Port Stephens Shire Council v Booth & Ors; Port Stephens Shire Council v... [2005] NSWCA 323 | Case summary

Port Stephens Shire Council v Booth & Ors; Port Stephens Shire Council v... [2005] NSWCA 323 | Case summary | Zoe

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Tuesday 27 September 2005 PORT STEPHENS SHIRE COUNCIL v BOOTH & ORS PORT STEPHENS SHIRE COUNCIL v GIBSON & ANOR Judgment 1 BEAZLEY JA: I agree with Giles JA. 2 GILES JA: The Moffat family had been established in the Swan Bay area within Port Stephens since 1893, originally as timber cutters and then as oyster farmers. In the 1960s an oyster shed was built on their land for use in oyster processing. In the early 1970s the shed was converted into a restaurant known as Moffat's Oyster Barn. 3 On 17 February 1993 a development application was lodged by Lloyd Moffat Investments Pty Ltd ("LMI") with Port Stephens Shire Council ("the Council") for the development of a budget level holiday cabin resort on the family's land, to be known as Fisherman's Village. The proposed development involved construction of forty one new cabins, to be used with an existing four cabins and the restaurant as an eco-friendly tourist facility, together with infrastructure works. The land was to be subject to a community plan subdivision in accordance with the Community Land Development Act 1989, the effect of which would be that lots in the subdivision would be sold with the purchasers having shared interests in community property. On 21 April 1993 the Council granted development consent. 4 At some time prior to 22 December 1993 LMI lodged a building application with the Council. It was approved on that date. 5 Construction of the cabins and the infrastructure works commenced. From late 1993 onwards a number of purchasers entered into contracts to purchase lots in the community plan from LMI. The community plan was registered on 27 September 1994. The purchasers "off the plan", and other purchasers who thereafter entered into contracts to purchase lots, completed their purchases. Many of them purchased for investment, intending that their cabin(s) be rented out to persons holidaying at Fisherman's Village. 6 On the registration of the community plan a neighbourhood association was constituted. It appointed Fisherman's Village Pty Ltd ("FV") as managing agent for the neighbourhood plan. FV also entered into agreements with purchasers to act as agent for renting out their cabins. 7 The Williamtown RAAF Base was situated approximately nine kilometres to the south-west of Swan Bay. Aircraft from Williamtown used the Salt Ash Weapons Range ("the Range") for the purpose indicated by its name. The Range was situated much closer to Swan Bay, approximately two and a half kilometres to its south-west. 8 Until at least late 1995 aircraft noise was not a significant problem to those involved in Fisherman's Village. Mr Moffat and others said that they were aware of aircraft in the vicinity of Fisherman's Village, but that the noise did not affect the amenity of the site to the point of discomfort. From late 1995 the aircraft noise increased in frequency of aircraft movements and intensity of noise, although seldom if ever at weekends or at night. Guests at Fisherman's Village complained. In late 1998 it was decided to operate Fisherman's Village commercially only at weekends. 9 In early 1999 proceedings were brought against the Council by LMI, FV and the principals of LMI and FV, Mr Lloyd Moffat and Mrs Michelle Moffat (collectively, "the developers"). Later in 1999 twenty-five proceedings were brought against the Council by lot owners, including LMI and Mr and Mrs Moffat. All the plaintiffs claimed damages for negligence in the grant of the development consent and the building approval, and the lot owners also claimed damages for negligence in the issue of certificates under s 149 of the Environmental Planning and Assessment Act 1979 ("the EPA Act"). 10 In the statements of claim on which the proceedings went to trial, negligence was alleged -

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(b) as to the lot owners, also in failing to include in the s 149 certificates an accurate notation to the effect that the land was forecast to be subject to ANEF levels of 25 and above and would therefore be unacceptable for residential development and only conditionally acceptable for hotel, motel and hostel development. (A further allegation was made about a noise pollution level, but negligence in that respect appears to have fallen away and, while mentioned, was not significantly addressed in the judge's reasons or raised on appeal.) 11 In February and March 2002 Sidis DCJ heard preliminary questions common to all twenty six proceedings. Her Honour's reasons, delivered on 8 August 2002, were intituled in two of the proceedings only, one the proceedings brought by the developers and the other proceedings brought by a lot owner, but it appears to have been intended that they should determine the preliminary questions for all the proceedings. The effect of the determination was that the Council owed duties of care to the plaintiffs, and was in breach of the duties of care, in the respects alleged by the plaintiffs, and that the Council had not made out the defence of acting in good faith available under s 149(6) of the EPA Act in relation to the issue of the s 149 certificates. 12 In June and November 2003 the judge heard the remaining issues in four of the proceedings, all proceedings brought by lot owners other than LMI and Mr and Mrs Moffat. The lot owners were Mr and Mrs Booth (lots 24 and 25), Mr Burcher (lot 21) and Mr and Mrs Gibson (lot 15) (collectively, "the purchasers"). The remaining issues all went to damages. The judge delivered her reasons on 14 May 2004. There were four separate judgments, with much common content and adaption to the circumstances of the particular purchaser(s). Her Honour held that the purchasers were entitled to damages for diminution in the values of their lots and for consequential losses. With the addition of interest, the damages ranged (in round figures) from $98,000 to $110,000. Judgments were given in favour of the purchasers. 13 These are appeals from the judge's decisions in the four proceedings. Where the damages are less than $100,000 leave is required, and should be granted. The appeals in the four proceedings encompass the determination of the preliminary questions so far as material to the purchasers, but not so far as material to the developers. 14 There was a procedural question, whether the judge erred in hearing and determining the purchasers' claims in advance of the developers' claims. The substantive questions in the appeals were whether the judge erred in -

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The procedural question 17 The question was raised, and the purchasers responded to it, only in the parties' written submissions. It was not made clear what order was sought on appeal if the Council's submission was accepted. 18 On 16 June 2003, at the commencement of the hearing of the remaining issues in the purchasers' proceedings, the Council applied for "an adjournment in order that the issues relating to the claims brought by the Moffat interests may be determined ahead of those which are listed for hearing today". This is taken from the judge's reasons in ruling on the application; any formal application was not in the appeal papers. 19 The judge related the history of the proceedings, including that on 6 November 2002 the four purchasers' proceedings were put forward as those to be dealt with "on a preliminary basis", as I understand it meaning prior to the other proceedings. She recorded that the Council had not objected to that proposal; that orders for the filing and service of evidence in respect of those matters had been made; that the proceedings were before her on numerous further interlocutory occasions, which she detailed; that the hearing was specially fixed, and then refixed to commence on 16 June 2003, for dates to be departed from only in exceptional circumstances; and that only on 11 June 2003 was it first suggested that it was "necessary to deal with the Moffat interests ahead of the interests of the individual unit holders". The judge said that the argument on 16 June 2003 was "that the true cause of the losses claimed by the individual unit owners is mismanagement by the Moffats and the entities which they control that have managed Fisherman's Village". 20 The judge noted that "the issue", as I understand it meaning the issue of mismanagement as the true cause of the loss, had not arisen recently, and - "I remain to be persuaded that the necessity exists to take the matters in the order proposed at this late stage by the defendant. It is particularly so since today the plaintiffs in the four cases that are currently before me have informed the Court that their claims are limited to the issue of the true value of their units at the date of purchase, rather than at the date of trial, together with some minor consequential losses. Each party tells me it is ready to proceed to hear them. Should it become apparent that it will be necessary to consider the claims of the Moffats before a decision is made, then I will reconsider the matter and I will reconsider any further application which the defendant wishes to make at the conclusion of the hearing of the matters that are currently before me." 21 We were not informed of any further application to the judge by the Council. 22 In its written submissions the Council put, with considerable elaboration, an argument which came down to the same argument as that noted by the judge. Despite the elaboration, the argument was in generalities. It was repeated that the lot owners' financial losses were "intricately linked to the conduct of the developers and managers", and were "influenced by the contracts into which they entered with the developers and their interests". It was asserted that the "true cause" of the losses incurred by the lot owners was their conduct in entering into the contracts, and the conduct of FV and the directors of LMI in ceasing to let cabins on weekdays after 1998. It was said in conclusion- "114. Questions of fact arising from the overall management and conduct of the operations of the Resort were relevant to the proceedings concerning LMI. It follows that the trial judge could not properly determine any of the lot owners' claims until such time as the Court had heard all of the evidence pertaining to these relevant matters. For these reasons it is submitted that her Honour erred in declining the appellant's application." 23 It is difficult to see any substance in the Council's application to the judge. If the Council wished to contend that the true cause of the purchasers' consequential losses was their conduct in committing the letting of their lots to others and mismanagement by those others it could cross-examine, lead evidence and put submissions to that end in the purchasers' proceedings, without the necessity for prior hearing of the developers' proceedings. In due course it cross-examined at some length on those matters. In the result, however, it was agreed that the purchasers could recover their consequential losses if they recovered the diminutions in value of their lots; there was ultimately no issue between the parties. 24 Assuming some basis for the application, in my opinion no ground has been shown for error in the judge's discretionary decision. The Council's submissions did not suggest one of the grounds for intervention described in House v The King (1936) 55 CLR 499. Their generalities did not demonstrate error of fact or principle, but simply asserted that her Honour had come to the wrong decision. In my opinion, the decision was well open to her Honour, who also reserved to the Council the opportunity to ask her to defer her substantive decision-making until after the developers' claims had been considered if, in the unfolding of events, her refusal of the application proved to have been inappropriate.

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ANEFs and AS2021 25 An Australian Noise Exposure Forecast ("ANEF") is a plan of an airport and environs on which noise exposure contours of 20, 25, 30 and 40, and sometimes an intermediate 35 contour, have been drawn. The higher the contour value, the greater the noise exposure. In areas outside a 20 contour it is generally accepted that noise exposure is not of significant concern. Between the 20 and 25 contours noise exposure emerges as an environmental problem, and it increases as the contour value increases. 26 The contour values designate forecast noise exposure, as distinct from noise level. Noise level is the loudness, sound frequency and duration of a noise event, measured in decibels. Noise exposure as designated by a contour value in an ANEF represents a prediction of the cumulative exposure to aircraft noise during a specified future time period. It is essentially a combination of noise level and frequency of operations, broadly on the basis that a loud noise perceived infrequently and a moderate noise perceived frequently produce similar subjective responses. The computation of the value takes into account the intersection, duration, tonal content and spectrum of audible frequencies of the noise, the forecast frequency of aircraft types and movements and the average daily distribution of aircraft movements in daytime and at night-time. The value represents a predicted daily average noise exposure during the specified future time period. ANEFs commonly forecast noise exposure for a period of a single year. Thus the 2002 ANEF later mentioned was a forecast of daily average noise exposure during 2002. 27 As a forecast for a future year, an ANEF does not necessarily represent the noise exposure experienced or forecast at the time the ANEF is issued or at any time prior to the stated year. The forecast noise exposure may be experienced prior to the stated year, or it may not be experienced for the stated year or at all. As an average for the year, and given the manner of its calculation, an ANEF also does not necessarily represent the noise exposure forecast to be experienced at any given time in the stated year or at any given place between the contour lines. 28 The Noise Exposure Forecast ("NEF") system was developed in the United States in the 1960s, and was refined for use in Australia in the 1980s. It provided, and provides, a valuable tool for planning land use around airports. In 1985, after an initial 1977 version, AS2021-1985 ("AS2021") was issued as the Australian standard to provide, together with the applicable ANEF, guidelines for determining whether the extent of aircraft noise intrusion made acceptable the activities to be accommodated on a site and the extent of noise reduction and type of building construction required to provide acceptable indoor noise levels for the activities. The standard did not cover the acceptability of outdoor spaces. 29 AS2021 provided first for identifying "Building site acceptability based on ANEF zones". The building site would be located on the ANEF plan, and the highest value contour enclosing the site would be determined. Whether the building type was acceptable, conditional or unacceptable would be determined according to a table. Houses, home units, flats, schools, universities, hospitals and nursing homes were acceptable for less than 20 ANEF, conditional for 20 to 25 ANEF and unacceptable for greater than 25 ANEF. Hotels, motels and hostels were acceptable for less than 25 ANEF, conditional for 20 to 30 ANEF and unacceptable for greater than 30 ANEF. Public buildings were acceptable for less than 20 ANEF, conditional for 20 to 30 ANEF and unacceptable for greater than 30 ANEF. Commercial buildings were acceptable for less than 25 ANEF, conditional for 25 to 35 ANEF and unacceptable for greater than 35 ANEF. For light industrial buildings higher contour values were stated, and heavy industrial buildings were acceptable in all zones. 30 The notes to the table included the warning that the location of the 20 contour was difficult to define accurately, mainly because of variation in aircraft flight paths, and that the procedure for conditional acceptability could be followed for building sites outside but near the 20 contour. Note 3, referable to hotels, motels, hostels, school, universities, hospitals, nursing homes, public buildings and commercial buildings and their conditional acceptability within the relevant zones, stated that "[a]n analysis of building noise reduction requirements by an acoustic consultant should be made and any necessary noise control features included in the design of the building." 31 If for the building type the site was conditionally acceptable, AS2021 provided for further steps to be taken. The process was complex, and the complexities were greater than the following brief description suggests. The aircraft types normally operating at the airport, distance coordinates describing the position of the site relative to the airport, and the maximum noise levels (note, noise levels) to which the site would typically be exposed would be determined according to the aircraft types and the distance co-ordinates. Then the reduction in noise level appropriate for building type, with regard also to the particular activities, would be determined, and then the construction requirements to achieve the noise level reductions for the building or various parts of the building. As note 3 indicated, these further steps would typically require professional assistance.

