City of Botany Bay Council v Jazabas Pty Limited (ACN 060 105 053)

MASON P: I have had the benefit of reading the judgment of Fitzgerald JA. I gratefully adopt his summary of the facts.

I agree with Fitzgerald JA that the primary basis of liability contended for by the respondent and accepted at trial was not established. For the reasons given by his Honour, the certificate under s149 of the Environmental Planning and Assessment Act 1979 (EPA Act) was not inaccurate or misleading. The answer for item 10 was correct because in 1993 the land was not affected by any council policy to restrict development by reason of the risks identified in the Department of Environment and Planning’s 1985 Risk Assessment Study (RAS).

It therefore becomes necessary to look at the respondent’s alternative claims based upon the Council’s letter of 10 December 1993 and Mrs Cuthbert’s conversation with Mr Haigh on 13 December 1993. These involve allegations of negligence and misleading or deceptive conduct in trade or commerce. There is also the claim that the Council was negligent in granting development approval in 1996.

Once the case based upon the s149 certificate is removed, the facts have the simplicity of a law school moot problem. They also throw up issues of nuanced complexity suitable for such an exercise. Facts

The Council knew that the property was going to auction. Statements in earlier s149 certificates about the absence of any development control plan were no longer accurate in light of the events of 8 and 10 December 1993. The Mayor had approved Mrs Cuthbert’s recommendation to prepare and exhibit a development control plan “ to indicate council's future development objectives for this land” . Mrs Cuthbert was the Council’s Director of Planning and Environment. In these circumstances, Council’s solicitor wrote to the auctioneer as follows: LOT 1 DP 224496 - NILSON AVENUE, HILLSDALE We act for Botany Council. We understand that the above property is going to public auction on 16 December 1993. We are instructed to inform you that the Council has today resolved to prepare a development control plan over the above property. The effect of the plan will be to maintain the current floor space ratio of 0.5 to 1 and establish a proposed building footprint/site coverage of 0.166 to 1, recognising the predominant development in the locality and the long standing recreational use of the land. In addition, Council is of the view that any proposed residential flat development should incorporate an area to provide pedestrian access, vehicle access manoeuvring space, private open space and other facilities associated with a residential flat development within the overall development parcel. The Council invites you to draw attention to this advice to any potential bidders prior to and at the auction. Should any further information be required in relation to the proposed development control plan contact should be made with Diane Cuthbert of Botany Council on phone number 317 0512 or 317 0515.

The letter came to the attention of Mr Haigh, a director of the developer. He rang Mrs Cuthbert and the following conversation ensued: Haigh: My name is Steve Haigh. We are interested in purchasing the site for flat development at 2-10 Nilson Avenue, Hillsdale and we have received a letter from Council’s Solicitors … I see from the letter … the floor space ratio of 0.5 to 1 and the foot print site coverage of 0.166 to 1. If we comply with these issues, would we have a problem in obtaining Council’s development approval? She said: I don’t believe so. Mr Haigh added that Mrs Cuthbert may have also said the following additional words: You should have regard also to the various planning instruments affecting the property.

As it turned out, there was no problem in obtaining development approval, although later events revealed that there would have been if the Council had given effect to the recommendation of the RAS to establish and maintain a Risk Reduction Zone (RRZ). Risks based on propinquity to industrial sites like the ICI complex that had been identified in the Study were generally disregarded by the Council until after July 1996. Nor was the recommended RRZ established or applied until after then. Consistent with this attitude, the Council granted development approval for the site in June 1996. It treated other sites within the area of the proposed RRZ in similar fashion, until July 1996.

When Rolfe J turned to the assessment of damages, the respondent’s detrimental reliance was found to be the purchase of the site rather than investing its money in alternative developments. Its loss was the greater profit it would have earned from those hypothetical projects. On this basis, it was irrelevant that development consent did issue for the subject land, as Mrs Cuthbert is said to have predicted in the conversation. (The legal propositions about damages inherent in this summary were not the subject of any debate before us.) Pleadings relating to the letter and conversation

In its Amended Points of Claim, the respondent did not rely upon the letter as representing other than that certain restrictions applicable to development would apply to the subject land because of the terms of the proposed development control plan (par 7). It was Mrs Cuthbert’s telephone conversation that allegedly represented on behalf of the Council that the restrictions mentioned in the letter were the only restrictions applicable to development of the site, and that there were no other constraints upon the development of the site and no planning impediment or other planning considerations relevant to development on the site (par 8).

The pleading as to falsity and inaccuracy was a rolled up one, parts relating to the s149 certificate rather than the conversation. Nevertheless, I set out pars 12A and 12B: 12A. The Representations were false and inaccurate in that: (a) As from 1985 the subject land was within the Zone and affected by potential risk of hazard and danger from the Botany Industrial Complex as assessed by risk assessment criteria in the Risk Study; (b) As from 1985 the Defendant had in its possession a copy of the Risk Study and was aware of its contents; (c) the association of South Sydney Regional Councils (SSROC) of which the Defendant was a member, in 1991 accepted the policy proposed in the Risk Study should be implemented; (d) the Defendant was aware in 1991 of hazardous spills in and about the Botany Industrial Complex and viewed the potential hazard as a major concern to development within the Zone; (e) the Defendant in 1991 endorsed the views of SSROC referred to in (c) in relation to implementing the policy, as later incorporated into the Hazardous Industry Planning Advisory Paper No 4 (1991) and the Botany Bay Regional Policy Guidelines issued in 1992 by the Department of Planning; (f) the Risk Study was relevant to the determination of development consents by the Defendant for any residential development within the Zone; (g) in the premises, the subject land was affected by a Council policy or draft policy, restricting development by reason of a risk to residential development on the land of which the Defendant was aware. 12B In the premises there were planning impediments and planning considerations relevant to the development of the subject land, including risk of hazard and danger to habitation on the subject land, with resultant detriment to the commercial viability of proposed residential developments on the subject land by purchasers or potential purchasers of the land.

The breach of duty of care was pleaded in par 16 as follows: 16. In breach of its duty of care pleaded in paragraph 6E, the Defendant: (a) made the Representations; (b) failed to disclose to Evenvest or the Plaintiff the matters pleaded in paragraphs 12A and 12B in: 1. communications with the Plaintiff or Mr Haigh as its agent; 2. the 1993 LEP issued by the Defendant; 3. s149 Certificates issued in relation to the subject land; or 4. otherwise; (c) failed to correct the Representations.

As well as negligence, the matters pleaded were said to involve engaging in conduct in trade or commerce which was misleading or deceptive or that was likely to mislead or deceive, in contravention of ss52 and 53A of the Trade Practices Act 1974 (Cth) and the corresponding provisions of the Fair Trading Act 1987 (NSW) (par 27). Insofar as the representations were made with respect to any future matter, it was also pleaded that the Council had no reasonable grounds for making the representations: the respondent relied upon s51A of the Trade Practices Act and s41 of the Fair Trading Act (par 26D). Conclusions of Trial Judge relating to the letter and conversation

Rolfe J held that the Council owed a duty of care in supplying information by the s149 certificate, the letter and the telephone conversation ( Jazabas v Botany Council [2000] NSWSC 58 at [149]ff).

At [158] he held that, independently of the s149 certificate, … the letter from Dunhill Madden Butler and the telephone conversation with Mrs Cuthbert were capable of constituting representations that the land was suitable, because there was no qualification in either by reference to the RAS or the land being in the Risk Reduction Zone. Whilst I am satisfied that the letter was written for the purpose of overcoming the negative answer to question 10 which, in the circumstances that prevailed after the issue of the certificate, needed correction, I agree that it indicated that the land was suitable, in the sense to which Mr Rayment [representing Jazabas] referred, for development. Once again, so far as the telephone conversation with Mrs Cuthbert was concerned, that made the same type of unqualified statements, although they may have been the more misleading in the context of the questions asked by Mr Haigh. Although it was a short conversation, Mr Haigh made it clear that he was seeking to know about impediments to obtaining Development Approval. No one was in as good a position in the Council as Mrs Cuthbert to know and advise about the RAS and the Risk Reduction Zone, yet she said nothing in answer to a general question. She was not called to offer explanations of the type for which Mr Tobias [representing the Council] contended in submissions.

Later, his Honour stated that “the letter certainly confirmed the view that there was no other impediment to development” (at [174]). He continued: 175 Mr Tobias also submitted that the letter contained no representation that there was no other relevant information. The vice in the letter is that it held out that the land could be developed conformably with the Development Control Plan without directing attention to other problems of which the Council was well aware. It left the impression, which was reinforced by the conversation with Mrs Cuthbert, that provided its requirements were met then, in all probability, development approval would be granted. 177 … any reasonable reading of the letter would indicate that there were certain controls over the land with which a developer would have to comply. It may be that had the s149 certificate referred to the risk created by the Risk Reduction Zone that would have been sufficient. But neither document referred to that and each document gave the clear impression that subject to compliance with the zoning requirements, including the Development Control Plan, development could go ahead. The plaintiff’s complaint is that there was no disclosure of the risk of going ahead created by the RAS and Risk Reduction Zone.

Some of these remarks are no longer apposite, once the s149 certificate is cleared of the charge of falsity. Nevertheless, the trial judge’s reasoning about the letter and conversation stands independently of his findings about the s149 certificate.

Rolfe J also said this on the issue of negligence in the answering of Mr Haigh’s enquiry: 181 It was submitted that Mrs Cuthbert was given no opportunity to consider the impact of the RAS or to ascertain whether the land fell within the Risk Reduction Zone, although it seems to me that from her intimate knowledge of those two matters, which is confirmed by many documents which were tendered, she would have been aware of both circumstances. It cannot be said that when she was called upon to prepare the Development Control Plan on or about 8 December 1993, that she did not realise that the land was within the Risk Reduction Zone. If that was sought to be made good it would have been necessary, in my opinion, to call Mrs Cuthbert, which did not happen. Further, if she was in any doubt she could have reserved her position by stating, for example, that specific questions should be put, perhaps in writing, and would be answered after due inquiry. She was a very senior officer of the Council and the person to whom the Council had decided at least certain questions about the land should be directed. As I have said, she was not called to give evidence to support any of those submissions. 182 It was further submitted that Mr Haigh only telephoned Mrs Cuthbert because of problems envisaged with local residents. However, it is clear from the conversation that he asked her whether if there was compliance with "these issues" any problem would be encountered in obtaining Development Consent. As I have suggested that question opened up for consideration all other relevant issues. Mrs Cuthbert's response that she did not believe so paid no regard to her close knowledge of the RAS or the Risk Reduction Zone and their effect. Once again this is a case where the representation is one by silence.

The finding by Rolfe J that the answer in the s149 certificate was negligently false was a sufficient basis to ground the award of damages in light of his conclusions about duty of care and reliance and the way the case was conducted as to damages. Excision of this basis of common law liability means that it becomes necessary to segregate the findings relating to the December 1993 letter and the Cuthbert conversation.

These transactions were found to involve negligence because of the failure to disclose the unsuitability of the land for development (at [149]). The exact nature of the undisclosed unsuitability was addressed in various places, with sometimes differing emphases (see [158], [177], [181], [182]).

Rolfe J found that the Council, through the letter and Mrs Cuthbert’s remarks, represented that the site was suitable for residential flat development. The falsity of such representation lay in the failure to qualify such representation by reference to the RAS and RRZ. Rolfe J summarised the submission of senior counsel for Jazabas as contending that it was “information relevant to [the] known potential impediment” constituted by the RAS and RRZ which should have been disclosed (see at [150]). It was this submission that his Honour accepted (at [158], [175], [182], [187]). These findings were made in the context of the negligence claim and depend upon the existence of a relevant duty of care (a topic to be separately addressed). Rolfe J did not need to consider whether there was misleading or deceptive conduct in the information provided in the letter or Cuthbert conversation.

The respondent adopts these findings and presses them into service in the alternative claim of misleading and deceptive conduct.

Some matters were and remain common ground. The zoning as affected by the development control plan permitted the development, as the unchallenged development approval demonstrates. See also judgment at [133]). The Council was not obliged to follow the Department’s eight year old recommendation about a RRZ (at [121], [133]. See also Jazabas Pty Ltd v Botany Bay City Council [1999] NSWLEC 90 at [22]-[23] per Lloyd J). To this must be added the finding that is made in the appeal, to the effect that there was no Council policy to restrict development by reason of the hazard risk disclosed in the RAS or the mere presence of land in the RRZ.

On the other hand, it was and remains common ground that the Council was obliged to take into account risk elements associated with the land in considering a development application (see judgment at [120] and s90(1)(g) Environmental Planning and Assessment Act 1979 as it stood at the time). The RAS itself was not itself a risk element although it pointed to such elements. The Council accepts that it was aware of the RAS (Submissions §43). Mrs Cuthbert herself was aware of the RAS, having cited the Study and its RRZ in a detailed report prepared in 1989 recommending that Council be excluded from SEPP 28 (see also the findings at [181]-[182], which neither side challenges). What was represented in the letter and cuthbert conversation?

This question lies at the heart of the claims against the Council based upon negligence and/or misleading or deceptive conduct.

In light of Fitzgerald JA’s findings on appeal (with which I agree), there was no antecedent misrepresentation of fact in the earlier s149 certificates. In these circumstances there was, in my view, no misstatement of fact or misleading or deceptive statement in the letter. It told no untruth or half truth. It merely provided accurate details about the proposed development control plan. It may be accepted that it inferred that development consistent with the development control plan was permissible under the current zoning and legislative provisions, but such an assertion was clearly correct, as evidenced by the valid development approval later obtained by the respondent. The letter went no further. The fact that the respondent procured and used the development approval to its advantage are further impediments to acceptance of any submission that the land was unsuitable for residential flat development (cf Verschures Creameries Ltd v Hull and Netherlands Steamship Co Ltd [1921] 2 KB 608). The pleader of par 7 of the Amended Points of Claim had been correct to aver no misrepresentation in the letter and the learned trial judge was, in my respectful view, in error to conclude otherwise.

What then of the Cuthbert conversation? Mr Haigh made it plain that he had seen and understood the letter. His question did not seek “further information… in relation to the proposed development control plan” , as invited in the letter. The question was expressly predicated on the basis of having satisfied the stipulations of the proposed development control plan. Mrs Cuthbert was asked in effect whether there would be any additional problems in obtaining development approval.

The case below proceeded on the basis that Mrs Cuthbert gave both the answer stated by Mr Haigh in his statement and the answer conceded by him as one she may also have said, namely: I don’t believe so. You should have regard also to the various planning instruments affecting the property.

As with the letter, it may be accepted that there was an implicit representation by Mrs Cuthbert that development consistent with the development control plan was permissible - as it was. To be actionable, Mrs Cuthbert’s answers must be construed as going further. Rolfe J held that they did. He concluded that the conversation reinforced the impression derived from the letter that, provided the requirements of the development control plan were met, then in all probability development consent would be granted (at [175] of judgment, set out above). Such approval was granted in fact. But his Honour was making the point that Mrs Cuthbert was asserting that the land was suitable for development in a different sense. He held that she should have disclosed the risk of non approval, even if the risk did not ultimately come home. Later, he referred to the failure to advise Mr Haigh of the RAS and the RRZ as “critical matters and essential failures on the part of the Council” (at [187]. See also [158], [188]).

In my respectful view, there is an element of circularity in this reasoning. Silence is not a misrepresentation: its significance falls to be considered in the context in which it occurs ( Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32, Australian Development Corporation Pty Ltd v White [2001] NSWCA 9 at [83]-[87]).

Mrs Cuthbert’s failure to qualify her answer by reference to these matters only becomes actionable if the answer she gave was in some way misleading or deceptive without reference to them, or if the scope of any duty of care called for her to advert to them. The former issue is what is being addressed in this section of my judgment. Duty of care is addressed in the next section.

Mr Haigh’s question was: “If we comply with these issues, would we have a problem in obtaining Council’s development approval?”

No one suggests that Mrs Cuthbert was being asked to provide the enquiring developer with information about the general amenity of the land or its profit-yielding potential.

Mrs Cuthbert was being asked to advise about or predict a future matter, ie the Council’s likely response to a development application for flat development in accordance with current zoning and the stipulations of the proposed development control plan. The parties contemplated approval being sought some reasonable time in the future, if only to allow for the purchase to be effected.

Mr Haigh wanted to know from Mrs Cuthbert, the Council’s Director of Planning and Environment, if there were any present or anticipated problems over and above the usual formalities of obtaining development approval. He was not asking for a disquisition about town planning law generally, with all its complexities and inherent risks. The developer was concerned with the prospect of development approval being declined or delayed due to some particular aspect of the site or some particular application of development control to the site. He wanted information about the likely outcome of his anticipated development application. He wanted an answer based upon Mrs Cuthbert’s knowledge and experience, including her understanding of matters relevant to the development of the site. He would have expected honesty and care in the response. He neither expected nor received a warranty that approval would be forthcoming.

