Noor Al Houda Islamic College Pty Limited & Anor v Bankstown Airport Limited [2005] NSWSC 20 | Case summary

Noor Al Houda Islamic College Pty Limited & Anor v Bankstown Airport Limited [2005] NSWSC 20 | Case summary | Zoe

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Claim and Defences 4 The first plaintiff seeks damages from the defendant on three bases - s52(1) and s74(2) of the Trade Practices Act (TPA) and negligence. The second plaintiff relies upon s52(1) TPA and negligence. 5 In summary the plaintiffs assert that the land leased to them by FAC, from which the College operated, was contaminated or that there was such a risk of contamination as to render the site unsuitable for a school. As a result the College was unable to develop that site and was forced to move. The first plaintiff claims in respect of removal costs, loss of capital funding from the Commonwealth and in respect of loss of profits in that the contamination issue and relocation of the College resulted in a significant reduction in the number of students which in turn resulted in a significant loss of Commonwealth and State recurrent funding. 6 The claim under s74(2) TPA is based on an implied term in the lease that the site was fit for its specified purpose, ie the conduct of a school. Damages are sought from the defendant for breach of contract. 7 The claims under s52(1) and in negligence raise similar issues. The plaintiffs assert that when the lease was entered into FAC was aware of the contamination but failed to so advise the plaintiffs. Had the plaintiffs been advised, they would not have commenced operating the College on that site but would have operated from another site. Apart from relocation costs, damages are sought on the basis of the difference between moneys actually received by the College whilst operating from the airport site and what would have been received had the College operated from an alternative site. 8 The claim on behalf of the second plaintiff is something of a defensive measure and will only come into operation if the damages recovered by the College are insufficient to enable the second plaintiff's loan to the College of $603,153 to be repaid. 9 A claim in fraud was pleaded but was specifically abandoned at trial. 10 BAL challenges the factual basis of the claim, denies that the site leased by the College was contaminated and denies that it was otherwise unsuitable for the operation of a school. It also challenges the content of a number of conversations between FAC employees and Mr Adada and the second plaintiff. 11 BAL asserts that the College cannot bring itself within the ambit of s74(2) TPA and even if it could, there was no breach of the term sought to be implied. 12 In relation to s52(1) TPA BAL denies any misleading conduct. Alternatively, it says that the necessary ingredients for reliance upon s52(1) TPA have not been made out. It disputes that the transfer of "liability" from FAC to BAL included a TPA liability such as is brought into existence by the combination of s52 - 82/87 TPA. Finally, it asserts that the s52 claim has been brought out of time. 13 In relation to negligence, BAL denies the existence of a duty of care owed by FAC to the plaintiffs. It says that the relations between FAC and the plaintiffs were governed entirely by the terms of the lease and in particular, those clauses denying any reliance by the plaintiffs on representations by FAC. 14 BAL has disputed causation. It asserts that contamination, or potential contamination, did not cause any loss which might have been suffered by the plaintiffs. It asserts that such loss as can be proved was due to the plaintiffs' own conduct or to factors unrelated to contamination. 15 In relation to damages BAL asserts that the plaintiffs have failed to mitigate their damages and that the whole basis for the claim is defective in that it relies upon assumptions which have not been proved. 16 BAL has cross-claimed against the plaintiffs on three bases: (i) An outstanding debt for legal costs owed by the plaintiffs to BAL of $93,643; (ii) The cost of making good the site occupied by the College until December 2002 - $181,244; (iii) Damages generally for the deceptive, misleading and negligent conduct of the College in undertaking the covenants in the lease thereby inducing FAC to grant the lease.

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Factual background (to 31 December, 1998) 17 In 1992 the second plaintiff and Mr Adada had with others been directors of a company called the "Al Noori Muslim Primary School Limited". This company operated a primary school for children of the Muslim faith at Greenacre. As of 1993 approximately 90-100 students attended that school. The second plaintiff was at that time acting principal of the school. 18 Conflicts arose between the directors of that company, which culminated in two of them being removed in November 1993 - Messrs Siddiq Buckley and Dawood Goddard. Those directors challenged their removal in proceedings before O'Keefe J in this Court. As a result of those proceedings, Messrs Goddard and Buckley were reinstated as directors and a receiver was appointed to the company. 19 A costs order was made against Mr Adada and the second plaintiff. At a special meeting of that company in February 1994, neither Mr Adada nor the second plaintiff stood for positions on the board and as of that date they ceased to be involved with the company. A deed of release dated 3 February 1994 set out the terms under which their relationship with the company and the school ceased. 20 As early as 1990 the second plaintiff and Mr Adada had in contemplation the setting up of a larger school for students of the Muslim faith, which would include instruction for high school students as well as primary. To that end the second plaintiff had been looking for suitable sites for either lease or purchase in the western Sydney area. As of August 1994 those attempts to find a suitable site had been unsuccessful. To better understand correspondence originating from the second plaintiff, it should be noted that she was the proprietor of a business name "Noor Ul Ilm". 21 Inquiries were made in relation to a site at Drummoyne (formerly the Drummoyne Boys High School), a site known as the "Dog Track" at Panania, a site known as "The Towers" in the Canterbury/Belmore area, the former Hurlstone Park Primary School, a property at Campbelltown and a property at Croydon being the former Evandale School. Inquiries had also been made as to suitable properties in the Liverpool area, at Burwood and at Bexley. 22 It was stated by the second plaintiff, both in an affidavit of 27 September 2004 and in her oral evidence, that in late 1994 she had under consideration other properties in Western Sydney which would have been suitable for a school. I am not so persuaded. Neither the second plaintiff nor Mr Adada could identify any alternative suitable site which was available as of late 1994 when negotiations were taking place in relation to the occupation of the Bankstown Airport site. 23 I find that as of August 1994 neither the second plaintiff nor Mr Adada had any suitable property under consideration for their proposed school (letter second plaintiff to FAC, 16.8.94 - tab 5, second plaintiff's affidavit 15.11.02). 24 By August 1994 the need to obtain a suitable site for the school had become urgent since approval for Commonwealth recurrent funding had been obtained for the 1995 school year. Although that approval had been obtained in relation to the Drummoyne site, the second plaintiff and Mr Adada hoped that it could be carried over to a new site, if one could be located. This in fact occurred. 25 In August 1994 the second plaintiff contacted Ms Williams, who was employed by FAC, and was the administration controller for the Bankstown Airport. The second plaintiff both in writing and by telephone indicated to Ms Williams what the land requirements were for the proposed school (letters, tabs 5, 6 and 7, second plaintiff's affidavit 15.11.02). 26 In late September or early October 1994, a meeting took place between the second plaintiff, Mr Adada and Ms Williams. That meeting took place at Bankstown Airport. In the course of the meeting Mr Knox, the Airport Manager, attended and for some period of time participated in the conversation. There is some dispute as to how many meetings took place. The second plaintiff asserted three meetings but Ms Williams and Mr Knox could only remember one. Nothing turns on how many meetings took place. 27 There is also a dispute as to whether at the end of the meeting or at the end of a meeting, the second plaintiff and Mr Adada were driven by Mr Knox and Ms Williams to a location at the eastern end of the runway to be shown the suggested location for the school. Neither Mr Knox nor Ms Williams could remember such a car trip. Ms Williams was definite that she was not authorised to drive near the runway to the location described by the second plaintiff and Mr Adada. 28 The significance of the drive to the proposed school site arises from representations said to have been made by Mr Knox and Ms Williams during the course of that journey. The dispute on this issue highlights a particular problem in the matter. 29 The evidence in chief, on behalf of the second plaintiff and Mr Adada on the one hand, and Ms Williams and Mr Knox on the other, was primarily contained in carefully crafted affidavits prepared by lawyers. It would be fair to say that under cross-examination none of those persons adhered to the specific detail, particularly as to conversations, set out in those affidavits. In making that observation I do not wish to be critical of the honesty of any of the deponents. 30 What became clear is that memories had faded with the effluxion of time. Whereas the deponents could remember that particular topics had been raised and in some cases could remember some specific details, none had a comprehensive and accurate recollection as to detail, particularly in relation to actual words used. 31 I was impressed with both Ms Williams and Mr Knox as witnesses of truth. Having said that, Mr Knox had been experiencing health problems in early 2000 and had subsequently retired for health reasons. His recollection as to detail was not particularly good. 32 By way of illustration, it seems fairly clear from a reading of the letters at tabs 6 and 7 of the affidavit of the second plaintiff of 15 November 2002 that some inspection of the proposed site must have taken place and this could only have occurred in the presence of someone authorised by FAC to provide access to such land. That person would logically have been Mr Knox or somebody at his direction. Accordingly, I am satisfied that at a meeting some inspection of the proposed site did take place. That finding does not reflect adversely on the credit of Mr Knox or Ms Williams. It simply means that they had no recollection of such an inspection. 33 I am less sure of the impartiality of Mr Adada and the second plaintiff. It was apparent from the overall tenor of the evidence of Mr Adada that he is not a person who is concerned with detail. He approached matters in a broad brush way. On many issues where he would be expected to have detailed knowledge (ie actual works carried out) his evidence was vague. Accordingly, I regard his evidence as to actual conversations, particularly in his affidavit, as unreliable. 34 The second plaintiff was more precise and detailed in her recollections. Since she is passionately dedicated to the success of the College, and since the outcome of this case will largely determine the future of the College, she had a clear motivation to give her evidence particularly as to conversations in such a way as to assist the College. An area of clear unreliability was at paras 49-51 of her affidavit of 27 September 2004 (T.280-281). Nevertheless I found her oral evidence generally reliable. Where, however, it conflicted with that of Ms Williams I prefer the evidence of Ms Williams. 35 Ms Williams, like Mr Knox, is no longer employed by FAC or by BAL. I found her evidence under cross-examination at T.830-837 to be reliable and of particular assistance. She was prepared to make concessions where appropriate and where she could not remember details she said so and did not try to reconstruct. 36 Applying the above qualifications I find that in a meeting, which took place in late September or early October 1994, Ms Williams was careful to point out to the second plaintiff and Mr Adada that there were difficulties with the site, from the point of view of setting up a school. In particular she brought to their attention that there were noise issues and that the proposed site had no services. Ms Williams said that the Bankstown Airport could not assist with the provision of services. Her approach is set out at T.836.11: "They really had to go away and do their homework to see whether or not it was going to be a suitable site for them. I wasn't sure that it was, given that it had, you know, a number of problems associated with it, such as no services. It might have cost a huge amount of money to bring them onto the airport." 37 It follows from my acceptance of that evidence that I reject the evidence of Mr Adada and the second plaintiff to the effect that positive representations were made either by Mr Knox or Ms Williams that the proposed site was suitable for a school, that noise levels were quite acceptable, that they need not be concerned about safety issues such as plane crashes and that by reference to the Bankstown Grammar School (a school which was successfully operating from another site at the airport) a representation was made "that is where you will be up to in a few years". 38 I accept that at a meeting the second plaintiff specifically referred to a system of construction known as "earth integration", which was used for the Greenacre School. I accept that this reference was made in the context of that method of construction being suggested for the site of the proposed school at the Bankstown Airport. I also accept that when that suggestion was made, Mr Adada said that such a method of construction was too expensive. I reject the evidence that when the suggestion was made Mr Knox and Ms Williams said "that would be a good way to proceed on this site". 39 I accept that at a meeting the second plaintiff raised the question of FAC granting to the College a twenty-five year lease. I accept that this was done in the context of informing Ms Williams and Mr Knox that such a lease was necessary before capital funding could be obtained from the Commonwealth Government. I reject the evidence that either Mr Knox or Ms Williams in any way suggested to the second plaintiff that subject to the College being financially viable, it could expect to be granted a twenty-five year lease. I find that both Ms Williams and Mr Knox made it clear that such a lease could only be approved by the board of FAC and that such an approval could not be guaranteed. (T.293.18-20,.33-35, T.311.25-30).

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42 A matter of dispute between the parties was whether, apart from the reference to the method of building known as "earth integration" previously referred to, any discussion had taken place between the second plaintiff and Ms Williams concerning the use of perimeter earth mounds as a means of construction of the proposed school and as a means of reducing the effect of noise. I am of the opinion that no such discussion took place. It seems clear from the letter from the second plaintiff to FAC of 7 October 1994 that the matter of "perimeter earth mounds" was a fresh proposal and had not been previously discussed (tab 7, second plaintiff's affidavit, 15.11.02). 43 It is common ground that nothing was said about contamination in any of those discussions relating to the use of land at the airport by the College. 44 As a result of the discussions between the second plaintiff and Ms Williams the position reached by early November 1994 was that the College and FAC had in contemplation a seven year lease of a specified site at the airport from which a school could be operated. Because of the length of the lease demountable buildings, rather than permanent buildings, would be used. The construction of permanent buildings was in clear contemplation but was contingent on a long lease being granted as a result of a future successful application to FAC board. This is evident from the letters of 4 November 1994 - FAC to the second plaintiff, and 10 November 1994 - second plaintiff to FAC (tabs 8 and 9, second plaintiff's affidavit, 15.11.02 and clause D in the annexure to the lease of 1 December 1994 at tab 1). 45 As indicated, the College was incorporated on 24 October 1994. The structure of the College which gave to Mr Adada and the second plaintiff a controlling interest was decided upon to ensure that there were no divisive disputes relating to the control and conduct of the proposed school as had happened with the Al Noori Muslim Primary School (T.98.52-58, T.99.1-9). 46 The draft lease documentation was sent to the College's solicitor, John Burrell, on 16 November 1998. It is clear that the lease was discussed by Mr Burrell with the second plaintiff before a substantial list of amendments were requested from FAC's solicitors by letter dated 22 November 1994. The second plaintiff and Mr Adada said that they did not read the lease carefully and in the case of the second plaintiff, left everything to the solicitor. 47 Mr Burrell did not give evidence. His conveyancing file was tendered (exhibit 15, tab 42). It makes clear that there were a number of conversations between him and the second plaintiff. The references to conversations are in note form and consequently it is not possible to ascertain exactly what was said by Mr Burrell by way of advice or otherwise to the second plaintiff. 48 Even if one accepts the evidence of the second plaintiff and Mr Adada that they did not pay particularly close attention to the contents of the lease, it is clear that they understood that the document was setting out the mutual obligations of the College and FAC in relation to the occupation of the site (T.138-54, T.303.2). Their failure to properly read the lease does not assist the College (Toll (FGCT) Pty Ltd (formerly Finemores GCT Pty Ltd) v Alphafarm Pty Ltd (2004) 79 ALJR 129). 49 By January 1995 the second plaintiff appears to have become concerned at the delay, which was taking place in relation to the finalisation of the lease. By letter dated 11 January 1995 she advised FAC that Mr Burrell was no longer acting. The lease was eventually signed on or about 17 February 1995 with the second plaintiff acting on behalf of the College. 50 Accompanying the lease was a licence agreement which entitled the College to occupy the leased site from 17 November to 31 December 1994. The lease took effect from 1 January 1995. It was for seven years and was to conclude on 31 December 2001. An incorrect termination date of 31 December 2002 was inserted in the lease, but that was corrected by subsequent correspondence. The lease and licence agreement are at tab 1 to the affidavit of 15 November 2002 of the second plaintiff. 51 Considerable emphasis was placed by BAL on three clauses of the lease which for convenience I will set out:

