and for that purpose may enter upon and occupy that land and those waters and may remove or erect a gate or any fence hindering the exercise of such powers.
102 As it appeared to me that the analysis in Thompson was particularly apposite to the facts presently under consideration, I gave leave for further submissions to be served by both parties addressing that issue. Those submissions were served on 15 December 2008.
103 In his submissions for EnergyAustralia, Mr Leeming SC places weight on the provisions in the 1987, 1990 and 1995 legislation to which I have referred above which conferred on EnergyAustralia or its predecessors functions, powers and duties the counterpart to those relied upon by Hodgson J in Thompson. In particular, Mr Leeming refers to the provisions of each statute which refer in terms to "maintaining" works or facilities for the supply of electricity.
104 Mr Webster, on the other hand, submits that a close comparison between the Electricity Supply Act 1995 and the Telecommunications Act 1975, and the transitional Acts relating to both pieces of legislation, and the lack of any equivalent in the Sydney Electricity Act to s 18 of the Telecommunications Act to which Hodgson J had expressly referred, means that there is nothing in the 1995 legislation which gives a right on the part of EnergyAustralia to "maintain" all existing electricity installations (on private land).
105 Reference was made in that regard to s 45 (set out above), s 51 and s 54 of the Electricity Supply Act. Section 54 provides as follows:
Section 54(1) POWERS OF ENTRY
(1) An authorised officer of a network operator may enter upon premises for the purpose of exercising any function conferred or imposed on a network operator by or under this or any other Act or law, including
…
(b) Installing, extending, maintaining , repairing or removing electricity works or
…
(1A) An authorised officer of a retail supplier may enter the premises of a customer for the following purpose in respect of electricity works prescribed by the regulations:
…
(b) installing, extending, maintaining , repairing or removing electricity works. (my emphasis)
106 Mr Webster submits that the word "maintaining", when used in s 54(1)(b) and in s 54(1A)(b), refers to the works "installed" under that Act, not to works otherwise (or earlier) installed. I do not accept that submission. Section 54 gives a power of entry "for the purpose of exercising any function conferred or imposed on [EnergyAustralia] under this or any other Act or law", including maintaining "electricity works". The Sydney Electricity Act had vested in Sydney Electricity (EnergyAustralia's relevant predecessor) all the assets of Sydney County Council (which must have included the electricity infrastructure in question) and gave it the function of the provision and maintenance of works for the supply of electricity. This position continued in 1995.
107 MetNorth, and MetNorth Energy in turn, clearly had the function of maintaining both existing and any new facilities for the distribution of electricity (see in the case of MetNorth Energy s 9(2) Energy Services Corporation Act 1996). I see no basis for confining the powers of entry in s 54 to purposes connected with electricity works installed pursuant to that legislation (as opposed to electricity works already installed on private lands and vested in MetNorth Energy).
108 It is submitted by Mr Webster that the perceived lacuna in the Sydney Electricity Act (namely, as to the right to maintain existing installations) is made evident by the comparison of the provisions within both the telecommunications legislation and of s 37 of the Sydney Water Act.
109 However, s 37(2) of the Sydney Water Act (unlike s 54 of the Electricity Supply Act) is not a provision which contains a power both to install and to maintain. It is limited to what can, in effect, be done with works already installed. Section 54 is not so limited. It also authorises installation of works. If s 54 were intended to have been limited to powers of entry to install works and, once installed, to maintain those (and only those) works, it could easily have said so. Rather, the power of maintenance is included in the same clause as the power of installation as a separate power and could on its face extend both to existing and future works.
110 What seems to be required, (adopting the test in Thompson), in the absence of an express provision, is to ascertain whether there is a legislative intention that EnergyAustralia (or its predecessors) at the relevant time have the right to maintain in place electricity installations on private lands. The indicia of such a legislative intention in Thompson were the proprietary ownership of the installations on private lands, coupled with the function and duty to run a system which included those installations.
111 I consider that the Sydney Electricity Act, by giving Sydney Electricity the function of "the provision and maintenance of works for the supply of electricity" (s 5(1)(b)) and by transferring to it the assets of Sydney County Council (Schedule 5 s (4)) (which included the electricity infrastructure), demonstrated sufficient legislative intention that Sydney Electricity have the authority to maintain those assets in place where they had previously been lawfully installed, notwithstanding the absence of an express power of entry onto private lands for that purpose.
112 Even, if there were some question as to the position between 1990 and 1995, the 1995 legislation in my view clearly authorises entry onto lands for the purposes of maintaining electricity works and is not limited to entry onto public land.
113 While there is no exact equivalent of s 18 (which gave Telecom an express power to maintain telecommunications installations on any land), s 54(1) of the Electricity Supply Act clearly gives EnergyAustralia the right to enter premises for the purpose of exercising its functions in relation to the supply of electricity, including "maintaining" electricity works. I consider that to be sufficient indication of legislative intention for present purposes.
114 Therefore, even if the Sydney Electricity Act 1990 did not by implication do so, in my view, the Electricity Supply Act (by vesting ownership of the electricity infrastructure in EnergyAustralia (s 51) and by giving EnergyAustralia the power to enter onto premises, inter alia, to maintain electricity works for the purposes of exercising its functions under that or any other Act in circumstances where one of the principal statutory functions of EnergyAustralia was to establish, maintain and operate facilities for the distribution of electricity (s 9(2) Energy Services Corporations Act 1995)), impliedly conferred on EnergyAustralia a licence to keep in place not only any electricity infrastructure installed by it under the Act but also electricity infrastructure lawfully installed by its predecessor, even where that infrastructure was on private land.
115 Accordingly, as at and from the time the Lyons entities acquired the subject land in 1998 there was no trespass. The claim in trespass therefore fails.
Knowledge of the Lyons entities when acquiring the subject land
116 Before turning to the claims in contract/representation, I should note, in the context of the trespass claim, that there was a dispute as to the knowledge held by the Lyons entities at the relevant time of the existence of the electricity infrastructure.
117 The Lyons entities sought, at the commencement of the hearing, to file an amended reply which admitted that they were "relevantly" aware of the existence of the electricity structure. The qualification of relevance as to the admitted "awareness" (I was informed by Counsel) was intended to refer to the evidence subsequently to be given by the managing director of the Lyons entities (Mr Lyons) that, although he was aware of the existence of electricity poles on or near the subject land, he was uncertain as to whether or not they were on the land his companies were acquiring and he thought they were temporary.
