Precision Products (NSW) Pty Limited v Hawkesbury City Council

· Cease the use of the premises for the processing of hazardous chemicals immediately as the premises is [sic] being used in a manner where there is potential to cause danger to the environment and public health. · Remove all chemicals from the site within fourteen (14) days from the date of this notice. · Provide to Council in writing where the chemicals were transported or disposed of within twenty one (21) days from the date of this notice. · Ensure the premises is [sic] cleaned to the satisfaction of the Manager of the Environment & Waste Branch including all waste holding vessels, separators and underground tanks. All chemicals/waste are to be disposed of by an authorised waste removal company and all appropriate documentation indicating the amount and receiving company forwarded to council within twenty one (21) days. This notice is issued under section 91 of the Protection of the Environment Operations Act 1997 . It is an offence against that Act not to comply with this notice, unless you have a reasonable excuse for not complying. 6 It is important to note the following features of the notice that assumed some importance in the litigation. First, whilst the notice referred to potential to cause danger to the environment and to the fact that the notice was being issued to prevent the pollution of receiving waters, no so-called "pollution incidents" were separately referred to. Secondly, reference was made to the alleged lack of development consent. 7 Between 22 May and 8 July 2002, the appellant ceased using the premises and removed chemicals from the premises. This, it was asserted, caused it economic loss. 8 On 6 June 2002, the Council issued a second notice under the PEO Act, s 91. Its terms were, relevantly, the same as the earlier notice. It was issued after a request for further time to comply by the appellant. 9 The appellant claimed that the economic loss suffered by it was a consequence of conforming with an invalid notice (or notices) which were negligently issued by the Council. The trial of the action involved a significant body of disputed facts as to what actually happened, findings of credit by the primary judge (by and large consistently against Mr Zeuschner and in favour of Ms Tierney) and a conclusion by the primary judge that the appellant was without legal remedy. It is convenient to delay any more detailed examination of the facts until the discussion of the legitimacy of the conduct of the Council in the section of these reasons on breach of duty, on the hypothesis of the existence of a duty of care as alleged.

10 The heads of relief claimed in paragraph 20 of the Second Further Amended Statement of Claim ("the 2nd FASC") were:

(v) such further order or orders as the Court thinks fit. 11 In relation to the first purported notice under the PEO Act, s 91 issued on 22 May 2002, the appellant alleged (see the 2nd FASC paras 7A and 7B) that the Council did not afford it procedural fairness and that the notice was thereby invalid. Additionally, or alternatively, the appellant asserted (see the 2nd FASC paras 7C and 7D) that the notice issued on 22 May 2002 was invalid (a) because it did not identify any "pollution incident [that] has occurred or is occurring" within the meaning of s 91; (b) because the notice required the appellant to carry out work which was not "clean-up action" within the meaning of s 91; and (c) because the work to be carried out on the site and the terms of the notice amounted, effectively to a notice prohibiting the plaintiff from carrying on its business contemplated by Pt 4.4 of the PEO Act, which the Council had no power to issue. 12 Further, it was alleged (see the 2nd FASC paras 7E and 7F) that the decision of the Council to issue the notice was manifestly unreasonable and therefore invalid. 13 Finally, it was alleged (see the 2nd FASC paras 7G - 7I) that the notice was invalid because of a lack of proper authority in Ms Tierney to sign the notice. 14 In paras 10-10I of the 2nd FASC the appellant alleged that the second notice issued on 6 June 2002 was also invalid for reasons substantially similar to those invalidating the first notice. 15 The appellant further alleged in paras 14-16 of the 2nd FASC that the Council owed a duty of care to the appellant "to see that proper skill and care was exercised in investigating and the issuing of [the first and second notices]". 16 The appellant alleged that the Council breached the duty of care in that the directions were not "validly, properly or reasonably issued". The particulars to this allegation of breach of duty were as follows:

(a) Issuing the directions on grounds incapable of supporting their issue as at both 22 May and 6 June 2002. This included the assertion that the defendant did not reasonably suspect that a pollution incident within the meaning of the PEO Act had occurred or was occurring at or from the site or that the plaintiff was causing or had caused a pollution incident. (See para 17A.)

(b) Issuing the directions without affording procedural fairness. (See para 17AA.)

(c) Failing to ensure that the notices were signed by an officer of the Council who was validly authorised to do so. (See para 17AB.)

(d) Issuing notices that were invalid. (See para 17AC.)

(e) Issuing the notices in the absence of grounds capable of supporting them in that: (i) the use of premises for the processing of hazardous chemicals in a manner where there was potential to cause danger to the environment and public health was not a valid basis for the issue of a direction to take clean-up action under s 91; (ii) the lack of approval of a development application for a use being made of premises was not a valid basis for the issue of a notice to take clean-up action under s 91; and (iii) the lack of development consent for a use being made of premises was not a valid basis for the issue of such a notice under s 91.

(f) Issuing the notices on the basis that the Council had not approved a development application for the use of the site for processing hazardous chemicals when in fact the Council had approved such a development application by granting development consent. (See para 17C.)

(g) Issuing the notices without adequately checking its records in order to determine whether the Council had approved a development application for the use of the site for processing hazardous chemicals. (See para 17D.)

(h) Issuing the notices expressed so as to require action that went beyond what might reasonably have been required to remove existing "pollution" within the meaning of the PEO Act and/or preventing pollution that was likely to occur. (See para 17E.)

(i) Representing to the appellant that it (the appellant) did not have development approval for the activities being carried out by it on the premises. (See para 17F.)

(j) Continuing to insist on the appellant complying with the notices notwithstanding that the Council was aware, at all times, of the building approval and development approval and that the appellant notified the Council on or about 23 May 2002 that the Council had issued a development approval for the activities being carried out. (See para 17G.)

(k) Issuing the notices expressed so as to require action that went beyond what might reasonably have been required to remove existing pollution and/or prevent pollution that was likely to occur as a result of the pollution incidents and action which the Council was not entitled to require the plaintiff to take and action that was not "clean-up action". (See para 17H.) Issue was taken by the Council with all aspects of the claims made.

Summary of conclusions 17 The essential conclusions of the primary judge were as follows:

(a) the claim was in essence one for judicial review of the exercise of the Council's functions, seeking relief that was, by the Land and Environment Court Act 1979 (NSW) ("the L and E Court Act "), s 71(1), made exclusive to the Land and Environment Court and that the District Court had no jurisdiction to hear it;

(b) that there was no duty of care owed by the Council to the appellant;

(c) that if there were a duty of care there was no breach;

(d) that if there were breach, the Civil Liability Act 2002 (NSW), s 43A applied to protect the Council;

(e) that although rejecting the Council's assertion of contributory negligence, the appellant had failed to mitigate its position by failing to take various steps and because of this the claim should fail;

(f) that if her Honour were otherwise wrong, damages in the order of $26,000 would have been awarded to the appellant; and

(g) in relation to costs, in a separate judgment, the primary judge ordered that the appellant pay costs on an indemnity basis in certain respects. The question of jurisdiction 18 The primary judge concluded that the proceedings were in substance to review a function of the Council and so exclusively within the jurisdiction of the Land and Environment Court by reason of the L and E Court Act, ss 20(1)(e), 20(2), 20(3)(a) and (b) and 71(1).

The question of the duty of care 19 The primary judge's essential findings included the following:

(a) The appellant was not "vulnerable", because although it could not prevent the issue of notices, it could have resisted the notices by citing a reasonable excuse not to comply with them because of the notices' invalidity or by moving for relief in the Land and Environment Court. The appellant was in a position to protect its own economic interests and was not in any relevant sense "vulnerable" or within the control or power of the Council.

(b) Reliance and proximity alone do not constitute a basis for the imposition of a duty.

(c) The knowledge of the Council officers that the appellant would rely on the notices was "problematic", given that the notice itself stated that it was to be obeyed "unless you have a reasonable excuse for not complying".

(d) The foreseeability of economic harm flowing from the exercise of the power was insufficient.

(e) The PEO Act , s 91 confers a discretionary power. Further, it is a power which of its nature must impose cost on the person affected.

(f) There was no duty to exercise the power in any way for the benefit of a person in the position of the appellant; rather, the power was to be exercised for the benefit of the public and the protection of the environment.

(g) The PEO Act , s 91(4) expressly contemplated an "innocent" recipient of a notice under s 91.

(h) The Council did not appreciate that the notices were relevantly deficient.

(i) There was no dishonesty or malice on the part of the Council or any officer in issuing the notices or making the decision to do so.

(j) The PEO Act was concerned with the protection of the environment and the public interest and in determining whether a common law duty exists it was necessary to give close consideration to the statutory scheme involved and especially whether a common law duty of care was "inconsistent" or "incompatible" with the statute.

(k) There is no express statutory requirement for procedural fairness in the decision-making process for the issue of notices on s 91.

(l) The appellant did not plead a common law duty to accord procedural fairness. 20 In all the circumstances, after a consideration of the terms of the PEO Act and related legislation and after a discussion of a number of cases to which I will make reference below, the primary judge was of the view that there was no duty of care imposed on the Council of the kind pleaded.

Breach of duty and the validity of the action taken

Reasonable suspicion 21 The primary judge found that the Council officers, in particular, Ms Tierney, held the belief or suspicion that there had been or would likely be pollution from the premises and that those beliefs were reasonable. 22 At page 95 of the primary judge's reasons the following finding was made: I find that Ms Tierney in fact held the suspicions of which she gave evidence, and that they were reasonable suspicions in the circumstances. I find that in deciding to issue each of the notices, Ms Tierney acted bona fide upon her reasonable suspicions then formed. 23 The credit of Ms Tierney, was severely called into question in cross-examination. There was an allegation, dealt with early in the primary judge's reasons, that Ms Tierney had fabricated documents after proceedings had started to justify her position in relation to the issue of the notices. It was also alleged in cross-examination of her that she had fabricated a diary note at a later date. The primary judge rejected these allegations. She found Ms Tierney to be "patently honest", "frank and honest", a "witness of complete honesty" and "honest, frank and reliable". 24 The rejection of these allegations was important because included in the notes said to be a fabrication was contemporaneous support for evidence given by Ms Tierney about what she thought of the premises and the possible danger to the surrounding environment. In particular, the relevant note contained a record of something said by Mr Zeuschner which contained a clear admission that he thought that he would be subject to some action by the authorities because of the way he was conducting his business. This statement was denied by Mr Zeuschner, but found by the primary judge to have been made by him. 25 The findings about the honesty of Ms Tierney were made in the context of contradictory evidence, not only of Mr Zeuschner, but also of others, including the appellant's solicitor who gave evidence of the extent and contents of documents provided on discovery, which, he said, did not include a document produced by Ms Tierney in her evidence and said to be contemporaneous with events. 26 Ultimately, the appellant challenged only one aspect of the primary judge's acceptance of Ms Tierney's evidence - about conversations after the notice had been served concerning the scope of the development consent, and what was said to flow from that in connection with the reason for issuing the notices. I will come to this challenge in due course in dealing with the factual issues in the context of the asserted breach of duty. 27 The primary judge accepted all the evidence of Ms Tierney as to what she saw and thought about the state of the premises and concluded that there was a clear base upon which to issue a notice under s 91. 28 Within this conclusion was the rejection of the assertion that the only reason for issuing the notice was a belief that the activities conducted at the premises by the appellant went beyond the development consent that had been issued by the Council. The primary judge accepted that there were discussions about the development consent and indeed heated meetings. The primary judge stated the following at p 89 of her reasons: I am conscious that there was much discussion about development consent immediately after the notices were issued, and a rather heated meeting convened to discuss that subject on 5 July 2002. But the fact that a meeting with town planners focussed upon a discussion as to the content of the development consent is hardly surprising. I do not find that the fact of that meeting or the content of the debate at that meeting supports the plaintiff's contention that the notice was issued because of the Council's view about the lack of development consent. The lack of development consent was a separate problem which the Council addressed for a while, but which for reasons not explored in these proceedings the Council did not pursue. Procedural fairness 29 After a discussion of various cases, including Twist v Randwick Municipal Council [1976] HCA 58; 136 CLR 106; Liverpool City Council v Cauchi [2005] NSWLEC 675; 145 LGERA 1; Kioa v West [1985] HCA 81; 159 CLR 550; and Deputy Commissioner of Taxation v Richard Walter Pty Limited [1995] HCA 23; 183 CLR 168 and of the structure of the relevant legislation, the primary judge found no breach of duty to accord procedural fairness. It is not clear whether the primary judge so concluded because of a finding that there was no duty or that in the circumstances here no steps needed to be taken. In any event, the primary judge distinguished Cauchi.

