Loulach Developments Pty Ltd v Roads and Maritime Services

1. [1]

   LEEMING JA: On the northern edge of the Parramatta CBD, at the corner of Pennant Hills Road and Albert Street, there is a distinctive, modern multi-storey building, with 3 basement car park levels, comprising 55 apartments and 3 commercial tenancies. The developer was the plaintiff, Loulach Developments Pty Ltd. Construction was complete by around July 2012, and the large majority of the units have been sold, apparently realising a considerable profit. An aerial view of the building as constructed is below (the long street frontage is Pennant Hills Road, while the building’s shadow falls onto Albert Street):

2. [2]

   The red line superimposed onto the photograph depicts how the building’s footprint does not occupy the entirety of the site. The site comprises lots 11 and 12 in deposited plan 1052593, but the building has been erected solely on lot 11. The land adjoining Pennant Hills Road within the red line identifying the site, which now forms an extra-wide footpath, is lot 12.

3. [3]

   In August 2008 and January 2009, when Loulach was pursuing development consent to build on lot 11, the defendant’s predecessor the Roads and Traffic Authority (the RTA) confirmed in writing that lot 12 was required for a road. Those statements constituted the “first representation” and the “second representation”.

4. [4]

   Loulach contends that at those times (and indeed, for many years earlier) lot 12 was not required for a road. Loulach contends that the RTA owed it a duty of care when it made the first and second representations, and that the RTA failed to take reasonable care when it did so. Loulach further contends that if it had been told that the RTA no longer required lot 12, then it would have obtained rezoning of lot 12 and applied for and obtained development consent to build a mixed use building occupying the whole of its site, rather than merely lot 11, and that it would have made greater profits from that building than the one which was in fact constructed. Loulach claims damages in excess of $5,000,000.

Overview

1. [5]

   Loulach was incorporated in 1996. Shortly thereafter, Loulach and Mondray Pty Ltd lodged a development application with Parramatta City Council for the construction of a residential flat building containing 40 apartments and car parking on land surrounding the site. Consent was granted and that building was constructed on the land hatched on the diagram below (which was the location map for the 1996 development application; the land which is the subject of the litigation is shaded yellow).

2. [6]

   The words “Prop Road Widening” where the land joins Pennant Hills Road, indicated on that plan, anticipate the central issue in this litigation.

3. [7]

   Later, in 2000, Loulach and Mondray applied for, and obtained, development consent to build another residential flat building on the land at the corner of Pennant Hills Road and Albert Street, albeit one which was much less tall than that which was constructed in 2012. A condition of the 2000 consent was that the strip of land along the boundary of Pennant Hills Road, which for more than three decades had been designated for road widening, be dedicated to the council. Although the building authorised pursuant to that consent was never constructed, the subdivision required by the dedication occurred, resulting in Loulach and Mondray lodging deposited plan DP 1052593, which created lots 11 and 12. Lot 12 was some 399m2, while lot 11 was some 1051m2. The deposited plan also stated that:

4. [8]

   The 2000 consent lapsed. Loulach bought out Mondray’s interest in lots 11 and 12 in 2006. After a rezoning of the land in 2007, Loulach obtained consent to build the much taller combined commercial/residential flat building which has now been constructed wholly on lot 11. This consent, unlike that granted in 2000, did not include a condition for the dedication of lot 12, which Loulach continues to own to this day.

5. [9]

   Blueprint Property Pty Ltd is owned by family members of the people who own Loulach, and assists Loulach’s property development business. In early August 2008, Blueprint completed and lodged a “Property Information Inquiry Form” with the RTA. The form stated that Loulach was the owner of lots 11 and 12 and that Blueprint was acting for it, and asked:

6. [10]

   The form was addressed to the attention of Mr Russell Steele and added:

7. [11]

   The form stated that a cheque in the amount of $27.00 was enclosed herewith. The form appears to have been sent in an “express post” envelope, with the tracking receipt stuck to the copy that was tendered in evidence. The form was completed in handwriting, by a number of hands (at least three, possibly more). Mr Simon Loulach said that none of the handwriting was his; I accept that evidence.