118 The relevance of Mr Lyons' awareness in 1998 of the electricity infrastructure on the land (other than as to credit perhaps) goes only (as I apprehend EnergyAustralia's submissions) to the question whether any loss was sustained by reason of the alleged trespass.
119 I note that Hodgson J in Thompson said at 17:
I think in most cases, this result [multiple claims for compensation] would be avoided by application of principles concerning causation: in other words, if a new owner knew of the existence of a cable, or if by making reasonable inquiries would have known of its existence, then I think it would be likely that according to the usual principles of causation, it would be considered that the new owner is not caused injury by the maintaining of the cable.
120 That reflects EnergyAustralia's submission in this proceeding. EnergyAustralia contends that the Lyons entities were aware, through Mr Lyons (or alternatively through the knowledge of an agent, Don Fox Planning Pty Limited) of the existence of electricity poles on the land. Don Fox Planning Pty Limited had carried out work in about 1993 the Lyons entities in respect of an earlier application for development consent from Sutherland Shire Council in respect of Lot 1, in the course of which a survey had been obtained from Moriarty Stapley, surveyors, of land including the subject land.
121 Further, it was submitted that even if (contrary to EnergyAustralia's primary submission) the Lyons entities neither had actual knowledge (through Mr Lyons) nor imputed knowledge (through their consultants) of the electricity infrastructure, the Lyons entities would have known of their existence had they made reasonable inquiries.
122 As I have not found any trespass, this issue does not strictly arise. However, insofar as this issue remains of any relevance, I am of the view that the evidence (which I consider in more detail in relation to the contract/misrepresentation claims) discloses that Mr Lyons at the time the Lyons entities acquired the land was at least aware of the possibility that the electricity poles in question were on the subject land.
123 Mr Lyons was aware that an earlier survey had been commissioned on his companies' behalf prior to the sale contract being signed for Lots 1234/5. On 22 April 1998, Mr Lyons wrote to Moriarty Stapley, referring to work which earlier had been carried out by them in relation to Lot 1 and asking that they calculate the square metreage of Lots 1234/5. In that letter, Mr Lyons referred to an earlier survey using the reference: "Your ref 48465". This appears to correspond to the reference number of a Moriarty Stapley survey which had disclosed the existence of poles on the land. (Ex 8).
124 Mr Lyons wrote and asked for advice in relation to the poles and stanchions previously identified and plotted by Moriarty Stapley, noting his assumption that some of the poles and overhead lines were "outside the easement" (ie outside the main transmission easement), those being any poles and stanchions on the land he was proposing to acquire. (See Tab 8.3 and Ex AB p 100.)
125 It is not clear whether Exhibit 8 (or another survey in the same series) was the one sent to Mr Lyons or his companies to which Mr Lyons was referring in his 1998 letter. Mr Lyons, in cross-examination, said he saw the 1993 survey only in 2000. Mr Webster submits that Mr Lyons' evidence should be accepted that he first saw the survey in 2000, emphasising in part that in the course of Mr Lyons' evidence in cross-examination Mr Lyons had made the point that he did not know that there were high voltage wires over the land (and that until he was told that he just thought they could be knocked down).
126 EnergyAustralia submits that this is implausible and that the court should infer that Mr Lyons gave that oral evidence only in order to support his earlier sworn evidence that he did not know, when the property was purchased in 1998, whether the poles were located on the subject land.
127 Mr Leeming placed emphasis on the fact that Mr Lyons had "volunteered" this evidence indicating that he was concerned pre-emptively to distance himself from awareness of the survey plan. I do not think much can be drawn from Mr Lyons' answers in this regard. Mr Lyons had a habit of pre-empting or foreshadowing questions in cross-examination. From my observation he did so on a number of occasions (such as in response to questions put to him relating to discovery of documents). He also appears to have spent some time before or during the hearing refreshing his memory or making his own enquiries as to matters he thought might be put to him in cross-examination (such as when he made enquiries as to matters in relation to the sale of the land or as to how loan funds had been disbursed).
128 However, Mr Lyons does appear to have been keenly interested in the development potential of the subject land (and that of Lot 1) for quite some time. Mr Lyons took an active part in negotiations with various people in relation to the land over the years (potential purchasers, representatives of the relevant government Department and others). Given the close attention Mr Lyons seems to have paid to the subject land and the potential for development of this land since at least 1991, I think it improbable that Mr Lyons did not have regard, at least to a cursory extent, to the survey commissioned in relation to the land in 1993 (or indeed any survey) at or about the time it was prepared.
129 Mr Lyons' correspondence in April 1998 with Moriarty Stapley (Ex 23 p 100) (before the contract for sale was signed) makes it clear that Mr Lyons was of the belief that some of the poles and overhead lines were outside the main transmission line easement. Presumably that belief came either from his own observation of the site (though he said this was overgrown and that the electricity infrastructure or boundaries of the land were not as readily discernable as was the case later following clearance of or landfill on the land) or from discussions with the surveyor or his review of plans in relation to the land. Logically, Mr Lyons can only have thought it necessary to seek advice from surveyors in relation to this if he considered that there were or might be electricity or other poles on the land his companies were acquiring. His later correspondence to EnergyAustralia (discovered only during the course of the hearing) makes this clear. (Ex AB Tab 2).
130 Mr Webster further submits that it should be accepted that (in 1998) Mr Lyons did not consider the poles to be "of prime concern" to the viability of the development of the subject land. From the tenor of Mr Lyons' evidence, I accept that he did not at the time place any great importance, or have any great concern, as to the presence or possible presence on the subject land of electricity poles. Nevertheless, whether or not Mr Lyons did have any or any detailed regard to the survey commissioned on his or the Lyons entities' behalf, it is clear that when the Lyons entities acquired the subject land Mr Lyons knew that there was a possibility (or risk) that part or all of the electricity infrastructure (whatever its perceived permanence or impermanence) was on the subject land. Perhaps with the same confidence which Mr Lyons expressed in the witness box as to his ability to procure any necessary SEPP 1 variation or rezoning of the land to achieve what he perceived to be its development potential, or perhaps thinking he could simply demolish the poles, Mr Lyons evidently considered that the presence of any electricity poles on the subject land was an impediment he could in due course overcome and was prepared to accept this risk.