Delegation 30 There was a certain lack of clarity and contradiction in the primary judge's reasons in relation to delegation. On at least one occasion, the primary judge appeared to indicate her view that the delegation of authority to Ms Tierney was valid; in other places, it appeared that she concluded the delegation to be invalid. More importantly, however, the primary judge found that there was no negligence in Ms Tierney or any Council officer in assuming or believing that she had authority to issue the notice. In particular the primary judge rejected the proposition that the Council was required to check the delegation before issuing the notice.

The question of what should or could have been done by the Council 31 The primary judge discussed the issue of the unlicensed storage of dangerous goods. Her Honour also noted that the matters which concerned Ms Tierney were also to be seen in the views of the appellant's expert. In cross-examination, the appellant's town planning expert, Mr Falson, agreed that the potential for a pollution incident by reason of the method of storage of the chemicals on the site was ever present. This was particularly so given that there was no bunding to protect the surrounding environment from any spill. 32 The primary judge rejected any proposition that no steps were required to be taken. Her Honour concluded that the appellant had failed to discharge the onus of proving that the notice went too far and was not a legitimate clean up notice under the PEO Act or that it could not reasonably be seen as such. The Civil Liability Act 2002 (NSW), s 43A 33 The primary judge expressed the view that the Civil Liability Act, s 43A protected the Council. This was a finding based substantially on the findings as to the reasonableness of the Council's approach.

Contributory negligence and mitigation 34 The primary judge rejected the Council's pleading of contributory negligence. This was not challenged on appeal. Nevertheless, the primary judge concluded that the appellant had failed to mitigate its position and because of that its claim should fail. The primary judge accepted the Council's submission that the appellant should have undertaken the following conduct to ameliorate its position and thereby mitigate its loss or damage:

(a) The appellant could have done nothing and rested on a reasonable excuse for non-compliance.

(b) The appellant could have exploited the argument that the notice was not addressed to the correct company.

(c) The appellant could have sought professional assistance at an earlier point from environmental consultants, town planners, dangerous goods consultants or lawyers.

(d) The appellant could have applied to the Land & Environment Court for immediate relief against compliance.

(e) The appellant could have complied with the first notice and cleaned up within the required 14 days, secured the required dangerous goods licence and resumed operations at that point. 35 The primary judge accepted a submission from the Council that the appellant had failed to do any of these things and had otherwise led no evidence supporting a contention that it was mitigating its loss. The submission of the Council that was accepted was also to the effect that the appellant was preoccupied with what business it could operate at 97 Fairey Road rather the way it was carrying out its activities. 36 For these reasons the primary judge said that the appellant's claim should fail.

Damages 37 The primary judge prefaced her remarks on loss with a comment about the lack of adequate documentation reflecting the business affairs of the appellant and of the unreliability of Mr Zeuschner's evidence. 38 The primary judge also prefaced her conclusion on the posited heads of loss by noting that the Council could have acted against the appellant even if the notice was too broad and by also noting that if the Council had not acted the likelihood was that the WorkCover Authority would have stepped in to take some unidentified action in relation to the state of the premises. These comments may have formed the foundation for a conclusion that even if the notice in this form should not have been issued, no loss had been proved to have been suffered because there had been no attempt to identify what loss would have occurred from a properly framed notice given the findings as to the state of the premises. 39 In any event, the primary judge considered each of the relevant heads of loss. The primary judge would have awarded:

(b) $4,247.75 for loss of stock consequent upon the notice;

40 The appellant stressed that the relief it claimed was for damages at common law, not "to review" or "to command" a function conferred or imposed by a planning or environmental law. It was the relief claimed that was determinative, it was submitted, not the findings that may have to be made in considering whether relief is to be given. It was submitted that once one identified claims for relief that were of a common law character the L and E Court Act, ss 20(2) and 71(1) did not operate. Reliance was placed on Bathurst City Council v Saban (1985) 2 NSWLR 704 at 709; Darkingjung Pty Limited v Darkingjung Aboriginal Land Council [2006] NSWSC 42; and National Parks and Wildlife Service v Stables Perisher Pty Limited (1990) 20 NSWLR 573 at 583. 41 The Council made submissions in writing supporting the primary judge's conclusion. It was submitted in writing that for the purpose of assessing jurisdiction here, it was the findings that may have to be made that were determinative, not the relief that was claimed. The Council conceded that a case of misrepresentation could have been based on the claims of invalidity. Here, it submitted, the claim was for no more than review of the function. 42 In oral argument on the appeal, the Council conceded that what was involved was an action for common law damages which was within the jurisdiction of the District Court. 43 Notwithstanding this concession, it is appropriate to make the following remarks. 44 The passages in Bathurst City Council v Saban, Darkingjung and National Parks and Wildlife Service make clear (as do the terms of the L and E Court Act, ss 20(1)(e), 20(2) and 71(1)) that it is proceedings to do certain things that are made exclusive to the Land and Environment Court. Relevantly, here, "proceedings to review … the exercise of a function conferred or imposed by a planning or environmental law". 45 Notwithstanding the baldness of some of the assertions in the pleading of invalidity, it is clear that the only claim for relief was one for damages and, by para 19 of the 2nd FASC, that claim was grounded only upon the allegation of breach of a common law duty to exercise proper skill and care in "investigating and issuing the two directions". 46 The primary judge, of course, found there to be no such duty. In those circumstances the claim simply failed. 47 If the Council was under a duty to exercise due care at common law in the respects identified, a proceeding which propounded a claim for damages for breach of that common law duty would not answer the description of a "proceeding to review … the exercise of the function". The fact that only damages were sought was not determinative (though it was relevant). If a plaintiff were to seek damages consequent upon an order in the nature of certiorari, that is a claim for damages arising from or in respect of the flawed administrative action, different considerations might apply.

The appellant's submissions on duty of care 48 The appellant identified three erroneous conclusions in the primary judge's reasons. First, the primary judge erred in finding that no established category of duty applied. Secondly, the primary judge erred in determining whether a duty applied by concluding that considerations of the vulnerability of the appellant and reliance by the appellant here were not relevant or not of sufficient weight. Thirdly, the primary judge erred in taking into account or giving too much weight to various matters, being the so-called "precautionary principle", the principle of coherence between any posited duty of care and administrative law concepts of procedural fairness and the statutory scheme under the PEO Act, and the availability of alternative relief in the Land and Environment Court. 49 The first and primary proposition of the appellant was that the passage in the joint judgment of Dixon CJ, McTiernan, Kitto and Taylor JJ in Caledonian Collieries Limited v Speirs [1957] HCA 14; 97 CLR 202 at 220 had not been given proper consideration by the primary judge. In that passage, their Honours said the following: The well settled principle applies that when statutory powers are conferred they must be exercised with reasonable care, so that if that 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. 50 The appellant noted that Caledonian Collieries had been subsequently referred to in a number of High Court and Court of Appeal decisions, including Sutherland Shire Council v Heyman [1985] HCA 41; 157 CLR 424 at 436, 458 and 484; Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330 at 391; and Port Stephens Shire Council v Booth [2005] NSWCA 323; 148 LGERA 351 at 369 [83]. 51 Her Honour was incorrect, it was said, to distinguish or put to one side Caledonian Collieries on the basis that this was a discretionary power being exercised here and not a power which there was a duty to exercise. 52 The appellant criticised her Honour's reliance on cases such as Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; 200 CLR 1; Graham Barclay Oysters Pty Limited v Ryan [2002] HCA 54; 211 CLR 540 and Romeo v Conservation Commission of the Northern Territory [1998] HCA 5; 192 CLR 431 on the basis that these were cases concerned with the duty to take action, that is, a duty to exercise a power to avoid loss, not (as here) the negligent exercise of a power. The appellant submitted that in circumstances where a power is exercised (here in taking action under the PEO Act) the Council had an obligation to take reasonable care in the exercise of the power to prevent a reasonably foreseeable and avoidable loss that may occur should the power not be exercised with reasonable care. 53 The appellant submitted that her Honour was also in error in dealing with the decision of the High Court in Northern Territory v Mengel [1995] HCA 65; 185 CLR 307 in the way she did. Her Honour had referred to the passages in Mengel which dealt with Beaudesert Shire Council v Smith [1966] HCA 49; 120 CLR 145. The appellant emphasised the passage in the High Court judgment at 348 that "in this country governments and public officers are liable in negligence according to the same general principles that apply to individuals". The appellant pointed out that in Mengel negligence was not considered in the High Court because the judge at first instance had apparently accepted the existence of a duty of care, but found no breach of it and there had been no intermediate appeal pressed on that issue. 54 The appellant argued that when cases such as Woolcock Street Investments Pty Limited v CDG Pty Limited [2004] HCA 16; 216 CLR 515 and Perre v Apand Pty Limited [1999] HCA 36; 198 CLR 180 are understood properly, there was a proper basis to conclude here that the appellant was vulnerable and that a duty arose. In particular, the appellant relied upon the following:

• First, the appellant was given no warning about the inspection or, in the three week delay before the first notice was issued, that the respondent had concerns about the premises. The appellant had no opportunity to comment or give an explanation for any of the concerns.

• Secondly, the appellant was not told about any of the four "pollution incidents" that Ms Tierney said in her evidence had caused her to issue the notice. The appellant had no opportunity to explain these incidents or to take action voluntarily to address them before the notice was issued.

• Thirdly, the notice did not identify any pollution incident so that the appellant had no way of knowing whether it might have a reasonable excuse for failing to comply with the notice or some other defence to a prosecution.

• Fourthly, the notice indicated that it was being issued because the appellant did not have a development consent for its activities on the site and that this matter was confirmed to Mr Zeuschner by Ms Tierney when he asked about the matter.

• Fifthly, the Council was in a much better position than the appellant to investigate the permitted uses of the land.

• Sixthly, the nature and extent of the action required to be taken was within the discretion of the Council and required action of the most drastic type. 55 The appellant submitted that it was unrealistic to think that a person in the position of the appellant had a real opportunity to protect itself in circumstances where such a notice was given with the threat of fines of $250,000 per day in circumstances where no warning or proper notice to the appellant had been given about the issue on the notice. 56 The appellant also attacked the primary judge's reference to the so-called "precautionary principle" referred to in the Protection of the Environment Administration Act 1991 (NSW) (the "PEA Act"), s 6. The primary judge referred to the PEA Act, s 6(1) and (2)(a) in the context of the structure of the State legislation of which the PEO Act formed part, and the statutory purposes of the Environment Protection Authority (the "EPA") in the PEA Act. 57 The appellant noted that the precautionary principle, in its proper context, is one suited to assist decision-makers who are confronted with the task of undertaking environmental assessment of any proposed activity. The principle required them to approach the task from the common sense point of view that if there was a lack of scientific certainty available for the decision maker to rely upon, the decision should be made cautiously: Leatch v National Parks and Wildlife Service (1993) 81 LGERA 270 and Telstra Corporation Limited v Hornsby Shire Council [2006] NSWLEC 133; 67 NSWLR 256 at [128]. The appellant submitted that the principle had no relevance to the circumstances here and that the discussion of it reflected a misunderstanding of the appropriate task in assessing whether the duty of care existed. 58 The appellant submitted that one of the reasons for the primary judge coming to the view that there was no duty of care was her view that such duty would be incompatible with the Council's duty under the statutory scheme in the PEO Act which was the source of its power and that such a duty would therefore be inimical to "coherence" in the law. As required by State of New South Wales v Paige [2002] NSWCA 235; 60 NSWLR 371, the appellant submitted that it was necessary to analyse the relevant statutory scheme closely in order to answer this question. It was submitted that the primary judge failed to do this adequately. In the appellant's submission, there was nothing incompatible in the Council being required to exercise care in adhering to the text and purpose of the statutory scheme. 59 The appellant submitted that its use of the phrase of "procedural fairness" in its pleading may have misled her Honour into error. The appellant submitted that the phrase in the pleading was shorthand for the Council failing to warn the appellant that it was considering issuing a notice, failing to seek consultation with the appellant as to why the notice should not issue, failing to allow the appellant to comment on the terms in which the notice would issue and, in particular, the nature and extent of the action to be required and failing to give the appellant an opportunity voluntarily to take such steps as might be required to address the Council's concerns. These were said to be not directed to the public law context of the Council's actions, but to compliance with the common law duty to exercise the power without negligence. The appellant submitted that the invalidity of the notice was claimed only as a particular of negligence: that the Council was negligent in that it breached its duty of care by issuing an invalid notice, by failing to give the appellant any acceptable warning that it was considering issuing the notice and in failing to give it a chance to comment upon it or address the Council's concerns. 60 Though not pleaded precisely in this way, the appellant propounded before the primary judge and on appeal two duties, both of which were said to arise at common law: first, the "duty in Caledonian Collieries"; and secondly, the duty (the decision having been taken to exercise the power) to exercise the power properly in accordance with statutory requirements. During oral argument the duty to conduct an investigation with reasonable care (part of the pleaded duty in para 16 of the 2nd FASC) was abandoned. 61 Both these duties were said to have been breached in five ways:

(a) the failure to accord the appellant procedural fairness, being a warning or an opportunity to make submissions or address the Council's concerns;

(b) the failure to identify the pollution incidents in the notices;

(c) the issue of the notices without a proper basis of a reasonable suspicion of pollution incidents;

(d) the drawing of a notice which was either misleading as to the pollution incidents on which it was based or misrepresented that there was no development approval; and

(e) the requiring of action that was not clean-up action within the meaning of the PEO Act .