Mrs Cuthbert’s “I don’t believe so” has never been suggested to be a dishonest representation of the state of her mind. The critical issue is what (if anything) the answer represented beyond the state of Mrs Cuthbert’s mind.

In my view, the answer “I don’t believe so” was capable and only capable of being seen as expressing Mrs Cuthbert’s opinion to the effect that compliance with the stipulations of the proposed development control plan would not lead to any problem in obtaining development approval for flat development. Naturally the developer should have regard to the various planning instruments affecting the property, as Mrs Cuthbert warned in her additional words.

It has never been suggested that Mrs Cuthbert did not hold the opinion she expressed. She was aware of the RAS and the hazard risks disclosed in it. And she must, I think, be taken to have been aware of the possibility that Council might apply the departmental recommendation to establish and maintain a RRZ, despite not having done so for the past eight years. But (absent a relevant duty of care) the mere failure to advert to that risk and that possibility cannot convert her opinion into a misstatement, or misleading or deceptive conduct, without closer analysis of what was to be taken from the words used in answering Mr Haigh’s question.

This leads to the critical question on this part of the appeal. Was Mrs Cuthbert speaking about the likely outcome for the developer in relation to the anticipated development application; or was she addressing the conduct which the Council ought to adopt in handling the application? Or both? It is most improbable that she or Mr Haigh would have drawn any distinction between the two overlapping areas, but the distinction becomes essential to the disposition of the claim based on misleading or deceptive conduct and it is a critical but not determinative aspect of the negligence claim. (It is not determinative because, if there was a relevant duty of care, it may conceivably have imposed an obligation upon Mrs Cuthbert to turn her mind to what the Council ought properly to have done in the particular case. It would depend upon the scope of the duty enlivened in the particular case, the topic yet to be addressed.)

In my view, the answer was directed solely at the likely outcome of the foreshadowed development application. Mrs Cuthbert gave an (honest) prediction to the effect that approval was likely to occur and that problems or delay were not likely to be encountered. She was not addressing the internal processes that the Council would, should or might adopt. Rather, she was predicting the only matter of concern to the developer, ie success. Mr Haigh asked “would we have a problem” not “could we have a problem” and the problem raised was that of obtaining development approval from Council.

Despite being unqualified by the matters to which Rolfe J held she should have adverted, Mrs Cuthbert’s answer was not in any way false or misleading so long as the RAS and RRZ were not in truth likely impediments to a successful outcome of the anticipated development application, having regard to the Council’s attitude to those matters at the relevant time. These matters only became such impediments in late 1996, but this no longer mattered because the respondent had by then obtained the development approval it sought. The existence and scope of the duty of care to give careful information and advice

The provision of information in the letter clearly attracted a duty of care in light of the principles stated in L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta (1981) 150 CLR 225 ( Shaddock ). In an oft-cited passage, Mason J approved what Barwick CJ had written in Mutual Life & Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 572-3, saying (at 250): According to the Chief Justice, whenever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to act on that information or advice, the speaker comes under a duty to exercise reasonable care in the provision of the information or advice he chooses to give. Aickin J agreed. Gibbs CJ (at 233-4), Stephen J (at 242-3) and Murphy J (at 255-6) spoke to similar effect. See also Tepko Pty Ltd v Water Board [2001] HCA 19.

Nor could there be any doubt that the Council through Mrs Cuthbert was under a duty of care when providing “ further information... in relation to the proposed development control plan” . Enquirers had been directed by the letter to Mrs Cuthbert for that very topic of information.

Mr Haigh's question to Mrs Cuthbert arguably entered a new dimension because it went beyond the scope of the invitation in the letter and it did not relate to the contents of the proposed development control plan. The antecedent relationship between the two people did not commit Mrs Cuthbert to answer whatever Mr Haigh asked, or to make the range of disclosures expected of a specialist medical practitioner pursuant to the duty of care expounded in Rogers v Whitaker (1992) 175 CLR 479.

Mrs Cuthbert was the Council officer responsible for town planning matters generally and this site in particular. She was the person deputed in the letter to answer inquiries about the development control plan for which she had the carriage. She knew of the contents of the RAS. And she was not called as a witness, nor was her absence explained. All of these matters support the inference that Mr Haigh could have reasonably relied upon such information as she might proffer within the scope of his particular question. He did rely upon it, so it has been found.

There was, however, no dispute about what Mr Haigh swore she had said to him and the parties’ rights are to be determined on the basis of those facts, no more or no less.

Had Mrs Cuthbert made a positive and unqualified statement about the capacity of the land to be developed as proposed or the scope of the Council’s legal duties with respect to the development application, then the accuracy of any such statement or opinion would have been subject to the duty of care recognised in Shaddock . And the duty of care might possibly have called forth an obligation to go beyond a careful prediction of the likely outcome of the development application. It would have been no answer to the Council’s liability that Mrs Cuthbert did not expressly hold herself out as having expertise in the particular matter upon which she chose to answer.

But Mrs Cuthbert’s qualified answers cannot be ignored, any more than the scope of Mr Haigh’s question. They are important parts of the context in which the reasonableness of Mr Haigh’s reliance is to be considered, as regards the issue of duty of care in relation to the particular information conveyed . See also Tepko at [47], [49], [75]-[77], [87]-[88].

Mrs Cuthbert was not retained to provide general advice about the possible pitfalls of Mr Haigh’s incipient venture. Nor was she under a duty to give any answer to Mr Haigh’s question about the prospects of development approval, beyond the issues raised by the approved development control plan. In my opinion, she chose not to do so and would have reasonably been seen not to have done so. Her “I don’t believe so” was a guarded response to a bold, albeit limited question. It was one that Mr Haigh should have and would have realised did not depend upon any inquiry or perusal of documents made by Mrs Cuthbert during the currency of the short phone call. The warning that Mr Haigh “should have regard also to the various planning instruments affecting the property” indicated that Mrs Cuthbert was not allowing herself to be placed in the position of a legal or town planning adviser with general retainer. The whole context was much more specific, as I have already endeavoured to describe.

In my view, “I don’t believe so” meant in its context and was seen as meaning “not to my personal knowledge and belief” . It did not represent anything about the state of Council’s records beyond those records as they impacted to Mrs Cuthbert’s knowledge or belief at the time of the enquiry. There is nothing to suggest that Mrs Cuthbert was giving a considered opinion based upon a particular search or investigation.

Nor did the prompt response convey any notion that Mrs Cuthbert was considering the full extent of Council’s legal duties in relation to the foreshadowed development application. The question and answer were concerned with prediction of outcome from the developer’s point of view.

Mrs Cuthbert’s absence as a witness meant that her reason for not referring to the RAS or the presence of the site in the RRZ proposed in the RAS were not explored. The Council cannot take advantage of this absence of testimony, but conversely it is not open to the respondent to contend that the answer was dishonest in either of the senses discussed in Derry v Peek (1889) 14 App Cas 337. The case had never been run on this basis. As regards the Council as a whole, the evidence shows clearly that the RAS and RRZ were generally disregarded by Council in the processing of development applications until late 1996 (see the judgment of Fitzgerald JA). This provides more than ample scope for accepting the answer as a wholly honest response to the enquiry. It would also go far in establishing the reasonableness of the response (assuming for the moment that a duty of care went that far).

The issue remains whether Mrs Cuthbert was called upon to exercise care in going further before answering as she did. It is not enough to isolate what she might have said by way of qualified response unless the circumstances of the question and answer called upon her to exercise care in considering those matters. To fail to approach the matter this way is to fall into the trap of circularity of reasoning.

In Shaddock there are statements recognising that a person who otherwise might be subject to a duty of care in providing information or advice may avoid liability by declining to give the information sought (see per Gibbs CJ at 236) or by an effectual disclaimer (see per Gibbs CJ at 231, per Stephen J at 242. See also Gibbs CJ’s reference to “considered notice or information” at 234).

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 was a case where a reference given “without responsibility” carried no duty of care as regards the accuracy of the information supplied. However, any disclaimer principle is not an absolute one (see Shaddock at 231 per Gibbs CJ. See also Micron Construction Ltd v Hong Kong Bank of Canada (2000) 184 DLR 4th 75). The particular facts must be placed under the template of the broader principle stated by Mason J in the passage in Shaddock (at 250) that I have quoted above.

In Shaddock, the answer for which the Council was held liable was provided in a certificate under s342AS of the Local Government Act 1919 . The certificate was silent in that part of the standard form asking whether the property was affected by any road widening proposals. In those circumstances, the silence was pregnant and the certificate was construed as containing a statement that there were in fact no such proposals.

In Rawlinson & Brown Pty Ltd v Witham (1995) Aust Torts Rep ¶81-341 this Court held that an estate agent was liable in negligence for having overstated the capacity and life expectancy of a water bore on a rural property. The purchasers knew that the statement concerning the bore’s capacity came from the vendors. But the agent was liable for his negligent failure to verify the accuracy of the information he passed on, because he had not advised the purchasers that the information was unverified and because, in the circumstances, the purchasers reasonably relied upon the accuracy of the statement as the opinion of an agent with experience in the sale of irrigated properties.

The judgments of the Court (Kirby P, Mahoney JA and Sheller JA) review the legal principles stemming from Shaddock , with emphasis upon the inquiry whether the information-provider ought reasonably to have known that reliance was being placed upon the accuracy of the information provided.

Of present relevance are several statements in the judgments emphasising the circumstances which engendered the duty of care in that case, and how matters would have been different had the agent made it clear that the information he was passing on was unverified. Thus, Kirby P said (at 62,409, emphasis added): The appellant’s contention proceeds on the erroneous assumption that Wood J imposed upon the agent a duty to verify the information and that, as nothing in the purchaser’s conduct suggested to Mr Owers that this was expected or even suggested, it was unreasonable to expect Mr Owers to have realised that Mr Witham was reliant on him to provide information concerning bore capacity, beyond honestly passing on whatever Mr Briggs had told him. In the circumstances, the duty was to provide accurate information. That duty might be discharged by verifying the information. It might also be discharged by making it clear to the listener that the information was unverified. Simply because Mr Witham admitted knowing that the information came from the Briggs and failed to make it clear whether he thought Mr Owers had verified it, was not equivalent to the proposition that he knew the information came from the Briggs, unverified by Mr Owers. Had that been so, Mr Owers’ duty would have been discharged. The effect of the appellant’s proposition, if accepted, would be to shift the duty from the agent entirely to the purchaser. At least in the facts of this case I am not prepared to accept this argument.

Later (at 62,411-12) Kirby P said (emphasis added): …in Roots v Oentory Pty Ltd [1983] 2 QdR 745 at 756f, Thomas J explained the obligations of an agent in words which [semble, I] accept: A real estate agent in the business of selling businesses is in a business which includes giving information about the nature of the business, and commonly the takings of the business and even the value of the business. If he does not have such information, or lacks expertise in any such matter, he has merely to say so. He can avoid liability by honestly stating the limits of his knowledge (compare Anns v Merton London Borough Council [1978] AC 728 at 752; and the remarks of Barwick CJ about “reservations” in MLC v Evatt (supra) at 752 ) . If he does make positive utterances on such matters, the listener is likely to act on them because the agent is in a line of business that includes giving such information. Thus, Mr Owers could have avoided his liability by honestly stating that the figure of water flow came from the Briggs, unverified. This would have clarified the limits of Mr Owers’ personal knowledge (and thus that of the appellant) while extinguishing any reliance which Mr Witham might have placed on the statement. Mr Witham would have been placed on alert to ask further questions, to approach independent advisers, to examine the bore himself or even to withdraw from the purchase.

Mahoney JA said (at 62,413): But, as I have indicated, in the present case the agent conveyed the information as its own understanding of the position. This alone does not impose liability on the agent. It may be clear in the circumstances that, though the information is conveyed in that way, the purchaser is to understand that the agent is relying not upon its own understanding of the position but upon what it has been told.

Sheller JA said (at 62,414): Wood J made the point that it is a different matter if the agent stated the source of the information and said that it had not been verified. But the complete answer to the appellant’s argument is his Honour’s finding that Mr Owers passed on the information as his own understanding of the position.

In Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] 1 QB 574 questions were asked in pre-contractual negotiations about the deadweight capacity of a barge. The answers were incorrect, although the correct answer could have been ascertained from the ship’s documents in the owner’s possession. The English Court of Appeal held that there was no liability in negligence.

Lord Denning MR held that there was no duty of care in the particular case. He said (at 592) that: … The duty is one of honesty and no more whenever the opinion, information or advice is given in circumstances in which it appears that it is unconsidered and it would not be reasonable for the recipient to act on it without taking further steps to check it.

In Howard Marine the first question over the telephone was answered “off hand, as best he could without looking up the file” . The second was asked at a meeting when the businessman was away from his office, without his file, and was “as best he could from memory. If they had wanted considered advice they should have written a letter and got it in writing” (at 592 . See also per Bridge LJ at 598. See also Shaddock at 238).

On the other hand, Shaw LJ thought it was relevant that what had been asked was a specific fact which the inquirer had not itself any direct means of ascertaining. The fact that the person questioned chose to answer an important question from mere recollection “off the cuff” did not in his view diminish the “gravity of the inquiry or the importance and influence attached to the answer” (at 601, citing Lord Pearce in Hedley Byrne at 539).

It depends on the particular circumstances whether or not an “off-the-cuff” opinion will be regarded as having attracted a duty to be careful as distinct from a duty to be honest. And when such a duty is attracted, what is reasonable conduct will have regard to the circumstances in which the inquiry was made and the response given (see Mohr v Cleaver (1985) Aust Torts Rep ¶80-720, James v Australia & New Zealand Banking Group Ltd (1986) 64 ALR 347 at 384, Woollahra Municipal Council v Sved (1996) 40 NSWLR 101).

In my view the existence and scope of a duty should depend upon the impression conveyed by the answer to a reasonable person in the position of the inquirer. The specificity of the information sought will be relevant (cf Howard Marine ) as will the specificity of the disclosed purpose of the inquirer’s question (cf Woollahra Municipal Council ). If it is clear that the person questioned was not being asked to make any specific inquiries or to consult any records, or if that person made it plain that he or she had not done so before giving an impromptu answer, then a duty of care may be negated or alternatively attenuated in its scope and content. In Hedley Byrne , Lord Pearce said (at 539) that: To import such a duty [of care] the representation must normally, I think, concern a business or professional transaction whose nature makes clear the gravity of the inquiry and the importance and influence attached to the answer …. A most important circumstance is the form of the inquiry and of the answer . (emphasis added)

If, in the light of the surrounding circumstances, the speaker’s answer was hesitant or uncertain, or was said to be based on recollection, then it should not normally attract a duty of care. On the other hand, an answer given promptly without qualification and with apparent confidence should attract such a duty if it impliedly represents that the speaker had no doubt about the answer. See generally Spencer Bower, Turner and Handley, Actionable Misrepresentation 4th ed, 2000, par 404.

Not every “I don’t believe so” answer will negate a broader duty of care. Thus, a solicitor who was asked whether a will should be in writing would not avoid liability for a negative answer by framing it “I don’t believe so” . The particular inquiry related to a simple proposition of law and the answer would have conveyed an implicit, though guarded, negative statement of opinion. A prompt response would (depending on the circumstances) probably be insufficiently qualified to prevent concluding that legal advice was being provided.

With fact-specific information or advice that would normally call for a more detailed investigation, such as a search of a file, an off-the-cuff response in similar terms would usually convey nothing more than the person’s actual state of knowledge and belief about the inquiry. It could not affect the existence of a duty of care said to stem from the conversation that two similarly placed persons might honestly have given opposite answers, depending upon their familiarity with or recall of the file or their sensitivity to problems that might surface: the objective circumstances would establish the duty or its absence.

For the reasons already given, Mrs Cuthbert’s answer contained no misleading statement and it was not pregnant with a half truth. It did not import the outcome of a detailed investigation and it did not purport to address any more than a prediction as to the likelihood of a particular outcome, ie the grant of development approval. It follows that, since nothing imposed a duty of care to give a further or more qualified answer, then an honest failure to do so (even if ex hypothesi it were careless) did not sound in liability in tort. No relevant duty of care existed.

