the planning certificate contained incorrect and misleading information concerning matters prescribed for the purposes of sub-ss (2) and (4) of s 149 and that it failed to include advice on relevant matters of which it was aware and that should have been disclosed pursuant to sub-s (5). The certificate was annexed to the contract of sale in accordance with s 52A of the Conveyancing Act 1919 (NSW) and the Conveyancing (Sale of Land) Regulation (2010).
By a resolution of 6 December 1994 Council adopted a Code of Stormwater Management ("the 1994 Stormwater Code"). A resolution concerning acquisition of drainage easements over No 13 was passed 11 June 2002 by the Services and Policy Committee of Council ("the 2002 resolution"). It is common ground that the Committee acted under delegation and that its resolution has the same force, effect and status as a resolution of Council. The plaintiff alleges that she entered into the contract in reliance upon the s 149 certificate and upon the absence from it of any reference to the land being affected by any policy of Council that would restrict development.
The plaintiff says that had the certificate been prepared with reasonable care it would have informed her of the 1994 Stormwater Code and the 2002 resolution, both of which she alleges restrict development. She also alleges that the planning certificate was negligently misleading in its failure directly to disclose the existence of the pipe and the susceptibility of the land to intermittent flooding. The plaintiff asserts that had she been made aware of those matters she would not have proceeded with the purchase.
It is common ground between the plaintiff and Council that s 59A of the Local Government Act 1993 (NSW) applies to the pipe. That section came into force on 1 August 2002, with the exception of sub-s (3), which was inserted later and took effect from 13 May 2009. Sub-sections (1) and (2) of s 59A have been in the same terms from first enactment.
The section is as follows (with emphasis added):
59A Ownership of water supply, sewerage and stormwater drainage works
(1) Subject to this Division, a council is the owner of all works of water supply, sewerage and stormwater drainage installed in or on land by the council (whether or not the land is owned by the council).
(2) A council may operate, repair, replace, maintain, remove, extend, expand, connect, disconnect, improve or do any other things that are necessary or appropriate to any of its works to ensure that, in the opinion of the council, the works are used in an efficient manner for the purposes for which the works were installed.
(3) The provisions of this section have effect despite anything contained in section 42 of the Real Property Act 1900.
In Bonaccorso v Strathfield Municipal Council [2003] NSWSC 408 at [44], Young CJ in Eq held that s 59A applies to drainage works whenever they may have been installed by a council, whether before or after commencement of the section. At [36]-[39] his Honour adopted a broad interpretation of the word "installed". It was held that the pipes in that case had been installed by Strathfield Council within the meaning of the section. The manufacturer had supplied them and provided supervision and lifting gear; the council had supplied the labour for installation - and the cost of the work had been born as to two thirds by the council and one third by the proprietor of the land.
Section 191A was inserted in the Local Government Act at the same time as s 59A. Sections 191 and 191A need to be considered together. They are in the following terms, so far as presently relevant:
191 Power of entry
(1) For the purpose of enabling a council to exercise its functions, a council employee (or other person) authorised by a council may enter any premises.
(2) Entry may only be made at any reasonable hour in the daytime or at any hour during which business is in progress or is usually carried on at the premises.
191A Power of entry - construction and maintenance of water supply, sewerage and stormwater drainage works
(1) Without limiting section 191, a council employee (or other person) authorised by a council may enter any premises to carry out water supply work, sewerage work or stormwater drainage work on or under the premises (being work that the council is authorised by this or any other Act to carry out).
A further statutory provision that has a bearing upon Council's rights over the pipe is s 94 of the Roads Act 1993 (NSW), of which the relevant subsections are as follows:
94 Roads authority may carry out drainage work across land adjoining public road etc
(1) A roads authority may, for the purpose of draining or protecting a public road, carry out drainage work in or on any land in the vicinity of the road.
(3) The roads authority must pay compensation to the owner of the land for any loss or damage arising from the exercise of any power under this section.
Council is the roads authority for Appian Way.
The plaintiff and Council agree that the pipe was "installed" within the meaning of s 59A(1) by a predecessor of Council and that a continuous chain of succession of local government authority can be traced to the present Council through a series of enactments and repeals. Council is therefore to be regarded as having installed the pipe so that s 59A is engaged. The plaintiff alleges that by reason of Council's ownership of the pipe and statutory rights over it, the property was worth very much less than the $3 million that she paid for it. The difference in value at the date of completion, 11 August 2011, is the principal component of the damages claimed by the plaintiff in her action for negligent misstatement based on the planning certificate.
Council does not dispute that it owed to prospective purchasers of the property, such as the plaintiff, a duty to exercise reasonable care with respect to the terms in which the certificate was issued. It denies that the matters stated in the certificate were inaccurate or misleadingly incomplete. It denies negligent breach of duty. This aspect of Council's defence turns upon the correct construction of questions that Council was required to answer in the certificate, as prescribed by Sch 4 of the Environmental Planning and Assessment Regulation 2000 (NSW). Council also disputes that the scope of its duty of care extended to a positive obligation to disclose, pursuant to s 149(5), the existence of the pipe or Council's rights or the risk of overland stormwater flooding of No 13. Council raises statutory defences under s 43A of the Civil Liability Act 2002 (NSW) (exercise of a "special statutory power") and under s 733 of the Local Government Act (act or omission in good faith).
[5]
Action against second defendant for non-disclosure
The plaintiff has pleaded at pars 65-94 of the statement of claim alternative bases upon which she says the second defendant is liable to her in damages because the pipe running under the land and Council's rights over the pipe constitute a defect in title to No 13. This part of the plaintiff's pleading is difficult to follow. With the benefit of submissions from the plaintiff's counsel my understanding of the alternative basis of claim is as follows.
[6]
Failure to convey good title - cl 16.3
In pars 73-77 the plaintiff relies upon cl 16.3 of the contract, which required that the vendor "cause the legal title to the property … to pass to the purchaser free of any … other interest". She cannot recover damages upon the basis that a deficiency of title discovered after completion constituted a breach of that clause. The doctrine of merger precludes such a claim, as explained in Christopoulos v Angelos (1996) 41 NSWLR 700 at 706C-F (Powell JA) in the following terms:
In the case of a contract for the sale of land, all the provisions in the contract which the parties intend should be performed by the conveyance, or memorandum of transfer, are merged in the conveyance, or memorandum of transfer, and all the rights of the purchaser in relation thereto are thereby satisfied although if there are provisions in the contract which are collateral to the main duties of proving title, conveyance, or transfer and the like, the obligations imposed by [these stipulations are] not discharged by the performance of those main duties.
This principle is an insurmountable obstacle to the plaintiff's formulation of her claim against the second defendant for damages based upon cl 16.3 of the contract and I will not consider it further.
[7]
Non-disclosure of a latent defect in title - the pipe
In pars 80-94 of the statement of claim it is pleaded that in failing to inform the plaintiff of the pipe and Council's rights over it the second defendant breached an alleged general obligation owed by him, independently of the terms of the contract and independently of any requisitions being raised, to disclose defects of title. The second defendant disputes that he was obliged to make such disclosure, as matter of law, or that he could be held liable in damages after completion of the contract for any failure to disclose the alleged defect. This part of the plaintiff's pleading also invokes cl 6 of the contract, concerning errors of misdescription and providing for compensation where such errors are complained of prior to completion. I am unable to find any support in cl 6 for the plaintiff's innocent non-disclosure case but I will consider it in other respects under Issue 7 ([326]).
[8]
Action against second defendant for negligent misstatement
At pars 110-141 of the statement of claim the plaintiff alleges that the second defendant, as vendor, owed her a common law duty to exercise reasonable care in answering requisitions raised prior to completion. In the alternative the plaintiff alleges that a term of the contract of sale pursuant to which those answers were required to be given was subject to an implication of law that they would be provided with reasonable care. The answers are alleged to have been incorrect and misleading because, amongst other things, they denied the existence of any unregistered easement or of any "outstanding notification, claim or requirement of a … local authority". The plaintiff alleges that the second defendant had been aware from late 2002 that Council claimed s 59A rights over the pipe, that those rights were in the nature of an unregistered easement and that Council had given notifications and made claims concerning exercise of its rights that were relevantly "outstanding". The inaccuracy and incompleteness of the answers to requisitions in August 2011 is said to have been negligent having regard to the second defendant's knowledge of Council's claims.
The plaintiff alleges that she relied, through her conveyancing solicitor, upon the answers. Following receipt of them she proceeded to settlement. It is alleged that if the answers had been expressed with reasonable care they would have revealed Council's rights over the pipe and, with that knowledge, the plaintiff would have rescinded the contract. The damages claimed against the second defendant under these alternative causes of action in tort and in contract are the same as those claimed against Council on the cause of action for negligent misstatement.
Some particulars of the plaintiff's case against the second defendant depend upon it being established that Council's actual legal rights over the pipe - not just its claims - amounted to a defect in the second defendant's title and that this defect would have justified the plaintiff rescinding the contract if she had been aware of the true position. To succeed on those particulars, the plaintiff must prove that the pipe and Council's rights with respect to it constituted such a fundamental difference between what the second defendant had promised to convey and what the plaintiff would in fact receive that she could not have been compelled to complete, even upon terms of substantial compensation for misdescription.
The second defendant disputes that his answers to requisitions were inaccurate or misleading, taking into account the precise extent of information sought in the requisitions and having regard to what the second defendant alleges was an abandonment of Council's claims over the pipe as a result of it not having taken any action on those claims during the preceding eight years. The eight years dated from 4 February 2003, when Council gave the second defendant notice of intention to enter No 13 to repair the pipe, a notice that Council never acted upon. The second defendant also disputes that the pipe was installed by any local government authority that was a statutory predecessor of Council. He contends that the plaintiff has not proved that s 59A applies to the pipe.
[9]
Council's proportionate liability partial defence to the plaintiff's claim
The plaintiff's actions for negligent misstatement brought against Council and against the second defendant fall within the definition of apportionable claims in s 34(1) of the Civil Claims Act 2002 (NSW), each of them being "a claim for economic loss … in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care". It would have been open to Council to plead that, if both of these claims, as pleaded and particularised by the plaintiff, should be established, then its liability as a concurrent wrongdoer is:
limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of [Council's] responsibility for the damage or loss (s 35 of the Civil Claims Act).
However, instead of pleading a proportionate liability defence in reliance upon the plaintiff's formulation of her action against the second defendant, Council has pleaded an entirely distinct case of negligent misstatement upon which it says the second defendant is liable to the plaintiff. Council thus seeks apportionment under s 35 on the basis that the second defendant is concurrently liable on a cause of action that the plaintiff herself does not allege or adopt. It is not clear why Council has not sought apportionment in reliance on the plaintiff's own formulation of her action against the second defendant.
[10]
Second defendant's cross-claim against his conveyancing solicitor
The second defendant has joined the solicitor who acted for him on the sale of the property in 2011 as a cross-defendant. He pleads that the cross-defendant was professionally negligent in that he failed to elicit instructions about the existence of the pipe and Council's claims over it. It is alleged that any deficiencies in the answers to requisitions resulted from that negligence and that if the second defendant is found liable to the plaintiff for negligent misstatement then the amount of any judgment against him will constitute damages caused by the cross-defendant's negligent breach of his retainer.
The cross-defendant completed the answers to requisitions and delivered them to the plaintiff's conveyancing solicitor on the afternoon before settlement. He contends that he exercised reasonable care in taking instructions and that the answers he supplied were a faithful reflection of those instructions. The cross-defendant says that he asked the second defendant questions that, having regard to the cross defendant's knowledge of the pipe and of Council's claims under s 59A of the Local Government Act, should have elicited instructions about those matters.
[11]
Plaintiff's claim against Council in nuisance for stormwater flooding
Council disputes its liability to the plaintiff in nuisance for the repeated flooding of her land by overland flows of stormwater from Appian Way. It asserts that a cause of action can only be sustained against a public authority such as itself if the escape of accumulated stormwater onto privately owned property has occurred through negligence. Council not only disputes negligence but asserts that during the 11 month period in which intermittent flooding occurred the plaintiff refused Council access to her land to rectify the blockage in the pipe that was the cause of water backing up on Appian Way and escaping overland through No 13. Council denies that it was negligent in relation to the flooding. It also pleads in answer to the nuisance action a statutory defence of good faith under s 733 of the Local Government Act.
[12]
List of findings and issues
The myriad legal issues on which the parties are in dispute can only be resolved by reference to a protracted history of dealings and events, in several discrete periods. The parties disagree about the factual conclusions to be drawn from this mass of detail and about the application of the law. My factual findings will be set out in chronological sequence under the following headings:
1904: construction of the drain by Council's predecessor - [34]ff
1989-2011: second defendant's tenure of No 13 - [61]
2011: second defendant's sale of No 13 to the plaintiff - [132]
2011-2014: flooding of No 13; repair of the pipe; raising of the footpath - [139]
2015-2017: plaintiff's Development Application - [204]
October 2017-July 2020: Council's settlement negotiations - [216]
Whether the plaintiff is entitled to relief and determination of the cross-claim will depend upon resolution of the following issues:
Liability of Council for the s 149 certificate
1. With respect to Council's 2002 resolution and Question 7 in the planning certificate:
1. what is the statutory context in which Question 7 formed part of the planning certificate and was required to be answered ([233]-[235]);
2. was the 2002 resolution a "policy adopted by the Council" that affected the land by restricting "the development of the land because of the likelihood of … flooding" ([236]-[265]);
3. when the certificate issued on 9 August 2010 was the resolution still operative ([266]-[276]);
4. in the circumstances as found in answer to pars (a)-(c), was the resolution a policy that should have been referred to in answer to Question 7 of the planning certificate? ([277]).
1. Is the 1994 Stormwater Code a "flood related control" to which development on the land was subject, such that it should have been referred to by Council in answer to Question 7A of the planning certificate? ([278]).
2. Was Council required, by s 149(5) in conjunction with the common law, to exercise reasonable care to disclose in the planning certificate the 2002 resolution, the 1994 Stormwater Code, the existence of the pipe and/or the nature of Council's s 59A rights with respect to the pipe - independently of and in addition to the provision of answers to specific questions in the certificate? ([287]).
3. Insofar as the planning certificate was misleading by reason of the answer to either question 7 or question 7A or any failure to disclose information pursuant to s 149(5), did Council fail to exercise reasonable care in the issue of the certificate? ([291]).
4. Is Council able to rely upon statutory defences in s 43A of the Civil Liability Act (exercise of a "special statutory power") or s 733 of the Local Government Act (act or omission in good faith) in answer to the plaintiff's claim for negligent misstatement in the planning certificate? ([308]).
5. Has the plaintiff established reliance upon the planning certificate and consequent damage, to constitute a cause of action for negligent misstatement? ([320]).
Liability of the second defendant for non-disclosure or negligent misstatement
1. Can the plaintiff recover damages from the second defendant for innocent non-disclosure of the pipe prior to completion? ([326]).
2. Did the second defendant breach a common law duty of care owed to the plaintiff, or a contractual obligation of care implied by law, in answering requisitions under the contract of sale? ([330]).
3. Would the plaintiff have been entitled to rescind the contract of sale if the second defendant's answers to requisitions had disclosed the pipe and Council's rights with respect to it and/or Council's 4 February 2003 notification of intent to enter the land to repair the pipe and/or Council's 2002 resolution? ([348]).
4. Did the plaintiff rely upon the answers to requisitions, in so far as they did not disclose the pipe or Council's rights over it and notification in respect of it, when she did not purport to assert a right of rescission and instead proceeded to complete the purchase? ([359]).
Damages for negligent misstatement by Council and/or second defendant
1. If Council and the second defendant are liable on the plaintiff's causes of action for misstatement in the planning certificate and in the answers to requisitions respectively, what loss and damage has the plaintiff sustained? ([361]).
2. Did the plaintiff fail to mitigate her damages caused by misstatement in the planning certificate by not accepting offers made by the Council between October 2017 and June 2020? ([414]).
Apportionment between first and second defendants
1. Has Council established that that second defendant is a concurrent wrongdoer in respect of the plaintiff's damages upon the cause of action that Council has formulated for the plaintiff against the second defendant, based upon negligent misstatement by annexure of the planning certificate to the contract and by nondisclosure - so that any judgment against Council should be limited to its proportion of responsibility for the apportionable claim? ([415]).
2. If the first defendant is entitled to have liability for the plaintiff's damages apportioned, what is the appropriate share to be borne by each of Council and the second defendant? ([424]).
Claim against the cross-defendant for professional negligence
1. Did the cross-defendant exercise reasonable care and skill in obtaining instructions from the second defendant for the purpose of answering requisitions and in giving effect to those instructions by drafting and delivering the answers that he did? ([430]).
Liability of Council for nuisance; quantum of damages
1. Is Council liable to the plaintiff in nuisance for any instance or instances of overland flows of stormwater on to No 13 Appian Way in the period 7 November 2011 to 12 October 2012? ([439]).
2. If Council is liable to the plaintiff in nuisance, what is the quantum of the damage suffered? ([464]).
[13]
1904: construction of the drain by Council's predecessor
The facts summarised in the following paragraphs are primarily relevant to Issue 8 - whether the second defendant gave incorrect answers to requisitions under his contract of sale to the plaintiff. If a statutory predecessor of Council installed the pipe under No 13, within the meaning of s 59A of the Local Government Act 1993, and if the act of installation is to be imputed to Council so that the section is engaged, then Council had rights over the land, or at least a claim of such rights, that the plaintiff alleges should have been disclosed in answer to the requisitions.
[14]
1867 and 1897 Acts: Borough of Burwood proclaimed
Pursuant to s 11 of the Municipalities Act 1867 (NSW) (rep) the Governor of what was then the Colony had power by proclamation to declare a new borough (in the case of a city, town, suburb of Sydney or any other populous district), or a new municipal district (in the case of a less populated area of up to 50 square miles with not less than 500 inhabitants). It is agreed between all parties in the present proceedings that the Borough of Burwood was proclaimed under the 1867 Act. Section 25 provided that the electors for the time being of every borough or municipal district proclaimed and all succeeding electors entitled to vote in accordance with the terms of the Act:
shall be a body corporate under such name as the Governor shall in such proclamation direct […].
The parties also agree that, so far as relevant to these proceedings, the boundaries of the Borough of Burwood have, from the date of its proclamation under the 1867 Act, encompassed what is now the local government area of Burwood under the Local Government Act 1993, including the location of Appian Way and the lots on that street including No 13.
The 1867 Act was repealed by the Municipalities Act 1897 (NSW)(rep). In the 1897 Act the term "municipality" was defined to include "borough" and "municipal district". Section 4(III) of the 1897 Act provided that the present and future electors of any existing municipality, being those who were entitled to vote according to the terms of the 1897 Act, would:
be and remain a body corporate under such name as the Governor has, in the proclamation constituting such municipality, directed, and shall by such name have perpetual succession and a common seal, and be capable in law of suing and being sued, and of purchasing, holding, and alienating land, and of exercising all such corporate functions, and doing and suffering all such acts and things as by law and in conformity with this Act they may be entitled to exercise, do, and suffer.
Section 6 of the Municipalities Act 1897 prescribed the number of aldermen who should comprise the council of every municipality, according to the number of people living within the municipal boundaries. Other sections made provision for election of the aldermen. The authority of the council was established by s 8, as follows:
8 The council of every municipality shall, in and for all such acts, matters, and things as by law and in conformity with this Act may be done or suffered, be the sole representatives of the body corporate of such municipality, and all the acts and proceedings of such council shall be deemed to be the acts and proceedings of such body corporate.
[15]
Installation of the storm water pipe in about 1904
By 1903 Burwood Road had been constructed, running approximately north-south and intersecting with Liverpool Road running approximately east-west. George John Hoskins was the registered proprietor of more than 19 acres of land lying between these two roads in a triangle east of Burwood Road and north of Liverpool Road. He submitted to the Council of the Borough of Burwood a plan of subdivision. The plan provided for Appian Way to be constructed, commencing at Burwood Road in the north-west and following a serpentine route to join Liverpool Road in the south-east. The street was designed to diverge and then to rejoin around a small park approximately halfway along its length. That is how it was eventually constructed and that is the configuration of the road to the present day. No 13 is located opposite the small park, on the north side of the street. There are lawn tennis courts in the park.
Mr Hoskins' plan of subdivision provided for numerous residential lots to be created along each side of Appian Way. By 25 August 1903 the Council of the Borough had approved the plan and on that day it entered into an agreement with Mr Hoskins containing the following provisions:
1. Clause 4 provided that Mr Hoskins "shall dedicate the said Road to be called the Appian Way to public use as a public road and thoroughfare within the said Borough … and the said Borough shall accept such dedication and shall take and have the care construction charge maintenance and management of the said Road … as a public road street or thoroughfare within the said Borough".
2. By cl 2 it was agreed that as soon as practicable Mr Hoskins would supply to the Council of the Borough "suitable levels and sections of the said Road to be called the Appian Way whereupon the said Borough shall forthwith commence and diligently proceed with the construction of such Road". Clause 2 further provided that Appian Way "shall be completely constructed and finished by the said Council prior to the month of December in the year [1904]".
3. Clause 2 also specified that the Council would "with all reasonable dispatch carry out and completely finish" certain additional works, the description of which included "the drainage of the said Road with all proper provisions for the carrying off and away therefrom and from the lands before referred to of all surface waters and surface drainage including the construction of all proper culverts gullies gully shafts gratings pipes and other works necessary and efficient for the purpose".
4. Pursuant to cl 3 it was agreed with respect to all works carried out by the Council of the Borough under the terms of the agreement that "all work shall be under the supervision and to the satisfaction and approval of the Overseer of works of the said Borough and upon completion of such works or any of them the said Borough shall thereafter have the care maintenance and management thereof respectively and shall at all times keep the same in good order and repair".
5. Clause 5 required the Borough "with all reasonable dispatch after the execution of this Agreement [to] make construct and carry out a main drain from the lands and Works hereinbefore mentioned for the purpose of carrying all surface waters and surface drainage therefrom and from all buildings and improvements to be hereafter erected and made thereon … and the said Borough shall at all times have the care control and management of such main drain and shall at all times maintain and keep such main drain in good order condition and repair as a work of the said Borough".
6. By cl 6 Mr Hoskins agreed to contribute to the Borough the funds necessary for carrying out the works, up to a maximum of £1,100.
The Borough, being a body corporate constituted by its electors in accordance with s 4(III) of the 1897 Act, had the power to undertake construction and management of Appian Way and of the "main drain" and other surface drainage works. It had the power thereafter to maintain those works. This appears from the following extracts from ss 175 and 177 of the 1897 Act:
175 The council shall, within the boundaries of the municipality, have the care, construction, and management of public roads other than the main roads of the Colony … and shall adopt such means as may seem to them desirable for the establishment and management of … sewerage or other drainage …. For the purposes of this Act all roads, streets, lanes, or other thoroughfares … dedicated to public use … shall be deemed and taken to be public roads, streets … and thoroughfares … .
177 Any council or person authorised by any council may, for any purpose of this Act at all reasonable times in the day-time enter upon and layout … or make-up on or under any private land within the municipality, any sewers or other drains, water-courses … or any other necessary works […].
In accordance with the plan of subdivision, separate titles to lots along Appian Way were created. A report of Burwood Council's Group Manager Engineering Services, Mr Wyatt, dated 11 June 2002 states that "the records available show that … the road [was] completed by 1905 (including planting and road drainage) and the house [on No 13 was] built in 1911". The parties agree that construction of the house took place in 1911. It is a clear inference that by that year the pipe that runs through the centre of No 13 must already have been installed. I infer that this is the "main drain" referred to in cl 5 of the agreement of 25 August 1903.
It is established by reports of hydrological engineers tendered in the proceedings that Nos 13-17 Appian Way are located in a slight depression forming part of a drainage path dictated by the natural topography. A contour plan of the area lying immediately to the north of Appian Way is annexed to a report to Council from Brown Smart Consulting dated May 2012. It shows that the natural drainage path is oriented from south-west to north-east, across the south-east corner of No 17, diagonally across the middle of No 15 and then across the northern one third of No 13. One would expect the "main drain" to have been constructed across one or more of these three parcels of land. There is no evidence of any pipe or drain in the vicinity that could answer the description of the "main drain", other than the pipe through No 13 that is the subject of these proceedings.
The report of Mr Wyatt referred to above states that in Council's 2000 budget, presumably for the financial year ended 30 June 2001, funds were provided for an investigation of stormwater drainage from Appian Way, with a view to relieving periodic flooding of Nos 13-17. A letter from Council to a resident of 16 Appian Way dated 3 January 2001 stated that "a detailed drainage study" was being undertaken at that time. Mr Wyatt's June 2002 report summarises some of the results of the study. It records that "sidelines were found to run through the front yards of [No 13] and a number of adjacent properties". A plan illustrating the location of the pipe and the sidelines was submitted by Council to Mr Dundas of Egan National Valuers in July 2001. I infer that this plan was prepared from the results of the investigations carried out with funds from the 2000 budget and that what it illustrates is what was referred to in Mr Wyatt's report.
The plan shows six stormwater collection grated pits located in the gutters of Appian Way within a radius of approximately 80m of the front boundary of No 13. It depicts connecting subsurface drainage lines from these pits to the pipe that runs the length of No 13. Three of the connecting lines are shown as joining the pipe, apparently below the ground surface, in the front garden of No 13 between the house and the front boundary. I infer on the balance of probabilities that all of these pits and connecting lines are part of the original construction of the stormwater drainage works for Appian Way, executed by about December 1904 pursuant to the agreement made on 25 August 1903 between the Borough of Burwood and Mr Hoskins. This inference is supported by the consideration that the pits and sidelines are clearly adapted to and necessary for drainage of the road surface. They are integral to the road, which was required to be constructed under the terms of the agreement and which self-evidently was constructed.
I also infer on the balance of probabilities that it was the Borough that installed the drainage works. Completion of those works by the Borough was part of its consideration for Mr Hoskins' dedication of Appian Way as a public road. He plainly performed his side of the bargain. The Deposited Plan of subdivision is in evidence and there is no doubt that Appian Way has been a dedicated public road since 1904. It is a natural inference that the Borough discharged its corresponding obligation. The drains had to be constructed and there is no basis for finding, or entertaining the possibility, that the Borough repudiated this contractual obligation.
Further, the minutes of a meeting of the Borough Council held on 20 July 1903 record that it considered tenders that had been received from contractors, for execution of the work, and that it resolved, inter alia:
That the drainage as estimated for by the overseer of works be carried out by the Council.
The fact that the Council required Mr Hoskins to pay for the work and that this requirement was formalised in cl 6 of the agreement does not alter the position that the Borough was the entity that carried out the installation. Funding is a separate matter from execution. There is no evidence that the resolution of 20 July 1903, that the Council carry out the works, was ever countermanded. I find that the subsequent construction of the drain, which undoubtedly occurred, was the implementation of that resolution.
[16]
1906 Act: from a corporation of electors to a corporation of aldermen
With effect from 1 January 1907 the Municipalities Act 1897 was repealed by the Local Government Act 1906 (NSW)(rep). Boroughs and municipal districts constituted under the repealed Act, including the Borough of Burwood, were referred to in the 1906 Act as "existing municipalities".
Section 29 of the 1906 Act provided that every municipality shall be governed by a council consisting of elected aldermen. Section 12 effected a significant change in the identity of the municipal corporate body, relative to the operation of the 1867 and 1897 Acts. It provided as follows:
12 Every existing municipality … is constituted a municipality under this Act. Thereupon the body corporate of such existing municipality shall be dissolved, and shall be replaced by the council of the municipality which under that name is created a body corporate. All powers, rights, and liabilities of such old body corporate shall be the powers, rights, and liabilities of the council of the municipality.
Whereas under the 1867 and 1897 Acts all of the electors constituted the body corporate, now it was an incorporation of only the elected members of the council. The corporate entity named Borough of Burwood, comprising all of the electors, was dissolved and in its place was a corporate entity named Council of the Municipality of Burwood, comprising the elected aldermen.
This change is confirmed by the terms of s 44 of the 1906 Act. The word "area" in this section is defined to include "municipality". Section 44 of the 1906 Act was in these terms:
44 The duly constituted council of an area shall be a body corporate, having perpetual succession and a common seal.
By combination of s 73(xi) and s 74 of the 1906 Act, there was conferred upon the Council of the Municipality of Burwood the "care, control and maintenance of any stormwater channel, culvert, drain" - amongst many other powers and responsibilities. Section 76 conferred power to enter upon private lands lying near to public roads to make and keep open, inter alia, "tunnels, drains, and watercourses". Section 208 provided for enforcement of the Council's right to enter on private land for such purposes.
Subject to any inconsistent provision of the 1906 Act, of which I can find none that is presently relevant, s 4(6) provided as follows:
4(6) … [T]his Act shall apply to all matters and things made, done, or commenced under the Acts hereby repealed, and at the commencement of this Act of any force or effect … by virtue of the Acts hereby repealed, as if this Act had been in force at the time they were made done or commenced, and they were made, done or commenced hereunder.
Relevantly for the purposes of this case, s 4(6) had the effect that the 1906 Act was applicable to the execution of the works by the Borough under the 1897 Act as if the 1906 Act had been in force when those works were performed. Thus, the drainage works of Appian Way including the main drain through No 13 were governed by the 1906 Act as if those works had been installed by the newly incorporated Council of the Municipality of Burwood in exercise of its powers conferred by s 76 of that Act.
[17]
1919 Act: continuity of the incorporated council
The Local Government Act 1919 (NSW)(rep) commenced on 1 January 1920. It repealed the 1906 Act but made the following provision for continuity:
7 The repeal of any Act by this Act shall not operate to break the continuity of existence of a shire or municipality or of its council existing at the commencement of this Act.
8 (1) The repeal by this Act of any enactment shall not, as far as relates to any previous or pending transaction or matter, affect property vested, acts and things validated or authorised, rights powers and protection acquired, liabilities incurred, or indemnities given by or under the repealed enactment.
The 1919 Act did nothing to disturb the status of the Council of the Municipality of Burwood as a corporate entity. The following provisions confirmed that status:
22 (1) For the local government under this Act of each city municipality and shire there shall be a council.
(2) The council shall he a body corporate, with perpetual succession and a common seal, and may sue and be sued in its corporate name; and shall, for the purposes and subject to the provisions of this Act, be capable of purchasing holding granting demising disposing of and alienating real and personal property, and of doing and suffering all such other acts and things as bodies corporate may by law do and suffer.
23 (1) Each city and municipal council shall consist of aldermen elected by the electors (except where otherwise provided).
[18]
1993 Act: from corporation of aldermen to body politic
From the commencement of the Local Government Act 1993 on 1 July 1993, s 219 has established a council for each local government area. Local government areas are as proclaimed by the Governor pursuant to s 204(1). By cl 21 of the transitional provisions in Sch 7 of the Act, an area constituted as a municipality at 1 July 1993, such as the area within the boundaries of what was Burwood Municipality under the 1919 Act, is taken to be constituted under s 204(1) of the 1993 Act.
The legal status of each council is provided for in the following section of the 1993 Act:
220 Legal status of a council
(1) A council is a body politic of the State with perpetual succession and the legal capacity and powers of an individual, both in and outside the State.
(2) A council is not a body corporate (including a corporation).
(3) A council does not have the status, privileges and immunities of the Crown (including the State and the Government of the State).
(4) A law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation).
Clause 22 of Sch 7 makes the following transitional provision:
22 Continuation of existing councils
A council constituted immediately before the commencement of Division 1 of Part 2 of Chapter 9 [in which ss 219 and 220 are located] continues as that council and is taken to be constituted under this Act.
The effect of enactment of the Local Government Act 1993 is that the body of aldermen of Burwood Municipality that was an incorporated entity under the 1906 Act and that continued in existence without interruption under ss 7 and 22 of the 1919 Act has maintained its continuity under the new Act. The entity has changed its status from that of incorporated body of aldermen to body politic but there has been no change of identity and no dissolution of the previous entity or replacement of it by a new one. The present Council, the first defendant in these proceedings, is the same entity as the council of aldermen that was incorporated under the 1906 Act and that was, in substance and effect, deemed by that Act to have carried out the drainage works that were executed by its predecessor, the Borough of Burwood, in about 1904.
[19]
1989-2011: second defendant's tenure of No 13
The facts summarised under this heading are important to Issues 8-10 - whether the second defendant's answers to requisitions in connection with his 2011 sale to the plaintiff were erroneous or misleading and whether they were given negligently. The facts show that from late 2000 the second defendant knew that the pipe existed. By 4 February 2003 he knew that Council claimed ownership of the pipe; that it was 100 years old and in a dilapidated condition; that Council had issued a notification asserting its right and intention to enter the land to repair and maintain the pipe; that Council had resolved to acquire an easement over the pipe and that it had resolved to acquire at some time in the future an easement on the western boundary of the property.
The facts related in the following paragraphs, particularly those concerning events in the years 1996 to 2004, are also important to one aspect of Issue 11; namely, the question of what a hypothetical purchaser would have been willing to pay for No 13 in 2011 if he or she was fully informed about the pipe and Council's rights over it. Council's dealings with the second defendant during these years show that it was determined not to pay compensation for a drainage easement near the western boundary of No 13, to which the pipe could be relocated from under the house. The dealings also show that Council was markedly indecisive about rectifying the inefficiency of stormwater drainage from Appian Way through No 13 and resisted expending funds on improving this infrastructure, even in the face of firm, consistent hydraulic engineering advice and repeated pleas from affected landholders over many years. Council failed to take action despite knowing that the drain through No 13 had only 11.5% of the capacity that would be required for 1 in 20 year rain events - being Council's own standard for piped stormwater capacity, prescribed in the 1994 Stormwater Code for construction on private land. Awareness of Council's chronically unsatisfactory record with respect to the deficient pipe would be significant to the price that a fully informed hypothetical purchaser would have paid for the property in 2011.
[20]
Complaints of flooding to Council pre- and post- the second defendant's purchase
Given the continuity of the Council as a single legal entity under the successive Acts considered above, I will refer to it as "Council" in relation to all relevant events irrespective of the date on which they occurred. In December 1969 Council approved construction of a swimming pool at the rear of No 13, pursuant to an application by the second defendant's predecessor in title. No condition was imposed with respect to the pipe, such as any limitation on depth of excavation or on siting of the pool relative to the line of the pipe. The pool was in place when the second defendant bought the land in 1989.
In September 1986 Council received a letter from the proprietor of No 15 Appian Way reporting that on four occasions during the preceding 15 years the drainage of the street had proved "incapable of carrying storm water after heavy rain", resulting in overland flows down the driveway of the property. Other complaints from residents in 1984 and 1988 attributed these flooding events to blockage of drains by leaves and refuse.
When the second defendant purchased No 13 in 1989 a planning certificate dated 5 June 1989 was attached to the contract. It made no mention of the existence of the pipe, or of any rights asserted by Council with respect to it, or any restrictions upon use or development of the land by reason of the pipe, or the incidence of overland stormwater flows through the property as a result of inadequacy of the pipe. On inspection of the property prior to purchase the second defendant did not become aware of the pipe.
Wyatt Avenue runs more or less parallel to Appian Way, to the north of it. Six townhouses are constructed on a single parcel that is designated 10-12 Wyatt Avenue. That property and No 13 Appian Way are back to back. The pipe through No 13 terminates at a pit in the back garden of the property, just inside its rear boundary, which is the common boundary with 10-12 Wyatt Avenue. Stormwater is carried further to the north from the boundary pit, through 10-12 Wyatt Avenue. From time to time during the 1990s overland stormwater flowed through No 13 Appian Way as a result of inadequate capacity of the pipe, causing flooding and damage at 10-12 Wyatt Avenue. On 3 January 1996 the six townhouses suffered heavy flooding as a result of such overflows during a severe rainstorm.
This prompted the strata manager to write to Council's General Manager on 6 March 1996 requesting that "the Appian Way street drain [be] enlarged to enable it to collect all water in a heavy rainstorm". The General Manager's reply of 17 April 1996 included the following:
It is understood that flooding was caused by overland flows in excess of the capacity of the drainage system in Appian Way. … It is acknowledged that the drainage system in Appian Way requires upgrading to Council's current standards for stormwater drainage. A proposal for reconstruction has been submitted to Council for consideration and inclusion in the drainage component of Council's Management plan.