The Council's submissions on duty of care 62 The Council submitted that there was no general duty on a public authority to exercise reasonable care in the exercise of powers. The law, it was submitted, does not recognise a duty having such an ambit. The Court must have regard to the terms of relevant legislation in order to determine whether or not a common law duty of care exists and also to determine the scope of that duty. Reference was made to Crimmins v Stevedoring Industry Finance Committee at 34-35, 59 and 99; Romeo v Conservation Commission of the Northern Territory at [123]; Sullivan v Moody [2001] HCA 59; 207 CLR 562 at [60] and [61]; Sutherland Shire Council v Heyman at 459 and 483; Pyrenees Shire Council v Day at 346; and Graham Barclay Oysters Pty Limited v Ryan at [78], [79] and [185]. 63 It was submitted that the duty cannot be defined by reference to proximity: Graham Barclay Oysters Pty Limited v Ryan at [99] and [236], or by reference to reliance on the part of the appellant on the Council exercising a statutory function for its particular benefit: Pyrenees Shire Council v Day at 344 [20], 347-348 [45] and 411 [231]. 64 Further, it was submitted that it was wrong to regard the duty as requiring the Council to take reasonable care to guard against any foreseeable risk: Romeo v Conservation Commission of the Northern Territory at [126]-[129]. 65 It was submitted that vulnerability, properly understood, was important to the imposition of a duty of care. However, vulnerability did not simply mean that the appellant was exposed to risk, but that the appellant was unable to do anything to protect itself from the economic consequences resulting from the Council's conduct. It was submitted that the onus was upon the appellant to show that it could not have protected itself against economic loss allegedly suffered: Woolcock Street Investments Pty Limited v CDG Pty Limited at [23], [31], [32], [80], [96], [213] and [231]. 66 The Council submitted that a duty of care should not be imposed upon a public authority if the observance of such a duty would be inconsistent with, or have a tendency to discourage the due performance of, a public authority's statutory duties: Sullivan v Moody and X (Minors) v Bedfordshire County Council [1995] AC 663 at 639. This, it was submitted, was the position here. 67 It was also submitted by the Council that there was no duty imposed on the Council if the purpose of the statutory scheme was (as here) to protect the public: Curran v Northern Ireland Housing Association [1987] AC 718 and Davis v Radcliff [1990] 1 WLR 821. 68 The Council submitted that care was required in the imposition of a duty of care upon public authorities in how they exercise their public powers. The availability of public law remedies in the courts to review unlawful decisions and relieve individuals of the consequences of them indicated, it was submitted, that no additional overlay of remedy based on the tort of negligence would apply, unless misfeasance in public office could be established. 69 Here, the statutory framework for the protection of the environment in the State and therefore the protection of a wider public interest by the PEO Act, together with the control of the Council by the terms of the PEO Act and the direction of the Environmental Protection Authority militated against a duty of care in favour of those against whom the protective powers are directed. The recognition of a common law duty would have a tendency to discourage the performance by the Council of its obligations and would conflict in that sense with the broader social and ecological responsibilities imposed by the PEO Act. 70 The Council also submitted that the requirement of coherence between administrative law and the law of torts militated against the imposition of a duty to take reasonable care to avoid engaging in invalid administrative acts. Particular reliance was placed on State of New South Wales v Paige at 387-405 [76]-[258]. 71 The Council submitted that the appellant was in no way vulnerable or under the Council's control. It could rely on having a reasonable excuse (if it had one), or seek declaratory or prerogative relief, urgently if necessary, if the notice were bad, to be relieved of its apparent threat. 72 The Council submitted that the issuing of a notice under s 91 required it to engage in an investigative process. The public interest required unimpeded investigation and not a duty of care directed to the subject of the possible exercise of power which might cramp or chill the process of investigation and associated decision-making: see Cran v State of New South Wales [2004] NSWCA 92; 62 NSWLR 95 at 113. 73 The Council submitted that the primary judge did not use the so-called precautionary principle in any determinative way. Rather, it was submitted that the primary judge referred to the principle as a reflection of the wider statutory purpose of which the PEO Act, s 91 formed part.

Consideration: duty of care 74 I agree with the conclusions of the primary judge that the duty or duties of care propounded by the appellant and said to be owed by the Council to the appellant does or do not arise. Subject to the following expression of my views, I agree with the substance of the Council's submissions. 75 The passage from the judgment of Dixon CJ, McTiernan, Kitto and Taylor JJ in Caledonian Collieries forms part of the fabric of the common law in the task of the ascertainment of the existence and scope of the duty of care. Its relevance can be seen in cases of the highest authority: Sutherland Shire Council v Heyman at 436-437, 458-459 and 484; Pyrenees Shire Council v Day at 391-392 [177]; Crimmins v Stevedoring Industry Finance Committee at 29-30 [62]; Romeo v Conservation Commission at 18 [25]; and Brodie v Singleton Shire Council (2001) 206 CLR 512 at 575 [144]. See also in this Court, Port Stephens Shire Council v Booth at 354 [1], 369 [82]-[83] and 397 [199]. 76 The "well settled principle" is not, however, a stand-alone unitary test for the identification of a duty of care or the ascertainment of its scope. It is not a basis for concluding that whenever an authority, here a Council, decides to exercise any statutory power, it owes a duty of care to any person who might foreseeably be detrimentally affected in any way by the exercise of the power. The existence and the scope of any duty must be analysed by reference to the principles governing such tasks. The principle is, however, a reflection of one of the competing themes in this area - the importance of the notion of equality of citizen and state in the working through of rights and obligations in society: see Graham Barclay Oysters Pty Limited v Ryan at 553-554 [6]; and Northern Territory v Mengel at 348; and compare the Judiciary Act 1903 (Cth), s 64 in the exercise of federal jurisdiction. 77 Here, the ascertainment of whether a duty of care was owed to the appellant, and if it was, its scope, must be analysed by reference to at least two bodies of principle: that governing the duty of care to avoid causing economic loss (the relevant loss to the appellant being, it asserted, its loss of business) and that governing the duty of public authorities in relation to the conduct of administrative or public responsibilities. Both are areas of some complexity: cf Pyrenees Shire Council v Day at 397 [189] and Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422 at 445 [67]. 78 The necessary starting point for any analysis is the legislation in question. From this one finds not only the express powers, duties and functions of the Council, but also the statutory background and framework in which any relevant common law principle must be placed in an harmonious, compatible and coherent way. See generally, Sullivan v Moody and Paige at 387-405 [76]-[258]. 79 The statutory provisions referred to below were those in force during the currency of the events in question. Section 91 of the PEO Act takes its place in Chapter 4 dealing with "Environment protection notices". Four types of notice are provided for: · clean-up notices under Part 4.2 · prevention notices under Part 4.3 · prohibition notices under Part 4.4 · compliance cost notices under Part 4.5 80 Chapter 4, in turn, takes its place in the PEO Act as containing one group of instruments or mechanisms to help achieve the objects of the PEO Act which are set out in s 3, and which include the following: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, …

(d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following: (i) pollution prevention and cleaner production, (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment, (iia) the elimination of harmful wastes, (iii) the reduction in the use of materials and the re-use or recycling of materials, (iv) the making of progressive environmental improvements, including the reduction of pollution at source, (v) the monitoring and reporting of environmental quality on a regular basis … 81 These are objectives which reflect the important public policy of the protection of the environment and the health and well-being of the people of New South Wales. 82 Section 6 identifies the authorities who have these public responsibilities: the EPA, local councils (such as the Council, here) and other public authorities (see s 6(2) and the definition of the phrase "local authority" in the Dictionary to the PEO Act) and other public authorities declared by regulation (see s 6(3)). 83 The EPA can be seen to have an over-arching role in supervising public authorities such as the Council in the exercise of their functions concerning the environment: see for example, the PEA Act, ss 11 and 12 dealing with performance targets for, and directions to, public authorities (such as the Council, here). 84 The objects of the PEA Act insofar as they affect the operations of the EPA are not irrelevant in understanding the place and functions of public authorities (such as the Council, here). The PEA Act, s 6(1)(a) and (2)(a) are in the following terms: (1) The objectives of the Authority are: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development …

(2) For the purposes of subsection (1) (a), ecologically sustainable development requires the effective integration of economic and environmental considerations in decision-making processes. Ecologically sustainable development can be achieved through the implementation of the following principles and programs: (a) the precautionary principle - namely, that if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the application of the precautionary principle, public and private decisions should be guided by: (i) careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment, and (ii) an assessment of the risk-weighted consequences of various options …

85 The PEO Act, chapter 2 deals with protection of the environment policies; chapter 3 deals with environment protection licences; chapter 5 deals with environment protection offences; chapter 6 deals with environmental audits; chapter 7 deals with investigation; chapter 8 deals with criminal and other proceedings; and chapter 9 deals with miscellaneous matters. 86 Section 91 must be read together with the relevant definitions in the Dictionary, as follows: · "pollution" means: (a) water pollution, or (b) air pollution, or (c) noise pollution, or (d) land pollution. · "pollution incident" means: … an incident or set of circumstances during or as a consequence of which there is, has been or is likely to be a leak, spill or other escape of a substance, as a result of which pollution has occurred, is occurring or is likely to occur. It includes an incident or set of circumstances in which waste has been placed or disposed of on premises unlawfully, but it does not include an incident or set of circumstances involving only the emission of any noise or odour.

· "clean-up action" in relation to a pollution incident includes: (a) action to prevent, minimise, remove, disperse, destroy or mitigate any pollution resulting or likely to result from the incident, and (b) ascertaining the nature and extent of the pollution incident and of the actual or likely resulting pollution, and (c) preparing and carrying out a remedial plan of action. It also includes (without limitation) action to remove or store waste that has been disposed of on land unlawfully.

87 Section 91 provides as follows: (1) Notices The appropriate regulatory authority may, by notice in writing, do either or both of the following: (a) direct an occupier of premises at or from which the authority reasonably suspects that a pollution incident has occurred or is occurring, (b) direct a person who is reasonably suspected by the authority of causing or having caused a pollution incident, to take such clean-up action as is specified in the notice and within such period as is specified in the notice.

(2) Notices by EPA in emergency The EPA may, if it considers that it is necessary to do so because of an emergency, give the clean-up notice even if it is not the appropriate regulatory authority with respect to the pollution incident. (3) Reports The clean-up notice may require the person to whom the notice is given to furnish reports to the appropriate regulatory authority regarding progress on the carrying out of the clean-up action. (4) Recovery by person given notice If the person given a clean-up notice complies with the notice but was not the person who caused the pollution incident, the cost of complying with the notice may be recovered by the person who complied with the notice as a debt in a court of competent jurisdiction from the person who caused the pollution incident. (5) Offence A person who, without reasonable excuse, does not comply with a clean-up notice given to the person is guilty of an offence. Maximum penalty: (a) in the case of a corporation - $250,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or (b) in the case of an individual - $120,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues. 88 Section 92(1) empowers the EPA to direct a public authority to take clean-up action. Section 92(2) authorises a public authority to take clean-up action if it considers it necessary.

89 Clean-up directions can be given orally: s 93(1) and (2); but the direction must be reduced to writing: s 93(3). 90 Prevention notices are dealt with in Part 4.3. Prevention notices can be given by a regulatory authority such as the Council in circumstances set out in s 96(1) and (2): (1) Application of section This section applies when the appropriate regulatory authority reasonably suspects that an activity has been or is being carried on in an environmentally unsatisfactory manner at any premises or by any person (otherwise than at premises). (2) Prevention notices The appropriate regulatory authority may, by notice in writing, do either or both of the following: (a) direct the occupier of the premises, (b) direct the person carrying on the activity (whether or not at premises), to take such action, as is specified in the notice and within such period (if any) as is specified in the notice, to ensure that the activity is carried on in future in an environmentally satisfactory manner. 91 The meaning of the phrase "environmentally unsatisfactory manner" is contained in s 95: For the purposes of this Part an activity is carried on in an environmentally unsatisfactory manner if: (a) it is carried on in contravention of, or in a manner that is likely to lead to a contravention of, this Act, the regulations or a condition attached to an environment protection licence, or (b) it causes, or is likely to cause, a pollution incident, or (c) it is not carried on by such practicable means as may be necessary to prevent, control or minimise pollution, the emission of any noise or the generation of waste, or (d) it is not carried on in accordance with good environmental practice.

