Norcross Pictorial Calendars Pty Ltd v Central Coast Council

1. [1]

   On 10 December 2002 the first plaintiff, Norcross Pictorial Calendars Pty Ltd (“Norcross”) entered into a Joint Venture Agreement (“the JVA”) with the predecessor to the defendant, Gosford City Council (“the Council”) to develop land owned by the Council in Pine Tree Lane, Terrigal (“the Land”).

2. [2]

   The JVA provided that:

3. [3]

   In the JVA the Council gave Norcross a number of warranties and indemnities.

4. [4]

   Also on 10 December 2002, Norcross and the Council entered a Call Option entitling Norcross to call on the Council to transfer the PTL Land to it or its nominee for a nominal consideration.

5. [5]

   On 20 January 2004, Norcross and the Council entered into a Deed of Variation that varied the JVA in a manner not relevant to the issue in these proceedings but which otherwise reaffirmed the JVA, including the warranties and indemnities.

6. [6]

   Norcross constructed the car park on the Car Park Land during 2004 and 2007.

7. [7]

   On 18 March 2005, by which date the Council had subdivided the Land into the Car Park Land and the PTL Land:

8. [8]

   Almost ten years later, on 16 September 2015, PTL entered into a contract (“the Building Contract”) with Richard Crookes Construction Pty Ltd (“the Builder”) to construct a six storey residential and commercial building on the PTL Land. The Building Contract specified 3 March 2017 as the date for practical completion.

9. [9]

   Work commenced on the site in November 2015.

10. [10]

    Practical completion was achieved on 21 July 2017. Strata plans for the development of the PTL Land were registered on 28 July 2017.

11. [11]

    It is common ground that the PTL Land was at all relevant times contaminated with asbestos, acid sulphate soil and general solid waste.

12. [12]

    It is also common ground that:

The parties’ claims

1. [13]

   PTL, alternatively Norcross, claims damages from the Council under warranties and indemnities in the JVA arising from:

2. [14]

   The Council brings a Cross-Claim alleging misleading or deceptive conduct on the part of Norcross and seeking an order that the warranties and indemnity in the JVA be declared void.

The hearing

1. [15]

   The hearing before me was conducted with admirable economy. The matter was fixed for hearing for seven days. It was completed in three.

2. [16]

   I was greatly assisted by the written submissions of counsel. Much of what follows, especially as to uncontroversial background matters, is drawn from those submissions; especially those of the plaintiffs.

Decision

1. [17]

   PTL is entitled to the damages it seeks.

2. [18]

   The Council’s cross claim should be dismissed.

The course of events

1. [19]

   Douglas Partners prepared a geotechnical report in respect of the Land, dated 5 April 2002. Mr Andrew Cochrane, later a director of PTL, was in possession of the Douglas Partners Report since shortly after this date.

2. [20]

   The Douglas Partners Report contained an analysis of the subsurface of the Car Park Land and the PTL Land and stated:

3. [21]

   Norcross and the Council executed the JVA and the Call Option on 10 December 2002.

4. [22]

   Mr Cochrane first mentioned the 2002 Douglas Partners Report at a meeting with Council officers on 7 August 2003. The minutes of that meeting record:

5. [23]

   Mr Cochrane provided Mr Stephanou at the Council with the Douglas Partners Report on 17 September 2003.

6. [24]

   After Norcross built the car park on the Car Park Land, the development of the PTL Land was delayed due to unfavourable market conditions and the global financial crisis. Nothing turns on this delay.

7. [25]

   The PTL Land development was reactivated in 2015.

8. [26]

   As I set out at [8], on 16 September 2015 PTL entered the Building Contract with the Builder.

9. [27]

   To fund construction costs, PTL had a facility with the ANZ bank.

10. [28]

    The Builder commenced excavation work in November 2015.

11. [29]

    Almost immediately, the Builder discovered fragments of asbestos sheeting in the fill being excavated. The Builder reported this to PTL’s superintendent, Cadence Australia Pty Ltd (the “Superintendent”).

12. [30]

    The Superintendent authorised the removal of the asbestos contaminated fill and approved the costs incurred by PTL for the removal.

13. [31]

    The Builder also excavated, treated and removed acid sulphate soil and general solid waste from the PTL Land.