Two years went by without Council taking any action to rectify the acknowledged deficiency. Other evidence in this case has shown that Council's statements to residents who have been affected by Appian Way stormwater overflows cannot be relied upon. The Court has no acceptable evidence that in 1996 there actually was a proposal before Council for reconstruction of Appian Way drainage or, if there was, that Council considered it. In April 1998 the proprietor of No 17 Appian Way reported to Council that the basement level of his house had been flooded by stormwater flowing down his driveway when the drainage system for the street proved inadequate. He reminded Council that this had last occurred in January 1996, during the same rainstorm that had resulted in stormwater damage at 10-12 Wyatt Avenue. The proprietor of No 17 pointed out that on that earlier occasion he had been told by Council that the rain storm of January 1996 was a "1 in 100 year event", an explanation for the failure of the street drainage system that he no longer accepted in view of a recurrence after two years. Council's response was to have an officer attend No 17 and propose ways in which the overland flows down the driveway could be diverted around the house. Still nothing was done about the acknowledged inadequacy of the drain under No 13.
Neglect of the problem continued throughout 1998, 1999 and 2000. Although the inadequacy of this system had been demonstrable from residents' reports of flooding since 1972 and had been acknowledged by Council in early 1996, over the ensuing period of nearly five years Council did not identify which drain was causing the problem. During that time Council's engineering personnel did not ascertain that there was a critical main drain under No 13 and that it was in a dilapidated condition.
The Chairman of the unit holders at 10-12 Wyatt Avenue wrote to Council's engineering department on 6 June 2000, in the following terms:
It is agreed generally that the overland flooding to our property really begins from an inadequate drain in the area of 13 and 15 Appian Way, which has not been able to handle large quantities of water during deluges. Consequently, this water overflows through the driveway and garage at 13 Appian Way, builds up in his backyard then overflows onto our properties.
We understand and hope it is true that a substantial sum of money is budgeted to increase the Appian Way drain system and ask that this be given highest priority to be completed as soon as possible.
Whatever hope may have been held out to the Chairman in mid-2000 that Council would do anything in the reasonably near future to enhance the stormwater drainage of Appian Way proved to be false.
[21]
January 2001: Council found that the pipe had deteriorated
In about late 2000 and in January 2001 Council workmen attended a blocked drainage pit on the south-western side of the small park around which Appian Way diverges. They observed that a storm water pipe ran north under the park towards No 13. A camera inserted through the pipe was used to produce a video recording. This showed that the pipe passed directly under the house and swimming pool on No 13. That information was passed on to the second defendant, as the then occupier of the property, at some time in late 2000. It was the first he knew of the pipe.
The results of Council's investigation at this time are in evidence only through Mr Wyatt's report to Council of 11 June 2002. The report included the following:
The detailed investigation revealed that the existing pipeline, which was thought to have been located along the side boundary was in fact located beneath the existing house and swimming pool at number 13 Appian Way. Sidelines were found to run through the front yards of this and a number of adjacent properties. A small section of pipeline appeared to be missing at the junction of the sideline with the mainline in the front yard of No 13 Appian Way.
The investigation of the interior of the pipe using closed circuit TV camera showed that the pipe under the house has extensive longitudinal cracking, tree root infestation and a lost section under the front lawn of the property. Unfortunately, the investigation was not able to check the pipe joints so no information is available regarding the amount of leakage through the joints. Should there be a lot of leakage it could lead to structural damage of the house.
The "missing" or "lost" section of the pipe was not associated with collapse of the internal diameter or blockage. Water still passed through. This must have depended upon the surrounding soil being sufficiently compacted to maintain the opening.
When this information emerged in January 2001 it became manifest to Council that the pipe was not only of proven inadequate diameter and capacity, even for rainfall events of a 2 year Average Return Incidence ("ARI"), but that it was also unserviceable. Council's senior engineering officers considered the solution to lie in acquiring a drainage easement, 2m wide, inside and adjacent to the western and northern boundaries of No 13 and extending for the full length of those boundaries. The total area affected would be 211m². On the western boundary this easement would be located in the area of an existing driveway, carport and garage that lay to the west of the house. The officers intended that a new storm water pipe of greater capacity would be installed on this proposed easement and that the existing pipe would be decommissioned. The second defendant was first informed of this proposed solution by a Council engineer who was investigating the street drainage, at about the time when the second defendant was told of the existence of the pipe.
[22]
May 2001: commencement of negotiation for an easement
It would reasonably have been expected that Council would respond to the 2001 investigation results with a sense of urgency. However, five months went by before Council officers formally approached the second defendant for acquisition of the proposed easement, at a meeting on 25 May 2001. The second defendant said he was agreeable to granting an easement if no viable alternative was available. Mr Wyatt said that there was "no viable alternative". The second defendant said he would expect compensation for the easement. He pointed out that he had been unaware of any stormwater pipe when he purchased the property and that there had been no reference to any such pipe in the planning certificate that had been issued by Council at that time. The General Manager was present at the meeting and said that he would have two valuations prepared to determine the effect of the proposed easement on the value of the property and hence the appropriate level of compensation.
On 8 June 2001 the General Manager advised the second defendant that a valuer had been appointed. Council received a valuation from Mr Dundas of Egan National Valuers on 10 August 2001. Mr Dundas was of the view that the easement would create a "blot on the title" and would give rise to 4-6 weeks of interference with enjoyment of the land while the new stormwater pipe was laid. He also took into account that conditions of the easement would likely preclude future construction of improvements over the area affected. These detriments were valued at $95,000.
However, Mr Dundas thought there would be considerable betterment to the property through decommissioning of the old pipe. This involved an assumption that it would be a condition of the grant or resumption of the easement that the rights associated with it would be exercised by Council and that a new pipe would be laid and the old one would cease to be used. Mr Dundas wrote:
[It] is considered the location of the existing pipe below the residence would be of serious concern to any potential purchaser of this property. It is my opinion it would devalue the property by between $125,000 and $150,000.
That range of figures constituted the measure of betterment that would result from decommissioning of the pipe. It exceeded the $95,000 assessment of detriments arising from the easement, leading Mr Dundas to assess compensation at nil.
Mr Dundas' report was not initially sent to the second defendant but a plan of the proposed easement was forwarded to him under cover of a letter of 13 September 2001 from Council's General Manager, with no offer of compensation. The letter included the following:
The need to establish the proposed easement results from drainage infrastructure works being carried out by Council in the vicinity of [your] property.
The infrastructure works, amongst other things, are intended to improve the drainage system for all properties in the vicinity of this property. Clearly, the carrying out of such works is desirable because they will benefit the community generally.
[…] Council considers that the construction of a new drainage system within the site of the proposed easement and the decommissioning of the existing line of pipes, which currently run directly under the swimming pool and residence, will be beneficial to [your] property.
Naturally, Council will pay all costs and expenses associated with the construction of the drainage system to be located within the site of the proposed easement and the decommissioning of the existing line of pipes. You will not be required to contribute to those costs and expenses.
Council is prepared to pay all your reasonable legal costs and expenses associated with the creation of the proposed easement.
Please consider the Council's proposal and let us know whether it is commercially acceptable to you.
On 21 September 2001 the second defendant replied, stating that he did not find Council's proposal commercially acceptable. He complained of the lack of detail of the works proposed and requested a further meeting. The second defendant's letter included the following:
When I purchased this property I had no idea that there was a storm water pipe under my house. It was only last year that Burwood Council were working on the street stormwater that one of your engineers approached me to discuss the possibility. Searches were then carried out to confirm this. It seems that even your engineers were not certain of the whereabouts of those pipes. That engineer then raised with me for the first time the possibility of me giving an easement. Of course I am concerned about the pipe and the possibility that it might burst or leak.
[At the meeting on 25 May 2001] I further explained that I expected compensation to be paid by Burwood Council to me for the granting of [a new drainage easement]. After all the presence of such a large storm water pipe on my property will affect my property in a very significant way.
Shortly after this letter was written the second defendant retained Mr Brady, a certified practising valuer. In a report issued in early November 2001 Mr Brady assessed that Council's proposed drainage easement would diminish the value of the property by $100,000. No offset was allowed for betterment from de-commissioning the old pipe. The second defendant did not provide a copy of this valuation to Council until a year later.
By February 2002 the lack of progress towards a negotiated agreement for Council to acquire a drainage easement over No 13 was causing deferral of other works. Resurfacing of Appian Way was two years overdue. If an easement were to be acquired and a new storm water pipe installed on it, the pits at various locations in the gutters would have to be relocated and new connecting lines would have to be laid. According to a memorandum from Mr Wyatt to one of the Councillors dated 7 February 2002, resurfacing could not proceed until the reconfiguration of pits and drainage lines under Appian Way had been completed.
[23]
March 2002: differences concerning Council's rights and "betterment"
On 21 March 2002 Council's General Manager together with Mr Wyatt and Mr Cormican, the Engineering Manager, met with the second defendant and his solicitor, Mr Hones. Mr Hones said that he had a barrister's advice on the status of the pipe under No 13, on the basis of which he considered Council's claimed rights over the pipe were "in some jeopardy". He therefore disputed that compensation for the proposed easement should assume betterment to the second defendant from decommissioning the old pipe. Council's officers proposed that they would investigate the history of the pipe and obtain their own legal advice. They suggested that the parties' valuers should meet.
Mr Wyatt said that a new pipe would be laid within the proposed easement by thrust boring so that the existing driveway, carport and garage would remain undisturbed. Mr Hones said that the new pipe should be laid at sufficient depth to permit lowering of the driveway and construction of a basement under the existing residence, in case such development of the site should in future be desired.
[24]
April 2002: Robinson GRC hydraulic study
In April 2002 Council received a report from Robinson GRC Consulting Pty Ltd (Robinson GRC) on a hydraulic study that Council had commissioned. The report presented the results of drainage system modelling on almost all of the stormwater drainage operated by Council and by Sydney Water within the municipality. A computer program was used to calculate stormwater flows in pipes and channels and to forecast the magnitude of overflows during major storms. Probable maximum precipitation data from the Bureau of Meteorology was utilised, as well as records of storm patterns that enabled calculations to be made of maximum run-off from the extensive impermeable surfaces across the local government area.
Several discrete catchments were identified, one of them being "Dobroyd North". From part of the Dobroyd of North area, stormwater drains through No 13 Appian Way. The report identified likely trouble spots where high overflow rates and levels of ponded water were likely to occur. Such locations were identified by means of hydraulic calculations. The likely flows in excess of system capacity were quantified. In addition the consultants examined Council's files concerning drainage works and complaints. The file for Appian Way yielded the most complaints for the whole municipality, recorded in the consultants' report as follows:
October 1972 17 Appian Way - Flooding
November 1974 17 Appian Way - Flooding of garage
July 1988 16 Appian Way - Flooding
January 1996 10-12 Wyatt Avenue - Flooding; 17 Appian Way - Garage and basement flooding
April 1998 17 Appian Way - Flooding
November 1998 13 and 15 Appian Way - Blocked pit
January 1999 15 Appian Way - Overflowing drain
Until February 2015, when Council raised and levelled the footpath, the lowest point along the combined frontages of Nos 13-17 Appian Way was at the driveway of No 17. When the capacity of the pipe through No 13 was exceeded overland flows would initially proceed down that route. If the excess over pipe capacity was great enough there would be overland flows through Nos 13 and 15 as well.
Robinson GRC rated the severity of potential for flooding at the Appian Way trouble spot as "significant". The consultants understood that the diameter of the pipe was 450mm. Their report included the following:
In heavy storms the capacity of [the pipe under No 13] is inadequate and the resulting surface flows can pass through Nos 13, 15 and 17 Appian Way and properties in Wyatt Avenue to the north. […]
[Works] are proposed by Burwood Council to reduce the drainage problems at Appian Way. These include the provision of additional pits and pipe work to more effectively collect stormwater from the low point adjacent to No 13 Appian Way. These [works] are limited because of the difficulty of enlarging the 450mm pipeline that runs through No 15 [sic] Appian Way. […]
The current works will improve the flooding situation, but flooding is likely to occur in future. Effective options would be: the construction of a new pipeline to Wyatt Avenue through private property; demolition or alteration of some buildings and fences between … Appian Way and Wyatt Avenue to provide a clear flow path for overflows.
Both of these are difficult because of the existing buildings on the lots.
Table 6.2 in the Robinson GRC report set out the magnitude of overflows at Nos 13-17 Appian Way that would result from the insufficient capacity of the pipe through No 13 to handle likely recurrent intensities of precipitation. The table showed the overflow values for various Average Recurrence Intervals, as follows:
1 year ARI 0.32 m3/sec
10 year ARI 1.7 m3/sec
100 year ARI 2.8 m3/sec
Potential Maximum Precipitation 12 m3/sec
[25]
April - June 2002: inconclusive negotiations for acquisition of an easement
In response to matters raised by Mr Hones at the meeting with Council officers on 21 March 2002, Mr Wyatt wrote to the second defendant on 24 April 2002. He advised that on information available to Council it appeared likely the drain under No 13 had been constructed in connection with the roadworks of Appian Way in "or around" 1905. Mr Wyatt said that Council had obtained its own legal advice. He quoted statutory provisions that he said gave Council sufficient power to undertake work on the existing drain and/or to improve the drainage of Appian Way. He asserted that, regardless of the outcome of the parties' dispute about whether Council had rights over the existing pipe, the installation of a replacement on the proposed new easement would be desirable for the relief it would give from flooding of No 13. He said:
This benefit is enough in itself to extinguish the bulk of the owner's claim for compensation payable in respect of the proposed easement.
Mr Wyatt expressed Council's preference for resolving the question of compensation by negotiation "rather than seeking a legal solution" and he proposed that the parties' valuers should meet. A meeting took place between Messrs Dundas and Brady on 23 May 2002. This achieved nothing because the second defendant had not given Mr Brady authority to negotiate on valuation methodology or to release a copy of his own valuation report. Through Mr Brady the second defendant maintained his stance, in reliance upon legal advice, that there was no benefit to him from decommissioning the old pipe because Council had no rights over it.
In a letter dated 29 May 2002 Mr Hones offered on behalf of the second defendant to accept compensation of $200,000 for the easement. Needless to say Mr Brady's valuation at $100,000 had still not been provided to Council at this time. In oral evidence the second defendant denied that he had authorised this offer but I do not accept that evidence. Mr Hones' letter contains detailed additional proposed terms of an easement and these must have been the subject of instruction. I find it improbable in the extreme that the solicitor would have made this offer without authority. Having observed the second defendant in the witness box when he gave evidence that the offer of $200,000 was unauthorised, I am satisfied that this was said not on the basis of any genuine recollection but in order to deflect embarrassment caused by the cross-examination, in which it was suggested that his seeking $200,000 while withholding a valuation for half of that sum was disingenuous.
On 31 May 2002 Mr Wyatt wrote to Mr Hones to point out that, without a copy of Mr Brady's valuation, Council had no basis for assessing the offer to accept $200,000. He said:
If your client is not prepared to provide information necessary to resolve this situation quickly, Council will consider commencing proceedings for the compulsory acquisition of the easement. If forced to go down this path, Council will look for the most cost-effective solution - including the acquisition of an easement over the existing pipeline or abandoning the whole project. Given the demands on Council's financial resources, it is unclear when or if the project will again receive funding should Council resolve to reallocate the funds for the project.
The second defendant was difficult. The advice he said he was receiving was, in my respectful opinion, wrong. But Mr Wyatt's letter disregarded Council's responsibilities to the owners of other affected properties. It should not have been considered open to Council to pressure the second defendant by threatening to leave him - and, necessarily, the other owners - to suffer ongoing stormwater damage from the inadequate drainage system.
[26]
June 2002: Council's resolution
Mr Wyatt prepared a detailed report for consideration at a meeting of Council's Services and Policy Committee scheduled for 11 June 2002. His report summarised the history of construction of the pipe under No 13, the frequency of complaints from residents of Nos 13-17 since 1984 and the results of the investigation in January 2001 that had revealed deterioration of the pipe. He referred to the Robinson GRC study of the hydraulic capacity of the pipe in "a variety of storm conditions". Mr Wyatt identified two options. The first was to acquire an easement at the western boundary of No 13 and install a larger diameter pipe. The second "significantly cheaper solution" was to remediate the existing pipe and install a lining in it. He said that neither solution would completely eliminate overland flows during heavy rainfall events but that such flows would be higher under the second, cheaper option.
Mr Wyatt included in his report a summary of the failed attempts to negotiate with the second defendant for acquisition of a western boundary easement on agreed terms. He said that continued negotiation was "unlikely to resolve the issue in a reasonable time frame with acceptable conditions". Mr Wyatt drew Council's attention to the avenue of compulsory acquisition under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). He also said that, given the second defendant's legal advice, Council would need to establish its legal entitlement to enter upon No 13 for the purpose of refurbishing the existing pipe, if that option were adopted. Mr Wyatt recommended that Council move to acquire a western boundary easement compulsorily if a last attempt at negotiation should prove unsuccessful. He recommended as follows:
That, should Council be unable to proceed with the relocation of the pipe in a new easement, it should initiate action to gain access to the property and proceed to reline the pipe in its current location. (Future development of the property should include the establishment of an easement adjacent to the side boundary for drainage purposes).
On 11 June 2002 the Services and Policy Committee acting under delegated authority from Council adopted a plan that did not follow the first part of Mr Wyatt's recommendation. The Committee decided not to invoke the compulsory acquisition process in respect of a western boundary easement. The creation of such an easement was postponed until it could be achieved as a condition of future development of the property. The only easement Council resolved to acquire compulsorily was over the existing pipeline. The Committee's 2002 resolution was as follows:
A That Council proceed to negotiate the creation of an easement over the existing pipeline and then proceed to reline the existing pipe in its current location beneath the house.
B That, should Council be unable to gain consent from the owner, it proceed with compulsory acquisition of an easement over the existing pipeline. (Future development of the property should include the establishment of an easement adjacent to the side boundary for drainage purposes).
C That the Acting General Manager and Council's Solicitor meet with the owner and his solicitor to advise them of Council's adopted course of action.
The second defendant was informed of Council's 2002 resolution by a letter to Mr Hones dated 14 June. Mr Hones replied on 3 July 2002 with an invitation to Council to make an "offer of what sum is thought appropriate to acquire the easement as proposed".
[27]
July - November 2002: negotiations and impasse regarding Council's rights
On 12 July 2002 a meeting was held between Mr Wyatt and Mr Cormican, representing Council, and the second defendant. The second defendant said he wished to reopen negotiations for compensation for the proposed western boundary easement, that Mr Wyatt had said was abandoned by Council due to "inability to obtain details of your valuations". The second defendant said he was now willing to exchange valuations, preliminary to further negotiations. Mr Wyatt said there was no basis for further negotiations but the matter could be taken back to Council for reconsideration of its 2002 resolution if additional information from the second defendant provided justification for this.
As earlier mentioned, ss 59A and 191A of the Local Government Act 1993 (see [13]-[15] above) came into force on 1 August 2002. By 8 August 2002 there had been no material development between Council and the second defendant. On that date Mr Wyatt wrote to the second defendant as follows:
As almost a month has passed and Council has received no information, it would appear that you have reconsidered this matter and decided against the proposed course of action. I therefore wish to inform you that I am proceeding to implement Council's resolution, details of which were covered in Council's letter dated 14 June 2002 to [Mr Hones].
On about 8 October 2002 Council's solicitors drew to Mr Hones' attention the enactment of the new sections and provided him with an extract of the agreement of 25 August 1903 between Mr Hoskins and the Borough of Burwood. Council's solicitors clearly considered that the amendments to the Local Government Act 1993 strengthened Council's rights over the existing pipe and reinforced the argument that, if the pipe were decommissioned in conjunction with the grant of a new easement, there would be a betterment to the property and this would offset the second defendant's claim to compensation.
On 10 October 2002 Mr Hones sent to Council's solicitors a copy of Mr Brady's valuation that had been prepared in November 2001. With reference to the question whether the pipe had been "installed [on the land] by Council", within the meaning of s 59A, Mr Hones wrote as follows:
We are unaware of and to date we have seen no evidence that Council in fact installed stormwater drainage pipes. If in fact the Council did install the drainage pipes, then we would have expected Council to have notified our client of its ownership of those pipes in the Section 149 Certificate presented to our client when he purchased the property. Obviously had our client known of the existence of the pipes at the time of his purchase then the purchase price would have been adjusted accordingly. Our client was not granted that opportunity.
[…] Obviously the existing pipe is totally inadequate to carry the volume of water which may flow from Appian Way and the suggestion that this smaller pipe may be upgraded but of the same diameter is totally inappropriate.
The letter concluded with a request that Council make an offer of compensation for a western boundary easement.
In a further report to Council dated 10 October 2002 Mr Wyatt stated that the delay up to this point in implementation of Council's resolution of 11 June had been:
intended as a final attempt to avoid the legal action which is likely to follow if Council seeks to force entry to undertake the work. While Council's legal position appears to be sound, the owner has indicated that it will be challenged in court if it proceeds.
On 31 October 2002 Mr Hones informed Council's solicitors that he had an opinion from senior counsel to the effect that ss 59A and 191A of the Local Government Act 1993 had not been shown to be applicable because it had not been proved that the Borough of Burwood "actually paid for and constructed the drain", nor that the pipe through No 13 was the "main drain" referred to in the 1903 agreement with Mr Hoskins. The second defendant therefore maintained his position that Council was presently without rights over the pipe and that there would be no betterment from decommissioning it and installing a new drain adjacent to the western boundary. He asked whether Council would agree to pay the $100,000 that Mr Brady had assessed as compensation for the easement
On 26 November 2002 Mr Hones wrote to Council's solicitors a detailed letter disputing the right of Council to come on to the second defendant's land to refurbish or maintain the pipe and stating that the second defendant would be entitled to compensation if this should occur. Mr Hones said:
Our client's greatest concern is that at no time was he aware by the exercise of normal care and enquiry that an easement existed or that a pipe existed through his land under his house. If Council were to exercise a right to enter to reinstate the pipe or to maintain the pipe our client will suffer a loss arising out of what is tantamount to rights similar to those which would be vested by an easement and there is the attendant loss in value to our client's land as a result of an exercise of such a right by the Authority.
[28]
December 2002 - March 2003: Council's notifications of entry to repair the pipe
Council responded on 12 December 2002 with two letters. The first was in these terms:
As previously advised Council has resolved to carry out maintenance of the drainage pipeline which passes through your property. Council intends to reline the pipe and undertake maintenance of the pipeline.
Council will carry out this work pursuant to section 94 of the Roads Act 1993 which enables Council, as roads authority for Appian Way, to carry out drainage work for the purposes of draining a public road.
There followed advice that the second defendant would be notified of the date and time of proposed entry, first for the purpose of inspection and subsequently to carry out the requisite work.
The second letter of 12 December 2002 was in the nature of formal statutory notice, headed as follows:
Notice of Entry to Carry out Drainage Work to 13 Appian Way, Burwood (Lot 33 DP 12249)
This letter again stated that the power of entry would be for the purpose of carrying out Council's function under s 94 of the Roads Act 1993. It included a paraphrase of sections of the Local Government Act 1993 and s 118B of the Environmental Planning and Assessment Act, to explain the extent of Council's asserted powers. Mr Hones responded on 27 December 2002 reiterating the second defendant's denial of any right of entry and his claim for compensation if work should be undertaken on his land.
At some time in late December 2002 or early January 2003 Mr Hones offered on behalf of the second defendant to accept $70,000 for the acquisition of the proposed new easement. Council might have taken a conciliatory approach to compensation in light of the valid points that had been made by Mr Hones on 10 October and 26 November 2002 (see [102] and [105] above). But it did not. By letter of 14 January 2003 Council's solicitors rejected the offer to accept $70,000 and a recent offer from Council of $15,000 was withdrawn on the grounds of increased legal costs incurred after that offer had been made. Mr Hones was informed that Council intended to act on its 2002 resolution but that fresh notices, in place of those dated 12 December 2002, would be issued.
By 14 January 2003 Council had arranged for a contractor to inspect the pipe, so far as he could, from pits on Appian Way and to provide a price for relining the pipe with UV cured fibreglass. On 4 February 2003 fresh notices were issued to the second defendant under s 94 of the Roads Act 1993, in substantially the same terms as the notices of 12 December 2002. It was advised that Council would enter No 13 for the purpose of inspection on 17 February 2003 and would again enter for the purpose of carrying out pipe refurbishment work between 3 and 7 March 2003. The second defendant wrote to the Mayor on 7 February 2003 protesting Council's proposal to maintain the old pipe and requesting mediation of the issue of compensation for a new easement. The Mayor replied on 14 February 2003, concluding as follows:
I therefore confirm that Council will act pursuant to the notices issued to you on 4 February 2003.
At this time the estimated cost of the relining work was $60,000 and further works at a cost of $125,000 would have to be done on the inlets and other connections in the street. The alternative of constructing a new pipe within a western boundary easement had not been designed in detail but its cost was estimated at $210,000. This would also require additional work in the street for altered connections. Any compensation payable to the second defendant for acquisition of the easement would be additional.
[29]
February 2003: Council deferred its remediation work on the pipe
By 20 February 2003 the second defendant had instructed Mr Hones to seek an injunction to restrain Council if it should attempt to undertake work on No 13 in connection with the existing pipe. Mr Wyatt discussed the matter with the second defendant on that day and agreed that Council "would not proceed with its works at this time" and would investigate alternatives to the current proposal. The second defendant's position was confirmed in a letter sent by Mr Hones to Council the next day, concluding as follows:
Would you kindly confirm as a matter of urgency that you will not [proceed] with the works on 3 March [2003] as notified by you to our client. In the event that you do not so confirm, we are instructed by our client to seek an injunction to restrain Council from undertaking these unauthorised works.
At first impression it would seem contrary to the second defendant's interests to have refused access to his land for the repair and relining of the failing storm water drain under his house. The only available inference, which I draw, is that the second defendant's opposition was a tactic to force Council to resume negotiations for the acquisition of a western boundary easement and for the payment of substantial compensation. The tactic did not achieve its objective. It led to the worst possible outcome for the second defendant and for the proprietors of all properties that lay in the path of stormwater flooding from Appian Way. Council did not resume negotiations to acquire an easement but did allow itself to be deterred from exercising its undoubted statutory powers to enter the second defendant's property and remediate the pipe.
In a letter to the second defendant dated 5 March 2003 the General Manager said this:
Council's position remains that no further rights or easements are required to undertake maintenance of the existing pipe and that no net compensation is payable in respect of any new pipeline on the side of your property.
The General Manager referred to the second defendant's position that Council could not perform work on the existing pipe in the absence of an easement over it and that he would be entitled to net compensation for a western boundary easement. The General Manager's letter continued:
Given this impasse Council has agreed to defer the proposed drainage works through your property until this matter could be resolved. This includes the proposal to replace the missing section of pipeline under the front section of your property.
The General Manager's letter stated that Council would investigate the possibility of acquiring an easement down the eastern side of No 13, possibly with half of its width located on the adjoining property, No 11. The letter also stated that Council would examine minimally intrusive techniques for constructing a pipe in the proposed easement on the western boundary of No 13. The letter concluded in these terms:
Council has agreed not to enter your property in accordance with the notice issued, and will formally notify you should it wish to proceed in this manner at some time in the future. No other formal response is required from you in relation to the current notice.
On 21 March 2003 Mr Wyatt reported to the Mayor, General Manager and Councillors on the meeting with the second defendant of 20 February 2003. He said:
As a result of the meeting it was agreed that Council would not proceed with the maintenance work as advised and it would investigate the possibility of relocating the pipeline in an adjacent property. The owner was advised that the funds which had been allocated for the project would be reallocated to other projects and that future funding of this project would need to be considered in conjunction with other projects in future capital works programs.
There was no further communication between the parties until 16 December 2003, when the second defendant wrote to the General Manager to enquire whether the possibilities referred to in the letter of 5 March 2003 had been examined. Mr Cormican replied on 21 January 2004 that Council had not yet investigated those alternatives. On 15 March 2004 Mr Cormican informed the second defendant that provision for capital works in Appian Way had been made in a draft Council budget for the forthcoming financial year. In the event, the only further works executed, probably in 2005, were the reconfiguration of drainage inlets and feeder pipes within the street and the placement of the large junction pit below the gutter close to No 13, as referred to at the commencement of these reasons and described further below.
In summary, from March 2003 Council shelved and ignored the need for improved stormwater drainage infrastructure at Appian Way. The impasse with the second defendant concerning compensation for a western boundary easement could readily have been submitted to just resolution according to law, by commencing a compulsory acquisition process that would have given the second defendant standing to seek a determination of the value of a resumed easement in the Land and Environment Court. The impasse concerning interim access to No 13 could readily have been resolved by application to this Court for a declaration of Council's s 59A rights. Council chose to do nothing, leaving the second defendant and his neighbours to the certainty of future flooding.
[30]
June 2004: second defendant's development application
On 18 June 2004 Council consented to a development application by the second defendant for a patio 3m wide across the rear of the residence at No 13 in place of the existing patio, 1.5m wide. The development included construction of a skillion roof over the new patio, by extension of the existing roof line of the house. The consent was granted upon conditions but these did not include that a western boundary easement be established and Council did not raise its requirement of such an easement at this time.
[31]
October 2004: Brown Consulting (NSW) Pty Ltd updated hydraulic study
In October 2004 Brown Consulting (NSW) Pty Ltd reported on a review that Council had asked the firm to make of the 2002 Robinson GRC hydraulic study of the municipality. Revised calculations showed an increase in projected overland stormwater flows from Appian Way through private property towards Wyatt Street, representing excess surface flows beyond the capacity of the pipe through No 13. The increase in the projections was attributed to changes to the computer program used for the forecasts and alterations within the catchment, such as the percentage of impervious surfaces. The new projections of overflows were as follows:
1 year ARI 0.6 m3/sec
10 year ARI 2.0 m3/sec
100 year ARI 3.0 m3/sec
Potential Maximum Precipitation 12.3 m3/sec
For comparison, the results reported by Robinson GRC are summarised at [89] above. For 1 year ARI rainstorms the forecast excess over the capacity of the pipe had increased 100%.
[32]
May 2005: Webb McKeown concepts and costings for Appian Way drainage
In December 2004 Council briefed Webb McKeown and Associates Pty Ltd to undertake technical investigations and detailed design for a range of alternatives to resolve the inadequate stormwater drainage of Appian Way. The design brief informed Webb McKeown of the deterioration, partial obstruction and inadequate diameter/capacity of the pipe running through No 13. Nothing had been done to remediate the deterioration of the drain since its condition had been surveyed by CCTV camera in January 2001.
Webb McKeown's draft report, furnished in May 2005, noted that Council's 1994 Stormwater Code specified a 20 year ARI standard for piped systems in residential areas and suitable treatment of all surface flows to a 100 year ARI standard. The Robinson GRC report of 2002 and the Brown Consulting (NSW) Pty Ltd update of October 2004 had shown that the pipe through No 13 did not satisfy even a 1 year ARI standard. Webb McKeown stated that for a 20 year ARI the pipe through No 13 was under capacity by 2.3m³/sec, which would be the magnitude of the resultant overland flow through Nos 13-17.
The hydrological calculations by all consultants were made on the assumption of a 450mm diameter pipe in serviceable condition. Webb McKeown advised Council as follows:
The results indicate that the existing drainage system has less than a 1 year ARI capacity. Analysis of the [computer model] results also indicated that the drainage system capacity is limited by insufficient pipe capacity through No 13 Appian Way as well as insufficient pipe and surface inlet capacities in Appian Way itself. Hence, to upgrade the drainage system to Council standard would require improvements to the system within Appian Way as well as the pipeline connecting through to Wyatt Avenue.
It should be further noted that given the poor condition of the pipeline traversing No 13 Appian Way the capacity of the existing drainage system may even be less than that indicated from the results of the [computer modelling].
It is common ground between the parties to the present proceedings that the diameter of the pipe is only 400mm. It therefore has a cross-sectional area that is only 79% of the cross-sectional area implicitly assumed in the engineers' calculations. It follows that the under-capacity of the pipe through No 13 was even more severe than the engineers believed.
The Webb McKeown report considered four alternative concepts for upgrading Appian Way stormwater drainage. Advantages and disadvantages of each were considered and cost estimates were given. Concept 1 was as follows:
A structural liner would be inserted into the existing pipeline and the missing section of pipe in the front yard of No 13 Appian Way would be replaced. In conjunction the street drainage system upstream would be upgraded to divert the street drainage into pipes fully contained within the road reserve as compared to the existing arrangement which runs through private properties.
An attached diagram showed that under Concept 1 the sidelines feeding the pipe and connecting with it in the front yard of No 13 would be decommissioned. Seven new surface grated inlets would be installed in the gutters of Appian Way within a radius of 70m from the front boundary of No 13. Pipes from these would lead to a large new junction pit to be constructed under the gutter in front of No 13. The pipe running under No 13 would connect at the bottom of this pit and would thus receive all of the surface water flowing into the new system of inlets and feeder pipes. The cost was estimated as follows:
New pits and feeder lines on Appian Way $105,000
Re-lining the main pipe $95,000
Total $200,000
The benefits of Concept 1 were said to include that, if all components were executed, the flows through the refurbished pipe could be increased from 0.3m³/sec to 0.5m³/sec. This would still be less than the 0.9 m³/sec capacity that would be required to handle 1 year ARI storm water run-off wholly within the pipe. Webb McKeown warned of the following deficiencies of the Concept:
[The] capacity of the pipeline traversing No 13 Appian Way would not be increased. Hence there would be only marginal increase in the performance of the overall drainage system. The capacity of the drainage system under this option is still estimated to be less than 1 year ARI. Overflows through several private properties would still be quite high in major storms; the estimated overflow through the properties would be 2.1 m3/sec and 2.7 m3/sec during the 20 year and 100 year ARI storms respectively. Furthermore, this option does not provide for an overland flow path for flows in excess of the piped system capacity.
In the longer term, this option is undesirable as the pipeline would still be located beneath the house and swimming pool. This could affect the future redevelopment potential of the property and access to the pipeline would be difficult if required for future maintenance or upgrading.
Webb McKeown's Concept 3 is the only other concept that need be considered for present purposes. It involved acquisition of an easement over No 13 adjacent to the western boundary and installation of a new 900mm pipe within that easement. The consultants said this would be necessary to achieve Council's standard of 20 year ARI pipe capacity. Extensive works would be required on Appian Way to redirect stormwater from inlets in the gutters to a junction pit approximately in line with the western boundary. An increase in capacity of the downstream stormwater pipe running through 10-12 Wyatt Avenue would also be required. The existing pipe through that property was 750mm in diameter and an additional pipe would have to be laid alongside it to avoid surcharging at the point of connection from the proposed new 900mm pipe through No 13.
Webb McKeown recommended that the existing carport and garage on No 13 be removed and that the proposed easement should include terms that would prevent future construction on this area, so that any overland flows experienced in rainstorms more severe than 20 year ARI events could pass over the easement toward the rear of the property. The consultants' cost estimate was broken down as follows, not including any compensation payable for resumption of the proposed easement:
900mm pipe through No 13 $250,000
Upstream drainage work on Appian Way $330,000
Downstream augmentation of pipe to Wyatt Avenue $155,000
Total $735,000
[33]
May 2005: reconfigured street drainage junction pit in front of No 13
Council proceeded with only the drainage work on Appian Way that formed one component of Webb McKeown's Concept 1. Several new inlet pits and feeder lines were installed in the road reserve, all discharging into a large junction pit constructed beneath the gutter directly in front of No 13. The junction pit had to be built to a depth of about 3m in order to connect with the pipe running under the surface of No 13. The front yard of the property was about 1.5m below street level and the pipe through the yard was buried below that. I infer that this work was executed shortly after May 2005, having regard to the date of Webb McKeown's report. The second defendant said he thought the work was done in 2004 but he was uncertain.
The second defendant was aware of the junction pit being constructed near the front boundary of No 13. However there is no evidence that Council explained to him, or that he otherwise appreciated, that all street drainage inlets and pipes were directed to this pit. The second defendant deposed that over the 22 years of his occupancy of the property, from 1989 to 2011, he "did not experience any major flooding problems" and his land "had never been seriously affected by flooding". He said that during torrential rain, water would on occasions flow down his driveway and exceed the capacity of a U-profile surface drain that was laid, transversely, at the carport entrance. When that occurred the water would be diverted into the adjoining property, No 15. The second defendant said that, of the occasions when storm water flowed through to his garage behind the carport, the deepest he ever saw it was about 15mm. In the second defendant's experience, stormwater flows through No 13 were "almost always" as a result of heavy rain falling directly on his own land, rather than overflow from the surface of Appian Way. He was aware that surface run-off from Appian Way flowed through No 15.