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The 2002 ANEF and associated matters 32 The materiality of noise affectation from aircraft movements, and of ANEF forecasts, to the Council's land use decisions was well appreciated. Noise affectation from aircraft movements at Williamtown was not in issue in the proceedings; the relevant affectation was from use of the Range. It was common ground that the NEF system could be and was appropriately applied to noise exposure from use of the Range as well as from use of an airport. 33 There was reference in evidence to a 1985 NEF issued by the Department of Defence ("the Department"), it seems about 1976, in which the site of the future Fishermans Village was between the 25 and 30 contours. There was also reference to a 1990 NEF, it seems issued about 1982, with the site again between the 25 and 30 contours. The table on the two plans differed from that in AS2021 earlier mentioned; it permitted a hotel or motel between the contours without special requirement for acoustic controls, although recommending that residential use should not take place and housing density should be kept to a minimum. 34 In 1983 the Council's then Deputy Shire Planner and its Shire Clerk gave evidence before a Parliamentary Standing Committee on Public Works enquiring into facilities for the FA-18 Hornet aircraft at Williamtown. The Shire Clerk stated in his evidence that the Council had decided that no further residential subdivisions would be permitted in area within the 20 or 25 ANEF contours. The Committee's report included that it would be prudent to "not further compound the noise problem and to develop and rigidly enforce land use zonings of the area around Salt Ash falling at the very least within the 25 ANEF which are compatible with the existence of the range and which reflect land use planning advice implicit in the ANEF system." It was indicated that there should not be approval of residential land use between the 25 and 30 contours, and that between the 20 and 25 contours planning authorities may consider the incorporation of noise control features in the construction of residences. 35 In 1989 the Council commissioned a report from Caleb Smith Consulting Pty Ltd ("the Caleb Smith report"). According to the report, the "noise measuring exercise" was instigated by the residents of Swan Bay. As later appears, the report was not made known to the Council's planning staff. Mr Bowman, a councillor, was present; the report was addressed to the Shire Clerk. An FA-18 aircraft was provided by Williamtown RAAF. 36 Noise levels were recorded on 21 September 1989 at Lot 232 Moffats Road, Swan Bay, sometimes referred to as Mr Whitehair's property. The evidence did not establish with precision where the measurements were taken in relation to the future Fisherman's Village, but it was within the 20 contour on the 2002 ANEF later issued. After discussing the measured noise levels, and taking account of the fact that four aircraft were normally involved in flying the same profiles within the same time period, the Caleb Smith report said that the result would be "30 dB(a) over the extreme limit of noise exposure for residents of the rural area of Swan Bay". 37 On 27 February 1992 the Department sent to the Council the plan for a draft ANEF for Williamtown "incorporating civil and military operations to the year 2000". It said that the ANEF for the Range was being produced separately. 38 On 13 August 1992 the Department sent to the Council the plan for a draft ANEF for the Range, incorporating the earlier draft ANEF for Williamtown. The covering letter described it as "covering forecast military operations to the year 2002", and said that it was "proposed that both ANEF's will be valid to the year 2002". It said that the draft was provided for the Council's assistance in land use planning for the area, and drew attention to the "Building Site Acceptability Table". 39 On 21 October 1992 the Department sent to the Council the plan for the final ANEF for Williamtown and the Range, the covering letter again describing it as "covering forecast military operations to the year 2002" ("the 2002 ANEF"). There were the same references to land use, planning and the table. The 2002 ANEF showed 20, 25, 30, 35 and 40 contours. Most of the site of the future Fisherman's Village was between the 25 and 30 contours; a small part was between the 20 and 25 contours, just over the 25 contour line, but all the purchasers' lots were between the 25 and 30 contours. Endorsed on it was a table, in content identical with the table in AS2021 earlier mentioned, noting "Building site acceptability based on ANEF zones". 40 On 16 February 1993 the Department of Planning wrote to the Council recommending that it consider adopting a specific policy concerning the construction of new residential buildings in areas located within greater than the 20 ANEF contour. This caused the Council's Strategic Planning Manager to prepare a discussion paper, which included under "Current situation" - "In relation to control of development, Council currently plays only a notification or advisory role in that: - 1.1) Section 149 Zoning Certificates issued on land within the ANEF 25 contour contain the following statement:- Council's records indicate that the land may be subject to noise exposure. It is recommended that further enquires be directed to the Director General, Facilities Division, Environment & Heritage Section, Air Force, Department of Defence, PO Box E33, Queen Victoria Terrace, Canberra ACT 2600 It is acknowledged that the above statement can be improved upon in terms of additional information and to cover all land within the ANEF 20 contour as well. Action is currently being instigated to implement these changes. 1.2) Any development consents issued provide advice that the proposed development is on land within the ANEF 25 contour . This will be expanded to cover all land within the ANEF 20 contour now that the information is available ." (emphasis added) 41 Under "Possible strategies" the discussion paper postulated applying construction standards "to all developments within effected [sic] areas" as conditions of development and building approvals, by setting development standards in its planning instruments. It questioned matters of costs, reasonableness, enforcement and "does the noise issue really need any more than 149 notification, given that people are aware they are buying land effected [sic] by ANEF and proceed knowingly?" 42 The Council replied to the Department of Planning on 29 July 1993, enclosing a copy of the discussion paper and advising that it proposed to review its "Planning Instrument" and - "3) Council currently provides notification pursuant to Section 149 of the Environmental Planning and Assessment Act 1987 in relation to ANEF 25 affected land and is about to review the wording and expand the area of notification to the ANEF 20 affected areas."

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The grant of development consent 43 The land was zoned Rural "A" in the Port Stephens Local Environmental Plan 1987. "Tourist facilities" were permissible with the Council's consent, the relevant definition being - " … an establishment providing for holiday accommodation or recreation and may include a boat shed, boat landing facilities, camping ground, caravan park, holiday cabins, hotel, house boat, marina, motel, playground, refreshment room, water sport facilities or a club used in conjunction with any such activities". 44 The development application was for a mixture of single, double and three bedroomed cabins. The construction of the cabins was described - "These cabins are to be constructed in timber framing and timber roof trusses with timber cladding externally and plasterboard lining to the internal areas with paint finish. The main roof and porch roof are to be in colourbond metal roofing with facia boards. The porch and adjacent walkways are to be constructed on timber poles with timber planking and timber handrails/balustrades all treated and stained." 45 The development application was approved by the Council under delegated authority by its Development Assessment Panel ("the Panel"). The members of the Panel were the Manager of Development Services, Mr Warnes; the Senior Health and Building Surveyor, Mr Meredith; and the Senior Engineer. Mr Warnes gave evidence; Mr Meredith and the Senior Engineer did not. 46 Prior to the time of the approval the Council had entered zones from the 2002 ANEF on its "constraints map". An affidavit by Mr Warnes annexed a copy of the constraints map. The judge said that it was not clear whether it was the current map or the map as at the date of assessment of the development application. The map indicated only the 20 and 25 contours from the 2002 ANEF. 47 The Panel was not aware of the Caleb Smith report. Notwithstanding that it was addressed to the Shire Clerk, Mr Warnes believed that the report had been prepared at the direction of the then mayor and "the mayor had his own purposes for that", and said that it "was never disseminated to the staff via the mayor". The Council's evidence did not explain this further. 48 In assessing the development application, Mr Warnes recognised that the proposed development was between the 25 and 30 contours. From the permitted use of tourist facilities, he placed it in the building type "hotels, motels, hostels" in the table on the 2002 ANEF. According to the table and AS2021 the building type was conditionally acceptable, and according to AS2021 further steps were required with a view to construction requirements to achieve appropriate noise level reductions for the building or various parts of the building. Mr Warnes did not take the further steps set out in AS2021. He considered imposing noise attenuation conditions, but concluded that that should not be done. 49 In his affidavit Mr Warnes accepted that noise affectation was relevant to his assessment, but said that AS2021 was not a mandatory consideration and noise attenuation measures were not essential if the site was a tourist facility. He maintained that, because he knew of the site and its surrounds and that the Range was only used "intermittently", it was unnecessary for him to obtain advice to address the impact of existing and potential noise. (However, he described it as noise "from adjoining properties"). Although he knew that the site was "largely within the 25 ANEF contour", he took into account that the site was not to be used for permanent occupation and that a condition was to be imposed restricting operation; that as a tourist facility the occupancy was unlikely to exceed 60 per cent; that as a tourist facility with a focus on outdoor activities noise attenuation measures "were unlikely to make a difference to the occupants of the cabins from time to time"; that the use of the Range at the time was and was forecast to be intermittent; that alternative flight paths were available; that he was not aware of complaints from Swan Bay residents in relation to the operations of the Range; and that Mr Moffat had not raised "any concern about the viability of the proposed development by reason of aircraft noise". 50 Mr Warnes also said in his affidavit that, if he had known of the Caleb Smith report, it would "not have advanced my assessment", because it was not "specific to the subject site" and AS2021 "makes it clear that only where no ANEF exists would it be necessary to make an individual assessment of noise on a particular site". 51 In his oral evidence Mr Warnes said that, at the time of the assessment and when he appreciated that the site was conditionally acceptable, he asked Mr Meredith's advice. He said - "A. The advice was generally that it's difficult to actually exclude aircraft noise in accordance with the Australian standard because it was mitigated by a significant number of factors. In his mind it certainly did centre of [sic; on] the fact of the ability of the builder, his workmanship, the person that was supervising the work, the maintenance of the building and in fact the use of the building that those measures could become ineffective if a door was left open or a window was left open and therefore there was some difficulty as to whether or not the standard would achieve what it was set out to do." 52 So far as appears, Mr Warnes took the matter no further with Mr Meredith or anyone else. He agreed that there was "not a single piece of paper in Council's files which makes any note or reference in relation to the impact of aircraft noise for this development", and that there was no record of a "real attempt by any officer of Council to consider the impact of aircraft noise in relation to this development application". 53 While maintaining that knowledge of the Caleb Smith report would not have affected his assessment, Mr Warnes agreed in cross-examination that the report said there was a serious noise impact for the house in question and that "if aircraft flew in the same manner over another house that it would be likely that the same serious noise impact could result". He also agreed - "Q. What I'm putting to you though is that if, as a result of looking at the ANEF contours, you came to the view that there may be adverse noise impact over Fisherman's Village - do you understand that proposition? A. Yes. Q. Then if you had no other information, apart from the ANEF report and the Caleb Smith report of 1989, it would be a fair assumption that if there was aircraft activity over Fisherman's Village of the same type that had been recorded in 1989 over Mr Whiteair's [sic] property, then there would be a very severe noise impact on Fisherman's Village? A. Yes." 54 He agreed that the noise as described in the Caleb Smith report would make residential development unacceptable, and hotel, motel or hostel development unacceptable except with appropriate noise attenuation conditions. 55 Mr Warnes' overall position was that, although he knew that the Fisherman's Village site was largely between the 25 and 30 contours and was regarded as unacceptable for residential development and acceptable only on appropriate conditions for hotels, motels and hostels, it was a matter for the Council's discretion whether conditions would be imposed, and - " … I did make a decision and I believe that I was acting competently when I made the decision in looking at all of the issues relating to the application and my knowledge of the ANEF as shown on the plans." 56 The development consent was granted subject to a number of conditions, including that with the exception of two of the cabins "all lots proposed must not be occupied by any proprietor or occupier of that particular lot for longer than forty two (42) consecutive days or on aggregate of one hundred and fifty (150) days in any twelve (12) months, such period to be calculated from the date of the first occupation of a lot". The two cabins could be occupied permanently. One condition dealt with sound transmission for dividing walls, but none addressed construction of the cabins with a view to attenuation of exposure to aircraft noise. 57 Contrary to what appeared as the current situation in the discussion paper earlier mentioned, see the emphasised portion, the development consent did not provide advice that the proposed development was on land within the ANEF 25 contour. It said nothing about ANEF forecasts or noise exposure from aircraft.