92 Examples of the type of action that can be required by a prevention notice are set out in s 96(3), as follows:

The action to be taken may (without limitation) include any of the following: (a) installing, repairing, altering, replacing, maintaining or operating control equipment or other plant, (b) modifying, or carrying out any work on, plant, (c) ceasing to use plant or altering the way plant is used, (d) ceasing to carry on or not commencing to carry on an activity, (e) carrying on an activity in a particular manner, (f) carrying on an activity only during particular times, (g) monitoring, sampling or analysing any pollution or otherwise ascertaining the nature and extent of pollution or the risk of pollution, (h) action with respect to the transportation, collection, reception, treatment, re-use, reprocessing, storage and disposal of any waste, (i) preparing and carrying out a plan of action to control, prevent or minimise pollution or waste, 93 The obligations of the recipient of a prevention notice are set out in s 96(4) and (5), as follows: (4) Occupier's duty If the occupier who is given a notice is not the person carrying on the activity, the notice is taken to require the occupier to take all available steps to cause the action to be taken. (5) Reports A prevention notice may require the person to whom the notice is given to furnish reports to the appropriate regulatory authority regarding progress on carrying out the action required to be taken by the notice.

94 Section 97 contains an offence in the following terms: A person who does not comply with a prevention notice given to the person is guilty of an offence. Maximum penalty: (a) in the case of a corporation - $250,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or (b) in the case of an individual - $120,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.

(It is to be noted that there is no reference to "without reasonable excuse" as in s91(5).) 95 Part 4.4 deals with prohibition notices. These can only be given by the Minister upon the recommendation of the EPA. Sections 101 and 102 are in the following terms: 101 Prohibition on activities (1) Application of section This section applies where the EPA recommends to the Minister that a notice be given under this section because it is of the opinion that the emission or discharge of pollutants from (or within) any premises in which any activity is carried on: (a) is causing or is likely to cause such harm to the environment, or (b) is or is likely to be so injurious to public health, or (c) is causing or is likely to cause such discomfort or inconvenience to any persons not associated with the management or operation of the activity, that the giving of the notice is warranted. (2) Notice The Minister may, by notice in writing, do either or both of the following: (a) direct the occupier of the premises, (b) direct the person carrying on the activity, to cease carrying on the activity, or any specified aspect of it, for such period as is specified in the notice. (3) Occupier's duty If the occupier who is given a notice is not the person carrying on the activity, the notice is taken to require the occupier to take all available steps to cause the activity to cease. (4) Further notice The Minister may give further notices on the expiry of the period of the earlier notice if the EPA recommends in accordance with this section that the further notices be given.

102 Offence A person who, without reasonable excuse, does not comply with a prohibition notice given to the person is guilty of an offence. Maximum penalty: (a) in the case of a corporation - $250,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or (b) in the case of an individual - $120,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.

96 Part 4.5 deals with compliance costs, including the costs of clean-up notices, clean-up by an authority, prevention notices and prohibition notices. Section 104 deals with compliance cost notices: (1) Clean-up notice - monitoring or compliance costs The appropriate regulatory authority that gives a clean-up notice under section 91 to a person may, by notice in writing, require the person to pay all or any reasonable costs and expenses incurred by the authority in connection with: (a) monitoring action under the notice, and (b) ensuring that the notice is complied with, and (c) any other associated matters. (2) Clean-up by public authority A public authority that takes clean-up action under section 92 may, by notice in writing, require: (a) the occupier of the premises at or from which the authority reasonably suspects that the pollution incident occurred, or (b) the person who is reasonably suspected by the authority of having caused the pollution incident, or both, to pay all or any reasonable costs and expenses incurred by it in connection with the clean-up action. (3) Prevention notice - monitoring or compliance costs The appropriate regulatory authority (other than the EPA) that gives a prevention notice to a person may, by notice in writing, require the person to pay all or any reasonable costs and expenses incurred by the authority in connection with: (a) monitoring action under the notice, and (b) ensuring that the notice is complied with, and (c) any other associated matters. (4) Prevention notice or prohibition notice - non-compliance A regulatory authority that takes action under section 98 because a prevention notice is not complied with or takes action under section 103 because a prohibition notice is not complied with may, by notice in writing, require the person to whom the notice was given to pay all or any reasonable costs and expenses incurred by it in taking the action.

97 Section 105 deals with recovery of costs: (1) Recovery of unpaid amounts A regulatory authority or public authority may recover any unpaid amounts specified in a compliance cost notice as a debt in a court of competent jurisdiction. (2) Recovery by person given notice If the person given a compliance cost notice complies with the notice but was not the person who caused the pollution or pollution incident, the cost of complying with the notice may be recovered by the person who complied with the notice as a debt in a court of competent jurisdiction from the person who caused the pollution or pollution incident. 98 Sections 106 and 107 deal with the registration of charges on land in respect of compliance costs. 99 A notice under chapter 4 can be revoked or varied: s110. 100 In Chapter 7, dealing with investigations, power is given to authorised officers to enter premises: Part 7.4. Sections 201 and 202 in that Part expressly call for care, and refer to compensation, as follows: 201 Care to be taken In the exercise of a power of entering or searching premises under this Part, the authorised officer must do as little damage as possible. 202 Compensation The EPA or other regulatory authority that appoints an authorised officer must compensate all interested parties for any damage caused by the authorised officer in exercising a power of entering premises (but not any damage caused by the exercise of any other power), unless the occupier obstructed or hindered the authorised officer in the exercise of the power of entry.

101 From the above provisions the following can be stated. First, the exercise of the power in s 91 is one of judgment for the regulatory authority (or the EPA: s 91(2)). The notice "may" be given. Secondly, the power in s 91 is not exercised for the benefit of either the occupier or the person to whom it is given; rather, the exercise of the power is only for the benefit of the public by dealing with, or preventing, the escape of polluting substances. Thirdly, the nature of the possible action contemplated by the phrase "clean-up action" in s 91 is likely, in the ordinary course, to place a financial burden on the person obliged by the notice to act. Fourthly, the notice in s 91 must be complied with, unless a person has a reasonable excuse. Fifthly, the circumstances that may give rise to a clean-up notice under s 91, or a preventative notice under s 96, or a prohibition notice under s 101 are not clearly segregated. There is, to a degree, a hierarchy of importance or seriousness, but there is potential for overlap of the sections. This multiplicity of bases for action should not be used to limit the scope of any particular step provided for. All are concerned with the public good, by protecting the environment. Sixthly, the relevant suspicion or belief or opinion is as to the occurrence of a pollution incident (s 91), or the carrying on of an activity in an environmentally unsatisfactory manner, including the occurrence of a pollution incident (s 96) or the serious matters of environmental damage (s 101). The relevant state of apprehension or belief is not one required (at least in terms of the provisions) to be judged having regard to the interests of the person or persons to whom the notice is directed. Seventhly, the financial consequences of the notices are, to a degree, dealt with. Parliament has not, however, sought to create a statutory avenue for compensation should the views of the relevant authority turn out to be wrong. Eighthly, the power in s 91 (and ss 96 and 101) is compulsory and enforced by the criminal law. To that extent, an obligation to consider the interests of the person to whom the notice is directed may be seen as inherently in conflict with the direction and focus of compulsory state power. 102 It is against this background that the existence of the duty is to be assessed. 103 The asserted duty or duties can be taken to have as its or their essence that the Council will take reasonable care in issuing the notices so as to avoid causing the appellant foreseeable economic detriment by the issue of a notice that would not be issued or would be issued in different terms had due care been taken in the circumstances of its issue. 104 Such a duty should not be imputed to or imposed upon the Council in respect of the issue of notices under s 91 for a number of reasons. 105 The duty is to prevent or avoid economic loss, beyond that which it is reasonably necessary to cause in the proper administration of the PEO Act. The circumstances in which the common law will impose a duty of care to avoid causing pure economic loss have been the subject of considerable debate and uncertainty in Australia since Caltex Oil (Australia) Pty Limited v The Dredge "Willemstad" [1976] HCA 65; 136 CLR 529. Since then, in a series of cases in the High Court culminating in Woolcock Street Investments v CDG (Bryan v Maloney [1995] HCA 17; 182 CLR 609; Hill v Van Erp [1997] HCA 9; 188 CLR 159; Esanda Finance Corporation Limited v Peat Marwick Hungerfords [1997] HCA 9; 188 CLR 241; Pyrenees Shire Council v Day; and Perre v Apand) the High Court has identified an approach based on the presence, in the particular circumstances, of "salient features" that, when combined, constitute or reflect a sufficiently close relationship to give rise to a duty of care. Such salient features include the inherent likelihood of the production of economic loss (Caltex at 576) and assumption of responsibility and known reliance (Bryan v Maloney and the negligent misrepresentation cases). The most important of these features, however, is vulnerability, in the sense discussed in the joint reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments v CDG at 530 [23]: "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. (Citations omitted) 106 Here, though it was foreseeable that the exercise of the power would or may cause economic detriment to the appellant, there were absent the crucial elements of reliance, assumption of responsibility and, most importantly, vulnerability. 107 The appellant did not rely on the Council for any protection or assistance or skill as it may have done in a context of a building inspection or other beneficial regulatory step. The power was not directed to the benefit or protection of the interests of the appellant. The appellant did not rely upon the Council to state matters to better inform it. Rather, it was told to do certain things upon the assertion of lawful authority, and, under the sanction of the criminal law. 108 It was submitted that there was reliance upon the Council in the circumstances because the Council was the repository of knowledge about the terms of the development consent. I reject this submission. An occupier of land carrying on a business can be reasonably expected to understand the terms of any relevant consent that concerns it. In the circumstances here, although the Council made certain statements about the activities on the land and the development consent, this concerned the kind of matter one would anticipate a land user, such as the appellant, would be aware of. 109 The Council did not, by exercising a power to issue a notice under s 91, assume any responsibility to act in the interests, or for the benefit, of the appellant. The exercise of the power was directed towards protecting the environment; and to the extent that a cost was involved it was a power directed against the interest of the appellant. 110 The appellant was able to protect itself from the consequences of the notice to the extent that they arose from a lack of reasonable care in the issue of the notice in a number of ways. First, it was able to take legal advice immediately. To the extent (as it was argued here) that the notice was apparently bad or invalid on its face, or in the circumstances, that could be assessed and the notice challenged or ignored. It was said that procedural fairness was not afforded. For the reasons expressed later, I agree with that submission. That assertion could have grounded an application to the Land and Environment Court, or the notice could have been ignored as an invalid administrative act. To the extent that the notice was too widely drawn and not supported by s 91 and the associated definitions, that could also have been immediately put forward in an attack on the notice or as the basis for a reasonable excuse not to comply with it. 111 The factual considerations relied upon by the appellant do not establish a relationship or position of vulnerability in the sense described in Woolcock Street Investments v CDG. 112 This lack of vulnerability was reinforced when one looks at the purpose of the PEO Act. The powers are to be used to protect the environment and the public. The PEO Act does not require the interests of those who are suspected, or believed, to be responsible for, or be able to remedy, the pollution to be taken into account for the purposes of a common law duty of care. Indeed, to do so would, to a degree, be incompatible with the responsibilities under the PEO Act. Judgments about the existence and potential risk in connection with pollution need to be made. To cast on the EPA, or an authority such as the Council, the responsibility of taking into account the interests of the person who is, or may be, responsible for the pollution and requiring the authority to exercise care (enforceable by damages at common law) in going no further than is reasonable or necessary or proportionate to protect the environment is to infuse into the statutory process considerations that may have a tendency to discourage the due performance of the principal statutory duty. It might well lead to a defensive or overly cautious approach, or a hesitancy in ensuring that all steps are taken to protect the environment: cf X (Minors) v Bedfordshire County Council at 739 and 750 and Sullivan v Moody at 574. 113 In circumstances where there is an available court (which in fact specialises in matters of this kind), the risk of administrative over-reach can be seen to be protected against by the availability to the citizen of the courts (especially here, the Land and Environment Court) in the exercise of judicial power of review of administrative action. 114 The imposition of a duty of care to have regard to the economic interests of a person in the position of the appellant in the way proposed would be to subject the Council, whose responsibility is to exercise the power in the public interest, to a duty to have regard to the conflicting interests and claims of the party whose conduct (on this hypothesis) may have endangered the environment and the public interest. The setting up of this tension between the statute and the common law should not be permitted: Sullivan v Moody at 582. 115 Given the nature of the power as one the enforcement of which is committed to the criminal law, torts, such as malicious prosecution or misfeasance in public office, whose elements are concerned with failure to adhere to the honest and bona fide exercise of the power can be readily accepted as compatible and coherent with the statutory regime and administrative law. The difficulty with negligence in relation to such a power is that it sets up a conflict or tension in the decision-maker between the ends or purposes of the statutory provision and the object of the exercise of the power (such as the appellant), in circumstances of the honest and bona fide exercise of the power. 116 Not only is the duty proposed not compatible with the PEO Act for the reasons expressed above, it also poses issues of a lack of coherence with administrative law for the reasons expressed by the Chief Justice in Paige at 400-404 [156]-[177]. 117 The appellant's complaints here can be seen as rooted in administrative law: the negligent production of an invalid act. That explains the terms of the 2nd FASC and the complaints as propounded: (a) a failure (to exercise reasonable care) to accord procedural fairness; (b) a failure (to exercise reasonable care) to draft the notice to identify the pollution incident and not to be misleading about the development consent; (c) a failure (to exercise reasonable care) to issue a notice within the meaning of the PEO Act; and (d) a failure (to exercise reasonable care) to ensure that there was proper delegated authority to issue the notice. 118 It is unnecessary to repeat the considerations discussed by the Chief Justice in Paige at the above pages, which I gratefully and respectfully adopt. The duty contended for here amounts, in substance, to the assertion of a compensatory claim for administrative error: cf Dunlop v Woollahra Municipal Council [1982] AC 158; Takaro Properties Limited v Rowling [1986] 1 NZLR 22; and Rowling v Takaro Properties Limited [1988] AC 473. 119 The lack of coherence between administrative law doctrines and the imposition of monetary compensation for the flawed or failed exercise of governmental power is illustrated later in these reasons in the discussion of breach of the posited duty. As will be seen, if standards of administration are to be regulated and enforced by recourse to the recovery of damages at common law, the courts must necessarily become involved, not just in the constitutional role of ensuring legality, but also in laying down standards of administrative conduct by reference to a standard of reasonable care. This standard setting and its enforcement by the courts would be in relation to the exercise of power of another branch of government and in circumstances where there exist machinery and techniques for the setting and maintenance of good administration and good government. The courts, of course, play a central role in that machinery in supervising the legality of the activity of government. To infuse common law duties and the recovery of damages in such a field as the issuing of notices under s 91 where governmental (EPA supervision) and legal (judicial review) controls already exist would introduce an undesirable incompatibility and lack of coherence to the regime of environmental protection. 120 The above is not to deny the continued force of Caledonian Collieries v Speirs and like cases. When a Council examines a power to build a structure, approve a plan, give permission for an act or otherwise engage in activity, it may well be required (on pain of liability in damages) to exercise care in relation to someone who may be affected by the power's exercise. What tends to strike at the coherence of administrative law here is the positing of a duty to exercise reasonable care not to make a flawed decision by, for instance, failing to give procedural fairness or failing to confine the power within statutory limits. Such a duty, as contended for here, would tend to open public authorities to the spectre of compensation for flawed decision making, in circumstances where the validity of the exercise of power can be tested and resolved by judicial review, and where standards of competence and skill are well able to be dealt with by an appropriate regime of governmental administration. Breach of duty