So far as the evidence shows, after March 2004 and for the balance of the second defendant's tenure of No 13 up to August 2011, there was no further communication between Council and the second defendant on the subject of stormwater drainage.
[34]
2011: second defendant's sale of No 13 to the plaintiff
[35]
August 2010: obtaining the planning certificate
In August 2010 the second defendant contacted a real estate agent to market the property and submit it to auction. The agent requested that a contract of sale be prepared. On 6 August 2010 the second defendant completed and lodged with Council an application for a planning certificate pursuant to s 149 of the Environmental Planning and Assessment Act. He knew that such a certificate would have to be attached to the contract.
Council's application form offered a choice of certificates, as follows:
Section 149(2) Certificate … $40.00
Section 149(2) Certificate + 149(5) Certificate … $100.00
The second defendant checked the box for the second of these alternatives and paid the fee of $100. He did not specify on the application form any subject matter in respect of which he required information to be disclosed pursuant to s 149(5). On 9 August 2010 Council issued a certificate. It made no reference to the pipe, or Council's statutory rights over it, or any restriction upon development of the land by reason of the presence of the pipe. The certificate did not mention Council's 2002 resolution or its notices to the second defendant of 4 February 2003 regarding its intention to enter and repair the pipe.
In mid-August 2010 the second defendant attended upon the cross-defendant, Mr Lukas, and instructed him to prepare a contract of sale. The second defendant provided the planning certificate to Mr Lukas and a contract was prepared with the certificate incorporated. Mr Lukas sent the contract to the real estate sales agent on 10 September 2010. The property went to auction on 23 October 2010 but was passed in. In early March 2011 the plaintiff and second defendant agreed upon a price of $3 million. By letter of 15 March 2011 from the plaintiff's solicitor to Mr Lukas modifications to the special conditions of the contract were proposed. The plaintiff's solicitor also sought eight items of information prior to exchange. The fifth of these, so far as presently relevant was as follows:
5 Is the vendor aware of the following:
[…] Any outstanding notices affecting the land which have been issued under the Local Government Act and/or under the Environmental Planning and Assessment Act 1979.
On 15 March 2011 Mr Lukas took instructions from the second defendant by phone as to how this letter should be answered. He recorded in a file note the instructions given, which included that the answer to question 5 was, "No". Mr Lukas replied to the plaintiff's solicitor's letter of 15 March 2011 by email late on the same afternoon. All eight of the plaintiff's requests for information before exchange were answered in accordance with the second defendant's instructions. For reasons that will appear, the answer "No" to question 5 was incorrect. However, the plaintiff has not pleaded any cause of action upon that statement.
Counterparts of the contract were exchanged on 17 March 2011. Standard condition 5 provided for the purchaser to raise requisitions. Special condition 10 was in these terms:
10 The Purchaser acknowledges that the only form of general requisitions on title that the Purchaser shall be entitled to raise pursuant to Clause 5 shall be in the form of Requisitions on Title annexed and are deemed to be served at the date of this Contract.
A set of requisitions was annexed to the contract, as envisaged in special condition 10. Under cover of a letter of 14 July 2011 the plaintiff's solicitor requested answers to those requisitions. In a telephone conversation on 28 July 2011 Mr Lukas took instructions from the second defendant as to the answers to be given. The evidence concerning those instructions will be considered in detail below, in connection with the second defendant's cross-claim against Mr Lukas. By 11 August 2011 Mr Lukas had not sent the answers to the plaintiff's solicitor and at 9:19am that day the plaintiff's solicitor sent a reminder by email. On the basis of the instructions given by the second defendant on 28 July, Mr Lukas completed the answers in handwriting and sent them to the plaintiff's solicitor at 3:53pm on 11 August. The sale was settled the next day and the plaintiff and her family took possession.
The second defendant purchased No 16A Appian Way, on the slightly higher southern side of the street. He has resided there since 2011.
[36]
2011-2015: flooding of No 13, repair of the pipe, raising the footpath
The facts considered in the following paragraphs establish the extent of flooding of the plaintiff's property by stormwater from Appian Way between 7 November 2011 and 11 October 2012. These facts also support findings that the cause of the flooding was blockage of Council's pipe under No 13; that Council's long delay, until mid-July 2013, in rectifying this blockage was the product of its own indecision and inaction; that the plaintiff did not deny Council access to her land to repair the pipe and that she does not bear any responsibility for the flooding. All of these findings are relevant to issues 16 and 17 concerning the plaintiff's cause of action in nuisance.
During heavy rain on 7 November 2011 stormwater accumulated in the junction pit outside No 13 and overflowed to form a large pond at the gutter. The pond extended across the frontages of Nos 13-17. The water was unable to escape through the pipe under No 13. It continued to accumulate and then overflowed down the plaintiff's driveway. The driveway led to a carport with a vertically retractable panel door. The a U-profile surface drain across the driveway at the foot of the carport door, previously referred to at [130], had an outlet pipe that was designed to allow water to escape to the rear yard. The flow was too great for the surface drain and its outlet. Water therefore entered the carport and the garage behind it, flooding the latter to a depth of approximately 400mm. A number of the plaintiff's personal possessions stored in the garage were damaged beyond repair, including electrical items. The water escaped through the rear of the garage to the lawn and pool surrounds behind the house. These areas were inundated.
The plaintiff notified Council of the accumulation of water on Appian Way and of the flooding of her property. A Council employee who attended on 8 November 2011 and another whom the plaintiff contacted on 11 November attributed the problem to leaves in the gutters and inlet pits of the street, which was, in fact, not the problem.
Overnight on 22-23 November 2011 there was a second flooding of No 13, very similar to the first. No further damage to personal property occurred but a large volume of fast flowing stormwater surged through the plaintiff's carport and garage onto the rear lawn and pool area. During 23 November 2011 Council employees installed a pump at the junction pit in front of No 13, with a 150mm diameter flexible discharge hose that they laid down the driveway, through the carport and across the back lawn to a point near the rear boundary pit. This was effective to move water from the large pond at the kerb of Appian Way to the rear of the property, bypassing the house, carport and garage. However the discharge into the back garden thoroughly flooded it and eroded the rear lawn. The stormwater carried wastepaper and effluent and had an offensive smell. Its residue, after pumping stopped, left the back garden polluted, waterlogged and unusable for many days.
Council's Civil Construction and Maintenance Coordinator, Mr Jamal Aslan, realised that the cause of the junction pit overflowing and flooding the street and adjacent properties must have been a failure of the pipe under No 13. On 24 November 2011 he sent an email to Mr Bruce Macdonnell, who had taken over as General Manager at some time after Council's earlier dealings with the second defendant. The email included the following:
An investigation into the damaged pipe is ongoing and will resume once rain stops and water in the pipe recedes. Contractors […] will be engaged again on 29/11/11 (weather permitting) to carry out CCTV camera recording of pipe damage […].
Once pipe damage is located and assessed we can schedule and commence urgent repairs provided we have access to site and the location of damage. […].
Future blockage and flooding is highly likely even after pipe is repaired in view of the large catchment area discharging into this under-capacity small diameter terracotta pipe.
The plaintiff's property was flooded for a third time on 26-27 November 2011 because one of the hoses of the bypass pump became blocked. That was the explanation given to the plaintiff by a Council employee who attended the property at the time. The delivery hose was repositioned by Council's employee in response to a neighbour's complaint about the noise of the outlet jet striking a boundary fence. After it had been moved the hose discharged water at high velocity more directly onto the plaintiff's lawn and tore up sections of it.
On 7 December 2011 the General Manager and two other Council representatives met with the plaintiff and her husband at the property. The General Manager informed the plaintiff that there was a storm water pipe under her land and that it had "collapsed". This was the plaintiff's first knowledge of the existence of the pipe. The General Manager erroneously told her that it ran under the driveway. He said:
Council has an easement over the pipe.
That was also wrong, although Council's statutory rights were as much an encumbrance as an easement would have been. In answer to the plaintiff's question whether she would be able to make an extension at the back of the house the General Manager said:
You won't be able to do that on this property. The pipe won't be far enough beneath the surface.
The plaintiff's question whether the pipe could be lowered was met with this response:
No, and as you know the property is also affected by flooding which is another reason why you will not be able to [make an extension at the rear].
Council did not call Mr Macdonnell and the plaintiff was not cross-examined to challenge her recollection of the above conversation. One of the Council representatives present at this meeting said that it was proposed to investigate the pipe with a CCTV camera. It was agreed that this would not commence until after 20 January 2012 as the plaintiff and her family would be away from the property in the meantime. She was provided with a diagram purporting to show that the pipe ran under her driveway but a representative of Council informed her some time later that the pipe actually passed directly under the house and swimming pool and that the diagram shown to her on 7 December was an illustration of where Council wished to acquire an easement and install a replacement pipe. The plaintiff's affidavit contains the unsurprising and readily believable statement that, as a result of the confused and contradictory information provided to her, she "lost all confidence in Council and what its representatives were telling me".
No 13 was flooded for a fourth time on 11-12 December 2011. The mode of flooding was the same on each occasion, namely, stormwater backed up in the junction pit, overflowed and formed a pond at the northern gutter of Appian Way and then streamed down the plaintiff's driveway, through her carport and garage and across her rear garden and lawn. Council's bypass pump had to be manually started. Despite heavy rain on 11-12 December, no one from Council attended in a timely fashion to throw the switch. It was necessary for the plaintiff to maintain a careful eye on the weather and on the level of water in the pit and to phone Council to request that a staff member attend to operate the pump. The plaintiff's phone records show numerous calls to the Council that she says were for this purpose.
The combined effect of flooding up to this time caused a section of a sandstone retaining wall adjacent to the plaintiff's swimming pool to collapse on 12 December 2011. Dirty, polluted water and debris flowed into the pool on more than one of the first four occasions of flooding. It became unusable until the water could be changed.
On 12 December 2011 the plaintiff sought advice from Mr Pomare, solicitor. While the plaintiff was present in Mr Pomare's office, he phoned the General Manager. He asserted that Council had no easement over the land and no right to pump water through it. He demanded that the pumping cease. The General Manager recorded his response, in an email of the same date, as follows:
I further explained that [removing the pump and discharge hose] was not possible as this would have been the overland flow path for water even before development.
This was incorrect. The contour plan referred to at [43] above shows that the pre-development overland flow path would have been across only the rear one third of No 13. The General Manager was thoroughly uninformed about Appian Way drainage infrastructure and its deficiencies. He did not allow his ignorance of the facts to inhibit him from asserting Council's entitlements and endeavouring to make Appian Way stormwater someone else's problem; namely, the plaintiff's.
The General Manager considered Mr Pomare aggressive in the phone conversation on 12 December 2011 and hung up. Mr Pomare sent a letter the same day by facsimile. He wrote that the discharge of water by the pump was "considered a trespass and a nuisance" and he threatened that the plaintiff would apply for an injunction if pumping should continue. Mr Pomare noted that there was no drainage easement over the land. He made the following request for further information:
On the general issue of the stormwater pipes, please provide details as to the nature of any stormwater pipes located on our client's property and the basis upon which you allege that you have any entitlement to retain same on our client's property.
Council's solicitors replied on 13 December 2011. Their letter included the following:
[Our] client has an entitlement to retain stormwater pipes on your client's property without easement pursuant to s 59A of the Local Government Act 1993 ("LGA"). This section was proclaimed to commence on 1 August 2002. In that regard we refer you to the decision of […] Young CJ [in Eq] in Bonaccorso v Strathfield Municipal Council [2003] NSWSC 408.
The LGA, being a public statute, overrides the private rights of your client under the Real Property Act 1900.
Further, our client has the power to undertake necessary works and investigations pursuant to s 191A of the LGA.
Notwithstanding Council's claim of statutory rights, from 13 December 2011 it ceased to pump water from the junction pit into the plaintiff's rear garden and instead ran the discharge hose north-west and slightly uphill along Appian Way to a stormwater pit in Burwood Road.
The property was flooded for a fifth time during the plaintiff's absence between 9 and 20 January 2012. This was evident on her return from the presence of sand, dirt, leaves and other debris in the garage and backyard. A sixth flooding took place on 25 January 2012. The pump, now discharging to Burwood Road, still had to be activated manually and evidently Council staff did not attend promptly enough for this purpose.
On 25 January 2012 Council's contractor, Mr Allen Pickup trading as All About Pipes, attempted to clear the pipe under the plaintiff's land by inserting equipment from the downstream end, apparently gaining access to the pipe from the rear boundary pit. Tree roots and pieces of concrete were found to be causing the blockage. Mr Pickup's work continued on 1 February 2012.
By letter of 31 January 2012 Mr Pomare conveyed to Council's solicitor the plaintiff's consent for Council staff to enter the property on 1 February to undertake "above ground investigation work" to locate the storm water pipe and other subsurface drainage structures and to determine the extent of any existing damage.
On 10 February 2012 Mr Aslan made this report to the General Manager and others:
The investigation into the damaged drain(s) under the property is ongoing. We've been delayed due to wet weather and the holiday and in part by the resident previously denying Council access to the property to conduct investigations or repairs.
The underground pipe network is somewhat complicated. Weather permitting we expect to conclude our investigation into the damaged drains and other underground stormwater structures by mid next week.
The assertion that investigations had been to any extent delayed by the plaintiff denying Council access was untrue. She had never for any period denied such access. On 7 December 2011 the plaintiff had requested that any work on the property be deferred until 20 January 2012, when she could be present. This was a reasonable request and was agreed to by Council. Mr Aslan's reference to multiple drains under the plaintiff's property and to a "network" shows that he was unaware of the work done in 2005 following the Webb McKeown report. That work had decommissioned all pipes that had previously joined to the main drain under the front yard of No 13. The decommissioning had occurred at the same time as the junction pit and reconfigured inlets and feeder drains on Appian Way were constructed.
Council had substantial documentation of the drainage infrastructure in this known trouble spot. Many of the relevant records have been referred to in these reasons. The evidence has not explained why those records were not reviewed within Council at this time in order to have the then current engineering staff properly briefed with information already known to and recorded by Council.
On subsequent days during February 2012 Mr Pickup was able to identify the line of the pipe through the front and back yards of No 13, using ground penetrating radar. In conjunction with this an underground CCTV survey was conducted. A complete blockage was found 9.6m downstream from the junction pit, being 6.8m inside the front boundary, under the plaintiff's front garden. That was where the images recorded from within the pipe in 2001 had shown that a section of the pipe was missing under the front garden of No 13. Naturally, the line of the pipe had become blocked at that point. Another internal email from Mr Aslan shows that Mr Pickup had informed Council of these results by 14 February 2012.
From 15 February 2012 Council's pump at the junction pit was automated with a float switch. Instances of flooding became less frequent although they still occurred when the float switch failed to operate. On those occasions a Council employee had to be called out by the plaintiff and the response was not always quick enough. The plaintiff had her pool drained and refilled on 19 February 2012. On 7-8 March 2012, for a seventh time, the property was flooded when the pump failed to start automatically following heavy rain. The recently replaced pool water was again polluted and the pool was rendered unusable for the time being.
Council did not inform the plaintiff of the results of Mr Pickup's investigations until a letter was sent on 15 March 2012, following requests from Mr Pomare on 22 February, 1 March and 13 March 2012. The letter of 15 March 2012 came from Council's solicitors. It did not indicate what if any action Council was proposing to take to overcome the complete obstruction of the sole pipe that was available to carry stormwater from the junction pit at No 13 Appian Way.
On 16 April 2012 the mayor, Councillor John Faker, wrote to a resident of 14 Wyatt Avenue who had been affected by the overland flooding. The letter included the following:
Heavy rainfall in spring last year (and subsequent rains) has highlighted flooding issues in the Appian Way area and Council is now undertaking extensive investigations into this matter. Council also recently engaged Brown Smart Consulting to conduct hydraulic investigation of the area and produce options to address this matter, following on site investigation work by another contractor.
When these investigations have been completed, Council will be in a position to determine a suitable way forward and will notify affected residents. […]
It should be noted however, that given the severe (most likely a one-in-one-hundred-year rainfall event) rain experienced in Sydney in early March 2012, some flooding issues (as experienced elsewhere in Sydney) at this location are likely to have occurred notwithstanding the current problems.
The proposed "hydraulic investigation of the area" would be the third such study providing Council with stormwater flow projections for the Appian Way catchment. The previous municipality-wide studies by Robinson GRC in April 2002 and by Brown Consulting (NSW) Pty Ltd in October 2004 had both addressed this particular location and had contained ample information to inform storm water pipe design. The engagement of Brown Smart Consulting to "produce options to address this matter" was also redundant in view of Webb McKeown's full consideration and costing of the options in May 2005. There is no evidence that Councillors or engineering staff regarded the earlier reports as insufficient or unreliable. Rather, Council appears to have lacked capacity to disseminate and utilise existing corporate knowledge.
The mayor's assertions that the rainfall in March 2012 may have been a one-in-one-hundred-year event and that the flooding would likely have occurred irrespective of the "current problems" - presumably a reference to the blocked pipe - were unfounded. For 10 years it had been known within Council, from professional reports commissioned by it, that the pipe through No 13 could not cope with run-offs calculated to occur every year. It was a matter of Council record that flooding of properties in the area had occurred on at least five occasions in the preceding 24 years (see [86] above).
In April 2012, when Council had still taken no action to rectify the blockage of the pipe, the plaintiff resorted to laying sandbags across her driveway whenever rain threatened, in case the pump should fail to activate. Council was apparently paralysed by indecision about a more enduring remedy. It directed its employees to follow the plaintiff's lead and place sandbags across the frontages of Nos 15 and 17. As a result, during heavy rains a substantial lake formed on the north side of Appian Way. This phenomenon is depicted in photographs showing the water extending from the sandbags across to the centreline of the roadway. The accumulated water reached a depth of 400mm at times.
By the time the sandbags were laid it had been obvious to Council for five months - since November 2011 - that the only piped outlet was blocked. Council had been in possession of photographic evidence of the blockage for two months. The possibility of excavating down to the blocked section of pipe and unblocking it was surely not far-fetched or radical. It is what municipal authorities often do. The excavation would have to have been carried out on the plaintiff's land. As will be seen, Council did not even propose this until 2 October 2012, six months later.
While Council contemplated the commissioning of yet another study, as referred to in the Mayor's letter of 16 April 2012, the properties on the north side of Appian Way and down-slope from them on Wyatt Avenue continued to sustain periodic inundation. On 19 April 2012 a resident of 14 Wyatt Avenue sent an email to Council that included the following:
The flooding from the properties on Appian Way is worse than ever. Our backyard was a lake and our garage was flooded again. The drains and pits could not cope with the volume and were rapidly flooded. Water poured through the fences from the properties to the south on Appian Way and from the west, 16 Wyatt Avenue, as a river would. […] We drove around to Appian Way and the pump outside No 13 was working hard but could not cope. Turn a garden hose on a bush fire. That had the same silly effect. There was a lake of water to the front of the houses on the southern [scil northern] side of Appian Way. People had futilely sandbagged their drives against the rising waters.
Also on 19 April 2012 the occupant of No 17 Appian Way reported to Council that he had floodwater in his house to a depth of 400mm.
In May 2012 Brown Smart Consulting, apparently the same hydraulic engineering consultancy as Brown Consulting (NSW) Pty Ltd that had performed work in 2004, provided to Council a report entitled "Stormwater Drainage Assessment, Appian Way, Burwood". This stated that the catchment had been computer modelled, generating estimates of the peak stormwater flows arriving at the collection point in front of No 13. The run-off values estimated for various ARI frequencies were the same as those given in the October 2004 hydraulic survey. The report described several options that the consultants had been asked to consider "to effectively manage the stormwater drainage network and overland flows associated with the Appian Way catchment".
Only two of the options considered by the consultants are presently relevant. Under Option C2 Council would acquire an easement over No 13, adjacent to the western and northern boundaries, and a 900mm pipe would be installed. This was the same as Concept 3 considered by Webb McKeown in May 2005: see [127]-[128] above. Brown Smart Consulting's estimate of the construction cost was as follows:
900mm pipe through No 13 $288,000
Upstream drainage work on Appian Way $285,000
Downstream augmentation of pipe to Wyatt Avenue $179,000
Total $752,000
Under Option D1, Council would simply repair and reline the existing pipe under No 13. This corresponded with the second component of Webb McKeown's Concept 1: see [125] above. The estimated cost was $115,000. The consultants made the following observations upon this Option:
This option is a temporary solution only, what it achieves is to restore some drainage capacity to the existing Appian Way drainage network and allows for the removal of the pump and associated infrastructure. The capacity of this restored line will be in the order of 0.5 m3/sec. It must be noted though that the peak flow rate for the 1 year storm event has been estimated at 0.9 m3/sec. Thus this option will be able to alleviate nuisance flooding issues for smaller more frequent rainfall events, but it is not a long-term solution to the drainage issues of this area.
On 18 May 2012 the Mayor wrote to a number of residents of Appian Way to report upon drainage of the street. His letter included the following:
The analysis of overland flows is a complex task in an urban environment as is found in Appian Way. Council is currently investigating options to alleviate the drainage and overflow problems in Appian Way that are also impacting on the downstream properties in Wyatt Avenue.
Council officers will be making a determination on this matter (both in terms of an engineering solution and funding strategies) in the near future and the results of this will need to go to Council for final endorsement. When these investigations have been completed, Council will be in a position to determine a suitable way forward and will notify affected residents.
The evidence has not explained why a decision could not have been made on the basis of the reports that Council had received in 2005. In 2012 there does not appear to have been any new information sought or obtained concerning the drainage options.
On 10 June 2012 the plaintiff's property was flooded for the eighth time. Due to heavy rainfall overnight on 10-11 June and continuing during 11-12 June, water accumulated on Appian Way in front of the property to a depth of 400mm. The pump failed to operate. Despite several phone calls from the plaintiff to Council no one attended to activate it in sufficient time to prevent overland flow down the driveway of No 13 and into the carport and garage.
On 14 June 2012 Mr Pomare on behalf of the plaintiff sought an update on Council's plans to rectify the inadequate stormwater drainage of Appian Way. He wrote as follows:
[Our] client continues to live under unacceptable conditions and is not in a position to proceed with the repairs to [her] property until you have provided a response to our earlier correspondence including your client's proposal to remedy the substantive issues.
On 25 July 2012 the plaintiff and her husband and Mr Pomare met with Council representatives at Council's solicitors' office. Up to that date no material response had been made to Mr Pomare's letter of 14 June 2012. At the meeting Council's representatives produced a plan that identified the location of the blockage in the pipe through No 13 and an aerial photograph of the property, marked up to show the area of a possible future drainage easement adjacent to the western and northern boundaries. The aerial photograph was dated 23 July 2012. No evidence has been given of any discussion that may have taken place when the plan and aerial photograph were presented at this meeting. However, it is self-evident that Council's representatives must have indicated that Council wished to acquire the easement. No details of the size of the proposed pipe on this easement or the depth at which it would be laid were provided. Mr Pomare inquired about those details later.
On 26 June 2012 Council considered, in closed session, an "Appian Way Drainage Report". That document is not evidence but from the terms of the resolution passed I infer that it set out options for improving the inadequate drainage of the street. Council resolved as follows:
1 That Council authorise the General Manager to enter into negotiations with the owners of No 13 Appian Way for an easement as per Option B or to acquire the entire property No 13 Appian Way by Burwood Council as per Option C.
2 That a further report be provided back to Council on the outcome of the negotiations regarding the easement or acquisition of the entire property No 13 Appian Way by Burwood Council.
3 That a report for Council's consideration be prepared outlining the implications of a potential future Stormwater Management Service Charge (SMSC).
On 14 August 2012 Mr Pickup prepared a report of his February 2012 internal examination of the pipe, marked "without prejudice". No evidence has been given of circumstances that could attract without prejudice privilege for this document. The plaintiff had been informed on 15 March 2012 of the substance of Mr Pickup's findings, which are summarised at [160]. It is not clear whether Council had an earlier version of the report. Only the "without prejudice" document was provided to the plaintiff. From subsequent documents I infer that it was provided on 22 August 2012.
On 3 September 2012 Mr Pomare wrote to Council's solicitors requesting a copy of the 1903 agreement between Mr Hoskins and the Borough and any records relating to construction of the stormwater drainage of Appian Way. Mr Pomare was clearly endeavouring to determine whether the pipe under No 13 had been installed in circumstances that would engage s 59A of the Local Government Act 1993. Mr Pomare also requested copies of correspondence between Council and the plaintiff's predecessors in title concerning the pipe. He sought copies of investigative reports that may have been prepared in relation to it in earlier years. There was no indication in this letter that the plaintiff would deny the Council entry onto her land to clear and repair the pipe. The question of access had not arisen because Council had not made any decision to carry out repairs.
On 25 September 2012 the plaintiff sent an email to the elected Councillors in anticipation of a Council meeting that she understood would take place that evening to make a decision about Appian Way drainage. The plaintiff summarised the history of repeated overland flooding of her property since November 2011. She wrote the following:
Council was aware of this problem back in 2002 (and did not act to rectify the problem back then). They allowed the previous owner to sell the property and now we are being victimised into accepting what Council believes is the only solution - an easement. Why was this not done before? […].
[…] If an easement were placed on the property the pipe would need to be placed very low so we could incorporate a lower floor at the rear of the property much like numbers 11 and 17 and the house would need underpinning. Council's legal counsel has advised this would be too expensive and not to be entertained. It seems that any suggestion we make to Council is negated (we have tried to work with Council but it has been difficult).
The plaintiff attended Council's meeting on 25 September 2012. She read out a list of 19 questions concerning Appian Way drainage. These included: why the problem had not been dealt with in 2002; why Council had no records of dealings between itself and the second defendant concerning the pipe; what was the history of construction and subsequent works with respect to the pipe; whether the plaintiff could be provided with "the full suite of reports commissioned by Council"; why Council had taken no steps to put an incoming purchaser such as herself on notice of the existence of the pipe and the difficulties that had been encountered in relation to it. There is no evidence of any substantive response from Council to these questions. The meeting moved into closed session and resolved:
to inform the plaintiff that Council is lawfully entitled to enter the property and make the necessary repairs to the pipeline;
to authorise the General Manager to obtain quotes for repair and lining of the pipe and "take all the necessary steps to progress this matter forward" and
that an offer be made to meet the plaintiff without prejudice in relation to entering the property "to fix the pipeline".
On 2 October 2012 Council's solicitors sent a letter to the plaintiff that included the following:
The Council maintains that it owns the subject pipe for the purposes of s 59A of the Local Government Act 1993 ("LGA"). We note that your clients dispute same.
We confirm that investigations undertaken by the Council show that the subject pipe requires repairs so that it will operate in an efficient manner (the works).
We put you on notice that Council is currently readying itself to go out to tender for the works.
The Council will be undertaking the repair works once the Council is in a position to attend to same. The works are urgently required, in the opinion of the Council, to ensure that the subject pipe is used in an efficient manner for the purposes for which it was installed. […].
We also put you on notice that should your clients in any way impede the Council (including denying our client access to your clients' property), and the Council be unsuccessful in any proceedings issued by a resident of Appian Way (or any other resident) [to compel Council to undertake the repairs], then the Council will have no other option than to commence proceedings against your client for damages, including any costs orders against the Council. […].
We may also seek the Council's instructions to issue proceedings seeking a declaration that the Council is the owner of the subject pipe for the purposes of s 59A of the LGA […].
Rather than composing this overbearing letter, Council's solicitors might usefully have devoted their energies to providing their opponent with the information he had requested on 3 September 2012, upon which he would have been able properly to advise his client. So far as the evidence shows, up to 2 October 2012 there had been no intimation from the plaintiff that she would do anything to impede Council entering upon her land to repair the pipe. Consent for access had readily been granted, whether or not required, for the purpose of Council investigating the pipe. No occasion for impeding access for repair works had arisen because, almost a year after the pipe failure had first caused flooding and eight months after the precise location and nature of the blockage had been identified, Council was only now "readying itself" to seek tenders and have the blockage addressed. This undefined "readying" proceeded at a glacial pace.
Mr Pomare replied on 6 October 2012 with a request for a diagram of the pipe's exact location and particulars of its depth and size. He also sought "all documentation and information upon which the Council relies to support ownership of the subject pipe". This was a repeat of earlier requests, such as that of 3 September 2012, which apparently had not been met. It was reasonable for the plaintiff to have asked for the historical records of construction of the pipe. They had a bearing upon the applicability of s 59A. The existence of the pipe and the extent of Council's statutory rights over it critically affected the plaintiff, both in respect of the value of her property and in respect of its habitability, for herself and her family.
[37]
2015-2017: plaintiff's Development Application
In September 2015 the plaintiff proposed to develop No. 13 by removing the existing carport and garage; building a basement garage at the rear of the property with access via an extension of the driveway; extending the ground floor slab to the west of the house, over the driveway, to form the roof of a drive-through carport; constructing a retaining wall on the western boundary; building a rumpus room and other rooms within the proposed basement and replacing the existing pool. Prior to lodging a DA the plaintiff and her architect met with Council planning officers on 17 September 2015 to discuss the proposal.
This prompted a response from Mr Pokharel, a Council engineer, to the following effect:
1. The basement/garage would lie across the pipe and would not be permitted under cl 8.16 of the 1994 Stormwater Code, which states that new buildings and structures cannot be constructed over drainage lines.
2. This objection could be overcome if the plaintiff provided a 2.5m wide drainage easement along the western and northern boundaries of the property and installed an equivalent pipe within that easement, with appropriate connections at each end.
3. The plaintiff would have to submit with the DA "a detailed hydrological and hydraulic assessment" of this repositioning of the pipe, taking into account "the full stormwater network upstream of the property including the overland flow". The plaintiff would have to demonstrate that Council's downstream system would not be "compromised in a 1 in 20 year ARI storm event at minimum".
The plaintiff lodged her DA on 23 June 2016. Her proposed alterations would not materially alter the extent to which the house was constructed over the pipe. In order to address Mr Pokharel's points (1) and (2), so far as they may have been directed to the risk of damage to the pipe, the plaintiff's engineering drawings provided for piers on each side of the pipe to provide support for the basement/garage floor, thus protecting the pipe.
For the purpose of addressing Mr Pokharel's point (3), the plaintiff obtained a report dated 12 June 2016 from a hydraulic engineer, Mr Weber. He sought to demonstrate that the pipe could remain in its existing position and that the proposed development would not compromise stormwater flow through the property. On the assumption of a complete blockage of the pipe and a 100 year ARI rain event, Mr Weber calculated that the surface level of overland flows would be lower than the proposed basement floor level.
In September 2016 Council obtained a report from another hydraulic engineer, Mr Gray. He considered that the proposed basement should be considered at risk of flooding unless its floor level was at least 500mm above the surface of maximum overland flows. He said that "amendments to the overland flow path to facilitate the proposed development, for example a box culvert, are likely to lead to off-site impact issues". Mr Gray represented that the catchment for stormwater that accumulates on Appian Way in the vicinity of No 13 is an area of 8.4ha. That appears to have been an exaggeration by a factor of over 60%. No other hydraulic engineer has ever suggested that the catchment is more than 5.2ha. Both Mr Gray and Mr Weber assumed the diameter of the pipe to be 400mm.
On 12 October 2016 Council's planning officer notified the plaintiff that he would recommend that her application in its then form be refused. Numerous reasons were given, relating to many aspects of the application. With respect to engineering considerations, the planning officer cited Mr Gray's conclusions. The plaintiff made no revision to her application. Council had not determined it by 25 January 2017 and it was then deemed to have been refused. The plaintiff thereupon lodged with the Land and Environment Court an appeal against the deemed refusal.
In connection with the plaintiff's appeal she engaged another engineer, Mr Kozarovski. He conferred with Mr Gray and they produced a joint report dated 13 April 2017. They agreed that any risk of flooding to the basement from overland flows down the driveway could be addressed by installation of a mechanical flood barrier. This would be installed on the right-hand side of the driveway outside the entrance to the basement garage. The barrier would direct stormwater to continue flowing down the driveway towards the rear of the property and would divert it from entering the garage.
The engineers agreed that the development would not result in any change to the magnitude of overland flows through No 13 or the adjoining property, No 15. In particular, the installation of the flood barrier would not cause any such change. The only remaining difference between the engineers was that Mr Gray considered approval should be subject to conditions that before any work commenced, first, the plaintiff should grant a 2.5m wide easement on the western and northern boundaries and, secondly, she should install a replacement 400mm diameter pipe within that easement - as had been proposed by Mr Pokharel. These two requirements were referred to in the Land and Environment Court proceedings as "deferred commencement conditions". Mr Gray's support for them was based upon cl 8.8 of the 1994 Stormwater Code, which states that Council will require an easement in its favour over the location of any existing pipeline, and cl 8.16 (referred to at [205(1)] above). Mr Gray also supported the conditions out of concern as to whether the existing pipe might be damaged in the course of excavations adjacent to it.
The requirement that the plaintiff install a 400mm pipe in the proposed easement was contrary to engineering advice that had been consistently tendered to Council since 2001; namely, that a 400mm pipe was of insufficient capacity for 1 year ARI rainfall and that a 900mm pipe would be required to satisfy Council's standard of piped capacity for 20 year ARI storm water volumes. No explanation was given in evidence for Council imposing the apparently irrational requirement that the existing under-capacity pipe should be replicated. I infer that Council was seeking to portray its requirement that an easement be granted without compensation as merely an incident of the plaintiff having to replace like with like.
The appeal was heard by Commissioner Brown on 24 May 2017. It proceeded on the basis that Council pressed the two deferred commencement conditions and also "Operational Condition 99", that the plaintiff cause a "detailed drainage study" to be prepared by a hydraulic engineer to "demonstrate that the development has no adverse effects on adjoining properties as a result of flooding and storm water run-off and that there is adequate protection for buildings against the ingress of surface run-off". It is not apparent why Council should have pressed for another hydraulic engineering study having regard to the agreement of its own expert, Mr Gray, in the joint report of 13 April 2017, that the development would not change the magnitude of overland flows.
On 31 May 2017 Commissioner Brown upheld the plaintiff's appeal and approved the DA without the deferred commencement conditions and without Operational Condition 99. He held as follows
[14] The relevant parts of the Stormwater Code are:
8.8 Easements
For sites that have existing Council pipelines through them that are not covered by an easement, or where an existing pipeline is not within the easement, Council will require the creation of an easement in favour of itself over the pipeline. The easement width is to be the pipe, box, or channel section width plus 1.5m, with an overall minimum width of 2.5m.
[…]
8.16 Structures Over or Near Drainage Lines and Easements
New buildings, structures and tennis courts will not permitted over drainage lines or within easements. Paving over any drainage line or easement is acceptable, but will require appropriate jointing at the easement boundary, and to be in a material approved by Council's Engineer.
Clearances to easement boundaries are required to prevent structural loads on drainage structures or encroachment within the angle of repose of the soil. Piering is an acceptable technique to achieve this.
If there is an existing structure over the drainage line or easement within the site that is part of the application, then an access pit is required to be provided upstream and downstream of the structure. […]
[15] With the benefit of submissions from [counsel], I have little trouble in accepting that the conditions in dispute should not be included on any approval, for a number of reasons. First, I do not accept that the conditions satisfy the "Newbury tests" or principles to test the validity of planning conditions. In Newbury District Council v Secretary of State for the Environment [1981] AC 578 at 607 Lord Fraser held that the power to impose conditions was subject to certain limitations, being:
it must have a planning purpose,
it must relate to the permitted development to which it is annexed, and
it is [not] so clearly unreasonable that no reasonable planning authority could have imposed it.
[16] Under any assessment, it could not be said that the conditions "relate to the permitted development to which it is annexed". While the 400mm stormwater pipe runs through the site, the pipe collects stormwater from the 8.4ha catchment above the site; the site being at the low point in the catchment. Also of some importance is that the site does not make use of the stormwater pipe as the stormwater for the proposed dwelling, after the alterations and additions, will drain to the pit at the rear of the property. This pit is a junction point in the stormwater system before it enters an easement over 10-12 Wyatt Street and then further downstream. Similarly, I cannot accept that the need for a detailed drainage study that is to cover the 8.4ha catchment relates to the proposed development.
[17] Given the lack of any real association of the council's proposed conditions with the proposed development on the site, I can also comfortably conclude that the conditions are "so clearly unreasonable that no reasonable planning authority could have imposed it".
[18] Second, the council seeks, in the disputed conditions, that the applicant is to provide a detailed drainage study for the catchment, relocate and presumably upgrade the pipe, prepare the documentation for the easement, create the easement and transfer the easement to the council; all at no cost to the council. I accept the submission of [the plaintiff''s counsel] that the only power available for the council to acquire these works without cost is through s 94 of the Environmental Planning and Assessment Act 1979. It was accepted that the only mechanism that the council has for collecting s 94 contributions is through their Section 94 Contributions Plan (July 2012) and that this plan contains no such contribution for the work required by the disputed conditions.