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Clause 7.2: "The Corporation is not liable for damage to or loss of anything or injury to any person in or near the Airport due to any cause other than the negligence or default of the Corporation or any employee or agent of the Corporation." 53 The College commenced operation in 1995. It had less than one hundred students. This low number of students meant that the College did not qualify for any Commonwealth funding. By May 1995 the College was unable to pay rent to FAC and was several months in arrears. The College only seems to have been kept afloat during 1995 by loans from parents, from Mr Adada and the second plaintiff. The College was using demountable buildings, some of which had been hired and some of which were second-hand and had been acquired by Mr Adada. 54 Although the second plaintiff had qualifications as a Bachelor of Arts and a Master of Educational Administration with a Diploma in Education, her only previous experience as a school principal had been at the Greenacre primary school. Her only experience with a secondary school had been as a teacher on a part-time basis for one term. She had never previously administered a secondary school. 55 Mr Adada had studied architecture but had not graduated. He had experience in building. When the College commenced, it was Mr Adada who arranged for and participated in the construction of trenches, which enabled electricity, drainage and sewer services to be connected to the demountable buildings. 56 Between 1995 and 1998 the number of pupils attending the College steadily increased. In 1996 the numbers were one hundred and forty one, in 1997 three hundred and eighty seven and in 1998 five hundred and fifty. The College received recurrent Commonwealth funding by reference to student numbers for the years 1996, 1997 and 1998. 57 During those years the College was inspected by representatives from the NSW Board of Studies. As of November 1995 significant health and safety issues were raised, particularly in relation to fire fighting equipment, drainage and the stability of some of the demountables. It was noted that the staff were generally inexperienced. School rolls were inadequate. By the end of July 1996 the situation had improved. Staff supervision had improved as had roll-keeping. There were still difficulties with toilet facilities. (Exhibit 15, tabs 9 and 10). It should be noted that in the years 1995-1996 the College was only offering instruction up to year 8. This increased to year 10 in 1997. 58 Although the number of students at the College was increasing and facilities were improving, the overall facilities at the College would seem to have been fairly rudimentary. Complaints continued to be made by parents concerning the physical conditions experienced by students at the College and recommendations for improvement continued to be made by the NSW Board of Studies. 59 In 1997 a fire took place at the College, which resulted in the destruction of a demountable building and the need to expend substantial moneys to bring fire-fighting equipment up to an acceptable standard. In 1997-1998 significant amounts (in excess of $200,000 in 1998) were owed by the College to the Australian Taxation Office. Nevertheless some improvement in the College's profitability was occurring. In 1995 and 1996 losses of $115,000 and $88,000 had been incurred, but in 1997 and 1998 profits of $78,000 and $43,000 respectively had been achieved. 60 In 1998 the first application was made by the College to the Association of Independent Schools of NSW (AIS), which was the organisation which considered and made recommendations to the Commonwealth Government in relation to the making of capital grants to private schools. In making that application the College provided information as to its financial position in 1997 and made projections in relation to student numbers and its future financial position for the years 1998-2000. More will be said about the projected student numbers when considering damages. 61 The application for a Commonwealth capital grant in 1998 was unsuccessful. (Exhibit 15, tab 51, tab 75). Exhibit 15, tab 75 records the minutes of the AIS meeting which considered the College's application: "The Committee agreed that before it could finalise its consideration for a capital grant it would require the school's response to the following issues all of which influence the overall viability of the College. (i) Governance arrangements together with School Board membership. (ii) Clarify doubts re: status of annual accounts. (iii) The need for the College to establish a line of credit from a lending source (15 year borrowing). (iv) Financial viability - the need for the College to describe what steps it has/will take to improve current projected deficits. (v) The need to establish a professionally based Business/Financial plan." 62 That decision was communicated to the College in somewhat more diplomatic terms by letter dated 29 September 1998 (exhibit 15, tab 51). The letter referred to the future viability of the school and recommended the production of a comprehensive business/financial plan for a five year period, changes to the management structure and changes to the reporting practises of the College. Of particular concern to AIS was that control of the College was in the hands of only two directors, one of whom was the principal of the school. The lack of any breadth of experience and financial expertise in those running the College was referred to. 63 Although it was not raised in that letter, one of the Commonwealth eligibility criteria was that schools applying for capital grants must either own their own properties or have a minimum twenty year lease on any property on which buildings were to be constructed with the assistance of a grant. 64 The College did not respond to the AIS letter of 29 September 1998 nor did it take any steps until 2004 to comply with any of the requirements communicated in that letter. 65 In the course of 1998 the College entered into another lease with FAC for some additional land which adjoined the existing lease site to the west (the 1998 lease). 66 After BAL had taken over control of the airport, the situation in relation to a twenty-five year lease changed. It was no longer necessary for the approval of FAC board to be obtained. Officers of BAL had the authority to enter into such a lease. Accordingly, by letter dated 11 August 1998 BAL offered the College a twenty-five year lease of the land covered by the 1994 and 1998 leases. This was accepted by the College but the lease documentation was never finalised. 67 In November 1998 the College requested that an additional area of land be added to that proposed for the twenty-five year lease. A meeting took place on 25 November 1998 in relation to that matter between the second plaintiff and Mr Adada, on behalf of the College, and Messrs Michael Rowe and John Campbell, on behalf of BAL. At that meeting Mr Campbell handed to the second plaintiff a letter dated 25 November 1998 (second plaintiff's affidavit, 15 November, 2002, tab 23) offering a twenty-five year lease which referred to the additional area of land but which added certain conditions. "Special conditions. We advise that this proposal is further dependent upon your confirmation and the acceptance of the following: (1) That the number of pupils attending the school will not exceed the number specified in the Master Plan submitted in June 1997 ie 1,000. (2) That the additional area requested ie 2066 m2, as indicated on the attached plan, will be used for parking, sporting or recreational uses and will not be used to establish classrooms offices or other facilities which will add to the number of students or personnel on the site. (3) That any excavated material will be tested for contamination and any such material found to be contaminated will be removed and disposed of in a proper manner. Bankstown Airport Limited agrees to pay the cost of any testing and removal of material found to be contaminated within the original lease area of 19,527 m2. The testing and disposal of excavated material within the additional lease area of 2066 m2 will be at your cost …" 68 Shortly thereafter Mr Rowe handed to the second plaintiff and Mr Adada a report prepared by Johnstone Environmental Technology Pty Limited (JET) entitled "Preliminary Soil Contamination Investigation for the Condell Park Islamic School "Noor Al Houda" Bankstown Airport 1998". (Exhibit PB, tab 90 - "the JET report"). 69 This was the first occasion that the plaintiffs were made aware of there being any contamination or potential contamination affecting the site on which the College was located. 70 There is a dispute as to exactly what was said by each person at the meeting. I do not propose to resolve that factual issue since nothing turns on those conversations. 71 Either at that meeting or shortly thereafter, the second plaintiff noticed a reference in the JET report to an earlier report. A copy of that early report was requested from BAL and that earlier report entitled "Contamination Audit Bankstown Airport April 1994" prepared by Envirosciences Pty Limited, but authored by the same person who wrote the JET report, was subsequently provided to the plaintiffs in early December 1998 (exhibit PB, tab 8 - "the Envirosciences report"). 72 Having read both reports and having sought advice from their lawyers, the plaintiffs on 22 December 1998 wrote to BAL a letter in the following terms: "Reference is made to your letter (25 November 1998 Your Ref: 12-10-656) regarding the negotiations on our new lease including the time limit of 30 days. Due to contamination report which was provided to us recently, we have been advised by our solicitors to conduct a more detailed investigation on the soil contamination prior to signing for the extension of the lease. Therefore we request that you allow us to begin organising this investigation and we will contact you as soon as we are aware of how long it will take us to obtain the results and then consider our lease in the light of these results. We look forward to your co-operation in this matter." (Second plaintiff's affidavit, 15 November 2002, tab 24).

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Contamination 73 It is appropriate at this point to examine the state of knowledge of FAC at the time that it granted the lease to the College and the extent of contamination, or risk of contamination, of the land leased to the College and its suitability for conducting a school. 74 It is apparent from the early documents in exhibit PB, tab 1-7 that FAC was carrying out environmental investigations in relation to its airports including Bankstown. (Exhibit PB, tab 1.) It is also clear that FAC wished to carry out those investigations before discussing procedures to manage environmental risks with its tenants. It is clear from the memorandum from Peter Simpson, technical operations superintendent to Ms Lammerts, environmental officer, dated 7 October 1992 that the risk to tenants at Bankstown Airport from chemicals used on the airport was recognised. 75 The FAC memorandum of 9 July 1993 addressed to General Managers - Airports, Airport General Managers and Airport Managers - and also to Peter Simpson and Danny Eatock (an environmental officer employed by FAC at Bankstown) makes it clear that FAC appreciated the sensitivity of information which might be obtained as a result of "Environment Review reports" which it was intended to carry out. It directed that such reports should be general and should not contain "details of any more thorough investigations which may have been initiated when a problem was first detected". The memo went on to direct that "to ensure confidentiality all Environment Review reports completed between now and the end of September should be forwarded to General Counsel with a covering letter seeking legal review and advice". 76 In accordance with the program of conducting environmental reviews of its airports a Stage One Environmental Review Report was prepared in relation to Bankstown Airport in January 1994. A stage one report is a report which assesses the current situation. (Exhibit PB, tab 6.) 77 Contained in the report was section 3.5 headed "Rubbish Disposal - Historic Practices". Section 3.5 referred to Bankstown Airport being used for many years as the dump site for the sanitary can waste (night soil) collected in the Canterbury and Bankstown areas until mains sewer connections were available. The location of such sites could be identified by areas of grass growth, which appeared to be extremely well fed. Fourteen such sites had been identified in the eastern area of the airport, each of which measured roughly 3.5 metres by 14 metres. The contents of each area were not expected to contain anything other than nutrients for grass growth, but the author of the report noted "it is desirable however to confirm this expectation and it is proposed to have tests undertaken for the purpose … If such testing indicates any areas of concern, it is proposed to supplement the testing to better define any environmental risk potential." 78 A report entitled "Contamination Audit Bankstown Airport" was prepared by Envirosciences Pty Limited and was dated April 1994. The author was Lindsay Rockett. This was the Envirosciences report handed to the plaintiffs in December 1998. The report recorded instructions received from FAC to undertake a contamination investigation of three areas within the airport, one of which included "waste pits at the eastern end of runway 29R". The objectives of the study were to identify contamination and to determine whether, if contamination was identified, off-site migration through ground water movements, was occurring. The report noted that the potential for contamination was caused by poor earlier work and poor waste disposal practices. 79 Section 3.2 of the report referred to information supplied to the author by FAC indicating that waste had been dumped in the ground during the 1940's and 1950's in an area to the east of runway 29R. That information was supported by evidence in two forms - excavation of waste during the construction of an extension of the taxiway to runway 29R, and aerial photographic evidence of the existence of an extensive network of trenches denoted by darker strips of thicker grass covering nearly five hectares (figure 3). 80 Somewhat unfortunately it was not until shortly before the trial that access was gained to the original April 1994 Envirosciences report (exhibit AA). Until then experts and others had been working from a rather poor photocopy of figure 3, which did not make clear the extent of the network of trenches. When the original colour photograph was examined (exhibit BB) it made clear that the network of trenches extended substantially into the northwestern portion of the land leased by FAC to the College in 1994. (See also figures 1.1, 1.2 to the report of Dr Swane of 20 June 2003 and the reworked version of figure 1.2 (exhibit 23), T.790.39-54). 81 Thirty-seven test pits were dug to natural soil material. Those relating to the eastern dump site can be seen in the charts on pages 6 and 11 of the report. A total of seventeen test pits were dug in the vicinity of the eastern dump site depicted by the network of trenches. 82 A number of the test pits contained waste material, including isolated fragments of asbestos cement sheet, nylon, wire and plastic. In test pit 14 a newspaper dated 4 April 1956 was recovered. In that same test pit, a small quantity of black odorous material was found which when tested showed significant contamination. In other test pits a layer of dark brown fibrous material was found at a depth of approximately .75 metres. Possible sources of this layer were thought to be original top soil covered by fill, night soil or other organic material. The author concluded (section 8.2) "If the contaminants detected are not leaching into the ground water the material can remain as is, that is, covered by fill and top soil." 83 Although an analysis of ground water samples from the dump sites showed that the concentration of heavy metals, total petroleum hydrocarbons, BTEX products, polycyclic aromatic hydrocarbons and organochlorine pesticides were within limits recognised for the site, the report recommended that ground water quality be monitored at two monthly intervals. 84 The report concluded as follows:

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"Limit of the report The conclusions and recommendations presented in this report are based on necessarily limited inspection of conditions at specific isolated locations, chosen to be representative as possible under the given circumstances. It is, however, possible that these locations may not have encountered all areas of contamination. Inferences concerning the nature and continuity of soil quality from sample points are made but not guaranteed, due to the limited sampling program undertaken. This report has been prepared for the particular investigations described and no responsibility is accepted for the use of any part of this report in any other context or any other purpose." 85 It was common ground that the 1994 Envirosciences report was prepared at the request of Mr Eatock, an environmental officer employed by FAC. What happened to the report after it was received by Mr Eatock is not known. What is clear is that neither Ms Williams nor Mr Knox were aware of the report's existence or content when they negotiated with the College in 1994 in the lead up to it leasing a site at the airport for use as a school. 86 Although Mr Knox and Ms Williams were unaware of the content of the report, I do not understand the defendant to argue that its content as a matter of law was not known to FAC. If such an argument is sought to be made, I reject it. Clearly FAC, through Mr Eatock and probably the other environmental personnel referred to in tabs 1-7 of exhibit PB ie Mr Simpson and Ms Lammerts, was aware of the report's existence and its content. For reasons which were not explained (neither Mr Eatock, Mr Simpson nor Ms Lammerts was called to give evidence by the defendant), the information contained in it was not communicated to persons such as Mr Knox and Ms Williams, who were the employees of FAC charged with leasing portions of the Bankstown Airport and otherwise dealing with potential lessees. 87 It has been submitted on behalf of BAL that the effect of the receipt by FAC of the 1994 Envirosciences report needs to be assessed on the basis of how it would be interpreted by an intelligent layman without any particular expertise and in particular without the expertise of an environmental scientist. I reject this submission. It sits very uneasily with the contents of tabs 1-5 of exhibit PB, which identify employees of FAC as having some expertise in the environmental field and which also show a considerable sensitivity to the effect of such environmental information, particularly relating to contamination, on persons such as tenants. 88 A report was prepared by Dr Swane, an environmental scientist retained by BAL, dated March 2000 (exhibit DD). That report was only produced by BAL in the course of the trial after considerable argument. In it (pp 47-49) specific questions were put to Dr Swane as to what response should have been made to the 1994 report. 89 I set out that portion of the report. "6.3 Opinions on Specific Issues The following opinions are provided in response to questions raised by Phillips Fox. 1. Would anything in the 1994 report by Envirosciences Pty Limited indicate that: (a) The Site at that time posed any risk to health;

[29]