8. [12]

   Mr Loulach’s evidence when cross-examined on the topic was that shortly beforehand, he had had a conversation with an officer of Blueprint (Mr Khater) as follows:

9. [13]

   The reference to what Mr Loulach had been saying before was to this evidence:

10. [14]

    No such account had been contained in Mr Loulach’s affidavit, which merely recorded that there had been a conversation and that the form was by way of a submission of “a request for issue of a section 149 certificate”. It was put to Mr Loulach that his oral evidence was “entirely fictitious”, which he denied.

11. [15]

    By letter dated 19 August 2008, Mr Steele on behalf of the RTA responded to Blueprint, stating that:

12. [16]

    The letter gave further advice about the impact of the road proposal upon the property’s development potential, and drew attention to the rights of landowners under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW).

13. [17]

    The representation that the whole of Lot 12 was required for the widening of Pennant Hills Road was the “first representation”.

14. [18]

    Loulach lodged a development application in late 2008 which was referred to the RTA. During the assessment of that development application, by letter dated 30 January 2009, the RTA advised Parramatta City Council that it had reviewed the development application, and made 20 comments, the first of which was as follows:

15. [19]

    Contrary to the RTA’s letter, the 1967 road widening order did not apply to Loulach’s land. Nor did any other road widening order. (As will be seen below, the gazettal in fact applied to nearby land adjoining Church Street.)

16. [20]

    To anticipate some of the issues which will be considered below, the RTA’s letter to the council falls to be assessed in three quite distinct ways.

    1. (1)

       First, it may be distinguished from Mr Steele’s letter dated 19 August 2008, and not only insofar as it is addressed to Parramatta City Council, rather than to Loulach’s agent Blueprint, but also in that it is a response to a mandatory request for submissions made pursuant to cl 104(3) of State Environmental Planning Policy (Infrastructure) 2007. That bears upon whether in responding to the consent authority, the RTA became subject to a duty to take reasonable care.

    2. (2)

       Secondly, there is a hotly contested issue as to whether in incorrectly stating that the land was affected by the road widening order gazetted in 1967, there was any causative breach of duty. RMS maintains that the statement was substantially correct, insofar as there was in February 2009 a realignment proposal affecting the land. This is an intensely factual issue, turning on an understanding of the historical records maintained by RMS and the way in which proposals were recorded, amended and abandoned.

    3. (3)

       Thirdly, RMS seeks to rely upon s 43A of the Civil Liability Act 2002 (NSW) and says that the RTA was exercising a “special statutory power” when it responded to the council’s request, which could not be considered to be unreasonable.

17. [21]

    Considering its importance, it is somewhat remarkable that the evidence did not establish precisely how Loulach came to be aware of the RTA’s 30 January 2009 letter. However, its substance was included verbatim in the council’s assessment report, and it is plain that Loulach became aware of it prior to the development consent issuing.

18. [22]

    There was some opposition to Loulach’s application for consent. On the basis that five objections, one of which was a petition containing 11 signatures, had been received following the public consultation, a site view was held on 2 May 2009. One of the concerns expressed at the site view was recorded in the assessment report as follows:

19. [23]

    The council’s assessment report recommended granting consent, subject to no fewer than 100 conditions. The same report reproduced the entirety of the RTA’s letter of 30 January 2009. On 9 June 2009, the council granted consent to the development application, following which the building presently on the land was constructed. It is either 13 or 14 storeys high (the consent and letter enclosing the final occupation certificate each refer to 14 storeys; other documents in evidence refer to 13 storeys; nothing turns on this). The building did not extend onto lot 12. Just less than 6 years later, on 5 June 2015, Loulach filed a statement of claim in which it sued RMS for breach of duty to take reasonable care in respect of the 19 August 2008 letter and the 30 January 2009 letter.

20. [24]

    The date on which Loulach’s cause of action accrued is significant, because RMS relied on s 14(1)(b) of the Limitation Act 1969 (NSW), following an amendment permitted by me, over Loulach’s opposition, some seven weeks prior to the trial: Loulach Developments Pty Ltd v Roads and Maritime Services [2018] NSWSC 1402.