131 I any event, I am not satisfied that had there had been a trespass by reason of the presence of the electricity infrastructure on the land, any damages in respect of that trespass would have been reduced by reason of the fact that the Lyons entities had acquired the land on notice of that infrastructure. I note Mr Webster's submission in this regard, that as a matter of law, knowledge does not inform the quantum of damages for trespass.
Contract/Misrepresentation claims
132 That brings me to the claims in contract/misrepresentation. Before addressing those claims, I should note the further matters by way of factual background.
Further Facts
133 At the time Sydney County Council installed the electricity infrastructure on the subject land in 1982/3, as at the present, there were very high voltage main transmission towers and high tension lines running along the foreshore adjacent to (but not part of) the subject land In 1983 an easement was gazetted in respect of those lines. It is accepted that this easement did not cover the electricity infrastructure which was installed in 1982 or 1983 on that part of the land which became Lots 1234/5 and which is the subject of the present dispute.
134 The proposed closure of Bate Bay Road was first notified in 1990. Sydney County Council objected to the closure as overhead mains were constructed on the road. There had been discussions between Sydney County Council and Cronulla Sutherland Leagues Club ("Club") (which was at some time around 1990 seeking to the purchase the subject land) as to the creation of an easement for poles and lands on Bate Bay Road if it were to be closed.
135 Sydney County Council, by letter dated 27 July 1990, sought consent from the Department to the creation of an easement over the subject land for the electricity infrastructure prior to the (then proposed) sale to the Club of the land. The Department refused such consent. The terms in which it did so suggest to me that the Department considered it more appropriate for the proposed ultimate owner of the land (rather than the Department) to consent to any easement. It may well be that the Department was concerned not to take any steps in relation to the title of the land which might adversely affect the proposed sale or encourage the proposed purchaser to seek to renegotiate the price for the land. There is no evidence as to the Department's reasons for its refusal to consent to an easement at this stage. I simply note that, to the extent that the Lyons entities at one stage appeared to rely on the position taken by the Department in this correspondence as evidence of a lack of consent to the initial installation, I do not consider such an inference should be drawn.
136 On 29 August 1990 a deed of agreement was entered into between the Club and the Sydney County Council for the grant of an easement over the electricity infrastructure, following which on (7 September 1990) the Sydney County Council withdrew its objection to closure of the road However, no such easement was ever finalised.
137 On 12 July 1993 Sydney Electricity requested provision of easement documents from the Club and said that if they were not made available it would object to the road closure (although by then it would seem the road had already been closed, so it is not apparent how Sydney Electricity would have been in a position to implement that threat).
138 I do not see EnergyAustralia's conduct in seeking an easement at that stage (or earlier) as any admission that it had no right to leave the electricity infrastructure on the subject land. It seems to me consistent with EnergyAustralia realising that, insofar as there might be any uncertainty or doubt as to that matter, it would be prudent (given the possibility of a change in ownership of the land) to put the matter beyond doubt.
139 By letter dated 23 July 1993 the Club advised Sydney Electricity that the development of the area was at a "standstill" due to the current financial position of the Club.
140 At this point, reference should be made to Mr Lyons' involvement with the Club. For some time in or about the late 1980's or early 1990's, Mr Lyons, or entities associated with him, were involved in what Mr Lyons described as a "joint venture" with the Club with a view to development of the land adjacent to the Club (including both the subject land and the land which became Lot 1). I do not know whether there was ever a formal joint venture arrangement. However, each of the Lyons entities and the Club in separate correspondence with the Department on 24 and 22 November 1993 (Ex 23 p 27 and p 30, respectively) described the other as a "former joint venture partner".
141 Mr Lyons or his companies in 1991 commissioned a valuation of the area of land described as "Site A" which included the subject land, Lot 1 and Woolooware Road North. That valuation, by Jones Lang Wootton assessed the value of all three areas together at $350,000 on the assumption that they were all owned by the Club.
142 As noted above, Mr Lyons appears to have taken a close interest in the various matters affecting the proposed development of the land in this area (including the subject land) for some time prior to his acquisition of the subject land (from at least 1990) and, more than most if not all other purchasers, must have had ample opportunity to assess the value of and potential limitations on use of the subject land.
143 Mr Lyons or his companies had retained external advisers (Don Fox Planning Pty Limited and Moriarty Stapley) in relation to an application for consent to the development of Lot 1 for use as a service station, which consent was ultimately obtained after a lengthy process and, as Mr Lyons' correspondence made clear, at considerable cost.
144 On 15 March 1991, an amending LEP 151 was published in relation to land referred to as site "A". Site "A" included both Lot 1 and Lots 1234/5. The zoning amendment permitted use of site "A" for refreshment rooms, take away food shops and convenience stores, as well as for a service station.
145 The rezoning was subject to a three year sunset clause, expiring 15 March 1993 (later extended by request from Mr Lyons until 15 March 1996). The Lyons entities relied upon the amended zoning to procure development consent for Lot 1 for construction on that lot of a service station. However, it seems Mr Lyons was unable at that stage to persuade the Department to utilise the benefit of the rezoning in respect of the balance of Site "A" (including Lots 1234/5) (see Ex 23 p 27, for example and Ex 23 P 36) and ultimately the amended rezoning in relation to Lots 1234/5 expired.
146 At some time in the early 1990's, the Club experienced financial difficulties and was placed in receivership. There was then apparently a dispute leading to court proceedings between Mr Lyons or his companies and the Club. This was ultimately resolved by what Mr Lyons described as a "lengthy negotiated settlement", as part of which the Lyons entities acquired Lot 1 for $82,408 and the Club (or its then receivers and managers) acknowledged that Mr Lyons or his companies (the Lyons entities) were free to pursue commercial negotiations for the "special purchase" of the subject land. (Ex 23 p 30).
147 The price at which the Lyons entities acquired Lot 1 was $82,408, reflected the proportionate value (on a square metre basis) of Lot 1 as part of the overall Site A, in accordance with the Jones Lang Wootton valuation, although I understand that there may have been other (non-monetary) consideration referable to the sale.
148 The Lyons entities mortgaged Lot 1 for the sum of $500,000 lent to them by a Mr Tattam in February 1994. A valuation of the land had been prepared by Mr Rennie of Herron Todd White for that purpose and in that amount .(Ex 15).