[19] Third, the matter of proportionality is relevant. In my view, the work sought by the conditions is disproportionate to the extent of the alterations and the need to relocate the existing stormwater pipe and the other matters associated with the creation of an easement. The proposed alterations and additions only marginally extend the existing footprint over the existing stormwater pipe. To expect the applicant to prepare a drainage strategy for the 8.4ha area above the site and undertake an extensive and likely very expensive works given the minimal additional impact on the stormwater pipe is unreasonable, in the extreme.
[20] Fourth, I am not convinced that the Stormwater Code provides the necessary warrant, as suggested by Mr Gray to undertake the work required by the proposed conditions. Part 8.16 is relevant and states, in part:
If there is an existing structure over the drainage line or easement within the site that is part of the application, then an access pit is required to be provided upstream and downstream of the structure. […].
[21] If read literally, these comments do not suggest that the drainage line should be relocated but only that access pits be provided. There is nothing in the Stormwater Code to support the proposed conditions. The requirement for an easement only becomes relevant, in this case, if there is a sufficient reason to relocate the pipe, which has not been provided. The requirements in the Stormwater Code, in my view, should not be read literally but seen as general design principles that should be considered broadly and with a proper consideration of the particular issues involved.
[22] The reference in cl 8.16 (first paragraph) to "New buildings, structures and tennis courts will not [be] permitted over drainage lines or within easements" is not relevant and clearly is a reference to new development rather than a situation where a building is already constructed over drainage lines or within easements. The words "will not be permitted" suggests an absence of any structure over drainage lines or within easements and that in the event that approval was sought, any approval "will not be permitted".
[23] Put simply, the imposition of the conditions sought by the council is unmeritorious and should not be entertained.
In accordance with the Land and Environment Court's procedural rules and its practice in planning appeals, no order was made with respect to costs. The plaintiff incurred over $80,000 in legal costs to defeat Council's unreasonable attempt to make her bear the cost of relocating the pipe from under her house to the western boundary - a cost of infrastructure for the benefit of the local community that should have been born by Council on behalf of all ratepayers and that should have been outlaid, including upgrade of the pipe to 900mm, 16 years earlier, in 2001, when the necessity for these changes was made known to Council through unquestioned professional engineering advice.
[38]
October 2017-July 2020: Council's settlement negotiations
The findings of fact recorded in this section of the reasons are relevant to Council's contention that the plaintiff failed to mitigate her damages flowing from negligent misstatement in the planning certificate: Issue 12 (at [414]). Council tendered in the trial of these actions evidence of its communications with the plaintiff, as summarised in the following paragraphs, in support of its claim that the plaintiff failed to mitigate the loss that her purchase of No 13 in reliance upon the planning certificate had caused her. The plaintiff submits that in these communications Council never made an offer that was sufficiently certain to be capable of acceptance. She submits that such offers as were made by Council involved settlement of the entire proceedings, including her nuisance claim and that the offers are not relevant to mitigation of damages but could only have a bearing upon the Court's discretion as to costs. The plaintiff says she acted reasonably in not accepting Council's offers, so far as any of them may have been capable of acceptance.
The proceedings were commenced on 17 March 2017. The plaintiff's solicitor sought to initiate mediation of her claims by letters sent to the legal representatives of both defendants on 19 September 2017. On 3 October 2017 the plaintiff's solicitor notified the defendants that the plaintiff had obtained a construction certificate for her proposed alterations and additions; she had arranged for demolition to commence in December 2017 and for piling on the western boundary, to permit lowering and extension of the driveway, to commence on 7 January 2017. It was urged that mediation should proceed expeditiously as the progress of these works would limit the possibility of Council acquiring an easement and installing a new drain as part of any settlement.
During the first three weeks of October 2017 the solicitors for the Council and for the plaintiff exchanged letters concerning the diameter of the pipe that Council would install in the proposed easement. Council proposed a pipe of 750mm whereas the plaintiff wanted a 1200mm pipe that her engineer had indicated would eliminate overland flows even during infrequent and extreme rain events. On 27 October 2017 Council's solicitors sent to the plaintiff's solicitors a formal notification that Council considered acquisition of a 2.5m wide easement and installation of a 750mm diameter pipe necessary "to reduce the likelihood of any flooding to the property and other properties in the Appian Way in the future". This letter stated that if the plaintiff failed to agree within seven days to negotiate for the acquisition of this easement, it was expected that Council would commence the compulsory acquisition process, in exercise of its power under s 186 of the Local Government Act. The threat of enforcement action was unnecessary. It disregarded the plaintiff's prior communications endeavouring to initiate negotiations concerning an easement.
The plaintiff's solicitor responded on 31 October 2017 with the observation that not only was his client willing to negotiate but that he had been trying to convene a mediation for over a month. He advised that unless a mediation should take place in early November 2017, the plaintiff would proceed with her proposed works. No mediation took place and on 28 November 2017 Council by resolution approved commencement of the formal process to acquire an easement 2.5m wide, either compulsorily or by agreement, for the installation of a new pipe of either 750mm or such diameter as may be agreed with the plaintiff.
The plaintiff was notified of the passing of this resolution by letter from Council's solicitors dated 18 December 2017. The letter stated that as there was no agreement for the grant of an easement, Council intended to acquire it compulsorily and would issue a Proposed Acquisition Notice in accordance with s 11 of the Land Acquisition (Just Terms Compensation) Act. By the same letter Council demanded an undertaking that the plaintiff not proceed with any construction works that would encroach on the proposed easement. Council threatened that it would apply to this Court to seek urgent injunctive relief if such an undertaking was not forthcoming.
On discretionary grounds alone an application for an injunction would have had poor prospects. Council's senior engineer in early 2001, Mr Wyatt, had appreciated that the acquisition of an easement was "the only viable option". Council had at that time refrained from pursuing compulsory acquisition because the second defendant, as registered proprietor, sought compensation. Council had taken no steps towards acquiring the easement up to 2015 and had then failed in its endeavour to obtain it without compensation through the DA process. Having held up the plaintiff's development for 2½ years in pursuit of unreasonable conditions, Council wished to exercise its compulsory acquisition power more than 16½ years after being professionally advised that it needed to do so, just as the plaintiff was commencing her works and at a time when an injunction would cause maximum disruption and loss. There was no legal basis for Council's threat of injunction proceedings. The threat was not carried out.
Notwithstanding Council's aggressive posturing, negotiations with respect to the terms of an easement resumed in February 2018. By 6 March 2018 Council had agreed that it would install a new pipe of 1200mm diameter and that structures could be erected in the airspace above the easement to the extent approved in the plaintiff's existing development consent. This included the westward extension of the ground floor of the residence, to form a carport roof over part of the driveway. At this date Council had a valuation of the easement and the plaintiff was waiting on her own valuer. Compensation for the easement was therefore not yet agreed.
On 19 April 2018 the plaintiff's solicitor informed Council's solicitor that revised engineering calculations showed that a 1050mm diameter pipe would be sufficient to handle 100 year ARI storm water volumes and that the easement need not be any wider than this diameter plus 1.5m, in accordance with the 1994 Stormwater Code. At the end of April and during May 2018 the plaintiff's solicitor repeatedly informed his opponent that construction work was progressing and that there was limited time left for the parties to reach agreement on an easement and for Council to install the proposed new pipe before the works in the area of the proposed easement would be completed. In particular, he pointed out that once the extended ground floor slab had been installed over the driveway it would "no longer be possible for the pipe to be craned into position in that area … nor for piling works to be undertaken in that area (which are needed to facilitate the installation of the pipe without damaging adjacent structures)". He said that it appeared unlikely that the valuers would reach agreement and that it would be best to aim for an agreement to grant an easement on terms that could be settled in most respects, but with "a mechanism for determining the easement compensation amount".
This reasonable and sensible letter was met with an extraordinary response from Council's solicitor, blaming the plaintiff's solicitor for protraction of the negotiations, disputing his recollection of prior discussions between them concerning mechanical and procedural matters and threatening that Council would claim damages if the plaintiff's building work "encroaches upon the site of the proposed easement". There would be no legal basis for such a claim.
The parties exchanged valuations in late June 2018 but agreement was not reached and negotiations lapsed. Even at this point, seven months after Council had resolved to acquire an easement compulsorily and with negotiations apparently exhausted, Council did not proceed with an application to the Minister for Local Government for approval to issue a proposed acquisition notice pursuant to s 11 of the Land Acquisition (Just Terms Compensation) Act. Ministerial approval was a necessary preliminary step: see s 187(2) of the Local Government Act.
On 22 March 2019 the plaintiff's solicitor advised his opponent that the plaintiff was still willing to grant an easement, "assuming it is still possible to install a pipe along the western boundary despite recent building works". By this date the plaintiff's works were complete. The plaintiff's solicitor proposed a meeting to negotiate the amount of compensation. This took place on 21 May 2019. No concluded agreement was reached but after the meeting Council's solicitor commenced to prepare a deed of grant of an easement. No draft of such an agreement had been submitted to the plaintiff's solicitors by 11 November 2019, on which date Council applied to the Minister for Local Government for approval to issue a proposed acquisition notice. On 19 February 2020 Council's solicitor informed the plaintiff's solicitor that the application to the Minister had been made.
On 2 June 2020 Council's solicitors submitted to the plaintiff's solicitors a proposed Deed to Grant Easement. Notable features of the offer constituted by this draft Deed are as follows:
1. Clause 2 provided that the plaintiff agreed to execute a Transfer Granting Easement in a form said to be annexed to the Deed. No such transfer was annexed. This was important because it was evident from the negotiations that the plaintiff did not contemplate a general drainage easement under which Council would be at liberty to determine what drainage works would be undertaken thereon. It is apparent that the plaintiff contemplated granting an easement under which Council would construct, and only construct, a 1050mm diameter drainage pipe. Even if the works to be executed by Council were stipulated and limited in the Deed, in the plaintiff's interest the easement that was to be registered would have to stipulate that no greater or lesser work could be undertaken. This would be important to the value of the land on resale. The plaintiff's purchaser, not being a party to the Deed, would be unable to hold Council to its terms and would be reliant upon the registered dealing.
2. Clause 3 provided that Council would carry out, inter alia, installation works in the easement, in accordance with a Schedule C to the Deed. The draft had no Schedule C attached. Precise specification of the work to be undertaken was obviously critical to any agreement under which the plaintiff would transfer an easement to Council, not least because the size of the pipe to be installed would determine the degree to which it would protect the property against overland flooding.
3. Clause 4 prescribed a mechanism for determining the amount of compensation. Pursuant to this clause, the owner would serve a valuation and make an offer to Council to accept the amount thereof. If Council did not accept the offer, it could serve its own valuer's assessment. If that was not accepted by the plaintiff, the issue of compensation would be submitted to an independent valuer appointed by the President of the Australian Valuers Institute.
4. In a covering letter Council's solicitors offered a compensation amount of $200,000. The letter stated that Council's valuer assessed the appropriate compensation at nil, on the basis that the betterment resulting from decommissioning of the old pipe would add $500,000 to the value of the property and that this exceeded the amount of compensation that might otherwise be payable for the easement, which Council's valuer put at $275,000.
5. Clause 5.1 provided as follows:
5.1 Upon carrying out the Decommissioning Works [with respect to the existing pipe under the house] the [plaintiff] agrees to release Council from any claims, actions, demands, suits or proceedings of any nature arising from or in any way related to the [existing pipe].
Clause 5.1 was significant. The Deed did not prescribe parameters for assessment of the appropriate compensation by the independent valuer under cl 4. The covering letter made it clear that Council would contend that the plaintiff's compensation should be reduced or offset by a betterment component for removal of the old pipe. This implicitly assumed that the plaintiff's title to and enjoyment of the property was impaired by Council's rights over the pipe. The plaintiff claims in the proceedings that she is entitled to damages for this impairment as a component of her loss caused by Council's negligent misstatement in the planning certificate. Clause 5.1 would have the effect that the plaintiff would be entirely giving up her claim to damages on that cause of action. She would be releasing the Council from any claim for loss arising from having purchased the impaired property on the faith of the planning certificate while at the same time receiving nothing for the transfer of the easement upon the basis that decommissioning the pipe would improve the property. Further, by cl 5.1 the plaintiff would abandon claim to damages for nuisance.
Council eventually obtained the Minister's approval and on 8 July 2020 it issued to the plaintiff a proposed notice of acquisition of the easement. Perhaps unsurprisingly, given the 20 year history of Council's disregard of professional engineering advice concerning stormwater drainage in Appian Way, this notice states that the purpose of the easement is to install and maintain a stormwater pipe of only 750mm diameter. I infer that this size must have been selected to avoid having to increase the capacity of the downstream pipe that runs through 10-12 Wyatt Avenue: see [127] above.
The Webb McKeown report of May 2005 calculated the capacity of the 750mm pipe through 10-12 Wyatt Avenue at 0.9m3/sec. This has not been refuted or questioned in any other hydraulic engineering opinion. Assuming that other factors affecting pipe capacity would be comparable for a new pipe laid through a western boundary easement over No 13, the 750mm pipe that Council proposes for that location would also be capable of conveying only 0.9m3/sec. In all of the run-off calculations that have been tendered in the proceedings, 0.9m3/sec is given as the expected stormwater flow at 1 year ARI. The proposed new pipe would therefore be inadequate, leading to ponding on Appian Way and overland flows in all heavier rainfall events. Rain intensity that can be expected every two years would result in an overland flow of 1.4m3/sec. Every five years there would be an overland flow of 1.9m3/sec, every 10 years 2.3m3/sec and every 20 years 2.6m3/sec.
That is why Webb McKeown calculated that a 900mm pipe should be installed under its Concept 3. Those consultants recommended the same diameter pipe in each of two other concepts that they considered, which it has not been necessary to set out in these reasons. Webb McKeown said that a 900mm pipe would have a capacity of 2.6m3/sec - sufficient to handle 20 year ARI events, in accordance with Council's standard. They also advised that downstream augmentation would be necessary through 10-12 Wyatt Avenue.
Residents of the affected properties may expect continued overland flows and flooding if the 750mm pipe is installed. Installation will involve difficulties of access now that the plaintiff's alterations have been completed. As a result of Council having deferred compulsory acquisition for 20 years, from early 2001 when it first knew that a drainage easement would be required, the cost of the work will be greater by much more than the factor of inflation. Council's proposed installation of an undersized pipe in order to avoid the cost of the downstream work that would be required in order for the job to be done properly follows the established pattern of Council's procrastination, half measures, false savings and departures from advice. An increase in the piped capacity through the easement over No 13 at a later date will add more expense, most likely significantly greater than the marginal difference between the cost of a 750mm pipe and that of a 900mm pipe if the work were to be done in accordance with the engineers' advice in the first place.
[39]
Issue 1: Council's 2002 resolution and Q7 of the planning certificate
The evidence that Council issued the planning certificate on 9 August 2010 is referred to at [132]-[133] above. Until 15 February 2007 reg 279 and Sch 4 of the Environmental Planning and Assessment Regulation 2000 required that a certificate under s 149 include the following information:
7 Council and other public authority policies on hazard risk restrictions
Whether or not the land is affected by a policy:
(a) adopted by the council, or
(b) adopted by any other public authority and notified to the council for the express purpose of its adoption by that authority being referred to in planning certificates issued by the council,
that restricts the development of the land because of the likelihood of land slip, bushfire, flooding, tidal inundation, subsidence, acid sulphate soils or any other risk.
With effect from 16 February 2007 Sch 4 of the Regulation was amended by deleting the word "flooding" from the final paragraph of the above clause and inserting the words "(other than flooding)" at the end of the clause. At the same time a new cl 7A was added to Sch 4, as follows:
7A Flood related development controls information
(1) Whether or not development on that land or part of the land for the purposes of dwelling houses, dual occupancies, multi dwelling housing or residential flat buildings (not including development for the purposes of group homes or seniors housing) is subject to flood related development controls.
(2) Whether or not development on that land or part of the land for any other purpose is subject to flood related development controls.
(3) Words and expressions in this clause have the same meanings as in the instrument set out in the Schedule to the Standard Instrument (Local Environmental Plans) Order 2006.
Clauses 7 and 7A of Sch 4 remained in the form described at [234] up to and including the issue of Council's planning certificate to the second defendant on 9 August 2010. Council, however, worded its certificate in accordance with the pre-16 February 2007 version of cl 7, coupled with the post-16 February 2007 wording of cl 7A. The result was a certificate containing the following questions and answers (with irrelevant wording removed and emphasis added):
7 Council […] policies on hazard risk restrictions
Is the land is affected by a policy adopted by the Council […] that restricts the development of the land because of the likelihood of land slip, bushfire, flooding, tidal inundation, subsidence, acid sulphate soils or any other risk?
No
7A Flood related development controls information
Whether or not development on that land or part of the land for the purposes of dwelling houses, dual occupancies, multi dwelling housing or residential flat buildings (not including development for the purposes of group homes or seniors housing) is subject to flood related development controls.
No
[40]
Construction of the disputed words in their statutory context
The plaintiff contends that the answer given to question 7 was incorrect and misleading because Council's 2002 resolution (reproduced at [97] above) affected No 13 and was "a policy adopted by the Council … that restricts the development of the land because of the likelihood of … flooding". Council submits that this contention "essentially raises a question of statutory construction", namely, the proper interpretation of cl 7 of Sch 4 of the Environmental Planning and Assessment Regulation and, in particular, whether the 2002 resolution falls within that clause.
For the purposes of the plaintiff's misrepresentation case, the question is whether the answer "No" to question 7 was misleading having regard to the existence of the 2002 resolution. This cause of action cannot succeed if it is based upon the plaintiff attributing an unreasonably wide meaning to question 7 and its answer. As Council was required by s 149 of the Environmental Planning and Assessment Act (reproduced at [7] above) to provide the information prescribed by Sch 4 of the Regulation, the plaintiff could not reasonably have understood question 7 in any sense different from that which it bears in its statutory setting. Acting reasonably, the plaintiff must be taken to have understood that what was annexed to the contract was a statutory certificate and that the words in it must bear the same meaning as they bear in the subordinate legislation by which the content of the certificate is prescribed.
Accordingly Council's submission that the plaintiff's negligent misstatement case raises a question of statutory interpretation may be accepted. However, for reasons that follow, the Act and the Regulation do not provide contextual influence that would dictate an interpretation of cl 7 in Sch 4 or question 7 in the planning certificate any different from the ordinary English meaning of the words used. As a result, no difficulty of interpreting question 7 arises from the fact that the wording adopted by Council had been superseded by amendment of the Regulation prior to issue of the certificate.
[41]
Interpretation of the word "policy"
The Environmental Planning and Assessment Act as in force in August 2010 contained no definition of the word "policy". I refer to the Act in the past tense in order to identify its provisions at the date when Council issued the relevant planning certificate. Most of the provisions referred to in this judgment remain in force to this day, although they have been comprehensively renumbered in the current form of the Act. As at August 2010, the objects of the Act were set out in s 4 and were, broadly, to encourage proper management of development of land and conservation of resources; to encourage provision of land for public purposes; to encourage ecologically sustainable development and protection of the environment; to promote sharing of responsibility for environmental planning between different levels of government and to increase opportunities for public involvement in environmental planning. All of these are objects that would be promoted by the adoption of what might be termed, in plain English, "policies". The Act provided for the adoption of general plans for achieving the stated objects but it did not refer to them as policies.
Part 3 of the Act was entitled "Environmental planning instruments" and provided for two types of such instruments: "State environmental planning policies" (also referred to as SEPP) and "local environmental plans" (referred to as LEP): s 24. Section 33A empowered the Governor, by order, to "prescribe the standard form and content of local environmental plans or other environmental planning instruments". Pursuant to this power the Standard Instrument (Local Environmental Plans) Order 2006 was gazetted, being a pro forma LEP with standard provisions. Section 53 provided that there should be an LEP for each local government area. Division 4 of Pt 3 stipulated the manner in which LEPs may be adopted, including preliminary submission of a proposed plan to the Minister and subsequent community consultation. Division 6 of Pt 3 provided that an environmental planning instrument (that is, either an SEPP or a LEP) may require Development Control Plans (DCPs) to be prepared before any particular development or kind of development may be carried out.
In both the Act and the Regulation as at August 2010 there was no use of the word "policy" or "policies" to describe, generically, documents containing plans for development or conservation of land, or otherwise to achieve the objects of the Act. Such plans were referred to throughout the Act as "instruments" and the word "policy" appeared only as part of the title of one type of instrument, namely, a "State environmental planning policy". As a result, the meaning of "policy" in cl 7 of Sch 4 of the Environmental Planning and Assessment Regulation, either before or after amendment of the clause, is not elucidated by its statutory context. The meaning of "policy" in question 7 of Council's planning certificate is, likewise, not elucidated by that context. The word must be given its ordinary English meaning.
Council submitted that "in a planning context the word 'policy' is usually not applied to a resolution adopted by Council in respect of one site and one development application" and that "a 'policy' is ordinarily in the nature of an instrument which has the character of establishing a course of action for environmental planning for a locality or for the State". The reference in these submissions to "a planning context" is indeterminate and does not meaningfully identify any relevant context beyond the Regulation in which the word is used and the Act under which the Regulation is made. As found above, that context imparts no particular meaning to "policy".
In support of its submission Council cited Cobden-Jones v Woollahra Municipal Council [2002] NSWLEC 2; (2002) 118 LEGRA 41. In that case a Development Application in respect of a commercial site was affected by SEPP 1, by Woollahra LEP 1995 and by a Development Control Plan (DCP) that Woollahra Council had developed for the precinct in which the site was located. Council resolved to adopt certain urban design guidelines as an acceptable method of interpreting Council's planning controls for the subject site, whereby the constraints of the otherwise applicable planning instruments were alleviated. In an application to the Land and Environment Court objectors alleged that the urban design guidelines were beyond the power of Woollahra Council to adopt. Sheahan J found in favour of the council. There was an unsuccessful appeal to the Court of Appeal but that Court's reasoning is not presently relevant: Alison Cobden-Jones v Woollahra Municipal Council [2002] NSWCA 382.
Sheahan J held as follows:
[162] Central to the applicants' challenges is the allegation that the [urban design guidelines] resolution is ultra vires the Council, because it purports to exercise plan-making powers without satisfying the requirements of Pt 3 of the [Environmental Planning and Assessment Act], notably those involving the participation of the public and, in the case of an LEP, the Minister. […]
[163] The technical requirements of Pt 3 apply equally to LEPs and DCPs, but there is no doubt the Pt 3 processes, as such, played no part in the evolution and making of the Council's [resolution to adopt the urban design guidelines]. […]
[165] The applicants concede that the [urban design guidelines] are neither an environmental planning instrument nor a DCP, but contend that they purport to do the job of an LEP or DCP, and supplant the statutory controls presumed to have been duly made in the LEP and the relevant DCP. […] [Provisions] of a LEP cannot be amended in this way and may be amended only by the making of a new LEP. [The applicants] contend that there is no statutory basis for the Council to formulate such guidelines as a "method for the interpretation of its planning controls". […]
[169] I accept the Council's submission that, as admitted by the applicants, the [urban design guidelines] are neither an environmental planning instrument nor a development control plan. Accordingly, they do not depend in any way on the operation of Pt 3 of the [Environmental Planning and Assessment Act], and, accordingly, cannot be controlled by it.
[170] I also accept the "backup" submission [on behalf of the Council] that they are also not a "policy", such as would attract the administrative law principles of "inconsistency", or "fettering of discretion". Corkhill v Hope (1991) 74 LGRA 33.
[171] The term "policy" is usually not applied to a resolution in regard to only one site or one DA. Policies can deal with a wide range of subject matters, but they also do not purport to be LEPs or DCPs, and cannot include consideration of the particular circumstances of a case. See Re Drake and the Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640-1.
[172] The [urban design guidelines] are not of general application - they were developed from a specific planning analysis, with one particular site and one particular project in mind.
The last three paragraphs of this extract, upon which Council relies, are concerned with administrative law concepts. A valid policy adopted by a government authority in order to structure the application of a broad discretionary power may be a consideration that must be taken into account by a decision maker. On the other hand, a policy that purports to exclude considerations that are required by statute to be taken into account may be ultra vires and irrelevant, so that the decision maker will commit a reviewable error if he or she takes it into account. These concepts are elaborated at length in the judgment of Brennan J in Re Drake and the Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In the context of those administrative law principles the concept of a policy is that of a plan or approach that may be applied across a broad range of separate cases; for example, in the varied circumstances of individual non-citizens who may be under consideration for deportation.
Nothing in Sheahan J's judgment supports Council's proposition that this concept of a "policy" is imported by the use of the word in legislation that applies to planning and development in New South Wales. The subject resolution was a policy in the sense of a broad plan of action with multiple components, some of them contingent upon others or upon the course of events, drawn up to address a significant and persistent stormwater management problem that affected a number of landowners and users of a public road in one part of a local government area. Sheahan J's judgment provides no basis for treating a "policy" of that nature as not falling within the meaning of the word where it is used in the Regulation and in the certificate.
[42]
The 2002 resolution was a "policy"
For ease of reference pars A and B of Council's 2002 resolution are repeated (from [97] above):
A That Council proceed to negotiate the creation of an easement over the existing pipeline and then proceed to reline the existing pipe in its current location beneath the house.
B That, should Council be unable to gain consent from the owner, it proceed with compulsory acquisition of an easement over the existing pipeline. (Future development of the property should include the establishment of an easement adjacent to the side boundary for drainage purposes).
The object of these paragraphs was to achieve adequate drainage of stormwater from Appian Way and to avert the risk of flooding the road and/or Nos 13-17 and/or properties in Wyatt Avenue. Paragraph A called for an immediate first step of negotiating acquisition of an easement over the line of the existing pipe. The step described next is the relining of the pipe. However the resolution allowed for the contingency that negotiations for the easement would be unsuccessful. In that event, the second step chronologically would have to have been compulsory acquisition of an easement over the existing drain. The resolution provided for that in par B. Given the regime of the Land Acquisition (Just Terms Compensation) Act, the compulsory process could take 12 months or more. The resolution prescribed, as an aspect of the whole plan, that Council would not undertake relining of the existing pipe until it had acquired an easement over it, compulsorily if necessary.
The final step called for by the resolution, in par B, was the acquisition of a western boundary easement and relocation of the pipe: "(Future development of the property should include the establishment of an easement adjacent to the side boundary for drainage purposes)". Because this would be contingent upon the proprietor of No 13 seeking to develop the property, it might be deferred for a considerable period. The resolution does not state in terms that development consent would be made conditional upon the grant of a western boundary easement but that is what was meant - and what is conveyed - by the words in parentheses in par B. That is how the second defendant himself understood the resolution. He gave these answers in cross-examination:
A Well, they had said in their 2002 resolution - if I've got that term correct - that they would want an easement if there was to be a DA; there was to be a condition of the DA that you would have to grant them the easement.
A What I knew is that in 2002 they had said that a DA would be conditional upon the granting of an easement. It didn't say that they needed time to investigate.
[…]
Q You were told on 14 June 2002 about this resolution and that one of the terms of any future development application for the property would be the establishment of an easement down the western boundary?
A Yes.
Such a long term plan of action, with a defined objective and multiple intermediate and contingent steps, was a "policy" according to the ordinary meaning and usage of that word in the English language. The policy was adopted "because of the likelihood of … flooding" of road infrastructure and vulnerable properties. The fact that the means chosen would require drainage access through only one parcel of private property and would therefore restrict the development of only that property does not make it any the less a "policy". Council submitted that its 2002 resolution only had to be disclosed in answer to question 7 if it applied generally throughout the local government area or at least to multiple properties. But question 7 in the certificate is not so limited.
Certainly it was inherent in the 2002 resolution that the stormwater flooding problems at Appian Way should be addressed by exercising compulsory powers only in respect of one of the affected properties. An alternative might have been to spread the burden, for example, by acquiring an easement on a boundary so that half of its width would be on each of two of the properties, or by acquiring additional narrow easements on each of Nos 15 and 17 and increasing stormwater capacity by installing two extra 400mm pipes. The 2002 resolution represented a policy choice.
Paragraph B of the resolution is silent as to whether, at the point of future development, Council would require an easement to be created without compensation to the proprietor. In my view that is implicit. If Council intended to pay fair compensation - or to acquire the easement compulsorily under the Land Acquisition (Just Terms Compensation) Act and submit to assessment of compensation by the Land and Environment Court - there would have been no reason to defer acquisition of the western boundary easement until "future development of the property".
I do not accept Council's submission that the words in parentheses in par B are ambiguous or vague. Council submits that the resolution "does not even identify the part of the property over which the easement is sought". However the western boundary is necessarily intended. That appears from the physical condition of No 13, from Mr Wyatt's report which was before Council when the resolution was passed and from antecedent correspondence. All aspects of the resolution were sufficiently defined for it to constitute a policy, capable of being implemented over time.
I reject Council's submission that the 2002 resolution was "an 'operational' decision, not a 'policy' decision". The only immediate, operational action that was approved by the resolution was the first step of negotiating to acquire an easement over the existing drain. The further action of commencing the compulsory acquisition process for an easement on the line of the pipe was approved, contingent upon negotiations being unsuccessful. Acquisition of a western boundary easement and relocation of the pipe could not be operational matters because both steps were expressly made contingent upon the proprietor initiating further development of the property.
Inconsistently with the submission that the resolution was an "operational" decision, Council also asserted that it "expresses a desired course of future action, not a decided course of future action". This is apparently directed to the words in parentheses in par B. In fact, those words contain no reservation about Council's intention to give effect to them. However, because future development of the property would depend upon action by the owner and would occur in a timeframe not under the control of Council, necessarily this aspect of the resolution could not be precise as to date of implementation. That is consistent with it being an element in a policy.
[43]
The resolution "restricts the development of land"
From the date of passing the resolution, the policy to which it gave effect restricted development of the land. In the early stages of implementation, the policy's requirement that an easement over the existing pipe be acquired would restrict development. According to the usual terms of such an encumbrance, a drainage easement would preclude building any structure over the area affected by it. This would be subject to the existing house but the easement would sterilise, from the point of view of building development, areas through the centre of the front and rear gardens. An easement would impose restrictions additional to those that already applied under s 59A of the Local Government Act. Even if new construction over the easement should be permitted to some degree, the minimum burdens of a drainage easement would create a degree of restriction upon physical development of the site.
The policy's provision for acquisition of a western boundary easement in the event of future development of the property involved still further restriction. Irrespective of whether compensation would be paid, either pursuant to an offer from the Council or following assessment in the Land and Environment Court, Council's policy of acquiring such an easement would restrict development. At a minimum the requirements of a western boundary drainage easement would preclude or limit construction on a substantial proportion of the property.
Council has argued the case as if it only had to disclose the 2002 resolution if it was a policy adopted with the primary intention, design or purpose of creating a restriction on development of land. I do not accept that argument. Question 7 requires disclosure of policies according to whether they have the effect of creating a restriction. The effect is what is material to anyone who may rely upon a planning certificate, such as a purchaser of land. Question 7 required disclosure of any "policy adopted by the Council […] that restricts the development of the land because of the likelihood of … flooding". The words to which emphasis has been added are addressed to effect, not intent. Restriction on development would be an inherent effect of the creation of easements pursuant to the policy in the 2002 resolution.
Council further submitted that it "could not pass a resolution affecting the second defendant's property rights … without giving [him] the right to be heard". According to Council's argument the words in parentheses in par B could not mean that any future development would be on condition of the establishment of a western boundary easement. Such a resolution would affect the second defendant's rights and as he was not given any hearing about this, Council submitted that it would be void. This argument does not follow. It is irrelevant whether the validity of the resolution would have been open to challenge on the basis suggested. If it constituted a policy that restricted development of No 13 because of the likelihood of flooding, as I have concluded, then not disclosing the resolution in answer to question 7 was misleading. The possibility that a Court might declare the resolution invalid would no doubt be a consideration material to a purchaser. But the answer "No" to question 7 would still be incorrect.
[44]
The restriction is imposed "because of the likelihood of flooding"
From all surrounding circumstances it is clear that Council's intention with respect to the proposed new boundary easement was to install on it a more adequate pipe. Equally clearly, the intention in acquiring an easement over the existing drain was to secure Council's right of access for keeping that drain open and in good repair. In both cases the easements were to be acquired, with their concomitant restrictive effects on development of the land, because of the likelihood of recurring uncontained surface flows of stormwater. That justification for the 2002 resolution falls within the meaning of the expression "because of the likelihood of … flooding" in question 7 of Council's planning certificate.
Council has endeavoured to portray inundation by stormwater run-off as something other than "flooding" in the sense in which the word is used in question 7. Council went so far as to put this argument:
[The 2002 resolution] had nothing whatsoever to do with "flooding". … [The resolution] set out the intended course of action for Council to repair and upgrade its stormwater infrastructure. … However, that has nothing to do with "flooding".
The resolution does not deal with the issue of flooding at all.
I find that submission surprising and unrealistic. I reject it. Mr Wyatt's report to Council for the very meeting at which the resolution was adopted commenced as follows (emphasis added):
Since 1984, Council has received complaints about local flooding from residents at Numbers 13, 15 and 17 Appian Way, Burwood. The flooding follows heavy storms where the capacity of the existing drainage system has been exceeded or compromised by heavy leaf litter. […] Damage has been recorded at No 17 Appian Way: stormwater flooded the downstairs living area damaging carpets and furnishing.
Mr Wyatt was not alone in regarding inadequate piped capacity at Appian Way as giving rise to a problem of "flooding". Everyone who has spoken of uncontrolled stormwater surface flows through this part of Appian Way, for nearly 50 years, has referred to the problem in those terms. In "everyone" I include the numerous residents who have made complaints to Council since 1972 and Council's own personnel and consultants who have written reports and letters referring to the incapacity of the drainage system. See the evidence referred to at [64], [66]-[70], [86], [88] and [96] above concerning communications up to the date of the resolution. In accordance with common usage and common sense, those communications almost invariably referred to the risk associated with the under-capacity pipe as a risk of "flooding".
In Council's Statement of Facts and Contentions in the Land and Environment Court, dated 21 February 2017, the following propositions were advanced (emphasis added):
2.1 The Development Application should be refused because the proposed basement area will be used as a habitable room contrary to Provision P4 of [Burwood Development Control Plan (BDCP)].
Particulars
b The proposal is incompatible with the known overland flow path and the property is flood affected. See Contention No 5 below for further details of this particular.
5 INCOMPATIBILITY WITH OVERLAND FLOW PATH AND FLOODING ISSUES
5.1 The Development Application should be refused because in accordance with Council's planning controls under Clause 6.2 Flood Planning of [Burwood Local Environment Plan] 2012 and Section 6.4 Flood Planning in BDCP, development consent must not be granted to the proposed development as the development fails to satisfactorily demonstrate that:
- it is compatible with the site's flood risk;
- it will not adversely affect existing flood behaviour or the environment; and
- it incorporates appropriate measures to manage risk to life from flooding.
Particulars
a The development proposal is incompatible with the known overland flow path and the following matters are raised:
1 In a flood event, flow is likely to enter the premises and cause widespread damage including potential risk to life.
Council saw no difficulty in characterising stormwater surface flows over No 13 as "flooding" when its purpose in the Land and Environment Court was to invoke planning policies to obstruct the plaintiff's DA (unless she would grant an easement without compensation and install a Council drain at her personal expense). In this Court, for the different purpose of denying that Council's planning certificate contained negligent misstatements, it contends that the 2002 resolution for drainage easements to manage the same stormwater surface flows has "nothing whatsoever to do with 'flooding'". The meaning of the word, so far as Council is concerned, appears to depend upon which Court it is addressing and for which of its purposes. The Court could reasonably expect from a public body such as Council a more forthright approach to argument. Contrary to Council's submission, its 2002 resolution had everything to do with "flooding".
[45]
The 2002 resolution was not revoked or abandoned
Council's actions and failures to act in the period between the passing of the resolution and the issue of the planning certificate have been set out at [98]-[129] above. The order of events is summarised as follows for ease of reference, with notation of earlier paragraphs of this judgment in which the detail is set out. Contrary to Council's submissions, these events do not suggest that the plan in the resolution was abandoned:
14 June 2002: Council notified the second defendant of the terms of the resolution - [98].
3 July to 31 October 2002: Council had a meeting with the second defendant and exchanged correspondence with him concerning negotiation of an easement on the western boundary. Negotiation to that end at that time was not part of the sequence prescribed in the resolution. Council notified the second defendant on 8 October 2002 that s 59A of the Local Government Act had been enacted - [99]-[104].