21. [25]

    Loulach alleges that in making the first and second representations, the RTA assumed a duty to Loulach to take reasonable care in relation to the provision of information and advice, which duty had been breached by failing to take reasonable steps to confirm the accuracy of each of the first and second representations. It was alleged that had the duty not been breached, Loulach would have applied for a rezoning of lot 12 to “B4 mixed use”, which would have led to the Minister’s amending the LEP accordingly, and Loulach’s applying for and obtaining consent to build a different development of 65 apartments, 5 commercial premises and 2 levels of underground parking (“the Desired Development”) on both lots 11 and 12, which would have been more profitable to it.

22. [26]

    Damages are complicated. Loulach does not seek to prove its actual costs or actual revenue from the building which it built. Instead, by reference to a “Desired Development” which extends onto lot 12 which it says it would have obtained consent to build and would have built, it has obtained opinion evidence from a quantity surveyor and a valuer to the effect that its profit would have been more than $5,000,000 greater than the profit it in fact generated.

23. [27]

    RMS made some admissions in its amended defence, and abandoned other points by the end of the hearing. RMS admitted that it had succeeded to the liabilities of the RTA. It admitted that the RTA had been wrong to say in the second representation that lot 12 was affected by a road widening order. A partial defence based on the proportionate liability provisions of Part 4 of the Civil Liability Act had been abandoned in advance of the hearing.

24. [28]

    By the end of the hearing, RMS had also abandoned defences based on s 43 of the Civil Liability Act and contributory negligence. It had confined its defence based on a “special statutory power” within the meaning of s 43A of the Civil Liability Act to the second representation. It had in substance admitted that it owed a duty of care to Loulach in responding to the 6 August 2008 information request, but denied that the scope of that duty extended to the present status of proposals for widening or realignment of Pennant Hills Road, as opposed to the timing of any construction works.

25. [29]

    Otherwise RMS put in issue all remaining aspects of Loulach’s claims. It denied that it owed any duty of care to Loulach when it wrote to the council in February 2009. It denied that there was any breach of duty insofar as the substance of both representations was correct, based on its contention that there was an extant proposal involving the widening of Pennant Hills Road in 2008 and 2009. It denied that any breach of duty had caused loss to Loulach. It denied that Loulach would have sought rezoning, or obtained rezoning, or applied for a different development consent, or been granted consent for a different building, and it denied that Loulach had suffered any of the loss claimed. As will be seen below, RMS did not merely put Loulach to proof, but advanced a positive case in respect of each of those issues; this was the subject of extensive expert evidence. Finally, RMS alleged that the whole of Loulach’s cause of action was statute barred by reason of s 14(1)(b) of the Limitation Act 1969 (NSW).

26. [30]

    Accordingly, the principal issues which arise are as follows:

    1. (1)

       the scope of the duty of care owed by the RTA to Loulach when making the first representation (essentially, whether the acknowledged duty extended to the representation which was in fact made);

    2. (2)

       whether the RTA owed a duty of care to Loulach when making the second representation to the council – this was regarded by both parties as a novel tortious duty of care;

    3. (3)

       whether there was in fact a proposed widening or realignment proposal in mid 2008 or early 2009 on lot 12 – this is a question of fact, and was treated as determinative of the question of breach;

    4. (4)

       whether any breach of duty caused Loulach damage, which is to be determined in accordance with ss 5D and 5E of the Civil Liability Act;

    5. (5)

       whether s 43A of the Civil Liability Act applied to the second representation;

    6. (6)

       whether either or both of Loulach’s causes of actions was statute barred, and

    7. (7)

       what was the quantum of damages suffered by Loulach (this includes a suite of sub-issues, and was the subject of architectural, town planning, quantity surveyor and valuation evidence).

27. [31]

    The questions of breach and damage are very factually intensive, in contrast with the issues as to duty and causation and RMS’s defences of s 43A and the Limitation Act. Rather than summarising all of the evidence, and making findings on parts which are contested in isolation from the treatment of the legal issues, I think it is preferable to summarise the (uncontroversial) evidence as to the history of the land and its zoning and then to descend immediately into the issues which arise, parts of which can be done quite concisely, and then to deal with the evidence at the same time as the parties’ submissions and my resolution of the issues arising.