TID test results also indicated that the sample from TP 14 generated elevated levels of volatile hydrocarbons. The report indicates that composite sample Comp 1 was taken from test pits TP4 and TP5 between .65-7m, Comp 2 was taken from test pits TP7 and TP 13 between .5-.7m, the sample from TP14 from a depth of 1.5m. The test pit logs indicate that samples Comp 2 and TP14 probably consisted of Night-soil Fill. While the exact location of these three samples cannot be determined from the report, the data provided in the 1994 report indicate that ground contamination at unacceptable levels was present in the general area of the Site. The contamination would have posed a risk to human health if the contaminated materials were present at the ground surface. However, the test pit logs indicated that the contamination was buried, although this was not clearly quantified by the report. The results of the current investigation have shown that at all locations investigated, the contaminated Night-soil Fill is covered by not less than .8m of "clean" soil. (b) The results of the 1994 report were sufficient to indicate there was a possibility that unacceptable levels of contamination may have been present at some parts of the Site. On account of this uncertainty, the results of the 1994 report were sufficient to indicate the Site at that time was not suitable for use as a school unless further investigations were to be undertaken which indicated otherwise. This opinion is based on the use of the "Precautionary Principle" which is an approach that the ANZECC and NHMIC (1992) guidelines recommend as needing to be used when considering management strategies for Site contamination. I interpret this principle as requiring the use of a cautious and conservative approach when dealing with uncertainties that arise when assessing contamination at a Site. Since contamination was found in the general area of the Site, the Site should not have been used for a more sensitive land use until further investigations had been undertaken and any areas containing unacceptable levels of contamination had been removed. (c) Refer to my answer 2(b). (d) Refer to my answer 2(b). (2) If your response to questions 1(c) and 1(d) is "yes", could excavation and construction have taken place with appropriate management plans? If so, what management plans would have been necessary. Answer The information provided by the 1994 investigation should have prohibited any excavation and construction occurring at the Site until a more detailed investigation had been conducted at the Site." 90 In his report of 20 June 2003, and in his oral evidence, Dr Swane sought to make the following distinction. He said that the opinion expressed by him in the March 2000 report was an opinion of an environmental scientist. It should not be taken as the opinion of an intelligent lay person. An intelligent lay person such as the employees of FAC, would not have formed such an opinion and would not have regarded the 1994 Envirosciences report as indicating a potential risk to persons seeking to use the site leased to the College as a school. (2003 report pp 20-21 para 2.3.12, T.844.53-58, T.845.26-28, T.846.28-56, T.871.24-48.) 91 Apart from the obvious criticism that Dr Swane has no expertise to express an opinion as to what was the reasonable response of an intelligent lay person when reading the report, the distinction which is sought to be drawn is misconceived. 92 As indicated, the persons who received the report were experienced in environmental and contamination issues. The report is expressed in relatively simple terms and its meaning is clear. The author of the report was expressing his opinion based on the existing user of the Bankstown Airport, ie as an airport. He had not been asked to consider a more sensitive use, ie as a school. One does not have to be an environmental scientist to reach the same conclusions in relation to the 1994 report, as those of Dr Swane in his report of March 2000. They are matters of common sense. 93 Given the limited nature of the investigation carried out in 1994 by Envirosciences in relation to the eastern dump sites and the clear qualification in the conclusion, a reasonable person even without any environmental qualifications or experience having read the report, would have concluded that further investigations should be carried out in relation to any specific site intended to be operated as a school. This is particularly so when it was known that some digging of trenches for the installation of services would be required and some question had been raised of using a form of "earth integration" as a method of building. 94 In the absence of any evidence from Mr Eatock or Ms Lammerts, and in the absence of any explanation as to why they were not called (the evidence revealed that Mr Eatock was currently performing work at the Coolangatta Airport T.1002.48), I conclude that the evidence which those persons could have given would not have assisted the defendant's case. There was evidence that Mr Simpson had taken a job in Amman (T.826.41) at some time after 1994, but otherwise no explanation was offered as to why he could not give evidence. 95 For the above reasons, I find that the responses recorded by Dr Swane at pp 47-49 of his report of March 2000 generally reflect the response that employees of FAC would or should have had to the 1994 Envirosciences report had they been aware that a school was to be operated in the vicinity of the eastern dump sites. This is so even where it was anticipated that the buildings would be demountables. In this case it was clear that even though the initial structures would be demountable, the intention was to build permanent buildings if a twenty-five year lease could be obtained. 96 It follows from that analysis that until further testing was carried out, the effect of the 1994 Envirosciences report was to indicate to FAC that there was a risk to health for persons setting up and conducting a school in the vicinity of the eastern dump sites. 97 Although some testing of ground water took place in the vicinity of the Bankstown Airport, no further investigations were carried out in relation to the eastern dump sites and specifically in relation to the land leased to the College by FAC until 1998. 98 In the second half of 1998 Mr Rowe, the operations superintendent of BAL, was supervising some excavation work on land approximately eighty metres south west of that occupied by the College. That work did not concern the College. He observed some tins and bottles being removed from the excavation (affidavit paras 37-40, T.997.58, T.998.1-3, T.999.1-24). Because Mr Rowe was aware that the College was seeking to lease more land, he arranged for an organisation called Johnstone Environmental Technology Pty Limited (JET) to carry out tests of land to the west of the College's existing lease site. Mr Rowe was referred to JET by Mr Eatock since Mr Rockett, who had prepared the 1994 Envirosciences report, was at that time employed by JET. 99 In October 1998 JET prepared a report entitled "Preliminary Soil Contamination Investigation for the Condell Park Islamic School "Noor Al Houda", Bankstown Airport". This was the JET report which was handed to the second plaintiff by Mr Rowe at the meeting on 25 November 1998. 100 The purpose of the report was: "To undertake a soil contamination investigation on a site to be used as part of the Condell Park Islamic School … and this soil contamination investigation was undertaken because of the proposed expansion of the school onto the Bankstown Airport land … The objective of the investigation was to determine whether any residual soil contamination was present on the existing and proposed school site and, if so, what remediation would be necessary to ensure the site is returned to a condition appropriate for its intended future use as school playground." 101 The land to be investigated was described: "The investigation area occupies an area of approximately 5000 square metres and the eastern section, which was formerly part of the Airport land, is currently occupied by the school and is used as a playground area. A wire fence separates this playground area from the western section of the investigation area which is open space on BAL land and is unused except for the access road to the runways as shown on figure 1. A row of demountable buildings is located in the playground adjacent to the wire fence as shown on figure 1." 102 Eighteen test pits were dug. No organic matter, and in particular night soil, was found closer to the surface than .5m. The worst night soil contamination was found at pit IS4. This was found at a depth of 1m. At three locations in the leased area (IS10, IS12, IS13) the environmental risk based criteria was exceeded for copper and zinc. Those same three test pits also showed that environmental risk values were exceeded for dieldrin and/or DDT. There were exceedances for copper, zinc, dieldrin and/or DDT in other test pits on the additional land sought to be leased. 103 The conclusion was expressed as follows: "From a health risk perspective the results are all satisfactory. Some exceedances of environmental risk criteria were found, particularly metals and pesticides. For the metals it should be noted that this may have thytotoxic effects on some plant species. It is noted that OCP exceedances of the environmental risk criteria were related to subsurface samples and provided that excavations are not carried out that may result in this soil being left at the surface, the environmental risk is considered to be very low. Attention is drawn, however, to IS4 and it should also be noted that excavation in this area will require specific disposal of this soil because of the high pesticide value."

[52]

Answer The Night-soil Fill would be unsuitable for constructing the mound since the levels of contamination exceed the criteria recommended by the NSW EPA for the protection of human health and the environment at land used for a primary school or landscaped open spaces." 107 The plaintiffs' then solicitors, Messrs Price Waterhouse Coopers Legal, obtained a report from Golder Associates Pty Ltd, environmental scientists, dated June 2001 (February 3, second plaintiff's affidavit 15/11/02 - the Golder report). In preparing that report, Golder Associates Pty Ltd had available the 1994 Envirosciences report, the 1998 JET report and the Douglas Partners report. In addition, nine test pits were excavated to depths that ranged from 1.1 to 2.3 metres below ground surface using a backhoe. Five boreholes were drilled to depths ranging between .4 m - 1.4 m using a hand auger. 108 At section 7.4, Golder Associates Pty Ltd commented on the suitability of the leased site for school use and for a proposed additional classroom. The report said:- "For reasons discussed above it is difficult to comment with confidence on whether the existing levels of contamination are such as to permit continuing use of the existing site for the purposes of a school. This is because the site investigation coverage is insufficient to provide confidence that there is consistently clean cover over contaminated horizons. There is also a risk of soils being disturbed and relocated to the surface by inappropriately managed excavation/foundation works. Consequently remediation will be required at the site and the remedial action plan (RAP) should be produced." 109 Some remediation options were discussed. Indicative remediation costs were suggested at between $235,000-$300,000. The author of the Golder report, Mr Greenwood, was in the United Kingdom and was unable to be called in the plaintiffs' case. Ms Lloyd, an environmental scientist who had participated in the preparation of the report, was able to give evidence. Under cross-examination she agreed with the opinion of Dr Swane in his 2003 report to the effect that provided the coverage of earth of approximately .5m was maintained over those parts of the leased site which contained night soil and other contaminants, there was no significant risk to the health of persons using that land as a playground or for other purposes associated with a school. 110 It became a moot point as to what activities were sufficient to disturb the earth cover over any contaminants. It was the plaintiffs' case that the trenches which had been dug for the installation of services even for demountable buildings were sufficiently deep to have broken through that .5m coverage of earth. Mr Adada gave evidence that the trenches for services were approximately 1.2 metres deep (T.83.35-44). Mr Adada's evidence on this issue was challenged. Photographs of the College taken in December 2002 and later were shown to him to demonstrate that such trenches as were dug for electrical and sewerage services were relatively shallow and did not reach that depth. 111 Mr Adada explained that in the vicinity of the demountable buildings, the trenches for services which contained pipes and wiring were shallow because they had to be connected to the buildings. Away from the buildings the trenches were much deeper, particularly in relation to sewerage and stormwater because they had to link up with existing connections which were at a deeper level. 112 It was significant that the photographs relied upon by BAL in exhibits 25 and 27 were taken in the vicinity of the demountable buildings and consequently showed the trenches containing electrical wiring and pipes to be relatively close to the surface. This was consistent with the evidence of Mr Adada. 113 I am satisfied that some of the trenches which provided the connection of services such as electricity, sewerage and stormwater to the demountable buildings were deeper than .5 of a metre, particularly when those services were at a distance from the demountable buildings. It follows that there would have been some disturbance of the covering of soil, even without the construction of permanent buildings on the site. The digging of those trenches had of course been largely completed by the time the plaintiffs learned of the potential contamination problem. 114 In the course of the evidence of Ms Lloyd it emerged that Golder Associates Pty Ltd had prepared two further reports which had not been served. One of those reports had been provided to the plaintiffs' then solicitors, Messrs Price Waterhouse Coopers Legal, but it was not clear whether the other report had been so provided. There was no evidence that either report had been provided by the solicitors or by Golder Associates Pty Ltd to the plaintiffs. There was evidence that the cost of those additional two reports had been met by the College. The additional Golder reports, which were draft reports, were dated July 2001 and 31 July 2001 and were marked as exhibits 12 and 11 respectively. 115 The effect of the report of July 2001, exhibit 12, was that unless the surface coverage of earth was substantially disturbed there was little danger to persons using the site for normal above ground activities. The effect of the report of 31 July 2001, exhibit 11, was that twelve surface soil samples collected from locations above suspected waste trenches returned concentrations less than health risk based guidelines for both open space and residential use. Golder Associates Pty Ltd concluded that provided the surface grass coverage was kept intact there was an acceptable risk from exposure to the surface soils and that the College could continue to use the western area of the site as playing fields. Golder Associates Pty Ltd recommended appropriate health and safety precautions be taken should any subsurface work be conducted in the vicinity of the waste trenches. 116 The only report of Dr Swane which was served by the defendant prior to the commencement of the trial was that of 20 June 2003. The conclusion of Dr Swane that the College could continue to use the leased site for playing fields, provided the surface coverage remained intact, was in accord with the conclusions of Golder Associates Pty Ltd in their reports and the evidence of Ms Lloyd. 117 Dr Swane went somewhat further. In figures 1.1 and 1.2 he provided three overlapping overlays. The purple overlay indicated the extent of the 1994 lease, the blue overlay indicated the additional land leased in 1998 and the red overlay indicated his estimate of the extent of night soil trenches. A further figure, exhibit 23, was prepared by Dr Swane to correct wrong data in relation to the location of the Golder Associates Pty Ltd boreholes which was set out on figure 1.2. 118 The plaintiffs challenged the accuracy of the red overlay and argued that it should not have formed a dog-leg towards the northern side of the leased site and should have extended directly to the road. The dog-leg created by the red overlay excluded most of the College's demountable buildings in the north-west corner. 119 Exhibit BB, being the aerial photograph which formed part of the original 1994 Envirosciences report, is persuasive evidence that the submission made on behalf of the plaintiffs is correct. Under cross-examination in particular between T.811 and T.817 Dr Swane conceded that he could not exclude the night soil trenches extending to include the four buildings of the College complex in the north-western corner. On the basis of exhibit BB I am of the opinion that more likely than not the night soil trenches did so extend as the plaintiffs submit. 120 A disturbing feature of the report of Dr Swane of 20 June 2003 is the difference between the opinions there expressed and those in the report of March 2000 and in draft reports prepared in 2001. They are significant. Under cross-examination Dr Swane explained the difference on the basis that between March 2000 and 20 June 2003 more information came to hand which enabled him to be more definite in expressing his opinion that there was little risk associated with the use of the leased site by the College and that the site was suitable for a school. (Compare ex DD pp 49-53 with June 2003 report pp 11-16, T.862-865 and T.877-879). 121 Dr Swane was carefully cross-examined to identify the additional information which had caused him to change his opinion. It was apparent from that cross-examination that the only additional information arose from some further test pits made in October 2000 and the service of the Golder report of June 2001. It was clear that the additional information provided by those examinations was not such as would produce such a change in opinion. (T.841.46-55 - T.842.7-40) It did not take Dr Swane's knowledge very much beyond the level that had been achieved in March 2000. 122 Under cross-examination Dr Swane offered by way of further explanation that when he had reconsidered matters again he had changed his opinion. 123 One cannot help but think that the changed opinion and recommendations of Dr Swane in the 2003 report and at trial were to some extent influenced by the litigious process. In that regard I prefer the conclusions set out at pp 49-52 of Dr Swane's report of March 2000 (see paras [89] and [106] hereof). 124 As with Golder Associates Pty Ltd, Dr Swane was of the opinion in both the March 2000 and June 2003 reports that excavation for the construction of permanent building if it took place in the vicinity of the night soil trenches would have to be properly managed otherwise it could present health risks. His primary position was, however, that such excavation would not be necessary: "The new buildings could have been constructed by the College in the western part of the site over the former nightsoil disposal trenches by using appropriate design techniques. Such a design technique would have involved supporting the building on a pier and beam foundation, which involves the construction of drilled concrete piers in the undisturbed soils away from any night soil trenches. The piers would be found on the shale bedrock connected by concrete edge-beams at ground level. The ground floor slab would then have been supported on the edge-beams. This design would have eliminated the need for any part of the building to come into contact with the buried night-soil or for the night-soil to be disturbed in any way."