149 From the early 1990's, through to the late 1990's, Mr Lyons was involved in discussions with the Department with a view to Mr Lyons or his companies acquiring the subject land. (Indeed, it appears from a letter dated 9 November 1998 from the Lyons entities to Sutherland Shire Council (Ex 22 Tab 6) that an application to acquire the land may first have been made by the Lyons entities and the Club as early as 1988.)
150 In the course of those negotiations, Mr Lyons (both himself and through a property consultant retained by one or more of the Lyons group of companies and, working out of their offices, Mr Keith Binney), stressed that the subject land was of almost no, or minimal, value and indeed was only of any value to the owner of Lot 1.
151 By letter dated 19 March 1992 to the Regional Director of the Department, the subject land was described by Mr Lyons as "basically unusable" unless it is combined with Lot 1 (Ex 23 p 10). In that letter Mr Lyons ascribed a value of $65,000 to the land and noted various negative features of the land, ie any construction would require "substantial costly geo-technical sub-soil enhancement", and that it had previously been a swamp. (At that time the Valuer General had apparently suggested a value in excess of $500,000). By letter dated 24 November 1993 (Ex 23 p 27) Mr Lyons, writing on behalf of the Lyons entities similarly described the land as having "almost no value" and said that it "will have minimal value once it reverts back to its previous zoning".
152 In 1994 and 1996 the value was described as being "severely diminished" or "negligible" because of the 30 metre foreshore building line or set back (Ex 5 p1 - 9.2.1994 and Ex 3 p 1 - 21.8.1996).
153 Mr Lyons proposed a sale price in 1992 of $100,000 (it seems this was roughly calculated pro rata on a square metreage basis, using a valuation he had obtained for the whole of Site "A" of $350,000). An alternative option also then being considered was a long term lease of the subject land to the Lyons entities.
154 By letter dated 5 June 1996 the Department wrote to Mr Lyons (referring both to previous correspondence and to "recent discussions" with Mr Keith Binney advising that the Minister under delegation had approved in principle the sale of Lots 1234/5 to the owners of Lot 1 (the Lyons entities) at a purchase price being "the current market value of the land, having regard to its proposed use, as assessed by the Valuer General". (Ex AB p 63).
155 The Valuer-General (by letter dated 8 July 1996) was instructed to value the subject land "based on the current zoning and the proposed use of the adjoining land [Lot 1] for service station/convenience store by the intended purchaser. The Valuer-General's response suggests that he considered that there were some problems associated with the task including "possible relocation of power poles??" and "exact location of power poles" (see Ex AB p 67).
156 The Valuer-General's valuation of 2 December 1996 put the current market value of Lots 1234/5 as totalling $73,000 to $95,000. On the basis that there was said to be a very good chance that the zoning of the Crown land could easily be changed to allow for commercial usage as indicated on LEP 151, it appears the Department recommended that negotiations commence at $180,000 (See Ex A1 pp 15-20).
157 Once approval in principle was obtained for sale at market value having regard to its proposed use, Mr Lyons and Mr Binney then stressed the restrictions on development/use of the subject land
158 By the end of 1996, the Department had apparently offered to sell the land for the sum of $180,000. In evidence were copies of some notes prepared by the Department's officers of a meeting on 23 December 1996 with Mr Lyons and Mr Binney, in which Mr Lyons apparently "detailed the history of the site and in conclusion indicated that the site as is was not worth $180,000".
159 The belief was apparently formed by the Department's representative (Greg Foster) from the meeting that "the applicants want to purchase the land even as 6(c) zoned land that may only be able to be used as car parking or landscaping". (Ex AB p 79).
160 By letter dated 14 January 1997, Mr Lyons, writing as managing director of the Lyons Brothers Group of Companies, submitted an offer to enter into a 25 year lease at a rent of $15,000 per annum for year one but required an option to acquire the freehold at a purchase price of 10% capitalisation of the then rent (ie $150,000 if the rent was $15,000) (Ex AB p 80).
161 That offer was in principle acceptable (Ex AB p81) but the Department was not prepared to agree to the option price, advising that subsequent sale of the land would be considered on its merits as at the date of the application for purchase (letter dated 17 February 1997 - Ex AB p 81).
162 By letter dated 24 October 1997 to Mr Keith Binney, the Department responded to issues apparently raised in relation to the permitted use of the land under any such lease and noted that a change of purpose of the lease would be "an expensive, lengthy and time consuming exercise". The Department indicated it would be prepared to re-open negotiations on the "asking price" of $180,000 for the sale of the land.
163 That evidently prompted a re-consideration by Mr Lyons of the desirability of a lease versus purchase of the subject land and, by letter dated 28 October 1997, Mr Lyons, writing for the Lyons entities, advised that they wished to retain the "right" to take up the lease which had been offered but made an unconditional offer to purchase the land at $150,000 (Ex AB p 92). In that letter Mr Lyons stressed that "we have been negotiating with your office for 8 years".
164 Approval was given on 7 November 1997 for the sale of Lots 1234/5 to the owner of Lot 1 at a price of $150,000 (Ex A1 p 21).
165 At or about the same time, the mortgagee of Lot 1 exercised his rights as mortgagee to sell Lot 1 due to the failure of the Lyons entities to meet interest payments due on the loan taken out by them in respect of land. In the witness box, Mr Lyons appeared to attribute this to cash flow difficulties admitting that " … I think they … didn't have the funds at that time to continue to make the mortgage payments".
166 Therefore, the Lyons entities were defaulting on mortgage payments for Lot 1, just when Mr Lyons was in the midst of negotiation for the purchase by the same companies (the Lyons entities) of Lots 1234/5 for the sum of about $150,000. (Mr Lyons' oral evidence nevertheless was that the Lyons entities could have procured the necessary funds to pursue a development application over the land in the period from 1998 perhaps from his co-director, a Mr Muhs, or might have been able to persuade consultants to "punt" an application at no cost to his companies, had he thought development consent could have been obtained with the infrastructure still on the land.)
167 In late 1997 Lot 1 was sold at public auction by way of mortgagee sale to Galanos Brothers for the sum of $540,000, the land being sold with the benefit of the conditional development approval which had been obtained (22 December 1995) for use of the land as a service station.
168 The sale to Galanos Brothers was completed in January 1998. Of the proceeds of sale received by the Lyons entities ($114,621) about one third was paid to the solicitors acting for the Lyons entities on a number of matters not apparently connected to the land itself.