Title and zoning history of the land

1. [32]

   The details of the changing descriptions of the land are relevant, but only peripherally so, insofar as they permit an understanding of references in (a) the planning and zoning instruments and (b) the historical documents (addressed in the section of these reasons dealing with breach) relating to the proposed widening and realignment of Pennant Hills Road in the 1970s.

2. [33]

   Prior to 24 March 1969, the land at the corner of Pennant Hills Road and Albert Street comprised two lots, lot 1 in DP 166828 (known as 2 Pennant Hills Road) and lot 1A in DP 401279 (known as 4-6 Pennant Hills Road). On 24 March 1969, DP 237613 was registered. That deposited plan stated that various lots, including relevantly lots 3 and 4, “delineated hereon are required for road widening and there is no objection to such data being shown as road on certificate of titles for adjoining land after acquisition”. Lots 3 and 4 were created from lots 1 and 1A, respectively, and comprised thin strips of land, 4¼ perches and 6¾ perches respectively, adjoining Pennant Hills Road, wholly within but narrower than, lot 12.

3. [34]

   Four years later, DP 561268 was registered, creating lots 13 and 14 in generally the same areas as lots 3 and 4, but allowing for a greater area for the road. This deposited plan had a similar annotation as to the lots (relevantly, lots 13 and 14) being required for road widening. It is mentioned in internal documents, and in a letter to the former landowners, in January 1974 (referred to below).

4. [35]

   In 1994, DP 127190 was registered, which caused land in volume 7020 folios 8, 9 and 10 to become lot 1 in that deposited plan. For present purposes, little turns upon this, save to understand the 2003 subdivision which created lots 11 and 12. The most important land for present purposes was lots 13 and 14 in DP 561268.

5. [36]

   In April 1999, a development application was lodged with Parramatta City Council for a 4 storey/part 5 storey 18 unit residential development with some commercial units and underground parking. Council granted development consent to that application on around 10 August 2000. Although it was accepted that that consent was never substantially commenced, and lapsed, there are two aspects which are relevant to the present proceedings.

   1. (1)

      First, during the assessment process, on 3 February 2000, the RTA sent a letter to the council which identified lot 14 in DP 561268 and stated:

   2. (2)

      Part of the “attached copy” of deposited plan 561268 with red shading is reproduced below.

   3. (3)

      Secondly, condition 26 of the 2000 consent required part of the site to be dedicated for road widening as indicated on DP 561268, in accordance with the RTA’s letter. In partial compliance with that condition, on 2 June 2003 the then co-owners of the land, Loulach and Mondray Pty Ltd, lodged DP 1052593. That was a plan of subdivision which subdivided lot 1 in DP 127190 and lot 1 in DP 166828 to create 2 lots, which were lot 11 (with the area of 1051 m2) and lot 12 (with an area of 399.8 m2). Lot 12 corresponded to lots 13 and 14 in DP 561268, being the land adjoining Pennant Hills Road. The plan stated that “lot 12 is required for road and after construction will be dedicated as public road under section 10 of the Roads Act 1993.” However, the land was not dedicated.

6. [37]

   Turning to the planning restrictions applicable to the land, at least for the last 40 years, the land which has become lot 12 has been zoned for the purposes of a road. The zoning and other planning constraints applicable to the land which is now lot 11 have varied. That occurred as follows (taken from the history to which the parties’ planning experts agreed).

7. [38]

   On 1 June 1979, the Minister made Interim Development Order No 1 – City of Parramatta under s 342Y of the (former) Local Government Act 1919 (NSW). This order zoned lots 13 and 14 of DP 561268 5(c2) Special Uses (County Road Widening Purposes).

8. [39]

   On 21 July 1989, the Minister made the Parramatta Local Environmental Plan 1989 (City Centre), which relevantly replaced the Interim Development Order (cl 4(2)) and which zoned lots 13 and 14 “9(e) Reservations (Arterial Road Reservation)” (Ex 6, Tab 10). Under that zoning, the only development which was permitted with consent was “arterial road widening; arterial roads; utility installations (other than gas holders or generating works)”, and all other purposes were prohibited. The same LEP zoned the balance of Loulach’s land as 3(f) (City Centre Zone).