[53]

(2003 report, para 2.1.19.) 125 This suggested method of construction was not costed. No estimate was given as to whether it was more expensive than conventional methods of construction. Because the method proposed is unusual, I suspect that it would have involved additional cost. How much additional cost is not known. 126 Another alternative suggested by Dr Swane (T.865) was that if in the course of construction of permanent buildings for the College it became necessary to disturb contaminated soil, ie go below a depth of .5m, the soil thus disturbed could either be reburied or removed from the site. It is obvious that if conventional building methods were used for the construction of permanent buildings such as classrooms, excavations in excess of .5m would have been required. It is for that reason that Dr Swane suggested the alternate construction method in para [124]. As was the case with the alternate construction method the cost of reburying disturbed contaminated soils or removing same from the site was not specified. It would clearly increase construction costs. 127 Even though the defendant had offered in its letter of 25 November 1998 to pay for the removal of such disturbed soil (para [67]), one can readily anticipate problems arising during construction if large quantities of excavated soil had to be dealt with in such a way that it would not come in contact with persons on the site, either workmen or children, and so that it could be conveniently removed. I do not understand BAL's offer to pay removal costs to extend to additional costs of construction and delay if excavated soil had to be dealt with in that way. The "master plan" (exhibit A) and the staged development plans shown to Mr Rowe (exhibit F, p3) made it clear that permanent buildings were to be constructed on the western area of the leased site where night soil trenches were located. 128 It seems clear that if permanent buildings were to be constructed for the College on those parts of the leased site where contaminated soil was located, construction costs would have been significantly greater than those applicable to an uncontaminated site. One also needs to have regard to the estimate in the Golder report of the costs to remediate the site - $235,000 - $335,000 (p23). 129 The conclusion I have reached in relation to contamination is that so long as the College continued to conduct its operations from demountable buildings and provided there was no disturbance of the topsoil cover below a depth of .5m it was able to safely operate from the airport site. The College was not fully aware of that fact, even after receipt of the Golder report. It should be noted that after receipt of the Golder report, some parts of the leased premises were fenced off. The College was not provided with any expert reports to that effect by the defendant until 2003 after it had vacated the site. 130 In my opinion, the airport site was not suitable for use as a school if permanent buildings were to be constructed. The precautions which would have had to be taken, the stockpiling and removal of soil, the consequential delay and need to modify building techniques would have made such an undertaking impractical. Such modifications to building methods would have significantly increased costs. It would probably have been too dangerous to allow the College to operate while excavation was taking place.

[55]

That statement was made in the context of a request for emergency funding assistance (exhibit 5, tab 23). 133 No further negotiations with BAL occurred during 1999. An application was made on behalf of the College under the Freedom of Information Act (second plaintiff affidavit 15.11.2002 para 45, tab 26) on 27 September 1999 directed to FAC seeking documents relating to the contamination of the leased site. In due course some documents were provided which raised questions as to the viability of the site as a school. As indicated (para [104]), on 12 November 1999 a two page preliminary report was provided by Douglas Partners to the College at the request of its solicitors. No other inquiries were made in relation to the safety or otherwise of the site during 1999. 134 Proceedings were commenced on 14 January 2000 against FAC by the College alleging misrepresentation and negligent misstatement. By letter dated 4 February 2000 BAL withdrew the offer of a twenty-five year lease. (Second plaintiff's affidavit, tab 24). No further discussions took place between the parties in relation to a twenty-five year lease. 135 In 2000 the College had an enrolment of 682 students. That year it made a profit of $84,000. During the year the College appeared to be experiencing difficulties with a group of parents who were critical of how the College was being conducted. (Exhibit 15, tabs 11, 12 and 54). In the school newsletter dated 10 July 2000 the following was stated: "A number of parents have complained about a group which is pressuring them to leave the school or to make unfair complaints about the school. Previous Newsletters have mentioned these parents before who consist mostly of parents whose children have been asked to leave the school for discipline reasons. This group is part of a larger campaign that is being pursued in the community to shut Noor Al Houda down. The campaign is being orchestrated by members of the Muslim Women's Association in Lakemba as well as the Australian Federation of Islamic Councils. These groups wish to have control of the school which is the only truly independent Muslim school in Sydney. If they cannot have control of the school they wish to shut it down. Phone calls, letters and emails alleging lack of facilities, financial mismanagement and poor educational standards have been continuously sent to the Association of Independent Schools, the Board of Studies and the Ministry of Education." 136 An unsuccessful attempt was made by the College in May 2000 to bid at auction for an alternative site at Condell Park (Exhibit 15, tabs 54 and 55). The site was only a short distance away from the airport. The successful bidder was another Islamic organisation. Nothing was said to the parents about any contamination issues during 2000. 137 717 students were enrolled in the College in 2001. The College incurred a loss during the year of $453,000. Requests were made during that year to the State Government for land to be made available to the College for lease or purchase. Those requests were unsuccessful. 138 After receipt of the Golder report in June 2001, the College fenced off portions of the leased site where it believed contamination might be present. That situation prevailed until the College departed the site at the end of 2002. Parents were not told about any contamination issue during 2001. 139 The College remained in occupation of the site after 31 December 2001 despite that being the expiration date for the 1994 lease. It would seem from correspondence that the College was relying upon the incorrect termination date originally inserted in the 1994 lease. If that was the belief of the College it was misconceived in that the typographical error had been identified and clarified by letter dated 16 January 1995 from FAC's solicitors to the College (Exhibit 15, tab 18). 140 A less charitable view might be that the College was hopeful of obtaining occupation of the Linwood Hall school site at Guildford in early 2002 and was seeking to remain in its present site until the occupation of the Linwood Hall site took place (Exhibit 15, tabs 15, 16 and 62). 141 In January 2002 BAL commenced proceedings in the Equity Division of this Court (1030 of 2002) seeking possession and declarations in relation to the 1994 lease. Those proceedings were settled on the basis that the College pay BAL's costs of the proceedings and the College be allowed to continue in occupation of the airport site until 31 December 2002. The costs payable by the College have been assessed at $93,643.42 and form part of BAL's cross-claim. 142 The parents of students attending the College were first told about contamination issues affecting the site at a meeting in February 2002. In that year the number of students attending the College reduced to 571. It is not clear whether this was due to the communication of the contamination risk or the fact that it was known that the College was to relocate at the end of 2002. The College incurred a loss during the year of $480,000. 143 The College was unsuccessful in obtaining occupation of the Linwood Hall site during 2002. It was also unsuccessful in obtaining occupation of an Energy Australia site at 104 Eldridge Road, Bankstown (Exhibit 15, tab 63). As the end of 2002 approached the College faced the prospect of having no location to which it could relocate. By letter dated 27 November 2002 Messrs Phillips Fox, on behalf of BAL, refused a request by the College to remain in occupation of the site until April 2003 and insisted on the site being vacated by 31 December 2002. 144 In January 2003 the College was successful in obtaining occupation of a site at 416-420 Liverpool Road, Strathfield which was owned by Dr Teluja. It had previously been a theological college and included buildings with heritage importance. The site was much smaller than the airport site, and the buildings were in a significant state of disrepair. (Exhibits 49 and 50). Before the College could re-open on that site, significant repair and other work had to be carried out which included the restoration of buildings known as Brundah and Leigh Hall. 145 In March 2003 the College entered into a twenty-five year lease of the Strathfield site at an initial rent of $20,000 per month. It also undertook to carry out the restoration work. The site could accommodate up to 664 students. In 2003, 307 students were enrolled in the College. The College incurred a loss of $1,200,000 in 2003 and went into voluntary administration in July 2003. 146 In 2004, 354 students were enrolled in the College (exhibit R, para 70). It is the College's intention to occupy an additional site in 2006 - probably the old Lidcombe Hospital site. If the Lidcombe site is acquired, the girls' high school would operate from Strathfield and the boys' high school and primary school would operate from Lidcombe. At the time of trial the financial results for the College in 2004 were not available. 147 As a result of representations made by FAC, BAL and their solicitors in March 2000, the plaintiffs discontinued proceedings against FAC and joined BAL. On 19 September 2001 a second Amended Statement of Claim was filed which raised for the first time ss52 and 74 of the TPA. BAL filed its Defence on 11 December 2001. 148 On 24 June 2004 BAL filed an Amended Defence pursuant to leave granted by Howie J. The effect of the amendment (para 30A) was that in relation to the plaintiffs' claim under s52 TPA, the correct defendant was FAC in that the transfer instrument whereby BAL took over control of the Bankstown Airport did not transfer any liability under s52 TPA from FAC to BAL. It was common ground at trial that any attempt to add FAC as a defendant in relation to the s52 TPA claim was now statute barred. Leave was granted to the plaintiffs to file an Amended Reply to the Amended Defence on 18 November 2004.

[56]

Plaintiffs' claims under the Trade Practices Act Transfer of liability 149 Before considering the plaintiffs' claim pursuant to s52 TPA it is necessary to deal with para 30A of the Amended Defence. That argument if successful would prevent reliance by the plaintiffs on s52 TPA. 150 The argument of BAL is this. Section 52 TPA specifies a norm of conduct. For a breach of that norm to be actionable ss82 or 87 TPA need to be relied upon. Sections 82 and 87 in terms only allow a claim "by action against that other person or against any person involved in the contravention" (s82 TPA) and "such order or orders as it thinks appropriate against the person who engaged in the conduct or person who was involved in the contravention" (s87 TPA). 151 It is submitted by BAL that in terms both ss82 and 87 TPA confer rights of action only against the person who engaged in the proscribed conduct or was involved in that contravention ("involvement" being defined by s75B TPA). 152 In support of that argument, BAL relied upon the line of cases to the effect that a plaintiff cannot assign a cause of action under ss82 or 87 TPA. (Pritchard v Racecage Pty Limited (1997) 72 FCR 203 at 218-219, Chapman v Luminis Pty Limited (No 4) (2001) 123 FCR 62 at 116-117, paras 204-206). By analogy of reasoning BAL submitted that if the benefit of such an action could not be assigned nor could the burden. 153 It is not necessary to analyse the circumstances where the benefit or burden of enforcement proceedings under ss82 or 87 TPA can be transferred or assigned. What needs to be examined are the meaning of the relevant statutory provisions and whether they were effective to transfer any liability of FCA under ss82 or 87 TPA to BAL. No question as to the transfer or assignment of the benefit of such an action arises. 154 The relevant statutory provisions are the Airports (Transitional) Act 1996 (Commonwealth) (ATA) and the Bankstown Airport Transfer Instrument (BATI) (exhibit 34C, tab 1). It was those provisions which transferred liabilities from FAC to BAL. 155 Section 33 of the ATA provided: "(1) This section applies to a liability of the FAC (other than a liability under a contract). (2) The Minister for Finance may, by written instrument, declare that, in the event that a specified company is granted an airport lease for a specified airport under section 21 or 22 on a specified day, a specified liability: (a) ceases to be a liability of the FAC immediately after the grant; and (b) becomes a liability of the company immediately after the grant." 156 The word "liability" is broadly defined in s4 to mean "liability or duty, including a contingent or prospective one". By way of interpolation, it is difficult to imagine a broader and more encompassing definition of liability which is itself a wide concept. 157 On 1 July 1998 declarations were made in the BATI by a delegate of the Minister for Finance and Administration under various provisions of the ATA in relation to the defendant. In s2 of the BATI the Minister's delegate made a declaration pursuant to s33 of the ATA as follows: "(a) Each Specified Liability ceases to be a liability of the FAC immediately after the Grant Time and becomes a liability of the Transferee immediately after the Grant Time; … (c) The Transferee becomes the FAC's successor in law in relation to each Specified Liability immediately after the Specified Liability becomes a liability of the Transferee." 158 The term "Specified Liability" is defined in clause 1.1 and Part 1 of Schedule C to the BATI as: "Any liability of the FAC (other than a liability under contract or a liability to refund all or part of an aeronautical charge which arises as a result of litigation, action or demand concerning the validity of that charge by the FAC) in respect of, in relation to, in connection with or which arises from: (a) A Specified Asset, a Specified Contract, a Specified Employee; (b) Any land or Structure the subject of the Airport Lease; (c) The ownership, occupation or operation of the Airport Site by the FAC at any time before the Grant Time; or (d) A former employee of the FAC who was last employed at the Airport Site; or any combination of the above." 159 "Specified Liability" is defined in the widest terms "in respect of, in relation to, in connection with or which arises from the ownership, occupation or operation of the Airport Site by FAC at any time before the Grant Time". The granting of the 1994 lease by FAC to the College would clearly be an activity in respect of, in relation to, in connection with or which arose from the ownership or operation of the Airport Site by FAC. The transfer of liabilities effected by the ATA and the BATI is expressed in considerably wider terms than those which were held to be effective in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. 160 I am of the opinion that the inclusion in the concept of "liability" in the ATA of "a contingent or prospective" liability and the broad reference in the BATI to any liability of FAC in respect of, in relation to, in connection with or which arises from the ownership or operation of the Airport Site is sufficient to pick up a liability pursuant to ss82 or 87 TPA. The clear intention and effect of the ATA and BATI was to make BAL the successor in law to any liability of FAC, be it contingent or prospective. That intent was achieved. 161 It follows that I reject the defence raised in para 30A. 162 As an alternative answer to para 30A, the plaintiffs relied upon estoppel. This is set out in the Amended Reply filed by the plaintiffs on 18 November 2004. 163 The start point for that argument was the representation made by FAC, BAL and the solicitors between January and March 2000 seeking to have the proceedings against FAC discontinued and BAL joined to the proceedings in place of FAC (exhibit 34C, tabs 2-6). Included in that material was a letter from Mr John Elliott, assistant secretary, Airports Planning, Department of Transport and Regional Services to the Registry of the Supreme Court dated 24 March 2000 which relevantly stated: "Transitional arrangements were put in place for the Department of Transport and Regional Services to manage residual FAC assets and liabilities not transferred as part of the sales process. The transfer of these residual FAC assets and liabilities to the Commonwealth was completed on 8 September 1999. These transactions have reduced the FAC to a "shell" only with no remaining assets or liabilities. … On 1 July 1998 the Commonwealth of Australia (the Commonwealth) agreed to grant an airport lease in respect of Bankstown Airport to Bankstown Airport Limited ACN 083058637 (BAL), a company wholly owned by Sydney Airports Corporation Limited, a Commonwealth owned airport lessee company. The lease between the Commonwealth and BAL commenced on 2 July 1998. On 1 July 1998 the Secretary of the Department of Finance and Administration, for and on behalf of the Minister for Finance and Administration, made declarations under the Airports (Transitional) Act 1996 transferring from the Federal Airports Corporation (FAC) to BAL specified assets, liabilities and employees and contractual rights and obligations under specified contracts. Pursuant to these declarations BAL became the FAC's successor in law in relation to the transferred assets, liabilities and contractual rights and obligations on 2 July 1998." 164 The plaintiffs submitted that the original Statement of Claim against FAC, although couched in terms of misrepresentation and negligence, alleged misleading representations by conduct and silence (paras 14 and 16) and sufficiently pleaded the facts on which the subsequent claim for damages under s52 (82 and 87 TPA) could be maintained. In any event the second Amended Statement of Claim specifically raising breaches of the TPA was filed on 19 September 2001 to which a Defence was filed by BAL on 11 December 2001. Para 30A was not pleaded until June 2004, at which time it was not possible for FAC or the Commonwealth to be joined to the proceedings. In those circumstances the plaintiffs submitted it would be unconscionable for BAL to be allowed to rely upon para 30A of its Defence. 165 The plaintiffs submitted that the defendant was estopped from relying upon para 30A of its Defence in that:

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The plaintiffs relied upon the principles in The Commonwealth v Verwayen (1990) 170 CLR 394. 166 In answer to this submission BAL said that at the time representations were made by it and its solicitors no claim under the TPA had been raised and that consequently any representations made by it in the course of correspondence only applied to the causes of action as then pleaded ie misrepresentation and negligence. BAL freely admitted that the para 30A argument only occurred to it shortly before the date when amendment to the Defence was allowed. 167 In view of the conclusion which I have reached in relation to the effect of the transfer of liability from FAC to BAL under the ATA and BATI it is not necessary to decide this point. Were it to become relevant, however, I would accept the argument of the plaintiffs. 168 An examination of the correspondence between the solicitors in January - March 2000 makes it clear that representations were made in the clearest terms to the plaintiffs' then solicitors that all relevant liability had been effectively transferred to BAL. It is true that no specific reference had been made in the Statement of Claim to the TPA. Nevertheless, the facts on which the s52 claim were based had been expressly raised. BAL was on notice that this would be an issue. It has also been recently held by the Court of Appeal that reliance can be placed upon the TPA without there being any express reference to it in the pleadings (Richard v Gendore Enterprises Pty Limited and Anor [2004] NSWCA 116.) 169 Two years and nine months elapsed after reliance on the TPA was specifically raised by the plaintiffs in the Amended Statement of Claim before this point was taken. In the circumstances it would be unfair and unconscionable to allow BAL to rely upon para 30A of the Defence if the effect of that reliance was to prevent the plaintiffs from now relying on s52 and therefore ss82 and 87 TPA. 170 Should it become necessary, I uphold the estoppel argument raised by the plaintiffs in their Amended Reply of 18 November 2004.