The Easement

1. [32]

   On 15 May 2016, PTL requested the Council grant an easement over the Car Park Land for the supply of electricity to the PTL Land.

2. [33]

   The easement that was requested was over a very small part of the Car Park Land; an area of 1 metre by 5.67 metres. That area was located at the northern border of the Car Park Land, adjoining the south western border of the PTL Land. It would have facilitated the most direct electricity supply to the PTL Land from an existing Ausgrid substation on the Car Park Land.

3. [34]

   On 27 July 2016, the Council passed the following resolutions:

4. [35]

   On 4 August 2016, the Council asked PTL to engage a nominated valuer (“the Valuer”) to undertake a valuation for the compensation payable for the Easement.

5. [36]

   On 30 August 2016, PTL engaged the Valuer who, on 8 September 2016, produced a report stating that in view of the small area affected by the proposed Easement and the fact that it would not affect any existing access arrangements to the car park on the Car Park Land, nominal compensation was appropriate for the grant of the Easement. The Valuer assessed compensation at $1,000 plus GST.

6. [37]

   On 23 November 2016, without notice to PTL, and indeed without returning a number of telephone and email enquiries from Mr Cochrane, the Council resolved to rescind its resolution of 27 July 2016 granting the Easement.

7. [38]

   This necessitated PTL making other arrangements to procure the supply of electricity to the site.

8. [39]

   The result was that, on 21 March 2017, the Builder claimed an extension of time to achieve practical completion because of a “qualifying cause a delay”. The Builder claimed that the principal cause of the delay was its inability to secure the Easement.

9. [40]

   The Superintendent granted the Builder a 78 day extension of time.

10. [41]

    The extension of time was given in respect of working days. The 78 working days’ extension granted by the Superintendent was over an overall period of 104 days.

The issues

1. [42]

   First, whether PTL was Norcross’s “successor” for the purposes of cl 19.9 of the JVA, the effect of which was, amongst other things, to extend the benefit of the warranties and indemnities in the JVA to a “successor” of Norcross (the “Succession Issue”). This is significant for reasons I set out below.

2. [43]

   Second, if PTL was not Norcross’s “successor”, whether Norcross is entitled to recover against the Council for loss and damage (the “Loss Issue”).

3. [44]

   Third, whether:

4. [45]

   Fourth, whether in failing to grant the Easement, and more particularly in rescinding its decision to grant the Easement, the Council acted in breach of its obligations under the JVA (the “Easement Issue”).

5. [46]

   Fifth, whether, as the Council contends in its Cross-Claim, Norcross engaged in misleading or deceptive conduct for the purpose of s 52 of the Trade Practices Act 1974 (Cth) (“TPA”) so that the warranties and indemnity under the JVA should be declared void under s 87 of the TPA (the “Cross Claim Issue”).

6. [47]

   Sixth, quantum.

The Succession Issue

1. [48]

   The party that has incurred the expense associated with the Contamination Issue and the Easement Issue is PTL, rather than Norcross.

2. [49]

   Norcross, however, is the counterparty to the JVA. PTL is not a party to the JVA and, indeed, was not incorporated until 7 May 2004, several years after the date of the JVA.

3. [50]

   The question that arises is as to the standing of PTL to bring a claim to damages against the Council in relation to the Contamination and Easement Issues.

4. [51]

   In the JVA, the promise given by the Council concerning the Easement [1] and the warranties and indemnity relied upon by PTL concerning the Contamination Issue [2] were, in terms, directed to Norcross.

5. [52]

   The subject of the JVA was stated to be the “Project” which was defined to be:

6. [53]

   The Call Option was executed on the same day as the JVA. The JVA made express reference to it, including at cl 4.1(c) where the Council agreed that it would:

7. [54]

   The JVA and the Call Option were executed as part of the one transaction. Each is available to aid in the construction of the other [3] .

8. [55]

   The Call Option provided that:

9. [56]

   “Nominee” was defined as “all of the parties nominated by [Norcross] under clause 2.5” which provided:

10. [57]

    Thus, the parties contemplated that:

11. [58]

    On 18 March 2005 Norcross and PTL executed a Nominee Option Notice enabling PTL to become registered proprietor of the PTL Land.