121 The appellant submitted that there had been displayed a breach of duty in the ways identified earlier. At times, the expression of these breaches appeared to be couched in terms of the administrative invalidity of the act. Thus the submissions (and the 2nd FASC in certain respects) emphasised: (1) the failure to provide procedural fairness; (2) the failure to identify the pollution incidents in the notice; (3) the drawing of a misleading notice as to the pollution incidents and misrepresenting that there was no development consent; (4) requiring action in the notice that was not clean-up action within the meaning of the PEO Act; and (5) the fact that Ms Tierney was not validly authorised to sign the notice. 122 Implicit within (2) and (3) above was an allegation that the Council negligently issued the notice in circumstances in which it did not have a reasonable suspicion as to any pollution incident, but rather issued the notice because it thought that the appellant did not have development consent for its activities (a fact said to be both wrong and legally irrelevant to the issue of the notice). 123 An assessment of breach (assuming there to be a duty of the kind posited) requires an examination of the facts. Before undertaking that task, a number of things should be noted about the above submissions. First, the relevant complaint must not only be that the administrative act was invalid, but also that such invalidity was brought about by the negligence of the Council. The appellant did not argue that the act of issuing the notice in its form could be validly, but still negligently, issued. However, invalidity above is insufficient; it must be shown that the invalidity was caused by the negligent attendance by the Council officers to their task. 124 Secondly, although various breaches were asserted, in reality, there can only be four: the negligent denial of procedural fairness; the negligent drafting of the notice so as to over-reach the limits of a clean-up notice under s 91; the negligent issuing of the notice without there being any reasonable suspicion of any pollution incident and issuing the notice because of a belief of a lack of development consent; and the negligent issuing of a s 91 notice without authority of Ms Tierney to sign it. The asserted breaches of duty as to the lack of proper identification of the pollution incidents and of the misleading reference to the development consent are not independent grounds of invalidity. There was no prescribed form of the notice. There was no legal obligation to define or identify the pollution incidents in question. These may have been aspects which reflected a certain sloppiness in drafting or a lack of care to the form of the notice, but, of themselves, they did not lead to any invalidity. Each of the other four asserted breaches would lead to invalidity, if made out.

125 As to the facts, they are most easily understood, in the first instance, from the evidence of Ms Tierney, who was wholly accepted by the primary judge. It will be necessary to deal with such challenge as was made to her evidence in due course. 126 In March and April 2002 there were complaints made, and concerns communicated, to the Council about pollution in a creek into which Fairey Road drained. The creek flowed into the Hawkesbury River. 127 On 30 April 2002, two subordinates of Ms Tierney noted "aqueous substances" in the storm water system outside Unit 4, 97 Fairey Road and a concrete plant (the latter being in premises controlled by the EPA). After speaking with her subordinates, Ms Tierney decided to inspect the premises at 97 Fairey Road. Before she attended she obtained a copy of a standard form environmental review which she took to the premises. (This was one of the documents the subject of an attack of fabrication. It was said not to have been discovered.) Her observations at and approaching the premises were as follows. She looked at the stormwater grate at the front of the property and each of the grates between the front of the property and the grate closest to the rear of Unit 4 and noticed an aqueous solution under the grates. She also noticed a light coloured staining which appeared like bleaching on the ground surface adjacent to the roller door of Unit 4.

128 When she was on the site she caused photographs to be taken which were admitted into evidence. When she arrived at the premises she introduced herself to Mr Zeuschner who said to her words to the effect: "You guys didn't waste any time. I thought I would be right here at least until Christmas." (This statement was put in issue at the trial, but the primary judge found the comment to have been made and no appeal was pressed about that finding.) A diary note contained the entry. (This was the entry also said to have been fabricated. No appeal was pressed in relation to the primary judge's finding that it was not.) 129 Ms Tierney noticed numerous drums of chemicals in the open air. She said that the area seemed untidy and there was staining of the concrete where chemicals were stored and where pumping apparatus was located. She said that the storage sump was full of waste material. One of the subordinates of Ms Tierney commenced to record the chemicals which he observed at the premises. When Mr Zeuschner was asked for material safety data sheets he was unable to produce any, other than a data sheet for one chemical. Ms Tierney said that she asked Mr Zeuschner how he disposed of the waste. He replied that the waste was pumped out by a particular firm. He did not provide any invoices for that operation, either then or at any time, despite a request by the Council. 130 Ms Tierney observed that there was a pump and two hoses near the sump located near the southwest corner of Unit 4, which she later ascertained to be where the sewer pipe was. 131 Outside the front of Unit 4, Ms Tierney observed 44 gallon drums without any bunding. Some of these drums had labels designating the types of chemicals. 132 Mr Dan (Ms Tierney's subordinate colleague) took an inventory of the chemicals on the premises. These were provided to WorkCover under a facsimile on 2 May 2002. WorkCover then provided to Ms Tierney's subordinate certain information as to various of the chemicals that had been identified. This information, recorded by Ms Tierney's subordinate, was that of the identified chemicals some were highly flammable, some toxic and some oxidising. 133 Mr Dan made certain inquiries of the EPA. They indicated that the matter was to be dealt with by WorkCover and the Council. 134 Ms Tierney identified the matters that bore on her mind as the reasons why she caused the issue of the clean-up notices. These included the following:

(a) the presence of acqueous substances observed in the stormwater system outside 97 Fairey Road; (b) the presence of acqueous substances observed by Mr Dan in the stormwater system outside the units of Fairey Road; (c) the presence of staining on the ground adjacent to what she thought was the entrance to Unit 4, which staining continued towards the stormwater drain. She was concerned that a chemical solution had spilled on to the forecourt or ground surface and had flowed into the stormwater drain.

(d) her observation that the liquid storage sump in Unit 4 was full of liquid and she was concerned as to the manner in which Mr Zeuschner was disposing of liquid from the storage sump and was disposing of liquid waste. Her concerns in this regard were heightened by: (i) the absence of a trade waste agreement or documents produced for the removal of chemicals;

(ii) the observations she had made concerning the pump hoses and storage tank in the south-western corner of the building which she had found to be the corner for piping for sewerage and drainage.

(e) Mr Zeuschner's ability to provide her with only one material safety data sheet;

(f) Mr Zeuschner's inability to produce any trade waste contracts for removal;

(g) the lack of evidence in the Council that Mr Zeuschner had applied to Council for a trade waste agreement;

(h) the toxic and highly flammable character of the chemicals which had been stored on the premises which she became aware of from Mr Dan after his consultation with WorkCover;

(i) her inspection of the files at the Council relating to the Development Approval and the Development Application for the use of the premises;

(j) her inquiry of Mr Greg Hall at the Council to advise her about the Development Application and Building Application. Mr Hall advised her that Mr Zeuschner did not have approval for carrying out decanting and/or mixing or blending of hazardous or dangerous chemicals at the site.

(k) Mr Zeuschner did not have approval from the Council for the use of the external, underground, tanks which contained the hazardous chemical for which there was no bunding.

(l) the fact that Mr Zeuschner had said to her upon her introducing herself to him: " You guys did not waste any time. I thought I was right until Christmas ." This raised a suspicion in her mind that he was doing something illegal or something he was not supposed to do.

(m) the lack of any bunding around the underground storage tanks which contained dangerous chemicals, white spirit and Toluol;

(n) the lack of bunding around the 44 gallon drums which were stacked on their ends outside Unit 4;

(o) effluent and/or pollution appearing to be present in the proximity of 97 Fairey Road and the creek;

(p) the observations made by Mr Dan of the creek on 6 May 2002 when he had seen substances in the creek of an obvious polluting nature;

(q) the complaints made by residents and rate payers and the results of scientific analysis of water samples taken in April;

(r) the ability of any aqueous solution in the storm water system on Fairey Road to gain access to the creek and in turn the Hawkesbury River; and