If I am wrong about duty of care I would conclude nevertheless that there was no breach, for the reasons set out below in relation to the alternative statutory claims. The alternative statutory claims

The statutory claims of misleading and deceptive conduct based upon the Trade Practices Act and the Fair Trading Act failed before Rolfe J who held that the Council was not a trading or financial corporation and that it was not engaging in trade or commerce (at [193]-[208]). The respondent invokes the statutory claims afresh in its notice of contention (RB 214). The relevant pleadings are referred to above.

The issues whether the Council is a trading or financial corporation (essential to liability under the Trade Practices Act ) and whether the letter and conversation were “in trade and commerce” are not without their difficulties. They do not arise unless there was conduct that was misleading or deceptive or likely to mislead or deceive. In my view there was not.

In dealing with the negligence claim, I have already expressed the opinion that the letter contains no misleading or deceptive aspect. This conclusion may be carried across to the Trade Practices Act/Fair Trading Act context. I shall address the question whether there were reasonable grounds for making in the letter any representation with respect to any future matter at the same time as I consider that issue with regard to the Cuthbert/Haigh conversation.

In addressing the statutory claims stemming from Mrs Cuthbert’s “I don’t believe so” , it is pertinent to remember that the essential issue is ordinarily that of determining “what is to be taken from the actor’s conduct and whether it was contrary to the fact” ( Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 at 683 per Mahoney JA). In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1, Hill J said (at 46): It is the reader’s perception of the maker’s intention which will ordinarily be the significant matter. This said, if a statement is reasonably capable of conveying an assertion of fact and a statement of opinion to its target audience, then it must pass muster on both accounts ( ibid at 5-6 per Sheppard J, 26 per Foster J, 46 per Hill J).

I have already indicated that the nub of Mrs Cuthbert’s conduct was to represent her belief that a development application consistent with the zoning and the proposed development control plan would not be likely to encounter a problem with obtaining development approval.

A statement of opinion that proves to be inaccurate may ground liability for breach of the statutory norm if the statement implied that the opinion was held on reasonable grounds (see Bateman v Slayter (1987) 71 ALR 553 at 559) or if s51 of the Trade Practices Act (or its State counterpart applies). The former possibility does not appear to have been litigated at trial or raised on appeal, so I can put it to one side. The latter alternative needs to be addressed.

Rolfe J found it unnecessary to analyse the Cuthbert conversation by reference to whether it was a mere statement of opinion, nor did he explore its false or misleading character in the context of the statutory claims. His Honour did so in the negligence context, and concluded that there was a duty to disclose known information about risks. I have already stated my respectful disagreement. It remains necessary to consider whether Mrs Cuthbert’s answer contravened the statutory norms in any way outside the issues of falsity addressed in the context of the negligence claim.

In my view, it is not possible to torture Mrs Cuthbert’s statement into an implied representation to the effect that development approval would be immune from legal challenge, in the sense that it would be legally risk-free as regards the question of hazard risks. She was not seen to be embarking upon such an exercise, let alone misrepresenting fact or law in some presumed non-disclosure (see Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (1991) 28 FCR 151 at 167, Heydon v NRMA Ltd & Ors [2000] NSWCA 374 at [329]-[333], [431]-[432], [692]).

There was a future aspect about Mrs Cuthbert’s statement of opinion. She was expressing her belief about a future matter, ie that, subject to the requirements of the zoning and the proposed development control plan, no particular difficulties were likely to be encountered in obtaining development approval when and if it was lodged in the reasonably foreseeable future. It follows that, if her statement ( ex hypothesi ) was made in trade or commerce, it is to be taken as misleading under the Fair Trading Act unless it is established that she had reasonable grounds for making the representation. Despite the language of s51A(2) of the Trade Practices Act , which refers merely to the adducing of evidence, the effect of s51A(2) is likewise to impose on the representor the burden of persuading the trier of fact that there were reasonable grounds for making the representations (see Ting v Blanche (1993) 118 ALR 543 at 552, Blacker v National Australia Bank Ltd [2000] FCA 681 at [83]).

The honesty of Mrs Cuthbert’s belief does not necessarily establish that she had reasonable grounds for it ( Cummings v Lewis (1993) 41 FCR 559 at 565). Nor was her testimony essential for the Council to sustain the onus it bears.

In determining whether a person had reasonable grounds for expressing an opinion or making a prediction as to a future matter, is necessary to judge the matter as at the date of the representation (see Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599, Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513). This does not preclude examining evidence of later events which may throw light upon the overall probabilities (cf Cummings at 565). The overall probabilities and circumstances may offer the most reliable guidance ( ibid at 566). However, it remains vital to guard against hindsight illusion.

In Sykes Seary J summarised the law as follows (at 513): If there was a representation as to a future matter, s51A requires the representor to show: • some facts or circumstances • existing at the time of the representation • on which the representor in fact relied • which are objectively reasonable and • which support the representation made.

The third proposition stated by his Honour is, I think, implicit in the provisions. Were it otherwise, the sections would throw the inquiry into the full realm of the law of negligence, calling for consideration of what the representor ought to have taken into account, an inquiry that would track back into investigating the scope of any duty of care. Rather, the sections effectively require the representor to identify the facts or circumstances (if any) actually relied upon before turning it over to the trier of fact to decide whether they were objectively reasonable and whether they support the representation made. This approach to s51A(2) was recently adopted and applied by Katz J in Blacker (at [86]ff).

In seeking to rebut the onus squarely placed on its shoulders, the Council places particular reliance upon the mayor's approval, on 10 December 1993, of Mrs Cuthbert’s recommendation in favour of preparing a development control plan. That recommendation refers to the favourable zoning and the presence of development in the area consisting of medium-density residential flats (Blue 571). Mrs Cuthbert recommended a development control plan in order to "provide more detailed provisions than are contained in the Interim Development Order to indicate Council’s future development objectives for this land " (emphasis added). To this end, Mrs Cuthbert recommended that Council resolve to prepare a development control plan for the site, that she be authorised to prepare and exhibit such a plan, and that the Council advertise its intentions as required by the Environmental Planning and Assessment Act Regulation . The mayor approved and adopted the recommendation on 10 December 1993 and this prompted the dispatch of the letter to the auctioneer that day.

The Council submits that there could not be clearer evidence that the development proposal was reasonably considered to be feasible and approval likely. The feasibility was further demonstrated by the favourable report of 15 April 1996 (Blue 697) which led to the issue of development approval to the respondent on 4 June 1996.

The Council also submits that there was in 1993 no policy of restricting development by reference to the RAS risks or the proposed RRZ. Fitzgerald JA has concluded that no such policy then existed. I agree with him. The reasons supporting that conclusion and the evidence showing that no such policy came into existence until late 1996 are also pertinent to the present issue.

On the other hand, the respondent submits that Mrs Cuthbert's sanguine belief was not reasonably based having regard to the known existence of the RAS and the location of the site within the Department's proposed risk reduction zone.

Reliance is also placed upon Mrs Cuthbert's awareness of hazard risks due to the proximity of the proposed residential development to operations such as the ICI complex adjacent to the site. Mrs Cuthbert wrote on behalf of the Council to the Department of Planning in December 1989 seeking exclusion from SEPP 28. The letter recognises the hazard risk, and acknowledges the Department’s proposed risk reduction zone and the desirability of separation of residential and industrial zones by an effective buffer zone or barrier (Blue 547W).

However, the letter did not concede that no further development should take place (see Blue 549V, 550J). In fact, the Municipality of Botany was excluded from the operation of SEPP 28 in 1990. The subject land continued to be available for medium-density residential development and other properties within the RRZ were given development approval until late 1996.

A similar ambiguity about the Council’s acceptance of the Departmental position is expressed in Mrs Cuthbert’s report dated 6 December 1993. The topic was a draft Local Environmental Plan and the submissions received in relation to it. Many topics were addressed in this lengthy report. When dealing with issues touching the 4(a) and 4(b) industrial zones, Mrs Cuthbert commented that: (m) there are, at present, industrial and residential zoned areas which adjoin each other. It would be impractical to include a provision which has the effect of precluding Council from approving non-industrial development, which has the effect of constraining an existing lawful industry. Section 90 already requires the Council to consider these effects of a proposal on adjoining development and vice versa. There are industrial and residential zones which adjoin each area in the Local Government Area and in which uses have rights to development. To preclude non-industrial development, per se, from establishing next to industrial uses would be a denial of the rights of those property owners. There is no need to preclude an increase of residential population in those areas with existing potentially hazardous uses, given that residential uses already are prohibited in a 4(a) zone which cover such uses. The planning strategy also has been not to increase residential densities adjacent to the Banksmeadow industrial area.

Other examples of the Council’s non-acceptance of the RAS recommendations before late 1996 may be found at Blue 3/694 and Blue 4/793.

As Fitzgerald JA points out, it was a meeting between Council and Department officers in relation to hazard issues on 25 July 1996 that marked the turning point of the Council's attitude. Thereafter the Council sought departmental advice in relation to residential development applications for land in the risk reduction zone and generally decided those applications in accordance with that advice (ie by rejecting them).

The respondent places much weight upon events in and after 1996 when the Council was prompted by the Department to repent of having granted development approval for the site. There were reports from Council planning officers to the effect that development approval should never have been granted to the respondent. These are discussed by Fitzgerald JA. Thereafter the Council commenced to enforce the risk reduction zone. There were also the farcical volte-faces of the proceedings in the Land and Environment Court when the Council initially successfully opposed building approval and then successfully challenged the grant of such approval on the basis of error of law.

It may well be the case that (as a matter of environmental law) the Council ought to have had a greater regard to the RAS, the risks it highlighted, and the recommended risk reduction zone at all times since 1985. But it was not legally bound to give effect to the Department’s views expressed in the RAS, but not translated into prescriptive requirements. And it did not do so, as a matter of policy or practice, until late 1996. Mrs Cuthbert was asked to predict the likelihood of development approval issuing and she did so, carefully and correctly. The material she had at hand and upon which I infer she relied meant that such prediction was reasonably based. Negligent and/or misleading or deceptive conduct in the grant of development consent

At trial the respondent advanced an alternative case, to the effect that the Council had breached its duty of care to the respondent, or acted in a misleading or deceptive manner, when it granted development consent in 1996. Rolfe J rejected the alternative case (judgment at 143-144, 191).

By notice of contention, the respondent seeks to uphold the judgment below on this alternative ground.

I am content to adopt the trial judge’s reasons. I would add that there was no misleading or deceptive conduct nor any breach of duty to the respondent to grant it what it was seeking, namely development approval. Nor should the respondent be permitted to contend otherwise ( Verschures Creameries ). Disposition

In my view the appeal should be upheld, the orders made by Rolfe J on 14 March 2000 should be set aside and in lieu thereof there should be judgment for the defendant with costs. The respondent should pay the appellant’s costs of the appeal and have a certificate under the Suitors’ Fund Act, if qualified. The cross appeal seeking the award of a higher sum should be dismissed with costs.

BEAZLEY JA: I have had the benefit of reading the judgments of Mason P and Fitzgerald JA.

I agree with the reasons given by Fitzgerald JA, that the s 149 certificate was not inaccurate and misleading. I also agree with his Honour that the Council had a duty to take reasonable care in relation to the inquiry made by Mr Haigh.

However, I do not consider that there was any breach of that duty. My view in that regard is based on the answer given and the approach taken by Council at the time of the inquiry. Mrs Cuthbert’s answer “I don’t believe so” reflected the reality of planning approvals at that time. There was neither a policy nor a practice that applications for medium density housing were refused because of the RAS. Mrs Cuthbert also qualified her answer by directing Mr Haigh that he should have regard to the various planning instruments affecting the property.

In my opinion, the answer was sufficient to satisfy the duty of care which the Council owed.

I otherwise agree with the judgment of Mason P and with the orders proposed by him.

FITZGERALD JA: This is an appeal from a judgment in the Equity Division. Jazabas Pty Ltd (“Jazabas”) sued the City of Botany Bay Council (the “Council”) for damages. The trial judge awarded Jazabas $1,218,832.00 and ordered the Council to pay Jazabas’ costs. The Council appealed, and Jazabas gave a notice of contention and cross-appealed.

In late 1993, land at 2-10 Nilson St., Hillsdale in the Botany municipality was owned by Amcor Limited (“Amcor”). The Council had leased the land from Amcor since about 1980, and it had been used as a public park. Amcor decided to sell the land by public auction on 16 December 1993. The zoning of the land permitted medium-density residential development [1] with the Council’s approval.

On 5 November 1993, Amcor’s solicitor applied to the Council for a certificate (a “s 149 certificate”) under s 149 of the Environmental Planning and Assessment Act 1979 (the “ EPA Act ”). The Council issued a s 149 certificate on 11 November 1993 and an amended s 149 certificate on 29 November 1993. The amendment related to the name of the owner of the land and is irrelevant for present purposes.

Items 1 and 10 in the s 149 certificate issued by the Council were as follows: “1. Whether or not a Development Control Plan applies to the land or draft development control plan. … 10. Whether or not the land is affected by any Council policy to restrict development by reason of land slip, bush fire, flooding, tidal inundation, subsidence or any other risk.” The Council’s response in relation to each of those items in the s 149 certificate was “No”.

About a year earlier, on 25 November 1992, the Council had resolved to proceed with a draft local environmental plan (“LEP”) for most of the Municipality of Botany, including the land. The draft LEP was publicly exhibited between 7 September and 5 November 1993 and submissions were accepted until 19 November. On 6 December 1993, the Council’s Director of Planning and Environment, Mrs D M Cuthbert, provided a lengthy report to the Council in relation to the draft LEP entitled “Draft Local Environmental Plan for the Botany Local Government area - Submissions on the Draft Plan”. That report is later referred to in more detail.

A Council which considered it necessary or desirable to provide more detailed provisions than those contained in a LEP or draft LEP in respect of a part or parts of the land to which that LEP or draft LEP applied was authorised by s 72 of the EPA Act to prepare a development control plan (“DCP”) which generally conformed to the provisions of the LEP or draft LEP in relation to that land.

On 8 December 1993, Mrs Cuthbert provided the Mayor with a memorandum which recommended a development control plan for the land.

Mrs Cuthbert’s memorandum of 8 December 1993 to the Mayor provided: “I refer to your request for a report on the preparation of a Development Control Plan for this site. The subject site presently is zoned Residential 2(b) under Interim Development Order No. 19, Botany. Under the Draft Plan provisions, the site also is proposed to be zoned Residential 2(b). The existing planning provisions contained within Interim Development Order No. 19 set a maximum floor space ratio for development of this site at 0.5:1. The land has an area of 2,226 sq.m. and is traversed by a stormwater easement. The site has been used for open space purposes for an extended period at least since 1980. Development in the area consists of medium-density residential flats which, predominantly, are three storeys in height with parking underneath. Any development for this site should recognise the existing architecture and character of flat development in the area, as well recognise the long-standing recreational use of the land. The Development Control Plan should maintain the floor space ratio of 0.5:1 and establish a building footprint of 0.166:1, thus recognising the predominant development in the locality and the long-standing recreational use of the land. In addition to the building footprint, consideration should be given for area within the overall development parcel which would be needed to be allocated to provide pedestrian access, vehicle access and manoeuvring space, private open space and other facilities associated with the residential flat development. I believe that it is necessary to provide more detailed provisions than are contained in the Interim Development Order to indicate Council’s future development objectives for this land and the appropriate mechanism for such would be the preparation of a Development Control Plan. Should council be of a similar view, I recommend as follows: 1. That Council resolve to prepare a Development Control Plan for this site which incorporates the above criteria. 2. That the Director of Planning be authorised to prepare the appropriate Development Control Plan and place it on exhibition. 3. That Council advertise its Notice to prepare a Development Control Plan, as required by the provision of the Environmental Planning and Assessment Act Regulations.”

On 10 December 1993, the Mayor “approved and adopted” Mrs Cuthbert’s recommendations pursuant to his delegated authority.

On the same day, perhaps because the s 149 certificate had stated that there was no draft DCP applicable to the land, the Council’s solicitors wrote to Amcor and its real estate agent in the following terms: “We act for Botany Council. We understand that the above property is going to public auction on 16 December 1993. We are instructed to inform you that the Council has today resolved to prepare a development control plan over the above property. The effect of the plan will be to maintain the current floor space ratio of 0.5 to 1 and establish a proposed building footprint/site coverage of 0.166 to 1, recognising the predominant development in the locality and the longstanding recreational use of the land. In addition, Council is of the view that any proposed residential flat development should incorporate an area to provide pedestrian access, vehicle access manoeuvring space, private open space and other facilities associated with a residential flat development within the overall development parcel. The Council invites you to draw attention to this advice to any potential bidders prior to and at the auction. Should any further information be required in relation to the proposed development control plan contact should be made with Diane Cuthbert of Botany Council on phone number 317-0512 or 317-0515.”