12 December 2002 and 4 February 2003: Council notified the second defendant of its intention to enter No 13, in exercise of its statutory rights, to repair the existing drain. Entering the property on this basis, rather than pursuant to an acquired easement over the drain, was not part of the sequence in the resolution - [106]-[109].
5 March 2003: Council advised the second defendant that it would "defer" undertaking repairs to the drain until the impasse between the parties concerning Council's asserted statutory right of access was resolved. Council said it would formally notify the second defendant "should it wish to proceed in this manner at some time in the future" - [113]-[114].
21 January 2004: Council notified the second defendant that it had not yet investigated alternatives for drainage through No 13, namely, an eastern boundary easement or minimally intrusive pipe construction on the western boundary - [116].
18 June 2004: Council approved the second defendant's development application for a wider rear patio. No condition was imposed with respect to the grant of an easement on the western boundary - [118].
After May 2005: Council constructed the junction pit directly in front of No 13, with new inlet pits and feeder lines on Appian Way - [129].
No resolution amending or repealing that of 11 June 2002 was passed by Council up to August 2010. Council submits that its express notification to the second defendant on 5 March 2003 that it was deferring repair of the existing drain constituted abandonment of any intention to implement the resolution. I do not accept that submission. Deferment of remediation of the drain was not abandonment. In any event, what was deferred was the entry under statutory powers. Entry on that basis had not been dealt with in the resolution and deferment of it said nothing about whether Council would proceed in the future with acquisition of either an easement over the drain or a western boundary easement.
Council's deferment of entry was expressly only for the purpose of investigation of other possibilities, not for the decided purpose of actually doing anything inconsistent with the proposed repairs or proposed future actions. In the event, Council did not even investigate alternatives. The deferment became indefinite by default and inaction rather than as a result of anything so decisive as cancellation of the policy.
Council submits that abandonment of the 2002 resolution was "confirmed" in Mr Wyatt's memorandum to the Mayor, General Manager and Councillors of 21 March 2003 ([115]). That memorandum did no more than advise senior personnel that the second defendant had been advised of the deferment. Mr Wyatt, as Group Manager Engineering Services, had no authority to abandon a plan of action resolved upon by Council.
For a year before the passage of the resolution Council had known that it would have to acquire a western boundary easement over No 13 in order to discharge its responsibility of providing adequate stormwater drainage of Appian Way. The necessity for such an easement was recognised in the resolution and it was reaffirmed repeatedly in subsequent engineering reports. This imperative remained a constant up to and beyond August 2010. From the chronological findings set out earlier in these reasons, the following events are significant to this conclusion:
25 May 2001: Mr Wyatt had concluded by this time, as he informed the second defendant, that there was "no viable alternative" to the acquisition of a western boundary easement and installation of a larger pipe - [76].
April 2002: Robinson GRC's report advised of the inadequate capacity of the existing drain and the difficulty of enlarging it along its current line under the house - [88].
June 2002: Mr Wyatt's report to Council recommended compulsory acquisition of a western boundary easement and installation of a new larger pipe - [95]-[96].
October 2004: Brown Consulting (Australia) Pty Ltd reviewed the Robinson GRC report and confirmed the inadequacy of the existing drain - [119].
May 2005: Webb McKeown recommended their Concept 3, requiring acquisition of a western boundary easement and installation of 900mm diameter pipe - [122], [127]-[128].
From these frequent and consistent reiterations of engineering advice, Council was aware that establishment of a western boundary easement was a core, indispensable element of the 2002 resolution. Notwithstanding that the resolution itself postponed acquisition of such an easement until "future development of the property", Council knew that this acquisition was not just an option but that it would have to be done. Implicit abandonment of the plan in the resolution cannot be attributed to Council in these circumstances.
No evidence was called by Council to explain why it did not try to secure a western boundary easement at the time of the second defendant's development application in June 2004. Counsel for the second defendant adduced from Mr Olsen, a Council planning officer, that he did not see the 2004 development application. He did not claim to have had any involvement in the grant of consent. He agreed with the following proposition put to him:
The determination was dealt with by Council, by the various departments in council and considered by the various departments in Council from the time that - if normal course of events were followed from the time of the original application […] until the notice of determination of 18 June 2004.
Mr Olsen also said that:
[It] would have been referred to our heritage advisor and to our engineering section.
Having regard to Mr Olsen's lack of involvement or first-hand knowledge, this evidence was no more than a description of what ought to have happened and perhaps what would happened "if normal course of events were followed". The Court is left without any basis for finding what reviews the second defendant's development application actually went through. Accordingly, I rejected the second defendant's attempt to ask Mr Olsen "how it was that development consent was provided […] without it being a condition […] that the easement adjacent to the side boundary [be] established for drainage purposes". Any answer given by Mr Olsen to that question would have been no more than a speculative opinion.
The failure of Council to act upon par B of the 2002 resolution in connection with the second defendant's development application in 2004 may reflect no more than Council's lack of internal communication and dysfunction with respect to implementation of policy. It is possible that the application was dealt with by someone within Council who was not aware of the resolution or that, despite full awareness, the relevant decision maker simply did not give effect to it. The history of Council's dealings with No 13 and with the drainage problem on this part of Appian Way includes many examples of decisions not carried through, to some of which I have referred. Lack of implementation does not signify a change of heart in such an organisation. I do not regard Council's treatment of the 2004 development application as a constructive or implicit revocation of the 11 June 2002 policy. In the absence of explanation from Council no inference of abandonment can be drawn.
Council relies upon the fact that it did not attempt to invoke the 2002 resolution in seeking access to No 13, in the period March 2011 to July 2012, for the purpose of carrying out repairs to the drain after the plaintiff had acquired the property. Instead it passed a fresh resolution for the execution of those works on 25 September 2012. It is also said that Council did not rely upon the 2002 resolution as authorisation for negotiating with the plaintiff to acquire a western boundary easement in 2012 or as the basis for requiring that the plaintiff grant such an easement as a condition of approval of her DA in 2016 and 2017. These events took place between three and seven years after the s 149 certificate had issued. They are incapable of constituting any evidence of the status of the 2002 resolution at the date of the certificate.
Failure on the part of this Council to implement the resolution, in any respect, is not evidence of revocation. The policy adopted in the resolution was still operative when the planning certificate was issued on 9 August 2010.
[46]
Conclusion on Issue 1
The 2002 resolution was a "policy adopted by the Council … that restricts the development of the land because of the likelihood of … flooding" within the meaning of those words in question 7 of the s 149 planning certificate. It was incorrect for Council to have answered this question "No". A correct answer to the question would have been "Yes", followed by statement of the substance of the 2002 resolution.
[47]
Issue 2: 1994 Stormwater Code and Q7A of the planning certificate
[48]
Meaning of "flood related development controls"
In relation to Council's answer to question 7A on the planning certificate (see [235] above), the plaintiff's negligent misstatement case again raises an issue of statutory interpretation. The expression "flood related control" in question 7A could only have been understood by the plaintiff, reasonably, in the sense in which that expression is used in cl 7A of Sch 4 of the Environmental Planning and Assessment Regulation. There is no definition of "flood related control" in the Regulation or in the Act and it is not an expression used in common, everyday speech or writing. Each of the individual words has an ordinary English meaning but the composite expression has no particular ordinary meaning. However its correct interpretation may be gathered from a number of documents published by the Department of Infrastructure, Planning and Natural Resources ("the Department") in January 2007. I take those documents into consideration pursuant to s 34(1)(b)(i) of the Interpretation Act 1987 (NSW).
In April 2005 the Department published an updated Flood Plain Development Manual. This contained a statement of the New South Wales Government's policy for managing the development of flood prone land, with the object of facilitating its use while reducing the impact of flooding on individual owners and minimising private and public losses caused by flood events. The Manual provided guidance to local councils on how to assess the degree of risk of flooding in their respective areas and how to adopt appropriate Flood Planning Levels and freeboards, below which certain classes of development should not be permitted.
As at early 2007 s 117(2) of the Environmental Planning and Assessment Act empowered the Minister to issue directions to councils requiring them to prepare local environmental plans in accordance with "such principles, not inconsistent with this Act, as are specified in the direction". In exercise of that power the Minister directed councils to prepare local environmental plans consistently with the Flood Plain Development Manual 2005. On 31 January 2007 the Minister issued pursuant to s 117(2) Direction No 15, requiring that draft local environmental plans should be consistent, also, with the Guideline on Developmental Controls on Low Flood Risk Areas ("the Guideline"). The Guideline was published by the Department on the same day and both it and Direction No 15 were distributed to councils under cover of a Departmental planning circular on 31 January 2007.
Direction No 15 required that:
a draft LEP must not impose flood related development controls above the residential flood planning level for residential development on land unless the Council provides adequate justification for those controls to the satisfaction of the Director-General.
The Guideline stated the same restriction. It commenced with a description of its own contents, namely, that it:
provides advice to councils on appropriate flood related controls for residential and non-residential development in areas of flood prone land above the [Flood Planning Level] for residential development (sometimes known as low risk areas) and associated advice on section 149 certificate notifications.
The Guideline further stipulated that:
unless there are exceptional circumstances, councils should adopt the 100-year [Flood Planning Level] for residential development.
The Guideline used the expression "flood related development controls" repeatedly and consistently in the sense of restrictions imposed by local environmental plans upon residential development by reference to the location of the subject land either above or below an adopted Flood Planning Level. The Departmental circular under cover of which the Guideline and Direction No 15 were distributed also used the expression "flood related development controls" repeatedly and consistently in the above sense. The circular stated that cl 7A of Sch 4 of the Regulation, the Guideline and Direction No 15 constituted, together:
a package of changes concerning flood related development controls on residential development on land above the 1-in-100 year flood and up to the Probable Maximum Flood.
The circular said that the changes followed "community concern over notations about low flooding risk being included on section 149 certificates and the appropriate development controls that should apply to residential development in low flood risk areas". From the usage of the expression "flood related development controls" throughout these documents, issued by the Department at the time of cl 7A being inserted in the Regulation, I interpret the quoted expression where it appears in the clause as having the meaning discussed at [283] above. It has the same meaning in question 7A in the planning certificate.
[49]
The 1994 Stormwater Code
The plaintiff submits that the 1994 Stormwater Code is a "flood related development control" and that the answer "No" to question 7A on the planning certificate was therefore incorrect. The plaintiff relies upon cll 8.8 and 8.16 of the Code, which are set out in the extract from Commissioner Brown's judgment at [214] above. In August 2010 when Council's s 149 certificate issued, those clauses were capable of having a restrictive effect upon development of No 13 because of the drain running through the property. Clause 8.8 would be engaged by the existence of the drain and would require that the proprietor, upon seeking development approval, should create an easement in favour of Council, with concomitant limitations on full utilisation of the site. Clause 8.16 would, similarly, restrict freedom of development over the drain line.
It is no doubt true that preservation of the integrity of an existing drain and creation of an easement over it, as provided for in these clauses, are provisions related to ensuring that storm water is piped and contained and does not become an overland flood. But that does not constitute those clauses, or any other part of the Code, a "flood related development control" within the meaning that I have concluded at [283]-[284] must be attributed to that expression in question 7A. The quoted expression encompasses development controls that are stipulated according to the location of a property relative to a Flood Planning Level. A partial restriction upon full development of land, dictated by the presence of a drain on it and/or an easement over it, has only an indirect connection with flooding and is outside the concepts with which question 7A is concerned.
[50]
Issue 3: non-disclosure under s 149(5)
The plaintiff submits that by force of s 149(5) of the Environmental Planning and Assessment Act Council's duty of care extended to providing information beyond the matters prescribed by the Regulation. She submits that irrespective of whether the answers Council gave to questions 7 and/or 7A were literally correct, discharge of its duty required that there be disclosed in the certificate the facts that the pipe ran through the middle of the property, that it was owned by the Council and subject to Council's statutory rights and that No 13 was affected by overland flooding as a result of inadequate stormwater drainage of Appian Way.
The plaintiff was unable to cite authority for the proposition that the scope of Council's duty of care extended to volunteering information beyond that specified in the Regulation. There is no principle upon which the content of the duty could be so enlarged. By responding to the second defendant's application, lodged pursuant to s 149(1), Council could only be taken to be providing such information as subs (2) obliged it to provide.
Subsection (5) is expressed in permissive or facultative terms:
(5) A Council may, in a planning certificate, include advice on such other relevant matters affecting the land of which it may be aware.
Upon checking the appropriate box on the application form to seek further disclosure under subs (5) (see [133] above), the second defendant did not specify any particular subject upon which he sought information. It was left to Council to make such additional disclosure under s 149(5) as it thought fit. In this respect the case is quite different from Mid Density Developments Pty Ltd v Rockdale Municipal Council, where the applicant for a planning certificate expressly requested information beyond that specified in Sch 4 of the Regulation.
In the absence of an explicit request for information about Council infrastructure installed on the property, or any statutory rights Council may have that could interfere with use and enjoyment of the land, or any affectation of the land by inadequate street drainage, there was no obligation upon Council to address such matters. No person who received the certificate could reasonably rely upon it as containing full disclosure on those topics. Council's duty did not extend to the exercise of reasonable care with respect to such information.
[51]
Issue 4: Council's breach of duty in issuing the planning certificate
A correct answer to question 7 would have referred to the 2002 policy that Council had adopted by the resolution of its Services and Policy Committee. The existence of that policy was information about an act or decision of Council itself, not about some event or circumstance external to Council of which it might have learned by due enquiry. The passing of the resolution was inherently within Council's corporate knowledge. The duty to exercise reasonable care in issuing the certificate could only have been discharged by providing an answer to question 7 that reasonably accurately conveyed the existence of the policy. In a case where the information supplied concerns Council's own acts and/or decisions, it is not relevant to enquire whether Council took reasonable steps to maintain accurate records of policies that it had adopted or whether it followed a reasonable procedure for interrogating those records prior to issuing a certificate. The duty of care could not be discharged by the adoption of any system of keeping or searching records if, notwithstanding such system, Council failed to answer question 7 in a s 149 certificate with reasonable accuracy as to the existence of its own policy resolution that lay within its own repository of corporate knowledge.
This follows from consideration of the basis upon which a public body owes a duty of care in the provision of information within its possession. The basis was stated in L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) in the following passages:
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. (Gibbs CJ at 235).
Where, as in the present case, the supplier is the exclusive possessor of essential information concerning a matter of importance, such as the buying and selling of property, and, being a local government body, sets itself up as a centre from which, in a quite formalized fashion, this information is distributed to those who require it, it requires no holding out of special skill or competence in order to lead to the inference that care will be taken in furnishing that information. (Stephen J at 243).
In the discharge of their public functions local authorities have in a practical sense an obligation to provide information of the kind now in question in response to a request. It is information of vital importance to an owner or intending purchaser. It materially affects the use to which the land may be put in the future and its value. Because it relates to intended acts of the authority, it is information which it alone possesses. […] The specialized nature of the information, the importance which it has to an owner or intending purchaser and the fact that it concerns what the authority proposes to do in the exercise of its public functions and powers, form a solid base for saying that when information (or advice) is sought on a serious matter, in such circumstances that the authority realizes, or ought to realize, that the inquirer intends to act upon it, a duty of care arises in relation to the provision of the information and advice. (Mason J at 252-253).
The facts of L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta (No. 1) were similar to those in the present proceedings in that the road widening proposal that was not disclosed to a prospective purchaser in that case was the council's own proposal. The enquiry made of Parramatta Council, like question 7 in the planning certificate here, sought information about the council's own acts and/or decisions. Taking reasonable steps to collect and collate information and to search for it may be sufficient to discharge a council's duty of care in providing information concerning some matter extraneous to Council's own acts and decisions. An example is Mid Density Developments Pty Ltd v Rockdale Municipal Council in which the appellant had enquired of Rockdale Council whether it had "information which would indicate that the land is subject to the risk of flooding or tidal inundation?". Reasonable care in answering this question required that the levels of the subject land be ascertained and compared to flood prone levels as identified in two studies that were held by the council. Breach of duty was established on the basis that the council engineer who responded incorrectly had not made any examination of the levels or of the studies. Had he made a reasonably careful examination of the material, council's duty may have been discharged, even if he made an error.
Council argued the question of breach of duty in the present case and adduced evidence directed to the issue on the assumption that the plaintiff could only succeed by proving lack of reasonable care in Council's system of storing and searching for the information that was required to be disclosed in the certificate. I will address that argument and evidence in the following paragraphs although I do not consider that the plaintiff was required to prove breach of duty in this way where Council has made a statement in the certificate that is falsified by its own act of resolving upon a policy.
From 1998 to November 2017 Mr Brian Olsen was Council's officer responsible for issuing planning certificates. The usual procedure of Council in 2010 was that upon receipt of an application under s 149(1) from a member of the public, one of the personnel in Council's Customer Service Department would prepare a draft certificate. This was done by entering the Lot and Deposited Plan numbers for the property into a computer program named "Authority". This software had the capacity to interrogate a database on Council's mainframe computer identified as the "Property Module". Authority would generate a draft certificate.
It is apparent from Mr Olsen's affidavits that he does not have expertise in information technology and that he does not purport to understand or to be able to explain the capabilities of the Authority software or the details of what data is entered into and retained within the Property Module. He states that information in the Module is stored in the form of codes so that a draft planning certificate can be automatically generated. The Module does not contain, in electronic form, the documents from which data is drawn and does not enable access to such documents.
A report of Mr Lindsay Dyce, an expert in local government data systems, was tendered by Council. Taking Mr Olsen's affidavits together with the Mr Dyce's report I infer that the Property Module at least included the Digital Cadastral Data Base of all land in the local government area, sourced from the New South Wales government. I infer that it also included some information with respect to each parcel of land that would be relevant to answering prescribed questions in a s 149 certificate. The evidence does not disclose which information was entered into and stored within the Property Module or which questions purported to be answered by Authority in any draft certificates that it produced.
Mr Olsen deposed, in the present tense as at the date of his affidavit sworn 24 September 2018, to his practice upon receipt of a draft certificate generated by Authority. He said this:
First, I consult the Council's Geographic Information System ("GIS"). The GIS is a system used to capture, store, manipulate, analyse, manage and present spatial geographic data. The information contained in the GIS reflects information contained within a variety of sources, including the Burwood Local Environmental Plan 2012 and Burwood Development Control Plan 2013.
Reading this affidavit beneficially to Council, I infer that in 2010 the GIS recorded information from the then current local environmental plan and any development control plan that may have been in force. Mr Olsen has not deposed to any other sources from which information may have been drawn and stored in the GIS. He deposed that by entering the Lot and Deposited Plan number into the GIS, it would provide:
information relating to the particular property including but not limited to the zoning, heritage constraints (if any), and road widening proposals affecting the property (if any).
Mr Olsen deposed as follows regarding his practice in 2018 and I infer that this corresponds with his practice in August 2010:
I then conduct a manual comparison of the information contained in the draft Section 149 Certificate with the information contained in the GIS. Examples of the information that is manually checked include the title reference, the zoning and the records of road widening.
Mr Olsen said that he also uses his own knowledge of the area to check the accuracy of the information contained in the s 149 certificate. If he identifies anything that needs to be changed or amended, he corrects the certificate. If in the process he finds anything recorded in Council's records or computer systems that needs to be changed, he notifies the Manager Strategic Planning who then updates the Property Module.
Mr Olsen said that he was the officer responsible for issuing the planning certificate to the second defendant in August 2010. He identified his signature on the certificate. He did not know of the existence of the pipe under the land. He said that in his experience he had never seen disclosure on such a certificate of above-ground or in-ground services within a property. He did not give evidence that he knew of any other property in the Burwood Local Government Area that was affected by the presence of such a service and in respect of which a decision had ever been made whether or not to disclose its existence under s 149.
Mr Dyce's report includes his opinions about how various of the prescribed questions on a s 149 certificate should be answered, including whether one-word "Yes" or "No" answers should be given. These opinions are not admissible and I disregard them. The issue of what answers should be given to discharge Council's duty of care, taking into account particular information that may or may not be relevant to one of the prescribed matters, is a question for the Court's application of a legal standard to facts found. It is not a matter for opinion evidence. Mr Dyce's report also sets out his experience of matters that he has seen disclosed in planning certificates and other matters that he has not seen disclosed. That evidence is of marginal relevance. It does not assist me to determine whether Council failed to exercise reasonable care in not disclosing the 2002 resolution as part of its answer to question 7.
From Mr Olsen's evidence regarding Council's usual practice and from the content of the certificate issued on 9 August 2010 relating to the subject property, I infer that there was not entered in the Property Module or in the GIS any reference to the resolution of 11 June 2002 or, more broadly, to Council's proposal to acquire an easement over the pipe and later to acquire an easement adjacent to the western boundary. I infer that there was no other repository of data that (a) recorded such a resolution or its effect and (b) was routinely examined when preparing planning certificates .
There is no evidence to suggest that there would have been any difficulty, either financial or logistic, in recording the content of the June 2002 resolution, or at least a reference to it, against the Lot and Deposited Plan numbers of the property, in a readily searchable form, and establishing a system whereby that record would be interrogated for the purposes of s 149. The ability of Council to record other restraints upon individual lots, such as heritage classification and proposals for road widening, affirmatively shows that Council had the capacity to record in searchable form specific information such as the resolution. It is in any event common knowledge that there exist such systems of electronic record keeping and of indexing and searching that are widely used in business and in government.
The resolution embodied a policy decision of Council that was of great significance to any purchaser of No 13. The undisputed evidence of the second defendant and of the plaintiff is that Council did not at any time physically mark the drain at the point where it entered the property or where it exited at the rear boundary. No sign was placed on the road reserve or at the rear of the property to indicate the presence of the drain below the ground surface. Its existence was always known to Council in the sense that it was the subject of municipal records. After engineering staff had rediscovered the pipe in January 2001, Councillors and staff were made fully aware of its existence and of the fact that it was undetectable to the proprietor for the time being of No 13 and would be undetectable through reasonable physical examination by an intending purchaser.
In these circumstances Council ought reasonably to have known, from when the resolution was passed in June 2002, that any intending purchaser would see nothing upon inspection of the property that would put her or him upon such enquiry as might reveal the existence Council's policy for resolving the longstanding stormwater flooding problem on Appian Way. It ought to have been apparent to all responsible persons in Council that there would be no realistic possibility of an incoming purchaser learning of the policy in the 2002 resolution unless Council were to record that resolution in a manner that would facilitate it being identified and disclosed in the event of a planning certificate being applied for.
The proposed western boundary easement would seriously diminish the value, attraction and potential of No 13. The imperative for Council to implement this aspect of the resolution (see [270]-[271] above) and the impact a western boundary easement would have on an incoming purchaser meant that the consequences of failing to exercise reasonable care to disclose the resolution in answer to question 7 could cause considerable loss. A prospective purchaser misled by non-disclosure could be induced to enter into or to complete a contract that, with knowledge of the 2002 resolution, would have been rejected or rescinded. If it is necessary at all to consider the reasonableness of Council's method of storing and interrogating information about its own policy-making and resolution-passing activities, then Council negligently breached its duty of care owed to the plaintiff by issuing the erroneous answer to question 7 in the absence of any system of (a) recording resolutions such as that of June 2002 in a manner that would be readily searchable against the affected title reference and (b) routinely searching that record when preparing a planning certificate.
[52]
Issue 5: Council's claimed statutory defences
Council submits that s 43A of the Civil Liability Act is applicable to the plaintiff's cause of action against it for negligent misstatement. That section is in the following terms:
43A Proceedings against public or other authorities for the exercise of special statutory powers
(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority's exercise of, or failure to exercise, a special statutory power conferred on the authority.
(2) A special statutory power is a power -
(a) that is conferred by or under a statute, and
(b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority.
(3) For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.
(4) In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.
Section 43A does not apply to this case because the planning certificate was not issued in exercise of a statutory power. By providing the certificate Council performed a statutorily imposed obligation. Section 149(2) is expressed in mandatory terms. It requires that upon application by a person under sub-s (1) Council "shall, as soon as possible, issue a planning certificate". Council cited no authority that would justify interpreting the word "power" in s 43A so broadly as to bring s 149(2) within it. The cases in which s 43A has been applied by the Courts have concerned statutory provisions that confer powers in permissive and enabling terms.
One example is s 87(1) of the Roads Act. It provides that Roads and Maritime Services "may carry out traffic control work on all public roads". In Rickard v Allianz Australia Insurance Ltd [2009] NSWSC 1115 Hoeben J (as his Honour then was) held that the authority's placement of a sign on a highway, warning of a hazard constituted by the accumulation of water, was undertaken solely in exercise of the power conferred by s 87 of the Roads Act. It was alleged that the sign had been placed, negligently, too far from the hazard to provide an adequate warning to approaching vehicles. His Honour held that s 43A was engaged. Having first determined that less than reasonable care was taken in the positioning of the sign, his Honour proceeded to apply the more stringent test of liability in sub-s (3) of s 43A.
Another example is s 51 of the Road Transport (Safety and Traffic Management) Act 1999 (NSW), as in force in August 2004. Section 51 was considered in Curtis v Harden Shire Council [2014] NSWCA 314. It provided that persons and bodies that had been directed or authorised by the Roads and Traffic Authority had "appropriate authority to install, display (or to interfere with, alter or remove) a prescribed traffic control device". "Prescribed traffic control device" was defined as a signal or sign for warning traffic. Section 50 prohibited any other person from installing or displaying such a device on, above or near a road. Basten JA (Bathurst CJ and Beazley P agreeing) held that s 43A applied. The defendant council had been carrying out roadworks at a location where a car driven by the appellant's partner ran off the road and hit a tree, fatally injuring her. The appellant claimed that the accident was caused by loose gravel on the road surface and that the respondent was negligent in failing to provide adequate signage to indicate that resurfacing work had been done and that motorists should reduce their speed. Applying the high threshold for liability in s 43A(3) the Court held that the failure to include signage indicating that the road was slippery and that motorists should reduce their speed was a decision no body with the special statutory powers in question could reasonably have made in the circumstances.
Council relies upon Bankstown City Council v Zraika [2016] NSWCA 51 where the Court of Appeal applied s 43A to the exercise by a local government authority of its power under s 91 of the Environmental Planning and Assessment Act, as that section was in force in 1997. It was alleged that a local government authority had acted negligently in consenting to a development application without imposing a condition that a "left turn only" sign should be erected at the exit of a driveway onto a busy intersection. A vehicle leaving the premises and proceeding straight through the intersection had caused an accident that injured the plaintiff. Section 91 made it obligatory for the local government authority to determine the development application. That was not what attracted the operation of s 43A. The section was engaged by the council's exercise of its facultative power to attach conditions of consent: see [108]-[128] (Leeming JA, Gleeson and Simpson JJA agreeing).
The basis of the decision is clear from the following statement by Leeming JA (emphasis added):
[108] There was no dispute that the power exercised by the Council to grant consent conditionally was a "special statutory power" conferred on it within the meaning of s 43A(2) of the Civil Liability Act, or that the liability upon which the Council was sued was "based on" the exercise of that power.
After examining the evidence his Honour concluded:
[128] [It] has not been shown that no local council acting reasonably could properly consider the consent granted without a mandated left turn from the southern access point to be a reasonable exercise of the power. Even if the Council owed a duty of care to the plaintiff, there was no breach of that duty, in light of the s 43A standard of care.
The decided cases provide further examples but the above are sufficient to illustrate the type of provision that may be regarded as conferring a "special statutory power" within the meaning of s 43A(2) of the Civil Liability Act. Section 149(2) is not such a provision. The plaintiff's cause of action for negligent misstatement in the certificate is not "based on" Council's "exercise of, or failure to exercise, a special statutory power conferred" on Council.
Further, s 43A is only capable of being applied to a claim against a public authority that is based upon a deliberate act in exercise of a power or a deliberate refraining from action under the relevant power. It is only in relation to deliberate acts or failures to act that the Court can sensibly apply the test in sub-s (3); that is, whether the exercise or non-exercise of the power was:
so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.
If, contrary to my conclusion, s 149(2) should be regarded as conferring a "special statutory power", s 43A and in particular sub-s (3) could only apply if the plaintiff's case was based upon Council having exercised the power by issuing a certificate when it should not have done, or upon Council having failed to issue a certificate when it should have done. The plaintiff's case is not of that kind. Council clearly exercised the power - if s 149(2) confers a power - by issuing a planning certificate. The plaintiff's case is not based upon the fact that the power was exercised nor upon a contention, which could not succeed, that Council failed to exercise it. The plaintiff's claim in negligence is that Council erroneously answered "No" to the question in the certificate about the existence of a policy. The test in sub-s (3) could not meaningfully be applied to that negligent misstatement.
If s 149(2) creates a "special statutory power", it is one power with respect to the issue of a planning certificate, not multiple powers with respect to the provision or withholding of individual particles of information: see Bankstown City Council v Zraika at [96]. The plaintiff's case on negligent misstatement in the certificate is incapable of engaging s 43A.
Council also relies upon s 733 of the Local Government Act, relevant extracts from which are as follows:
733 Exemption from liability - flood liable land, land subject to risk of bush fire and land in coastal zone
(1) A council does not incur any liability in respect of -
(a) any advice furnished in good faith by the council relating to the likelihood of any land being flooded or the nature or extent of any such flooding, or
(b) anything done or omitted to be done in good faith by the council in so far as it relates to the likelihood of land being flooded or the nature or extent of any such flooding.
(3) Without limiting subsections (1), (2) and (2A), those subsections apply to -
(d) advice furnished in a certificate under section 149 of the Environmental Planning and Assessment Act 1979 […]
(4) Without limiting any other circumstances in which a council may have acted in good faith, a council is, unless the contrary is proved, taken to have acted in good faith for the purposes of this section if the advice was furnished, or the thing was done or omitted to be done -
(a) substantially in accordance with the principles contained in the relevant manual most recently notified under subsection (5) at that time […]
(5) For the purposes of this section, the Minister for Planning may, from time to time, give notification in the Gazette of the publication of -
(a) a manual relating to the management of flood liable land […]
The notification must specify where and when copies of the manual may be inspected.
Council submits that s 733(1)(a) is applicable if there should be a finding that, prima facie, Council is liable for failing to disclose in the planning certificate anything that "constitutes advice related to flooding". That is not an accurate paraphrase of par (a) of s 733(1). The actual words of the paragraph are "advice … relating to the likelihood of any land being flooded or the nature or extent of any such flooding". Those words are not engaged by Council's incorrect answer to question 7, to the effect that there was no "policy adopted by the Council … that restricts the development of the land because of the likelihood of … flooding". The answer is advice concerning the non-existence of any policy of a particular description. It is not advice "relating to the likelihood of [the land] being flooded".
[53]
Issue 6: plaintiff's reliance, consequent damage and cause of action
Prior to the plaintiff exchanging counterparts of the contract of sale on 17 March 2011 she retained a conveyancing solicitor to advise on the contract and thereafter to complete it. Before exchange the solicitor made enquiries of the vendor's solicitor as described at [134]-[136] above. I infer that if Council had issued the s 149 certificate that was attached to the contract with question 7 answered "Yes", then the purchaser's solicitor would have asked further questions to find out what policy was referred to in that answer. I infer that the solicitor would have advised the plaintiff against exchange of counterparts until those further enquiries were answered. I am satisfied that the plaintiff would have acted in accordance with her solicitor's advice. Of course, if question 7 had been answered on the certificate by providing the substance of the 2002 resolution, as in my view it should have been answered, then the plaintiff's solicitor would have had that information directly from the certificate.
Upon the plaintiff's solicitor becoming aware of the 2002 resolution in either of these ways I infer that the plaintiff's attention would have been drawn to it, from which she would have learned of the existence of the drain through the property, as well as Council's intention to acquire an easement over the drain (by negotiation or compulsory acquisition) and its intention to establish an easement on the western boundary in the event of any future development of the land. In drawing all of these inferences as to enquiries that would have been made and information that would have been obtained I take into account the diligence of the plaintiff's solicitor as demonstrated by the pre-exchange correspondence with the purchaser's solicitor. I also take into account that the plaintiff's correspondence and her evidence demonstrates that she is an educated, professional, competent person with a grasp of commercial and contractual concepts. In 2011 and subsequent years the plaintiff worked with her husband in a finance broking business.
As considered below in relation to the case against the second defendant for his negligent answers to requisitions, the plaintiff gave oral evidence that if she had known at any time prior to completing the contract "that there was a stormwater pipe running under the house and the swimming pool" she would have rescinded. I have no hesitation in accepting that evidence. No rational purchaser who, without knowledge of the pipe, was willing to enter into a contract to purchase this property at a price of $3 million would still be willing to proceed upon learning of this feature.
One can envisage a purchaser who might be willing to proceed with the purchase at a substantially reduced price, in the expectation of being able to have the pipe decommissioned and relocated. Completion of the purchase on that basis would involve capital risk and would require careful research into the possibilities for removal of the pipe, the cost of that exercise and the degree of physical vulnerability of the residence in the meantime. The plaintiff was not an investor of that type. She was seeking a home for herself and her family. Understandably, she would have regarded a 100-year-old, deteriorating vitrified clay stormwater pipe under the house and swimming pool as a completely unacceptable impairment.
If Council had issued the planning certificate with question 7 answered either "Yes" or by provision of the substance of the 2002 resolution, the plaintiff would thereby have learned of the pipe before entering into the contract and she would not have exchanged, just as she would not have completed the sale if this information had come to her through the answers to requisitions. But for Council's erroneous and negligent answer to question 7 the plaintiff would not have suffered the loss she sustained by acquiring No 13 at a price of $3 million when its value was very considerably lower than that because of the impairment constituted by the pipe.
All of the elements of a cause of action against Council for negligent misstatement in the planning certificate are established and I will consider the measure of damages later in these reasons.
[54]
Liability of second defendant for non-disclosure, negligent misstatement
[55]
Issue 7: second defendant's non-disclosure of the pipe
The plaintiff's contention that the second defendant was under an obligation to disclose latent defects of title is really no more than an unconventional way of stating the rule in Flight v Booth (1834) 1 Bing (NC) 370; (1834) 131 ER 1160 (Tindal CJ). The rule, discussed more fully below, is that if the property that the vendor is able to convey differs from what was promised in the contract in a respect so material that "it may reasonably be supposed that but for the misdescription the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether". Specific performance will not be ordered against the purchaser and he or she may rescind, notwithstanding any provision of the contract limiting the purchaser's rights to monetary compensation. The rule applies to a sufficiently serious "misdescription, although not proceeding from fraud".
The plaintiff's pleading at pars 80-95 and the submissions in support of it endeavour to construct upon, or infer from, the rule in Flight v Booth a duty of the second defendant to disclose the pipe and Council's rights over it, those being faults with the property that the plaintiff says are of such gravity as to constitute a defect of title according to the rule. Accepting for the purposes of the argument that it is permissible to speak of such a duty of disclosure, as a corollary or counterpart of the rule, the question is: what are the consequences of and remedies for a breach of the obligation? First, if the latent defect is discovered prior to completion then specific performance will not be ordered and the purchaser may rescind and recover any deposit; that is the rule. Secondly, if the purchaser proceeds to completion without having discovered the defect then he or she has no remedy upon discovering it afterwards - assuming that the non-disclosure was innocent, which is a premise of this discussion, having regard to the way the plaintiff has pleaded her case. Upon completion, the vendor's contractual obligation to convey good title is merged in the transfer: Christopoulos v Angelos, cited at [20] above. No claim for damages for the undisclosed defect of the property could survive completion for the additional reason that that is what the parties agreed by their contract: see cl 6.1 quoted at [349] below.
The plaintiff has cited no authority for her proposition that innocent non-disclosure of a defect in the property, of sufficient importance to constitute a latent defect of title according to the standard applied in Flight v Booth, will, without more, found an action at common law that may be pursued after completion for the legal remedy of damages. To sustain such an action the non-disclosure would either have to have been fraudulent in the sense explained in Derry v Peek (1889) 14 App Cas 337 or negligent in breach of a duty of care recognised by the common law.
Counsel opened the plaintiff's case in a manner that appeared to allege fraud on the part of the second defendant. When his departure from the statement of claim was pointed out, counsel applied to amend to bring the pleading into conformity with the opening in this respect. The application was met by substantial arguments of prejudice that would be occasioned to the second defendant if the plaintiff were permitted to introduce an allegation of such gravity after the trial had commenced. I was constrained to refuse leave. As for negligence, the answering of the plaintiff's requisitions was the only circumstance giving rise to a duty of care on the part of the second defendant in discharge of which he was required to disclose the pipe. That is considered under the next heading. There is no alternative, free-standing cause of action for damages based solely upon the obligation of disclosure that the plaintiff's counsel has sought to construct.