169 By letter dated 11 November 1997 the Department wrote to Mr Lyons advising that it was prepared to accept his offer for purchase of the subject land by the Lyons entities at a price of $150,000 but advised that the Minister would need to advertise his intention to sell. (Ex A1 tab 8 p 22; Ex AB p 89).
170 In cross-examination, Mr Lyons appears to have accepted that the price of $150,000 was only struck in 1997. This is contrary to the instructions apparently given by him to the two expert valuers retained by the Lyons entities (Rennie and Edmonds) to the effect that the price was negotiated over a period of some years (in Mr Edmonds' case said to be 8 years) and the history recounted by Mr Lyons to EnergyAustralia in 2001 that the purchase price was agreed 11 years ago (Ex A1 tab 29 p 248). This may be relevant in explaining why Messrs Rennie and Edmonds discounted or disregarded the 1998 sale price when assessing the value of the property.
171 At the very least the disparity between Mr Lyons' portrayal of events in relation to the negotiation of the purchase price for Lots 1234/5 suggests a tendency on the part of Mr Lyons to put a favourable gloss on events to suit his position. That tendency was also illustrated by the manner in which different aspects of the land were emphasised by Mr Lyons according to whether he was speaking as a purchaser or as a vendor of the land. Mr Lyons (or his consultant) emphasised the negative features of the land when negotiating to purchase the land but otherwise emphasised its positive features when seeking (even before he had acquired it) to on-sell the property or when selling to obtain finance on the strength of the property. In either case, Mr Lyons accepted that he was conscious of the need not to mislead or deceive those to whom such representations were made and agreed that he was not misleading the Department in his negotiations for sale, when stating the negative features of the subject land. I can only assume, therefore, that Mr Lyons accepts that the existence of developments constraints impacts negatively, at least to some extent, on the value of the land.
172 On 28 April 1998 the contract for the sale of Lots 1234/5 was signed. That contract was completed in May 1998 and the Lyons entities (in unequal shares) together acquired Lots 1234/5 from the State of New South Wales in 1998 for the sum of $150,000.
173 In May 1998 Mr Lyons sought from a number of valuers an initial "kerbside" a valuation of the subject land for intended use as two fast food restaurants.
174 At about the same time, by letter dated 14 May 1998, Mr Lyons wrote to a Mr Ken Mathews seeking advice in relation to the permitted use of the land and stating that "I am not too anxious to seek a rezoning, as dealing with Sutherland Council is even more tedious than other Councils". Mr Lyons appeared to be seeking advice as to whether two fast food operations could be carried out on the site without the need for rezoning (Ex AB Tab 3.)
175 Mr Lyons' conduct throughout the period from 1998 is consistent with his preference being, if at all possible, to on-sell the subject land at a profit but without incurring the expenses of undergoing the development application process. I accept that it would appear that Mr Lyons had in the back of his mind that failing this he had the option of seeking a development application and on-selling the site with DA attached. (See Ex 3, letter dated 11 September 1998 from a Mr Ben Gilles setting out his understanding that Mr Lyons was seeking to retain his services to prepare a development application to attach to the site for sale purposes.)
176 On 14 May 1998 Mr Lyons wrote to Mr Barry Crowther, the local bus operator, enquiring as to any interest he might have in renting or buying the subject land for the purpose of providing a facility for his buses. That letter noted that "from our experience, seeking a re-zoning from Sutherland Council is a lengthy and tiresome process" but suggested that use of the site without rezoning (providing a DA was achieved) might be possible and that a "gradual 'creep' of usage may evolve in time to a full scale depot".
177 On 11 August 1998 Mr Lyons offered the land to Mr Crowther for $850,000 or alternatively to lease the land to him (Ex 23 pp 105, 119).
178 Similar offers were made to others who Mr Lyons considered might be potentially interested in the purchase or lease of the land, including the owner of Lot 1 (see Exhibits 3, p14; and 9, pp 3, 4, 5, 6, 7 and 9).
179 On 21 July 1998 a valuation of the land was obtained from Mr Rennie, then of Herron Todd White, in the sum of $750,000 "for mortgagee purposes".
180 The Rennie valuation (Ex A1 Tab 13) assumed consolidation of the lots or a hypothetical sale as one saleable entity, something not possible by the time the Lyons entities had acquired the subject land, (unless some arrangement could be reached with the Galanos Brothers to merge or develop jointly the separate parcels of land). As noted, the value of the subject land was expressly assessed by Mr Rennie for mortgage security purposes. Reference was made to the sale of Lot 1, but it was said that a lower price/analysis was justified for the subject property "particularly without any DA and reflecting the highly restrictive zoning" (my emphasis).
181 There was no reference in that Rennie valuation to any impediment on development by reason of the electricity infrastructure.
182 A lower/mid price range was considered by Mr Rennie at that stage to be the mostly likely indication of value at $200/m2, although a purchase by the adjoining owner, it was said, would justify a higher price range up to $200-$300/m2.
183 The land, which had been acquired for $150,000 (in circumstances where Mr Lyons had emphatically asserted to the Department his belief as to its low value) was almost immediately put forward as security for a $500,000 loan supported by the Rennie valuation of $750,000.
184 On 10 October 1998, the Lyons entities granted a mortgage over the subject land to secure a loan of $500,000 from a syndicate of mortgage lenders. The stated purpose of the loan was to "obtain funds for expansion of business activities" (Ex A1 p 139).
185 Exhibit 22 Tab 5 represents, I am told, the entirety of the response by the Lyons entities to a call for documents recording the disbursement of the funds borrowed from the syndicate of lenders. It would appear from the evidence that at least the bulk of this money is likely to have been distributed by way of unsecured intra-group loans, although resolutions approving the loans were produced. Certainly, the $500,000 was not expended on development of the subject land.
186 On 11 August 1998, Mr Lyons wrote (in a letter produced only during the course of the hearing) to EnergyAustralia at its Oatley branch referring to an enclosed sketch which it was said indicated that power poles had been erected on Lots 1234/5 and for clarification as to the situation (Ex 22 Tab 4). It appears that this letter was sent to the wrong department within EnergyAustralia but Mr Newland and Mr Chin agreed that in the ordinary course misdirected correspondence of this kind would be redirected internally to the correct department.