Stephen William Haigh, a director of Jazebas and an associated company, Evenvest Pty Ltd (“Evenvest”), was provided with a copy of the Council’s solicitors’ letter of 10 December 1993. Not long afterwards, he had a telephone conversation with Mrs Cuthbert. Paragraph 14 of Mr Haigh’s statement of evidence includes the following: “14. On receipt of [a copy of the Council’s solicitors’ letter], I sought clarification from Botany Council as to the implication of the proposed site specific DCP. Accordingly, I rang Botany Bay City Council and asked to speak to Di Cuthbert. I did this as she was the person referred to in the letter of … as the person I should contact. After the call was answered a conversation to the following effect occurred: She said: Di Cuthbert I said: My name is Steve Haigh. We are interested in purchasing the site for flat development at 2-10 Nilson Avenue, Hillsdale and we have received a letter from Councils Solicitors, … I see from the letter … the floor space ratio of 0.5 to 1 and the foot print site coverage of 0.166 to 1. If we comply with these issues, would we have any problem in obtaining Councils development approval? She said: I don’t believe so. She may have also said the following additional words: ‘You should have regard also to the various planning instruments affecting the property.’”

On 21 December 1993, Evenvest entered into a contract to purchase the land from Amcor. Copies of the s 149 certificate and the letter dated 10 December 1993 from the Council’s solicitors were annexed to the contract.

Early in 1994, Evenvest obtained another s 149 certificate which again stated that the land was not affected by any policy to restrict development by reason of any risk. Subsequently, there was a novation of the contract of sale and Jazabas was substituted for Evenvest as purchaser.

Jazabas completed the purchase of the land on 28 June 1994. Neither party attached any significance to the circumstance that Jazabas was not the original purchaser.

Negotiations with the Council in relation to the development of the land commenced shortly after Evenvest contracted to purchase it and continued long after Jazabas had become its owner.

A letter from Evenvest to the Council on 31 January 1994 informed the Council that it had purchased the land “for the purpose of medium-density development…” and the negotiations continued throughout on the basis that a medium-density residential development which complied with the floor space ratio and building footprint/site coverage stated in the Council’s solicitors’ letter of 10 December 1993 would be approved. It was never suggested that a medium-density residential development which complied with those requests might be refused for any reason. Jazabas did not suggest that either the negotiations or the residential development which was approved were inconsistent with the Council’s solicitors’ letter of 10 December 1993 or Mrs Cuthbert’s statements to Mr Haigh.

During the period of those negotiations, the Council “considered a report on the options available” for the land on 24 August 1994 “and resolved to proceed with the preparation of a Development Control Plan.” [2] That resolution effectively confirmed the Mayor’s decision on 10 December 1993 and was consistent with the Council’s solicitors’ letter that day.

A draft DCP in relation to the land was publicly exhibited and submissions were received by the Council between 25 October and 22 November 1994. The “Introduction” stated that the draft DCP was “designed to ensure a high standard of multi-unit residential development while preserving a significant area of public open space on the site”. Both the “aims” and “objectives” of the draft DCP envisaged residential development on the land. Clause 2.0 “ residential objectives and performance criteria ” required the Council to take a variety of specified factors into account “in assessing the merits of any particular application for residential development.” Clause 1.5 “Application of Plan” provided: “The Council will take into account the provisions of this Plan when considering an application for development. Council must also take into consideration all those matters contained in Section 90 of the Environmental Planning and Assessment Act, 1979. Council also shall take into consideration any other standards or policies that may apply. Compliance with the provisions of this plan does not necessarily imply that Council will consent to any application.”

On 28 March 1995, “Council… resolved to prepare a Draft Development Control Plan for Multi-Unit Housing…” for general application in the Botany municipality, “… its purpose being to provide clear direction as to Council’s intentions and expectations with respect to multi-unit housing and to provide detailed guidance to people seeking approval for such development.” [3] The draft DCP for “Multi-Unit Housing”, which “encourage[d] villa houses and town houses,” was publicly exhibited from 3 April to 1 May 1995.

On 25 May 1995, the Council “deferred consideration” of the earlier draft DCP (which was specific to the land) “pending consideration of planning issues relating to Council’s desire to not unreasonably increase residential densities in the Hillsdale area.” [4]

The LEP for the Botany municipality was gazetted on 30 June 1995.

On 9 October 1995, the Council’s Planning Committee considered a “preliminary concept for the residential development” of the land involving “10-12 townhouses” which Jazabas’ consultant had submitted. The Planning Committee noted that the Council was “very concerned about the increase in population densities in that precinct of Hillsdale’ and deferred consideration of the matter to invite Jazabas’ consultant to give his opinion “as to whether he feels that an increase in density in that precinct of that magnitude would give cause for concern.”

On 5 December 1995, Jazabas’ consultant addressed the Council’s Planning Committee in relation to Jazabas’ “preliminary concept for the residential development” of the land. The Planning Committee referred the matter to the Council’s Executive Committee, which held meetings with Jazabas’ consultant.

A residential development application which was consistent with the discussions between the Council’s Executive Committee and Jazabas’ consultant was submitted by Jazabas on 1 April, 1996.

On 15 April 1996, Jazabas’ residential development application was recommended for approval subject to conditions, including a requirement that “[t]he development .. be carried out substantially in accordance with plans received by Council on 1 April, 1996 except where amended by the Conditions of the Consent.”

The report included the following: “ Section 90 Considerations In considering the Development Application, the matters listed in Section 90 of the Environmental Planning and Assessment Act 1979 have been taken into consideration in the preparation of this report. Conclusion Given the history of the site and the design of the proposed development, there are no Town Planning objections to the proposal. The proposal results in a satisfactory residential development and involves the dedication to Council of an area of public open space.”

Jazabas’ residential development application was approved on 4 June 1996, and Jazabas was notified of the approval on 6 June 1996.

Jazabas obtained a building approval in relation to its approved residential development on 15 July 1999. It did not proceed with the approved residential development, but sold the land with the benefit of the residential development and building approvals by a contract dated 25 August 1999. The trial judge found that it made a “modest profit”. Jazabas’ primary case on liability

Jazabas’ primary case is that, contrary to what it stated in the s 149 certificate, the Council did have a policy “to restrict development by reason of … risk” which affected the land, and that, in consequence, the s 149 certificate was incorrect and the Council’s solicitors’ letter and Mrs Cuthbert’s statements to Mr Haigh misstated the position because they omitted to refer to the Council’s policy. Jazabas submitted that the Council was negligent in providing erroneous and/or incomplete information that was misleading and/or deceptive. It is not part of Jazabas’ case that the Council applied its policy to restrict the residential development which it approved on the land or that the approved residential development differed in any material respect from the residential development which the Council’s solicitors’ letter of 10 December 1993 and Mrs Cuthbert’s statements to Mr Haigh led Jazabas (or Evenvest) to expect would or might be approved. Jazabas’ primary case is that, if the Council’s policy had been disclosed, Jazabas would not have purchased the land but would have used the money which it paid for the land to undertake other profitable developments.

It was common ground that the Council did not formally adopt a policy which affected the land “to restrict development by reason of … risk”. Jazabas submitted that the trial judge was correct when he held that the Council’s policy was “constituted” by its “course of action” or “course of conduct”.

The Botany municipality includes major hazardous industries and residential development in close proximity. After organised community opposition had frustrated an attempt to coordinate regional planning by a draft Regional Environmental Plan which had been exhibited from December 1982 to June 1983, the Minister for Environmental and Planning assumed planning control of part of the Botany municipality (not including the land) by directions under s 101 of the EPA Act . Those directions were still in operation when the Department of Planning and the Environment prepared a Risk Assessment Study (“RAS”) in 1985.

The “Introduction” to the RAS stated that the Department had conducted investigations because of departmental, council and community concerns “… including concern about the intensification of potentially hazardous installations and associated facilities in the area and their overall risk implications on nearby residential land uses,” and that the RAS was “.. based on extensive technical analysis of all industrial and associated operations in the study area”, which “… were undertaken using the most up-to-date risk assessment and hazard analysis techniques for land use safety evaluation and for risk quantification.”

It is unnecessary to discuss the methodology used in the preparation of the RAS, but a “[risk] level of less than one in a million per person per year [was] considered applicable to residential areas where people are normally present for extended durations”. “Resultant risk levels when plotted in terms of the Department’s criteria indicate[d] a zone where risk reduction is necessary ..”.

Section 4.4 of the RAS stated: “… Risk levels within that zone are affected by two main components:- (i) the multitude of industrial and associated operations in the study area; and (ii) the proximity of residential developments in some areas to such operations. To resolve land use safety conflicts in the area, relevant risk levels should be generally limited to within the boundaries of the industrial complex consistent with the nature of industrial activities being undertaken. This situation applies to the Port Botany area where relevant risk levels are contained within the boundaries of the Port, on a cumulative basis, and risk levels at residential areas from Port operations are well within the Department’s criteria. The dismantling of the Total oil refinery at Matraville (currently in progress) will also achieve the required reduction in the surrounds of the refinery site. In relation to the Botany/Randwick industrial complex the necessary reduction can be primarily achieved by a comprehensive review and update by industry of their operational and organisational safety controls to reflect their locational safety requirements. This particularly applies to the older establishments in the area identified as main contributors to overall risk. The results of this assessment fully justify such a review. … An overall specific emergency plan for the area will further assist in risk reduction. The assessment also indicates that further intensification of new residential developments within that zone, at lease until the results of the safety review and update by industry are clearly established, would be inconsistent with overall risk reduction principles. Residential intensification in this area will further aggravate land use safety conflicts and render control measures difficult to implement.”

Section 8 of the RAS stated: “8. CONCLUSION - BASIS OF RECOMMENDATIONS This assessment indicates that an overall risk reduction in the Botany/Randwick industrial complex is necessary. The extent of such reduction has been quantified. The main contributors being: (a) the cumulative risk from the multitude of industrial and associated operations in the area and the nature of such operations. Older establishments in this area are particularly relevant in that regard; and (b) the proximity of these industrial and associated operations to residential land uses in some cases. Basically two main options are available to implement such a reduction in risk levels and mitigate safety land use conflicts: (a) Removing the most hazardous processes (i.e. relocating existing industry) or; (b) reviewing and updating (as applicable) safety measures (both operational and organisational) at those existing industrial facilities that contribute most to risk and to reflect locational safety requirements; ensuring that any new hazardous operations to locate in the area are subject to stringent safety controls; and at least until the results of safety review and update are implemented and their effectiveness re-assessed, limiting any intensification of new residential developments in the risk reduction area. … This report concluded that option (b) should form the basis of a risk reduction strategy for the area and should be pursued in the first instance. … An integral part of the overall risk reduction strategy concluded by this assessment relates to land use planning and controls for intensification of new residential land uses. Although the conclusion and recommendations relevant to technical safety control would contribute to overall risk reduction, it is considered that at this stage no further intensification of new residential uses in the risk reduction zone should occur at least until the results of the safety review and update are implemented and re-assessed. This measure is consistent with the overall risk reduction option recommended by the Department. ….”

Paragraph 12 of section 9.3 and paragraph 20 of section 9.5 of the RAS stated: “… 9.3 Recommendations that relate to land use controls and planning 12. Pending the safety review and update as recommended above, no intensification of new residential developments should be allowed within the area indicated in Figure (5). Provisions which permit an increase in existing residential dwelling density within that area should be reviewed. New residential intensification within that area should be the subject of the Director’s concurrence in principle. … 9.5 Implementation of this Report’s Recommendations REGIONAL ENVIRONMENTAL PLAN 20. Several of this report’s recommendations particularly those that relate to land use control and planning could be readily implemented as an integral part of the Sydney Regional Environmental Plan (Botany Bay) currently being finalised. Alternatively a separate Regional Environmental Plan specifically dealing with the land use safety aspects of this study could be initiated.”

Appendix A to the RAS, “Statutory Planning Controls Applicable to the Study Area”, contained the following statement in relation to IDO 19: “Interim Development Order NO. 19 - Municipality of Botany aimed to operate as a short term holding measure pending assessment of major development and limits increased residential densities to those areas least affected by the concentration of industry, the port development or aircraft noise. The zonings of the Order largely reflect the existing pattern of development so as to keep as many planning options as possible open and not prejudice proposals arising from current studies on the planning of the area. …”.

Because of its location in relation to hazardous industries, the land is in the risk reduction zone (“RR zone”) identified in the RAS.

The Council was provided with a copy of the RAS in about June 1985.

Although the trial judge described the policy in which he attributed to the Council in different terms in different parts of his judgment, [5] his Honour appears to have considered that the Council had a policy to restrict residential development on land in the RR zone by reason of the risks identified in the RAS because it “had regard to” the risks identified in the RAS when deciding development applications. For example, he said: [6] “The issue is whether the Council was adopting or following a policy of having regard to that type or risk when considering development on the land.”

As para 120 of the trial judge’s judgment noted, the Council acknowledges that it was required by s 90(1)(g) of the EPA Act [7] to take relevant risks identified in the RAS into consideration when deciding development applications with respect to land in the RR zone. However, those risks were only one of the matters which s 90 required the Council to consider when deciding a development application on its merits. A policy of having regard to risks identified in the RAS as one of a number of material factors when considering residential development applications in respect of land in the RR zone was not, without more, a policy to restrict residential development of that land by reason of those risks.

Jazabas’ submission in this Court was that the Council’s “course of action” demonstrated “.. a policy of limiting residential development consistently with the objectives identified in the 1985 risk assessment study.… and that included a predisposition to refuse multiple occupancies on land where it was otherwise permissible consistently with the zoning.”

There is no direct evidence of the Council’s application of a policy to restrict residential development of land in the RR zone prior to its approval of Jazabas’ residential development application. Nothing turns on the trial judge’s assessment of the credibility or reliability of the evidence given by any witness. Jazabas submitted that a conclusion that the Council had the policy for which Jazabas contended should be drawn from the Council’s decisions and actions, as disclosed by its documents, and its omission to call Mrs Cuthbert or the Mayor or any other person to give evidence that it did not have a material policy or to say what its policy was.

An undated (probably 1988/1989) Department of Planning “Urban Consolidation Working Party” document indicated that there were 4 dual-occupancy development approvals and 2 multi-unit housing approvals up to two storeys granted in the Botany municipality in 1985/86, 4 dual-occupancy development approvals and 1 aged accommodation development approval granted in 1986/87 and 1 dual-occupancy development and 2 multi-unit housing development approvals granted in 1987/88. Multi-unit housing included “villas, townhouses and residential flat buildings”.

A letter from Mrs Cuthbert to the Department of Planning dated 4 February 1991 contained the following information: “ RE: REVIEW OF URBAN CONSOLIDATION INSTRUMENTS I refer to your circular letter concerning the above matter and set out below the details requested by you: 1. Dual Occupancies Forty-four (44) hectares of residential land within the Botany Municipality can be strata subdivided for dual occupancy. This land falls within the Residential 2(b1), 2(c1) and 2(c2) zones as the Municipality is exempt from State Environmental Planning Policy No. 28. A percentage calculation of all residential land in the Municipality would be highly inaccurate because of the number of sites that are not able to be developed for dual occupancy, due to location near hazardous industry and the effect of ANEF Contours. 2. Conversion of Single Dwelling Buildings to Dual Occupancy 1988 Dual Occupancy Same building submitted twice - Refused. Dual Occupancy Withdrawn. Dual Occupancy Refused. 1989 Dual Occupancy Seven (7) approved - one (1) refused. 1990 Dual Occupancy With child care centre - Refused. Dual Occupancy One (1) refused - two (2) approved. One (1) withdrawn. No decision yet on one. 3. Group Homes 1989 Application for a 15-unit dwelling for aged and disabled - Approved. Application for a boarding house for 70 residents - Refused. This was approved later with a reduced number of 15 residents. 1990 Application for conversion of existing building to group home for 7 persons - Approved.”

The evidence does not indicate which, if any, of the development applications referred to in the Urban Consolidation Working Party document and Mrs Cuthbert’s letter of 4 February 1991 related to land in the RR zone, or the Council’s reasons for its decisions on those applications.