The proper construction of cl 19.9 of the JVA

1. [59]

   It is in that context that cl 19.9 of the JVA must be construed.

2. [60]

   Clause 19.9 provided:

3. [61]

   The words that I have added in square brackets (thus “[ ]”) do not appear in the text. It is, however, common ground that they should be inserted in accordance with the ordinary principles of construction as, clearly, “something has gone wrong with the language” used by the parties [4] .

4. [62]

   In my opinion, Norcross and PTL were correct to submit that, when read as a whole, and in the context of the matters I set out above, [5] the words that the parties have used show that they intended that any “successor” to either Norcross or the Council would have the same rights and obligations vis-a-vis the other as did Norcross and Council in the first place.

PTL a “successor” to Norcross?

1. [63]

   The matters that divide the parties are the meaning to be attributed to the word “successor” and as to whether PTL is a “successor” to Norcross for the purposes of cl 19.9.

2. [64]

   The term “successor” is not defined in the JVA or the Call Option.

3. [65]

   The word “successor” is used in an earlier provision in the JVA. Thus, in cl 1.2(a)(ii) it is provided, under the heading “Rules for interpreting this document”:

4. [66]

   The use by the parties in this provision of the expression “successor in law” is apt to include an entity that succeeds to another by operation of law. That would include the defendant, Central Coast Council. By operation of ss 213 and 220 of the Local Government Act 1993 (NSW) and cll 6, 17, 32 and 33 of the Local Government (Council Amalgamations) Proclamation 2016 (NSW) it is the successor to and transferee of the rights and liabilities of the Council of the City of Gosford.

5. [67]

   The later use by the parties, in cl 19.9, of the expression “successor to a party” suggests they intended the word “successor” in that expression to have a different, and wider meaning than in the expression “successor in law”.

6. [68]

   In my opinion, the plaintiffs were correct to submit that a “successor” in the context of cl 19.9 is simply someone who succeeds to the property or rights of another.

7. [69]

   The JVA and Call Option were, as I have said, executed as part of a single transaction and show that the parties contracted on the basis that a nominee of Norcross might purchase the PTL Land. As the plaintiffs submitted, when both agreements are considered together, it is apparent that at least one intended function of cl 19.9 was to facilitate the continuation of the JVA for the benefit of any party Norcross nominated under the Call Option.

8. [70]

   On behalf of the Council it was submitted that in order to be a “successor” to Norcross for the purpose of cl 19.9 it was necessary that there be a binding novation of Norcross’s rights and obligations under the JVA, made with the consent of all parties concerned, for Norcross’s nominee to be substituted to the position of Norcross. Reference was made in this regard to the observations of Windeyer J in Olsson v Dyson. [6] His Honour was there stating what is required for there to be a novation of contract. I see nothing in his Honour’s observations that provides any guidance to the question at hand here.

9. [71]

   Nor do I see anything in the words used by the parties in cl 19.9 to suggest that they intended that a novation of the JVA was necessary in order that party become a “successor” to, relevantly, Norcross for the purpose of cl 19.9.

10. [72]

    The Council also pointed to provisions in the JVA which impose obligations on Norcross that the parties evidently intended would be obligations of Norcross alone: for example the obligation to “manage the Project” in cl 5.1(a). But nothing in cl 19.9 could have the effect of relieving Norcross of any such obligation. Indeed, after providing for a “successor to a party” cl 19.9 goes on to make clear that the clause does not otherwise permit “the obligations and the rights [under the JVA] … to be transferred or otherwise dealt with or disposed of by any of the parties”.

11. [73]

    My conclusion is that “a “successor to a party” as referred to in cl 19.9 includes a party nominated by Norcross under the Call Option to purchase the PTL Land; and thus includes PTL.

12. [74]

    It follows that PTL has “assumed all rights” under the JVA as if it were named in the JVA as a party.

13. [75]

    Accordingly, and contrary to the Council’s submissions, PTL has standing to enforce the JVA against the Council.

The Loss Issue

1. [76]

   Norcross submitted that if, contrary to its primary submission, and contrary to my findings, PTL was not its “successor” for the purposes of cl 19.9 of the JVA and thus had no standing to sue the Council for loss suffered, Norcross was entitled to recover damages from the Council on PTL’s behalf, or its own behalf.