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… 5. Council's records indicate that the land is contained within the Australian Noise Exposure Forecast (ANEF) 20 contour and consequently may be subject to noise exposure from aircraft. Standards and measures which can be adopted to minimise the impact of noise on buildings are detailed in 'Australian Standard 2021-1985: Acoustics - Aircraft Noise Intrusion - Building Siting and Construction'. Information as to the extent of the ANEF 20 contour is available from Council's Community Planning Department". 64 Immediately prior to completion of the purchasers' contracts Mr Williams obtained updated s 149 certificates. In his evidence he identified them by their reference numbers; they do not seem to be in the appeal papers. It was not suggested that they were materially different from the certificate annexed to the contracts. 65 The issue of a certificate involved the generation of a draft certificate by a computer based system which automatically incorporated the information concerning aircraft noise where appropriate. The draft was then checked against the constraints map by a member of the Council's staff. There was no evidence as to the checking of the certificate issued to LMI and attached to the contracts, or of the later certificates. 66 Prior to receipt of the 2002 ANEF, s 149 certificates issued by the Council contained information as to noise exposure in respect of properties within the 25 contour. In July 1993 it was decided to extend this practice to properties within the 20 contour, see the extract from the discussion paper earlier set out. From Mr Warnes' evidence, prior to July 1993 the computer based system had been programmed to refer to the 25 contour even if the property was within a higher contour, and when it was decided to extend the practice to the 20 contour it was reprogrammed to refer to the 20 contour even if the property was within a higher contour. 67 Mr Warnes at one point referred to this as "a warning of potential aircraft noise for all properties within the 20 ANEF contour line". The reasoning appears to have been that an indication that the property was within the 20 contour carried with it that the property might be anywhere within that contour, including within one of the contours of higher value. Mr Warnes said that he thought it appropriate to describe land between the 25 and 30 contours as land within the 20 contour because - "A. It's a notion that if you were to draw a line around the airport or the weapons range activities that the encompassing contour where noise impacts are said to start is encompassed within and contained within the 20 ANEF, it goes up inside but it is all contained within that 20 contour. Q. So because it is literally correct it is an appropriate way in which to describe it in a 149 Certificate, is that your position? A. Well it was a terminology that was used by myself and planners in relation to this matter and might I say in relation to other matters." 68 Mr Warnes was asked about the like terminology used in relation to flood susceptibility. The Council's studies identified land affected by a one in ten years, a one in twenty years, and other such flood events, but the constraint maps showed only land affected by a one in a hundred years flood event. The Council's certificates disclosed only affectation by a one in a hundred years event, and Mr Warnes said that he thought people would inquire whether the land might also be affected by a one in ten years or a one in twenty years flood event "because the one in hundred event is a large event". He said also - "Q. So that did it follow from your view about the appropriate way of identifying the ANEF contours that it's sufficient to identify land which is within the one in a hundred year flood event, even if it also is within an area which is within a one in twenty year flood event? A. Yes. Q. And do you think that the average person in the street would understand that that's how it should be read or interpreted? A. I don't know but I would think that an average person in the street would have difficulty with not only the issue of the flood but also the aircraft noise exposure and especially in the aircraft noise exposure issue, they were invited to make inquiries of council." 69 Ms Westing, who was a senior officer of the Council from mid-1995 and in 1995-6 its Manager Sustainable Development, said that the Council had never identified contours affecting land other than the 20 ANEF contour for the principal reason that "there has been no adopted policy applying a distinction between planning controls applying to land in the different ANEF zones", and that the Council's practice was "to identify an issue that may affect the use of the property". 70 It is convenient to note at this point the Council's subsequent practice. 71 At a meeting in November 1995 with officers of the Department and the Department of Planning it was suggested that the Council could amend its s 149 certificates. Suggested amendments included that the land was within the 20 to 25 ANEF contours or "greater than 25", as the case may be, with reference in the first case to incorporating noise control features in dwelling construction and in the second case to construction of "houses, home units, flats and caravan parks (dwellings)" being unacceptable. 72 This was not done. At an expanded meeting in February 1996 Ms Westing said the Council would amend its certificates "if mandatory controls are adopted", meaning restrictions in its planning instruments. 73 In September 1996 a discussion paper was prepared directed to how the Council should deal with aircraft noise. The recommendations included that "in the 20-25 ANEF contours, Council retain its noise advisory system and not introduce mandatory building controls". The Council resolved to defer future land use decisions pending an updated ANEF, which was then anticipated early in 1997. 74 A draft 2005 ANEF was issued in May 1997. The Council amended its certificates to refer in all certificates to the draft ANEF and, if applicable, state that the land was within the ANEF 20 contour "or above". 75 The certificates were amended again in April 1998, but remained to like effect. If the land was within an ANEF zone, the certificate read - "'Council's records indicate that the land, or part of the land, is affected by the Australian Noise Exposure Forecast (ANEF) 20 or above and is likely to be exposed to noise from aircraft. Standards and measures which can be adopted to minimise the impact of noise in buildings in some cases are detailed in Australian Standard 2021-1994: Acoustics - Aircraft Noise Intrusion - Building Siting and Construction. Information as to the extend of the ANEF 20 or above contour is available from Council's Strategic Planning Section and you are advised to make further enquiries.'"

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(i) Discretion 81 The Council was determining a development application made to it under the provisions of the EPA Act. By s 90, it was obliged to take into consideration such of the matters in that section as were relevant to the development, it being common ground that the exposure to aircraft noise was a relevant matter. By s 91 it was obliged to determine the application, by granting consent, either conditionally or subject to conditions, or by refusing consent. 82 The Council was exercising a statutory power, one which it was obliged to exercise in one of the ways in s 91. It could not stand mute, and it entered upon the exercise of the power. The present question is not the existence of a duty of care, acknowledged as one owed to the purchasers, but its nature. It attracted the principle described by Dixon CJ and McTiernan, Kitto and Taylor JJ in Caledonian Colleries Ltd v Speirs (1957) 97 CLR 202 at 220 as - " … the well-settled principle … that when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely to be occasioned, by their exercise, damages for negligence may be recovered". 83 The test of exercise of a statutory power with reasonable care has been noted or adopted, sometimes the course of determining whether there was a duty of care, in relation to a stevedoring authority's power to regulate the performance of stevedoring operations (Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at [5], [34]-[35], [62], [360]), a council's exercise of a power to require that work be done upon premises to make them safe (Pyrenees Shire Council v Day (1998) 192 CLR 330 at [120], [177], [423]), and a council's power to inspect buildings in the course of erection (Sutherland Shire Council v Heyman (1985) 157 CLR 424, at 436-7, 458-9, 484, 509). In Voli v Inglewood Shire Council (1963) 110 CLR 74 a council was held liable for negligence in the examination and approval of plans and specifications for a building (although it was the building owner). In Wollongong City Council v Fregnan [1982] 1 NSWLR 244 a council was held liable for negligence in granting building approval; the negligence was approving without informing the applicant of a danger of slippage, the land being in the council's slippage register, and it was said that the council failed to take proper care in performance of its duty to consider the danger of slippage (at 248; see also 253). 84 In Alec Finlayson Pty Ltd v Armidale City Council (1994) 51 FCR 378 the trial judge held a council liable for negligence in granting subdivision approval and then development approval. The negligence was approving although the council knew that the land was significantly contaminated. It was said, with reference to Caledonian Colleries Ltd v Speirs, that the council was obliged to exercise its approval power with reasonable care (at 411), and that it had not done so by imposing any condition, giving a warning or any other means (at 412). On appeal in Armidale City Council v Alec Finlayson Pty Ltd the duty of care was upheld, and it was said (at [32]) that the holding of breach of duty was clearly open and "[g]iven the serious public health hazard, the Council's duty could only have been completely discharged by an outright refusal of the application, or at least a refusal except upon acceptance and performance by the applicant for approval of appropriate remediation conditions". I will return to this case; for present purposes, the test was the exercise of reasonable care, not Wednesbury unreasonableness. 85 See also Albert Shire Council v Bamford, again to which I will return, in which a council was held liable for negligence in granting subdivision approval and approval to carry out building work on a test of whether it took reasonable care; the land was unstable and unsuitable for building, and it was held that the council should have been aware of the instability. 86 There is good reason for not testing negligence by Wednesbury unreasonableness. The law of torts serves a different purpose from that providing public law remedies. In Pyrenees Shire Council v Day Gummow J referred to translation of the public law "may" into the common law "ought", and to principles of tortious liability being "formulated primarily for operation in the field of private law" (at [122]-[123]. In Crimmins v Stevedoring Industry Finance Committee Kirby J said (at [217]-[218] - "[217] From time to time judges have expressed concern that the imposition of a duty of care upon a public authority might cut across discretions which that body enjoys by statute, or impose upon it economic and other imperatives which judges and juries might be ill-equipped to evaluate. Importation of a common law duty could distort the performance of the functions of the statutory body in the attempt to avoid private actions. Judges have therefore sought to devise formulae to restrict the supplementation by the common law of the enforcement machinery provided in a statute. Some have resorted to the fiction of what Parliament "intended" to be the mechanism of enforcement. Others have applied public law criteria to evaluate whether a right of action at common law can coexist with the statute. This was the way in which Brennan CJ approached his decision in Pyrenees Shire Council v Day. Whilst that approach has distinguished supporters it did not find favour with the majority of this Court in Pyrenees. It has also been expressly rejected by the unanimous opinion of the House of Lords. [218] In X (Minors) v Bedfordshire County Council , Lord Browne-Wilkinson remarked, with the concurrence of all of the participating Law Lords: ' ... I do not believe that it is either helpful or necessary to introduce public law concepts as to the validity of a decision into the question of liability at common law for negligence. ... [I]t leads, in my judgment mistakenly, to the contention that claims for damages for negligence in the exercise of statutory powers should for procedural purposes be classified as public law claims and therefore ... should be brought in judicial review proceedings'. 87 Smith v Eurobodalla Shire Council [2005] NSWCA 29 concerned a claim for negligence in approving the construction of a house. McClellan AJA, with whom Mason P and Santow JA agreed, referred at [104] to a public authority's duty to act "with appropriate care", citing Sutherland Shire Council v Heyman at 447 (Gibbs CJ), 460 (Mason J), 479 (Brennan J) and 509 (Deane J). The Council submitted that this was "the Wednesbury test". I am unable to agree. Gibbs CJ did refer to negligence in the improper exercise of a discretion, but his Honour had stated the duty as a duty to give proper consideration to whether it should exercise its powers and was doing no more than recognise what he called "a large element of policy or discretion". At the other pages their Honours' language was fully consistent with a common law duty of care; for example, Brennan J referred to a person, whether a statutory authority or not, being "bound to do what is reasonable to prevent the occurrence of the injury unless statute excludes the duty". 88 The Council did not revive its reliance in this context on City of Botany Bay Council v Jazabas Pty Ltd. This is understandable. So far as the case involved a claim for negligence in the grant of development approval, as distinct from the issue of a s 149 certificate and the answer to an inquiry, Mason P (with whom Beazley JA relevantly agreed), adopted the reasons of the trial judge. The trial judge had said (Jazabas v Botany Council [2000] NSWSC 58 at [191]) that "save in the circumstances where the Council may have acted in an irrational or entirely improper manner" it was open to it to grant the approval, and that in his view it was not negligent in doing so. The holding was that there was no negligence. His Honour did not equate negligence with an irrational or entirely improper decision. 89 The Council submitted that its position was supported by my observations in Central Coast Leagues Club Ltd v Gosford City Council. I held that the council owed the club a duty to take reasonable care in the approval of plans for extensions to its premises. In rejecting that the duty was "as broad as ensuring that the premises were safe", I distinguished between the Council's approval function subject to reasonable care and its specific discretionary functions which could be challenged for Wednesbury unreasonableness. The case is in fact against the Council. 90 As was pointed out by Gaudron J in Crimmins v Stevedoring Industry Finance Committee at [34], a common law duty in relation to the exercise or non-exercise of a body's powers "only imposes a duty to take those steps that a reasonable authority with the same powers and resources would have taken in the circumstances in question". Subject to any statutory overlay, however, discharge of the duty requires that the authority act with reasonable care. The test for negligence in the Council's approval of the development application and the building application is not Wednesbury unreasonableness.