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Limitation Defences 171 In relation to the College, para 31 of the Defence relies on the three-year limitation period which applied to claims under s82 TPA before the recent amendments. BAL's submission was that if the College suffered any damage this occurred in the context of s82 TPA when it entered into the seven-year lease in January 1995. Because the present proceedings were not commenced until January 2000, the College could not rely upon s82 to found its claim for damages. 172 It is common ground that for the purposes of s82 TPA a cause of action only arises when "measurable loss" or "actual loss" has been suffered. (Wardley Australia v WA (1992) 175 CLR 514 at 525). I am of the opinion that the earliest date at which actual loss could have been suffered by the College was in November/December 1998 when it became aware of the potential contamination of the Bankstown Airport site and that any twenty-five year lease would be subject to potentially unacceptable conditions. Actual damage was, of course, suffered on later dates eg in 2002 when student numbers significantly reduced apparently as a result of information concerning the potential contamination being communicated to parents and at the end of 2002/early 2003 when the College had to relocate. 173 As seems to be implicitly conceded there is no limitation period applicable to plaintiffs seeking relief under s87 TPA (Sent v Jetcorp of Australia Pty Limited (1986) 160 CLR 540, Blacker v National Australia Bank Limited (2001) FCA 254 at [51]). 174 I am of the opinion that the College was within time to bring actions under the TPA. 175 Para 32 of the Defence raises as against the second plaintiff not only the three year limitation period under s82 TPA but also the six year limitation period applicable to torts under the Limitation Act 1964 (NSW). Because the plaintiff was not joined to the proceedings until 27 September 2001, the defendant submitted that she was out of time in relation to both causes of action. 176 It is implicit in BAL's submission that damage was suffered insofar as the second plaintiff is concerned in 1995. As with an action under s82 TPA, the gist of an action in tort requires that damage be suffered. For the reasons set out in para [172] the earliest date for any damage which might have been suffered by the second plaintiff was November/December 1998. Accordingly her joinder to the proceedings was within time and I reject para 32 of the Defence.

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Sections 52, 82 and 87 TPA 177 Section 52 TPA is deceptively simple in its terms. "52(1) A corporation shall not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive." 178 As indicated in the factual background I have concluded that no misleading or deceptive statements were made by the defendant. The question is whether the defendant by not referring to the 1994 Envirosciences report in its negotiations with the plaintiff in late 1994 "engaged in conduct that was misleading or deceptive or was likely to mislead or deceive". 179 Some useful statements of principle in relation to misleading conduct by silence are: "Obviously, it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive. However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed. ( Winterton Constructions Pty Limited v Hambros Australia Limited (1992) 39 FCR 97, Hill J); "Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case for if particular matters exist they will be disclosed". ( Demagogue Pty Limited v Ramensky (1992) 39 FCR 31, Black CJ); and "In my view, to inquire in such a case whether an independent "duty to disclose" has arisen is to digress from the application of the terms of section 52". ( Demagogue, Gummow J at 40). 180 On behalf of BAL it was submitted that when considering misleading conduct by silence a party seeking to rely upon s52 has to establish circumstances which give rise to an obligation to disclose relevant facts - (Henjo Investments Pty Limited & Ors v Collins Marrickville Pty Limited (1998) 39 FCR 546 at 557). In contrast, it was submitted on behalf of the plaintiffs that the proper test is whether there is "a reasonable expectation of disclosure". 181 Having read the cases to which I was referred by the parties it seems to me that the better view and that which is supported by more recent authority is that the proper test is whether there is "a reasonable expectation of disclosure". (Warner v Elders Rural Finance Limited (1993) 41 FCR 399 at 401-2, Franich v Swannell (1993) 10 WAR 459 at 474-5, Arbest Pty Limited v State Bank of NSW Limited (1996) ATPR 41-481, Fraser v NRMA Holdings Limited (1995) 55 FCR 452 at 465.) 182 In the circumstances of this case where the plaintiffs had made it known to BAL that they intended to use the leased site for a sensitive purpose, ie conducting a school, the plaintiffs would have had a reasonable expectation that had there been a risk of contamination they would have been told. Quite clearly some employees of FAC were aware of the contents of the 1994 Envirosciences report and yet the plaintiffs were not told about it. 183 In relation to the reasonable expectation test, the way in which Ms Williams approached her discussions with the second plaintiff and Mr Adada is important. Ms Williams endeavoured to comprehensively point out the disadvantages of the proposed lease site so as to enable the second plaintiff and Mr Adada to make an informed decision as to whether or not it was feasible to conduct a school on the site. In that context the plaintiffs would have had a reasonable expectation that if there had been any other problems associated with the site, such as a risk of contamination, they would have been told. The very candour of Ms Williams on other issues increased the misleading effect of the failure to mention the potential risk of contamination. 184 BAL raised another argument against the applicability of s52 TPA. It submitted that where it was alleged that s52 TPA had been infringed by conduct that involved either refusing or refraining from doing an act, before that conduct was actionable it must have been deliberately engaged in. (Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Limited (1986) 12 FCR 477 at 84, Costa Vraca Pty Limited v Berrigan Weed and Pest Control Pty Limited (1998) 154 ALR 714 at 722 and Alpine Hardwood (Aus) Pty Limited v Hardys Pty Limited (2001) FCA 1876 at [317] Fitzwood Pty Limited v Unique Goal Pty Limited (2001) 188 ALR 566 at 578.) BAL submitted that misleading conduct by silence only involved a breach of s52 TPA if it was deliberate. 185 It followed, so BAL argued, that a defendant could not be liable under s52 TPA for failing to disclose facts of which it was unaware. Even if such a broad proposition were correct (which I doubt) (Fraser v NRMA Holdings Limited (1995) FCR 452 at 467), it is clear that FAC was aware of the contents of the 1994 Envirosciences report even if Ms Williams and those dealing directly with the plaintiffs were not (para [86] hereof). 186 The approach adopted by Finkelstein J in Vraca Pty Limited arose from the definition of "conduct" which included "refusing to do an act". That phrase is in turn expressly defined as including "refraining (otherwise than inadvertently) from doing an act". On the basis of those definitions Finkelstein J held that in the circumstances of that case unintentional non-disclosure did not amount to a breach of s52. 187 As has been pointed out by Colin Lockhart in "The law of Misleading or Deceptive Conduct" 2nd ed Butterworths 2003 paras 5.2 and 5.3 this exclusionary construction of the definition of "conduct" sits uneasily with the principle that proof of intention is generally not required in order to establish that s52 has been contravened. As that author demonstrated, it was not unusual for the alleged breach of s52 to arise out of a course of conduct, including both positive conduct and non-disclosure. It was by no means clear how such conduct was to be assessed pursuant to the restrictive approach to the definition of "conduct". To require that conduct "must have been deliberately engaged in" in order for it to amount to a contravention of s52 required proof of intention wherever a breach was alleged by conduct that included non-disclosure with the effect that accompanying positive conduct was also subject to the intention requirement. 188 In an attempt to accommodate the two approaches the Federal Court in Johnson Tiles Pty Limited v Esso Australia Pty Limited (2000) FCA 1572 sought to restrict the intention requirement: "[66] There is a question whether, in non-disclosure cases, the facts which are not disclosed must be known to the party failing to make disclosure. As a general proposition it is not necessary in order to show misleading or deceptive conduct for the purposes of s 52, that the contravenor intended to mislead or deceive - Hornsby Building Information Centre Pty Limited v Sydney Building Information Centre Limited at 228. In the case of an alleged non-disclosure it is not necessary to show that the contravenor knew of the facts not disclosed. In Fraser v NRMA Holdings Limited (1995) 55 FCR 452 at 467 the Full Court said: "For the purposes of section 52, if by reason of what was said and what was left unsaid, the conduct of the corporation is misleading and deceptive or likely to mislead or deceive, a contravention would occur even if the corporation through its directors and officers did not have knowledge of the undisclosed facts which rendered the conduct in breach of s 52. A contravention of s 52 may occur without knowledge or fault on the part of the corporation, and notwithstanding the exercise of reasonable care: Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 142 CLR 191 at 197." That is not to say that knowledge may not be a relevant circumstance. For in a case where disclosure would reasonably be expected of a fact if that fact were known to the Corporation, failure to make disclosure may convey the implication that that fact is not known." (French J with whom Finkelstein and Beaumont JJ agreed.) 189 The conclusion of Mr Lockhart at para 5.3 seems to me to be reasonable and correct: "In view of these difficulties, it is suggested that the better view is that the "expanded meaning given by [the definition] to "conduct" should not distract attention from the fundamental issue" where breach by non-disclosure is in issue, namely, "whether in the particular circumstances the silence constitutes or is part of misleading or deceptive conduct". In accordance with that approach, the impugned actor's intention or knowledge will be a relevant, but not decisive consideration in the determination of whether a contravention by non-disclosure has occurred." 190 It seems to me that the qualification suggested by Merkel J in Johnson Tiles Pty Limited v Esso Australia Limited (1999) ATPR 41-696 at 42888 and [1999] FCA 569 at [2]-[4] is correct, namely that the requirement for conduct to be deliberately engaged in only applies where "silence alone" is relied upon as constituting the misleading or deceptive conduct. That is not the situation here. What is relied upon by the plaintiffs is the combination of the full disclosure by Ms Williams of disadvantages affecting the proposed lease site of which she was aware ie lack of services and noise combined with the absence of any mention of the risk of the site being contaminated. 191 I am satisfied that the plaintiffs have established that in the context of the conversations between Ms Williams and Mr Knox, on behalf of FAC, and the second plaintiff and Mr Adada, on behalf of the College, the failure to refer to the risk of contamination involved FAC engaging in conduct which was misleading or deceptive or was likely to mislead to deceive so as to constitute a breach of the norm of conduct required by s52 TPA. 192 For a breach of s52 TPA to be actionable under either ss 82 or 87 TPA reliance upon the misleading or deceptive conduct has to be established. Damage has to be suffered "by conduct of another person". In this case the second plaintiff says that had she been told about the risk of contamination, the College would not have entered the 1994 lease and would not have commenced operating a school on the site. I accept the honesty of that answer. 193 That does not end the matter. As was pointed out by McHugh J in Chappell v Hart (1998-99) 195 CLR 232 at 246 note [64]: "In practice, there is likely to be little difference in the application of the subjective and objective tests in medical issue cases. Human nature being what it is, most plaintiffs will genuinely believe that, if he or she had been given an option that would or might have avoided the injury, the option would have been taken. In determining the reliability of the plaintiff's evidence in jurisdictions where the subjective test operates, therefore, demeanour can play little part in accepting the plaintiff's evidence. It may be a ground for rejecting the plaintiff's evidence. But given that most plaintiffs will genuinely believe that they would have taken another option, if presented to them, the reliability of their evidence can only be determined by reference to objective factors, particularly the attitude and conduct of the plaintiff at or about the time when the breach of duty occurred." 194 In my opinion, the importance to the plaintiffs of obtaining Commonwealth capital grants so that permanent buildings could be constructed on whichever site the College eventually occupied, supports the accuracy of the second plaintiff's evidence that had she been aware of the risk of contamination, the College would not have entered into the lease and would not have commenced operating the school at the Bankstown Airport site. Integral to the construction of permanent buildings was the need for excavation which inevitably meant a disturbance of at least some contaminated soil. 195 I accept that had the second plaintiff been told about the potential for contamination at the airport site, the College would not have entered the lease and would not have commenced conducting a school at that site.

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(e) The evidence establishes that the plaintiffs relied upon what they were told by Ms Williams as to the factors affecting the proposed lease site. 198 The term which the plaintiffs sought to imply into the 1994 lease was that the leased premises were fit for the conduct of a school. They said that the premises were not fit for a school due to soil contamination and that as a result they were entitled to sue for damages for breach of contract. 199 In response, BAL submitted that the College could not bring itself within the definition of "consumer" in s4B(1)(b)(i) and 4B(2) TPA. The College would only be taken to be a consumer if the price of the services provided did not exceed $40,000. Because the services were provided otherwise than by way of purchase s4B(2)(d) applied. The affidavit of the valuer, Mr Norris, whose evidence was not contested, established that the value of occupying the Bankstown Airport site under the 1994 and 1998 leases was considerably in excess of $40,000. 200 Clearly the six week licence could not be valued at $40,000. Accordingly the term relied upon by the plaintiffs could be implied into the licence. That of itself does not assist the plaintiffs since it cannot be established that any breach of such a term in the six week licence produced a loss which would result in an entitlement to damages. I do not understand the plaintiffs to be seeking any damages in relation to the licence per se. 201 The plaintiffs sought to rely upon the presence of the implied term in the licence in this way. They referred specifically to clause 5 of the licence. The plaintiffs submitted that the effect of clause 5 was to provide that the terms of the 1994 lease and of the licence were the same. If the term could be implied into the licence pursuant to s74(2) TPA, then by virtue of clause 5 of the licence that same term would also form part of the 1994 lease. 202 In order to resolve that argument it is necessary to examine clause 5 of the licence. "5. The tenant has a licence to use the Site from the occupation date until 1 January 1995 on the same terms as in the lease annexed to this deed, but without payment of rent or any other outgoing." 203 As I read clause 5 of the licence, it does not import into the 1994 lease its terms but rather imports into the licence the provisions of the 1994 lease. Accordingly clause 5 of the licence does not have the effect of importing into the lease any of the terms of the licence, implied or otherwise. The plaintiffs' argument based on clause 5 of the licence fails. 204 If that is so, it follows that the point taken by BAL that the College is not a "consumer" as defined by s4B TPA is made out for the purposes of the 1994 lease and the College's claim for breach of a term implied into the 1994 lease by s74(2) TPA fails. 205 As an alternative argument, BAL submitted that even if a term in the form sought to be relied upon by the College was implied into the 1994 lease, ie that the leased site was suitable for a school, that implied term had not been breached by the defendant. 206 On this issue BAL's argument was as follows. The 1994 lease was for seven years. The term sought to be implied into that lease by the College could only be a term which was effective for the term of the lease ie seven years. Such an implied term had not been breached in that a school had been conducted successfully on the site for seven years being the term of the lease. 207 In my opinion the alternative argument on behalf of BAL is also made out. Even if a term in the form sought to be relied upon by the College were to be implied into the 1994 lease it has not been established that such a term was breached by BAL and consequently the College is not entitled to damages for breach of contract.