2. [77]

   As to recovering damages on PTL’s behalf, Norcross relied on the observations of Brennan J [7] in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [8] and submitted that Norcross could seek specific performance of the JVA for PTL’s benefit or seek damages on PTL’s behalf on the basis that Norcross was either trustee for the benefit of PTL of the promises made by the Council in the JVA or an agent of PTL authorised by the JVA to sue on PTL’s behalf.

3. [78]

   These arguments were not pursued with any great enthusiasm in final submissions. A difficulty with them is that PTL did not exist when Norcross entered the JVA. A further difficulty is that a second joint venture agreement made on 30 August 2004 between Norcross, PTL and another company, PTL Holdings Pty Ltd shows that PTL held its interest in the PTL Land as trustee for Norcross (and also PTL Holdings) and not the other way around

4. [79]

   As to recovering damages on its own behalf, Norcross submitted that as the sole shareholder of PTL it was entitled to recover from the Council the diminution in value of its shareholding caused by PTL’s loss.

5. [80]

   Norcross relied on the unchallenged evidence given by Mr Kenneth Allen, a director, and ultimate shareholder of Norcross:

6. [81]

   Norcross accepted that, as a matter of general principle, shareholders cannot sue for the loss suffered by the company in which they hold shares, this being said to be derivative or reflective loss. [9]

7. [82]

   However, Norcross submitted this rule did not apply where the shareholder had suffered loss in its individual capacity, separate from any loss suffered by the company.

8. [83]

   Norcross referred to the reference with apparent approval by Beazley JA [10] , with whom Heydon and Hodgson JJA agreed, in Chen v Karandonis [11] to the reasoning of Lord Bingham in Johnson v Gore Wood & Co [12] where his Lordship said:

9. [84]

   Norcross submitted:

10. [85]

    Norcross did not however adduce evidence of any diminution in value of Norcross’s shareholding in PTL said to have resulted from the Council’s alleged breaches of the JVA.

11. [86]

    Rather, Norcross relied on what Lord Millett said in Johnson v Gore & Wood [14] :

12. [87]

    My attention was not drawn to any Australian authority adopting Lord Millett’s assumption of such an exact correspondence.

13. [88]

    It has recently been rejected by the United Kingdom Supreme Court in Servilleja v Marex Financial Ltd. [15]

14. [89]

    Thus, the correct conclusion may be, as the Council submitted, that Norcross has failed to prove it has suffered a separate loss to that suffered by PTL.

15. [90]

    As I have concluded that PTL was Norcross’s “successor” it is not necessary that I resolve these arguments.

The provisions in the JVA

1. [91]

   As I have said, it is common ground that the PTL Land was at all relevant times contaminated with asbestos, acid sulphate soil and general soil waste.

2. [92]

   The JVA contained warranties that the PTL Land was not contaminated.

3. [93]

   By cl 7.1 the Council represented and warranted to Norcross that:

4. [94]

   By cl 7.2, the Council indemnified Norcross:

5. [95]

   Further, clause 15.1(b) provided that “each of the parties must”:

6. [96]

   “Contamination” was not defined but “contaminated” was defined to mean:

7. [97]

   “Waste” was defined to mean:

8. [98]

   As PTL is a successor to Norcross, and thus entitled under cl 19.9 to assume all rights conferred on Norcross under the JVA as if it were named in the JVA as a party, PTL is entitled to enforce the warranty in cl 7.1 and the indemnities in cll 7.2 and 15.1(b) to the same extent as would Norcross; subject of course to proving it has suffered relevant loss or damage.

Out of time?

1. [99]

   In relation to a claim under the warranties in cl 7.1, the plaintiffs accept that time would run from breach, and that as breach occurred when PTL contracted to buy the PTL Land on 18 March 2005, any claim by PTL under the warranties is now statute barred and out of time.

2. [100]

   The Council contends that any claim by Norcross or PTL under the indemnities in cll 7.2 and 15.1(b) of the JVA is also out of time because, as is common ground, the PTL Land was contaminated at the time that Norcross and the Council entered the JVA.

3. [101]

   It follows, the Council submitted, that “an immediate non-contingent obligation to indemnify arose” because there was nothing in cl 7.2 stipulating that a liability would be created (1) if and when loss was ascertained or quantified, or (2) upon a notice being given or recalled on the indemnity being made.