[56]
Issue 8: second defendant's breach of duty in answering requisitions
At [137] above reference has been made to the correspondence by which the plaintiff's conveyancing solicitor sought answers to requisitions and Mr Lukas supplied answers, in accordance with the second defendant's instructions, at 3:53pm on 11 August 2011, the day before settlement. The requisitions that the plaintiff asserts were incorrectly answered were as follows:
REQUISITIONS RESPONSE
6 Is the Vendor aware of:- NO
(a) any unregistered easements such as a right-of-way which affect the property? If so, please give full details. The purchasers should make their own enquiries.
(b) the breach of any covenant noted on the title? If so, such breach must be remedied before completion.
7 Has the Vendor received any notification from the Roads and Traffic Authority or local Council that the land or part of it is to be realigned, widened, altered or resumed? If so please give full details NO, but purchaser should make own enquiries
8 Is there any outstanding notification, claim or requirement of:-
(a) a statutory or local authority, or Not to vendors knowledge but purchaser should make own enquiries
(b) an adjoining owner which affects the property or part of it? Not to vendors knowledge
Any such notice, claim or requirement issued before contracts were exchanged must be complied with by the Vendor will before completion
19 Is the Vendor aware of any restrictions on the use or development of the land? Purchaser should make own enquiries
[57]
A vendor owes a common law duty to a purchaser to exercise reasonable care to answer accurately requisitions on title: Bebonis v Angelos; Christopoulos v Angelos (2002) 56 NSWLR 127; [2003] NSWCA 13; Votraint No 1088 Pty Ltd v The Commonwealth [2005] NSWCA 249 at [13]-[19] (Mason P, Giles JA and Campbell AJA agreeing). The duty of care is not disputed by the second defendant. I am satisfied that there is also implied by law a contractual obligation to exercise reasonable care to answer requisitions accurately. Whether the above answers were incorrect or misleading is to be measured against the circumstances that prevailed in August 2011 concerning the pipe and Council's plan for resolution of the Appian Way drainage problem.
[58]
Council's rights over the pipe; engagement of s 59A
The extent of Council's statutory rights over the pipe in August 2011 when the above answers to requisitions were supplied has been established by examination of historical facts and legislation at [34]-[60] above. The operation of successive Acts, transitional provisions and deeming provisions upon the circumstances of the original installation leads to the conclusion that the pipe was "installed in or on [No 13] by the council", within the meaning of s 59A of the Local Government Act. Therefore, as at August 2011 Council owned the pipe and had rights in respect of it and over the land on which it was constructed as provided for in sub-s (2) of s 59A. Council's ownership and statutory rights over the pipe have continued to the present day.
The second defendant said in oral evidence that, at least from Mr Cormican's letter of 15 March 2004 (see [116]) he did not understand that Council claimed ownership of the pipe but that it did claim a statutory right to come onto No 13 and maintain the pipe. He agreed that in June 2005 he understood that Council claimed both ownership of the pipe and the right to enter the property to maintain and repair it. He gave this answer with respect to his understanding at the time when the property was sold to the plaintiff:
Q In 2011 when you sold the property to the plaintiff you were aware that the council had not abandoned its claim in respect of the pipe?
A I don't really know what the council's position was but I would expect that they hadn't abandoned their position. Yes, I didn't know anything to the contrary. They hadn't written to me. We hadn't had any correspondence about it. In the absence of some other thing the situation that existed in 2005 I guess existed in 2011.
The second defendant gave these further answers concerning his state of knowledge when providing instructions to Mr Lukas:
A I knew when I sat with Mr [Lukas] in the absence of any other knowledge that the Council would probably still be maintaining its position about the ownership of the pipe.
[…]
Q You knew when you spoke to [Mr Lukas] in July 2011 that the Council still maintained that it had a right to come onto the property to fix the pipe?
A Okay.
Q You're agreeing that you knew that?
A I would have thought that their position hadn't changed.
[59]
Status of Council's 2002 resolution in August 2011
For the reasons given at [266]-[276] above, Council's 2002 resolution had not been revoked or abandoned as at August 2010 when the s 149 certificate was issued. Nothing that occurred during the next 12 months, up to the date when the requisitions were answered, constituted revocation, abandonment or qualification of that resolution. In order to be correct, the answers provided had to take into account that the policy contained in the resolution remained operative. The second defendant gave evidence that because Council had not made provision of a western boundary easement a condition of his Development Application in 2004, he "would have thought they'd abandoned" the intention to impose such a condition. Nothing that had occurred, as found in these reasons, made it reasonable for him to answer the requisitions upon that assumption without full disclosure of what had taken place between himself and Council after he was notified of the resolution on 14 June 2002.
[60]
Status of Council's February 2003 notices in August 2011
As recorded at [109] above, Council issued to the second defendant on 4 February 2003 notice of its intention to enter upon No 13 for the purpose of carrying out maintenance and relining "of the drainage pipe line which passes through your property", pursuant to s 94 of the Roads Act. The substance of the notices is set out at [106]-[107]. On the evidence referred to at [108]-[116] I find that Council never withdrew its notices of 4 February 2003. By the General Manager's letter of 5 March 2003 and through Mr Wyatt's discussion with the second defendant on 21 March 2003, the second defendant was informed as follows:
1. the repair and relining work proposed in the notices was deferred "until this matter could be resolved" - referring to the impasse regarding Council's assertion of statutory rights to enter No 13 and regarding payment of compensation for resumption of an easement on the western boundary;
2. Council would investigate the feasibility of alternatives for resolving the Appian Way stormwater problem;
3. Council would "not enter your property in accordance with the notice issued, and will formally notify you should it wish to proceed in this manner sometime in the future".
The second defendant was never informed by Council that the feasibility of alternative solutions had been investigated, let alone that any alternative had been adopted. Council never stated that it no longer asserted the statutory rights under which its notices of 4 February 2003 had been issued. Those notices were simply not acted upon by Council for the remainder of the second defendant's tenure of the property.
The answer "No" to requisition 6(a) was misleading. It was literally true because no easement had been granted and there was no instrument that was capable of being registered but was presently unregistered. However Council's ownership of the substantial storm water drain that ran through the centre of the property, together with Council's rights under s 59A(2) to "operate, repair, replace, maintain etc", were so closely similar to the qualification of title that would arise from a drainage easement that in substance the simple answer "No" was misleading.
This had been recognised by the second defendant's own solicitor, Mr Hones, on 26 November 2002 when he wrote to Council on the second defendant's behalf to deny Council's claimed statutory rights to enter upon the land. His letter included the following:
If Council were to exercise a right to enter to reinstate the pipe or to maintain the pipe our client will suffer a loss arising out of what is tantamount to rights similar to those which would be vested by an easement … .
[62]
Requisition 7 concerning "any notification from the … local Council that the land or part of it is to be … resumed"
So far as relevant to the issues in this case, requisition 7 required the second defendant to disclose whether he had "received any notification from the … local Council that the land or part of it is to be … resumed". The answer "No" was incorrect because the second defendant had been informed by letter of 14 June 2002 of Council's resolution passed three days earlier: see [98] above. That letter provided the second defendant with the text of the resolution. In terms it notified that an easement over the existing drain would be resumed. By clear implication it notified that a western boundary easement would be resumed in the future.
As noted at [335] above the 2002 resolution remained operative and the fact that the second defendant had been notified of it should have been disclosed in answer to requisition 7. Even if the second defendant thought that the resolution had been abandoned or had in some other way lapsed on a date after he was notified of it on 14 June 2002, the correct answer to requisition 7 would have been in the affirmative. The addition of the words "but purchaser should make own enquiries" did not negate or neutralise the falsehood of the answer "No".
[63]
Requisition 8(a) concerning "any outstanding notification, claim or requirement of a local authority"
For present purposes the relevant part of requisition 8(a) was an enquiry whether there was "any outstanding notification, claim or requirement of a … local authority … which affects the property or part of it". The answer, "Not to vendors knowledge but purchaser should make own enquiries" was erroneous, firstly, because the notifications of 4 February 2003 were outstanding as explained above at [336]-[337]. Secondly, the notification on 14 June 2002 of Council's requirement of an easement over the existing drain was outstanding, for reasons given above in relation to requisition 7. Thirdly, irrespective of the status and ongoing efficacy of any of the past notifications, Council had "claims" that it owned the pipe and that it was entitled to enter upon No 13 from time to time as necessary to exercise rights under s 94 of the Roads Act and s 59A of the Local Government Act to perform work on the pipe. Those claims had never been relinquished and were outstanding regardless of the lack of action by Council to enforce or invoke them for several years.
The erroneous answer to requisition 8(a), that there was no relevant notification, claim or requirement to the second defendant's knowledge, was not corrected or neutralised by the addition of the words "but purchaser should make own enquiries".
[64]
Requisition 19 concerning "any restrictions on the use or development of the land"
The second defendant's response to requisition 19 that "purchaser should make own enquiries" was misleading because the correct answer would have been that he was aware of restrictions both on the use of the land, arising from the existing drain running through the middle of it, and on development of the land, arising from the 2002 resolution under which Council would require establishment of a western boundary easement at the time of further development. Reasonable care required that the response to this requisition should have included particulars of the existing pipe, reference to Council's claimed statutory rights over it and disclosure of the 2002 resolution.
The second defendant gave the following evidence in cross-examination:
Q You knew at the time, didn't you, that you spoke to Mr [Lukas] in July 2011 that the existence and location of the pipe was likely to result in restrictions being placed upon the purchaser by the Council in relation to the use or the development of the land?
A Yes.
Q You knew at that time that the Council still maintained that it had a right to enter the property to fix the pipe and that it owned the pipe and that those two things were likely to result in restrictions on the use and development of the land?
A When I owned the property and up until the time that I sold it, I think the Council always maintained that it had a right to enter the property under those 59A.
[…]
Q You knew at the time you spoke to Mr [Lukas] that the fact that the Council maintained that it owned the pipe was likely to result in restrictions on the use and development of the land?
A Yes.
[65]
Failure to exercise reasonable care in answering the requisitions
All of the misleading and erroneous answers to the requisitions referred to above constituted negligent breaches of the second defendant's common law duty and implied contractual obligation to exercise reasonable care that his answers should be accurate. The evidence considered below in connection with Issue 15 shows that the second defendant did not tell Mr Lukas of the existence of the pipe; of the claims Council had made in respect of it in 2001-2003; of the notices he had received, in December 2002 and February 2003, that Council intended to enter No 13 to repair and reline the pipe; or of the 2002 resolution under which Council proposed to acquire an easement over the existing drain and, at a later date, along the western boundary. The second defendant did not inform his solicitor of any advice he had received from Mr Hones or from counsel retained on his behalf in 2002-2003.
Even if Mr Lukas had received proper instructions before issuing the impugned answers, the second defendant would still have been liable in negligence and in breach of contract for their incorrect and misleading content. Obviously the second defendant should have disclosed all of these matters to his solicitor and followed advice as to what answers should be made. The second defendant would have been just as much liable to the plaintiff for the incorrect and misleading answers if he had given Mr Lukas full instructions and if the latter had made an error of professional judgment in the answers he provided.
[66]
Issue 9: plaintiff's entitlement to rescind by reason of the pipe
The contract described the subject matter of the sale as "13 Appian Way Burwood 2134 and being the whole of the land in Certificate of Title Folio Identifier 33/12249 and being Lot 33 in DP 12249". The following standard clause required the second defendant to transfer title to the land so described on completion:
16.3 Normally, on completion the vendor must cause the legal title to the property (being an estate in fee simple) to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration.
Given the existence of the pipe and Council's ownership of it and rights under s 59A of the Local Government Act, the subject matter promised by the second defendant under the contract was affected by a misdescription. The following clause applied to the situation:
6.1 The purchaser can (but only before completion) claim compensation for an error or misdescription in this contract (as to the property, the title or anything else and whether substantial or not).
Had the second defendant answered the requisitions correctly, the plaintiff would have become aware of the misdescription. The question whether in those circumstances the plaintiff would have been entitled to rescind or would have been limited to compensation under cl 6.1 depends upon whether the Court should now find, as a matter of fact, that what the second defendant was able to convey in purported performance of the contract fell foul of the rule in Flight v Booth, referred to above at [326].
In Batey v Gifford (1997) 42 NSWLR 710 Handley JA encapsulated the principle in the following statement at 717D:
As a general rule therefore, compensation clauses cover errors or misdescriptions, even a trivial kind, which would have entitled the purchaser to rescind at common law, but do not cover cases where the error or misdescription is so substantial that it "annuls" the sale in accordance with the rule in Flight v Booth.
In Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193 at [39]-[41] Brereton J considered a number of modern applications of the rule in Flight v Booth, providing illustrations of misdescriptions that have been found sufficiently significant to justify rescission and other examples where the misdescription has not been of that order. Further examples are given by Sackar J in Raphael Shin Enterprises Pty Limited v Waterpoint Shepherds Bay Pty Limited [2014] NSWSC 743 at [113]-[160].
The facts in two of the decided cases bear a close similarity to the circumstances in which the present plaintiff would have sought to rescind had she known of Council's pipe under No 13. In Torr v Harpur (1940) 40 SR (NSW) 585 there was a contract for the sale of land on which two semi-detached cottages were partly erected. Prior to completion the purchaser discovered that a box culvert had been constructed beneath the surface of the land, three years before the contract was entered into. It was 1.98m wide and 1.2m deep. The top of it was between 1.2m and 1.8m below the surface and it had been laid diagonally across the property. The culvert was undiscoverable upon reasonable inspection prior to the contract being entered into and it was not referred to in the contract. The contract provided that "no error or misdescription of the property shall annul the sale" but compensation would be paid if demanded in writing before completion.
Williams J was satisfied that the culvert was soundly built, that it was capable of bearing a load at least three times that of the cottages under construction, that no movement of the foundations had occurred during the four years since construction had commenced and that there appeared to be "only a remote possibility of any such trouble developing". However, his Honour concluded that the purchaser was entitled to rescind under the rule in Flight v Booth, upon the following considerations (at 592-593):
The evidence of Mr Stanton and Mr Fuller [apparently, valuers], which is uncontradicted, establishes that the presence of the drain would be an extremely great defect if the purchaser desired to resell or to mortgage the property. In effect they say that, speaking generally, a prospective purchaser or mortgagee, when he discovered the drain, would not proceed any further. Now that the purchaser knows of the drain it would be his duty to inform any prospective purchaser or mortgagee of its presence: Carlish v Salt [1906] Ch 335..
[The valuers'] evidence appears to me to be in accordance with common sense and with what one would conclude to be the position from one's own experience and knowledge of the world. A house in the best order and condition would be an unattractive proposition to any person who was informed that instead of being erected on land in its natural state, it was erected partly above a large tunnel in the land, comprising a drain which would become filled with water every time it rained. It is obvious that in such a case any purchaser or mortgagee would at least have to seek expert advice. It would entail enquiries from the Public Works Department to ascertain whether the drain had been properly designed and constructed, and an inspection of the foundations [of the cottages] in order to be sure that they were adequate. Even if such an inspection showed the precautions suggested by [an architectural expert in the case] had been taken, I think that the presence of the drain would be such a defect that it may reasonably be supposed, "that, but for such misdescription, the purchaser or mortgagee might never have entered into the contract at all". As soon as he heard of its presence he would probably not proceed any further with the deal. He would look elsewhere for an in investment for his money.
[…] The facts of the present case show that the misdescription is in a material and substantial point seriously affecting the subject matter of the contract. If I refused the [purchaser] relief I would be forcing upon him something which "by reason of a departure from the terms of the contract, is so materially altered in character as to be in substance a different thing from that contracted for".
The purchaser in Torr v Harpur was an investor who proposed to let the two cottages when they were built. Nevertheless, the considerations referred to by Williams J are applicable to the plaintiff in the present case, who purchased No 13 with the intention of occupying it herself. Had she learned of the existence of the pipe, through the second defendant exercising reasonable care in answering the requisitions, her case for rescission would have been at least as strong as that of the purchaser in Torr v Harpur. If the plaintiff were forced to complete in that hypothetical situation, there would be imposed upon her a house property beneath which lay a large diameter pipe, that would carry stormwater upon every fall of rain, would fill to capacity during significant rain probably once per year, was over 100 years old, was constructed of vitrified clay and was in a seriously deteriorated state. Specific performance would not be ordered against the plaintiff to require her to accept from the second defendant a residential property so different from that which was promised under the contract, impaired by the pipe to an extent that would make it saleable only at a great discount if at all.
In Liberty Grove (Concord) Pty Ltd v Yeo [2006] NSWSC 1373 purchasers of land discovered after entering into a contract and before completion that a 750mm diameter drain lay beneath the surface through the centre of the property. No easement for drainage was registered. The ownership of the drain was not established. Sydney Water did not own it. It had been installed at some time prior to 1994. The Council of the local government area, Canada Bay, asserted that it had constructed the drain pursuant to s 241 of the Local Government Act 1919, by which councils were empowered to construct drains on private land for the purpose of draining or protecting public roads. Upon the purchaser's application, the Council refused permission for the drain to be removed. Palmer J's findings included the following:
[24] […] It is clear that the drainage line carries a substantial volume of water and that its continued existence is necessary.
His Honour upheld the purchasers' right to rescind on the following basis (some citations omitted):
[21] The Defendants rely on the line of authority founded on Flight v Booth and summarised in Torr v Harpur. They say that the nondisclosure of the drainage pipe in the contract so far affects its subject matter in a material and substantial way that it may reasonably be supposed that, but for the failure to disclose, the Defendants might never have entered into the contract. If the omission to disclose has that character, the law provides that a purchaser is not compelled to resort to compensation clauses in the contract but may rescind: see Torr v Harpur; Beard v Drummoyne Municipal Council (1969) 71 SR(NSW) 250; Micos v Diamond [1970] 72 SR(NSW) 392.
[26] In my opinion, the continued existence of the pipeline, at the very latest since 1994, and the purpose for which the Council insists on its continued use and presence on the Land, place the pipeline in that category of rights which may be called quasi-easements.
[27] In my view the facts to which the Defendants point, and to which I have referred above, amply support the conclusion that the drainage pipeline constitutes a substantial latent defect in title which would justify the Defendants in rescinding the contract.
The decision in Liberty Grove (Concord) Pty Ltd v Yeo further supports my conclusion that if the requisitions under consideration in the present case had been answered accurately the plaintiff would have been entitled to rescind and she would thereby have averted the heavy loss that she has sustained by completing the contract at a price of $3 million, for a property that was worth very much less than that by reason of the pipe and Councils' rights and claims with respect to it. It follows that if the plaintiff has shown that she relied upon the answers to requisitions in completing the contract, because those answers did not reveal the facts upon which she would have been entitled to rescind, then the second defendant's negligent provision of those answers has been causative of her loss.
[67]
Issue 10: plaintiff's reliance on the answers to requisitions
The second defendant submitted that the plaintiff has not proved reliance upon the answers to requisitions or causation of damage by their inaccuracy, because she did not give evidence that she read the answers herself or that she formed any view about them or consciously accepted them in proceeding to settlement. In Bebonis v Angelos; Christopoulos v Angelos the Court of Appeal dealt with a similar argument, raised in relevantly equivalent circumstances. Handley JA held as follows at [92] (Beazely and Heydon JJA agreeing):
[92] The submission that there was no evidence of reliance by the purchasers was without substance. Reliance through an agent is an everyday event, not the least in the case of corporate principals. The whole purpose of requisitions is to obtain answers on which the purchasers' solicitor may rely when proceeding to completion. A truthful answer would have provoked a very different response from the purchasers. Reliance on a misrepresentation need not be established by direct evidence but may be proved by inference from the circumstances: KR Handley, ed, Spencer Bower, Turner & Handley Law of Actionable Misrepresentation (4th ed, 2000 Butterworths) at 76-7.
Reference has been made at [322]-[323] to the plaintiff's evidence that she would have rescinded the contract had she learned of the existence of the pipe before completion. As earlier stated, I accept that evidence. It is an inescapable inference that the plaintiff's conveyancing solicitor, who pressed for a response to the requisitions close to the appointed settlement date, read the answers and proceeded to completion on the basis that they were apparently benign. Had the answers been accurate and not misleading, the solicitor would undoubtedly have informed the plaintiff of the existence of the pipe, upon learning of which she would have given notice of rescission. The above consideration of Flight v Booth satisfies me that the plaintiff would have been legally entitled to rescind and that she would have recovered her deposit and suffered no loss. Reliance and causation have been proved. The plaintiff's causes of action in tort and in contract for negligent misstatement are complete. Clause 6.1 of the contract does not purport to exclude liability in tort or for breach of the implied obligation to exercise care in answering the requisitions.
[68]
Damages for negligent misstatement by Council and/or second defendant
[69]
Issue 11: damages for Council's/second defendant's misstatements
The plaintiff's damages for the negligent misrepresentations of both Council and the second defendant are to be assessed on the basis that but for the negligence there would have been no transaction; that is, the plaintiff would not have entered into the contract, or would have rescinded it and recovered her deposit. The measure of damages is therefore the difference between what the plaintiff paid and the market value of the property in 2011, impaired as it was by the pipe and by Council's rights. There is no evidence that there would have been any difference in the market value between March 2011 when the contract was entered into and August 2011 when it could have been rescinded if the plaintiff had received an accurate response to her requisitions.
[70]
Legal principles of valuation
The general principle upon which a court is to determine the value of land was stated by Griffith CJ in Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418 at 432 in the following terms:
In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.
At 441 Isaacs J said:
To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.
In the valuation exercise presently at hand it is particularly important that full effect be given to the requirement that the hypothetical willing but not over anxious seller and buyer must be presumed to be "conversant with the subject matter at the relevant time" and "cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features". On that subject, in Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413 McHugh J cited at [49] the above passages from Spencer v The Commonwealth and added the following:
[50] The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.
The plaintiff and both defendants tendered reports of expert valuers. All of them agreed that in order to arrive at a 2011 market value for No 13 Appian Way in its impaired state they should commence by assessing its value assuming that it was not so impaired. This was agreed at $3 million, having regard to comparable sales and the rigour of the negotiation process that led to that price having been agreed between the plaintiff and the second defendant. The valuers further agreed that they should then determine what discount a hypothetical, fully informed, willing but not over anxious vendor and purchaser would agree upon to allow for the presence of the drain and Council's rights with respect to it. The three experts adopted markedly different approaches to assessing the appropriate discount and the results of their respective methods diverged widely.
In reaching my own conclusion upon the appropriate level of discount I am not restricted to choosing between the experts' competing approaches and results. I have regard to the inherent imprecision of the valuation exercise in this case, as in any case. In Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373, the Privy Council said this at 391:
It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at.
That passage was quoted with approval by Isaacs J in Spencer v The Commonwealth at 442-443. Similarly in Boland v Yates Property Corp Pty Ltd [1999] HCA 64 Callinan J said:
[277] It should also be firmly kept in mind that valuation practice, like legal practice, cannot be an exact science. Both require the exercise of judgments and the forming of opinions, often on matters in respect of which certitude is impossible and uncertainty highly likely.
In the same case Kirby J referred at [120] to the:
"principles" developed by the courts (including this Court) to flesh out the meaning of the simple phrase "the value of the land" which provided the statutory foundation for Yates' entitlement to compensation.
His Honour made these observations (citations omitted):
[120] Many of those so-called "principles" are "ambiguous and contentious". They may be necessary in cases of this kind, in the same way as the "principles" of sentencing are necessary. They may help to guide the decision-maker to a rational, just and consistent process of decision-making. However, like the "rules" governing sentencing, the "principles" governing the valuation of land in cases of its compulsory acquisition involve inconsistencies, overlaps, internal conflicts and occasional illogicalities that make their exploration a rather unrewarding one.
In Vale v Sutherland [2009] HCA 26 at [21] the High Court cited its decision in Boland v Yates Property Corp Pty Ltd for the stark proposition that:
Valuation is a notoriously inexact science.
In Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205 at [9]-[17] Bell P cited a number of other decisions of the High Court and intermediate appellate courts to similar effect.
[71]
The facts of impairment that would be known to a purchaser in 2011
In order to assess what discount would be arrived at between a seller and a buyer in 2011 for the impairment constituted by the pipe, I commence by identifying the facts concerning the property that the hypothetical parties should be presumed to have known, as persons "cognizant of all circumstances which might affect its value". Those facts are of wider scope than merely the existence of the pipe and Council's statutory rights over it. Knowledge of those matters, alone, would have been sufficient to cause many prospective purchasers, like the plaintiff, not to proceed at all. However to arrive at a discounted market value it is necessary to conceive of a purchaser who would be willing to take the impaired property and who would make all reasonable enquiries to ascertain how the pipe may affect enjoyment of the residence and what future expenses may be associated with it.
Council made this submission:
There is no factual basis for finding that a person in the position of the plaintiff, in contemplating an ordinary residential real estate transaction, would have obtained expert opinions from a hydraulic engineer and a structural engineer to determine whether it was possible to relocate the pipe running through the property, and the cost of doing so, prior to making an offer to purchase the property.
I am fortified in rejecting this submission by noting that it is directly contrary to Williams J's conclusion in Torr v Harpur: see the passage quoted at [354] above. I am satisfied that no rational person "contemplating an ordinary residential real estate transaction" would purchase the property at all without assurance that the pipe was of sound construction and adequate hydraulic capacity. A rational purchaser expecting to buy a parcel of "ordinary residential real estate" would also want to know the depth at which the pipe was placed and any potential impact it may have upon future alterations or improvements to the property. None of these assurances could be acquired without obtaining the advice of a competent engineer.
It must be assumed that the hypothetical purchaser would ascertain, either by his or her own enquiries or by those of an engineer engaged for the purpose, that the pipe was over 100 years old and made of a material - vitrified clay - that as a matter of common knowledge has long since been superseded by concrete for applications such as this. It would be ascertained that the pipe had been found, 10 years earlier, to have deteriorated seriously, with longitudinal cracking, root infestation and a missing section under the front garden. The purchaser would discover that no repairs had been carried out in the 10 years since that survey. A rational hypothetical purchaser, even without specialist knowledge, would regard such a pipe as a threat to the foundations of the house because of the potential for leaking and for further deterioration of the integrity of the pipe walls. The second defendant perceived such a risk in September 2001: see [80] above.
With the above knowledge and recognition of risk, a willing but not over anxious purchaser would certainly obtain engineering advice. None of the engineering reports furnished to Council over the past 20 years have suggested that the pipe could be replaced, economically and safely for the foundations of the house, along the line of the existing pipe. I impute to the hypothetical purchaser that he or she would receive advice consistent with that position. In those circumstances the hypothetical purchaser would understand that in order to bring this property to a satisfactory condition for long-term habitability the existing pipe would have to be replaced by a new one laid adjacent to the western boundary.
Upon recognising these difficulties and uncertainties, any prospective purchaser answering Council's description of "a person in the position of the plaintiff, … contemplating an ordinary residential real estate transaction" would, like the plaintiff, walk away. A rational and fully informed purchaser still interested in the property would be a different type of buyer altogether and would necessarily approach the transaction with calculations such as those that would be applied to a development project. That is not to say that the class of interested purchasers would be limited to those who would wish to replace or substantially alter the existing residence. But the class would not comprise people simply looking for a residence that was immediately fit for enjoyable occupation. A purchaser taking on the property with full information would know that it could not be left in its existing state and that to bring it to the condition of a normal Federation residence, comparable to others in the street, there would lie ahead a substantial and risky project in which the proprietor would not be in control of the timing and execution of remedial work and in which it would be necessary to deal with a council that had proved itself thoroughly unbusinesslike in relation to the problem over four decades.
The prospective purchaser making rational enquiries would ascertain that the existing pipe was in 2011, as it still is, the sole stormwater main for a catchment of 5.2ha and that the run-off from this area was concentrated to a large pit directly in front of No 13, from which the pipe was fed. Further, he or she would learn that hydraulic surveys over the preceding nine years, since April 2002, had repeatedly confirmed that the pipe was of inadequate capacity for even 1 year ARI rain events and hence that it would be fully charged, on heavy rain, at least annually. The purchaser would appreciate that replacing the pipe with one laid along the western boundary would require a larger diameter installation. It would be perceived that this work would be required urgently and that re-lining of the existing pipe as an interim protective measure for the house would be required immediately. On the evidence in this case I have no doubt that a reasonably competent hydraulic or civil engineer would advise a prospective purchaser that both the relocation and the interim re-lining were urgent.
There should be imputed to the hypothetical purchaser an awareness of Council's statutory rights in respect of the pipe and its record of past dealings with the proprietor of No 13. This would include knowledge that in order to have the pipe replaced by one laid on the western boundary Council would insist upon a drainage easement in its favour. Further, the purchaser would know that no compensation would be paid in respect of such an easement. Council's dealings with the second defendant had shown its intransigence about this. The hypothetical purchaser would appreciate that he or she could not have the issue of compensation adjudicated by the Land and Environment Court unless Council initiated compulsory acquisition and that Council had demonstrated in 2002 that it would not take that course. It would be seen that upon purchasing the property the only way the purchaser could force the issue of Council obtaining an easement, being an essential prerequisite to decommissioning the existing pipe before it caused serious damage to the house, would be to make a gift of the easement.
The hypothetical purchaser would also recognise that making a gift of a western boundary easement would not, alone, achieve decommissioning of the pipe under the house. Installation of a larger drain within the new easement would also be required. The cost of that work in May 2005, on Council's information from Webb McKeown, would have been $735,000, the breakdown of which has been set out at [128] above. In May 2012 Brown Smart Consulting updated that costing to $752,000: see [170]. Two expert reports tendered in the proceedings estimated the cost at $738,000 and $810,000 respectively, although the latter appears to have assumed some additional work that only become necessary as a result of alterations to the property carried out since 2011. It is reasonable to infer that a purchaser in 2011 would have ascertained that the cost would be in the order of Brown Smart Consulting's estimate, which I repeat for ease of reference as follows:
900mm pipe through No 13 $288,000
Upstream drainage work on Appian Way $285,000
Downstream augmentation of pipe to Wyatt Avenue $179,000
Total $752,000
A fully informed purchaser would see that for Council to undertake such a large outlay it would first have to budget for it in a future year or years. Council's budget allocation for stormwater drainage capital works in the financial year to 30 June 2003 was only $370,000. The evidence does not disclose how much was allocated for this type of work in subsequent years but is unlikely that $752,000 could readily have been found for this single project after decades of Council apparently having failed to set aside money to create the necessary fund.
Council's record up to 2011 was of indecision inefficiency and procrastination in relation to Appian Way drainage. It commissioned further studies in preference to acting upon those it already held. It declined to follow engineering advice in June 2002 and again in response to the Webb McKeown report in May 2005. The hypothetical purchaser would foresee great uncertainty as to whether Council would ever decide to install a 900mm pipe on the western boundary at a cost of $752,000. He or she would foresee that even if the decision was made there was a prospect of some years' delay before the work would be budgeted for and then actually executed. These uncertainties would remain notwithstanding the grant of an easement without claim for compensation.
Doubts that Council would ever pay for an amplified drain along the western boundary would be compounded by the fact that Council had spent about $95,000 in May 2005 installing new pits and feeder lines in Appian Way, including the large junction pit in front of No 13: see [125] and [129] above. That work was dedicated to the continued use of the existing pipe through the property. There is no evidence that the 2005 street infrastructure could be modified to redirect stormwater to a western boundary easement at a cost any less than the $285,000 referred to at [378] above. The likely redundancy of the street works that had been carried out in 2005 at significant cost to Council would be a factor in it being reluctant to relocate the drain with the urgency that the project would require from the point of view of a purchaser of No 13.
The hypothetical purchaser would recognise that the cost of relining the existing pipe in 2011 would likely exceed Webb McKeown's 2005 estimate of $95,000. That work had not been done and, as mentioned above, would reasonably be regarded by a rational purchaser in 2011 as an urgent interim measure. It could be expected that Council would not outlay a sum of that order on work that would become redundant if a new pipe were to be installed on the western boundary.
The hypothetical purchaser would take into account that if he or she could persuade Council to accept a western boundary easement for the installation of a larger drain, it would utilise about 262m2 of the land, calculated as explained at [388] below. No construction on or over that area would be permitted: see cl 8.16 of the1994 Stormwater Code quoted at [214] above. The purchaser would allow for disruption of enjoyment of the land during installation of a new drain over about eight weeks. In the price to be paid for the property the fully informed purchaser would take account of the anxiety that would be associated with living in the residence from the date of settlement until the pipe under the house could be decommissioned. There would be a constant sense of threat arising from knowledge that a torrent of stormwater would surge under the house, through an antiquated and failing drain, during every heavy rainfall.
When taken together, all of these circumstances presumed to be known to an informed purchaser would make this property an extremely unattractive proposition unless the price could be very substantially discounted. The only sensible way to measure the detriments in a dollar value is to assume that the purchaser would intend to rectify them and would calculate the likely cost of doing so. The purchaser would consider whether the projected cost, as a discount, should be adjusted down or up to allow for a possibly better or worse outcome in dealings with Council, a possibly shorter or longer delay until the pipe could be relocated and a possibly greater or lesser degree of discomfort associated with living in the property in the meantime.
If a purchaser could be found who would not intend to rectify the physical detriments of the property proactively and who would therefore not approach the question of an acceptable discount to price on the basis of the likely cost of rectification, that would be a person willing to run the risk of the residence being damaged as a result of failure of the pipe and patient enough to wait in hope that Council would at some time resume a western boundary easement, submit to the jurisdiction of the Land and Environment Court with respect to compensation and relocate the pipe at ratepayers' expense. A hypothetical purchaser who would approach the matter in that way would suffer significant loss of enjoyment of the property in the meantime, both in terms of the anxiety earlier referred to and by reason of constraints upon development imposed by the existing pipe and by the expectation of a western boundary easement being compulsorily acquired in the future.
While it is not possible to attribute, directly, a dollar value that such a purchaser would place upon these detractions from enjoyment of the land, the Court may safely conclude that in an efficient market he or she would not be driven by competition to pay any more for the property than would be offered by a hypothetical purchaser who would calculate an acceptable discount based upon the cost and delay of rectification.
Council submitted that the presumed discounting calculations of a prospective purchaser cannot be used as a guide to value because they look at only one side of the hypothetical transaction. It was Council's submission that, whatever view the Court might take of how much a fully informed purchaser would deduct from the otherwise market value in formulating his offer, that would not determine value because a willing but not over anxious vendor would not necessarily accept the discounted offer. I reject that submission. The process of judicial valuation, in accordance with Spencer v The Commonwealth, necessarily assumes that minds meet and that a transaction results. In identifying all the features and circumstances of this property that would bear upon the hypothetical purchaser's decision about what he or she would be willing to pay, the Court must assume that the vendor would be equally cognisant of all of those matters. The vendor would have to accept that the pipe and the uncertain future of resolving the pressing issue of drainage through No 13 would cause many otherwise prospective purchasers not to touch it. On the basis that any valuation exercise must assume a transaction at a price point, the hypothetical willing but not over anxious vendor would simply have to accept the heavy discounting that a rational purchaser would apply.
[72]
Discount for a western boundary easement in favour of Council
The expert valuers who gave evidence in the case were Mr Gedeon for the plaintiff, Mr McGuirk for the first defendant and Mr Bregozzo for the second defendant. With respect to the diminution in value that should be attributed to the need to grant Council a western boundary drainage easement, the area affected would be in the order of 262m2. That figure was calculated by Mr Bregozzo on the basis that the length of the western boundary is 86.49m, that some extension of the easement along the northern boundary would be necessary to enable a new drain to be connected to the pipes that run through to Wyatt Avenue and that the easement would have to be 2.5m wide, being the minimum acceptable under cl 8.8 of the 1994 Stormwater Code.
The total area of No 13 is approximately 1,688 m2. Accordingly, as accepted by all of the valuers, the proportion of the site that would be affected by the easement would be approximately 15.5%. Mr McGuirk was of the view that the market value of the land alone in 2011 was $2.2 million. In his view an appropriate valuation of the easement, taking into account that the area affected by it would not be completely alienated, would be in the order of 50% of the proportionate land value; that is 50% of 15.5% of $2.2 million. That calculation produces a sum of $170,500 but Mr McGuirk said he would "probably come to that figure of 175, maybe 200,000".