[43]

(ii) Discharge of the duty 91 For the reasons later given, the s 149 certificates were misleading and did not adequately warn prospective purchasers of the noise affectation. Their inadequacy was the product of the Council's then practices. Therefore, even if the content of the duty of care was as the Council submitted, the duty of care was not discharged. But I do not accept that the content of the duty of care was as the Council submitted. 92 Although a duty of care owed to the purchasers was conceded, it is material to ask why the Council came under a duty of care. 93 In Armidale City Council v Alec Finlayson Pty Ltd land was used by Hasell for industrial purposes involving significant contamination. While the land was still owned by Hasell, the council rezoned it for residential purposes. Hasell sold the land to Basia. The council granted Basia consent to subdivide part of the land into residential lots. Basia sold the balance of the land to Finlayson. The council granted Finlayson consent to subdivision of the balance into residential lots. Finlayson effected its subdivision, and constructed and sold homes on some of the lots; it also purchased from Basia some of Basia's lots and did the same. When the contamination was revealed, Finlayson suffered loss. 94 The trial judge, Burchett J, had asked whether the council when it came to consider the initial and subsequent development applications, owed a duty of care to "the owner of the land, to a known prospective purchaser of parts of the land, or to other persons who might acquire parts of the land or lots into which it was to be subdivided pursuant to the Council's approval of the particular development application" (FCR at 401). He had enquired into a relationship of proximity, as was the then approach to finding a duty of care, and had regarded as a "fundamental feature" that by approving the development application the council "created a danger, thereby subjecting itself to a duty of care for the safety of others" (at 409-10). His Honour had also regarded as a "highly relevant factor" the concept of "reliance, by those who may be affected, on the public authority to take reasonable care", and had said (at 412) - "The complexity of modern life continually places citizens in situations where, in a practical sense, they have to rely on the due performance of functions by authorities in circumstances in which lack of care may create or permit hidden hazards. In City of Kamloops v Nielsen (supra, at 674), Wilson J described the citizen's "ever-increasing reliance on public officials" as "a feature of our age". Applying this consideration to the present case, the applicant, buying part only of the land, had no practical means either of investigating or of remedying the contamination of the whole area. Yet the applicant would be affected by contaminants both on the land it acquired and on adjacent parcels. It had to rely on the Council to have approved the development with due care. Indeed, it had no means of knowing or reason to suspect what was in the soil to excite a particular need for that care. According to Mr Hegarty, the signs were actually covered over by the gravel in 1985. The Council's officers knew that covering was deceptive, but the ordinary purchaser would not, and the Council should have taken the position of potential purchasers into account: cf Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 at 300. Nor could the Council have thought a purchaser would obtain, at great expense, chemical analyses of land in a residential subdivision. It is a situation where, of necessity, the functions of the Council, in approving development of the subdivision, must be seen as supplanting private responsibility, to use Mason J's phrase.

[44]

In my opinion, the existence of a relevant duty of care has been established in respect of each of the decisions upon the development applications involved in this case." 95 By the time of the appeal to the Full Court proximity had fallen from favour in finding a duty of care, see Hill v Van Erp (1997) 188 CLR 159 and later cases. The Full Court (Beaumont, Moore and Merkel JJ) nonetheless upheld the duty of care owed to Finlayson. Their Honours said (at [27]) - "[27] As was contended for on behalf of Finlayson, the following considerations point to the existence of a relationship between Finlayson and the Council that was so close, that a duty upon the Council of care arose on these undisputed facts: · To the Council's knowledge, pockets of contamination were randomly located on the land and were hidden under a deceptive gravel surface. · So far as the Council knew, the applicants for residential subdivision development approval (first Basia, later Finlayson) were unaware of the contamination risk. · The Council could not have thought that purchasers of the land would have thought that there was a contamination problem, or would have had the means, or even the idea, of obtaining expensive technical analyses of the land. · Here there were both physical proximity and, from Finlayson's perspective, latent defects, yet the Council knew that the gravel surface was deceptive (see Hawkins v Clayton (1988) 164 CLR 539 per Deane J (at 577)). · The Council had before it an application for residential subdivision which could not proceed without its consent. · It must have been apparent to the Council that, if it approved the subdivisions, the overwhelming probability was that the subdividers, unaware of the contamination problem, would sell the resulting blocks to purchasers, who would also be unaware of the problem, and that the blocks would ultimately be used for residential purposes. · The Council knew that the use of the land for residential purposes had the potential to cause serious harm to the occupiers of the land. · The Council had a statutory obligation to consider whether the land was suitable for residential subdivision, regard being had to risks such as contamination. · Without incurring expense or delay, the Council had only to look to the information in its own records and to the specific knowledge of its officers in order to appreciate that it could not conclude that the land was suitable for residential subdivision. · The Council's approval of the development applications proceeded, in fact, without the need to resort to any "policy" considerations. · It must have been obvious to the Council that the subsequent discovery of the contamination had the potential to cause economic loss to the purchasers of the land. · It must also have been obvious to the Council that the subsequent discovery of the contamination in land sold to local residents by a firm such as Finlayson (known to the Council as a local builder/developer) in consequence of the approval given to its subdivision application, had the potential to damage severely Finlayson's reputation as a competent and responsible builder/developer and the community's willingness to deal with him." 96 It is not easy to transpose to the present case these features on which a duty of care was said to arise. The essentials, however, were the council's knowledge of the contamination, the applicants' ignorance of the contamination and the unlikelihood that purchasers would become aware of the contamination from their own investigations, the potential for economic loss to the purchasers and the ease with which the council should have appreciated that the land was not suitable for residential subdivision. So far as the council was held liable to Finlayson as a subsequent purchaser, its duty of care very much rested on the vulnerability to risk of injury which has come to be regarded as of key importance in cases such as Perre v Apand Pty Ltd (1999) 198 CLR 180 and, in relation to whether an engineer owed a duty of care to the subsequent purchaser of a building, Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515. 97 The vulnerability lay in the approvals making contaminated land available to be sold to a subsequent purchaser which was unlikely to become aware of the contamination from its own investigations. A like basis for a duty of care owed to a subsequent purchaser can be seen in Albert Shire Council v Bamford. The council granted subdivision approval and approval to carry out building work to a developer. The purchasers bought their land from the developer. On appeal, it was not in dispute that the council had been negligent in the grant of building approval. The principal issue on appeal was whether the council had been negligent in the grant of subdivision approval, and the trial judge's holding that it had been negligent was affirmed. The purchasers were therefore entitled to increased damages. The duty of care was not in dispute, as was noted in the reasons of Pincus JA and Thomas J, but the reasons of McPherson JA included - "The effect of approving a subdivision puts into circulation something which, in that form, is for the first time capable of being bought and sold, or in other words, dealt with as a merchantable commodity. Viewed in that way, the Council's action may be compared to that of the manufacturer in Donoghue v Stevenson [1932] AC 562 who, by fabricating a commodity and making it available for distribution to the public, comes under a duty of care to persons who sustained damage through negligence in the course of manufacturing it." 98 Although it was not put in this way, the Council's position was in substance that a prospective purchaser's vulnerability could be accommodated by a warning of noise affectation, via a s 149 certificate; the issue of a s 149 certificate was therefore sufficient to discharge the duty of care. It sought to distinguish Albert Shire Council v Bamford on the basis that the risk in that case was a risk of physical injury, which was properly to be met by preventing the development of the contaminated land; in the present case, it said, the risk of exposure to aircraft noise was properly met by a warning. 99 Albert Shire Council v Bamford is not readily distinguishable in the same manner, and for Armidale City Council v Alec Finlayson Pty Ltd itself the risk to Finlayson was not a risk of physical injury. I do not accept the Council's position. 100 Although the appeals were not concerned with the duty of care owed to LMI, it can not be overlooked in considering the duty of care owed to the purchasers; cf Woolcock Street Investments Pty Ltd v CDG Pty Ltd at [14], explaining Bryan v Maloney (1995) 182 CLR 609 as dependent on the builder owing a duty of care to the first owner of the house. Proper attention to the 2002 ANEF and AS2021 was required in the exercise of reasonable care in considering the development application, in the discharge of the duty of care owed to LMI prior to and apart from the duty of care owed to prospective purchasers from LMI. LMI would not be warned by a s 149 certificate. The Council's own practice, according to the discussion paper, was to advise with the development consent that the proposed development was within the 25 contour, later the 20 contour, although this was not done in the case of LMI's development consent. So far as prospective purchasers were concerned, although according to conveyancing practice most would obtain a s 149 certificate, there was no certainty that all would do so, and just as the duty of care owed to LMI would protect it from putting onto the market the defective commodities of land with inappropriately constructed cabins, so also the duty of care owed to prospective purchasers protected them by preventing the defective commodities coming onto the market. The land was not like a medication which could be used safely or unsafely, so that a duty of care was satisfied by instructions as to use. The time for reasonable care, in the interests of prospective purchasers as well as LMI, was in the consideration of the development application and the building application, so that the approvals were not given without appropriate noise attenuation conditions.

[46]