4. [102]

   I do not agree.

5. [103]

   What the Council promised to do in cl 7.2 was to indemnify Norcross (and thus by reason of cl 19.9, PTL) against any loss or expense incurred in respect of any contamination.

6. [104]

   Similarly, under cl 15.1(b) the Council promised to indemnify Norcross (and thus PTL) against loss and damage that may arise by reason of any breach of Council of its obligations under the JVA.

7. [105]

   Norcross’s and PTL’s right to seek indemnity only arose when one of them suffered such loss and damage; and the Council’s obligation to indemnify only arose when it failed to do what was required of it, that is, give indemnity in respect of that loss or damage. [16]

8. [106]

   PTL suffered the loss of which it complains in 2015

9. [107]

   The time to bring these proceedings commenced then. The claim under the indemnity is not statute-barred.

Asbestos

1. [108]

   PTL claims $360,878 comprising:

2. [109]

   In final written submissions, the Council accepted that the presence of asbestos in the Car Park Land was “Contamination” for the purpose of the indemnity in cl 7.2 of the JVA and did not dispute the quantum of PTL’s claim.

Acid Sulphate Soil

1. [110]

   PTL claims $65,661, being the provision made in the Building Contract for “[acid sulphate soil] management plan, excavation and treatment”.

2. [111]

   The Building Contract made provision for excavation of $221,461. PTL contends that had there been no acid sulphate soil, the cost of excavation and disposal would have been $155,800.

3. [112]

   In final written submissions, the Council accepted that the presence of acid sulphate soil in the Car Park Land was “Contamination” for the purpose of the indemnity in cl 7.2 of the JVA and did not dispute the quantum of PTL’s claim.

General Solid Waste

1. [113]

   PTL claims $126,928.10 comprising:

2. [114]

   The Council did not dispute that PTL had incurred these costs but contended that they were not recoverable because the presence of General Solid Waste is not “Contamination” for the purpose of the warranty in cl 7.2 of the JVA.

3. [115]

   It is true that “Waste” is not “Contamination” unless the land in question is “affected or degraded” by it and it “creates or may create a risk of harm to the Environment”. [17] It is also true that the plaintiffs have not adduced evidence that the “Waste” removed from the PTL Land had either of these characteristics. The plaintiffs have thus not proved that the “Waste” constituted “Contamination”.

4. [116]

   As the indemnity in cl 7.2 is, relevantly, against loss or expenses incurred in respect of “Contamination” the plaintiffs have not shown that this indemnity has been enlivened.

5. [117]

   However, the indemnity in cl 15.1(b) is wider and relates to loss arising in respect of any breach by the Council of its “obligations” under the JVA.

6. [118]

   The Council has admitted in its Response that by giving that warranty it “assumed an obligation to the effect that what was so warranted and represented was true” and that the indemnity in cl 15.1(b) extended to any breach by it of its obligations under the JVA [18] .

7. [119]

   Relevantly to the question of “Waste” on the PTL Land, the warranty in cl 7.1(b) is not directed to whether the PTL Land was “Contaminated” by “Waste” but to the question of whether the PTL Land had ever been used for the “disposal or storage of Waste”. It is common ground that the PTL Land has been so used. It follows that the Council is in breach of its “obligation” under cl 7.1

8. [120]

   The Council did not dispute that the expenses claimed by PTL arose in respect of that breach.

9. [121]

   It follows that the indemnity under cl 15.1(b) is thus enlivened, notwithstanding the fact that PTL is now out of time to sue directly for breach of the cl 7.1 warranty.

10. [122]

    PTL is accordingly entitled to recover the amounts claimed.

The Easement Issue

1. [123]

   Clause 4.1 of the JVA stated that one of the Council’s “General Obligations” was to:

2. [124]

   As I have set out above, PTL requested the Council to grant the Easement. The Council resolved to do so on 27 July 2016 [19] but on 23 November 2016 resolved to rescind its resolution. [20]

3. [125]

   PTL claims that the Council was obliged to grant the Easement and that it has suffered damage as a result of the Council’s rescission of its decision to do so.

4. [126]

   The Council offers a number of defences to this claim.