187 On 25 January 2000, the Land Titles Office wrote to Mr Lyons advising that it had been contacted by EnergyAustralia "in regard to formalising the easement for power lines" for the electricity infrastructure (Ex A1 p 206, Ex JHL-9 to affidavit of 4 October 2007) and requesting that Mr Lyons contact EnergyAustralia. Mr Lyons denies receipt of that correspondence.
188 The initial mortgage loan secured over Lots 1234/5 fell due for repayment on 8 April 2000. The syndicate of lenders was unable to extend the loan. However, on 8 April 2000 the initial loan was refinanced by Mr George Stamatakis for a term ending in April 2001. The letter approving the refinancing noted that the lender required that the previous valuation by Herron Todd White of $750,000 be confirmed (Ex AB 131). It is not clear whether that confirmatory valuation was provided.
189 On 18 April 2000, a notation was placed on the title of the subject land in relation to a proposed easement in favour of EnergyAustralia.
190 On 16 October 2000 EnergyAustralia wrote to Mr Lyons in relation to the January 2000 letter from the Land Titles Office and seeking his agreement to formalise the easement. Mr Lyons responded to this letter on 30 November 2000 stating that the "whole issue" had come as a "great shock".
191 On 7 December 2000 Mr Lyons wrote to EnergyAustralia asserting that the subject land was worth $1.082 million and advising it was his intention to build two fast food operations on the subject land.
192 In his affidavit of 4 July 2007, Mr Lyons swore that at the time the property was purchased it was his intention to develop two fast food outlets on the property within two years. This is consistent with his request for a kerbside valuation of the land with that intended use. However, Mr Lyons' correspondence with Mr Mathews suggests that Mr Lyons was not necessarily intending to proceed to make a formal application for development consent at that time, let alone actually to develop the land.
193 Exhibited to Mr Lyons' affidavit was a plan for one fast food restaurant on the subject land and a convenience store on Lot 1. Mr Lyons conceded in cross-examination that this plan was drawn prior to the mortgagee sale of the service station at least four years before the subject land was acquired (at a time when the Lyons entities owned Lot 1) and, contrary to the assertion in his affidavit that this was the development for which the Lyons entities intended to seek consent at the time they acquired the subject land in 1998, this was not what they intended at the time. I note that no plans were produced at the relevant time which reflected that the intention was to develop the subject land for use with two fast food restaurants.
194 On 13 December 2000 Sutherland Shire Local Environment Plan 2000 came into force. There was a dispute between the valuers who gave evidence as to whether this plan prohibited fast food outlets. Nevertheless, for present purposes I note that Mr Lyons maintains he was confident of his ability to procure approval for such a use.
195 On 12 March 2001 Mr Lyons wrote to EnergyAustralia enquiring whether EnergyAustralia wished to purchase or to rent the site or to pay him compensation. EnergyAustralia submits that this was the first occasion on which it was asserted that EnergyAustralia should remove the infrastructure if it did not buy or lease the land.
196 The refinanced loan from Mr Stamatakis fell due for repayment in about April 2001. It was extended to 7 April 2003 (Ex A1 Tab 31). The purpose of the loan, as extend, was said to be "for business loan". At the time of the extended loan the easement notation was on title and it appears Mr Lyons may earlier have signed a statutory declaration (in connection with the loan) as to the fact that power lines had been erected on the land. There was in evidence a letter dated 30 April 2003, in which reference was made to a statutory declaration signed in October 2001 referring to the erection of power lines by Sydney Electricity "without due authority". Therefore, at least insofar as the assertion that the presence of the power lines prevented the later refinancing of the Stamatakis loan, this seems to be belied by the fact that finance had earlier been able to be obtained in just such a situation, albeit from an existing financier.
197 On 10 July 2001 EnergyAustralia advised Mr Lyons that the infrastructure had been lawfully erected by Sydney County Council in 1983 pursuant to the Public Works Act.
198 On 19 July 2001 Mr Lyons, in a without prejudice letter to EnergyAustralia, asserted that the occupation of the land (by the infrastructure) rendered the property unable to be developed and sought compensation in the form of a monthly rental (Ex A1 p 218 or 219).
199 On 7 August 2001 EnergyAustralia offered $20,000 compensation as assessed by the Valuer-General's office in relation to an easement.
200 By response on 15 August 2001 Mr Lyons said that the easement would nullify the value of the land and again asserted that the value of the property was $1.082 million. He threatened to demolish the electricity infrastructure (Ex A1 p 248/249). In that letter Mr Lyons asserted (apparently incorrectly) that the square metreage rate for acquisition of the subject land was calculated and agreed 11 years ago.
201 On 24 August 2001 EnergyAustralia reiterated the existence of its statutory right and said it would respond in relation to valuation issues.
202 On 11 January 2002 Mr Newland was advised by Mr Warwick Weekley within the Property Office - Network Easements and Lease, at EnergyAustralia, that the State Valuation Office had increased the compensation figure from $20,000 to $60,000. A subsequent email by him on 4 February 2002 noted that a before and after method (ie the difference between the property's value immediately prior to and following the acquisition of the easement) had been used and that a higher before figure had been adopted to reflect an increase in the market value of the land "and to resolve all issues in favour of the dispossessed landowner".
203 In November 2002 a caveat was lodged on the title by the State Crown Solicitor on behalf of the Crown, claiming a charge on the land for unpaid land tax (Ex AB p 137-139).
204 Mr Lyons gave evidence that in or about February 2003 the Family Court made orders restraining him from selling, transferring or encumbering a range of his assets (a fact on which Mr Lyons in part relied to counter the criticism that he had taken no, or few, steps to proceed with the intended fast food outlet on the site at an earlier stage). Whether any such order directly or indirectly bound the Lyons entities is not clear to me.
205 The Stamatakis loan was not repaid on 7 April 2003 (see Ex AB 140) and, in accordance with the terms of the mortgage, a higher default rate of interest thereupon became payable. On 28 April 2003, solicitors for the mortgagee advised that a further extension of the mortgage was unable to be given.