Mr Gedeon said that he thought $621,000 was a reasonable valuation of a western boundary easement. That figure was derived by Brown Smart Consulting in April 2012, as a fraction of the total improved value of the property proportionate to the area that the engineers calculated would be taken up by the easement. I accept Mr McGuirk's view that the appropriate percentage of land area should be applied only to the land value, not to the total improved value.
Commencing with the valuation experts' consensus that the improved value of the property in 2011 was $3 million, the land only component is a function of what value it is assumed the market would attach to the improvements, being a 100-year-old Federation home. In Mr Gedeon's view the house did not contribute any more than $400,000 to the total improved value. He gave these answers:
[Even] though they're […] nice improvements - they don't add a lot of value to the property. They were an under capitalisation of the land so you're looking at a 100-year-old improvement. When you're buying a $3 million property you want to have a substantial house that goes with the purchase. The house was not substantial … .
[Appian Way is] pretty much the most prestigious street, not just in Burwood but insofar as heritage properties and heritage areas it's - it's the most prestigious street in the whole of the inner west, and people who live in that street and want to live in that street live there because of the grandiose nature. It's got a big tennis court right in the middle of the street, and it's a lovely environment, and they all want to have lovely homes.
Mr McGuirk adopted $800,000 as the value of the improvements. He said that the house as it stood in 2011 was reasonably commensurate with the value of the location and he did not accept that it represented under capitalisation. I do not entirely accept the position of either Mr Gedeon or Mr McGuirk on this and consider that a realistic assessment of the value of the improvements lies somewhere between. It is reasonable to adopt a figure of $600,000 and to treat the value of the land alone, unimpaired, as $2.4 million.
When the 15.5% land proportion for the easement is applied, the result is a figure of $372,000. Mr Gedeon did not consider it justified to apply a further reduction factor of 50% and I agree with him. This drainage easement would not be used for the laying of modest pipes to serve a single dominant tenement. It would be an easement to accommodate a 900mm, industrial scale piece of infrastructure to serve the entire community living within a 5.2ha area. The proprietor of No 13 would have no control over the depth of placement. Nothing could be built over it. The valuers at times referred to such an easement as "a blot on the title". That conveys the idea of an abstract and almost theoretical encumbrance. But this easement would involve a very real intrusion upon a residential allotment in a sought after location. The above-mentioned figure of $372,000 is a reasonable assessment of this component of the discount that a hypothetical purchaser would require.
I disregard altogether the valuations that Council's valuers in earlier years have from time to time attributed to the easement: see [78] and [227(4)] above. I have no idea what assumptions underlay those figures and the experts who provided them were not called to provide any explanation.
[73]
Discount for the cost of relocating the pipe
Together with the value of the easement, the hypothetical purchaser would factor in the cost of interim relining at $95,000 and the full cost of installing a 900mm replacement pipe along the western boundary, including street work in Appian Way and downstream amplification - the $752,000 referred to at [378].
The hypothetical purchaser would ascertain the history of Council's past conduct concerning this drainage problem, at least in outline. That knowledge would be important in predicting whether Council might bear expenses and take action with the necessary urgency to rectify the impairments to No 13. In my view an incoming purchaser would have no expectation, based on the history of the matter, that Council would commit to relocation of the pipe, let alone implement such a decision, within a time frame that would be reasonable having regard to the physical risk to the property and the diminution of enjoyment that would be engendered by that risk until it could be removed.
The purchaser would take into account the possibility of an outcome more favourable than having to pay the full cost of interim relining, installing a new drain and constructing the off-site connections. He or she would consider the possibility that Council might undertake the relining itself; and/or that it might only require a contribution to the cost of a new drain, perhaps as a condition of consent to a future development application; or that any such requirement for contribution would be disallowed in the Land and Environment Court; or that Council might simply bear the whole cost of the new drain. Consideration would be given to whether any of these more favourable outcomes might be offset by long delay in decision-making and/or implementation; and/or by delay and irrecoverable costs associated with Land and Environment Court proceedings.
On the other hand the hypothetical purchaser would take into account the possibility of worse outcomes; for example that once interim relining had been carried out Council would be relieved of pressure to relocate the drain and would impose long delays in relation to that work; or that Council might not permit the proprietor of No 13 to relocate the drain, even at its own expense, because of the requirement for connecting works in Appian Way and amplification of downstream drainage, which Council might not be willing to have carried out.
Taking into account all possibilities in my view the hypothetical purchaser with knowledge of the circumstances would consider it necessary to include the full cost of interim relining and of relocation of the drain as an allowance in the discount to price. The whole of those costs might not actually be incurred but the amount of any expenditure averted would be an appropriate proxy measure of the economic costs of delay, compromised enjoyment of the land in the meantime, legal expenses and risk.
In the calculations of a purchaser undertaking what would be in effect a development exercise, Council's entrenched tendency to procrastinate would translate into prolongation of the project, the cost of extended negotiations, holding costs and a longer period of living in a house threatened by the ancient pipe running under it and unable to be developed. The valuation of the impaired value of the property in 2011 is made upon the basis that the purchaser would apply a discount commensurate with a project of bringing the property up to its unimpaired value of $3 million. For the reasons given above a purchaser would see the project as difficult and risky. He or she would require a discount sufficient to leave some margin as a reward for the risk involved.
[74]
Total discount that would be applied by a hypothetical purchaser
In summary, the components of the discount that in my view a hypothetical purchaser would apply to the otherwise market value of the property - and that a hypothetical purchaser would be driven to accept - are as follows:
Value of easement gifted to Council $372,000
Cost of interim relining of the pipe $95,000
Cost of capital works to install an amplified drain
on the easement $752,000
Total $1,219,000
[75]
Mr Gedeon's method and opinion
Mr Gedeon's primary method of assessing the market value of the impaired property in 2011 was described by him as a "before and after" approach, in which he adopted a full market value of $3 million, by reference to comparable sales and other indicia, then applied a percentage discount that he concluded a hypothetical purchaser would apply - and that a willing but not over anxious vendor would have to accept - on the basis of a list of deficiencies. His list was as follows:
Council's ownership of and rights with respect to the pipe, treated by Mr Gedeon as equivalent to an unregistered easement. Mr Gedeon observed that the location of this "has the effect of severing the land into two parcels notwithstanding that a dwelling currently straddles both sides of the easement".
The risk of stormwater flooding.
Structural risk to the existing improvements. Mr Gedeon thought a hypothetical purchaser would discount the value of improvements to nil because he or she would be "highly reluctant" to spend money on a house that could collapse or require significant underpinning work.
The risk that the purchaser would not be permitted or able to make alterations or additions to the dwelling because of the presence of the drain and the risk of damage to it from anything erected over it.
The risk of disturbance and nuisance as a result of Council exercising its rights of entry to maintain and repair the drain.
General overall risk.
Upon these considerations Mr Gedeon considered that a hypothetical purchaser would discount the price he or she would be willing to pay by 50%. As a check on this Mr Gedeon applied the process that I have adopted above, of calculating what a hypothetical purchaser would likely allow for the cost of removing the impairment constituted by the pipe and thereby eliminating the risks referred to in the preceding paragraph. For that purpose he utilised his valuation of the easement at $621,000 and adopted a cost of capital works figure of $749,000, for a total of $1,370,000. He concluded that a further discount of $130,000 would be applied by a purchaser for disturbance, temporary relocation and accommodation during construction, legal costs, architectural and engineering fees and mortgage and refinancing costs.
I consider Mr Gedeon's "before and after" method too broad brush to be relied upon. He does not claim to be able to support the percentage discount that he has adopted by sales evidence of purchasers in comparable situations having applied discounts of that order. The method lacks transparency. I consider Mr Gedeon's secondary or check method to be more reliable although I have adopted different figures for use in my approach of treating the hypothetical transaction as an improvement project.
[76]
Mr McGuirk's method and opinion
Mr McGuirk had regard to the discount to full market value that appeared to have been applied by purchasers of properties at 1 The Causeway, Strathfield South in March 2011 and at 68 Churchill Avenue, Strathfield in April 2017. The first of these properties was affected by a subsurface sewer main within an easement running diagonally across the land and under an existing dwelling. The second was subject to a stormwater easement lying diagonally across the centre of the land, under an existing house, with a pipe laid through it. Mr McGuirk derived the full market value of each property by reference to sales of other houses in the near locality that were comparable but unaffected by any easement in favour of a public authority or by the presence of a subsurface pipe. He calculated that the first of the properties had changed hands at a price that was discounted by 13.75% to full market value and the second had sold at a discount of 22%. From this Mr McGuirk concluded that it would be appropriate to apply a discount of 20% in the case of No 13 Appian Way as at 2011. He valued the property in its impaired state at $2.4 million.
From Mr McGuirk's descriptions of the affectation of the properties that he used as comparators I am not satisfied they were affected anything like as seriously as the property that is under consideration in this case. There is no suggestion that the subsurface pipes across the properties at The Causeway and Churchill Avenue were of 100-year-old construction or that they had been found, upon survey more than 10 years before the respective sales, to be in a deteriorated condition that had never been addressed by the authority responsible for them. There is no suggestion that those pipes were known to be of inadequate capacity for the flows that they were required to carry. Although in each case the pipes would have been difficult to relocate, there is no evidence that the prospective purchasers perceived relocation to be necessary.
Here, in contrast, any rational purchaser of No 13 Appian Way would perceive relocation of the drain under the house to be both necessary and urgent and would be aware that it was improbable Council would bear or contribute to the cost of this work, or undertake the work within a reasonable time frame, or compensate for the grant of the necessary easement. Given those circumstances and the risk that a purchaser of No 13 might not even be able to secure consents to undertake the necessary work at his or her own expense, I cannot regard the examples presented by Mr McGuirk as usefully comparable.
Mr McGuirk took into account the following consideration in reaching his conclusion:
The buyer [of No 13] would balance Council's right to decline to relocate the pipe against the written correspondence and previous negotiation process which outlined Council's willingness to relocate the pipe subject to negotiations around the granting of an easement over the relocated pipe.
I do not accept that a rational hypothetical purchaser would take this sanguine view of the prospects of getting Council actually to undertake the work of relocation and to incur the cost. Mr McGuirk's caveat, "subject to negotiations around the granting of an easement", brushes over a serious impediment. Council's "negotiations" with the second defendant on the subject were not deserving of the name. Council's determination not to pay anything for an easement is manifest in the record of these "negotiations".
Mr McGuirk also attributed to the hypothetical purchaser the following understanding:
A fully informed purchaser would understand the drainage pipes deal with water collection and dispersal from alternate parts of the Appian Way estate and do not deal with water flow within the subject property. Hence costs associated with dealing with the augmentation of the drainage system should be borne by Burwood Council.
No doubt the last sentence of this accurately describes what "should" occur. A fully informed purchaser would examine the record of Council's neglect of this problem and find considerable divergence between, on one hand, what Council "should" do in performance of its statutory responsibilities and, on the other hand, what it actually had done in the past and what could reasonably be expected of it in the future.
Mr McGuirk dismissed the making of any allowance for the hypothetical purchaser's perception that the failing drain might put the house at risk. He said:
I believe Burwood Council, as the owner of the pipe, would have a responsibility for any damage caused to the existing improvements, being either the dwelling, the land or the pool, which resulted from deterioration or damage to the pipe. As such these rights provide a level of protection to the owner's improvements.
In so saying Mr McGuirk must have been completely unaware that Council has fought tooth and nail in these proceedings to deny the plaintiff any compensation for the repeated flooding of her property that has occurred as a result of the dilapidated pipe under her house having become completely occluded, entirely predictably, in November 2011. Confining my consideration to what would be known to or expected by a hypothetical purchaser earlier in 2011, I do not accept that such a person would place any reliance upon the prospect of Council compensating for damage to the house as a basis for moderating the discount to market value that he or she would insist upon.
Mr McGuirk's suggested 20% discount does not come anywhere near reflecting the reduction in price that a hypothetical purchaser would hold out for if he or she had full knowledge of the physical impairment and threat to this property that was constituted by the pipe and a reasonable appreciation of the difficult and expensive path that lay ahead in trying to have that impairment resolved, dealing with a council that had over many years proved itself obdurate towards the proprietor of No 13 and other affected landholders and oblivious to advice with respect to the problem.
[77]
Mr Bregozzo's method and opinion
Mr Bregozzo was asked by the second defendant's solicitors to prepare several alternative valuations of the property in 2011, each valuation to be carried out on the basis of one of a range of assumptions. One of the assumptions was that there was a stormwater pipe under the house "with no known defects". Another was that there was such a pipe "with defects needing repair at no cost to the property owner". These assumptions and the others that Mr Bregozzo was asked to make do not relate to the facts as I find them. On each of the given assumptions Mr Bregozzo arrived at a valuation of either $2.95 million or $2.9 million, assuming full market value of $3 million. These conclusions confirm that the assumptions the valuer was asked to make are out of touch with reality. This is not a reflection upon Mr Bregozzo's skills as a valuer or the weight of his opinions as an expert witness. He was asked irrelevant questions. A discount of only $50,000 or $100,000 for the complex problems created by the pipe under the house and the unattractive prospect of having to deal with this Council to resolve those problems is manifestly inadequate.
[78]
Conclusion on measure of damages
I assess the amount of the plaintiff's damages at $1,219,000, being the difference between the price of $3 million that the plaintiff paid for the land in 2011 and its market value at that time discounted by reason of its impaired state.
[79]
Issue 12: alleged failure of plaintiff to mitigate damages
The course of the negotiations considered at [216]-[228] above satisfies me that the plaintiff adopted a reasonable position at all times during the negotiations with Council between October 2017 and July 2020. Having regard to the uncertainties of the draft Deed that was ultimately submitted on 2 June 2020, Council never reached the point of making an offer in sufficiently certain terms to be capable of acceptance. The draft Deed did not specify the scope of works definitively and no Transfer of Grant of Easement was submitted in a form suitable for execution and registration. Further, even if those outstanding elements of the draft Deed had been finalised, it would not have been unreasonable for the plaintiff to refuse what was in effect a capitulation on both of her causes of action against Council in exchange for no more than the construction of a new and larger storm water pipe without cost to herself. No failure to mitigate has been demonstrated.
[80]
Issue 13: Council's entitlement to apportionment
In pars 79-88 of its second further amended defence filed 18 August 2020 Council pleads that its liability to the plaintiff for negligent misstatement should be limited under s 35 of the Civil Liability Act. Council's allegation of concurrent wrongdoing is advanced solely on the ground that a cause of action is said to be available to the plaintiff against the second defendant arising from s 52A of the Conveyancing Act and from a warranty implied in the contract of sale by the Conveyancing (Sale of Land) Regulation (2010) as in force when the contract was made.
In March 2011 s 52A was in the following terms so far as relevant:
52A Contracts for sale of land
(1) Except in so far as the regulations may otherwise provide, this section applies to contracts for the sale of any land, including land subject to the provisions of the Real Property Act 1900, […] and irrespective of whether or not any such Act makes provision for or with respect to the conveyance or transfer of land.
(2) A vendor under a contract for the sale of land:
(a) shall, before the contract is signed by or on behalf of the purchaser, attach to the contract such documents, or copies of such documents, as may be prescribed, and
(b) shall be deemed to have included in the contract such terms, conditions and warranties as may be prescribed.
(6) The regulations may make provision for or with respect to the remedies and relief available to a purchaser under a contract for the sale of land and the penalties which may be incurred by a vendor under such a contract:
(a) for any failure or refusal to comply with any of the provisions of this section or the regulations made for the purposes of this section, and
(b) for any breach of a term, condition or warranty deemed to be included in the contract under this section.
(7) Without limiting the generality of subsection (6), the remedies and relief may include remedies and relief by way of rescission of the contract by the purchaser and the payment of compensation by the vendor.
(8) The regulations may provide that a term, condition or warranty prescribed as referred to in subsection (2) (b) shall not merge in the transfer or conveyance on completion of the contract.
(9) The regulations:
(a) may require the inclusion in contracts for the sale of land of terms, conditions and warranties prescribed as referred to in subsection (2) (b), and
(b) may require the attachment to contracts for the sale of land of notices or other documents.
Pursuant to reg 4 and Sch 1 of the Conveyancing (Sale of Land) Regulation (2010) Council's s 149 certificate was a prescribed document for the purposes of s 52A(2)(a) of the Act. For the purposes of s 52A(2)(b) of the Act, reg 8 and Pt 1of Sch 3 of the Regulation had the effect that the contract was deemed to include the following warranty (extracted so far as relevant):
Part 1 Warranty in contract
1 The vendor warrants that, as at the date of the contract and except as disclosed in the contract:
(c) the section 149 certificate attached to the contract specifies the true status of the land the subject of the contract in relation to the matters set out in Schedule 4 to the Environmental Planning and Assessment Regulation 2000
In par 83 of its second further amended defence Council alleges that the second defendant knew about the pipe and the tendency of the property to flood and that he knew that those matters were relevant to how the property could be used and developed. Council alleges that the contract, including the annexed planning certificate, did not disclose any of those matters and that the certificate "did not disclose the true status of the land … in relation to the matters set out in Sch 4 of the Environmental Planning and Assessment Regulation". In par 84 it is alleged that the second defendant did not inform the plaintiff, prior to completion of the contract, of any of those matters.
The pleading then continues as follows:
85 In the premises, by reason of the second defendant's acts and omissions pleaded above (including by his silence), the second defendant negligently misrepresented to the plaintiff that the planning certificate attached to the contract disclosed the true status of the land subject to the contract … in relation to the matters set out in Sch 4 of the Environmental Planning and Assessment Regulation, when as a matter of fact it did not because it did not disclose or contain any information about [the pipe and/or the tendency of the property to flood].
86 In the premises, by reason of the second defendant's acts and omissions (including by his silence) pleaded above, the plaintiff suffered loss and damage. [By way of particulars, the second defendant repeated those parts of the plaintiff's statement of claim in which she alleged that, had she known of the pipe and of Council's statutory interest in it she would have rescinded the contract].
87 In the premises:
a The claim against [Council for damages for negligent misstatement] and the claim against the second defendant pleaded in paragraphs 79-86 above [that is, of the second further amended defence] are each claims in respect of the same loss and damage to the plaintiff, and therefore constitute a single apportionable claim and
b [Council] and the second defendant are concurrent wrongdoers in relation to the claim, being persons whose acts and/or omissions caused loss and damage the subject of the claim.
88 Therefore, in the premises, by reason of the second defendant being a concurrent wrongdoer, pursuant to s 35 of the Civil Liability Act [Council] is entitled to have its liability to the plaintiff for any loss or damage caused by reason of the matters pleaded [in the plaintiff's claim against Council for negligent misstatement] reduced by an amount that the Court considers just having regard to the responsibility of each of [Council] and the second defendant for that loss or damage.
I do not consider that either s 52A of the Conveyancing Act or the warranty implied by the Regulation, or a combination of those provisions, supports the pleading in par 85 that the second defendant represented, by silence or otherwise, "that the planning certificate … disclosed the true status of the land … in relation to the matters set out in Sch 4 of the Environmental Planning and Assessment Regulation". There was a statutory implied warranty that the planning certificate disclosed the true status, not a representation. Notwithstanding s 52A(6)(b), the Regulation made no provision for the remedies and relief available to a purchaser for breach of the warranty. Notwithstanding s 52A(8), the Regulation did not provide that the statutory warranty "shall not merge in the transfer or conveyance on completion of the contract".
There is no evidence that the plaintiff understood the second defendant's silence, or any other circumstance of the contract, as a representation by the second defendant that the planning certificate was accurate. The plaintiff has not pleaded any such case. With respect to misstatements in the planning certificate she has alleged only that they were made by Council, by issuing the document. Her negligent misstatement case against the second defendant is based upon his answers to requisitions. There is no evidence that the plaintiff or her solicitor relied upon an implicit representation by the second defendant, by silence or otherwise, that the s 149 certificate was accurate. Council has not cited any authority that would support, let alone require, that the second defendant be held liable to the plaintiff on a cause of action arising from the statutory implied warranty as formulated by Council in pars 79-88 of its pleading.
For the purposes of s 35 of the Civil Liability Act it would have been open to Council to rely upon the second defendant's liability to the plaintiff for negligent answers to requisitions as the basis upon which judgment against Council should be limited to its apportionable share of responsibility. However Council has deliberately chosen not to plead its proportionate liability defence in that way, even as an alternative to the ground of concurrent liability that it has formulated in pars 79-88, which I find unsupportable. The Court inquired of Council's representatives on two occasions during closing arguments why it did not invoke s 35 on the basis of the case that the plaintiff has run against the second defendant, instead of attempting to construct its own independent contention of concurrent liability on his part. Council's only substantive response was to file several pages of supplementary submissions directed to advancing its pleaded case on this subject. I am unpersuaded by those submissions.
I cannot uphold Council's proportionate liability defence on the only basis that appears to me to be available, being that the second defendant's concurrent liability arises from negligent answers to requisitions, where Council has not pleaded or even attempted to adopt that ground for apportionment. Accordingly I will give judgment against each of the defendants for the full amount of the plaintiff's damages that have been occasioned, concurrently, by the negligent misstatements of both of them.
[81]
Issue 14: proportions of liability between Council and second defendant
I am not able to determine a suitable apportionment between Council and the second defendant upon the contingent basis that, contrary to my own conclusion, the second defendant is liable to the plaintiff on the cause of action pleaded by Council in pars 79-88 of the second further amended defence. Determination of proportionate liability requires the Court to assess the causative effect of the respective wrongs of the concurrent tortfeasors and to evaluate their relative degrees of culpability. I cannot do either of those things on the basis of Council's pleaded case concerning the second defendant's liability to the plaintiff because I do not regard it as legally sustainable.
In case I should be wrong in declining to apportion the damages by reference to the second defendant's liability for negligent answers to requisitions, I will indicate the proportion for which I consider it would be just to hold Council responsible if it had invoked s 35 of the Civil Liability Act on that basis. First, the causative potency and effect of each of the defendants' negligent misstatements was equal. Accurate information in the planning certificate concerning Council's June 2002 resolution or correct answers to the requisitions would, equally, have saved the plaintiff from purchasing this compromised property.
Secondly, with respect to degree of culpability, it is relevant that over a period of about three years from 2001 to 2003 both Council and the second defendant had engaged in protracted consideration of the detriments to No 13 caused by the pipe and by Council's need and policy to acquire an easement for an upgraded drain. Relative to the dates of their misstatements in August 2010 and August 2011, respectively, that period of close consideration was quite recent and memorable.
The whole issue would certainly have been present to the second defendant's mind when he sold the property and was asked for instructions to answer the purchaser's requisitions. Corporate memory is a different phenomenon but it was part of Council's business and responsibility to manage corporate knowledge through its records and information retrieval systems. Pursuant to s 149 of the Environmental Planning and Assessment Act it was Council's duty to record information such as the existence of the June 2002 policy in a manner that would keep it ready to hand for inclusion in a planning certificate. Council should have organised itself to be in just as good a position to disclose this information, on a certificate, as the second defendant was to provide accurate instructions to his conveyancing solicitor for the requisitions.
The second defendant's answers to requisitions constituted a direct provision of important information to the purchaser's solicitor in the context of a contractual relationship that was concerned solely with this property. In contrast, Council issued its certificate to the second defendant and was not in any direct relationship with the plaintiff. I do not consider that that reduces the degree of culpability of the Council. Like any local government authority, it was well aware that by statute the certificate would be required to be incorporated in the contract of sale and knew of the potential for a purchaser to rely upon it. All things taken into account, I consider that Council fell just as far short of the requirements of reasonable care in relation to its function as the second defendant fell short of the care that he should have taken.
If I were called upon to apply s 35 as between the two defendants, I would consider it just that each should bear 50% of the judgment in the plaintiff's favour for damages for negligent misstatement, having regard to the extent of their responsibility, respectively, for the damage.
[82]
Claim against the cross-defendant for professional negligence
[83]
Issue 15: alleged negligence of second defendant's solicitor
[84]
Second defendant's instructions to his solicitor for the answers to requisitions
Mr Lukas acknowledged that he could not recall the phone conversation with the second defendant in which he sought and obtained instructions for the purpose of answering requisitions. However he had a brief file note of the conversation. He gave evidence of his usual practice in this aspect of conveyancing. He said that there was no reason to think that he departed from his practice on this occasion.
Mr Lukas deposed as follows:
When I receive requisitions on title, I typically telephoned my client to take instructions about them. It is not my usual practice to ask the client for instructions in relation to each individual requisition. I do, however, universally ask the client about whether there are any disputes with neighbours; and whether the client has received any notices from the local council or any notices from a public authority, that may be detrimental to the property. The question is broadly framed so that the client will consider everything that detrimentally affects the property, including easements.
Depending upon the particular transaction and whether the client has disclosed a potential detriment to the property, I may seek specific instructions in relation to other requisitions, but that varies from time to time depending on the particular matter.
In oral evidence Mr Lukas provided further explanation of his practice. He said:
What I tend to do as I ask sort of general questions which [answer] a lot of the requisitions.
Mr Lukas gave examples of his general questions, including the following:
Have you received any notification from some public authority?
Somebody wants to resume your land?"
Is there anybody - anybody got access of your land? Anybody claiming some right of your land?
Mr Lukas said that he would not have used the wording of the requisitions in seeking these instructions and, for example, he would not have asked directly whether there was any unregistered easement. He considered that most clients would not know what an unregistered easement was and that to ask a question using that terminology would only tend to confuse the client. Mr Lukas said that he made the following note of the date and content of a telephone conversation with the second defendant in which he followed the above-described usual practice:
28.07.2011 No notifications/breaches/notices
With respect to this file note Mr Lukas deposed as follows:
The entry for the date 28 July 2011 indicates (and this is my recollection) that [the second defendant] instructed me he had received no notifications from any council or public authority; and that he was not in breach of the Local Government Act or any law or regulation relating to the property.
I have no recollection of specifically asking [the second defendant] whether there were any unregistered easements affecting the property. My question to [him] would have been broadly framed about anything that adversely affects the property.
The second defendant deposed that he recalled speaking to Mr Lukas on a date that he believed was 28 July 2011 but he did not recall Mr Lukas asking him:
… about any notification from any council or public authority, or whether I was in breach of the Local Government Act or any law or regulation relating to the property.
In cross-examination the second defendant maintained that he had no recall of Mr Lukas asking about those matters or about "any notices that [he] may have received in respect of the property".
Despite the second defendant's lack of recollection, I am satisfied that Mr Lukas followed what he described as his usual practice. The brief file note quoted above is a contemporaneous confirmation that this practice was followed and that the second defendant's instructions did not include information of which he was aware and that clearly should have been included in frank answers to Mr Lukas' enquiries. At [333]-[334] and [345] above reference has been made to some aspects of the second defendant's knowledge, in July and August 2011, of Council's claims in relation to the pipe. In addition, he acknowledged the following under cross examination by Mr Lukas' counsel:
Q That was a real concern that you had in September 2001, that there was a possibility that the pipe under the house and pool would burst or leak?
A It's a possibility. Yes, definitely.
Q At no stage did you ever disclose that to Mr [Lukas] did you?
A No, I did not.
[...]
Q You were aware that there was a possibility of an easement being created?
A Yes.
[…]
Later, Mr Lukas' counsel adduced this evidence from the second defendant regarding his approach to provision of information to the solicitor:
Q Mr Dellafranca, is this the position. […] - you've already said that you didn't disclose to Mr [Lukas] issues concerning your negotiations with council in relation to an easement?
A Yes, that's correct.
Q Is it the case that you also didn't disclose to the agent matters in relation to the easement and the pipe on the property?
A That's correct.
Q So is that because to disclose those matters you thought it might have jeopardised the $3 million sale?
A No, it's because of the fact that I wondered what my obligations were to disclose. When I go to sell a property, I wonder what things I have to volunteer. I need to have a solicitor tell me what my obligations to disclose are.
Q Is it the case that you were waiting for him to ask you the right question to tease out what you knew about the pipe and the easement?
A I'm not going to say the right questions. I'm going to say that I expected the solicitor would inform me of what obligations to disclose, what would my obligations, because there were many things that I wasn't going to volunteer. I mean--
HIS HONOUR
Q Give me an example, an example of something you weren't going to volunteer?
A Well, in 96 it had been recorded to me that water had jumped the gutter and flowed down the driveway, you know. Did I have to volunteer that?
[…]
Q [Did] you turn your mind to that when you, as it were, had Mr [Lukas] engaged, did you turn your mind to the question, should I or shouldn't I ask Mr [Lukas], you know, am I right to disclose this circumstance, someone - there was a bit of a flood there in 96, did you turn your mind to that?
A Well, I think that when I sat with Mr [Lukas], I was - my intention was that he would ask me questions, that he would protect my interests and I - as long as I answered truthfully and accurately, that would be all that I needed to do, not that I had to know what it was that I was supposed to tell my solicitor.
[Further questions from Mr Lukas' counsel]:
Q You didn't think for a minute that you ought to disclose the - in rough [terms], the dealings that you had with council concerning a pipe that was under the house, running through the middle of the property, and that you thought this a financial detriment - it's presence had a financial detriment to the value of that property?
A Look, I'm not going to make a moral judgment about what I should and shouldn't have done, but I was only going to do what I was required to do. I wasn't going to volunteer things that I knew. I wasn't going to volunteer about the 96 matter. I wasn't going to volunteer about a noisy neighbour. I wasn't going to volunteer other things--
[…]
HIS HONOUR: Just a moment.
Q When you say you weren't going to volunteer and - do you mean to the purchaser, either directly or through the agent?
A Through - to Mr [Lukas].
Q To your solicitor?
A To my solicitor. I wasn't going to volunteer things -
Mr Lukas' general questions were quite sufficient to discharge his professional duty of care to obtain adequate instructions from which to provide the purchaser's solicitor with accurate responses to the requisitions. The erroneous and misleading responses that were in fact provided and have given rise to the second defendant's liability to the plaintiff came not from any want of care on the part of Mr Lukas but from the second defendant having withheld information that was within his knowledge and that was clearly called for by way of frank answers to Mr Lukas' enquiries. For that reason the second defendant's cross-claim against Mr Lukas will be dismissed.
[85]
Liability of Council for nuisance; quantum of damages
[86]
Issue 16: Council's liability in nuisance for flooding of No 13
[87]
Legal principles of nuisance committed by public authority
In Gartner v Kidman [1962] HCA 27; (1962) 108 CLR 12 at 48-49 Windeyer J (with whom Dixon CJ agreed) laid down the following principles with respect to "water which comes naturally upon the land from which it flows, as distinct from water artificially brought or concentrated there and allowed to escape" (paragraph numbers added for ease of reference):
1 The higher proprietor: He is not liable merely because surface water flows naturally from his land on to lower land.
2 He may be liable if such water is caused to flow in a more concentrated form than it naturally would.
3 It flows in a more concentrated form than it naturally would if, by the discernible work of man, the levels or conformations of land have been altered, and as a result the flow of surface water is increased at any particular point.
4 If a more concentrated flow occurs simply as the result of the "natural" use of his land by the higher proprietor, he is, generally speaking, not liable. What is a natural use is a question to be determined reasonably having regard to all the circumstances, including the purposes for which the land is being used and the manner in which the flow of water was increased: as for example whether it is agricultural land drained in the ordinary course of agriculture, whether it is timbered land cleared for grazing, whether it is a mining tenement, or is used for buildings and so forth.
5 The proprietor of higher land is not liable for a more concentrated flow from his land if it is the result of work done outside his land by someone else, and for the doing of which he is not responsible, as for example by the paving and guttering of public roads by municipal authorities.
6 The above statements concerning the concentration of surface waters relate to cases when the increased flow results from work done when the higher land and the lower land were held by separate proprietors. Different considerations apply when the lower land receives a concentrated flow as the result of work which was done when it and the higher land were in the same ownership and possession.
7 The lower proprietor: He may recover damages from, or in appropriate cases obtain an injunction against, the proprietor of the higher land who is, for any of the reasons given above, liable to an action because he has concentrated or altered the natural flow.
8 Although he has no action against the higher proprietor because of the natural unconcentrated flow of water from his land, he is not bound to receive it. He may put up barriers and pen it back, notwithstanding that doing so damages the upper proprietor's land, at all events if he uses reasonable care and skill and does no more than is reasonably necessary to protect his enjoyment of his own land. But he must not act for the purpose of injuring his neighbour. It is not possible to define what is reasonable or unreasonable in the abstract. Each case depends upon its own circumstances.
9 It may be added that the proprietor's right to defend his land against water coming upon it by erecting barriers, is generally speaking restricted to penning it back on to the higher land whence it would otherwise have naturally come. It does not entitle him to divert it on to the land of a third proprietor to which it would not have naturally gone to the damage of that proprietor.
These principles have been applied in many subsequent cases and they remain good law. See for example Gales Holdings Pty Limited v Tweed Shire Council [2013] NSWCA 382 at [135]-[137]; Owners Corporation SP 46510 v Tan [2020] NSWSC 1564 at [55]-[58] (Robb J). In Gales Holdings Pty Limited v Tweed Shire Council Emmett JA (with the agreement of Leeming JA and Sackville AJA) stated the following additional principles:
[131] A nuisance is either a continuous or recurrent state of affairs. An occupier of land will be liable for continuing a nuisance if, with knowledge or presumed knowledge of the state of affairs, the occupier fails to take reasonable steps to bring it to an end despite having had ample time to do so (Hargrave v Goldman [1963] HCA 56; 110 CLR 40 at 59-61). There will be nuisance if a state of affairs created, adopted or continued by an owner or occupier of land harms another person's enjoyment of land occupied or owned by that other person, unless the first person's conduct involves no more than the reasonable and convenient use of its own land (Hargrave v Goldman at 62).
[132] That is to say, nuisance is a wrongful interference with another's enjoyment of land by the use of other land occupied or owned by the alleged wrongdoer. However, an owner or occupier of land is not an insurer. There must be more than mere harm being done to another's enjoyment of land. The harm must be caused by the alleged wrongdoer's use of its own land. The word use connotes that a degree of personal responsibility is usually required, even though a deliberate or negligent act is not. A deliberate or negligent act will however be sufficient. A balance must be maintained between an owner or occupier's right to do what it likes with its land and a neighbour's right not to be interfered with. The proper test to apply in most cases is what is reasonable, according to the ordinary usages of a particular society. While negligence is not essential, fault of some kind is almost always necessary (Elston v Dore [1982] HCA 71; 149 CLR 480 at 487-488).
Where the "higher proprietor", in Windeyer J's terminology, is a public authority that has caused a nuisance by acts undertaken in exercise of a statutory power, it is necessary to consider whether the statute by which the power is conferred excludes liability for nuisances so caused. As found at [448]-[451] below, by constructing drainage works on Appian Way in 2005 Council caused stormwater to discharge onto No 13 in a manner that unreasonably interfered with the enjoyment of the property. The works were carried out pursuant to s 71 of the Roads Act and s 59A of the Local Government Act. Those sections do not exclude liability for nuisances. It was so held in Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31. In that case a council similarly carried out drainage works that resulted in the discharge of stormwater on to and adjacent to the plaintiff's land, changing its previous affectation by water. The drainage works were kerbing and guttering and the installation of a pipe system in a subdivision. Giles JA (with whom McColl JA and Hunt AJA agreed) held at [42]:
Section 733 of the Local Government Act 1993 […] clearly contemplates that there can be liability in nuisance - it provides protection against liability but conditioned on good faith. I do not think there is excluded liability in nuisance for the respondent's conduct resulting in nuisances.
In Allen v Gulf Oil Refining Ltd (1981) AC 1001 a statute empowered the defendant to construct an oil refinery. A resident of a village adjacent to the site brought an action in nuisance alleging that noxious odours, vibrations and offensive noise levels emanated from the refinery. At 1011 Lord Wilberforce said this:
It is now well settled that where Parliament by express direction or by necessary implication has authorised the construction and use of an undertaking or works, that carries with it an authority to do what is authorised with immunity from any action based on nuisance. The right of action is taken away: Hammersmith and City Railway Co v Brand (1869) LR 4 HL 171, 215 per Lord Cairns. To this there is made the qualification, or condition, that the statutory powers are exercised without "negligence" - that word here being used in a special sense so as to require the undertaker, as a condition of obtaining immunity from action, to carry out the work and conduct the operation with all reasonable regard and care for the interests of other persons: Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430, 455 per Lord Blackburn. It is within the same principle that immunity from action is withheld where the terms of the statute are permissive only, in which case the powers conferred must be exercised in strict conformity with private rights: Metropolitan Asylum District v Hill (1881) 6 App Cas 193.