(2) the defendant did not make available to the Development Assessment Panel the 1989 Caleb Smith report. In this respect, I accept the evidence of Mr Ishac that this report, although not specific to the land, would have provided to the Development Assessment panel some guidance as to the noise levels recorded in a rural area affected by the ANEF 20 contour. 12.3 Notwithstanding the assertions of Mr Warnes that there was no misunderstanding of the ANEF system by the Development Assessment Panel, it became very clear in the course of his evidence that members of the Panel mistakenly understood the 2002 ANEF to provide a forecast of aircraft noise for the 10 year period from 1992 to 2002. On this basis the Panel relied on conditions prevailing at the time of assessment of the development application and building application to reach the conclusion that the development consent and building approval should be granted and that conditions addressing noise attenuation were not warranted. The level of confidence appeared to be such that no consideration was given to the need to alert the developers to the 2002 ANEF, to the advisability of seeking qualified technical advice as to the implications of the 2002 ANEF or to the conditions which might appropriately be applied as recommended by AS2021-1985." 103 Her Honour considered that the Council failed to do what s 90 of the EPA Act required because of an "uninformed and mistaken understanding of the implications of the 2002 ANEF in respect of which they had taken no appropriately qualified advice", including that the Panel inappropriately used the concept of a tourist facility when the development proposal "incorporated many characteristics of residential development" and was for substantially increased intensity of development at odds with the situation within the 25 contour. 104 Relatively early in his cross-examination Mr Warnes agreed "that an ANEF forecast for 2002 was a forecast for the entire 10 year period". At a later point he said that he appreciated that the 2002 ANEF was a forecast for a period of time 10 years in the future; he explained - "Q. I think you said this morning you thought it applied for each of the ten years? A. No what I said as I understood that it was cumulative and it would go to that point but there was nothing to suggest that it couldn't reach that level in year 1, year 2, year 3 or subsequently it could drop off because it was all dependent on the operations of the RAAF. There was no reason why those flight levels and numbers couldn't have been achieved in year 3 or 4. It was certainly the advice given to me that the usage of the range was going to be constant and the aircraft weren't going to change in that 10 year period." 105 The Council submitted that, in her Honour's reference to "a misunderstanding of the methodology of the ANEF system" in her para 12.9(1), the judge had wrongly found that Mr Warnes misunderstood the methodology, and that his evidence in the passage last set out showed that he did understand it. There was more evidence than these passages, and on a reading of the evidence as a whole I consider that the judge was entitled to come to the view she did. I do not think that, in her para 12.9, the judge was referring solely to the ANEF being a forecast for noise exposure during a specified future time period. The essential misunderstanding was equating the noise exposure as Mr Warnes understood it in 1993 - the intermittent use not generating complaints - with the forecast noise exposure. That lay behind Mr Warnes' first answer, and was not overcome by his later explanation. As the judge said, he did not appreciate that the conditions which prevailed in 1993 were not those which were forecast to apply in 2002. Hence there was the under-estimation to which the judge referred, an under-estimation because the Panel failed to address the 2002 ANEF on its own merits. It is not irrelevant that Ms Westing understood that the 2002 ANEF was an expression of aircraft noise valid from 1992 to 2002. 106 The Council knew that the site was largely between the 25 and 30 contours, and was only conditionally acceptable for the building type Mr Warnes considered appropriate. Whether it was the appropriate building type, given the nature of the development and despite the condition restricting occupation to 42 consecutive days or an aggregate of 150 days in any twelve month period, may be passed over for the moment. Any exercise of reasonable care required that AS2021 be followed through, with attention to construction for noise level reduction and the imposition of noise attenuation conditions. 107 Ms Smith was well experienced in land use planning, including in the assessment of development applications. She gave evidence that it would be standard planning practice to seek an understanding of the effects of the Range on the development, by obtaining and interpreting ANEF information and obtaining acoustical advice, and that if the Council had properly considered the development application it would most likely have been refused. She thought that the proposed use of the cabins for up to 150 days "encroaches upon residential use". In her view, a prudent planner would advise the developer of the ANEF forecast "and what this may mean for the future of the site", and AS2021 should have been followed so that the development was not permitted without noise attenuation measures. 108 Mr Meredith's advice as recounted by Mr Warnes was rather confusing, but the fact that Mr Meredith appears to have told Mr Warnes that noise attenuation would not be easy was not a reason to go no further. The nature of the proposed Fisherman's Village, as known to the Council, was closer to that of a residential development than the building type hotels, motels, and hostels, as is evident from the permissible occupation for 42 consecutive days or an aggregate of 150 days in any twelve months, and two of the cabins could be permanently occupied. At the least, this heightened the need properly to give attention to construction for noise level reduction. In the manner I have indicated, Mr Warnes was unduly influenced by his understanding of the noise exposure as at 1993. 109 To this may be added that, at a corporate level, the Council failed to provide to the Panel the information in the Caleb Smith report. Despite what Mr Warnes said, it was relevant to the assessment of the development application and should have been provided to the planning staff, amongst other things because it gave a good indication of the noise level to which properties in the ANEF zones would be exposed if the forecast came to fruition. It was directly relevant as an indication of noise level in the steps dictated by AS2021, which should have been considered. It was likely to, and certainly should have, negated any view that the forecast position, if it came to pass, would not affect the amenity of the site of Fisherman's Village and that noise attenuation did not require further consideration. Ms Smith said, agreeing with the acoustical consultant Mr Ishac, that since the report identified unacceptable noise levels at a nearby property within the 20 contour, a reasonable assumption would be that the noise levels would be of even greater concern to occupants of a development within the 20 contour; she would have taken it into account accordingly. 110 Had the Council exercised reasonable care, Mr Moffatt would have been told of the ANEF zoning and required to submit a professionally backed follow-through of the steps in AS2021, or the development would have been approved only on conditions having the consequence that the steps in AS2021 were taken. Perhaps the conditions need not have spelled out the construction for noise attenuation, but they should have made the consent subject to LMI constructing the cabins to achieve the requisite noise level reductions and satisfying the Council on that matter.

[49]

(3) each of the certificates states that the land is within the ANEF 20 contour and invites inquiry only as to the ANEF 20 contour of either the defendant's Community Planning Department or the Strategic Planning Section. No reference is made to any other contour." 113 Her Honour considered that the certificates did not provide "meaningful advice concerning the potential impact of aircraft noise on the use and enjoyment of the land or of the potential restrictions on the use of the land by reason of that impact", and that the information in their Part I was misleading. She concluded - "13.9 … that there was misstatement as to the identity and import of the noise exposure referred to in the s 149 certificates. It is not stated that the 2002 ANEF is referred to. It is not stated that the 2002 ANEF dealt with exposure to aircraft noise forecast to be experienced in 2002 rather than at the date of issue of the certificates. 13.10 Once more negligence is found in the failure of the defendant to make available the 1989 Caleb Smith report to those on its staff who were responsible for the preparation of the s 149 certificates. This document would have alerted them to the potential severity of the aircraft noise to which land within even the ANEF 20 contour was exposed. Of further significance is the failure of the senior staff to recognise the complexity of the NEF system and the need for the assistance of an appropriate qualified expert in meeting their obligations to those to whom the s 149 certificates were issued." 114 The Council submitted on appeal, as it had before the judge and referring to evidence in those terms, that the s 149 certificates were "technically correct". I do not think that assists it. It meant no more than that a property between the 25 and 30 contours was necessarily within the 20 contour. The peak of Mount Everest is within the sea level contour. It was materially misleading to convey that the land was within the 20 contour and consequently may be subject to noise exposure from aircraft, when the true position was that the land was between the 25 and 30 contours and subject to a higher degree of forecast noise exposure which, according to the building site acceptability which informed land use and building noise reduction requirements and was plainly material to the enjoyment of the land, made some uses unacceptable, and other uses conditional on analysis of building noise reduction requirements and construction for noise attenuation. It was prejudicially misleading when the land in question was, even in the Council's eyes, in the conditionally acceptable category. 115 I do not think it necessary to attach significance to failure to identify the ANEF as the 2002 ANEF or to identify the future year 2002. It is not an answer that the recipient of a certificate was told that information as to the extent of the ANEF 20 contour was available. A recipient unfamiliar with the ANEF system might not be provoked to enquire, when disclosure of the conditional acceptability would be much more meaningful and would provoke enquiry. A recipient familiar with the ANEF system might be led not to enquire, believing that noise affectation between the 20 and 25 contours was meant and being prepared to accept it. 116 In my opinion, there was failure to take reasonable care in the issue of the certificates in the form they took. From the 2002 ANEF, the Council knew all the contours, and there was no evidence that including all the contours on the constraints map and programming the computer based system to refer to all the contours presented difficulty. The practice from May 1997 of referring to the 20 contour "or above" was at least an improvement, but not even that was done in 1993-4. Balancing the harm in misleading certificates against the ease of correct disclosure, it was unreasonable to have issued the certificates in the form they took. 117 The failure in due care was highlighted, as the judge indicated in her para 13.10, by the corporate failure to provide the Caleb Smith report to the planning staff. If that had been done, there should have been impressed on them the likely significance of noise levels within the 20 contour and more so within the higher value contours. It was attributable to a systemic failure to appreciate the significance of the increased noise exposure or the need to follow through the steps required by AS2021. In the absence of better explanation from the Council, Mr Meredith's advice to Mr Warnes can be taken to have informed the Council's understanding of the significance of the steps required by AS2021; it was inadequate.

[50]

Question (c): The good faith defence 118 Section 149(5) provides that a certificate may "include advice on such other relevant matters affecting the land of which [the council] may be aware". The information in Part I of the s 149 certificates fell within this subsection. By s 149(6), a council "shall not incur any liability in respect of any advice provided in good faith pursuant to subsection (5)". It was common ground that it was for the Council to satisfy the Court that it provided the advice concerning aircraft noise exposure in good faith. 119 The judge directed herself by reference to Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290, in which it was said that good faith called for more than honest ineptitude and there must be "a real attempt by the authority to answer the request for information at least by recourse to the materials available to the authority". Her Honour said - "13.12 … In this case, it might have been possible, having regard to the complexity of the ANEF system to find good faith in the genuine misunderstanding by the defendant's staff of the import of the 2002 ANEF. I see no reason, however, to excuse the unexplained failure of the defendant to make known to the staff responsible for responding to inquiries made under s 149 of the EPAA the content of the 1989 Caleb Smith report. A proper appreciation of the information contained in this report, coupled with the historical background to the aircraft noise problems experienced by residents in the defendant's local government area, may well have alerted the defendant's staff to the need to obtain technical advice for the purposes of formulating the advice to be provided to inquirers. For this reason, the defendant will not be allowed the protection of the good faith provisions of s 149(6) of the EPAA." 120 The Council submitted that it had recourse to the 2002 ANEF, and that although it did not have recourse to the Caleb Smith report that report was of "dubious relevance" and information from it would not have appropriately been referred to or incorporated in a certificate. It said that there was no more than "an error made in the inspection of records", and that it had made a real attempt to answer the inquiry constituted by application for a s 149 certificate. 121 It is erroneous to focus upon the words used in Mid Density Developments Pty Ltd v Rockdale Municipal Council on the facts of that case. On those facts, the council had not acted in good faith because there was no system for having recourse to the council's records in order to answer the request for information, and the council officer had consciously not had recourse to the records which contained the information. 122 Other cases on analogues of s 149(6) include Lamont v Wyong Shire Council (Palmer AJ, 13 December 1991, unreported); Forbes Shire Council v Pace [2002] NSWSC 966; and Melaleuca Estate Pty Ltd v Port Stephens Shire Council [2004] NSWSC 415; the last is currently under appeal. Their facts differ. They include reference, sometimes by illustration, to no effort at all to take care to avoid causing foreseeable damage, to delegation of design to persons known not to be qualified, to lack of honest endeavour to undertake the relevant task, to "fobbing off" rather than genuinely attempting to remedy a situation, and to declining to remedy a nuisance because the work would cost too much. Each case must turn on its own facts; as the High Court said in Bankstown City Council v Alamdo Holdings Pty Ltd [2005] HCA 46 at [50], speaking of s 733(1) of the Local Government Act 1993, the range of advice, acts and omissions to which it may apply may vary from one case to the next and it is "unwise, if not impossible, to place a definitive gloss upon the words of the statute". 123 In the present case, the failure to take reasonable care went beyond failure to have recourse to available information. The Council had the Caleb Smith report, but the mayor withheld it from the planning staff; all we know is that he did it for "his own purposes". It was plainly relevant to the staff's appreciation of potential noise affectation and thus the need for more full and accurate disclosure of ANEF zoning, and at the corporate level withholding relevant material for unknown and apparently private purposes is an impediment to proof of good faith. There was what appears to have been a conscious decision to refer in certificates to the ANEF 20 contour alone, without identifying that land might be, let alone was, within a higher value contour. The reasoning in my view could not be supported, and any real consideration should have brought the realisation that the technical correctness espoused in the proceedings was in fact in the nature of a trap. If advice on ANEF zoning was to be included in the certificates, proper attention had to be given to its inclusion in a manner which was not materially and prejudicially misleading, and was not. No cost inhibitions on certificates which stated the correct ANEF zoning were demonstrated. 124 There was not a casual act of negligence, but the systemic failure earlier described. In my opinion, the Council has not shown that it provided the advice concerning aircraft noise exposure in good faith.