206 On 30 April 2003, Mr Lyons wrote to Mr Michael Yabsley (as a political lobbyist) seeking his assistance "to facilitate a very fast track negotiated settlement" with EnergyAustralia, among other things to have EnergyAustralia acquire the whole of the land at its appropriate commercial value (which, it was said, "may be as much as $1.5 million"). On a square metreage comparison with the price obtained for Lot 1, Mr Lyons put the value of the subject land at $1,082,176. However, with the "EnergyAustralia impediment" he said, "it may be very lucky to be worth $50,000" (Ex AB pp 141-143). In that letter Mr Lyons (as he later did when instructing expert valuation witnesses) suggested (erroneously) that the sale price of $150,000 had been agreed with the Crown several years before the 1998 sale. Mr Lyons asserted that (with the impediment) "the prospective commercial land use would now be 'zero'".
207 On the same day, Mr Lyons wrote "without prejudice" to the mortgagee's solicitors referring to alleged indications given to him (back in 2001) that upon expiry the loan was likely to be further "rolled and/or extended". Mr Lyons said that "Based upon such assumption and your non-explicit verbal assurances, we had not anticipated any early repayment" (which it might be thought - and certainly from their response seems to have been read - as setting the ground for a later claim based on estoppel or misrepresentation against the mortgagee or its solicitors). That letter asserted that the presence of the "unauthorised and unwanted illegal impediment to the land, if allowed to continue, would render the land close to worthless, and … accordingly make re-finance virtually impossible!" The land, it was said, appears in the short term to be "near worthless". (Ex A1, Tab 34). There was no evidence that at this stage Mr Lyons was taking steps to arrange such refinancing.
208 On 28 May 2003, Mr Lyons' solicitors formally demanded the removal of the infrastructure by EnergyAustralia.
209 This led to a critical meeting - a meeting on 11 June 2003, attended by Mr Lyons and his solicitor, Mr Wawn, on the one hand and by Ms Campion, a senior legal officer of EnergyAustralia, and Mr Newland on the other hand.
210 I consider this meeting in more detail later in these reasons. However, for the purposes of the overall chronology I note that there is a dispute as to whether or not that meeting was conducted on a without prejudice basis.
211 More critically, there is a dispute as to whether or not any binding agreement was reached at that meeting pursuant to which EnergyAustralia was obliged to remove the electricity infrastructure (or, alternatively, whether it represented to Mr Lyons that it would do so within a particular time).
212 After the meeting, Mr Newland prepared some typed minutes. His evidence is that he typed them himself in the afternoon of the meeting (ie about four hours after the meeting).
213 In evidence were two different copies of emails from Mr Newland to Ms Campion at about 5.58 pm on 11 June 2003 attaching the draft minutes. Each is in different font (and with a different time clock) to the other. Mr Newland could not explain the difference. It seems to me (without the benefit of any expert evidence as to whether or not the respective computers could technically have been manipulated to change the time or date recorded in respect of the email transmission) that the likely explanation is the one proffered by Mr Newland, that it depends on whose computer it was from which the respective copies were printed. Mr Newland gave evidence that he still has the email on his computer system.
214 I accept Mr Newland's evidence that the minutes were prepared by him that afternoon. In terms of a contemporaneous recollection of the discussion at that meeting, Mr Newland's minutes provide the best (and practically only) source. He clearly anticipated that they would be provided to Mr Lyons and his lawyer, since he suggested that Ms Campion review them and if appropriate send them out. I would therefore infer that he prepared them expecting that any inaccuracy in the minutes would be noted; and so took due care in their preparation to ensure that they fairly reflected what had been discussed.
215 There was no real suggestion that the minutes were created at a time when Mr Newland's recollection of the discussion was not fresh in his mind. The timing of the emails under cover of which he forwarded the draft minutes to Ms Campion is consistent with his recollection of events. Where there is a conflict in the evidence of what occurred at the meeting I would prefer the version appearing on the face of the minutes.
216 Mr Newland identified Mr Amir Hanna and Mr Trevor Armstrong within EnergyAustralia as the persons responsible for authorising the work. As at 11 June 2003 it was his view that if an easement could not be negotiated, the infrastructure would need to be removed. He gave evidence that he spoke to Mr Hanna on 11 June 2003 after the meeting with Mr Lyons and Mr Hanna "agreed that he would handle the authorisation of the works" (17/11/08 T 34.36-41). This conversation was before Mr Newland contacted Mr Chin (the engineer within EnergyAustralia with responsibility for relocation of transmission lines), by email sent at 6.02 pm, and advised Mr Chin as follows:
After today's meeting with Mr Lyons it appears we will be going ahead with the relocation of our 132 kV pole line from his property to the unformed road, hooping up to the tower line mains along the span.
Could you now undertake a more detailed review of the preferred option, and provide Amir Hanna with an estimated cost and completion date so that we can arrange an IPO for the work to be completed on the compliance budget. On receipt of the IPO, please initiate the environmental review ASAP so that works can proceed in accordance with the time frame discussed at our last meeting".
217 There is some doubt as to whether the "preferred option" in this email refers back to what Mr Newland and/or Mr Chin saw as the preferred way of physically effecting the removal of the infrastructure or, rather, that its removal was the preferred option for EnergyAustralia (as opposed to compulsory or other acquisition of an easement or any other option it may have had to resolve the dispute). Used in this email, and the later July communication between Mr Chin and Mr Newland, "preferred option" must bear the former meaning. In terms of what was discussed at the 11 June 2003 meeting, however, it seems more likely that any reference to a "preferred option" was in the context of what would be the least costly option for EnergyAustralia to resolve the dispute.
218 Mr Chin responded to Mr Newland on 16 June 2003 with advice that the estimated cost would be $67,000, with the estimated completion date of nine weeks from receipt of an internal purchase order (IPO).
219 On 19 June 2003, an IPO was issued (signed by Mr Amir Hanna, "Manager - Asset Compliance - SAM" and Mr Trevor Armstrong, "manager - SAM") for the relocation of the infrastructure. This included the specification of the delivery date as "to be completed by 30 September 2003" and referred to Mr Chin's 16 June 2003 email as the suppliers quotation reference.
220 There is no suggestion that there was any communication at this stage to Mr Wawn or Mr Lyons in relation to the matters discussed at the 11 June meeting. Mr Newland suggested that the reason an IPO was issued at that stage was to minimise delay. Mr Newland said that the issue of an IPO did not mean that the work would be done. However, there is nothing on the face of the IPO to suggest it was in any way provisional.
221 EnergyAustralia appears to have proceeded, following the 11 June meeting and issue of the IPO, as if a decision had been made to proceed with the works and it took various steps, (including obtaining an environmental assessment clearance) to do so. It is not apparent to me when any such decision was made.