The trial judge’s conclusion that the Council had a policy to restrict residential development of land in the RR zone by reason of the risks identified in the RAS was principally based on the Council’s “.. reliance on the RAS and the Risk Reduction Zone for exclusion from SEPP 28 and the refusal of the sports club application.” His Honour considered it “.. difficult to imagine a clearer instance [than the Council’s application for the exclusion of the Botany municipality from SEPP 28] of the Council’s adopting a course of action based upon at least in substantial part, on restricting development because the land was subject to the Risk Reduction Zone.” The “sports club application”

In May or June 1989, the Eastern Suburbs Sports Club applied for permission to use 3 industrial units within an existing factory complex for the purposes of an indoor sporting and fitness club (the “sports club application”). The Club had then been using the premises for that purpose over 12 months. Part of the land to which the sport club application related was zoned General Industrial and part was zoned Special Uses (Water Board Land). However, the entire site was within an area covered by a direction under s 101 of the EPA Act , so that the Minister, not the Council, had authority to grant or refuse the sports club application.

The Council wrote to the Department about the sports club application on 7 July 1989. On 15 January 1990, the Department wrote to the Council as follows: “I refer to Council’s letter of 7th July, 1989, and subsequent discussions regarding the above mentioned Development Application. As advised by the Department’s letter dated 26th June, 1989, the Hazard Unit does not favour the establishment of a sports club in this location. The site is exposed to risk levels in excess of the Department’s fatality risk criteria for commercial development. Approval of the subject proposal would increase the number of people at risk and increase the difficulty of evacuation in the event of a hazardous incident on adjoining lands. Further, it is considered that such use would constrain future industrial development in the area. Consequently, the Department objects to the proposed development.”

On 22 June 1990, Mrs Cuthbert reported to the Council with recommendations. Her report includes the following passages: “ Town Planning Considerations The subject property is zoned General Industrial 4(a1) under Local Environmental Plan No. 29 and part Special Uses (Water Board Land) under Local Environmental Plan No. 34. The site is contained within the area subject of a Section 101 Direction affecting the Randwick/Botany port and industrial area. The Minister for Planning is the Consent Authority in respect of this application. …. It is considered … that the proposed activities and the use would be permissible with Consent in the Industrial General 4(a1) zone. The major issue raised in respect of the subject Application relates to the hazard implications of having large numbers of people congregating on the site in the event of an incident at one of the industrial facilities in the vicinity of the site. It is considered likely that the numbers of persons gathered at a facility such as the one subject to this Application would far exceed the numbers of employees using industrial premises in the same complex. Further, the fact that the premises would attract large numbers of casual visitors and sporting groups presents greater difficulties in responding to incidents than would be the case with a relatively stable work force in an industrial concern. Conclusion The proposed use is permissible with Consent and, given the location of the site and the availability of parking in the absence of adjacent residential properties, it is considered reasonable from a general amenity point of view. The difficulties presented by the potential for the use to attract large numbers of visitors to the site are less acceptable since the increased numbers of people and the difficulties association with evacuation in the event of a hazardous incident are a cause for concern. In view of these considerations, it is considered that Council should advise the Minister for Planning that it does not favour the subject Application. Recommendation In view of the preceding comments it is RECOMMENDED that Council advise the Minister for Planning that it does not favour Development Application No. 2119. To use Units 7, 8 and 11, Part P Lots A and B, DP. 107228-6-10 Beauchamp Road, Botany for the purposes of an indoor sporting and fitness club for the following reasons: 1. The site is exposed to risk levels in excess of the Department of Planning’s fatality risk criteria for commercial development. 2. Approval of the proposal would be likely to encourage use of the site by large numbers of persons and thereby increase difficulty of evacuation in the event of a hazardous incident on adjoining lands. 3. Use of the premises for the subject purpose would be likely to constrain potential industrial uses on adjoining properties.”

On 3 July 1990, the Council resolved to adopt Mrs Cuthbert’s recommendation.

On 6 July 1990, the Council wrote to the Department advising it that the Council had resolved that it did not favour the sports club application for the reasons set out in Mrs Cuthbert’s report of 22 June 1990.

The Department informed the Council that it proposed to recommend to the Minister that he refuse the sports club application but that the Club was entitled to require a hearing. Subsequently the Department informed the Council that the Club required a public hearing.

On 15 August 1990, Mrs Cuthbert reported to the Mayor. Her report stated: “This Application varies from others in the vicinity in that it does not, of itself, involve potentially hazardous or dangerous processes…. however, Council has legitimate concerns about the establishment of such a use in the vicinity of existing hazardous industries. In this case, it is considered that, since the reasons for Council’s opposition are in accord with and stem from hazard-related considerations of the Department of Planning, Council’s participation in the Commission of Inquiry be limited to a submission rather than full legal representation.” Mrs Cuthbert’s report concluded with a recommendation that she prepare an appropriate submission. That course was approved by the Mayor on 23 August 1990.

On 13 December 1990, the Department informed the Council that the Department was conducting negotiations with the Club with a view to identifying alternative venues for the Club’s activities and that it appeared likely that those negotiations would be successful and would obviate the need for a Commission of Inquiry.

The Council contacted the Department on a regular basis throughout 1991 but received no response until 24 January 1992, when the Department informed the Council that the Minister had introduced a new section 101 Direction for the Botany / Randwick industrial complex as a result of which the sporting club application was “.. no longer subject to s 101 and accordingly it is now a matter for Council to determine.” The letter went on to confirm the Department’s objection to the sporting club application because “… the site is exposed to risk levels in excess of the Department’s Fatality Risk Criteria for Commercial Development and approval of the subject proposal would excessively increase the number of people at risk and increase the difficulty of evacuation in the event of a hazardous incident on adjoining land. Further, it is considered that such a use may constrain future industrial development in the area.” However, the Department suggested that the Council might consider granting approval “… for the remainder of [the Club’s] lease only…. in view of the costs that would be incurred in terminating the existing lease and the current economic circumstances.”

In a report dated 6 February 1992, Mrs Cuthbert recommended that the Council refuse the sports club for the reasons which had been set out in her earlier report. Her “Assessment” set out in her report of 6 February 1992 was as follows: “As was noted in the initial report by the Director of Planning and Environment, the major issue raised in respect of this Application relates to the hazard implications related to operating a sporting venue in close proximity to hazardous industrial facilities in the area. It is noted that, notwithstanding the applicant’s calculations as to the number of persons visiting the premises that the Department of Planning still is of the view that the risk criteria recommended for commercial premises would be exceeded. In view of the continuing concerns raised in this respect, it is considered that Council has no alternative but to refuse the Application in accordance with its earlier Resolution. Should the Applicant seek a period of grace in which to relocate it would be necessary for any such submission to be considered by Council on its merits.”

The Council adopted Mrs Cuthbert’s recommendation to refuse the sporting club application on 20 February 1992 and the Club was notified on 24 February 1992. The reasons given for the refusal in the Council’s letter to the Club were those set out in the “Recommendation” section of Mrs Cuthbert’s report to the Council dated 22 June 1990.

Neither the Council’s decision on the sports club application nor the contents of Council documents relating to that application evidence a Council policy to restrict development on land in the RR zone by reason of risks identified in the RAS. The Council rejected a particular commercial development on industrial-zoned land in the RR zone which would have attracted large numbers of “casual visitors and sporting groups” who would have been difficult to organise and evacuate if a “hazardous incident” occurred at one of the nearby industrial facilities. SEPP 28

As earlier noted, the sports club application was lodged in mid-1989. During that year, the Department of Planning introduced State Environment Planning Policy No. 28 - Town Houses and Villa Houses (“SEPP 28”). Broadly stated, the presently material intent and objectives of SEPP 28 were to permit town houses and villa houses “on suitable residential land and certain special uses land” despite a prohibition of that development in a local planning instrument, so as to reduce housing cost pressures arising from shortage of suitable housing in metropolitan areas of Sydney, promote the more efficient use of public investment in infrastructure in established urban areas, reduce the need for urban expansion into more remote areas, respond to changed or changing housing needs by increasing the range of dwelling types available in residential zones, enable a higher proportion of dwellings to be accessible to transport and other facilities and to enhance opportunities to increase the supply of rental accommodation.

SEPP 28 empowered the Minister for Planning to exclude land from its operation if that land was subject to a local environmental plan which made adequate provision for the carrying out of development for town houses or villa houses or other development which satisfied the objectives of its policy or if that land was affected by “… such environmental factors that [SEPP 28] should not apply..”.

On 12 December 1989, Mrs Cuthbert prepared a detailed report for the Council in which she suggested that it “.. make a submission to the Department of Planning, proposing that the Municipality be excluded from SEPP 28 for the reasons detailed in the report.” Numerous reasons were advanced, including the “… severe environmental and physical constraints which .. place a limit upon increased development that will lead to increased residential populations and density.” The report referred to the RAS and the RR zone which it had identified and said: “The Department of Planning’s study states that the assessment indicates that further intensification of new residential developments within that zone, at least until the results of the safety review and update by industry are clearly established, would be inconsistent with overall risk reduction principles. It further states that residential intensification in this area will further aggravate land use safety conflicts and render control measures difficult to implement.”

The conclusion which Mrs Cuthbert expressed in her report was in the following terms: “The State Environmental Planning Policy No. 28 has been introduced by the State Government. However, it does not take effect until the end of March, 1990. The effect of the State Policy will be to allow town house villa development in all Residential and most Special Use areas. Councils can seek exclusions from the Policy, based on the prescribed criteria which has been listed above in the report. It is suggested that a submission be made to the Department of Planning, proposing that the whole of the Botany Municipality be excluded from the Policy on environmental grounds. In summary, Botany Municipality is affected by significant aircraft noise levels, the risks associated with hazardous development, high air pollution levels and unacceptable noise levels. Notwithstanding the environmental constraints, it is also considered that Council has a relatively high gross residential density and, in the past, has contributed adequately to urban consolidation. There are substantial areas where high density development has occurred and, particularly, in Eastlakes and Hillsdale. It is also pertinent that Council has already exceeded the multi-unit housing commencement targets previously set by the New South Wales Department of Planning for the period 1986 - 1991. It is considered that the permissible residential densities should not be increased because of the significant environmental constraints applying within the Municipality.”

The Council adopted Mrs Cuthbert’s suggestion on 16 December 1989, and, on 21 December 1989, she wrote to the Department on behalf of the Council seeking the exclusion of Botany municipality from SEPP 28.

“Ground 1” in Mrs Cuthbert’s submission to the Department of Planning was headed “Environmental Factors”. Sub-ground (a) was headed “Hazard Risk”. Under that heading Mrs Cuthbert referred to the RAS and said: “The main types of hazards were identified and quantified in terms of consequences and probability, using computer modelling techniques and based on assessment principles. Cumulative risk levels for each facility and for the whole industrial complex are estimated accordingly. Resultant risk levels, when plotted in terms of the Department of Planning’s criteria, indicate a zone where risk reduction is necessary. Risk levels within that zone are affected by two main components:- (1) The multitude of industrial and associated operations in the study area. (2) The proximity of residential developments in some areas to such operations. The Department of Planning’s study states that the assessment indicates that further intensification of new residential developments within that zone, at least until the results of the safety review and update by industry are clearly established, would be inconsistent with overall risk reduction principles, it further states that residential intensification in this area will further aggravate land use safety conflicts and render control measures difficult to implement. …”

Under the subheading “(d) Industry ,” Mrs Cuthbert’s submission to the Department stated: “The unfortunate risks of industrial and residential zones in the Botany Municipality provides an effective constraint on increasing the permissible densities of residential areas. Desirably, residential and industrial zones should be separated by an effective buffer zone or barrier. When this is not possible, there should be two basic objectives:- (1) To ensure that industrial activities are relatively low-key and have minimum effect on the amenity of local residents. (2) Limit the occupation levels of the residential areas to ensure that a minimum number of persons is subjected to the adversities of the industry.”

Later, under the heading “2. Performance ” Mrs Cuthbert’s submission to the Department continued: “Notwithstanding the environmental constraints, it is also considered that Council has a relatively high gross residential density and, the past has contributed adequately to urban consolidation. There are substantial areas where high density development has occurred and, particularly, in Eastlakes and Hillsdale. It is also pertinent that Council has already exceeded the multi-unit housing commencement targets previously set by the New South Wales Department of Planning for the period 1986/1991. … Although it is considered that medium-high density development is unsatisfactory within Botany Municipality because of severe environmental constraints, it is relevant that provisions already exist within the principal planning scheme Interim Development Order No. 19. (“IDO 19”) to enable this type of development in particular areas. There are areas of Mascot zoned Residential 2(b) and Residential 2(c1) enabling townhouse/villa and residential flat building development. A recent survey of these areas revealed a potential for the development of an additional 500 dwelling units.

Mrs Cuthbert’s submission to the Department ended with the following “ Conclusion ”: “Conclusion Although a Policy that aims to reduce urban sprawl and maximise efficient use of existing infrastructure is desirable, it is important that urban consolidation occurs in conditions that are appropriate for a potential increase in densities and population. In the case of Botany Municipality, it is pertinent that the Policy lists criteria under which a request for exclusion of area may be based. Botany Municipal Council is affected by severe environmental and physical constraints which inevitably place a stringent limit upon increased development that will lead to increased residential populations and density. It is proposed that the whole of the Botany Municipality be excluded from the Policy. In summary, Botany Municipality is affected by significant (1) aircraft noise levels, (2) the risks associated with hazardous development, (3) high air pollution levels and (4) unacceptable traffic and industrial noise levels. Notwithstanding the environmental constraints, it also is considered that Council already has a relatively high gross residential density and there is scope through the zonings under Interim Development Order No. 19 for the development of a significant number of additional dwelling units. …”

The municipality of Botany was excluded from the operation of SEPP 28 by a notification published in the Gazette on 23 February 1990. That did not relevantly affect the land, which continued to be available for medium-density residential development with the Council’s approval under IDO 19.

The Council’s application for exclusion from SEPP 28 and the reasons for that application establish that it did not want residential development of land in the RR zone to be increased beyond what was permissible, or able to be approved by it, under IDO 19. In that sense it sought to restrict the residential development of land in the entire municipality, not only the RR zone. The “residential intensification” provided for by SEPP 28 to which the Council objected was an increase in the “residential densities” which were “permissible” under IDO 19. The statements made with respect to the restriction on residential development in Mrs Cuthbert’s letter on behalf of the Council to the Department of Planning seeking exclusion from SEPP 28 and other Council documents must be read in that context. Although Mrs Cuthbert’s letter to the Department noted the Council’s objective to “[l]imit the occupation levels of the residential areas to ensure that a minimum number of persons is subjected to the adversities of the industry,” it went on to state that “[a]lthough .. medium-high density [residential] development is unsatisfactory within Botany Municipality because of severe environmental constraints, it is relevant that provisions already exist within the principal planning scheme Interim Development Order No. 19 … to enable this type of development in particular areas. There are areas …. zoned Residential 2(b) …. enabling townhouse/villa and residential flat building development.” Later, Mrs Cuthbert’s letter referred to the “scope through the zonings under Interim Development Order No. 19 for the development of a significant number of additional dwelling units.”

Neither the Council’s application for exclusion from SEPP 28 nor the contents of Council documents relating to that application evidence a Council policy to restrict residential development which was allowed or could be approved by the Council under IDO 19 by reason of risks identified in the RAS. Other Council Documents prior to 10 December 1993

In 1991, the Department of Planning sought comment in relation to “Botany Bay Draft Regional Guidelines”. Mrs Cuthbert prepared another report in relation to the draft guidelines in the form in which they existed in about the second half of 1991. The draft guidelines upon which Mrs Cuthbert commented are not in evidence, but there is probably no material difference between that draft and the Botany Bay Regional Guidelines (the “BBR guidelines”) which were published in May 1992.

The BBR guidelines were intended to bring into one document State Government objectives and policies relevant to the planning and development of the Botany Bay region. The foreward to the guidelines stated that they also “highlight the major issues in the region and identify areas for possible review” and “should therefore serve as a good reference document for local and regional planning.”

Section 11 of the BBR guidelines was headed “Potentially Hazardous Industry,” and contained a statement that the RAS “… assessed the level of risk from existing hazardous industry, established criteria for new development and made wide-ranging recommendations on land use safety issues. It still provides the basis for the department’s policy and decision-making for development in this area.”

Section 11.6 of the BBR guidelines contained a statement of “State Government Objectives And Policies”. Two columns were respectively titled “Policy” and “Implementation”. The policy stated for the Botany/Randwick industrial complex was “Minimise risk impact of industrial development on adjoining non-industrial areas.” Opposite, under the heading “Implementation”, the following appeared: “The Department of Planning and the Botany and Randwick Councils to limit the number of people working in, or residents adjoining industrial complexes. The Department of Planning and the State Emergency Services have prepared and regularly review emergency and evacuation plans for the area. The Department of Planning and Botany and Randwick Councils ensure that specific development proposals are accompanied by appropriate safety studies. The Department of Planning to regularly review its risk assessment study for Kurnell and the Botany/Randwick industrial complex, as well as land use restrictions around the Lucas Heights reactors. Industry is required to regularly review and update its emergency plans and to use the best available technology in its operations.”