[52]

(2) Causation : involving the extent to which, if reliance is established, the losses claimed by the plaintiffs are attributable to the defendant's conduct." 126 This appears to have reflected issues as propounded by the Council. They were put forward in similar terms in the Council's written submissions on appeal, posing the question "[w]hether the plaintiffs made out the fundamental element of negligent misstatement in the absence of actual reliance" and including that there was "no causative nexus between the alleged breach of duty to require attenuation and the loss claimed". 127 Notwithstanding the reference to the development consent and the building approval, her Honour's consideration of reliance was principally directed to the s 149 certificates. Her conclusion was that "through Mr Williams there was evidence of actual reliance upon the conduct of the defendant in the issue of the s 149 certificates, the development consent and the building approval in proceeding to complete the purchase of the properties". The reasoning in relation to the development consent and the building approval is not clear from the preceding discussion. The judge went on, under the second issue of causation, to reject the contention that the true cause of the purchasers' losses was the failure of their solicitor to investigate adequately the information concerning exposure to aircraft noise in the s 149 certificates, and in other respects to find that the forecast exposure to aircraft noise and the aircraft noise in fact experienced affected the value of the lots in Fisherman's Village and the income from letting the cabins. 128 So far as the Council's submissions on appeal were directed to the s 149 certificates, it was submitted that it was necessary for the purchasers to establish affirmatively that each of them had, in fact, read or learned of the terms of the certificate and was, in fact, misled by those terms. In the absence of that actual reliance, it was said, the certificate "played no relevant causative role in [the purchasers'] decision to purchase the land". Rather, the purchasers had decided to purchase their lots before their solicitor received the s 149 certificates, and had not given evidence of reading them, and Mr Williams had not made any enquiry into noise affectation on their behalves. The Council submitted that there had not been made out the "fundamental requirement of the tort of negligent mis-statement, namely that the misrepresentation must have induced the plaintiffs to act to their detriment", citing the statement by Brennan CJ in Pyrenees Shire Council v Day at [9] - "When the damage in issue is 'pure economic loss which is not parasitic upon physical damage', its immediate cause is frequently the action or inaction of the plaintiff who suffers the damage. To sheet home liability to the alleged wrongdoer in cases of that kind, it is necessary to show that some act or omission on the part of the alleged wrongdoer induced the plaintiff to act or to refrain from acting in the way which caused the damage. Thus the chain of causation is established between the act or omission of the alleged wrongdoer and the particular loss. To prove inducement, it is necessary to show that the plaintiff acted or refrained from acting in reliance on the alleged wrongdoer's act or omission. Reliance becomes a critical link in the chain of causation and a necessary element in the plaintiff's cause of action." (citations omitted) 129 The Council's primary submission on appeal as to causation and the grant of development consent was that there was no causation in the absence of reliance; it said that Pyrenees Shire Council v Day made clear that "there is no doctrine of general reliance in respect of the exercise of a discretionary statutory power" and that actual reliance had not been established, and that the present case was on all fours with Curran v Greater Taree City Council (1992) Aust Torts Rep 81-152. It submitted also that, if the breach of duty lay in failure to impose noise attenuation conditions, the only loss which could be recovered was that caused by failure to construct the cabins with noise attenuation, and that the diminution in value and consequential losses awarded by the judge were not caused in that manner. (I confess to difficulty with the written submissions at this point, which were not amplified in oral submissions; this is my best understanding.) 130 There were two operative breaches of duty of care, one in relation to the grants of the development consent and the building approval and the other in relation to the issue of the s 149 certificates.

[53]

(i) The grants of the development consent and the building approval 131 It is not entirely clear what the judge meant by reliance through Mr Williams on the development consent and the building approval. Her Honour may have had in mind Mr Williams' evidence later mentioned that he thought that the Council had "considered itself the appropriateness of … giving of the consent and the building approvals", that "the relevant circumstances would have been attended to in the registration process and approvals by council", and that in considering whether it was "prepared to admit the development" the Council had "taken into account the relevant factors which would have included the considerations under the ANEF 20 and Australian Standard". 132 At least on appeal, the purchasers put it differently. They submitted that, had the Council declined development consent or building approval because of the forecast noise exposure, or had it imposed conditions for construction of the cabins appropriate to the forecast noise exposure, the Fisherman's Village development would not have gone ahead. If so, they would not have purchased their lots, and they would not have suffered loss. There was no question of reliance, any more than there could have been in (for example) Perre v Apand Pty Ltd; the only question was causation in fact. 133 That the development would not have gone ahead was supported by Mr Moffatt's evidence, as I have said implicitly accepted by the judge. The causation in Armidale City Council v Alec Finlayson Pty Ltd must have been of the same kind, that the residential lots would not have been in existence whereby contaminated land was able to be sold to the purchaser, and the causation of a commodity being made available for distribution to the public readily flows from the reasoning of McPherson JA in Albert Shire Council v Bamford. The disapproval of general reliance in Pyrenees Shire Council v Day was in connection with whether a duty of care was owed; causation of loss is a different matter. Once it is held that in approving a development a council is in breach of a duty of care owed to a subsequent purchaser, it will often be artificial to speak of reliance by the purchaser other than in the sense of general reliance, although actual reliance may be proved. That does not preclude finding causation in that the land was made available for purchase by the approval of the development. 134 Curran v Greater Taree City Council was a different case. The subsequent purchasers of a house claimed that the council had been negligent in approving the plans and specifications which did not include a means of bridging the foundations over a culvert. The trial judge held that the council did not owe the purchasers a duty of care because, as an element in proximity, the purchasers' reliance on the approval in purchasing the house had not been reasonable. The finding of unreasonable reliance was challenged on appeal, but was upheld, and that was agreed as sufficient to dispose of the appeal (at 61,123). The case was concerned with whether a duty of care was owed. With respect, it may be thought curious to have paid regard to the reasonableness of the purchasers' actual reliance in that regard, but the case does not make essential to causation of loss that the purchaser reasonably relied on the council's approval. 135 In my opinion, on the facts of this case the purchasers' losses were caused by the Council's breach of duty. The Council's further submission, resting upon the breach of duty lying in failure to impose noise attenuation conditions, is misconceived. Loss came from the purchase of the lots.

[56]

Ross Williams: 'I will check it out'." 139 Mr Williams told the Gibsons that he had made enquiries "and nothing has arisen which would preclude this sort of development". 140 All the purchasers gave evidence that, if they had been told prior to signing the contract(s) that it was forecast by the Department that in 2002 and possibly earlier the noise from military aircraft might be "such that residential development would not be acceptable and that hotel motel or hostel development would only be acceptable subject to conditions", they would not have purchased their lot(s). Save for Mrs Gibson's evidence mentioned above, none of the purchasers gave evidence of specific awareness of the s 149 certificates attached to the contracts, or awareness of the certificates obtained by Mr Williams prior to completion. The judge found that, "properly informed", they would not have proceeded. 141 When he received instructions from Mr and Mrs Booth, their contracts being the first in relation to which he acted, Mr Williams "reviewed the contracts for sale and their inclusions". With respect to cl 5 in Part I of the s 149 certificate in the contracts, he said in his affidavit - "11 ... I am able to say that up to that time I had dealt with occasional conveyances involving purchases in areas affected by noise exposure associated with Sydney airport and, as such, had seen similar clauses in zoning certificates. My practice in 1993, as it is today is to discuss all unusual clauses with my clients prior to exchange of contracts. Whilst I have no precise independent recollection of discussing the clause with the Booths I would be surprised if I had not done so, particularly as to the likely sources of aircraft noise in the area local to that in which they were purchasing and as I considered then and I consider now that such clauses are unusual and warrant discussion." 142 Mr Williams said that he similarly thought he would have discussed the clause with Mr Burcher and with Mr and Mrs Gibson. 143 Mr Williams said he had some understanding of ANEFs, which he described as an estimate within various ranges of likely noise from aircraft from airport general aircraft activity, with the index figure relating to severity of the noise emanating from aircraft from a moderate range to a higher range. He did not understand that it was "a cumulative exposure to noise", or that it related to a specific period. He was not familiar with AS2021. He said of the updated s 149 certificates obtained prior to completion that, while he had no specific recollection, it was his practice to compare them with the certificates in the contracts "to ensure that there had been no material change about which I should advise my clients". 144 In his oral evidence Mr Williams said that he believed that in his discussions with his clients "reference was made to the endorsement in relation to the ANEF". He had a discussion with an officer of the Council, only "that the tourist resort was permitted and that with the required consents of council to the various - to the management statement and the development contract to which the contracts were to be subject, that the type of development was permitted". 145 Mr Williams' oral evidence included - "Q. Did you have regard to the restrictions on the land when you considered that certificate? A. Not otherwise than realising that the council was required to give consents and have considered itself the appropriateness of that giving of the consent and the building approvals. Q. But you understood that your clients were purchasing this land for a particular investment purpose. Did you give any consideration to matters which may prohibit or inhibit the future sale of this land? A. I considered that the relevant circumstances would have been attended to in the registration process and approvals by council. Q. No. Did you give any consideration in this transaction to any factors that may adversely affect your clients or inhibit or prohibit the sale of this land by them in the future? A. Realising that the type of investment that was being undertaken was yet to be proven, in that context I wouldn't have advised otherwise than that the saleability would depend upon the success of the facility. Q. So you did advise them that the saleability of this land in the future would depend upon the success of the resort as a resort? A. Yes, that was implicit. Q. Well, did you tell your clients that that success or lack of success would have a bearing on the saleability of the land in the future? A. I can't recall that I specifically had that discussion. Q. Do you agree that the notation on this section 149 certificate, and you may like to have it in front of you before you answer this question, do you agree that the notation on this 149 certificate was an unusual notation? A. Yes. HER HONOUR: Q. You're talking about the notation concerning the aircraft noise, are you? A. Item 5. STITT: Yes, item 5. Q. What did the ANEF 20 contour mean to you at the time that you acted for your clients on this - I'll withdraw the question. What did the notation ANEF 20 contour on the certificate mean to you at the time you acted for your clients? A. From previous involvement with other matters, particularly surrounding Sydney airport, I was aware that that was the lowest of the categories. If there was no ANEF 20, there was nothing. Q. In the answer that you've just given did you form that view because you understood - in giving that answer did you understand that an ANEF 20 contour is difficult to define accurately? A. No, I wasn't possessed of that knowledge. Q. But what you say you did understand was that an ANEF 20 contour was the lowest of the possible index ratings, is that right? A. That's correct. Q. Did you seek your clients' instructions to obtain further advice about the effect of this notation from any other professional adviser? A. No, I only queried them on their own knowledge of aircraft noise. Q. But you must have understood that your clients had no knowledge of aircraft noise or these contours - or these readings, isn't that so? A. Well, I posed the question as to whether they had any knowledge at all and, taking that in conjunction with it being in the lower or the lowest register and my discussions with council --- … Q. Did you have any discussion with your client as to what ANFE (as said) 20 contour meant? A. Not specifically. Q. Did you have any discussion with your client as to their understanding of what an ANEF 20 contour meant so far as this land was concerned? A. Having not had the first discussion, no, I would not have any recollection of having had a subsequent discussion based on that. Q. And you therefore, I suggest, understood that your clients - you therefore understood that it would have been extremely improbable that your clients themselves had any independent understanding of what ANEF 20 contour meant in relation to this subject land, is that so? A. That's correct. Q. Did you do anything to throw light on your clients' lack of knowledge about that subject? A. Well, again I come back to the discussion I had with council --- Q. No, no. I'm asking you about did you do anything with your clients to lift their state of ignorance about that subject matter? A. Not by informing them. Having --- Q. Well, I'm only asking you about your clients, you see? A. Mmm. Q. You say not by informing them? A. Not by informing them specifically on the issue of ANEF 20, but taken in the context of my discussion with council as to what was --- … Q. Mr Williams, I'm asking you about - solely about your conversation between you and your client in which you were discussing this transaction. In that context did you say anything to your client about the ANEF 20 contour? A. No. Q. Did you say anything to them about the fact that an ANEF is a reading of cumulative aircraft noise at a particular time? A. No. Q. Did you advise your client that they should make enquiries as to what ANEF 20 contour in the context of this transaction in fact meant? A. No. Q. Did you advise your client that they should seek some professional advice from an appropriate qualified person as to what ANEF 20 contour meant in the context of this transaction? A. No." 146 In re-examination Mr Williams said that he reported his discussion with the Council officer to his clients; he also said - "Q. You've told her Honour that you didn't advise your clients to make any enquiry themselves as to what ANEF 20 meant? A. Yes. Q. Why didn't you? A. I considered that each had, from my interviews with them, individual knowledge of some aircraft movements in the Williamtown Air Base area. I considered also that the enquiry of Council as to whether on its criteria it was prepared to admit the development there had taken into account the relevant factors which would have included the considerations under the ANEF 20 and the Australian Standard." 147 Causation may be established by reliance on a misleading statement, or it may be otherwise established; there can be causation, including reliance, through an agent. It is not necessary that the purchasers themselves had read the terms of a s 149 certificate and were misled by its terms, and causation may be established by proof that, because the certificate was misleading, the purchasers through Mr Williams were not alerted to the forecast noise affectation and proceeded with their purchases when they would not have done so had the certificate been framed with reasonable care. 148 Mr Williams' familiarity with the ANEF system was fairly rudimentary, but he knew that an ANEF "index figure" indicated severity of noise with ANEF 20 as the lowest of the index figures. It followed that he would have been made aware by an index figure of 25 that the severity of the noise was in a higher range, and he would certainly have been alerted by a reference to conditional acceptability. He was misled, and it can not be overlooked that he saw no occasion for inquiry in response to the reference to ANEF 20 because he believed that the Council had taken into account that status of the Fisherman's Village site in its grant of approvals; his belief was as to a wrong status. Although the judge did not expressly so state, she must have concluded that, had the certificates referred to ANEF 25, Mr Williams would have been caused to inquire further or advise his clients to inquire further, and that it would have been found that the site was in the conditionally acceptable category calling for noise attenuation in the construction of the cabins but the cabins were not to be or had not been so constructed; whereupon the purchasers would not have gone ahead. In my opinion, that conclusion was open to her Honour as an inference from the evidence, and causation was thereby established.