222 On 7 July 2003, there was an internal notification within EnergyAustralia that the works would be scheduled to commence in early September. Mr Shaun Lenehan (who Ms Campion identified as being from EnergyAustralia's Environmental Services Unit) emailed Ms Campion on 7 July 2003 as follows:
Peter Chin tells me that they are planning to commence work at Cronulla in early September 2003. He says that the work should take one to two weeks to complete …"
223 On 8 July 2003, Mr Chin advised Mr Newland by email of details in relation to the two options for the relocation of the electricity infrastructure.
224 On 11 July 2003, Ms Campion wrote to Mr Wawn. That letter, headed "without prejudice", said:
Subject to satisfactory environmental assessment, EnergyAustralia intends to relocate the pole and stay poles on your client's property early in September 2003.
I have sought and am awaiting instructions in relation to your client's views on rent.
225 Ms Campion says that she also, by DX later that day, forwarded to Mr Wawn minutes of the 11 June meeting which had been prepared by Mr Newland. Mr Wawn denies having asked for or having received any minutes from Mr Newland.
226 On 12 September 2003, a notice of default under the Stamatakis mortgage was served on the Lyons entities. This was a default in repayment of principal. The notice was served under cover of a letter denying that anyone on the mortgagee's behalf had led Mr Lyons to believe the mortgage would be automatically extended but also noting that Mr Lyons' April letter had indicated a further six months was required in which to refinance and that hitherto the mortgagee had declined to give instructions to issue a 57(2)(b) notice (ie Mr Lyons had by then had the benefit of about five months' grace in terms of the exercise by the mortgagee of its rights). Repayment of the principal sum was required within three months.
227 On 16 September 2003, Mr Wawn wrote to EnergyAustralia saying there were difficulties with financiers. This is the first documented evidence of EnergyAustralia being on notice of any financial pressure underlying Mr Lyons' request for removal of the infrastructure (Ex A1 p 305), although in oral evidence it was said by the Lyons' witnesses that this was discussed at the June 2003 meeting. Moreover, there is some suggestion that this letter was not received by EnergyAustralia (a later follow up call by Mr Wawn produced a request for the letter to be re-sent; and the first response within EnergyAustralia to this issue was in December 2003).
228 On 18 September 2003, the first of a series of delays was encountered in relation to the relocation works - namely, the discovery that there was insufficient stock of insulators and that delivery of future supplies was not expected until 27 October 2003.
229 On 22 September 2003, Mr Chin advised Mr Newland by email that the diversion work had been scheduled during the first week of November and that it was estimated the work would stretch over one week (Ex A1 p 307).
230 The second delay was on 13 October 2003 when Mr Chin was requested to accommodate a request by Caltex Oil to defer the "outage" required for transfer of the transmission lines. (I interpose to note that it would seem EnergyAustralia took the view that it should prioritise the needs of a large consumer (Caltex) over the relocation works which had been requested by Mr Lyons and which, by this stage at least, it seems EnergyAustralia had decided to effect.)
231 A third delay occurred due to rain. On 27 November 2003 Mr Chin advised Mr Newland and Ms Campion that "the diversion work schedule for last week" had to be cancelled due to rain and that the work had been rescheduled to 15-18 December.
232 Ms Campion wrote to Mr Wawn on 1 December 2003 advising that because of the delay due to the rain the supply diversion work to install the new pole, previously scheduled for 24-26 November 2003, had been rescheduled to 15-18 December 2003.
233 On the same day Ms Campion emailed Mr Newland and a Mr Colin Peacock that:
The solicitor for the owner says that the owner is having trouble refinancing the property because there is a proposed easement marked on the title.
They will undoubtedly attempt to recover damages for our delay in moving the pole.
234 Mr Newland responded:
I think we should resist any attempt to claim against delays in our relocating the poles, firstly because they are not attempting to sell the land, and secondly because if it was only the mention of a proposed easement on the title deeds that was troubling their new lenders, then they should have approached us about removing it, since they were already aware that we were taking action to remove the poles and so a proposed easement would not be required.
235 The Lyons entities sought to rely on EnergyAustralia's internal response (namely the above exchange of emails) to the correspondence (in September 2003) in which EnergyAustralia was put on notice of the financial difficulties then faced by Mr Lyons as amounting, in effect, to an admission that EnergyAustralia was bound to remove the electricity infrastructure by early September. In that exchange of internal emails, Ms Campion warned that Mr Lyons would no doubt seek damages for delay in the removal of the infrastructure and Mr Newland exhorted her to resist any such claim.
236 I do not read this exchange as any admission of liability. Rather, it is consistent with EnergyAustralia anticipating that Mr Lyons would (as he appears to have done in other circumstances, including with his mortgagee) resort to threats of claims for damages as a means of attempting to secure the action (or, in the case of his mortgagee, inaction) he desired.
237 On 5 December 2003, EnergyAustralia lodged with the Land Titles Office a request dated 3 December 2003 to remove the reference on the title to DP 1015819 (giving notice of the application for a proposed easement for electricity purposes).
238 On 10 December 2003, the fourth delay to the works arose when it was decided that because of the ground fill there would need to be geotechnical assistance. An investigation report was commissioned in relation to the foundations for pole 28. That report, dated 23 December 2003, by Douglas Partners identified the poor foundation conditions which it is said were unsuitable for support of the pole foundation and recommended methods to address this issue.
239 On 23 December 2003, Mr Stamatakis (the mortgagee) notified the Lyons entities that the mortgagee would be exercising its power of sale.
240 On 21 January 2004, these proceedings were commenced, in which initially the Lyons entities simply sought damages for trespass.
241 On 30 January 2004, Mr Newland advised Ms Campion that the earliest completion was likely to be early April.
242 During February 2004, further consideration was given to the need for geotechnical investigations in relation to the foundations and on 10 February 2004, Mr Chin recommended additional capital expenditure of $71,000 to complete the work required for the relocation of pole 28. An amended IPO was issued with a revised completion date of 30 April 2004.
243 By letter dated 25 February 2004, to Herron Todd White, Mr Lyons wrote:
Whilst this action [against EnergyAustralia] continues we have, in informal talks, received an acknowledgement from EnergyAustralia that they have no right to the easement, and subsequently I am reliably informed that the notation has been removed, and that they are in the process of physically removing the offending poles and electrical apparatus. (Ex B Tab 19)