(s) the apparent poor housekeeping practices at the business being conducted by Mr Zeuschner at Fairey Road, chemicals being held in containers throughout the building and there appeared to be no designated storage areas and no bunding. 135 The debate before the primary judge and in submissions on appeal descended to the minutiae of proof of some of these matters. There was debate about what the evidence proved about the source of the "aqueous solution", and whether it came from Unit 3 or Unit 4. There was a debate about whether the ownership of the drums outside had been proved. It was said that the testing in April had not been proved. A challenge was made to the evidence as to the stain said to have been noticed. This was said at the trial to have been an invention. Ms Tierney was believed about this. 136 The ultimate factual resolution of many of these matters does not matter. For instance, it is of no account that there was no attempt to make a distinction as to who owned which drums. Though disparate, the observations of Ms Tierney, as the primary judge found, were ample for a reasonable suspicion that a pollution incident (as defined) had occurred or was occurring at, or from, Unit 4. It is to be recalled that what is required to be shown for a reasonably based suspicion is not a concluded and correct opinion. It is short of a reasonably based belief or opinion. A suspicion is something more than a mere idle wondering whether something exists or not, it is a positive feeling of apprehension or mistrust amounting to a "slight opinion but without sufficient evidence": see generally George v Rockett [1990] HCA 26; 170 CLR 104 at 115-117 and there citing, in particular, Queensland Bacon Pty Limited v Rees [1966] HCA 21; 115 CLR 266 at 304. 137 In her cross-examination, Ms Tierney accepted that there were four pollution incidents with which she was principally concerned. She said that when she issued the first notice she had reason to believe a pollution incident previously had occurred on the site, that two pollution incidents were occurring on the site and that one was likely to occur on the site. The pollution incident she had reason to believe had occurred on the site was the staining of the concrete. The two pollution incidents she had reason to believe were occurring were the aqueous solution entering the storm water system that she had reason to believe came from Unit 4 and the waste material being placed into the Council sewerage system illegally. She said that she considered that the fourth pollution incident, likely to occur, was the way the chemical drums were being stored at the front of Unit 4 with no bunding to withhold any leakage if there was a rupture. 138 Thus, on the material accepted by the primary judge there was ample material to ground a reasonable suspicion that the four pollution incidents identified by Ms Tierney had occurred or would occur. It may be that she made an error in relation to the staining and to the aqueous substance. However, her belief was such as she had. The fact that she was wrong, if she were wrong, did not make her suspicion unreasonable. 139 It was submitted that the late filing of her second affidavit which was more fulsome in describing the basis of her suspicions and why she issued the notice should be such as to convince this Court that her evidence should not be accepted and that the Court should conclude that the real issue for the issuing of the notice was what was contained in the first paragraph of the 22 May notice, that is, the lack of development consent. 140 Her Honour accepted Ms Tierney's evidence. No attempt was made on a wholesale basis to challenge those findings. Looking at the photographs and the objective material which is not in contest, most of the matters discussed by Ms Tierney in her second affidavit are likely to have been to her mind when she issued the notice. The correspondence with WorkCover and the EPA are testimony to the contemporaneous concern she had about the environment. Also, the notice of 22 May did recite that at the time of inspection Unit 4 was being utilised for the processing of hazardous materials in a manner which was likely to cause danger to the environment and public health. 141 Ms Tierney, plainly in my view, did have facts before her which were sufficient to give rise to the reasonable suspicion of pollution incidents. The primary judge, having so concluded, effectively put to one side the appellant's case about the influence on Ms Tierney of her view of the lack of development consent. The primary judge saw the dispute about the development consent as irrelevant. That dispute focused at the hearing on some disputed conversations about the extent of the development consent.

142 Mr Zeuschner gave evidence in his affidavit that after he received the notice, he visited the Council and spoke to Ms Tierney. He asked her about the question of Council approval, to which he said Ms Tierney said: "The only approval ever given by Council for that business was for the operation of a candle making business. What you are doing is not candle making so you have no approval." This was denied by Ms Tierney. 143 Mr Zeuschner also said that a meeting was arranged between Council officers and himself, Mr Cassidy, his solicitor (Mr Shaddick) and Mr Wilson (his "consultant") on about 5 July 2002. The meeting occurred at the Hawkesbury City Council. Present at the meeting were three Council employees including Ms Tierney as well as Mr Zeuschner, Mr Cassidy, Mr Zeuschner's solicitor and Mr Wilson. At this meeting, Mr Zeuschner said Ms Tierney said the following: "No, the only approval given is for candlemaking. The covering letter with the development application makes it clear that what is involved is candlemaking, so the approval was given in that context". Mr Cassidy and Mr Wilson supported Mr Zeuschner's version of events in their affidavits. Ms Tierney denied the conversation and was cross-examined about it.

144 The contemporaneous notes of a Council officer made in relation to this meeting contains the following: "There was some confusion as to the consent being for a candlemaking factory". Another Council file note for the meeting contained the following: It was suggested by Warren [Wilson] that there was some confusion on Councils [sic] behalf regarding the approval for the property being for a candle-making factory. Allan [Zeuschner] suggested that the mixing process at the plant was similar to a wax rolling process, but that the chemicals and end product were very different. It was emphasised that the approval for the operation was in no way connected to the approval for the Willie Winky candlemaking facility

Warren and Mr Don Shaddock suggested that the Councils [sic] consent for a "chemical warehousing and blending facility" should stand up in court as being a good justification for the storage of the chemicals listed in the infantry [scil inventory] by Mr Chris Dan attached to this property file. This is regardless of whether or not the chemical names and types were provided to Council during the application process for the facility. There was a disagreeance on this matter.

145 Mr Cassidy also said that he had a similar conversation with Ms Tierney in early June. Ms Tierney said she had no recollection of the conversation. 146 Mr Wilson also said that he had a similar conversation with Ms Tierney in late June. Ms Tierney said she had no recollection of the conversation. 147 Also, in a WorkCover document dated 3 June 2002 there was a written contemporaneous note stating the following: Following liaison with the complainant and the provision of advice, further investigation revealed that the occupier of the premises did not have an approved DA for the processes being carried out at the workplace. Consequently, Council officers served a Cease to Use Notice on … 22 May 2002. According to this note there was a clear link between the lack of approval and the issue of the notices. 148 In all the circumstances, there appears to be clear and cogent evidence about the issue of the development consent which supports a number of conclusions relevant to the resolution of the dispute. First, the asserted lack of coverage by the development consent was seen to be relevant by the Council. It was, after all, in the first paragraph of the notice. Secondly, the lack of development consent was discussed, to some degree, at the meeting in early July. The contemporaneous notes of Council support that. Thirdly, the lack of development consent appears to have had some effect on the issue of the notice - see the notice's first paragraph and the WorkCover memorandum. 149 It can be accepted, as the primary judge did, that Ms Tierney had a reasonable suspicion about pollution from the premises. However, it also seems to be an inescapable conclusion that she had the view that the lack of development consent was relevant to the issue of the notice. This relevance was reflected in the defence filed by the Council to the statement of claim. 150 To the extent that the primary judge's findings were inconsistent with Ms Tierney acting, and issuing the s 91 notices in the form in which they were, in part at least because of a belief of lack of relevant Council development consent, I reluctantly conclude that such findings are in conflict with clear objective evidence and the probabilities. 151 Once one appreciates the likely concurrent influence on Ms Tierney's decision to issue the s 91 notice of both her reasonable suspicion as to s 91 pollution and her belief that the development consent did not cover the mixing of hazardous chemicals, the form of the notice, and its failure to address the pollution incidents which she said she perceived or feared is explicable. 152 It was common ground on the appeal that the question of the coverage of the Council development consent was a legally irrelevant consideration to the issue of the notice. No doubt investigating any pollution incidents may have required an appreciation of the scope of the consent. Any absence of consent was not, however, a basis to issue the notice. 153 Turning to the question of procedural fairness, the PEO Act does not contain in its terms a removal of the obligation to afford procedural fairness. A notice under s 91 will almost always affect the rights (and any business) of the person to whom it is directed. There is no appeal in terms from the issue of a notice. In these circumstances, unless the PEO Act removed the obligation to accord procedural fairness, such obligation is to be recognised either as an implied incident of the exercise of the power or as a common law right attaching to the exercise of the power: Twist v Randwick Municipal Council and Kioa v West. It is unnecessary to discuss the question as to whether the obligation is better understood as an implied incident of the statute in question or as a common law right. 154 As was made clear in Kioa v West and many cases since, the content of the obligation depends upon the circumstances in question, the touchstone being a fair and just opportunity to deal with the matter in question. As McClellan CJ (as the Chief Judge at Common Law then was as the Chief Judge of the Land and Environment Court) said in Cauchi at 12 [51]: There will be cases where a pollution incident has occurred which requires urgent attention or where it is continuing to occur an immediate response may be required. In those circumstances there may only be confined obligations which may have to be fulfilled before an effective notice can be given. Each notice will depend on its own facts. 155 I would respectfully agree with the decision of McClellan CJ in Cauchi's case to the effect that the obligation to afford procedural fairness is (in either of the senses that I have identified) an incident of the exercise of power under s 91 of the PEO Act, though what will be required in any particular case will depend on the facts and circumstances present at the time. 156 Here, given the terms of the notice and all the circumstances including the time that had passed since the visit, I see no reason why Mr Zeuschner and the appellant should not have been given some opportunity to deal with what Ms Tierney was concerned about. That does not require the Council to have engaged in any long process of discussion. Rather, the particular concerns as to pollution should have been identified permitting Mr Zeuschner or the appellant an opportunity to comment on the proposed action. Precisely what is required in any particular case will depend upon the circumstances and all the communications between the parties. Those circumstances will, of course, include the seriousness of any pollution event and the immediacy of any perceived threat. If, however, as here, significant affectation on the business of a party will be required and no apparent imminence of any particular pollution incident is apprehended, prudence and fairness would dictate a clear enunciation of the Council's concerns. 157 Thus, in my view, the notice was invalid for the reasons discussed by McClellan CJ in Cauchi. Also, for the reasons discussed in Cauchi, the failure to accord procedural fairness would have meant there was reasonable excuse as a defence to any prosecution pursuant to the notice. This reinforces the fact that the appellant, properly advised, was in no way vulnerable to this notice, and should not be characterised as vulnerable for the law of torts and the imposition of a duty. 158 Though I have come to the view that procedural fairness was not afforded, I am not prepared to conclude that Ms Tierney was negligent in failing to give Mr Zeuschner warning of the terms of the notice or some other opportunity to deal with the matter. The primary judge concluded that Ms Tierney acted bona fide. That, of course, is not an answer to the question whether she exercised due care. However, the material in Ms Tierney's affidavit and the contemporaneous notes as to the investigations made by her and Mr Dan, lead me to conclude that she was significantly concerned at the state of the premises and the risk it posed to the surrounding environment. One of the difficulties of the posited duty is assessing a reasonable benchmark for decision-makers as to how they should appreciate and take into account principles of due administration and legality such as procedural fairness. Ms Tierney had visited the site. She had met with Mr Zeuschner. Mr Zeuschner, on the findings of the primary judge, made a statement to Ms Tierney which could reasonably be understood by her at the time as a clear admission by him that the authorities would at some stage require him to take steps in relation to the conduct of his business. One of the difficulties in the court intruding into assessment of governmental action with the law of negligence in this fashion, is the laying down of standards of reasonable administrative conduct beyond rules or principles as to legality, such as the requirement to accord procedural fairness. The assessment that an administrator has failed to exercise due care in and about an administrative act requires a judgment, not as to the lawfulness of the act, nor as to the merits of any decision, but as to the proper administrative and governmental approach to the exercise of the power. This reinforces the existence of the problem of coherence to which I have earlier referred. At this point, however, I am assuming the existence of a duty of the kind claimed. Nevertheless, I am not prepared on the evidence that was led to conclude that Ms Tierney was negligent in failing to afford the procedural fairness which, as a matter of legality, should have been afforded to the appellant. 159 As to the reach of the notice, once again, the matter has to be analysed from both the perspective of validity and reasonable care. In my view, the notice issued went beyond what was reasonably required to deal with the four pollution incidents recognised by Ms Tierney in her evidence. The terms of the notice went beyond dealing with those four incidents and in effect required the closing down of the appellant's business. Implicit within any notice within s 91 is a reasonable degree of proportional relationship between the pollution incidents which are reasonably suspected as having occurred or occurring and the clean-up action required by the notice. This is made clear by the definition of clean-up action to which I have referred which is hinged upon the relationship to a pollution incident. That is not to say that a pedantic or limited scope should be given to what action can be required. The definition of clean-up action is intended to give the Council power to require any step to be undertaken which would deal with the pollution incident in a manner which prevents, minimises, disburses, destroys or mitigates any pollution. 160 Here, the reach of the notice was far greater than the four incidents which Ms Tierney identified as those which she had a reasonable belief about. For those reasons, the notice under s 91 exceeded any proportional and reasonable response to the pollution incidents reasonably suspected. 161 It is unnecessary to define authoritatively the precise relationship between the terms of the clean-up action required in the notice and the pollution incident. It is sufficient to conclude in relation to these circumstances that the notice went far beyond any reasonable remedying or preventing of the four incidents the subject of Ms Tierney's reasonable beliefs. The argument was put that the requirement to cease the business necessarily took the matter outside the possible scope of any issue of a notice under s 91. I am not prepared to go so far and to conclude that a notice under s 91 could never require steps to be taken that were required in this notice. How one prevents any pollution resulting or likely to result from any future incident may well depend upon reasonable apprehension of particular circumstances at the time. Here, the problem was the lack of reasonably proportionate correlation between ultimately what Ms Tierney accepted were the four incidents concerning her and what was demanded of the appellant. 162 The reasonableness of Ms Tierney's conduct is also problematic. Though Ms Tierney in her evidence distilled her beliefs to four pollution incidents, she was faced with a state of affairs at the premises at 97 Fairey Road of real concern to her. This was not an illegitimate consideration. Seeing a state of affairs where liquid product from an operation of chemical mixing was being, or may have been, disposed of through the sewer and where haphazard storage of chemical without any bunding created a potential for spillage of chemicals into the Hawkesbury River via the local creek, Ms Tierney was of the view that the activities should cease. She drew a notice to that effect. She was also clearly of the view that the lack of development consent supported the giving of the notice. 163 To the extent that the belief as to the lack of development consent was relevant to and helped to support the issue of the notice (as the evidence reveals) that reflected a lack of appreciation of the powers being exercised. It is likely to have informed the broad terms of the notice and to explain why there was no attempt to conform the notice to the pollution incidents. The four incidents could have been dealt with by: (a) removal of the stain and requiring procedures to ensure that repetition of such an event was minimised; (b) preventing the discharge into stormwater drains of any chemicals; (c) the cessation of the use of the sewer for chemical or liquid disposal; (d) better placement of drums and bunding. 164 Ms Tierney was simply unable to recall why the notice was expressed so broadly. It is difficult to escape the conclusion that it was because of the perceived relevance of the absence of development consent supporting the notice. 165 In any event, without any assistance from Ms Tierney as to why she thought the reach of the notice to be appropriate, I am not prepared to conclude that the form of the notice was other than from a lack of due care. 166 As to the asserted absence of authority of Ms Tierney, this can be disposed of shortly. Although the reasons of the primary judge are not entirely clear, it does appear that her Honour found Ms Tierney not to have authority. In my view, there is some doubt about this conclusion, but the appeal can be resolved on the assumption that her Honour was correct that Ms Tierney did not have appropriately delegated authority. In my view, it is clear that there was no negligence at the time in Ms Tierney failing to appreciate such delegation, which she undoubtedly appeared to have, was legally valid. If there was an oversight in the form of the delegation and an absence of a Council resolution, this was not any aspect of negligence by Ms Tierney or those concerned with the issue of the notice. The Civil Liability Act 2002 , s 43A 167 The liability of public authorities is dealt with in Part 5 of the Civil Liability Act. Section 43A was inserted into the Civil Liability Act in an apparent reaction to a decision of the Supreme Court at first instance in Presland v Hunter Area Health Service [2003] NSWSC 754. The decision was overturned in the Court of Appeal: Hunter Area Health Service v Presland [2005] NSWCA 33; 63 NSWLR 22. The case concerned whether a duty of care was owed by a medical practitioner to a psychiatric patient who successfully (at first instance) obtained damages after he was released from an institution. After his release he killed the fiancée of his brother. He complained that if he had been detained as mentally ill or mentally disordered, he would not have killed the victim and would not have suffered the legal consequences of that act. Section 43A was included in the Civil Liability Amendment Bill 2003 which Bill made various amendments to the Civil Liability Act concerning public authorities, criminals, mentally ill persons and childbirth (Schedule 1), proportionate liability (Schedule 2), other amendments (Schedule 3), and amendments to the Mental Health Act 1990 (Schedule 4). In his second reading speech, the Minister for Health (the Honourable Morris Iemma) on 13 November 2003 stated: "The main purpose of the Civil Liability Amendment Bill is to amend the Civil Liability Act 2002 to address issues arising from two recent court cases which caused considerable community concern. … The first case that the Bill seeks to address is known as the Presland case. … [The facts of the case were briefly set out.]