[60]

(6) In the current case, it is necessary to take into account not only the reality of the new forecast but also the reality that the plaintiff's properties have in fact been affected by severe aircraft noise. The proposition put forward by Mr Cooper that, on paper, the noise should not have been as severe as was in fact experienced must be read in conjunction with the evidence, correspondence and admissions set out in section 6.6 of these reasons. Thus, whilst, on paper, the position appears as it was in 1993/1994, in fact it is not. The circumstances are significantly different. The evidence of the plaintiffs and the defendant was that in 1993/1994 there was little appreciable aircraft noise experienced at the site of the then proposed Resort. The 2002 ANEF indicated that in 2002 noise levels would be severe. The 2011 ANEF indicates that by 2011 aircraft noise affecting the Resort will be reduced to the point where the noise attenuation requirements of AS2021 will no longer apply. There is no evidence before the Court to suggest that this forecast already has application to the properties. I am thus not persuaded that the publication of the 2011 ANEF is of any relevance in assessing the plaintiffs' loss as at the date of contracts for the purchase of their properties." 153 Mr Cooper to whom the judge referred was an acoustic consultant called by the Council, whose lengthy report included the opinion that, with changes in aircraft type and flight paths, the actual noise exposure at Fisherman's Village had fallen in the late 1990s and, if the 2011 ANEF (in fact an ANEC, see later) were used for planning purposes no noise control measures would be required. Mr Cooper added, however - "152. Nevertheless, from the maximum noise level information that has been obtained for the purpose of determining noise controls for the subject development, I find that noise levels from aircraft operating at the weapons range in 1992 were greater than that experienced in the late 1990's and significantly greater than that experienced now." 154 The "evidence, correspondence and admissions set out in section 6.6" to which the judge referred was a series of matters, including consideration of Mr Cooper's report, which evidently caused her Honour to accept (see her para 6.8(3)) that aircraft noise became a significant problem commencing in the latter part of 1995. 155 Before going to the Council's submissions on appeal, something should be said of later noise exposure forecasts. 156 I have referred to the issue by the Department of a draft 2005 ANEF in May 1997. The evidence was not entirely clear. It seems that the draft was prepared for the Department by VIPAC Engineers & Scientists Ltd ("VIPAC"). According to Mr Cooper, the VIPAC draft was "never endorsed" because it was found that an assumption upon which it was based was incorrect. According to Ms Westing, subsequent to the issue of the draft the Department advised that it was "the final draft 2005 ANEF contours", but "never formally endorsed them". The evidence included two apparently different drafts, one showing the Fisherman's Village site partly within the 25 contour and partly within the 30 contour and the other showing it partly within each of the 20, 25, 30 and 35 contours. Whatever the position, it is apparent that the noise exposure forecasting was in a state of flux, but the forecast for the site tended to greater noise affectation. 157 According to Ms Westing, in January 2001 the Department issued a revised draft ANEF as the noise exposure forecast for Williamtown to 2010. Ms Westing nonetheless said that the 2005 ANEF "is still the most current information available for [the Range]". She apparently did not regard the noise exposure forecasts next mentioned as of planning significance. 158 In 1999 the Department commissioned GHD Pty Ltd ("GHD") to undertake a study of the likely impact of the introduction of the Hawk aircraft, as a replacement for the Macchi, in operations at Williamtown and the Range. GHD produced a 2011 Australian Noise Exposure Concept chart ("the 2011 ANEC"). It showed Fisherman's Village between the 20 and 25 contours. 159 Mr Moss of GHD said that an ANEC is "used for evaluation of particular operations such as used for this study". He put forward the description of an ANEC - "An ANEC is an illustration on a map, which shows contours of defined noise exposure using inputs which may be quite different to the inputs used to produce an ANEF or ANEI. ANECs are prepared for the purpose of assessing the noise exposure of various operational or airport development alternatives and are based on a hypothetical set of conditions of runways, aircraft types and flight operations. Several ANEC maps may exist for some future year, based on different forecast conditions. ANECs should not be used for definitive land-use planning; however, the land-use compatibility table (Table A.1) is used to assess the potential impact of operations depicted on the ANEC plans." 160 Mr Cooper described an ANEC as "a hypothetical concept … that has not been subject to the rigorous examination and cross checking of an ANEF", and his report included - "41. If one considers the possibility of projected aircraft operations, at some point in time in the future, then the chart that is produced is identified as the Australian Noise Exposure Concept (ANEC) chart. As there can be different opinions under consideration for an aerodrome development, there may be several ANEC charts at any one point in time. As such, the ANEC may not necessarily be the considered position of the airport at some point in time and therefore does not have status as a document to be used for land-use or planning purposes. 42. The Australian Noise Exposure Forecast (ANEF) chart is a contour map determined from a projection of aircraft operations at some point in the future. This chart is a contour map that has been developed following extensive consultation and validation of the forecast of aircraft movements, operating times, types, flight paths etc, developed for an aerodrome. Obviously an ANEF at one point in time would have been an ANEC. … The ANEF chart is an ANEC that has been examined for its accuracy in terms of computer generated predicted levels, input data and modelling results and having received an endorsement is the official ANEF document to be used for planning purposes." 161 In 2003 the Department commissioned GHD to prepare a new ANEF for Williamtown and the Range. GHD's report noted that "[t]he current, endorsed 2002 ANEF for [the Range] is included in the 2002 ANEF for Williamtown and was produced in 1992", and that the Hawk aircraft had replaced the Macchi and it was "therefore appropriate that a new ANEF be published". The report proposed a 2012 ANEF in which Swan Bay appears to be within, but only just within, the 20 contour. 162 The Council did not challenge on appeal the judge's acceptance of valuation evidence. It submitted that the differences between the values and the contract prices should not have been awarded as damages, because the Department had published a new noise contour map showing Fisherman's Village in the 20-25 ANEF contour so that the purchasers were - " … at the date of the trial and remain, in the same position that they claimed that they believed they were in at the date of purchase. That is, that they each owned cabins in the Resort that are unaffected by an adverse noise forecast requiring the provision of noise attenuation". 163 The new noise contour map on which the Council relied at this point was the 2011 ANEC, although the Council equated it with an ANEF. It referred also to the proposed 2012 ANEF, changing from one to the other rather indiscriminately; that proposal was not shown to have gone beyond the GHD report. It is not clear to me that, or the extent to which, the 2011 ANEC or the proposed 2012 ANEF had entered the public domain, although the purchasers' submissions did not include that no account could be taken of them because they had not. 164 The submission was again put in two ways. The first was that the purchasers' losses were contingent losses only, although not because it was necessary that the lots be sold in order to establish a loss, but because the purchasers had in fact not sold their lots and suffered losses but continued to hold them when the subsequent publication of the new noise contour map meant that they were no longer exposed to sale at a loss. The second was that the subsequent publication of the new noise contour map meant that no losses had been suffered. I do not understand the submissions to have gone to the consequential losses, although it was not entirely clear, but it is difficult to see how they could negate the consequential losses or at least the entirety of them. 165 As to contingency, the Council relied on Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Murphy v Overton Investments Ltd (2004) 216 CLR 388. The contingency there in question was different from the relevance of the later noise exposure forecasts to the purchasers' losses. The purchasers suffered losses immediately they purchased their lots, in the difference between the prices paid for their lots and the lots' then values. The present question is rather one of ascertaining the values of the lots in quantifying the loss, and whether and how in doing so there is taken into account the subsequent event of the 2011 ANEC or the proposed 2012 ANEF. The High Court made plain in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 that contingency as considered in Wardley Australia Ltd v Western Australia and Murphy v Overton Investments Ltd was a different matter, see below. 166 As to the subsequent publication of the new noise contour map, the Council again relied on Kizbeau Pty Ltd v W G & B Pty Ltd and also on HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd; the latter case was decided after the judge's reasons of 14 May 2004. 167 In Kizbeau Pty Ltd v W G & B Pty Ltd Kizbeau had purchased a motel business relying upon a representation by WG & B that an upstairs portion of the premises could lawfully be used for seminars and conferences. Conditions in a council permit prevented this use, and the representation was false. Damages were assessed as the difference between the value of the business at the date of purchase and the price paid. Relevantly, it was held that it was necessary to take into account that Kizbeau had in fact used the upstairs portion for seminars and conferences, and had after a time obtained an amendment to the conditions of use whereby, subject to a limitation of numbers, the upstairs portion could lawfully be used for seminars and conferences. 168 In the joint judgment of Brennan, Deane, Dawson, Gaudron and McHugh JJ it was said (at 291) that, although the value of the thing acquired was to be assessed at the date of the acquisition, subsequent events "may be looked at insofar as they illuminate the value of the thing as at that date", although only those subsequent events "that arise from the nature or use of the thing itself" as distinct from subsequent events "that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement". Their Honours said (at 295) that in arriving at the value of the business the valuer should have considered the likelihood that the conditions of use might change, even if they had not been changed when he valued the business, and that "[a]rmed with the knowledge that the conditions in the town planning permit have been changed, the Federal Court was bound to act upon that knowledge even though the change in the conditions occurred after the date of sale". 169 This was further explained in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd. In April 1977 Astonland purchased a shopping arcade in reliance on HTW's valuation, which it was held should have been qualified by informing the reader that the effect on rental income of a rival shopping centre then under construction was uncertain. The trial judge awarded damages measured by the difference between the price paid by Astonland and the value of the shopping arcade at the end of 1998, after the rival shopping centre had been operating for the better part of a year. It was held that this was incorrect, and that Astonland's loss did not await the establishment and a year of trading of the rival shopping centre; but that in ascertaining the value of the shopping arcade in April 1997 it was necessary to take into account how the uncertain effect on rental income was known to have evolved into certainty. The result in that case would have been to increase the damages, because the value so arrived at would have been less than the value at the end of 1998. 170 In the joint judgment of Gleeson CJ and McHugh, Gummow, Kirby and Heydon JJ it was said (at [28]) - "If the plaintiff had learned the day after entering the contract to buy the Plaza, or the day after completing that contract, that the defendant's conduct had been misleading in the sense ultimately found by the trial judge, it could have started proceedings then and there. There was unchallenged evidence from Mr Dodds that on either of those dates the plaintiff was in fact worse off as a result of the defendant's breach, since the market value was less than the price. It was not necessary to wait for nearly two years to ascertain that some loss had been suffered. The plaintiff could have found out at once that it had bought something which was worth less than that which it had agreed to pay and did pay. It could have recovered at least the difference between the price paid for, and the market value of, the Plaza. The limitation period would have begun to run." 171 Their Honours went on to say (at [29]-[30]) that the case was not like Wardley Australia Ltd v Western Australia or Murphy v Overton Investments Ltd, and that Astonland had not been exposed to a contingent loss but had suffered an actual loss. The Council's submission as to contingency can not stand with this. 172 Their Honours accepted Astonland's submission that the correct measure of damages, apart from consequential losses, was to deduct the value of the shopping arcade at the date of purchase from the purchase price, and in assessing that value to bear in mind post-acquisition events. They said that the approach of subtracting value from price was flexible, and that - "[36] One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and 'market value', but price and 'real value' or 'fair value' or 'fair or real value' or 'intrinsic' value or 'true value' or 'actual value' or what the asset was 'truly worth' or 'really worth' or 'what would have been a fair price to be paid … in the circumstances … at the time of the purchase'. This distinction is sometimes difficult to draw, but it is old and fundamental. [37] A second qualification flows from the first. The distinction between a value which answers one of the tests just stated and market values means that market values - the prices actually obtainable in market sales - may be disregarded if they are 'delusive or fictitious' because they are the result of 'a fraudulent prospectus, manipulation of the market or some other improper practice on the part of the defendant'. There are other reasons why the law does not limit recovery by reference to market value - the amount for which the plaintiff might have sold the assets acquired. One is that, subject to mitigation issues, the plaintiff is 'not bound to sell them'. Another is that there may not be a market. Another is that the market is mistaken on some basis other than manipulation. It is common to speak of shares being undervalued (or overvalued) by the market. [38] The last point is supported by another matter to which Dixon J [in Potts v Miller ] referred, in the context of shares: '[T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.' He referred to Sir James Hannen's observation in Peek v Derry - '[S]ubsequent events may shew that what the shares might have been sold for was not their true value, but a mistaken estimate of their value.' Dixon J continued: '[L]ooking back from subsequent events to the earlier state of the company it may appear that at the time the shares were taken the assets of the company did not correspond in value to the money paid.' [39] In the same way, in Kizbeau Pty Ltd v W G & B Pty Ltd this Court pointed out that, in many fields of law, assessments of compensation or value at one date are commonly made taking account of all matters known by the later date when the court's assessment is being carried out. This has been so in relation to the remarriage of widows, the termination of a dependency by early death after the date from which damages were to be assessed, the death of a person having a claim for personal injuries which was unexpectedly early and unrelated to those injuries, rises in wage rates, assessing the value of reversionary life interests which never came into possession, valuing annuities, and assessing compensation for the acquisition or destruction of property rights. The limpid words of Lord Macnaghten about the duty of an arbitrator in determining compensation are far too well known to escape repetition: 'Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?' The significance of Kizbeau Pty Ltd v W G & B Pty Ltd is that it endorsed that approach in relation to s 82 of the Act when the court is assessing damages by comparing the price and the real value of the asset at the date of the acquisition." (citations omitted) 173 Importantly, their Honours explained when post-acquisition events were to be taken into account, saying - "[40] Finally, although the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. 'If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be "independent", "extrinsic", "supervening" or "accidental", then the additional loss is not the consequence of the inducement'." (citations omitted) 174 This explanation was illustrated. Their Honours considered that the fall in value of the shopping arcade was "not independent, extrinsic, supervening or accidental", but "lay in circumstances crucial to the value of the Plaza at the time when the plaintiff acquired it - the current building, and the impending opening, of the Beach Road Shopping Centre" (at [41]). They considered that the rental levels, and therefore the value, of the shopping arcade were "doomed from the start - 'pregnant with disaster' - because so long as the building of the Beach Road Shopping Centre continued the loss was inevitable", and compared the shopping arcade to a horse which died of a latent disease inherent in its system at the time of its purchase, as distinct from one which died of a disease contracted after the purchase (at [43]). 175 The valuer had valued the shopping arcade as at April 1997 taking into account the "serious risk" of the rival shopping centre being completed as having an "impact on the market at that time". In their Honour's view, the court should go further. Their Honours said (at [44]-[46]) - "… In carrying out valuations, [the valuer] had to take account of risks so far as the market perceived them to be present realities at the date at which value was to be fixed. The task of valuation is to be conducted without hindsight - that is, without knowledge of events which have not happened by the date at which the value is to be ascribed, though they have happened by the date on which the valuation takes place. That task is different from the task of assessing loss, because the latter task is to be conducted with hindsight. [45] Thus, in assessing damages in this case, the court is not limited to the assessment of risk as at 28 April 1997, but is entitled to take account of how those risks had evolved into certainties at dates after the date on which the comparison of price and true value was being made. The market values Mr Dodds arrived at may well have been entirely accurate; if so, they demonstrated not that he was in error, but that the market assessment of the risk was erroneous. In short, the market value in 1997 was not a 'true value, but a mistaken estimate of … value'. [46] Figures worked out by analysing what willing but not anxious buyers and willing but not anxious sellers would agree on, without taking account of subsequent events, may correspond with market value; but they do not necessarily correspond with true value because the market can operate under some material mistakes. In particular, some material factor may not be apparent to it. A mistake of this kind, it seems likely, was present here. Though the market value on 21 April 1997 was $400,000, and in July 1997 it was $375,000, one matter was not apparent then which was apparent later. The trial judge found that $130,000 was 'the value of the land more or less since it became apparent that tenants were largely unavailable except at minimal rentals.' That unavailability was an inevitable consequence of the Beach Rd Shopping Centre once it was completed, but the perception of the likely effect of that completion was obscure in 1997, and only became clearer from the latter part of 1998 on." (citations omitted) 176 The essence of their Honours' reasoning was that, although it may not have been operating in the market to reduce the value of the shopping centre as at April 1997, a factor material to the true value (as distinct from the market value) of the shopping arcade was the inherent vulnerability of the shopping arcade to the competition of the rival shopping centre under construction at the time of purchase. The inevitable manifestation of that vulnerability, as it had come to be known, could be taken into account, and the valuer fell short of taking it into account because he paid regard to a risk rather than the known consequence. 177 The circumstances of the present case are in my opinion quite different. When the purchasers purchased their lots, there was no doubt the possibility that changes in aircraft types and usage of the Range would bring changed noise affectation for the site of Fisherman's Village. The evidence did not show that, at that time, any change would be for the better rather than for the worse; indeed, the draft 2005 ANEF demonstrates the possibility that it would be for the worse. It is still by no means certain that it will be for the better. The 2011 ANEC has the status only of a study, not an examined and approved ANEF, and the proposed 2012 ANEF may not be adopted. Whatever aircraft types and usage of the Range lies behind the 2011 ANEC or the possible 2012 ANEF would, even if the ANEC came to adoption as an ANEF or the proposed 2012 ANEF became an adopted ANEF, be open to further change, either with better or with worse consequences for noise affectation. Neither the 2011 ANEC nor the proposed 2012 ANEF is anything like the inevitable manifestation of the inherent vulnerability of the shopping arcade in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd. 178 The values of the of the purchasers' lots as at the dates of their purchases would have reflected the market's understanding of, amongst other things, the possibility that noise affectation from use of the Range might change, for the better or for the worse. The Council's submission was not that the valuer had failed to take into account the possibility that it might change for the better. It was that the mere fact of the 2011 ANEC or the proposed 2012 ANEF meant that the purchasers were now in the positions they claimed they believed they were in at the dates of their purchases, and so they had suffered no loss. Kizbeau Pty Ltd v W G & B Pty Ltd and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd do not support that, nor do they support an argument that the diminutions in value were nil because the real values of the lots, as distinct from their market values, were shown by subsequent events to have been the same as the prices paid for them. The Council did not call valuation evidence to the effect that a market informed of the 2011 ANEC or the proposed 2012 ANEF, and thus with any mistake of the kind afflicting the valuer in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd corrected, would have paid for the lots the prices the purchasers in fact paid. Perhaps on reasoning different from that of the judge, I do not think the Council has shown error in the judge's assessment of diminutions in value.