In her report on the draft BBR Guidelines (probably prepared in late 1991 or early 1992), Mrs Cuthbert referred to those statements of “Policy” and “Implementation” and made the following “Comment”: “I believe the first step should be to update the Botany/Randwick study identify the levels of risk and establish what changes have occurred since 1985. Once this is completed, decisions then could be made on further development in and around this industrial complex. ….”

On 6 November 1991, Mrs Cuthbert wrote on behalf of the Council to the Department of Planning, endorsing the submission made by the Southern Sydney Regional Organisation of Councils (“SSROC”) in relation to the draft BBR guidelines.

SSROC’s submission expressed dissatisfaction with the draft BBR guidelines, which it said needed “[c]onsiderable changes”. The following statements were included in the submissions: “SSROC shares the community’s concern about the continued development of the Botany/Randwick Industrial complex. An update of the 1985 Hazardous Risk Assessment of this Industrial Complex is urgently required. … The question needs to be asked whether work done since 1985 in regard to the reduction of risk warrants the continued expansion of hazardous industry within this area. The report suggests that buffer areas are required between industrial uses and other uses. SSROC concurs with this view, but believes that no effective buffers can be provided to acceptably separate this area of hazardous industries from other areas. This still leaves contamination problems in existing sites. In addition, no proper examination has been made of the pollution and contamination problems caused by these hazardous industries. At the very least, an updated study audit on the effectiveness of current policies in the Botany/Randwick Industrial Complex must be provided by 1993, and no increase in hazardous industries should be considered until such study is completed. … 11.3 Safety No mention is made in this section of health and safety issues associated with the Lucas Heights establishment, the Kurnell refinery, Kingsford-Smith Airport, Port Botany or hazardous industry sites. Land use controls associated with these developments should be specified. The implications of these developments on the region must also be detailed. 5. THE BOTANY/RANDWICK INDUSTRIAL COMPLEX AND THE KURNELL PENINSULA Objectives SSROC deplores the objective as currently stated. The State Government needs to investigate the potential for the establishment of alternate areas for the development of these types of hazardous industries, which SSROC insists must be placed in a specialist area in order to cater for the particular demands of these types of industries. The first step before even suggesting objectives should be to update the Botany/Randwick Study to identify the levels of risks and identify what changes have occurred since 1985. Once this step has been completed, discussion could then take place on further development in and around this industrial complex. …”

Mrs Cuthbert’s letter dated 6 November 1991 included the following: “Whilst Council does not concur with many of the policies outlined in the document, it believes that this set of guidelines portrays the region and its problems more accurately than those produced by the Department of the past. In particular, Council endorses those matters outlined in SSROC in relation to transport and hazardous industry and the impact that these have on the Municipality and the region as a whole. … Council believes that this document should be used as a guide only and have no statutory force in determining rezoning or development applications, but provide guidelines to Council, developers and others. … .”

On 18 May 1992, i.e. about the time when the BBR guidelines were published, the Council’s Senior Strategic Planner provided Mrs Cuthbert with a “Progress Report On The Preparation Of Consolidation Planning Report And Local Environment Plan (Municipal Planning Report And Plan)”. That report referred to the Department of Planning’s “different and conflicting policies in terms of residential land” and stated that “[t]he completion of the Municipal Planning Report, local environmental plan and zoning map [was] one of the main goals” of the Council’s planning department and that the “Work Program” was “generally in line with putting together a draft LEP and Planning Report by September, 1992 as earlier envisaged.”

Another Council document, an “Industrial Lands Review” for the Botany municipality (apparently issued in October and amended in December 1992), contained a section entitled “Precinct Issues”. There followed a description of the “… main issues which affect the industrial precincts and their respective existing zonings..”. The “main issue” in relation to the “Banksmeadow/Hillsdale/Pagewood Precinct” in which the land is situated was described as “.. the hazard and risk posed by the proximity of [hazardous] industries to residential areas.” The document continued: ‘To reduce these conflicts, the strategy could be to introduce a transitional area (buffer area) at the edge of industrial properties adjoining residential uses. With redevelopment or further development, only uses that are not of a hazardous nature will be permitted within this transitional/buffer area. Such uses could include car parking, landscaping, administration and offices associated with the main industrial uses.”

Mrs Cuthbert’s extensive report to the Council on the draft LEP on 6 December 1993 was written in the middle of the critical period. That report attached the draft LEP which had been exhibited as appendix “A”, a summary of the various submissions grouped under specific topics with comments and recommendations as appendix “B”, and a statement of the issues and amendments that were considered necessary from an internal review of the exhibited LEP by Council departments, including the Town Planning department, as appendix “C”. By her report, Mrs Cuthbert recommended to the Council that “.. the recommendations outlined in appendices “A, B” and “C” and those drafting changes shown on the map be adopted and that the Draft Local Environmental Plan be amended accordingly and forwarded to the Minister for gazettal”, and that “… should further amendments be necessary during the preparation of the Draft Plan documents referred to above, the Mayor be authorised to agree to such amendments, subject to these amendments not materially affecting the Draft Plan’s intent.”

One section of Mrs Cuthbert’s report dated 6 December 1993 was headed “Overall Topic: Residential Issues”. One “Topic” in that section of the report was titled “Anti-High Rise Residential Developments”. The “Comment” under that “Topic” provided: “The Draft Plan provides for two residential zones. Essentially, the 2(a) zone is for single dwellings and the 2(b) zone provides for residential flat buildings (this includes villa and town house-type developments). Development consent is required for such uses and, therefore, Council is able to ensure prescribed minimum standards and performance criteria are met. … In line with the State Government’s policy on urban consolidation, a variety of housing forms is being provided for in the Residential 2(b) zone. Villas and town houses are one of the forms of development being encouraged. Residents’ concerns about high-rise buildings are noted. The assessment of the effect of any residential proposals will include effects on the adjoining locality. Council’s policy is to ensure that a high standard of residential development is achieved. However, to encourage development, an incentive is necessary as is economic viable development. The Plan, when exhibited, did not include a floor space ratio (FSR) for the Residential 2(b) zone; however, on the basis of research carried out, it is considered the following floor space ratio is appropriate:- … This will allow larger sites to be comprehensively designed, take into account the matters outlines above. This will act as an incentive to encourage redevelopment from industrial to residential. …” A “Recommendation” under this “Topic” proposed an amendment of the LEP to deal with floor space ratios.

Another “Topic” in Mrs Cuthbert’s report to the Council dated 6 December 1993 was titled “Industrial Issues”. “Comment” in relation to that “Topic” included a statement that “[a]s part of the preparation of the Draft Local Environmental Plan, the zonings of all land in the Local Government Area were reviewed…”. The zoning of the land and the residential development permitted on it with the Council’s approval was effectively unchanged.

Further “Comment” in relation to “Industrial Issues” in Mrs Cuthbert’s report to the Council dated 6 December 1993 was as follows: “(m) There are , at present, industrial and residential zoned areas which adjoin each other. It would be impractical to include a provision which has the effect of precluding Council from approving non-industrial development, which has the effect of constraining an existing lawful industry. Section 90 already requires the Council to consider the effects of a proposal on adjoining development and vice versa. There are industrial and residential zones which adjoin each area in the Local Government area and in which uses have rights to development. To preclude non-industrial development, per se, from establishing next to industrial uses would be a denial of the rights of those property owners. … The planning strategy also has been not to increase residential densities adjacent to the Banksmeadow industrial area.”

Another “Topic” in Mrs Cuthbert’s report to the Council dated 6 December 1993 was titled “The Department of Planning”. A “Comment” in relation to that “Topic” provided: “3. A floor space ratio for the residential 2(b) zone has been recommended in the Residential section of this report. The issue of minimum residential allotment sizes can be investigated during the preparation of a Residential development Control Plan.”

Mrs Cuthbert’s “Comment” in relation to “Industrial Issues” in her report to the Council dated 6 December 1993 referred to a Council “planning strategy … not to increase residential densities adjacent to the Banksmeadow industrial area”. Nilson Street, in which the land is located, is separated from the Banksmeadow industrial area by Dension Street and the properties situated along Denison Street. Further, even if the “planning strategy” to which Mrs Cuthbert referred was based on the risks identified in the RAS and an “increase” in “residential densities” referred to an increase in the “residential population” not an increase in the residential development which IDO 19 permitted as of right or with the Council’s approval, the statement concerning the “planning strategy” must be read in context.

The two paragraphs which preceded the reference to Mrs Cuthbert’s “planning strategy” in her report of 6 December 1993 emphasised the Council’s obligation to respect the rights of property owners to have applications for development approval properly considered under the EPA Act , especially s 90. Further, the draft LEP to which Mrs Cuthbert’s report dated 6 December 1993 related retained the land in a zone which permitted medium-density residential approval with the Council’s approval.

Mrs Cuthbert’s report of 6 December 1993 in relation to the draft LEP must also be read in conjunction with her report of 8 December, i.e. two days later, which was specific to the land only. The report of 8 December 1983 recommending a draft DCP for the land contains no suggestion that the residential development which it recommended conflicted with any policy or “planning strategy”. The planning proposal in relation to the land, which the Mayor “approved and adopted” as the Council’s delegate, was to approve medium-density residential development on the land in accordance with a specified floor space ratio and building footprint/site coverage.

The Council’s documents up to and including its solicitors’ letter of 10 December 1993 do not establish that it had a policy which affected the land “… of limiting residential development consistently with the objectives identified in the [RAS] .. [which] included a predisposition to refuse multiple occupancies on land where it was otherwise permissible consistently with the zoning.” On the contrary, the Council documentation in the material period suggests that it did not have such a policy. In those circumstances, the absence of evidence from the Council other than documentation from that period does not permit a conclusion that it probably did have the policy which Jazabas asserted. [8] Council documentation after 10 December 1993

The trial judge stated that the Council’s “course of action … based on restricting development because .. land was subject to the Risk Reduction Zone” was “also adopted in relation to subsequent applications for development …”. The development applications referred to all related to land in the vicinity of the ICI complex. Jazabas submitted that later Council documentation supported its primary case that the policy which it ascribed to the Council existed in the material, earlier period.

Some of the Council’s documents for the period after 10 December 1993 have already been discussed. The first of the “subsequent applications” referred to by the trial judge related to the rezoning of the “Davis Gelatine site” at 28 Spring Street Botany from Industrial 4(a1) to Residential 2(b). That application was not made until November 1994, approximately a year after the material s 149 certificate. There is nothing in any document prior to 6 June 1996 when Jazabas’ was notified that its medium-density residential development application had been approved to strengthen its case that the Council had a policy between November 1993 and January 1994 to restrict development, or residential development, on land in the RR zone by reason of the risks identified in the RAS.

Early in 1996, the Council was engaged in litigation in the Land and Environment Court with Johnfletcher International, which had applied for development approval for a “container terminal and general storage facility” on approximately 5.4 hectares of land at the eastern end of Swinbourne Street, Botany. The development proposed included the provision of office space to accommodate approximately 50 employees and a caretaker’s dwelling. Both the offices and the caretaker’s dwelling would be within about 50 metres from the boundary of the ICI complex.

On 25 March 1996, Mr G.W. Smith, a director of Design Collaborative Pty Ltd, which was representing the Council in its Land and Environment Court dispute with Johnfletcher International, wrote to the Hazards Assessments branch of the Department of Urban Affairs and Planning. Mr Smith’s letter said: “We act for the Council for the City of Botany in this matter which is part heard by the Court. We seek your advice/assistance in relation to aspects of the proposed development which, we are told from some sources, breaches existing policy/guidelines in relation to development in the vicinity of the ICI complex. … Officers of our client Council claim that they are not aware of any restrictions on the establishment of dwellings close to the ICI complex. Others have claimed that a dwelling in this position would be exposed to abnormal hazards and could prejudice operations in the ICI complex. In particular, it is asserted that the level of noise from flaring and other operations at the ICI complex would far exceed what is acceptable in a dwelling as might be the noise from operations along the goods railway line. In addition, there is the issue of hazard from the petro/chemical complex where large storage tanks for aromatics and petroleum feed stock would be within 70 to 80 metres of the proposed dwelling. Could you please advise us of any restrictions or precautions that ought to be taken (e.g. that might be included by way of conditions on any approval of the proposed development), which might be pertinent to such a proposed development? The hearing is set down to continue in the Court on 23 April. We would appreciate receiving your advice as soon as possible so that we can - if necessary - draft appropriate conditions for inclusion in the draft conditions of consent which must be tendered to the Court on 23 April.”

As earlier noted, Jazabas’ application for medium-density residential development on the land was lodged with the Council on 1 April 1996 and favourably reported on 15 April 1996. There is nothing in that report, or any of the Council documents relating to Jazabas’ development application, which supports Jazabas’ argument that it was Council policy to restrict residential development in the RR zone by reason of the risks identified in the RAS.

On 22 April 1996, the Department of Urban Affairs and Planning replied to the letter from Mr Smith of Design Collaborative Pty Ltd in relation to the development application which had been made by Johnfletcher International. The Department’s letter, which was signed on behalf of Mr Sam Haddad, an Assistant Director-General, said: “ …. The Department has no specific knowledge of the details of the above development or Council’s assessment. The following advice relates solely to hazards and does not consider other environmental issues, such as offensiveness to air pollution, noise or visual amenity or other planning issues. The Department’s broad policy in relation to development in the vicinity of the ICI complex is that each should be assessed on its merit.”

After reference to the RAS and the provisions which it contained in relation to land in the RR zone, the letter from the Department continued: “The fatality risk criteria, in conjunction with the injury, irritation and biophysical risk criteria should be used by Council as appropriate, to assess the merits of a proposed development within a permissible zone. The study of the Botany/Randwick industrial area was undertaken to assist with land use safety planning in the vicinity of the Industrial Complex and took the above criteria into account. The proposed caretaker’s residence is inside the 1 x 106 per year fatality risk criteria contour within which new permanent residential occupancy may not be appropriate.”

On 24 April 1996, Ms Cathy McMahon, a senior town planner employed by the Council sent a memorandum to three other Council town planners. Ms McMahon attached a copy of the letter from the Department of Urban Affairs and Planning to Design Collaborative Pty Ltd, and said: “A copy of Figure 5 from the Risk Assessment Study which is mentioned in the Department’s response is attached. The map is somewhat hard to read and I have requested another copy of the [RAS] from the Department.”

Nothing further occurred before the Council approved Jazabas’ medium-density residential development application on 4 June 1996 and notified Jazabas of the approval on 6 June.

On 2 July 1996, Mr Ian Dencker, the Council’s Manager - Environmental Planning wrote to the Department of Urban Affairs and Planning in connection with a development application which the Council had received for a tourist depot at 21-23 Green Street Botany. The proposed development involved the provision of four bedrooms to be used for driver “sleeper-overs” on an intermittent basis and a caretaker’s apartment. Mr Denker’s letter said: “In view of restrictions to further intensification of new residential developments in the vicinity of the ICI complex and Port Botany as recommended in the [RAS], Council seeks your advice on the following: 1. Whether or not the intermittent use of drivers’ accommodation is permissible in the subject site. 2. Whether or not the use of a caretaker’s flat for residential purposes is permissible in the subject site. ..”

The Department wrote back on 6 September 1996 as follows: “It is advised that the construction of a caretakers residence and intermittent driver accommodation as part of the proposed development is located towards the edge of the “risk reduction” zone as identified in the 1985 Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany. As such the accommodation is unlikely to be subject to an intolerable risk level based on the 1985 study. Further, as the proposed development represents a very small change in the number of people, societal risk implications are likely to be minimal. Accordingly the Department would not consider that the proposals would be unacceptable based on risk grounds alone. In regard to the question of the permissibility of development in the area. This is a matter for the Council to determine and the Department offers no comment on the issue.”