5. [127]

   First, the Council points to the fact that cl 4.1(a) states that a request for an easement must be by Norcross, rather than PTL, and to the fact that it was PTL, and not Norcross that in fact requested the easement.

6. [128]

   The answer to this contention is that, for the reasons I have set out, PTL is Norcross’ “successor” for the purpose of cl 19.9 of the JVA and was, in that capacity, entitled to make a request for an easement under cl 4.1.

7. [129]

   Next, the Council submits that, on the proper construction of cl 4.1, it was only obliged to grant an easement “necessary to allow physical access to and from the PTL land” or, alternatively “necessary” for the purposes of the subdivision generally.

8. [130]

   I do not agree.

9. [131]

   The word “necessary” in the chapeau to cl 4.1(a) is directed to what the Council was obliged to do when “reasonably requested” by Norcross (or PTL) to grant an easement. The word “necessary” is not directed to the question of whether the easement was or was not “necessary”.

10. [132]

    The Council was obliged to do all things “necessary” to, relevantly, create an easement reasonably requested by Norcross (or PTL), a matter emphasised by the parenthetical expression “(acting reasonably)” in cl 4.1(a)(iii).

11. [133]

    The requirement in the clause of reasonableness is directed to the nature of the request made by Norcross (or PTL), that is, whether it was reasonable to request the easement in question.

12. [134]

    PTL’s request for the Easement was plainly reasonable.

13. [135]

    The Easement would have facilitated the most direct and cheapest manner to deliver power to the PTL Land. Evidently, the Council considered PTL’s request reasonable as, in the first instance, it resolved to grant the Easement.

14. [136]

    Further, the Council has admitted the following allegation in the List Statement:

15. [137]

    The admitted fact that PTL’s request for the Easement was in order to comply with Ausgrid’s requirements is a further pointer to the reasonableness of the request.

16. [138]

    It follows, in my opinion, that the Council was obliged to grant the Easement and that its rescission of its resolution to do so was a breach of those obligations under cl 4.1(a) of the JVA.

17. [139]

    PTL’s claim for indemnity in relation to its loss arising by reason of the Council’s rescission of its resolution to grant the Easement is under cl 15.1(b) of the JVA, as the indemnity in cl 7.2 of the JVA is only concerned with “Contamination” and like issues.

18. [140]

    As I have set out above, under cl 15.1(b), the Council’s obligation is to indemnify PTL against “losses and damages” arising in respect of a breach by Council of its obligations under the JVA: here, its obligation under cl 4.1 of the JVA to grant an easement reasonably required.

19. [141]

    As I have mentioned [21] on 21 March 2017 the Builder claimed an extension of time for carrying out works under the Building Contract.

20. [142]

    The Builder stated in its letter to the Superintendent:

21. [143]

    The Builder continued:

22. [144]

    On 24 March 2017 the Superintendent issued an “Extension of Time Assessment” in which it recited that the “Cause of Delay” was:

23. [145]

    The Superintendent concluded:

The 37 day point

1. [146]

   The Council contends that, notwithstanding the Superintendent’s decision to grant an extension of time of 78 days to the Builder, only 37 of those 78 days should be attributed to the Council’s decision to rescind the Easement.

2. [147]

   The Council pointed to the evidence given by Mr Kerry Edwards, an employee of the Superintendent, to the effect that had the Easement been granted by 31 October 2016, the Superintendent would not have allowed any extension of time and to the fact that Ausgrid approved a redesign connection to power (that is, not using the Easement) on 8 December 2016: 37 days later.

3. [148]

   But this ignores the reality that the necessity to reconfigure the means by which power was to be connected to the site following the Council’s rescission of the resolution involved more factors than the isolated question of when Ausgrid approved an alternative plan to enable the delivery of power to the site.

4. [149]

   The Builder’s 21 March 2017 application to the Superintendent for an extension of time referred to many factors occurring after 7 December 2016 which it contended, and the Superintendent accepted, were relevant to the critical path of the project.

5. [150]

   The question under cl 15.1(b) of the JVA is what loss PTL has suffered by reason of the Council’s breach of its obligation to grant the Easement.