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(e) The actual knowledge which FAC had as to the potential contamination of the site. 213 BAL denied the existence of such a duty. It said that such a duty was inconsistent with the terms of the 1994 lease. It submitted that the terms of the lease should govern the relationship between the College and the defendant, not a duty relationship such as envisaged by the tort of negligence. 214 BAL relied upon RW Miller & Co v Krupp (Australia) Pty Limited (1995) 11 BCL 74 at 150-52. By reference to what was said by Giles J in that case BAL submitted that the law of contract has not been assimilated to the law of tort by the imposition of a duty of care co-extensive with specific contractual obligations. In that case his Honour found that Krupp did not owe Miller a duty to take care in accordance with certain provisions of a building contract, or to avoid loss to Miller through failure to so comply. In essence BAL submitted that the courts have generally denied the existence of a duty of care if the parties have clearly considered, discussed and negotiated the terms of their arrangement which is embodied in a contract. 215 The RW Miller decision is readily distinguishable. There was a contract between commercial entities of equal bargaining strength. The way in which the contract had been constructed with the obligations of Krupp spelled out in detail, made that clear. The real point of distinction, however, was that his Honour found as a fact that Miller did not rely upon Krupp to take care in the design of the relevant piece of machinery. Although reliance as an indicator of negligence has fallen into some disfavour, it is in reality another aspect of the vulnerability test. 216 As part of that argument, BAL also submitted that consideration needed to be given to the landlord and tenant relationship between the College and FAC. The consequences of imposing a duty of care to award economic loss to one's tenant would have far reaching consequences. No longer would landlords be able to rely upon the provisions of their lease to set out the full extent of their obligations to a tenant. They would face unlimited liability for a tenant's economic losses incurred as a result of its use/occupation of the site. BAL submitted that such a duty of care did not exist in situations where the claim was by a tenant against the landlord for pure economic loss. 217 As a matter of principle, I can see no reason why in certain circumstances a duty of care cannot be found to exist as between a landlord and tenant where the consequences for breach of such a duty involve purely economic loss. Such a duty was found to exist in Northern Sandblasting Pty Limited v Harris (1996) 188 CLR 313. It is true that the case involved a claim for personal injuries, not economic loss. It is also true that its ratio is limited given the divergent reasons of the court. Nevertheless, I can see nothing in that decision which would limit the existence of such a duty only to claims involving personal injury. 218 Support for that proposition comes from Perre v Apand Pty Limited (1999) 198 CLR 180. In that case the High Court examined the traditional limits which had been placed on claims for purely economic loss (p192, para 5). In doing so the court made it clear that there was no "bright line rule" which prevented the recognition of a duty of care in cases where only economic loss was being claimed and that each case would depend upon its own particular facts (p193, paras 7-8). It should be noted that one of the classes of case where a claim for pure economic loss has been held to be available is negligent misstatement made to a person who to the knowledge of the maker of the statement relies upon the information provided. 219 The duty sought to be relied upon here is but a form of negligent misstatement. It is not the incorrectness of what was said which was relied upon but rather the absence of information which should have been provided which was relied upon to constitute the breach of duty. The novelty of the duty (if there be such) arises from the landlord and tenant context in which the duty is said to arise. 220 In Perre v Apand the court emphasised the vulnerability of the plaintiff. There the particular vulnerability arose from the plaintiff's reliance on actions of the defendant for its welfare and from its inability to protect itself from the defendant's conduct. (Perre paras 123-126, 216-217.) 221 Similar considerations are relevant here. Given the nature of the information which was not communicated to the plaintiffs, ie risk of contamination, there was nothing the plaintiffs could do to protect themselves. This was not something that reasonable inquiries would reveal. It was a circumstance in which the plaintiffs were entirely reliant upon FAC to disclose the true situation. 222 In my opinion that effectively deals with the "floodgates" argument raised by BAL. This is not the sort of factual situation which would normally arise in a commercial lease between a landlord and tenant. It is certainly not the sort of situation which arose in such cases as Leda Holdings Pty Limited v Oraka Pty Limited (1998) ATPR 41-610 and Eattens Pty Limited v JLW (NSW) Pty Limited (1998) ATPR 41-619 where tenants complained because information was not conveyed to them which might affect the profitability of their businesses. In this case the information which was withheld was fundamental to the proposed use of the premises by the plaintiffs and it was not something which the plaintiffs could have been expected to find out as a result of their own inquiries. 223 Put another way, FAC as landlord by virtue of its actual knowledge of potential contamination of the leased site was in a position of control so as to be able to determine the extent to which the College could exercise or enjoy its legal right as a tenant to conduct a school. 224 The statement of principle by McHugh J (Perre p202, para 42) is apposite: "In my view, where a person knows or ought to know that his or her acts or omissions may cause a loss or impairment of legal rights possessed, enjoyed or exercised by another, whether as an individual or as a member of a class, and that that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty of care on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss of impairment of those rights." 225 A similar observation was made by Giles J in R W Miller v Krupp: "… but it depends on a finding of proximity in the sense that word is used in relation to a duty of care in torts. The relationship created by the contract may in the particular circumstances be or be part of a relationship of proximity giving rise to a duty of care … whether there is a relationship of proximity requires examination of the particular circumstances." (p150) 226 Applying those principles to the facts, FAC ought to have known that its failure to advise the plaintiffs of the potential contamination in circumstances where it knew that the plaintiffs could not find out that information for themselves was such as to at the very least substantially impair the plaintiff's ability to conduct a school on the site. In those circumstances, the law should impose a duty on FAC to take reasonable steps to avoid that foreseeable risk of economic loss on the part of the plaintiffs resulting from that impairment. 227 Any economic loss suffered by the plaintiffs as a result of the failure by FAC to impart information about contamination was reasonably foreseeable by FAC. FAC was not legitimately protecting or pursuing its business interests in failing to disclose that information. It therefore accords with community standards and the goals of negligence law as an instrument of corrective justice to hold that FAC should have had the plaintiffs' interests in mind when it failed to provide that important information (Perre, p220, para 103). 228 The vulnerability of the plaintiffs is important in the context of the lease relationship upon which BAL relies. The following statements of principle are of assistance: "The Court has recognised that in certain circumstances concurrent duties in tort and contract can exist and that the law of contract and the law of negligence are informed by differing rationales. That difference supports a conclusion that the vulnerability of the plaintiff may often be justifiable, but not sufficient, reason for imposing a duty of care in cases of negligence resulting in pure economic loss where the plaintiff could not have protected itself in contract. One of the assumptions of the law of contract, for example, is that the parties can bargain to protect their interests. A plaintiff who is vulnerable - for whatever reason - cannot do this in any meaningful way. In its quest for corrective justice, the law of negligence may be able to fill the gap which the law of contract has left." ( Perre , McHugh J, para 123). "The Perres had no way of appreciating the existence of the risk to which they were exposed by the conduct of the Apand experiment and no avenue to protect themselves against that risk. They thus stood in quite a different position from that of the financier in Esanda Finance Corporation Limited v Peat Marwick Hungerfords which had the power to deal from a position of strength in ordering its commercial relationship with the party to whom it provided financial accommodation. Here, the relevant risk to the commercial interests of the appellants was in the exclusive control of Apand. Its measure of control was at least as great as that of the Shire in Pyrenees Shire Council v Day . … The characteristics of the present case to which I have referred combined, subject to what follows, to bring the Perres and Apand into such close and direct relations as to give rise to a duty of care owed by Apand for breach of which purely economic loss may be recovered." ( Perre, Gummow J, para 216-217.) 229 Accordingly, I find that FAC did owe a duty to the plaintiffs to exercise reasonable care to provide information which it possessed which was directly related to the use of the site as a school, ie the potential contamination of the site. That duty ran concurrently with, but independent of, any obligation which arose from the 1994 lease between the plaintiffs and the defendant. See also Armidale City Council v Alec Finlayson Pty Limited (1999) 104 LGERA 9. 230 The next argument by BAL relied upon the terms of the lease. BAL submitted that any claim in negligence had been excluded by the terms of the lease. 231 The specific submission was that clauses 5.2, 28.3 and 30.8 of the 1994 lease excluded any duty of care owed by the defendant to the College (see para [51]). 232 It is difficult to see how clause 5.2 can have that effect. In sub-clause (a) the College acknowledged that it had not relied upon any representation from FAC as to how the premises could be used. That is correct. There had been no express representation nor had any been relied upon. The complaint upon which the claim in negligence was based was a failure to disclose a particular fact about the site. 233 In relation to sub-clause (b) the College did make its own appraisal of the suitability of the premises for the operation of a school. The complaint on which the claim in negligence is based was that without the information concerning the possibility of contamination of the site, any such appraisal would be fundamentally flawed and of its nature inadequate. 234 In relation to sub-clause (c) the claim in negligence was not based upon any prohibition or restriction under requirements or orders of any authority or under any act or bylaw. It has no relevance to the claim. 235 Clause 5.2 of the 1994 lease does not exclude a duty of care owed by the defendant to the College. 236 Clause 28.3 raises similar issues to those in clause 5.2. To the extent that the College was able to make its own enquiries, it did so and to the extent that those enquiries were insufficient, no complaint is made. No reliance was placed by the College on any representation, warranty or undertaking by the FAC. The basis for the allegation of negligence was the failure by the FAC to communicate an essential fact relating to the occupation of the site by the College which would have informed any inquiries made by the College in relation to the site. Clause 28.3 does not exclude a duty of care owed by BAL to the College. 237 Clause 30.8 of the lease is more complex and raises different issues. Clause 30 is headed "Tenant's Works". Clause 30 in its parts is directed at works performed on the leased site by the tenant and is intended to exclude FAC from any liability arising from those works. Very detailed provisions in relation to the works are set out. Clause 30.8 needs to be read in the context of clause 30 as a whole. 238 Sub-clauses 30.8(a), (b) and (c) do not relate to the claim in negligence but to problems of design and construction. Similarly, the acknowledgement that any information made available by FAC forms no part of the lease is also irrelevant to that consideration. 239 The real question is whether the words "the tenant acknowledges that the Corporation is not responsible in any way for the accuracy or adequacy for the tenant's purposes of any information made available by the Corporation or its servants or agents" covers the claim in negligence brought by the College. My first observation is that the claim in negligence is not made concerning information actually provided, but rather the failure to provide information. Can the failure to provide information be so characterised as to come within the exclusion? There is another qualification. The particular information is described "as information furnished for the convenience of the tenant". Does that qualification limit the ambit of the word "information" as used? 240 There is a real distinction between the actual provision of information which is inaccurate or only partly accurate, and the failure to provide any information at all on a subject. If some information as to contamination, or lack of contamination of the site, no matter how vague or imprecise, had been provided, the exclusion may well have been activated. The failure to make any reference at all to the subject leads me to conclude that the acknowledgement is ineffective to exclude negligence of the kind sought to be relied upon. 241 The further characterisation "as information furnished for the convenience of the tenant" also operates to qualify the concept of "information" which is referred to. Whether or not the proposed lease site carried a risk of contamination was more than merely "information furnished for the convenience of the tenant". It was fundamental to the occupation by the tenant. 242 The 1994 lease was very much the FAC's document and to the extent that any ambiguity did exist in clause 30.8, the contra proferentem rule would apply. To the extent that there is ambiguity in the clause (as there seems to be) it should be read against the FAC and therefore BAL. 243 The final consideration in relation to clause 30.8 is the meaning to be given to the statement the "Corporation assumes no duties of care concerning any of the matters raised in this clause". That sentence takes the matter no further than that which has already been provided for in the clause. This is because of the qualification "any of the matters raised in this clause". It cannot apply to information generally but only to the information made available "as information furnished for the convenience of the tenant" and can only apply to information actually made available. It does not apply to subjects to which no reference was made, such as contamination of the proposed lease site. 244 The conclusion I have reached is that clause 30.8 of the 1994 lease does not operate to exclude a duty of care owed by BAL to the College. In that regard Darlington Futures Limited v Delco Aust Pty Limited (1986) 161 CLR 500 at 510 is of assistance: "These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity." 245 The plaintiffs relied on clause 7.2 of the 1994 lease as implicitly contemplating that claims in negligence could be made against the FAC and therefore BAL despite other provisions in the lease. That is so where one is dealing with "damage to anything, loss of anything or injury to any person in or near the airport". I doubt whether that clause is sufficiently broad to cover the sort of damage claimed by the plaintiffs. Its recognition of some claims in negligence against the Corporation or any employee or agent of the Corporation is, however, useful when construing the other clauses on which BAL sought to rely, in particular clause 30.8 and supports the interpretation which I have given to it. 246 The exclusion clauses sought to be relied upon by BAL would only operate against a party to the lease. The second plaintiff was not a party to the 1994 lease and even if the clauses upon which BAL sought to rely were effective to prevent a claim in negligence by the College, they would not be effective to prevent the second plaintiff succeeding under that head of liability. 247 It follows from the above that not only did the FAC owe a duty of care to the plaintiffs in the terms alleged but it breached that duty when it failed to provide any information concerning the risk of contamination of the leased site before the 1994 lease was entered into by the College. Although there is an argument about whether any damage was suffered by the College, it seems beyond argument that at the very least the College suffered damage by losing the benefit of whatever capital outlay and improvements it had made in relation to the site, the cost of restoring the leased site and the cost of moving to a new site. To the extent that such damage was suffered, the tort of negligence is complete.

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(iii) The assessed costs of $93,643.42 in Equity proceedings No 1030/2002. 249 To the extent that the misrepresentation claim was based upon breach of contract or common law misrepresentation, it fails for the reasons I have set out in my analysis of why BAL cannot rely upon the exclusions in the 1994 lease. There were no misrepresentations by either side so as to activate those clauses. It is apparent that to the extent it was able the College carried out inquiries to ascertain the suitability of the site for a school. Those inquiries did not include an investigation as to contamination because the risk of such a problem was not communicated to the College or anyone on its behalf in negotiations leading up to the execution of the lease. 250 To the extent that the defendant sought to rely upon a breach of s52 TPA on the part of the College, that claim also fails. There was no false and misleading information provided to FAC by the College. It did seek to satisfy itself as to the suitability of the proposed site for a school based on the limited information available to it. There was no evidence of any reliance, actual or inferred, by the FAC on the conduct of the College. Finally, to the extent that the College is entitled to damages from BAL, there is no evidence to establish that there was any misleading or deceptive conduct on the part of the College which caused that liability to arise in the defendant. 251 In accordance with the 1994 and 1998 leases, there was an obligation on the College to yield up the leased site in good and tenantable repair. There is unchallenged evidence that this was not done. The evidence of Mr Judge was that the costs of restoring the leased site would be somewhere between $197,270 and $345,800 depending upon whether the material on the leased site is found to be industrial waste and therefore more expensive to remove. 252 It was, however, argued on behalf of the plaintiffs that these costs represented damages suffered by the College as a direct result of BAL's conduct and that any entitlement to damages of this kind by BAL was to be set off against the plaintiffs' overall entitlement. I will deal with this question under the heading of damages. 253 In accordance with the terms of settlement between the College and BAL by which Equity proceeding 1030/2002 were resolved, the College was obliged to pay BAL's costs of those proceedings. These have been assessed at $93,643.42 (exhibit 32). This figure is not disputed by the plaintiffs. That figure will be deducted from any damages which are awarded to the College.