The community rightly was outraged about the court decision because it allowed Kevin Presland to benefit even though he had caused the death of his brother's fiancée. NSW Health is currently appealing that decision but it raises important issues that deserve to be put beyond doubt in legislation.

In a case involving a special statutory power, a public authority will be liable only if its decision was so unreasonable that no public authority having such a power could consider it to be reasonable. It will not affect the exercise of "operational" functions of agencies, for example, where they are given general functions to provide particular services. The Bill makes it clear that this principle covers public authorities as well as individuals such as psychiatrists in hospitals who have public official functions.

168 The Legislation Review Committee of the Parliament of New South Wales reported that the new provision "lowered the duty of care": see the discussion in Watson GS "Section 43A of the Civil Liability Act 2002 (NSW): Public Law Styled Immunity for the Negligence of Public and Other Authorities?" (2007) 15 Torts Law Journal 153 at 157-158. 169 Section 43A should be seen in its place in Part 5. Sections 42 to 46 deal with various aspects of the responsibilities of public and other authorities. Those sections are as follows:

42 Principles concerning resources, responsibilities etc of public or other authorities

The following principles apply in determining whether a public or other authority has a duty of care or has breached a duty of care in proceedings for civil liability to which this Part applies: (a) the functions required to be exercised by the authority are limited by the financial and other resources that are reasonably available to the authority for the purpose of exercising those functions, (b) the general allocation of those resources by the authority is not open to challenge, (c) the functions required to be exercised by the authority are to be determined by reference to the broad range of its activities (and not merely by reference to the matter to which the proceedings relate), (d) the authority may rely on evidence of its compliance with the general procedures and applicable standards for the exercise of its functions as evidence of the proper exercise of its functions in the matter to which the proceedings relate.

43 Proceedings against public or other authorities based on breach of statutory duty

(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a breach of a statutory duty by a public or other authority in connection with the exercise of or a failure to exercise a function of the authority. (2) For the purposes of any such proceedings, an act or omission of the authority does not constitute a breach of statutory duty unless the act or omission was in the circumstances so unreasonable that no authority having the functions of the authority in question could properly consider the act or omission to be a reasonable exercise of its functions. (3) In the case of a function of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.

43A Proceedings against public or other authorities for the exercise of special statutory powers

(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority's exercise of, or failure to exercise, a special statutory power conferred on the authority. (2) A special statutory power is a power:

(a) that is conferred by or under a statute, and (b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority.

(3) For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power. (4) In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.

44 When public or other authority not liable for failure to exercise regulatory functions

(1) A public or other authority is not liable in proceedings for civil liability to which this Part applies to the extent that the liability is based on the failure of the authority to exercise or to consider exercising any function of the authority to prohibit or regulate an activity if the authority could not have been required to exercise the function in proceedings instituted by the plaintiff. (2) Without limiting what constitutes a function to regulate an activity for the purposes of this section, a function to issue a licence, permit or other authority in respect of an activity, or to register or otherwise authorise a person in connection with an activity, constitutes a function to regulate the activity.

45 Special non-feasance protection for roads authorities

(1) A roads authority is not liable in proceedings for civil liability to which this Part applies for harm arising from a failure of the authority to carry out road work, or to consider carrying out road work, unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm. (2) This section does not operate:

(a) to create a duty of care in respect of a risk merely because a roads authority has actual knowledge of the risk, or (b) to affect any standard of care that would otherwise be applicable in respect of a risk.

carry out road work means carry out any activity in connection with the construction, erection, installation, maintenance, inspection, repair, removal or replacement of a road work within the meaning of the Roads Act 1993 . roads authority has the same meaning as in the Roads Act 1993. 46 Exercise of function or decision to exercise does not create duty

In proceedings to which this Part applies, the fact that a public or other authority exercises or decides to exercise a function does not of itself indicate that the authority is under a duty to exercise the function or that the function should be exercised in particular circumstances or in a particular way. 170 Only s 43A was relied upon in this case. A number of matters arise from the terms of s 43A, not all of which were dealt with in argument on appeal. Given the views that I have expressed in relation to the matter and thus the degree of remoteness of this provision from the disposition of the appeal, given the extent of argument that took place as to the section and given the importance of the section, I do not think it appropriate to express concluded views about the meaning and effect of s 43A. 171 A number of important issues about its operation should, however, be noted. First, it is not clear whether, as the Legislative Review Committee thought, the section affects the existence or scope of the duty of care or whether it is a statutory immunity which is engaged at the point of consideration of whether there is a liability for what would otherwise be a breach of a duty of care, the scope of which being ascertained without consideration of the terms of s 43A. There was no argument in this appeal that s 43A affected the scope of any posited duty. In this respect, it is to be noted that s 43A(3) refers to giving rise to civil liability, whereas s 43(2) refers to constituting a breach of statutory duty. 172 Secondly, it was argued that the provision should be limited to the valid exercise of power or a decision not to exercise the relevant power and should not extend to protecting an authority where a power has been sought to be exercised (as here), but because of the jurisdictional error involved in the purported exercise of the power, no true exercise of the power has taken place: Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597 and Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211 CLR 476. An interpretation which limited the effect of s 43A in this way might be seen to be in accordance with principles requiring statutory immunities cutting down common law rights to be read strictly or even jealously: Australian National Airlines Commission v Newman [1987] HCA 9; 162 CLR 466 at 471; Board of Fire Commissioners (NSW) v Ardouin [1961] HCA 71; 109 CLR 105 at 116; Puntoriero v Water Corporation [1999] HCA 45; 199 CLR 575 at 588 [34]; and Coco v R [1994] HCA 15; 179 CLR 427 at 436. Important questions of statutory interpretation would arise at this point including the second reading speech of the relevant minister, the surrounding material, and the overall intent and purpose of the Civil Liability Act (cf NSW v Bujdoso [2007] NSWCA 44; 69 NSWLR 302 at 315 [56]; and see also Malika Holdings Pty Limited v Stretton [2001] HCA 14; 204 CLR 290 at [28]-[29]). The question as to whether s 43A affected the existence or scope of a duty of care would be relevant to this question. 173 Involved in the above question of statutory interpretation would be a close examination of the text of the provision. Important in the above debate would be an assessment as to whether the phrase "involving an exercise of" used in sub-s 43A(3) widened the notion in sub-s 43(1) of "based on … [an] exercise of" a special statutory power. 174 If the provision is sufficiently wide to encompass the purported exercise of a special statutory power, it may be necessary to place a limit upon the operation of the section based on the kinds of conception discussed by Dixon J in R v Hickman; ex parte Fox [1945] HCA 53; 70 CLR 598 at 615: "… provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body." Though this formulation was in the context of privative clauses and its content and context is now to be approached as the High Court has indicated in Plaintiff S157, such a formulation may provide a limiting connecting factor permitting purported exercises of power to be encompassed by s 43A; cf the discussion of a related concept in Paige at 402-403 [167]-[170]. 175 A further important consideration is the content of sub-s 43A(3) and the meaning of the phrase "so unreasonable that no authority having the functions of the authority in question could properly consider the act or omission to be a reasonable exercise of its function." Such wording can be seen to have its source in what is often referred to as "Wednesbury unreasonableness" from Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223 at 229-230. Regard could equally be had to the formulation of cognate concepts in Avon Downs Pty Limited v Federal Commission of Taxation [1949] HCA 26; 78 CLR 353 at 360; R v Connell; ex parte Hetton Bellbird Collieries Limited [1944] HCA 42; 69 CLR 407 at 430; and Buck v Bavone [1976] HCA 24; 135 CLR 110 at 118-119. Cognate ideas are also found in the law attending the responsibility of company directors. The Court there focuses on whether decisions made by boards are made honestly in the interest of the company or are of a kind which no reasonable person could have reached: see Shuttleworth v Cox Brothers and Co (Maidenhead) Limited [1927] 2 KB 9 at 23-24; Peters' American Delicacy Co Ltd v Heath [1939] HCA 2; 61 CLR 457 at 481; and Wayde v New South Wales Rugby League Limited [1985] HCA 68; 180 CLR 459 at 469-470. 176 While these are different areas of human endeavour, formulations of the kind used in these cases, whether it be in public law, the law of business or the law of torts are attempts to formulate more attenuated tests for legitimate activity than by reference to a fixed standard of reasonable care. 177 Whether it is appropriate to describe s 43A as encapsulating the blunt expression of "gross negligence" is a matter for debate. However, it is plain that the drafter of s 43A was attempting to ameliorate the rigours of the law of negligence. 178 To the extent that s 43A has a protective role to play here, I would conclude that the only possible aspect of Ms Tierney's conduct that could be said to fall outside the terms of s 43A(3) was the extent of the demands of the notice. The evidence of the expert witness, Mr Falson, is not ultimately persuasive in this regard. He had never issued a notice under s 91; his experience was questionable; and he had not fully familiarised himself with the property. Mr Wilson, who had town planning and consulting experience, also lacked a relevant background to be of great assistance. 179 Not without hesitation, I am not prepared to conclude that the decision to issue the s 91 notices in the form they were was an act so unreasonable that no public authority could properly consider it to be a reasonable exercise of the power. The primary judge accepted Ms Tierney as to her honest belief as to the extent of the pollution. Though in cross-examination she categorised her views into four incidents, she was clearly of the view that how the activity was being run on the premises was a danger to the environment. Those findings and that belief may have led another to come to the view that the extent of the notice, though drastic was appropriate to prevent any future incident. Ms Tierney, as I find, was also motivated by her view of the effect of non-compliance with the development consent. That is not something that can be considered relevant to the hypothetical Council in the application of s 43A. Nevertheless, taking all that she perceived and the potential breadth of a notice under s 91, I am not prepared to conclude that the act was so unreasonable as to fall within the proviso within s 43A(3).