6. [151]

   By reason of the Superintendent’s decision to grant an extension of time of 78 days, the project was delayed to that extent. In my opinion, PTL was correct to submit that the question of whether or not the Superintendent was contractually correct to certify an extension of 78 days is beside the point. His decision was contractually decisive because, without more, the time for practical completion of the Building Contract was thereby extended.

7. [152]

   Accordingly, I do not accept that PTL’s damages in respect of the Easement should be calculated by reference to a 37 day, rather than a 78 day, delay.

8. [153]

   PTL claims $456,410.80 comprising:

9. [154]

   In final submissions, the Council took issue only with the amounts claimed in (a), (e) and (h).

10. [155]

    The Council’s dispute concerning this figure was premised on its contention that only a 37 day delay should be attributed to its failure to grant the Easement. As I have not accepted that contention, the Council’s dispute about this figure falls away.

11. [156]

    In relation to this item, Mr Adrian Connell, a project manager employed by the Builder, agreed in cross examination that a component of the amount claimed, that attributable to the supply and installation of cabling was “about the same amount” as would have been incurred in any event had the Council granted the Easement.

12. [157]

    Accordingly, that component of this item is not recoverable by PTL.

13. [158]

    The remaining two components of this item concerned a new “termination enclosure”. Mr Edwards said these would not have been needed had the Easement been granted. They are recoverable by PTL.

14. [159]

    PTL seeks to recover the extra interest and fees it was obliged to pay ANZ over the 104 days from 8 March 2017 to 20 June 2017 caused by the 78 working day extension of time granted by the Superintendent to the Builder.

15. [160]

    PTL relied on its bank statements to show that it had paid an extra $318,564.35 to ANZ over that period.

16. [161]

    Apart from the “37 day” argument, which I have not accepted, the Council raised two matters.

17. [162]

    The first was that PTL included in its claim a line fee of $76,250 charged by ANZ on 15 May 2017 that the Council submitted Norcross would have incurred in any event. But, as the plaintiffs submitted, had there been no extension of time under the Building Contract, the loan would have been repaid on 10 May 2017 and the line fee would still been incurred, but at a slightly lower rate: $72,060.44. The Council did not dispute the calculation leading to that figure and I propose to allow it.

18. [163]

    Second, the Council pointed to the fact that PTL’s calculation of its loss did not take account of the fact that, by reason of the extension of time granted to the Builder, PTL’s drawdowns under its facility had been delayed and that, accordingly, interest did not accrue on PTL’s drawings as early as would otherwise have been the case. On the other hand, as the plaintiffs submitted, the extensions of time meant that PTL ultimately repaid the amount owing to ANZ later than would have been the case absent the extension of time.

19. [164]

    PTL recalculated its loss to take account of these matters and revised its claim by deducting $33,695.35. Again, the Council did not dispute the calculation leading to that figure.

20. [165]

    This had the effect of reducing Norcross‘s claim for loss referable to its ANZ facility to $284,869. I propose to allow that figure.

The Cross Claim Issue

1. [166]

   By its cross claim, the Council contends that Norcross engaged in misleading or deceptive conduct for the purposes of s 52 of the TPA by reason of having failed to disclose to the Council “the contamination risk” disclosed in the Douglas Partners Report prior to entry by Norcross and the Council into the JVA.

2. [167]

   I have set out the relevant passages from the report at [20] above.

3. [168]

   As I have said, [22] Mr Cochrane mentioned the report at a meeting with Council officers on 7 August 2003 and provided a copy to Mr Stephanou at the Council on 17 September 2003.

4. [169]

   The Council’s pleaded case is that:

5. [170]

   The matter pleaded as set out at [169(a)] does not reflect the language in the Douglas Partners Report. The Douglas Partners Report did not state there was a “significant risk” of contamination. Rather, it said there was a “relatively high potential” and “a risk” for acid forming conditions on oxidation and the “potential” for acid sulphate soils to be present.

6. [171]

   That point aside, the short answer to the Council’s claim is that it has not made out the proposition set out at [169(d)] above, namely that in entering the JVA it relied on Norcross’s failure to disclosure the contends of the Douglas Partners Report.

7. [172]

   The Council has led no evidence of:

8. [173]

   The only evidence led by the Council on this question is that of Mr Stephen Glenn, who is an engineer employed by the Council, and Mr Robert Byrd, who was the solicitor then advising the Council.