Lord Wilberforce's statement of the law was quoted by the English Court of Appeal in Marcic v Thames Water Utilities Ltd [2002] QB 929 at 988 as part of the wide survey that the Court undertook of the cases in this area.
In Bankstown City Council v Alamdo Holdings Pty Ltd [2005] HCA 46; (2005) 223 CLR 660 the plaintiff's land was situated at the low point of a local catchment. It was subject to increasingly frequent inundation, for which the plaintiff brought an action against the local council in nuisance. The trial judge referred in his reasons to urbanisation of the catchment, that would have increased the extent of impermeable surfaces, as a cause of increased stormwater run-off. However his Honour had "not referred expressly to the significance for that urbanisation of development approvals [granted] by the [council]". In the New South Wales Court of Appeal the primary judge was taken to have treated the actionable conduct of the council as encompassing both the construction and operation the drainage system for the catchment and the council's "role in the urbanisation process which had rendered the system less and less adequate".
At [16] Gleeson CJ, Gummow, Hayne and Callinan JJ said this (some citations omitted):
[16] However, neither at trial nor in the Court of Appeal does attention appear to have been drawn to a line of authority marshalled by the English Court of Appeal in Marcic v Thames Water Utilities Ltd [2002] QB 929 at 988; revd on other grounds [2004] 2 AC 42. This indicates that a body such as the Council is not, without negligence on its part, liable for a nuisance attributable to the exercise of, or failure to exercise, its statutory powers. In this Court, it had been remarked by Gavan Duffy and Starke JJ in Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR 186 at 197:
"And though it was said in argument that the Company's claim was founded upon either trespass or nuisance or negligence, still the liability of the Corporation must depend upon whether, in the exercise of its statutory powers, it has acted negligently, so as to do unnecessary damage to the Company."
At [51], their Honours noted that:
… the nature of the nuisance complained of was clarified only in the Court of Appeal, and then recognised as encompassing the involvement of the Council over many years in the construction and operation of the drainage system and its role in the process of urbanisation
and further that:
… without negligence on its part in the exercise or failure to exercise its statutory powers, the Council was not liable in nuisance.
Tracing the line of authority from Allen v Gulf Oil Refining Ltd through Marcic v Thames Water Utilities Ltd to Bankstown City Council v Alamdo Holdings Pty Ltd, it is apparent that the High Court was speaking of negligence in the special sense explained by Lord Wilberforce. The following extracts from the judgment of Giles JA in Melaleuca Estate Pty Ltd v Port Stephens Council make the position clear:
[49] Absence of negligence in this sense is a reflection of inevitability. If exercise of the statutory power means that the interests of other persons are harmed despite all reasonable regard and care for those interests, there is no right of action.
[50] There may be a close relationship on the facts between negligence in the [familiar sense of] failure to exercise reasonable care and skill and negligence in the sense explained by Lord Wilberforce, but the two should not be equated.
[57] I do not understand the High Court to have departed from Lord Wilberforce's explanation of negligence. […] It is not correct to equate absence of breach of a duty of care with the absence of negligence material to the immunity from action of a body exercising a statutory power.
[88]
Conduct of Council that caused the nuisance
In the present case the plaintiff's action in nuisance does not depend upon proof that the natural flow of surface water from land up-slope from No 13 has been altered by urbanisation over a long time frame or that Council has been negligent in granting development approvals, leading to an increase of impermeable surface area in the catchment. The plaintiff's action is sufficiently based upon Council's reconfiguration of the Appian Way street drainage in 2005. That work redirected all run-off from the road surface, some of which in turn flowed from higher parts of the catchment lying to the south, into the large new junction pit directly in front of No 13.
Webb McKeown's Concept 1 for enhancement of Appian Way drainage has been described at [124]-[126] above. It had two components: installation of a structural liner to repair the pipe under No 13 and reconfiguration of the street inlets and feeder lines. As quoted at [126], Webb McKeown warned that if this Concept should be chosen, in preference to other higher performing alternatives proposed by the consultants, the system would still have insufficient capacity and "overflows through several properties would still be quite high in major storms". Council nevertheless proceeded with Concept 1 - but only with the street drainage aspect: see [129]. Council made no further attempt, in conjunction with this work, to gain access to No 13, either with the second defendant's consent or by enforcement of statutory powers. Council did not undertake structural re-lining or any other refurbishment of the pipe, which was known to be in failure.
Implementation of only the street works aspect of Concept 1 may fairly be described as half of a bad idea. Even if the pipe were to function at what the engineers believed was its theoretical hydraulic capacity of 0.3m³/sec - based on an incorrectly over-stated diameter of 450 mm - it would not have been able to cope with annual rain events, let alone meet Council's standard of piped capacity for 20 year ARI events. Having regard to this enormous shortfall in performance, relative to Council's own standards, execution of the whole of the Concept would have been impossible to justify on engineering grounds. Implementation of only one of the two interdependent parts of Concept 1 showed reckless disregard for the interests of the proprietor of No 13.
In 2005 Council had known for 5 years that the pipe under No 13 was in poor condition, that its hydraulic capacity was reduced by root infestation and other blockages and that a section of the pipe was missing. It was clearly at risk of collapse or complete obstruction. The effect of the new street works was that when stormwater flows exceeded the pipe's capacity, as would inevitably occur, the junction pit would fill and overflow. Upon the pipe's capacity being exceeded, instead of the stormwater backing up in multiple feeder lines to various inlet grates distributed along the gutters of Appian Way, the excess would all back up and overflow at the pit in front of No 13. Similarly, when the pipe became entirely blocked anywhere along its length through No 13, as it did, predictably, in November 2011, there was no path of escape or back-up for any of the stormwater that Council had channelled into the pit, other than for it to pour out at street level and flood the nearest property, being the plaintiff's. That is what occurred upon every significant rain from 7 November 2011 to 13 July 2013 (see [139]-[197] above). The result was nine instances of inundation up to October 2012 (see [140]-[186] above).
Council's negligence, in the relevant sense of disregard for the interests of the proprietor of the land adjacent to the junction pit, is of a kind comparable to that of the defendant in Hawthorn Corporation v Kannuluik [1906] AC 105, although the gravity of the resulting nuisance in the present case is less because the scale of the works was less and the water that discharged onto No 13 was not grossly polluted. The following is an extract from the advice of the Privy Council at 108-109 of the report:
In 1889 the municipal authorities of Hawthorn under their statutory powers took over the care and management of this watercourse and made it into a public drain. […] A number of subsidiary channels have since been made […] for the purpose of running off the storm water and sewage into the main drain. The result is that the water and sewage from the upper parts of [the catchment] are concentrated and poured into the main drain with great violence. There is an overflow, and when the flood subsides, the low lying lands, and [the plaintiff's premises in particular] are covered with an offensive mixture of sewage and slime.
The case seems to be a very simple one. The only question is, have the municipal authorities acted negligently so as to do unnecessary damage to [the plaintiff].
As for negligence, it is difficult to imagine a more conspicuous example of negligence than is shewn by repeatedly pouring offensive stuff into a receptacle or channel proved over and over again to be insufficient to hold it and pass it on. The municipal authorities might just as well pour this stuff directly on the plaintiff's land. The damage to the plaintiff cannot be denied.
Melaleuca Estate Pty Ltd v Port Stephens Council, the facts of which have been referred to at [441] above, is another case comparable to the present in which a council was found negligent in the relevant sense and liable in nuisance. It had disregarded the interests of a "lower proprietor" by draining stormwater onto her land. Giles JA there held as follows:
[60] The respondent may have brought about a well designed and constructed roadway and piping system which effectively drained the development in the catchment area, viewed as a system which brought the stormwater to the discharge points on and at the boundary of the land. There may have been no negligence of the kind in question in Metropolitan Gas Co v Melbourne Corporation (1924) 35 CLR 186 and like cases of escape of water. But the piping system ended with discharge of the collected water, and its pollutants, directly onto Mrs Coventry's land or at the boundary of her land, with the consequences earlier described. There was unreasonable regard and care for her interests, and she was left to suffer the increased water affectation.
[89]
Council's reliance upon s 733 of the Local Government Act
Extracts from s 733 of the Local Government Act are set out at [318]. The parts relied upon by Council in defence of the plaintiff's claim in nuisance are repeated as follows, for ease of reference:
733 Exemption from liability - flood liable land, land subject to risk of bush fire and land in coastal zone
(1) A council does not incur any liability in respect of -
[…]
(b) anything done or omitted to be done in good faith by the council in so far as it relates to the likelihood of land being flooded or the nature or extent of any such flooding.
(3) Without limiting subsections (1), (2) and (2A), those subsections apply to -
(e) the carrying out of flood mitigation works, and
(g) any other thing done or omitted to be done in the exercise of a council's functions under this or any other Act.
The Full Court of the Federal Court considered a defence pleaded under this section in Mid Density Developments Pty Ltd v Rockdale Municipal Council. It was held that honesty and absence of malice did not establish good faith in the provision of information under s 149(5) of the Environmental Planning and Assessment Act where no enquiry had been made within available records before supplying the information.
The High Court considered s 733 in Bankstown City Council v Alamdo Holdings Pty Ltd, where, as referred to above, a landowner sought to hold a local council liable in nuisance for stormwater run-off onto its land. At [47] Gleeson CJ, Gummow, Hayne and Callinan JJ said that in a case such as this the Council bears the burden "of making out its case for the operation of that section in its favour". Their Honours discussed and did not disapprove Mid Density Developments Pty Ltd v Rockdale Municipal Council. At [50] they said (citations omitted):
[50] Reference was made in Mid Density to various examples in the law where "good faith" is used as a criterion requiring some state of mind or knowledge other than the personal honesty and absence of malice of the relevant actor. Moreover, given the range of advice, acts and omissions to which s 733(1) may apply, what is required for something to be done or omitted in good faith may vary from one case to the next. This makes it unwise, if not impossible, to place a definitive gloss upon the words of the statute.
At [51] their Honours contrasted the facts of the case before them with those of Mid Density Developments Pty Ltd v Rockdale Municipal Council. The whole of [51], from which some extracts have been reproduced at [446] above, is as follows:
[51] In Mid Density, the standard of conduct against which the Council's conduct in issuing the s 149 certificates was to be assessed was apparent from the importance of the information sought for the routine processes of conveyancing. The present case stands quite differently in several respects. First, the nature of the nuisance complained of was clarified only in the Court of Appeal, and then recognised as encompassing the involvement of the Council over many years in the construction and operation of the drainage system and its role in the process of urbanisation. Given the vagueness of the complaints against the Council, the weight of its evidentiary burden to establish good faith was correspondingly lightened. Secondly, that was all the more so given that, without negligence on its part in the exercise or failure to exercise its statutory powers, the Council was not liable in nuisance. True enough that point was not taken as an answer to liability, but it cannot properly be shut out of consideration of the content of the requirement of good faith in this case. Here, something more than negligence is necessary because, unless negligence were present, there would be no liability for protection against which s 733(1) was required by the Council.
In the present case there is nothing vague about the plaintiff's allegation of conduct by Council that gave rise to the flooding nuisance. The plaintiff's complaints are wider than as summarised above at [448]-[451] but the particulars concerning reconfiguration of the street drains in 2005 are very specific and sufficient to found the cause of action. Council adduced no evidence capable of demonstrating good faith in its absurd decision to construct the junction pit in front of No 13 and to feed all stormwater run-off into it, when it knew that the outlet pipe was inadequate in both capacity and condition. The necessity to address the drainage problem at Appian Way could not support a conclusion of good faith because Council had been told that even the implementation of the whole of Concept 1 would leave the system well below adequate capacity and not even sufficient for 1 year ARI rain events. Good faith cannot be shown in relation to the partial undertaking of a scheme that would achieve no useful object.
It cannot be said that good faith in the reconfiguration of the street drains and construction of the pit was frustrated only by the second defendant's refusal of access to complete the second half of Concept 1. As mentioned at [130], there is no evidence that the second defendant was ever told the purpose of the pit and other works on Appian Way. He was not warned of the danger those works posed to his property in the absence of refurbishment of the pipe. There was no renewed request to him for access, nor did Council endeavour to invoke its clear statutory powers for the purpose of repairing the pipe. I find no trace of good faith in Council's implementation of the first half of this unsatisfactory Concept, that created such significant and obvious risk to the property in front of which the large junction pit was placed.
Council submitted that it had shown good faith by commissioning hydraulic studies, engineering studies and investigations of the condition of the pipe. I have referred to all of those in the chronological narrative of events earlier in this judgment. The commissioning of studies and investigations can hardly support a case of good faith when Council has acted contrary to the professional and technical advice contained therein. The flooding of No 13 from the junction pit installed near its front boundary was so predictable, from the 2001 internal inspection of the pipe's condition and from Webb McKeown's warnings about Concept 1, that there appear to be only two possible explanations for Council having reconfigured the street drainage in 2005. The first is that the relevant decision makers in Council failed to understand the professional advice and did not have sufficient common sense to see what was likely to occur if all stormwater from the catchment was concentrated in the junction pit, dependent as it was upon a failing pipe.
The other possible inference is that Council determined to pressure the second defendant to grant access to his land for repair of the pipe, by exposing his property to the primary risk of flooding if it should fail. If the inundation that the plaintiff experienced had occurred while the second defendant was in occupation he might have been more compliant with Council. I would not be willing to draw this inference in the absence of evidence from any of the decision-makers. It was Council's choice not to call them and if the issue had been more clearly in focus at interlocutory stages of the proceedings and in the trial then failure of the decision-makers to give evidence might have permitted the inference of such an improper and malicious purpose to be more easily drawn. The morass of issues litigated in the case did not identify the question whether Council may have deliberately misused its powers in this respect with sufficient clarity to justify drawing such a grave conclusion without hearing evidence from those who would be implicated. The other possible inference from the circumstances, to which I have adverted in the preceding paragraph, is sufficient to deny Council the defence of good faith under s 733.
Council argued that "whenever specific drainage issues or instances of flooding were reported to Council, those issues were promptly addressed". This contention appears to be addressed to the period after the flooding of No 13 commenced. I have found, contrary to the submission, that Council was extremely dilatory in alleviating the problem. Its first stage of alleviation, by pumping, only provided effective protection to the plaintiff's property after a delay of 11 months from 7 November 2011; that is, after 12 October 2012. More enduring alleviation was only achieved after a delay of another nine months up to July 2013 when relining of the pipe was carried out and then a further seven months until the footpath was raised and levelled in February 2015. At [199] above I have already dismissed Council's submission that its continuance of the nuisance was caused only by the plaintiff refusing access to her property. There was no such refusal.
Council has not discharged its onus of proving the defence provided for in s 733 and it is liable to the plaintiff for the flooding damage to her property.
[90]
Issue 17: plaintiff's damages for nuisance
The extent of damage to the plaintiff's chattels and the interference with her enjoyment of the land caused by Council's continuing nuisance over the 11 months from 7 November 2011 has been summarised at [140]-[142], [144], [147]-[148], [154], [161], [173] and [186] above. Council made the surprising submission that, so far as damage was done to the plaintiff's back garden by the pumping of water through it up to 11 December 2011, she consented to this and can claim no compensation. The alternative would have been for the plaintiff to allow the water to flood down her driveway, through her carport and garage and/or into her front garden or through the house. I will assess against Council all damage that was sustained to the plaintiff's back garden by reason of the pumping on the basis that it is likely to have been less than the damage that otherwise would have been done. The plaintiff's acceptance of pumping through her property for the first month after the pipe became blocked was reasonable mitigation.
I accept the plaintiff's evidence about damage to chattels and incidental cleaning and repair costs. $4,568 is assessed in respect of those items. I make no allowance for the cost of an internal inspection of the pipe carried out by the plaintiff's contractor in October 2012, being $6,204. That expense cannot be said to have been caused by the nuisance. It would reasonably be taken into account as part of the plaintiff's damages for misrepresentation, in that it is an expense that would not have been incurred if the plaintiff had received accurate information in the s 149 certificate and had never entered into the contract. However I will not make separate allowance for it as part of the damages in that cause of action because the estimate that must be made of the shortfall in value of the property is necessarily so imprecise that I regard it as encompassing all incidental costs.
The principal component of the plaintiff's damages for nuisance is the loss of enjoyment of her property. Over the 11 months of intermittent inundation there were extended periods when the rear garden and lawn were unusable due to waterlogging. For substantially the whole of the 2011-2012 summer the pool could not be used because it was polluted and it was not worth emptying and refilling it, or otherwise thoroughly cleaning it, until the plaintiff could be sure that Council's system of pumping storm water from Appian Way to Burwood Road could be relied upon.
I take into account that each instance of flooding was of brief duration and that after March 2012 the events were of lessening severity. Material loss of enjoyment of the property was contributed to by the repetition and frequency of stormwater ingress and the continuous apprehension to which this gave rise. The nuisance to the plaintiff's property warrants damages of $55,000, inclusive of the damage to chattels and incidental outgoings referred to above.
[91]
Interest up to judgment
Council submits that the plaintiff should be denied interest up to judgment upon such damages as may be awarded for the causes of action on which she has been successful. It is submitted that the plaintiff's claim for negligent misstatement accrued "at least by 7 December 2011, when she became aware of the pipe running through the property". The cause of action in nuisance accrued on 7 November 2011. Council made this submission:
Rather than commencing proceedings in respect of the pipe running through her property, the plaintiff instead commenced proceedings to obtain development consent for substantial alterations and additions to the property, even though the plaintiff says that she would not have purchased the property had she known about the existence of the pipe.
The plaintiff only commenced proceedings in the Land and Environment Court because she was driven to do so after Council had failed to determine her development application within the statutory time limit and in circumstances where Council required her to grant an easement free of charge, to commission and pay for another hydraulic survey of the catchment and to build, entirely at her own expense, a piece of infrastructure that was Council's long overdue responsibility. It was this stance by Council that Commissioner Brown found so unreasonable that no reasonable Council could possibly have adopted it. That was an understatement. Council's attempt to impose upon the plaintiff unreasonable economic burdens, forcing her to expensive litigation in the Land and Environment Court for relief, may properly be described as oppressive and an abuse of power. For Council then to assert that the plaintiff should be denied interest on her damages, upon the ground that she postponed the present litigation until she could vindicate some of her rights in another court, is very bold. I do not accept the argument.
Council also contended that the property had appreciated in value between December 2011 and the date when the proceedings were commenced. It is said that the plaintiff would "receive a windfall" if she should be compensated by interest for the loss of her money. I regard any appreciation in value of the subject property as irrelevant to whether interest should be awarded. If the plaintiff had been given correct information in the planning certificate and had not bought this residence, the money would have been available to be invested in some other appreciating asset.
I will award interest up to judgment on the damages for negligent misstatement from the date upon which the plaintiff completed her purchase of the property. Interest on the damages for nuisance will be awarded from 1 March 2012. That date is somewhat earlier than the midpoint of the period over which stormwater flooding incidents occurred. The worst of the flooding was in the early period and I attribute more than half of the damage to the first four months, November to February inclusive.
[92]
Orders
Orders to the following effect will be entered:
1. Judgment for the plaintiff against the first defendant in the sum of $1,274,000 together with interest up to judgment in accordance with s 100 of the Civil Procedure Act 2005 and Practice Note SC Gen 16 in the amount of $726,171.06 comprising
1. interest of $697,324.62 on $1,219,000 from 12 August 2011 and
2. interest of $28,846.44 on $55,000 from 1 March 2012.
1. The first defendant is to pay the plaintiff's costs of the proceedings against it.
2. Judgment for the plaintiff against the second defendant in the sum of $1,219,000 together with interest up to judgment in accordance with s 100 of the Civil Procedure Act 2005 and Practice Note SC Gen 16 in the amount of $697,324.62 from 12 August 2011.
3. The second defendant is to pay the plaintiff's costs of the proceedings against him.
4. The cross-claim by the second defendant against John Lukas is dismissed.
5. The second defendant is to pay the cross defendant's costs of the cross-claim.
6. The parties have liberty to apply to resolve any issue concerning the calculation of interest and to obtain additional orders quantifying interest if necessary.
[93]
Council's mismanagement of Appian Way drainage
The negligent misstatements of Council and of the second defendant have resulted a substantial award of damages to the plaintiff. Those aspects of the litigation arose from brief instances of tortious conduct in August 2010 and August 2011. Although the flooding of the plaintiff's property has given rise to a much smaller award for nuisance, the decades of Council's neglect that culminated in that flooding and Council's poor treatment of the plaintiff in connection with it cannot go unremarked.
Between 2001 and September 2016 s 7 of the Local Government Act provided that the general purposes of the Act included the following:
(d) to give councils:
the ability to provide goods, services and facilities, and to carry out activities, appropriate to the current and future needs of local communities and of the wider public.
In the same period s 8 provided that the charter of councils included these elements:
to provide directly […] adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively
to bear in mind that it is the custodian and trustee of public assets and to effectively plan for, account for and manage the assets for which it is responsible.
In relation to Appian Way stormwater drainage Burwood Council has over a long period repudiated the purposes of the Act and the statutory charter. For 50 years Council has known, from the complaints of residents, that the stormwater system in this location has insufficient capacity. To this day that deficiency has not been addressed. The frequency of flooding events in the 1980s and 1990s demonstrated to Council that it is not just exceptional rain events with which the system cannot cope. From the beginning of 2001 Council knew that the main drain lying under the residence at No 13 was not only too small for its task but that it had deteriorated and was failing.
Upon the pipe becoming completely blocked in November 2011, the plaintiff called upon Council to resolve the inadequacy of the system and to prevent stormwater from inundating her land. She asked Council to perform its duty. Stormwater management is, after all, a basic service of local government. As a ratepayer the plaintiff could reasonably have expected that there would be prompt rectification of a serious problem that Council had turned into an emergency through years of conscious neglect. Instead, from the outset, the General Manager gave no acknowledgement of Council's responsibility and demonstrated complete ignorance of the facts. There followed egregious delay in clearing the pipe and in carrying out interim repairs. False assertions were made by Council that the plaintiff was refusing access for its workmen. Council unconscionably used the development application process to try to make the plaintiff pay for new infrastructure. Council made unreasonable settlement proposals after its failure in the Land and Environment Court and then doggedly and without merit resisted the plaintiff's action for nuisance in the present litigation.
Over decades Council's neglect has resulted in significant property damage and worry for owners and occupiers in this neighbourhood. In more recent years it has caused great stress for the plaintiff. Her home has been threatened by stormwater that Council has channelled to her front boundary. Hostility has been stirred up against the plaintiff by Mayor Faker's letter to her neighbours on 18 December 2012 falsely alleging that she had delayed resolution of the problem by refusing access to her property. Contrary to that claim, Council's inactivity during the 13 months from when the pipe became blocked in November 2011 was caused by a particularly bad bout of decision making paralysis in Council's long and lamentable record of non-feasance.
Mr Della Franca's assertive approach to negotiations in 2002 provided no excuse for Council's failure to act at that time. His stance should have led to Council compulsorily acquiring a western boundary easement in the interests of the wider community, with compensation for Mr Della Franca to be assessed judicially if need be. In the face of Mr Della Franca's resistance Council abdicated its responsibility to surrounding residents, leaving them and the unsuspecting successor in title of No 13 to suffer the effects of a drainage system known to be grossly inadequate.
The plaintiff, particularly, has been let down by Council but so have the ratepayers of Burwood generally. Upon the pipe under No 13 failing in November 2011, urgent re-lining would have been useful as a temporary protective measure. It made no sense for Council to delay action for 20 months and then to re-line the pipe in July 2013. When the re-lined pipe could not cope, as Council had been told by its engineering consultants would be the case, it again made no sense to raise and level the footpath in February 2015. That merely created a dam by which the roadway would be flooded when stormwater could not escape quickly enough through the undersized pipe. The footpath became a spillway, poised above a row of valuable homes, over which excess stormwater was spread out to cause equal annoyance at Nos 13, 15 and 17.
Council appears to have squandered ratepayers' funds on these belated and half-baked postponements of the inevitable, instead of applying the money to compensation for acquisition of an easement over No 13 and the cost of a proper drain. Of course, Council had known from 2001 that a larger drain on a new easement was, in Mr Wyatt's words, "the only viable option". So Council moved quickly enough when it thought the plaintiff's application to develop her land presented an opportunity to make her bear the entire cost of these necessary public works.
Amendments to the Local Government Act that took effect from 23 September 2016, prior to the hearing of the plaintiff's planning appeal, included the following guiding principles for the exercise of councils' functions (in s 8A):
(g) Councils should work with others to secure appropriate services for local community needs.
(h) Councils should act fairly, ethically and without bias in the interests of the local community.
Burwood Council's attempt to extract from the plaintiff a free easement and the installation of a new public drain at her personal expense was irreconcilable with those principles. Words such as these in an Act of Parliament are not to be disregarded by a council as mere rhetoric. When Council's abuse of its power to impose development conditions was rejected by the Land and Environment Court, one would have thought that compulsory acquisition of an easement with fair compensation and installation of a larger pipe at public expense should have followed. Instead, after Commissioner Brown had given his decision Council frittered away three years on stop-start negotiations with the plaintiff, while her home improvement works proceeded to the stage where an adequate drain on the western boundary could now only be laid at considerably increased cost.
The ratepayers of Burwood have been burdened with substantial legal and other costs by a Council that has preferred disputation through solicitors' correspondence, litigation in the Land and Environment Court and now a trial in this Court, rather than decision-making and the construction of drainage works. Many aspects of Council's conduct towards the plaintiff have displayed a lack of understanding that it is an elected public body, constituted to serve its community, of which the plaintiff and her neighbours in the Appian Way flood path are members.
[94]
Amendments
08 February 2021 - Cross referencing corrected
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Decision last updated: 08 February 2021
Parties
Applicant/Plaintiff:
Lorenzato
Respondent/Defendant:
Burwood Council
Legislation Cited (19)
Civil Claims Act 2002(NSW)
Environmental Planning and Assessment Regulation 2000(NSW)
Local Government Act 1906(NSW)
(NSW)(rep) Local Government Act 1919(NSW)
(NSW)(rep) Local Government Act 1993(NSW)
Municipalities Act 1867(NSW)
(NSW)(rep) Municipalities Act 1897(NSW)
(NSW)(rep) Roads Act 1993(NSW)
Municipalities Act 1897(NSW)
Local Government Act 1919(NSW)
Road Transport (Safety and Traffic Management) Act 1999(NSW)
The relevant records should have been readily available for production. Council personnel, including legal advisers, must have had them to hand and must have examined them in order to satisfy themselves of Council's own position under s 59A. Council and its solicitors failed to provide this material to the plaintiff promptly when it was asked for. In addition to making direct requests through solicitors, the plaintiff endeavoured to obtain release of the documents pursuant to an application made by her town planner on 25 September 2012 under the Government Information (Public Access) Act 2009 (NSW). Documents were supplied under that Act on 13 November 2012. The evidence does not disclose what documents were handed over at that time.
In his letter of 6 October 2012 Mr Pomare also requested full particulars of the works proposed by Council. He concluded as follows:
Once our client has the benefit of this information and documentation, they will be in a position to give proper consideration to your requests and respond to same.
That conclusion was inapposite as the letter under reply, from Council's solicitors, had not made any "requests". It had merely given notice of intention to carry out works and warned that proceedings for a declaration may be commenced. Certainly, Mr Pomare's reply contained no suggestion that Council would be obstructed by the plaintiff in carrying out repairs to the pipe.
The ninth flooding of the plaintiff's property, by overland flow down her driveway, occurred on 11 October 2012. The pump had failed to activate automatically and it had been necessary for the plaintiff to call Council more than once between 3:00am and 4:00am to secure the attendance of a staff member who could start it up. In the meantime, the usual large pond formed on Appian Way and overtopped the plaintiff's driveway entrance before a Council employee arrived.
On 17 October 2012 the plaintiff engaged its own contractor to make an internal examination of the pipe. This examination was carried out on 22 October 2012 and shortly afterwards the contractor produced a report that confirmed the results obtained by Mr Pickup in February 2012. Access to the pipe was gained from the junction pit outside No 13 and from the rear boundary pit. Upon learning of this, Council's solicitors entered into gratuitous collateral correspondence with Mr Pomare concerning alleged breaches of workplace safety regulations arising from access to the confined space.
On 5 December 2012 the plaintiff and her solicitor took part in without prejudice discussions with Council representatives and legal advisers. There has been no waiver of the without prejudice privilege with respect to those discussions. However their subject matter is revealed in much later open correspondence between the parties' solicitors, dating from October to December 2017. In a letter of 31 October 2017 the following is recorded by the plaintiff's solicitor:
[We] are instructed that our client met with Council in 2012 for the express purpose (so our client understood) of negotiating the grant of an easement to Council. At that time and after having learned from our client that she intended to lodge a development application, Council advised our client that it did not require an easement […].
On 18 December 2012 the Mayor sent to residents of Appian Way a letter advising of developments with respect to the drainage problem. The letter included the following:
Council resolved to undertake a request for quotation or tender process for the repair and lining of a pipeline situated in No 13 Appian Way. The request for quotation or tender process is subject to the Council undertaking further CCTV confirmation in relation to the pipe.
Unfortunately, a dispute has arisen between the Council and the owner of No 13 Appian Way, the result of which means to date the Council has been denied access to the premises to undertake the necessary investigative works. The parties met on 5 December 2012. The Council cannot disclose anything that occurred at that meeting except that there was no resolution reached.
The second paragraph quoted above significantly misrepresented the position. Between February 2012 when the location of the obstruction in the pipe was established and 18 December 2012 the plaintiff had received no further request for access for investigation. There was no dispute between Council and the plaintiff about entry onto her land for this purpose and there never had been such a dispute. Contrary to the impression conveyed by the Mayor's letter, the cause of the drain having remained blocked for over a year had been Council's general dithering, inactivity and lack of internal communication. The extraordinary procrastination was in part contributed to by the repetition of engineering analyses that had been comprehensively carried out by Webb McKeown in 2005.
On 11 February 2013 Council's solicitors wrote to Mr Pomare substantially repeating what had been said in their letter of 2 October 2012. Again it was stated that rights over the pipe were claimed under s 59A and that Council was "readying itself to go out to tender for the works". The process of "readying itself" had by this date held Council in a state of suspended animation for over four months. Enclosed with the letter were technical documents explaining the work that would be undertaken, including lining the pipe. It was stated that these technical specifications would form part of the tender documents that were to be issued to prospective contractors - presumably, when Council had finished "readying itself".
Council's solicitors concluded their letter with the following:
Please advise by no later than 5pm on Friday, 22 February 2013 whether your client will consent to the Council accessing the property to undertake the works.
This was followed by a warning that proceedings for an injunction may be commenced if the plaintiff should fail to reply in the affirmative. The request for consent was superfluous in view of Council's powers under ss 59A and 191A of the Local Government Act and s 94 of the Roads Act.
Mr Pomare replied on 4 March 2013 to the following effect:
In the circumstances our client is prepared to consent to the repairs being undertaken and will allow access for that purpose.
However, before such works can commence, and given the nature of the work that is required […] our client requires reasonable notice of the following:
(i) The proposed commencement date of the works?
(ii) The hours during which the works are to be undertaken.
(iii) Advice as to what extent, if any, access to the property will be impeded.
(iv) The appointment of a liaison person through whom our clients can communicate any matters of concern for a prompt response, particularly in circumstances where our clients have young children.
Even if not stipulated by the plaintiff, these were matters to which Council would have had to attend in order to ensure efficiency and cooperation in the performance of the work. Mr Pomare also requested in this letter a statement of the purpose for which the pipe had been installed and copies of documents upon which Council relied to form the opinion that the proposed works were necessary. These enquiries appear to have been unnecessary having regard to the information that was already in Mr Pomare's hands by that date. The letter did not state that the plaintiff's consent was conditional upon Council's response to the enquiries.
On 19 March 2013 Council's solicitors responded to all of Mr Pomare's requests for information. It is difficult to see how there could have been any misunderstanding that Mr Pomare's letter of 4 March 2013 had conveyed the plaintiff's consent for the pipe repair works to be undertaken on her land. However, Council's solicitors managed to misunderstand, as reflected in the following passage of their reply:
Due to your client's refusal to allow our client to undertake the works, the Council cannot call for tenders until either your client accepts that the Council is entitled to enter the property to undertake the works, or alternatively a Court makes an order that the Council is the owner of the pipe pursuant to s 59A of the LGA.
Mr Pomare replied as follows on 3 April 2013:
Despite our client's consent being provided [in our letter dated 4 March 2013], we note that you have sought further confirmation on same. […]
Accordingly, and for the avoidance of doubt, our client will allow Council access to the property to undertake the works set out in the documents attached your letter of 11 February 2013, and to that intent, accepts that Council may enter the property to undertake the works pursuant to section 59A of the LGA.
Council finalised its tender process during May 2013. The repair work was commenced on 15 July 2013 and was completed within two weeks. A collapsed section of pipe under the plaintiff's front yard was replaced and the remainder of the pipe was lined, from the junction pit to the rear boundary pit. Council undertook remedial landscaping of the plaintiff's backyard in late August 2013, at no cost to her.
The minutes of a meeting of Burwood Council held on 26 August 2013 incorporated an "Information Item" concerning the repair of the pipe at Appian Way. This contained a paraphrase of Mr Pomare's letter to Council dated 12 December 2011 in which he had objected to Council pumping storm water into the plaintiff's backyard and requested information about the pipe under her property. The Information Item also recorded that by his letter of 3 April 2013 Mr Pomare had confirmed the plaintiff's consent for Council to enter her land to repair the pipe and had acknowledged Council's rights pursuant to s 59A of the Local Government Act. None of the events of the 16 intervening months were described or explained in the "Information Item".
By omitting any description of what occurred between 12 December 2011 and 3 April 2013 the Information Item conveyed the false impression that Council's inordinate delay in doing anything about the blocked pipe at No 13 was attributable to the plaintiff withholding consent for entry upon her land. That was untrue. It was a significant misrepresentation in this public document. In fact, responsibility for the delay rested entirely with Council's employed engineering staff or with the elected Councillors, or with both. Throughout these proceedings Council has maintained that the plaintiff brought upon herself the 11 months of intermittent inundation of her property, by denying Council access for the purpose of repairs. That contention has not been sustained. Responsibility for the continuing state of affairs rests entirely with Council.
Since the repair and lining of the pipe there has been no further flooding down the driveway of the plaintiff's property. However, after heavy rain, when the capacity of the pipe is exceeded, stormwater backs up in the junction pit and a pond forms on the north side of Appian Way. In about February 2015 Council raised the footpath in front of Nos 13-17 by about 300mm and brought it to the same level across all three properties. For many rain events in which the capacity of the pipe is exceeded, the raised footpath now acts as a stormwater detention weir, retaining sufficient water on the surface of Appian Way to prevent overland flows through the plaintiff's property and/or Nos 15 and 17.
The evidence does not disclose what level of intensity of rainfall, or at what ARI value, the holding capacity of this street-surface detention weir is exceeded so that overland flows through the three properties occur. The engineers who considered overland stormwater paths in connection with the plaintiff's Development Application ("DA") in 2015-2017 accepted that such flows would be experienced from time to time. Although the levelling of the footpath would distribute the excess flows between the three properties and thus reduce the volume through any one of them to one third of the total, the three streams would converge at the rear of No 13 and would likely contribute to flooding of 10-12 and 14 Wyatt Avenue, as occurred frequently in the past due to overland flows from Appian Way.
Mr Limnos, Council's current Senior Manager Civil Constructions, deposed on 9 October 2018 that after the footpath had been raised and levelled in February 2015 he had not become aware of any flooding in or around Nos 13-17 Appian Way apart from one incident involving a blocked drain on 15 November 2015. Mr Limnos says that during the period to which he refers there were some high-intensity rainfall events. If this evidence was intended by Council to show that the stormwater drainage problem on Appian Way has been solved then it has failed to achieve its objective. In the Land and Environment Court proceedings described below, in which Council sought to impose upon the plaintiff an obligation to grant a western boundary easement and install a new pipe at her cost, Council adduced evidence from a hydrological engineer - which Mr Limnos is not - to the effect that Nos 13-17 remain subject to overland flows.
Further, after failing in its bid to make the plaintiff bear the cost of relocating the drain, Council has negotiated with her about acquiring an easement and carrying out this construction work. Ultimately, Council has initiated the compulsory acquisition process. Despite Mr Limnos' anecdotal evidence the Court is left in no doubt that provision of satisfactory stormwater drainage at this location, to meet Council's own standards and to implement the professional advice it has received, still requires that a new, larger pipe be installed on a western boundary easement. That requirement has been a constant since January 2001.