In the meantime, officers of the Council and the Department of Urban Affairs and Planning had a meeting on 25 July 1996 in relation to “hazard issues”. On 30 July Mr Dencker wrote to Mr Haddad at the Department about that meeting. The material part of his letter provided: “ RE: HAZARD ISSUES - BOTANY BAY CITY COUNCIL Thank you for organising the meeting held at the offices of the Department of Urban Affairs and Planning on 25th July, 1996, where various hazard issues of relevance to this Council were discussed. Council would like to confirm with you the following issues raised at the meeting: 1. The Department of Urban Affairs and Planning is in the process of beginning a new hazard analysis to update the hazard contour lines for the Banksmeadow area. In this regard, the Department will provide Council with a work program for the analysis by about mid-August, 1996. The Department would welcome Council’s involvement in the analysis, so that Council’s concerns can be given due consideration. In the interim, Council may also present to the Department the proposed new residential areas that Council is proposing under its Residential Strategy seeking the Department’s advice on the hazard implications for these proposed areas. 2. New hazard contours for Port Botany would be made available to Council by about mid-August, 1996. 3. The Department of Urban Affairs and Planning would be willing to provide advice to Council on hazard issues if, and when, requested by Council. Industrialists seeking advice from the Department on matters within Council’s jurisdiction would be advised, as a matter of course, to contact Botany Bay City Council directly. …”

The meeting between the Council and Department officers in relation to “hazard issues” on 25 July 1996 marked a turning point. Thereafter, in accordance with paragraph 3 in Mr Dencker’s letter dated 30 July 1996 to the Department, the Council sought departmental advice in relation to residential development applications for land in the RR zone and generally decided those applications in accordance with that advice. Mr Haddad was opposed to residential development in the RR zone by reason of the risks identified in the RAS.

Late in 1996 or early in 1997, an application was made for development approval for the conversion of an existing dwelling at 22 Beauchamp Road Hillsdale into an attached dual occupancy (the “22 Beauchamp Road application”).

A little later, another development application sought “residential subdivision of a single lot into two premises at 36 Denison Street, Hillsdale” (the “36 Denison Street application”).

The Council sought advice from the Department in relation to the 22 Beauchamp Road application on 21 January 1997 and in relation to the 36 Dension Street application on 22 April 1997.

The Department gave the Council the same advice in relation to both applications, namely: [9] “The subject site is in close proximity to the ICI existing industrial complex. Irrespective of the quantitative nature of the risk contours, the intensification of residential development at this location, notwithstanding minor, is inconsistent with good land use safety planning. Intensification of residential development by way of subdivision at this location is also inconsistent with broad environmental amenity. By way of general comments, whilst continuous efforts must be maintained and strengthened to reduce environmental risk and pollution from existing industrial operations in the area, it is as strategically important not to increase the number of people exposed to the potential effects of such operations.”

The Council’s Manager - Environmental Planning recommended refusal of the 22 Beauchamp Road application and the 36 Dension Street application for the same reasons, namely: “1. Pursuant to Section 90(1)(g) of the Environmental Planning and Assessment act, 1979, the land to which that Development Application relates is unsuitable for that development by reason of its being, or likely to be subject to any other risk. 2. Pursuant to Section 90(1)(n) of the Environmental Planning and Assessment Act, 1979, the representations made by the Department of Urban Affairs and Planning. 3. Pursuant to Section 90(1)(q) and (r) of the Environmental Planning and Assessment Act, 1979, the circumstances of the case and the public interest.”

On 25 June 1997, the Council refused the 36 Denison Street application [10] for the reasons recommended by the Manager - Environmental Planning. An appeal to the Land and Environment Court was subsequently dismissed.

On 2 July 1997, a decision on the 22 Beauchamp Rod application was deferred after the applicant addressed the Council’s Development Committee. Subsequently, the application was refused for the reasons recommended by the Manager - Environmental Planning. An appeal to the Land and Environment Court was dismissed.

The report of the Council’s Manager - Environmental Planning in relation to the 36 Denison Street application, which was dated 4 June 1997, also included the following recommendation: “It is further RECOMMENDED that senior Council officers, as a matter of urgency, seek a meeting with the Assistant Director-General, Mr. Sam Haddad, as to the wider risk implications associated with the operation of the ICI industrial complex and, specifically, the ICI chlorine plant to land use in the locality.”

Jazabas’ application for building approval was lodged with the Council on 20 October 1997.

On 31 October 1997, Mr R.J Dowsett, the Council’s Manager - Building Control and Principal Building Surveyor, wrote to the Department of Urban Affairs and Planning as follows: “The Council has before it, a Building Application to erect a cluster housing development on vacant land at Hillsdale, and known as 2 - 10 Nilson Avenue Hillsdale, in Lot 1, DP224496. Consent exists under the Environmental Planning and Assessment Act 1979, for this development. However, between the granting of Consent by Council on the 6th June 1996, and now, the implications of hazard lines have arisen and the Departments advice is sought as to whether or not the site is within the area contained with the Botany hazard line. …”

On 7 November 1997, the Department responded to Mr Dowsett’s letter of 31 October 1997 as follows: “.. I refer to your letter dated 31 October 1997 requesting confirmation of the abovementioned sites location in relation to hazards work completed in 1985. The Department confirms that the site located at 2-10 Nilson Avenue Hillsdale is within the general risk reduction zone identified in figure 5 of the Department’s A Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany (1985). …”

Mr Dowset reported to the Council on 10 November 1997. His report recommended that Jazabas’ “building application be deferred and other measures placed entrain to address the issue of hazard”. The “other measures” proposed would have required ICI to cease conducting activities which were a “source of potential hazard” to the land and other sites. The report contained the following statements: “However it has come to the notice of the Manager - Planning and Environment that the site is within the boundaries of a risk reduction zone and given this situation, the knowledge of which surfaced after the granting of Consent, that the Building Application should not be determined or if determined, refused by reason of potential hazard implications. It is also the position of the Manager, that had this information been known when the Development Application was lodged, the application would have been recommended to Council for refusal. There is perhaps no need to dwell on what has happened, but the liability that is now likely to arise cannot be understated. The likely hazard to the site apparently arises from the Chlorine Plant at ICI, although the availability of information pinpointing the potential source or sources of identified hazards and the subsequent consequences thereof, remains with Department of Urban Affairs and Planning.”

A more senior Council officer required Mr Dowsett’s assertion that the knowledge that the land was in the RRZ had “surfaced” after Jazabas’ medium-density residential development application had been granted to be checked. That officer expressed the opinion that the Council would not be liable for granting Jazabas’ development approval “[p]roviding there is absolute certainty knowledge of the effect of the ‘risk reduction’ zone on property 2-10 Nilson Avenue WAS NOT KNOWN by Council officers PRIOR TO granting of development consent…”. There after, the Council’s concern with its potential liability increasingly attracted its attention.

The Council’s change of attitude became known to Jazabas at about that time. Another s 149 certificate was obtained in connection with Jazabas’ borrowing to finance its medium-density residential development of the land. This time, the Council gave a “yes’ answer in relation to item 10 and referred to the RAS.

Mr Haigh telephoned Mr Dowsett after the new s 149 certificate was issued. The trial judge said: “[Mr Haigh] said that Mr Dowsett told him that the Council had become aware of a problem relating to [Jazabas’] Building Application "a couple of weeks ago and I had avoided talking to you in the hope that the discussions I am currently having with the Department may resolve the matter". Mr Dowsett said the problem related to the proximity of the land to the ICI chlorine plant; that an RAS was done in 1985 by the Department of Urban Affairs and Planning, …; but that the Council "had not seen a copy of the report but was aware of its existence". Mr Haigh's evidence was not sought to be contradicted, but obviously what Mr Dowsett told him about the Council's not having seen the RAS was not correct. It was clearly aware of it from the time of its publication in 1985.”

On 23 December 1997, Jazabas appealed to the Land and Environment Court against the Council’s deemed refusal of Jazabas’ application for building approval.

On 6 January 1998, a solicitor then appearing for the Council told Mr Haigh that he wanted Jazabas’ Land and Environment Court appeal stood over for 21 days to give him the opportunity to seek to resolve it. Shortly thereafter, Mr Dowsett informed Mr Haigh that Jazabas’ application for building approval should go to a meeting of the Council towards the end of February 1998 “as it is recommended for approval”.

Decisions by Land and Environment Court Assessors in late February or early March 1998 dismissed appeals against the Council’s refusal of the 22 Beauchamp Road application and the 36 Denison Street application.

Evidence based on the RAS was given on the Council’s behalf in those Land and Environment Court proceedings by Mr Haddad. In addition, Mr Haddad wrote to the Council on 16 February 1998 in relation to Jazabas’ proposed residential development in the following terms: “Re: 2-10 Nilson Avenue Hillsdale - Proposed Cluster housing Development I refer to your letter dated 30 January and confirm verbal advice furnished by Derek Mullins with respect to the matters raised. There appears to be a misunderstanding as to the nature of the risk reduction zone identified in Figure 5 of the Department’s, “ A Risk Assessment Study for the Botany/Randwick Industrial Complex (1985)”. Your letter states “The Council notes that the general risk reduction zone.. was founded on the hazards of fire and explosion.” This assumption is incorrect. The generalised risk reduction zone should not be equated to a particular criterion level but is based on the identification of an area in which land use safety controls need to be focussed. For this reason, it is invalid to make a comparison between that zone and the Olefines 2 Fire and explosion Individual Risk (Figure A3.10, appended to your letter). The subject site is in close proximity to the Orica (Formerly ICI) industrial complex and specifically to the chlorine plant and associated operations. Irrespective of the quantitative nature of risk contours, the intensification of residential developments at this location, notwithstanding minor , is inconsistent with good land use safety planning. Intensification of residential developments by way of subdivision at this location is also inconsistent with broad environmental amenity. I trust the above is of assistance to Council, as consent authority, in tis future considerations.”

In March 1998, Mr Dowsett informed Mr Haigh that the Council would be defending Jazabas’ Land and Environment Court appeal.

The Amended Statement of Issues in the Jazabas’ Land and Environment Court appeal were as follows: “1. Given the location of the subject property within the Risk Reduction Zone established by the 1985 Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany undertaken by the then Department of Environment and Planning in 1985, and the proximity of the subject property to the Orica Australia Pty Limited (formerly ICI Australia Limited) Petrochemical Complex and in particular to the Chlorine Manufacturing Plant within that Complex: (a) the building plans are unsatisfactory in that: (i) they do not demonstrate a sufficiency to protect the inhabitants of the proposed buildings and their curtilages from risk of death or injury in the event of a substantial release of a toxic gas such as chlorine from the Orica Australia Pty Limited Plant; (ii) they do not include physical means to warn occupants or visitors of contamination events from the sources described in the 1985 Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany. (b) The deficiencies referred to in (a) above are incapable of being remedied in that there are no reasonable or practical measures available that could make the proposed buildings and their curtilages safe for occupants in the event of a substantial release of toxic chlorine gas from the Orica Australia Pty Limited Chlorine Plant.”

Mr Dowsett and Mr Haddad gave evidence on behalf of the Council in support of the Amended Statement of Issues, in which they relied on the RAS and the Department of Urban Affairs and Planning’s opposition to residential development on the land based on the RAS.

On 23 April 1998, a Land and Environment Court Assessor dismissed Jazabas’ appeal against the Council’s deemed refusal of Jazabas’ application for building approval. The Assessor decided that the evidence established the land “..unsuited for further residential intensification on hazard grounds”.

By that time, the Council was consistently relying on the risks identified by the RAS to refuse residential development applications in the RR zone and was simultaneously concerned about its potential libaility.

On 25 May 1998, the Mayor wrote a memorandum to the Council General Manager in relation to another property [ 11 ] in which he stated: “This building application, as I understand it, is for a lot of a subdivision which the council approved in August, 1995. The reality of the situation is that if the Risk Reduction Study (sic) not have permitted an intensification of the relative use, then the Council should not have approved the subdivision in 1995. It is, in my view, not an intensification of the use to build a house on land subdivided for that purpose, it is an intensification of residential use to allow the subdivision in the first place. In my view, having allowed the subdivision in the first place, the Council would be liable for damages even allowing for the lack of moral in revising the building application. On the other hand, if the situation is so dangerous that it would be responsible to approve the application, then that is a different situation and if that be the case, then a decision needs to be made as to others in the locality requiring relocation.”

Reports by Mr Dowsett in about May 1998 again asserted that applications which had earlier been approved would have been recommended for refusal if the Council had known of the RAS when the applications were approved, because to do otherwise “… would have been inconsistent with the objectives of the [RAS] to curtail further residential development in the [RR zone].” On the evidence, Mr Dowsett’s assertions were based on assumption.

In one report from Mr Dowsett to the General Manager, [12] he said: “… It was not until April 1996 that Council became aware of the Studies practical impact. However, notwithstanding the knowledge of such, Consents were subsequently granted for … (Lot No 3) and the development of land at 2 - 10 Nilson Avenue Hillsdale. The land 2 - 10 Nilson Avenue … exists in the defined hazard area and Council was left with no alternative but to address the issue of risk at the Building Application stage, whereas the more appropriate place would have been at Development Application stage. The issue of hazard was related to the “healthiness of the building’ and whilst it was acknowledged that this reason involved a great deal of latitude on Council part, as to suitability of this matter for consideration, the applicant to the Appeal did not question the matter of power. It was the view of Senior Counsel that had the applicant challenged the basis for refusal then the Assessor would have had not (sic) alternative but to refer the matter to the Duty Judge who in turn, would have dismissed the Appeal. … As alluded to in a recent report to the Development Committee council is likely to face a civil claim in relation to the granting of Development consent to 2 - 10 Nilson Avenue Hillsdale. Even with the recommendation to refuse the subject application, the Council may incur liability as like 2 - 10 Nilson Avenue Hillsdale, the land cannot be developed and is sterile to development of the kind the zoning permits. On the other hand, to grant approval, there remains the potential for occupants to be subject to illness or injury through accident, foul play or the like that may give rise to a toxic release from the adjoining industrial premises. Either way Council is exposed to liability and it is a question of taking the more appropriate course which in this instance, is refusal of the Building Application.”

The Council’s Director-Technical Services adopted a different attitude in a report which he wrote to the General Manager on the following day 27 May 1998. “[C]ommonsense” led him to the conclusion that “… approval should be granted to the development of the last underdeveloped lot” in the subdivision at 54 Denison Street Hillsdale. Later, his report stated: “… As for property 2-10 Nilson Avenue, Council is now in a position of some difficulty, given the current rejection of an application for building consent by the Land & Environment Court. I am of the opinion, if a claim for substantial damages is received in respect of the granting of development consent and rejection of building consent, it may be preferable to again revisit the development, through a new application, with a view to granting building consent given the rationale set out in relation to property 54 Dension Street, Hillsdale. I appreciate the quasi-legal view adopted by Mr Dowsett is a course to which he is, and should be, restricted but I am strongly of the opinion a somewhat wider approach might be taken by the Council, given the relevant circumstances applying to date and future liability that may be occasioned. I would appreciate the opportunity for further discussion on this matter prior to reference to the Mayor and/or a relevant Committee.”

On 12 August 1998, Jazabas commenced this action, which was transferred from the Federal Court of Australia on 16 September 1998.

On 12 February 1999, the Council appealed to the Land and Environment Court against the Assessor’s dismissal of Jazabas’ appeal. The Council’s new position was that it should have granted Jazabas’ application for a building approval because it had no power to refuse it on the basis of the RAS and that the Assessor had erred in law in dismissing Jazabas’ appeal.

On 16 April 1999, the Council’s appeal was upheld by a judge of the Land and Environment Court and Jazabas’ application for a building approval was remitted for redetermination.

On 15 July 1999, a Land and Environment Court Assessor upheld Jazabas’ appeal to that Court and made an order granting approval of its building application. [13]

The Council documentation after 10 December 1993 confirms that it did not have a policy in the period between November 1993 and January 1994 to restrict residential development on land in the RR zone by reasons of the risks identified in the RAS. Jazabas’ alternative case on liability

Jazabas’ principal alternative case is that, even if the Council did not have a policy between November 1993 and January 1994 to restrict residential development of land in the RR zone by reason of risks identified in the RAS, it negligently provided information which was misleading or deceptive.

Jazabas submitted that, while the s 149 certificate and the Council’s solicitors’ letter of 10 December 1993 might have been literally accurate and Mrs Cuthbert’s statement to Mr Haigh was presumably not deceitful or intended to cause harm, either the risks identified in the RAS or the location of the land in the RR zone must have been negligently overlooked or given inadequate consideration when the s 149 certificate was issued, Mrs Cuthbert wrote her reports on 6 and 8 December 1993, the Mayor “approved and adopted” Mrs Cuthbert’s recommendation for a draft DCP for the land and the Council’s solicitors’ letter was written on 10 December 1993, and Mrs Cuthbert informed Mr Haigh that she did not believe that there would be “any problem in obtaining Council’s development approval” to a “flat development” which complied with the floor space ratio and building footprint/site coverage stated in the Council’s solicitors’ letter of 10 December 1993. Jazebas argued that it should have been informed that the Council was required by s 90 of the EPA Act to have regard to risks identified in the RAS when deciding an application for a medium-density residential development application on the land which, as the Council knew, was the purpose for which the land was likely to be purchased, and of the significance of those risks in relation to the Council’s decision on such an application.