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Damages 254 The plaintiffs have succeeded in their claims pursuant to s52 TPA and in negligence. The damages recoverable are the same under either head of liability. 255 The plaintiffs' claim in damages is set out in the report of Mr Carter dated 30 June 2004 (exhibit R). Mr Carter was an accountant employed by Price Waterhouse Coopers. His calculation of damages was further refined during the course of the trial in reports dated 1 November and 4 November 2004 (exhibits S and T). Mr Carter had prepared an earlier report dated 3 April 2002 (exhibit 2). In that first report (exhibit 2) Mr Carter had assumed that government funding and donations to the school would be largely absorbed in the running costs of the school and consequently there would be no loss of profits. He calculated the College's entitlement to damages at $5,163,000 made up of the cost to establish a new school - $3,500,000 plus the cost to move from the existing site - $1,663,000. Those costs were estimates since at the date of the report the College had not yet moved. The unreality of these figures became obvious in that the actual amount claimed by the College under this head of damage was $496,000. 256 The reason for the change in approach in exhibit R was that the second plaintiff had explained to Mr Carter that provided Commonwealth funding was applied entirely for the purposes of the school, State funding (which was approximately half Commonwealth funding) and school fees could be used to generate a profit. This advice was confirmed by Mr Clarke as theoretically correct (T.974.36-47). In practice Mr Clarke was unaware of that having occurred in any school with which he was associated (T.972.50-56, T.973.52-58, T.974.1-34). 257 Before dealing with the way in which the College's claim for damages was framed, it is necessary to say something about the government funding which was available to independent schools such as the College. This evidence was provided by Mr Whitfield, who was the director/government liaison for the Association of Independent Schools of NSW and by Mr Clarke, who was the corporate secretary of the Sydney Anglican Schools' Corporation, both in their affidavits and in their oral evidence. 258 For a school to be eligible for both Commonwealth and State recurrent per capita funding, a school must be registered under the Education Act and accredited by the NSW Board of Studies. In February of the year for which funding is sought, the School is required to lodge a declaration as to actual enrolled student numbers by academic level. Commonwealth recurrent funding is granted by the Commonwealth based on the number of students, their academic level and the school's funding category. Until 2001 each school was given a categorisation based on location and financial status. Since 2001 the categorisation is determined by the socio-economic status of the residential location of students attending the school. Because the students attending the College were generally from low socio-economic areas, the College attracted the highest level of recurrent funding. 259 Recurrent funding from the State followed the same approach as the Commonwealth, but was approximately half the amount contributed by the Commonwealth. Commonwealth funding and State funding according to Mr Clarke would only meet a percentage of the operating costs of a school. "The Commonwealth funding and the State funding is only a percentage of the costs of operating the school. It is never a hundred percent or more. The Commonwealth could be fifty three, fifty six percent of the cost and the State may well be twenty three percent so there is no - the funding sources from the Commonwealth and the State combined will never fully cover the cost of operating the school. That is why I say there is no surplus available." (T.973.56-58, T.974.1-5). 260 Independent schools, such as the College, were also entitled to capital grants from the Commonwealth provided they satisfied certain criteria. The first criterion was educational need, ie that the school's facilities required capital expenditure. The next criterion was the financial need and viability of the school. The categorisation of a school so as to determine its level of capital funding was the same as for recurrent funding, ie was based on the socio-economic status and residential location of the students. The final criterion was that a school needed to own its land or have a lease for twenty years or more before a capital grant would be made. 261 If a capital grant were made to a school, it was necessary for the school to also raise money of its own. With specific reference to the College, the capital grant of $500,000 which was under consideration in 1998 would have required the College to contribute $860,000 for the project (T.428.28-58). The actual receipt of the funds comprising the capital grant would not occur in the year in which the grant was allocated but only when the project was underway. There was often a lapse of up to two years between the date when the grant was made and when it was received. The Commonwealth guidelines for capital grants are set out in exhibit 1. 262 Against that background, the plaintiffs make this claim for damages. They submit that had the College not entered into the 1994 lease it would have gained access to land of similar size and location shortly thereafter and would have conducted a school at that site. The submission is that the College has lost profits, which it would have earned at that alternative site, both for the past (since 1998) and for the future. Because at that alternate site a long-term lease would have been obtained, the College has also lost capital grants. Although the initial cost of occupation of the airport site and of the alternate site cancel each other out, the College has also suffered loss in having to move and set up at Strathfield, has lost the benefit of its capital outlay at the airport site and has incurred the cost of making good the airport site. The loss of profits is put in a range between $10,860,000 - $24,828,000, the re-establishment costs in a range between $753,000 - $1,453,000 and the loss of capital grants at $1,065,000. 263 There is also in the particulars and in exhibit R a claim for the College's legal costs in the Equity proceedings referred to in BAL's cross-claim. This claim was recognised by the plaintiffs as unsustainable and although it was not formally abandoned, no submissions were made in relation to it. As indicated, the College's position in those Equity proceedings was hopeless and no basis has been put forward for how the College could be entitled to its legal costs of those unsuccessful proceedings. I disallow that claim.

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Alternate site 264 Fundamental to the loss of profits and loss of capital grants claims is the assumption that had the College not entered into the 1994 lease it would have gained access to a similar piece of land in the Western Sydney region so as to develop a school in accordance with the projected student numbers set out in exhibit R. The source of those projected student numbers was the second plaintiff. As an alternative scenario in exhibit R, the plaintiffs accept that the acquisition of such a property may have been delayed by as much as two years, ie 1996. In submissions the plaintiffs accepted that if I did not find on the probabilities that it was more likely than not that the College would have acquired such a piece of land, I should approach the question on a "loss of a chance" basis. 265 As indicated in the factual background, the second plaintiff and to a lesser extent Mr Adada, had since 1990 been looking for a suitable site to set up a school but had been unsuccessful (paras [20]-[23]). The correspondence with Ms Williams (para [25]) makes that clear. 266 Even after the 1994 lease was entered into by the College, the second plaintiff was still looking for an alternate site for the College in the Western Sydney region. Tab 53 of exhibit 15 is a letter from Paul Lynch MP to the Minister for Land and Water Conservation seeking from the government access to land in the Liverpool/Campbelltown area for the College. The suggested size of the land was 10-15 acres and purchase or long-term lease was required. The letter is dated 27 October 1998 (ie before the plaintiffs received any notification of contamination) and is consistent with the evidence of the second plaintiff to the effect that even after the College entered into the 1994 lease, enquiries were still being made for a more suitable site. (See also exhibit 15, tabs 54 and 55.) 267 Those inquiries as to an alternative site had been unsuccessful as of late 1998. One suspects that the inquiries took on a new urgency after receipt by the plaintiffs of the 1994 Envirosciences report and the 1998 JET report. Nevertheless, despite that impetus the College was equally unsuccessful between the end of 1998 and the end of 2002 in finding such a site. 268 The College newsletters between those dates indicate a number of unsuccessful attempts to obtain such alternate sites. The submission at tab 60 of exhibit 15 was made to the New South Wales Government in 2001. It was unsuccessful. The College was not only competing with other private schools, but also with other Muslim schools. (Para [136] and exhibit 15, tab 55.) Until the end of 2002 the College was unsuccessful in finding any suitable alternate site on which to re-establish itself (para [143]). 269 The evidence of Mr Lyons, a registered valuer, both in his affidavit and orally, demonstrated how difficult it was in the years 1994-2002 to acquire land of suitable size and location to enable a school to be conducted on it. At T.934.39-48: "Q. From that have you developed an opinion as to how common it is for land in an area such as the Liverpool area generally to be offered by way of long lease? A. My opinion would be that it would be fairly rare and that would not have changed much before 1994 or after 1994. I think it's generally, leasehold land is predominantly in my experience offered by Government departments who philosophically don't want to lose the freehold so they will offer leases." 270 The financial position of the College in its first few years, and even after it commenced receiving recurrent Commonwealth funding, was never such as to be able to purchase freehold land in the Liverpool/Campbelltown area. Its only option was a long-term lease. It is apparent from the factual background that the College was significantly under funded and that its only source of capital were loans from the second plaintiff, Mr Adada and from parents. Between 1994 and the present time the College was limping from one financial crisis to another. I find that the only option for the College in relation to an alternate site was a long-term lease and that purchase of such a site would not have been possible. 271 The attempts by the second plaintiff in her lengthier affidavit of 27 September 2004 (paras 49-54) and orally, to identify an alternate site for the school were unsuccessful. She was comprehensively and successfully cross-examined on that issue. It is remarkable that the plaintiffs have not been able to identify one single, alternate, suitable site which was available or would have been available to the College between 1994 and the end of 2002. If the above were the only evidence on the issue I would find that this fundamental assumption behind the plaintiffs' claim in damages had not been made out. 272 What cannot be ignored is that at the end of 2002 the College was successful in gaining access to the former theological college site at Strathfield and did in April of 2003 enter into a long-term lease in relation to that site. That site is considerably smaller than the airport site and many of the other sites which the College was unsuccessful in acquiring. Nevertheless, it cannot be said that the plaintiffs had no chance of obtaining an alternate site had they not proceeded with the 1994 lease. 273 What has not been established and I so find, is that had the College not proceeded with the 1994 lease, it would have found a comparable site both as to size and potential elsewhere in the Western Sydney area. I am, however, satisfied that there was a chance that the College would have found a site, but that such site would have been smaller and less favourable than the 1994 leased site. I make that finding on the basis that when the College was forced to find a site at the end of 2002, it was able to do so. The loss which the College has suffered is the opportunity to occupy and develop such a site. I do not quantify that loss of opportunity at greater than fifty percent. 274 I consider such an approach to be permissible when dealing with past hypothetical events which have not occurred and which now can no longer occur. (Malec v JC Hutton Pty Limited (1990) 169 CLR 638, Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Fightvision Pty Limited v Onisforou (1999) 47 NSWLR 473 at paras 138-144.)

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Loss of profits (past) 275 This is dealt with in exhibit R at para 59 - 106. The calculations there set out are based upon a number of assumptions, one of which I have already rejected, ie that had the College not entered into the 1994 lease it would have obtained an alternate site of similar size in a similar location. 276 Another important assumption, upon which the calculations are based, is that the projection of student numbers made by the second plaintiff was accurate and reasonable and that the failure by the College to achieve those numbers between 1999 and the present time is causally related to the contamination issue. The only evidence that the projected student numbers were "reasonable" is that of Mr Whitfield in the context of the 1998 application for capital funding by the College. In that regard Mr Whitfield said that the figures seemed reasonable and there was no reason for the committee to inquire further. That evidence in that context does not provide any endorsement for the accuracy of the projected figures. 277 As was demonstrated by Mr Clarke and the defendant's accountant, Mr Mentzalis, an examination of the projected student numbers even before the notification of the risk of contamination, shows that they were far from accurate. The 1998 projections were for 250 high school students when in fact the actual number achieved was 196. In 1999 the projection was for 275 high school students, when the actual number achieved was 189. Since these projections were being made in respect of one year only into the future, the lack of precision says much about the unreliability of the projections. I find that the projected student numbers relied upon by Mr Carter in exhibit R were speculative at best and had no basis in fact. 278 The parents of the students attending the school were not told about the contamination problem until February 2002. Accordingly there is no evidence that the risk of contamination had any effect on actual student numbers for the years 1999, 2000 and 2001. The plaintiffs seek to answer that proposition by arguing that it was the lack of permanent buildings which contributed to student numbers failing to achieve the projected levels and that this was to be attributed (albeit indirectly) to the contamination issue. 279 There is no persuasive evidence to support that submission. At its highest the evidence from the second plaintiff was that parents were concerned about the absence of permanent buildings. More importantly, no parent was called to give evidence to that effect. There was, however, compelling evidence that there were other factors which may well have led to student numbers not achieving the projections made by the second plaintiff - the quality of the teaching (inexperienced teachers), the quality of the facilities, the continuing financial difficulties of the College, the inexperience of those managing the College and the ill will of some of the parents and others within the Muslim community (para [135]). 280 An analysis of the actual student numbers up to and including the year 2001 makes it clear that the College never achieved the projections made on its behalf by the second plaintiff and relied upon by Mr Carter in exhibit R. I find that this failure to achieve projected student numbers had nothing to do with the risk of contamination, but was due to a combination of the unreliability of the projections themselves and the other factors to which I have referred. It follows that any claim for loss of profits based on the difference between actual student numbers and projected student numbers for that period fails. 281 The claim for past loss of profits fails for another reason. Fundamental to the claim is that the College would have been operating from an alternate site in a similar area of a similar size. I have rejected that assumption and have found that at most such an alternate site would have been smaller. A smaller site (such as at Strathfield) would have had a much lower capacity for student numbers. On this basis also the claim for past loss of profits, based on the difference between projected numbers and actual numbers of students, fails. 282 Another assumption underlying the claim for loss of profits is that the more students who attended the College, the greater the potential profit. That proposition is supported by the calculations in exhibit R. Those calculations are based on per capita government funding (both State and Federal) from which estimated costs are deducted. If the case were entirely theoretical, those calculations might be persuasive. What I find more persuasive is the actual performance of the College between 1994 and the end of 2001. It is apparent from the financial performance of the College that significant increases in the number of students did not necessarily produce a profit. On the contrary, on occasions it produced a considerable loss. 283 Exhibit 43, which was prepared by the defendant's accountant Mr Mentzalis, provides a clear indication of this pattern. What Mr Mentzalis has done in the top half of that analysis is to add back into the profit/loss of the College for the years 1998-2002, the legal fees which the College had paid. When that is done the following emerges. 1998 - 550 students - $43,000 profit. 1999 - 578 students - $11,000 loss. 2000 - 682 students - $117,000 profit. 2001 - 717 students - $137,000 loss. 2002 - 571 students - $25,000 loss. 284 There was no clear evidence as to precisely how the costs of the College were made up. Attempts to elicit this evidence resulted in more theoretical calculations without any reference to the actual figures, and I rejected that evidence (second plaintiff's affidavit, 8 November, 2004). I suspect that the College was not being efficiently managed. That would not be surprising given the lack of experience on the part of the second plaintiff and Mr Adada, who appear to have been solely responsible for not only the running of the College as an educational institution, but also for its financial affairs. The actual financial results, as distinct from the theoretical calculations in exhibit R, make it clear that for the College an increase in student numbers did not necessarily mean an increase in profit. That assumption in exhibit R is not made out. 285 Before leaving the claim for loss of profits for the past, I need to deal with the years 2002 and 2003. 2002 was the first year in which the parents were told about the possibility of contamination. It can be inferred from the reduction in student numbers of 146, that this may have had some effect on student numbers, but that is not clear. No evidence was adduced from any parent that the communication of this information had that effect. What may have been of equal importance was that it was known the College was going to move at the end of the year. That latter consideration was directly related to the contamination issue in that the need to move only arose because of the College's decision not to remain on what it considered to be a contaminated site. Accordingly, it seems likely that the reduction in student numbers to 571 was primarily due to the contamination issue. 286 Even with a reduction in student numbers in the year 2002, the actual loss by the College in that year was significantly less than the previous year when student numbers were larger by 146. Accordingly, I am not satisfied that the reduction in student numbers in 2002 affected the profitability of the College in that year, nor am I satisfied that any loss due to contamination or the risk of contamination was incurred by the College in that year. 287 The year 2003 was complicated by relocation costs. The number of students for that year was even lower - 307. The financial loss by the College was very significant - $1,117,000 if one included the relocation costs. The need to move the school and set up at a new location can be inferred to be the major reason for these low student numbers. 288 It is difficult to identify any reason for such a large financial loss other than the further reduction in student numbers. Even allowing that in earlier years there was no direct ratio between the number of students and the profitability of the College, this very significant reduction (264) in student numbers in 2003 must have contributed to the overall increase in the College's loss for that year. 289 Unfortunately one cannot calculate that loss with any degree of accuracy since the approach which I have followed in relation to the College is different to the assumptions relied upon by Mr Carter in exhibit R. The loss of opportunity which I have found is the opportunity to occupy a smaller and less suitable site similar to that which is now occupied at Strathfield. There seems to be no argument between the parties that the maximum number of students which can be accommodated at Strathfield is 664 (exhibit R, para 70). Even so my quantification of the value of that lost opportunity is only fifty percent. 290 Doing the best I can, on the limited material available to me, it seems that the additional loss suffered by the College in 2003 due to loss of student numbers and overall disruption caused by the move would be in the order of $500,000. Applying as I do a fifty percent discount to that figure, I assess an actual loss suffered by the College for the year 2003 at $250,000. 291 I do not have any figures relating to the operation of the College for 2004. The only information I have is that 354 students were enrolled in the College in that year. I propose to include any loss in relation to 2004 in my calculation of loss of profit for the future. 292 Accordingly, I find that in relation to the past the only loss suffered by the College is $250,000 in respect of the year 2003. I reject the claim for any further loss of profit for the past.