[61]

Question (f): Interest 179 Again the Council's submissions, and the purchasers' response to them, were only in the parties' written submissions. It is far from clear that the Council's grounds of appeal were sufficient to carry their submissions. The purchasers did not take any point. 180 When the judge delivered her reasons on 14 May 2004 she stated her assessments of damages; taking Mr Burcher's proceedings as an example, $22,207.50 for diminution in value of his lot and $37,925 for consequential losses. Her Honour adjourned the proceedings to 21 May 2004 for submissions on interest and costs and the making of final orders. 181 The appeal papers did not show what occurred on 21 May 2004. The final orders appear to have been made on 28 May 2004. In Mr Burcher's proceedings, the judgment was for $98,802.50. I understand it to be common ground that the additional $38,670 was interest included in the judgment pursuant to s 83A of the District Court Act 1973 ("s 83A interest"). 182 It is not evident that s 83A interest was in contest at the trial. If it was the judge's reasons setting out the competing submissions and her resolution of them should have been available; none were provided. It may be that, for that reason alone, the Council's submissions should not be entertained. In any event, they should not be accepted. 183 The Council submitted that the purchasers had not lost the use of their money, because despite paying too much for their lots they had received a return from letting the cabins out. It asserted that, at least to an extent, the rental return fulfilled the purchasers' expectations, and that to the extent it did not it was necessary to show that the lack of return was due to the Council's negligence. It is unclear whether this complaint could go beyond interest on the diminutions in value. 184 The purchasers' consequential losses took account of their rental return. To continue with the example of Mr Burcher's proceedings, his consequential losses were calculated as - $ Purchasers costs Mortgage interest 41,459 Fees and other costs 4,591 46,050 Outgoings 16,246 Future costs 5,411 Rents received (29,782) 37,925 185 The Council's submission is misconceived. The damages represented money lost to the purchasers, being the overpayments for their lots and their net consequential losses after allowing for rentals, the loss being caused by the Council's breaches of duty. The partial rental return provides no reason for declining to allow s 83A interest on the damages. 186 The Council submitted that the purchasers still had their lots, that the lots had "potentially increased in value" and the increase in value "may well overwhelm any overpayment … as at the date of purchase", and that to award interest on the damages "would be potentially to overcompensate them". Again, it is unclear whether this complaint could go beyond interest on the diminutions in value. 187 The submission is again misconceived. If the purchasers are entitled to damages representing (relevantly) money lost to them by overpayment for their lots, notwithstanding that the lots may now or hereafter be of increased value, in law they have been deprived of the money lost to them and have been entitled to the damages since they purchased their lots. There is no error of principle in allowing s 83A interest on their damages. If a fortuitous increase in value known at the time of judgment could provide grounds for exercising the discretion against an award of s 83A interest, and I should not be taken to endorse the possibility, the judge's exercise of discretion as such has not been challenged. 188 The purchasers' consequential losses included interest on the money they borrowed to purchase their lots. This was not challenged on appeal. The Council submitted that s 83A interest should not have been awarded on the interest component of the damages. It submitted that the purchasers borrowed money rather than invest their own money, were "for the most part … not deprived of their money that they were otherwise entitled to", and that to award s 83A interest on the interest component "would be to over compensate them and pay double interest". It referred to Degman Pty Ltd (in liq) v Wright (1983) 2 NSWLR 348 and H T W Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd. 189 The submission is erroneous. The starting point is that the purchasers' losses included the money they paid as interest on their borrowings - whether that money was correctly wholly recoverable need not be gone into. The purchasers were deprived of their own money, the money they paid as interest on their borrowings. So far as there was s 83A interest on the interest they paid on money borrowed to purchase the lots, there was not double interest, but interest on a loss which had been suffered by payment of interest on borrowings. 190 Degman Pty Ltd (in liq) v Wright is not in point. It was relevantly concerned with whether a mortgagee could recover from a guarantor interest on the mortgage principal under s 94 of the Supreme Court Act 1970, or only interest at the mortgage rate. It was held that, on the construction of s 94, it could not recover interest under that provision because it was recovering a debt on which interest was payable as of right. Whether or not the decision is correct in this respect, that is not this case. 191 In H T W Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd the plaintiff recovered as damages the difference between the price paid for the shopping arcade and its value, trading losses, and some purchase and refurbishment costs. The judge awarded interest under an equivalent to s 83A on the trading losses and the costs, but said (Astonland Pty Ltd v HTW Valuers [2001] QSC 380 at [53]), "Since the trading losses in this case include interest on the funding for the purchase of the Plaza it seems to me to be inappropriate to award interest on any part of the primary loss". 192 In concluding that the judge's error in not taking into account subsequent events in arriving at the true or real value of the shopping arcade was balanced by errors in the other direction, in the High Court their Honours said - "[54] A further error, also relating to interest, arose from the trial judge's endeavour to avoid double counting. He refused to allow "interest on the funding for the purchase of the Plaza" on the ground that it was included in the trading losses. This would be correct if the whole of the $485,000 had been borrowed . … " (emphasis added) 193 The Council submitted that their Honour's endorsement of the refusal to allow interest if the purchase price had been borrowed supported its position. This was a misunderstanding of the case. The reason why interest was not to be awarded on the borrowed amount of the purchase price was that the trading losses included interest on the funding. Interest was awarded on the trading losses, and there would have been double recovery. Because the trading losses included interest on the funding and interest was allowed on the trading losses, however, interest was in fact awarded on the interest component of the damages. The case is against the Council, rather than supporting its position.

Port Stephens Shire Council v Booth & Ors; Port Stephens Shire Council v Gibson & Anor

At a glance

Court

Decision date

Before

Source

Judgment (67 paragraphs)

Cases Cited (32)

Cited By (12)