Jazabas’ subsidiary alternative case was not based on the information which the Council provided to Jazabas before it purchased the land but on the Council’s approval of Jazabas’ medium-density residential application. According to Jazabas, if the Council had not approved that residential development application, it would have sold the land earlier than it did and would have avoided some of its losses. Jazabas submitted that it was negligent of the Council to approve the residential development application which Jazabas had made because, by that time, it “.. did know about the difficulty arising from the [RAS] when [it] approved this development application.” According to Jazabas’ subsidiary alternative case, the Council could not reasonably have approved a medium-density residential development on the land having regard to the matters referred to in s 90 of the EPA Act because of the risks identified in the RAS.

The trial judge rejected Jazabas’ subsidiary alternative case, which does not arise for consideration unless both its primary case and its principal alternative case fail.

I propose first to consider Jazebas’ principal alternative case limited to its claim in negligence. The first question is whether a duty of care was owed. If that question is answered in the affirmative, the next question is whether that duty was breached.

The Council’s letter of 10 December 1993 implied that medium-density residential development of the land was feasible provided that the development satisfied the requirements which the proposed DCP was expected to impose. Prospective purchasers were expressly invited to contact the Council’s Director of Planning and Environment, Mrs Cuthbert, for “… any further information …. in relation to the proposed development control plan…”. Mr Haigh acted on that invitation. He telephoned Mrs Cuthbert to inquire whether he (or his associates) “would … have any problem in obtaining Council’s development approval” if the requirements which the Council expected the proposed DCP to contain were complied with. Whether or not Mrs Cuthbert needed to do so, she answered Mr Haigh’s question on behalf of the Council.

Mrs Cuthbert told Mr Haigh that, although he “should have regard … to the various planning instruments affecting the property”, she did not believe that he would “have any problem in obtaining Council’s development approval” if the anticipated requirements of the proposed DCP were complied with. Although it is probably not critical, the connotation of Mrs Cuthbert’s admonition to Mr Haigh that he “should have regard also to … various planning instruments affecting the property” was that there were no other matters of potential concern. In any event, Mrs Cuthbert did not express any other qualification or limitation.

Mrs Cuthbert was the appropriate Council officer to receive Mr Haigh’s question. She provided an opinion on behalf of the Council. Her answer, “I don’t believe so” was no different in substance from other common phrases which are to similar effect, such as “I don’t think so” or “not in my opinion”. Those expressions are qualified only in the sense that they are not statements of fact but statements of opinion. Statements of opinion do not attract liability in negligence merely because they are incorrect. Conversely, erroneous and ill-considered statements of opinion do not avoid liability merely because the are not deceitful or intended to cause harm. Liability in negligence attaches to a statement of opinion when there is a duty to take reasonable care and reasonable care is not taken.

In Tepko Pty Ltd v Water Board , [14] a majority of the High Court held that the appellant had not established that the respondent had owed it a duty of care when the respondent provided the appellant with information. All members of the Court [15] accepted that two statements of principle by Barwick CJ in Mutual Life and Citizens’ Assurance Co Ltd v Evatt [16] correctly describe the circumstances in which, in a case such as this, the law imposes a duty of care in relation to the expression of an opinion. Barwick CJ’s first statement was that “the speaker must realize or the circumstances be such that he ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence.” [17] His Honour’s second statement was that “the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker.” [18]

Those requirements were satisfied in the present case. Mrs Cuthbert did not give evidence but she must have realized that Mr Haigh intended to act on her statement in making a decision whether or not to purchase the land. Further, it was plainly reasonable for him to do so having regard to the Council’s s149 certificate and the letter from its solicitors dated 10 December 1993 to the vendor and its real estate agent, the subject matter of Mr Haigh’s question and Mrs Cuthbert’s answer, and the respective roles of Mrs Cuthbert as the Council’s Director of Planning and Environment and of Mr Haigh as a prospective purchaser of the land.

I have therefore concluded that the Council (and Mrs Cuthbert) had a duty to take reasonable care in the answer which was given to Mr Haigh’s question. The contrary view would require acceptance that, at common law, neither the Council not Mrs Cuthbert had any legal responsibility for any answer which she gave to Mr Haigh, however ill-considered and careless, unless it was deceitful or deliberately intended to cause harm in the sense discussed in Northern Territory v Mengel . [19]

Since a duty of care existed, it is necessary to decide whether, in all the circumstances, there was a reasonable basis for Mrs Cuthbert’s opinion. Unless there was, the duty of care was breached.

As the Council acknowledged, s 90 of the EPA Act required it to take the risks identified in the RAS into consideration when deciding an application for approval of a residential development on land in the RR zone. When Mrs Cuthbert wrote her report recommending that the Council prepare a DCP for the land on 8 December 1993, the Mayor “approved and adopted” her recommendations and the Council’s solicitors letter was written on 10 December 1993 and Mrs Cuthbert answered Mr Haigh’s query after he obtained a copy of that letter, the Council must either have considered that a medium-density residential development on the land which complied with Mrs Cuthbert’s recommendations should be approved notwithstanding the risks identified in the RAS or the risks identified in the RAS in such a medium-density residential development on the land must have been disregarded.

The Council’s written submissions in this Court acknowledged that the risks identified in the RAS were disregarded. Paragraph 56 of those written submissions stated: “ Although it was true that in considering any development application for the land the Council was required by paragraph 90(1)(g) of the EPA Act (as enacted as at June 1996) to take into account any relevant risk , the fact was that, rightly or wrongly , the Council, in November and December 1993, did not propose to take the RAS into account (and did not take it into account in June 1996) for the purpose of restricting development of the land which otherwise conformed to the provisions of the proposed development control plan referred to in the December letter.” [20] (Emphasis added).

The Council argued that it was under no duty to disclose the risks in residential development of the land identified in the RAS because “.. it did not then regard [those risks] as impacting upon the suitability of the land for residential development.” [21]

It is unnecessary to consider whether the Council would have been obliged to disclose the risks in residential development of the land identified in the RAS if a medium-density residential development on the land which complied with the floor space ratio and building footprint/site coverage referred to in the Council’s solicitors’ letter of 10 December 1993 could reasonably have been approved by the Council consistently with s 90 of the EPA Act notwithstanding those risks. Unless a residential development of that character could reasonably have been approved on the land consistently with s 90, of the EPA Act , there was no reasonable basis for the statements contained in the Council’s solicitors’ letter of 10 December 1993 and Mrs Cuthbert’s answer to Mr Haigh’s question, at least unless attention was drawn to the Council’s obligation under s 90(1)(g) of the EPA Act to take the risks identified in the RAS into consideration when considering an application for approval of a residential development on the land.

As earlier noted, the Council did not call Mrs Cuthbert, the Mayor or any other witness to explain the Council’s attitude to the residential development of land in the RR zone at the material time . Later Council documentation, including its evidence in the Land and Environment Court in Jazabas’ appeal against the Council’s deemed refusal of Jazabas’ application for building approval on the land, demonstrates that it belatedly recognized that, on a proper consideration of the matters referred to in s 90 of the EPA Act , a medium-density residential development on the land could not reasonably have been approved because of the risks identified in the RAS.

On the evidence, that continues to be the Council’s opinion.

Since the Council owed a duty of care and there was no reasonable basis for the opinion which it expressed, it was negligent in making the statements contained in its solicitors’ letter of 10 December 1993 and Mrs Cuthbert’s answer to Mr Haigh’s inquiry.

The Council did not contest the trial judge’s finding that Jazabas would not have purchased the land if it had been informed of the risks identified in the RAS. His Honour’s conclusion that the Council is liable to Jazabas for damages was therefore correct. Damages

The trial judge assessed the profits which Jazabas would have earned from other developments if it had not purchased the land at $1,273,129.00. That figure was calculated on the basis that Jazabas would have earned an average profit of $151,563.00 from each of 12 additional developments, discounted by 30% to take account of the uncertainties associated with the hypothesis on which Jazabas’ claim was based. His Honour then deducted $54,297, being the profit which he assessed Jazabas had made on the sale of the land. The difference, $1,218,832.00, was awarded to Jazabas as damages.

The Council did not challenge the trial judge’s approach to the assessment of Jazabas’ damages. However, it submitted that his Honour had assessed Jazabas’ loss of profit on an erroneous assumption that it would have been able to earn a profit of $151,653.00 per development from other developments throughout the whole of the period for which it owned the land. The profit of $151,653.00, which was used as a foundation for the calculation of Jazabas’ damages, had been earned from a particular development at 32 Menin Road. According to the Council, developments of that type were impermissible unless an application for development approval had been lodged prior to 31 March 1998. The Council submitted that there was no evidence that Jazabas could have continued to derive profits, or comparable profits, from other types of development after that date.

Jazabas’ difficulty was noted by the trial judge in para. 257 of his judgment, which stated: “The difficulty with this evidence, from [Jazabas’] point of view, is that [it] sought to restrict the area of its damages to developments of the type carried out at 32 Menin Road. Realistically, it seems to me, that had that type of development not been available [Jazabas] would, as a matter of probability, have undertaken other types of development. Mr Haigh gave such evidence, but the problem for [Jazabas] is that it has not sought to quantify damages on any other basis either to 31 March 1998 or thereafter.”

After later stating that Jazabas “… would have continued … to carry on business notwithstanding the change in March 1998”, [22] his Honour said that it “… would have been in a position to commence and would have commenced four new dual occupancy projects in each year.” [23] (The years referred to were 1994 to 1999 inclusive). Paragraphs 283 and 284 of the judgment continued: “283. … When one has regard to the history of the building activities of Mr Haigh and his associated companies and to the evidence that there was ample land available, even for the building of dual occupancies other than sub-divided ones after March 1998, it seems to me reasonable to assess damages on the basis that Jazabas would have achieved four dual occupancies per year, save for 1996 during which the dispute between Mr Haigh and Mr Kikiras was on foot. 284.On the approach to which I have just referred there would have been an additional 1 in 1994, 1 in 1995, none in 1996, 2 in 1997, 3 in 1998 and 4 in 1999, making a total of 9 additional developments.”

After further submissions, the “total” was subsequently corrected in an “Addendum to Judgment” to “11 additional developments”, and the number of “additional developments” was then increased to 12. Paragraphs 8 and 15 of the Addendum stated: “8. The base figure is $151,563.00 which, when multiplied by 12, produces $1,818,756.00. That is to be reduced by thirty per cent and rounded to the nearest dollar becomes $1,273,129.00. … 15. … the figure of $1,273,129.00 should be reduced by $54,297.00 to $1,218,832.00.”

The Council argued that “.. at least one or more of the three 1998 projects and all of the four 1999 projects should be deleted from the calculation”, [24] because “… the sole basis for his Honour’s assessment of Jazabas’ damages was subdivisible land occupancies” and “[t]here was no evidence as to the profit on, or profitability of, non- subdivisible land occupancies. … . … no attempt was made in [Jazabas’] case to quantify the profit on, or profitability of, dual occupancies that could not be subdivided.” [25]

As Jazabas pointed out, Mr Haigh gave evidence that it would have still been possible to “.. do dual occupancy developments .. and make similar profits” after 31 March 1998 although the developments would have been different from those previously permissible. It is not clear from paragraph 257 of the judgment whether the trial judge rejected Mr Haigh’s evidence as to “similar profits” or whether he overlooked it. Paragraphs 283 and 284 of his Honour’s judgment referred to the number of “dual occupancies” which Jazabas would have built in each of the material years, even if those developments would have been “dual occupancies other than sub-divided ones”, but did not refer to the profit which Jazabas would or might have earned form “dual occupancies other than sub-divided ones”. However, paragraph 8 of his Honour’s Addendum proceeded on the basis that, notwithstanding para. 257 of the judgment, the profit from each development, irrespective of the type of development or when it was undertaken, would have been $151,653.00. It is not clear whether that step was deliberate or an oversight.

Jazabas’ cross-appeal raised another issue in relation to its damages, which it submitted should be increased, not reduced. The point is dealt with in para. 22 of the Addendum to the trial judge’s judgment in the following terms: “ Inflation 22. [Jazabas] … submitted that an amount should be awarded for inflation over the years. In my opinion the rate at which I have fixed the calculation of damages does not require any further adjustment. In inflation is covered, in part, by utilisation of profits in further developments. Further, if regard was to be had to inflation, increased costs would have to be considered and, if, as is reasonable to assume, they existed, they would have to be taken into account. These figures, on a broad approach, balance showing that there is no necessity, in awarding damages, to allow for inflation.”

Jazabas argued that the trial judge made two errors in that passage. It submitted that “the calculations by [its] expert on quantum, which provided much of the base material for his Honour’s assessment of damages, did … assume an increase in costs of construction prices over the period 1994-1999 that would impact on the cost of alternative projects…”. [26] Further, “the fact that the measure of damages reflected the utilisation of money in further development opportunities does not, without more, encompass an allowance for inflation. The two matters are discrete.” [27]

In substance, Jazabas’ inflation argument effectively contended that inflation would have caused both costs and sale prices, and hence profits, to increase over the period for which Jazabas held the land so that the trial judge should have adopted a higher profit figure than $151,653.00 for the developments which Jazabas would have carried out in years subsequent to the year in which that profit was earned.

Jazabas also cross-appealed against the trial judge’s refusal to award interest under s 94 of the Supreme Court Act 1970 on the damages which it was awarded. When his Honour published his reasons for judgment to facilitate further submissions on outstanding issues, he indicated that he expected to add interest to the amount which he had then calculated as Jazabas’ loss. However, after further argument, his Honour refused interest because “the money was [notionally] immediately used to finance the next project, the profit providing part of the funds needed.” [28]

Paragraphs 19 and 21 of the Addendum stated: “19. … Prima facie interest is awarded to compensate the plaintiff from being deprived of money to which it would otherwise have been entitled, thus meaning that it has not earned interest or that it has had to borrow. In the present case that is not appropriate because in the absence of evidence that the plaintiff has been kept out of money, which it would have used, otherwise than as reflected in the amount on which the award of damages is based, this is a case where I do not consider the plaintiff has established an entitlement to interest. Such cases are rare, but the way in which damages were assessed and found leads me to that conclusion. … 21. [Jazabas] submitted that the continuing cash flow would have prohibited the continuation of building four developments each year. For that the plaintiff has been compensated. I do not propose to award interest in the particular circumstances of this case.”

Jazabas’ interest claim was founded on the proposition, which the Council did not contest, that interest is awarded as compensation for the delayed payment of money which the party being compensated was entitled to receive earlier. Although reference was made to the judgment of Barwick CJ in Ruby v March , [29] Jazabas claimed interest on the amount of its notional profit from each hypothetical development which it claimed it would have undertaken if it had not purchased the land from whenever it would have received that profit.

On the trial judge’s approach to the assessment of damages, Jazabas was not deprived of that notional profit. It received it and invested it, without deduction for taxation, in the next development or series of developments. In other words, in the theoretical exercise which the assessment of damages involved, Jazabas received and invested profits to which it was entitled in other developments as and when it became entitled to those profits.

The figures used by the trial judge, (i.e., 12 developments at a profit of $151,653.00 per development and a profit on the resale of the land of $54,297.00), appear to indicate that his Honour’s assessment of damages was a precise exercise undertaken on the basis of reliable evidence. The reality is that the assessment of Jazabas’ compensation necessarily involved value judgments and conjecture based on evidence which was not and could not accurately establish what would have, but had not, occurred. There is always room for disagreement in such circumstances, and it is often possible to criticise statements made by a trial judge to attempt to provide a rational explanation for an assessment when proof of the basis of the assessment is “necessarily unattainable.” [30] Appellate intervention is not warranted unless there is patent error or the amount awarded is plainly wrong or unjust.

That could not be concluded in the present case. For example, as the trial judge noted, the reduction of 30% which he applied for “vicissitudes” was “somewhat arbitrary”. [31] Although the Addendum to his Honour’s judgment does not expressly say so, the course which he adopted suggests to me that he considered that the figures which he had used, including the reduction factor of 30%, adequately catered for the competing factors which the parties relied on and that the total at which he had arrived was a just compensation for Jazabas on the necessarily inconclusive evidence on which his assessment had to be based.

If this Court were to reassess the damages on the evidence available taking into account both what the trial judge said and did and the parties’ challenges to his Honour’s explanation, there is no cogent reason for it to conclude that Jazabas is entitled to compensation in a significantly different sum from the amount awarded, i.e., appropriately $1.2 million. Conclusion

In summary, I would dismiss both the appeal and the cross-appeal, with costs.