Contributory negligence and mitigation 180 The primary judge's conclusion that there had been no contributory negligence on the part of Mr Zeuschner and the appellant was not the subject of complaint. The acceptance of the appellant's submission by the primary judge that contributory negligence had no place on the facts here was, if I may respectfully say so, one founded in common sense. If there was a duty and if there was breach, it is difficult to see why Mr Zeuschner and the appellant should be criticised for acceding to the assertion of lawful authority by the Council. Likewise, I do not think that the matters put forward by the Council to the primary judge and accepted by the primary judge logically or on any common sense basis make out a failure to mitigate. Mr Zeuschner and the appellant were given an instruction under cover of lawful authority by the Council. I do not think it can be said that he failed to mitigate his loss consequent upon that by failing to retain lawyers to challenge the notice, or to take any of the other steps referred to by the primary judge. 181 If, contrary to the views I have otherwise expressed, Mr Zeuschner ought to be found entitled to damages, it has not been made out that he has failed to mitigate in any relevant legal sense.

Damages 182 There were two issues raised in relation to damages. First, there was a complaint that her Honour should have found a greater sum than she did in relation to disposal of stock. Secondly, her Honour should have concluded that there were legitimate damages for lost customers. 183 There was a ground of appeal in submissions put in relation to exemplary damages but, for the reasons that are apparent above, exemplary damages do not arise given my view as to the conduct of the Council.

Disposal of Stock 184 The primary judge allowed only $4,247.75 for lost stock. The plaintiff had claimed loss of stock of $59,965. The primary judge awarded the lower figure based on comparing the appellant's change in stock from the end of May to June ($56,995.45 to $52,747.70) in a document called a stocktake dated June 2002, which was exhibit M. This was said to be a finding which disregarded the contemporaneous note of Ms Tierney that two thirds of the stock had been disposed of by 5 June 2002. The answer to this apparent inconsistency was the assertion at the trial that there had been a significant amount of stock purchased between 5 June 2002 and 30 June 2002: see p 115 of the primary judge's reasons. The primary judge did not accept that the $59,965 worth of stock was given away by the company. Reliance was placed upon the company's records in the stocktake. 185 On appeal, the Court was taken to various documents. One document was an expert report of Mr Bridger prepared on the instructions of the solicitors for the Council. This report had consolidated trading figures of the appellant and Prescision Products (Aust) Pty Limited and revealed a closing stock in June 2002 of $2,324. This had been taken from the Tax Return which was also in evidence. Exhibit M used by the primary judge was said to be a list of chemicals which on its face was a stocktake of "June 02". Mr Zeuschner denied that this was in fact a stocktake document or that it showed stock on hand at the end of June. Nevertheless, exhibit M was a document which Mr Zeuschner produced for his accountant. It was also accepted that Mr Zeuschner prepared the document and provided it to his accountant. In the circumstances of there being such a lack of clarity in the appellant's own records as to the stocktake, the judge's conclusion that the document prepared by Mr Zeuschner, calling itself a stocktake as at June 2002, provided by him to his accountant, could be taken as the basis of stock on hand cannot be criticised. The primary judge appears to have chosen this document rather than the tax return as the basis of the stock on hand and stock lost. No satisfactory explanation appears to have been provided to her Honour as to the inconsistency between the two. Mr Zeuschner was cross-examined about his stock on hand and about purchasing and this finding of fact results in part from that. In all these circumstances, I am not prepared to draw any conclusion that the finding by the trial judge as to lost stock was in error. This is especially so when the appellant was manifestly unable to bring forward to the primary judge and put into evidence coherent business records which clearly identified what the position was.

Lost customers 186 It was submitted that Mr Zeuschner's evidence of customers who did not return after his business closed should have been accepted as a basis for permanent loss of customer connection and good will. The appellant's accounting expert assessed the value of those customers for a three year period as $49,066. The Council's accounting expert, Mr Bridger, made no calculation of the value of lost customers. It was submitted that her Honour should have accepted the appellant's accounting expert. I am not prepared to conclude that there was any error in her Honour not accepting Mr Bridger's evidence on this. It was not for an expert accountant to explain why people did not return to the appellant's business. Some rational foundation in the evidence would need to be identified to permit the inference that customers who did not return after a brief shutdown did not do so because of the shut down. At p 120 of her Honour's reasons, the primary judge said that the plaintiff had failed to discharge its onus of proof. Her Honour accepted the submissions of the Council that there was no relevant evidence from customers as to why they failed to come back. The Council described the claim as speculative. Her Honour's agreement with that submission in the absence of any evidence from customers was perfectly reasonable. A so-called expert accountant giving evidence in proceedings based on assumptions was not relevant evidence to supplant real evidence of a connection between the refusal of customers to come back and a 43 day shutdown of the appellant's business. There was no error in this regard made by the primary judge.

Costs 187 One of the orders made by the primary judge as to costs in a separate judgment (order 4 made on 26 June 2007) was that the appellant pay the Council's costs on an indemnity basis from 31 October 2006, being the date from which the appellant's claim was amended to make manifest that the claim was one for administrative relief. Given the concession made by the Council on appeal that her Honour was wrong on jurisdiction it follows that that order should not stand. This order was made on 26 June 2007 and is order 4. 188 The primary judge also made an order that the appellant pay on an indemnity basis the Council's costs from 14 February 2007 because of the appellant's unreasonable refusal to accept an offer made by the Council shortly prior to that date. The context of the offer was that the solicitor for the appellant had written to the Council stating that the appellant was prepared to settle the matter on the basis that the Council pay the appellant the sum of $105,000 plus costs as agreed or taxed. The offer was to be open until 15 February. The solicitors for the Council wrote in response a letter dated 14 February 2007 in the following terms: Our client rejects the plaintiff's offer and by way of counter offer/s to settle in the sum of $60,000 inclusive of costs including any reserve costs and including any past special costs orders. We consider that the plaintiff's offer is an invalid offer for the purposes of a special costs order of the kind contemplated by your letter of 12 February 2007.

The offer is made a few days before a very lengthy trial is due to commence [and] is only for a very short period.

The plaintiff's late amendment and cascading service of witness statements when coupled with the very short offer period does not render it unreasonable that our client declines to accept the offer even if the plaintiff does better on hearing.

189 The primary judge accepted that the Council's counter offer was not such as to entitle it to the benefit of any presumption or order under the Uniform Civil Procedure Rules 2005. Her Honour said that the question was whether it should be treated as an offer at all and if so whether it should have any costs consequences. Her Honour found that it was an offer capable of immediate acceptance, was without ambiguity, that it involved a real element of compromise, and that it was plainly unreasonable not to accept the offer notwithstanding its unorthodox form. 190 Two criticisms were made. First that the offer was inclusive of costs. Secondly, that the full evidentiary foundation of the Council's case had not yet been filed and therefore it could not have been unreasonable of the appellant not to accept the offer. 191 I am of the view that her Honour failed to appropriately approach the question of unreasonableness. It is unnecessary to engage in any detailed discussion as to the characterisation of the offer, whether as a so-called Calderbank offer or not. The argument on appeal accepted that her Honour was able to make the award of indemnity costs in circumstances where the conduct of the appellant was unreasonable. The inclusive nature of the offer made the assessment of the offer difficult, though not impossible. One aspect not addressed in detail by the primary judge in her reasons was the state of the Council's evidence. It is not clear how the appellant should have viewed its prospects of success on the basis of the unamended affidavit evidence of Ms Tierney before the supplemented second affidavit. This was not discussed by the primary judge. Also, reading the costs judgment as a whole, I am left with the view that her Honour's view as to the hopelessness of the matter on jurisdiction (conceded as wrong on appeal) affected her approach to this aspect of the question of indemnity costs. 192 In re-exercising the discretion, I am not prepared to award indemnity costs because of this counter offer. Whilst the appellant lost the case (and, in my view, correctly so), that view is based principally on the non-existence of the duty. I have, however, come to the view that the Council was negligent in some respects (assuming a duty). I have also come to the view that the appellant was not accorded procedural fairness. An inclusive costs offer is capable of grounding an exercise of the Court's discretion to award indemnity costs. Here, however, in circumstances where the appellant was not accorded procedural fairness and complied with an otherwise invalid notice to shut its business, I am not prepared to conclude that it acted so unreasonably as to refuse this offer in circumstances where it was made late, where there was a real lack of clarity as to the case of the Council and where the Council's evidence was served late. In these circumstances I would also set aside order 5 made on 26 June 2007. 193 The primary judge also concluded that the appellant should pay the costs, on an indemnity basis, of the separate representation of Ms Tierney for parts of the trial because of what were said to be the baseless allegations of fabrication of documents and dishonest evidence. This is a difficult aspect of the primary judge's reasons. In her primary judgment and her costs judgment the primary judge drew conclusions that the appellant had baselessly made serious allegations of, in effect, fraud in circumstances where there was no basis whatsoever for making them. She laid this at the feet primarily of the appellant, but if made out, these matters reflected gravely on counsel in the case. The appellant spent some time in the written submissions tracing the change in the respondent's case up to and at the trial and the surrounding circumstances which gave rise to the legitimate challenge to Ms Tierney in relation to the creation of documents and the giving of evidence, primarily in the second affidavit. I have already indicated my view that in part that challenge does vitiate some of the findings of credit of the primary judge. 194 The late production of the second affidavit of Ms Tierney, the apparent movement of the Council's case, the available evidence of the apparent role of the development consent and the clear instructions of Mr Zeuschner concerning the conversation at the inspection of the premises at 30 April permitted counsel to cross-examine Ms Tierney in the manner he did. The attack on Ms Tierney's credit should not, in all the circumstances, be seen as such an unjustified body of conduct as to justify the payment of the costs of representing Ms Tierney. Whilst the appellant abandoned on appeal the wholesale attack on Ms Tierney's credit and limited itself to the aspects of her evidence to which I have referred, that does not in any way disentitle the appellant from pointing, as it does, in its written submissions to the factors which led to the strong attack on Ms Tierney's evidence. In all the circumstances, I do not agree with the primary judge's characterisation of the cross-examination of Mr Tierney. On that basis, in my view, orders 6 and 7 made on 26 June 2007 should also be set aside.

Miscellaneous matters 195 One ground of the appeal was a complaint about the credibility findings against witnesses called by the appellant. The complaints about the credit findings against Mr Zeuschner have some force. In particular, the primary judge's finding that Mr Zeuschner's statement that he did not use coolant was false, was made in the context of the matter not having been put to him. Also, the conclusions which the primary judge drew about the dangerous goods licence and Mr Zeuschner's evidence after Mr Cassidy's evidence have some difficulties. It is, however, unnecessary to resolve these in any detail. It was not submitted on appeal that the note regarding the conversation upon Ms Tierney attending the premises was false. There was therefore a clear basis for the finding that this conversation took place. I have already expressed my views as to why the primary judge's findings in relation to the discussions about development consent should not be taken as reliable. But these matters do not lead to a conclusion that the primary judge was not entitled to be otherwise suspicious about the reliability of Mr Zeuschner's evidence for reasons of his demeanour and taking into account all the matters before her in the working out of the trial. In particular, the unreliability of Mr Zeuschner in relation to explaining the accounting records and purchasing of stock is not, in my view, thrown into question. 196 I have dealt earlier with Mr Falson's evidence. It may be doubted that his evidence "bordered on the absurd" as found by her Honour. His views that there were a range of actions that the Council could have taken can be assumed to be open. That does not, however, assist, to any material respect, given the difficulties with his background and experience and the reasonable suspicion of Ms Tierney of pollution incidents and of a threat to the environment in relation to premises that were far from well maintained. 197 I have already dealt with the evidence of Mr Cassidy and Mr Wilson. I accept that their evidence together with the objective documentary material makes it probable that there were conversations about the extent of the development consent, contrary to the findings of the primary judge.

Orders 198 No separate argument was made about order 8 made on 26 June, but the consequence of my views as to orders 4, 5, 6 and 7 is that order 8 should also be set aside. Also, given that I would set aside orders 4, 5, 6, 7 and 8 made on 26 June I would also make consequential orders to order 3 such that the plaintiff pay the defendant's costs on the usual basis. For the above reasons I would make the following orders:

(1) Set aside orders 3, 4, 5, 6, 7 and 8 made by the District Court on 26 June 2007 and in lieu thereof order that the plaintiff pay the defendant's costs.

(3) Order that the appellant pay the respondent's costs of the appeal.

199 BEAZLEY JA: I agree with Allsop P. 200 McCOLL JA: I agree with Allsop P.

10/11/2009 - typographical error - Paragraph(s) [105]

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