9. [174]

   Mr Glenn said that, had he seen the report:

10. [175]

    Mr Byrd said:

11. [176]

    Neither Mr Glenn nor Mr Byrd were decision makers.

12. [177]

    It appears to me to be a matter of speculation as to what course the Council would have taken had Mr Glenn and Mr Byrd taken the steps the subject of their evidence. It is also a matter of speculation as to what Norcross’s reaction would have been assuming the Council had sought to negotiate with Norcross concerning the inclusion of cll 7.1 and 7.2.

13. [178]

    The Council had much to gain from the development the subject of the JVA as Norcross agreed to construct the car park on the Car Park Land at no cost to the Council.

14. [179]

    That points to the improbability that revelation by Mr Cochrane of the tentative conclusions in the Douglas Partners Report would have made any difference to the Council’s decision to enter into the JVA.

15. [180]

    Further, on 20 January 2004, several months after Mr Cochrane had provided Mr Stephanou with a copy of the Douglas Partners Report, the Council and Norcross executed a Deed of Variation on the JVA in which, amongst other things, the Council and Norcross affirmed the provisions of a JVA; suggesting that the Council was not troubled by the tentative opinions expressed in the Douglas Partners Report.

16. [181]

    For those reasons, assuming that Norcross did engage in misleading or deceptive conduct, the Council has not shown it suffered any damage “by” that conduct for the purposes of s 87 of the TPA.

17. [182]

    In any event, I am not satisfied that Norcross did engage in misleading or deceptive conduct.

18. [183]

    Mr Cochrane denied making a conscious decision to not refer to the contents of the Douglas Partners Report during his meetings with Council officers prior to entry into the JVA. [23]

19. [184]

    I accept that evidence.

20. [185]

    Section 52 of the TPA proscribes “conduct” which is misleading or deceptive.

21. [186]

    Section 4 of the TPA provides that:

22. [187]

    If the Council’s case that Norcross “failed to” disclose the contents of the Douglas Partners Report should be read as an allegation that Mr Cochrane, and thus Norcross “refused” to disclose the report, any such refusal was inadvertent, and thus not “conduct” for the purpose of these provisions.

23. [188]

    In final submissions, the Council did not put its case on the basis that Norcross has refused to disclose the Douglas Partners Report but rather on the basis that Norcross had remained silent about the report when the Council was reasonably entitled to expect its disclosure.

24. [189]

    Silence can amount to misleading or deceptive conduct.

25. [190]

    In Demagogue Pty Ltd v Ramensky [26] Black CJ said:

26. [191]

    There is authority that for silence to be actionable as misleading or deceptive conduct, it must be deliberate or intentional. [28] On the other hand, it has been said that the misleading or deceptive quality of remaining silent inheres in the non-disclosure of information rather than a refusal to provide it and that “it does not follow from the fact that a failure to act must be intentional in order to be actionable, that silence must be intentional in order to be actionable” [29] .

27. [192]

    Thus, Mr Cochrane’s state of mind may not be decisive on this question.

28. [193]

    Silence may constitute misleading or deceptive conduct if there is a reasonable expectation that the silence would be broken. Thus in Rafferty v Madgwicks [30] the Full Court of the Federal Court said:

29. [194]

    In Fabcot Pty Ltd v Port Macquarie-Hastings Council [32] Sackville JA said:

30. [195]

    Thus, here, what the Council must show is that it had a reasonable expectation that Norcross would disclose to it what it knew from the Douglas Partners Report about the PTL Land, namely that there was potential for acid forming conditions, such that an inference would arise from Norcross’s silence on that question that the land was not so affected.

31. [196]

    I am not satisfied that the Council had any such reasonable expectation.

32. [197]

    The Council is a sophisticated and well-resourced party. It had long owned the Car Park Land and the PTL Land. It was in negotiations with Norcross in relation to a proposed commercial venture. There were many “Project Progress” meetings concerning the venture at which the Council was represented by land use planners, engineers, surveyors and the like as well as its internal solicitor. As Norcross submitted, the Council had access to its own experts who were well able, if instructed, to examine the site.

33. [198]

    For these reasons, my conclusion is that the cross claim fails.

Conclusion

1. [199]

   The parties should confer and agree on the orders necessary to give effect to these reasons.