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Loss of profit (future) 293 In relation to future loss of profits, a series of somewhat complicated scenarios were proposed in exhibit R and in exhibit T. These scenarios all depended upon assumptions which I have rejected - that a similar alternate site would have been obtained, that the projection of student numbers was accurate, that any reduction below those projections was due to the contamination issue and that a reduction in student numbers would automatically involve a reduction in profit by the College. 294 Using those assumptions, exhibit R calculated future loss of profits by reference to the difference between 664 students (being the maximum which could be accommodated at Strathfield) and what would have been accommodated on the hypothetical alternate site. As an alternative scenario, exhibit R used the same approach but reduced the period of loss by assuming that by 2006 a further site would have been obtained by the College in addition to Strathfield on which it could expand so as to build up the numbers of students to the totals originally envisaged for the hypothetical alternate site. 295 On the findings which I have made, that approach is invalidated. That which was lost was the opportunity to occupy a smaller site similar to Strathfield from 1994 or some date thereafter. That does not mean that no loss has been suffered for the future. 296 If, as I have found, there was an actual loss suffered by the College during 2003 by the further reduction in student numbers to 307, one could anticipate a similar loss for the year 2004 when student numbers were only 354 and that some further losses would be suffered in the future until student numbers built up to the maximum which that site can hold - 664. By reference to the opportunity which I have found to have been lost, student numbers of 664 would have been achieved by the end of 2001, or at least 2002, so that what has been lost by the College for the future is any financial loss which it might incur between the present time and the future date when the number of students at the Strathfield site builds up to its maximum. 297 Exhibit R provides little assistance as to whether a loss has been suffered and if so its value. In para 70 of exhibit R, Mr Carter was asked to assume that Strathfield would reach its maximum numbers by 2009. No evidence was led to substantiate that assumption. Looking at the actual history of the College between 1997 and 2000, the numbers increased from 387 to 682, ie that increase occurred over a period of three years. Since the College has now been operating for ten years, I see no reason why a similar increase would not occur within three years at Strathfield, particularly since as at the end of 1997 the College had only been operating for three years. 298 The other difficulty is that to which I have already adverted, ie from the actual performance of the College, particularly between 1998 and 2002, an increase in student numbers does not necessarily mean an increase in profitability. 299 Despite the difficulty in calculation, if I am persuaded that a real loss has been suffered I am obliged by authority (State of New South Wales v Moss (2000) 54 NSWLR 536 at paras 66-87) to do the best I can to calculate the value of that loss. I am persuaded that the significant reduction in student numbers from 571 in 2002 to 354 in 2004 occurred as a direct result of the contamination issue and consequent move of the College. It also seems to me that as with the year 2003, such a significant reduction in student numbers would be productive of a loss of profitability, at least until those numbers built up to the 664 maximum capacity. On the basis of the past history of the school, I find that is likely to occur by the year 2007. Doing the best I can, I assess the future loss of profitability at $600,000. Applying the fifty percent discount for the loss of opportunity, I find a loss of future profit in favour of the College of $300,000.

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1997 $ 400,000 1998 $ 400,000 1999 $ 300,000 2000 $ 300,000 2001 $ 200,000 2002 $ 200,000 $1,800,000 301 Mr Carter was also asked to assume that in the future capital grants would only be fifty percent of what they were in the past. On that basis Mr Carter calculated a further loss to the College because future capital grants would be fifty percent less than in the past. 302 There were other impediments to the College receiving capital grants from the Commonwealth for the past. In addition to a long term right of occupation, the College needed to have a business plan and management structure which was satisfactory to the committee which Mr Whitfield chaired. No such financial plan was ever prepared and none was tendered. The management structure of the College was a difficulty for the funding committee in that the control of the College was entirely in the hands of the second plaintiff and Mr Adada (para [61]). The committee required there to be a division between those actually teaching at the school and those controlling the school, and for the controlling board of the school to have where possible a broad level of skills and representation. (T.400.2-45) 303 That latter requirement may have presented a major difficulty for the second plaintiff and Mr Adada, given their unfortunate experience with the first school where they had been removed from the board. As Mr Adada freely admitted, they so arranged the voting structure of the College so that this could not happen again. There was no evidence by the second plaintiff or Mr Adada as to whether they would have been prepared to change the management structure of the College and if so, to what extent in order to obtain capital grants. It is of some significance that the controlling structure of the College was never changed between its incorporation in late 1994 and the date of the trial. 304 A further impediment was the requirement that the College raise funds of its own. The illustration given by Mr Whitfield is revealing - for a capital grant of $500,000 the College would have to raise $860,000. The only evidence of the College's capacity to raise money by way of loan or otherwise, was a loan approval document from the Commonwealth Bank dated 6 October 1998 for $500,000 (exhibit M). There was no evidence of the College's capacity to meet the interest and repayment obligations in relation to such a loan. The evidence of the second plaintiff was that the shortfall of $360,000 would be met by unpaid voluntary work by parents of the students. In the context of a $1.36 million stage of a school building program, I find the suggestion that $360,000 would be made up of such unpaid voluntary work to be unbelievable. I doubt the College's capacity at any time in the past to raise sufficient funds on its own behalf to meet its financial obligation where a capital grant was made to it. If the College was successful in obtaining such a loan, I doubt that it could have serviced that loan. 305 The final impediment is of a similar kind. One of the matters which the Grant Committee took into account was the financial viability of the College (paras [61-7]). The reason why a capital grant had not been made to the College after its move to the present Strathfield premises was because of doubts about its financial viability (T.408.1-20). Given the various financial crises experienced by the College between 1995 and 2002, there has to be a real question mark about its financial viability from the point of view of a capital grant being made to it. 306 The assumption which Mr Carter was asked to make (exhibit R, para 120) that six capital grants of varying amounts would be made in consecutive years is not borne out by the evidence. Messrs Whitfield and Clarke agreed that depending upon need, more than one capital grant could be made over a period of six years. The reason why such grants were not made in consecutive years was that building work had to take place and to some extent be completed in relation to the particular phase for which the grant was made, before an application for another grant would be considered by the committee. It was also the evidence that a capital grant approved for one year may not be actually paid until two or three years later when the building works were underway (T.406.2-9). 307 Because the first application for a capital grant was made for the year 1998, I have concluded that at most the College would have been eligible for two grants between 1998 and the end of 2002. I reject the assumption by Mr Carter of six grants. 308 On the positive side, Mr Whitfield indicated that subject to the matters to which I have referred being satisfied, it had been decided by the committee to allocate a capital grant of $500,000 to the College in 1998. In line with my previous findings as to loss of opportunity, I am satisfied that by entering the 1994 lease, not only did the College lose the opportunity to establish the school on an alternate site such as the Strathfield site (the chance which I have quantified at fifty percent) it also lost the opportunity of successfully applying for two Commonwealth grants for such a site between 1997 and 2002. Because of the impediments to which I have referred, I quantify that loss of a chance at thirty five percent. 309 On the basis of those findings, I assess the loss of capital grants as follows. I find that the College lost the opportunity of obtaining two capital grants of $500,000 each. I have quantified the prospect of that opportunity eventuating at thirty five percent, which reduces the figure to $350,000. That figure, however, is based on another hypothetical lost opportunity, ie that an alternate site would have been obtained in relation to which the capital grant would be applied. I have quantified that likelihood at fifty percent. That further reduces the loss of the College in relation to capital grants to $175,000. I find that is the loss which the College has suffered in relation to capital grants for the past. 310 In relation to the future the evidence of both Messrs Whitfield and Clarke was that with the passage of time and the increase in the number of independent schools applying for capital grants, less money is being allocated to each successful applicant school. I find that to be a function of government policy and the current economic climate, and not to be causally related to any conduct on the part of BAL. I reject any claim for loss of capital grants by the College for the future.

[83]

Relocation costs 311 The estimate of relocation costs given by Mr Carter in exhibit R can be largely ignored. By affidavit dated 9 November 2004 Mr Adada sought to establish the actual costs incurred by the College in relocating to the Strathfield premises. One of the matters raised by Mr Carter, which is not otherwise dealt with, is a claim of $58,000 for staff redundancies. This is an estimate only. The only evidence to support that figure comes from the Administrator's report, exhibit 44, section 2 "Summary of Position", which indicates that there was approximately $862,183 by way of employee entitlements outstanding. There was no evidence as to how many employees were made redundant, although the reduction in student numbers between the end of 2001 and the beginning of 2003 from 717 to 307 must have involved significant redundancy payments. It seems to me that the amount of $58,000, which is the only calculation with which I have been provided, favours BAL. In those circumstances I allow that amount. 312 The affidavit of Mr Adada was challenged in a number of ways. The first attack related to the very basis of the claim. BAL submitted that the College had entered into a seven year lease and that is what it got. Accordingly, it was not entitled to any relocation expenses. 313 With due respect to BAL's submissions that puts the matter at too simplistic a level. The College entered into the 1994 lease with the hope of obtaining a longer lease. When that hope eventuated, the nature of the contamination affecting part of the leased site was such that it became impossible in a practical sense to develop a school on the site with permanent buildings so that the College had no alternative but to move. Accordingly, the relocation costs were foreseeable and causally related to the breach. 314 The total amount claimed by Mr Adada in his affidavit was $446,000. The affidavit was made up of a number of components, each of which has been challenged by BAL. In relation to the expenditure of time by Mr Adada himself, and the accounts rendered under his business name - Eco Space Design - BAL submits that these are no more than self-serving documents which are inconsistent with his previous taxation returns. It submits that there is no way of assessing what work Mr Adada would normally have performed for the College and what additional work was directly associated with the relocation. Mr Adada was extensively cross-examined on the material in his affidavit. 315 Despite the scepticism of BAL, it is obvious from other material that the premises at Strathfield were in a rundown state and did require substantial remedial work which had to be carried out before the education authorities would allow the school to operate from that site (exhibits 49 and 50). It was also a term of the twenty-five year lease obtained by the College in relation to that site that restoration work would be carried out by it (para [145]). The matters referred to by Mr Adada in paras 8, 9 and 10 of his affidavit accord with that situation. 316 Nevertheless, the criticism made by BAL has some force. Even the form of the affidavit (para 22) makes it clear that the figures are at best estimates and are based to some extent on a reconstruction by Mr Adada. In relation to what has been described as "management fees" (tab 4) I propose to allow $45,000. 317 In relation to tab 5, I also agree to some extent with the criticism levelled by BAL. It is impossible from the material in tab 5 to determine what payments would normally have been made to Mr Ayad and what payments were specific to the relocation. I propose to allow $15,000 in relation to tab 5. 318 In respect of tabs 6, 7 and 8 those figures do seem reasonable and I propose to allow them in full. I follow the same approach with the material behind tab 9, even though some of those entries are not supported by invoices. 319 A significant part of the relocation costs ($193,070.99) is related to the written down value of the capital improvements made to the airport site as of the date of the relocation. BAL's accountant, Mr Mentzalis, was asked how that amount should be treated and whether the loss of the value of those improvements was a proper relocation cost. He said that it was (T.1087.13-24). I found his explanation in that regard to be reasonable and I accept that amount as part of the relocation cost. 320 In relation to what is described as "repairs and maintenance of Brundah and Leigh Hall" (tabs 11 and 12) Mr Mentzalis made a distinction between immediate repairs which were necessary to enable the buildings to be used as a school and expenditure in the nature of a capital outlay, the benefit of which would be enjoyed over the next five to ten years. At least in the case of Brundah, some of the expenditure appears to be of a latter kind (T.1087.26-54). It is not possible, however, on the material available to me to differentiate between the two types of expenditure. Doing the best I can, I propose to deduct $15,000 from the figure claimed as properly attributable to long-term capital outlay, but otherwise allow the amount claimed. 321 In relation to tab 13, the submission of BAL has force in that some of the accounts relate to unpaid creditors and appear on the Administrator's list of creditors. Some of the payments appear to relate to regular maintenance items. I propose to reduce the claim under tab 13, to $25,000. 322 In accordance with the adjustments which I have made to the matters referred to in Mr Adada's affidavit, I propose to allow the following amounts as relocation expenses.

[85]

Mitigation 326 BAL submits that the College through its own conduct has broken the causal chain or alternatively that it has failed to mitigate its damages. The argument is that there was no reason for the College to leave the airport premises. It could and should have entered into the twenty-five year lease offered to it in November 1998 and if it had done so, it would not have suffered any damage. 327 Although the defendant had collected a considerable amount of expert material from Dr Swane and other personnel from Sinclair Knight Merz (SKM), none of that material was made available to the plaintiffs until the report of 2003 was served. Most particularly, the report of Dr Swane of March 2000 (exhibit DD) was never made available. Consequently the College had to make its decision as to what to do in relation to the site on the basis of the material which it had available. 328 The College had the 1994 Envirosciences report, the 1998 JET report, some documents produced under the Freedom of Information Act and the Douglass Partners report which it received in late 1999. Based on that material, it commenced these proceedings in January 2000. In February 2000 BAL withdrew the offer of a twenty-five year lease. That offer was not renewed. The Golder report of June 2001 was qualified in nature but made it clear that to remediate the site would involve significant expenditure and that night-soil was present in a layer of up to .7m in thickness and was covered with soil material to a depth of between .75m and 1m (para 5.1). The report also referred to danger if users of the site came in contact with any of the night-soil material. There was no cause for concern provided portable buildings continued to be used, except where a building was positioned over a night-soil trench (para 7.2). Paras 7.4 and 8 made it clear that excavations in the areas of the night-soil trenches would present a health risk. 329 After receipt of the Golder report of June 2001, it would have been clear to the College that construction of permanent buildings was not viable on the site, unless and until further investigation had taken place. There was a risk of substantial remediation costs being incurred. Building costs would undoubtedly increase if special arrangements had to be made in relation to the soil (para 127-130). The effect of the Golder report can be seen from the fact that the College cordoned off and prevented access by students to a significant part of the leased area. There was also a reputation issue. Once it became known that contamination was a problem, regardless of assurances, parents may not have wanted their children to attend the school. 330 The only contribution by BAL to offset these considerations was the offer (para [67]) to the effect that it would pay for the removal of contaminated soil. There was no offer to remediate the site or pay additional building costs or otherwise assist the College. 331 I do not understand BAL to suggest that following its withdrawal of the offer of a twenty-five year lease in February 2000, it would have renewed such an offer had it been approached by the College thereafter. No attempt thereafter was made by BAL to renew the offer. The confrontational tone of the correspondence which emanated from the solicitors for BAL during 2002 when the question of extending the lease and departure from the premises arose, does not provide any basis for an assertion that had the College sought to negotiate in relation to the twenty-five year lease after February 2000 such an approach would have been sympathetically received. 332 The prospect of constructing permanent buildings, at least partly on top of or close to a former night-soil dump, does not from any perspective provide a formula for the successful development of a school. Even had the College carried out more extensive (and more expensive) investigations, it would only have confirmed what Dr Swane identified that special precautions had to be taken if one were to build on the site. Perhaps not surprisingly the site remains unoccupied. 333 I am of the opinion that it was reasonable for the College not to accept the November 1998 offer of a twenty-five year lease with the conditions attached to that offer. The information available to the College as of December 2001 when the seven year lease was meant to end, confirmed the reasonableness of the College's decision to leave the airport site. The report of Dr Swane of March 2000 (exhibit DD) supported the reasonableness of that decision. 334 I find that there was no failure on the part of the College to mitigate its damages and that the conduct of the College in leaving the leased premises and in not taking up the twenty-five year lease which was offered to it in November 1998, did not break the chain of causation.

Noor Al Houda Islamic College Pty Limited & Anor v Bankstown Airport Limited

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Judgment (93 paragraphs)

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Cases Cited (27)

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