9. [40]

   On 20 August 1999, State Regional Environmental Plan No 28 – Parramatta commenced, providing that the 1989 LEP no longer applied to the site. The area which became lot 12 was described as “Land reserved for road widening see clause 72”. The Height Map and the Floor Space Ratio Maps showed a maximum height of 15 metres and a maximum FSR of 2:1 for the land which became lot 11.

10. [41]

    Highly significantly for the purposes of this litigation, on 21 December 2007, the Minister made the Parramatta City Centre Local Environmental Plan 2007. It may be noted that Loulach bought out its co-owner in 2006, shortly before the 2007 LEP was made. It may be inferred that the 2007 LEP was preceded by the statutorily mandated processes of consultation with affected public authorities, a draft being provided to the Director General, certification by the Director General, public exhibition and consideration of submissions (as required by (former) ss 62, 64, 65, 66 and 67 of the Environmental Planning and Assessment Act 1979 (NSW)). The evidence does not disclose whether Loulach was involved in that process, or when it first learned of the altered planning controls upon its land.

11. [42]

    By the time the 2007 LEP commenced, lots 11 and 12 had been created. Lot 12 was zoned “SP2 Infrastructure”. Lot 11 was designated a “Key Site”. The maximum building height increased to 40m, and the FSR increased to 4:1.

12. [43]

    The Key Site designation attracted the operation of cl 22B of the new LEP. That clause prevented development on a Key Site, if the capital value exceeded $1 million, unless an architectural design competition which was consistent with the City Centre Development Control Plan had been held in relation to it (subject to a presently irrelevant qualification in cl 22B(5)). Further, cl 22B(6) authorised the consent authority to grant consent to a building on a Key Site which exceeded the floor space ratio or the height by up to 10%, but only if “the design of the building or alteration is the result of an architectural design competition” and the Director General’s concurrence had been obtained. This became referred to as the “bonus” height or FSR. Clause 22B(8) provided that an architectural design competition was to be conducted in accordance with procedures approved by the Director General from time to time.

13. [44]

    Design competition provisions such as cl 22B seem to have originated in the Sydney CBD, and are found in the Liverpool and Penrith LEPs (see Liverpool City Centre Local Environmental Plan 2007, cl 22B and Penrith City Centre Local Environmental Plan 2008, cl 26). So far as I am aware, they were relatively unusual provisions in the New South Wales planning and design regime in 2008 and 2009.

14. [45]

    Although the architectural design competition imposed a new precondition to Loulach developing the site, it is obvious that the relaxation of the height and FSR restrictions amounted to the potential for the land to be exploited much more profitably than had previously been the case. As will be seen below, Loulach was not slow in seeking to take advantage of the new regime.

Scope of duty applicable to first representation

1. [46]

   Although RMS denied it owed a duty to take reasonable care in the provision of advice in its letter of 19 August 2008, and maintained that stance in its closing written submissions, it did so only briefly, reflecting the difficulties confronting the proposition. In oral address counsel initially passed over this issue entirely. Following an exchange, I understood RMS to have accepted that it owed a duty to take reasonable care in responding to Loulach’s agent, but denied that it was required to take reasonable care, in answer to a request for the “time factor”, in relation to whether this road was in fact required for road widening.

2. [47]

   It is as well as a matter of transparency to reproduce the exchange:

3. [48]

   If I am wrong about the effect of the exchange, I would in any event conclude that the RTA was under a duty to take reasonable care in responding to the Property Information Inquiry Form. The negligent provision of information by a statutory authority to a private person who was evidently intending to rely upon it was held to give rise to a duty in L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 150 CLR 225; [1981] HCA 59. A duty was held to arise in similar circumstances (an inquiry through a non-statutory mechanism to a council on a matter known to be important to the inquirer) in Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 126-127 (Clarke JA) and 146 (Cole JA). There is nothing like the factors which were influential in Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 (the practice of the Board not to supply information leading to the estimate of cost being supplied to two local Members of Parliament which was then passed on to the plaintiff, and the fact that the Board was “kept in the dark” by the plaintiff as to the significance of the estimate of the cost of a water connection: see at [46]-[49]).

4. [49]

   I have borne in mind the fact that at its highest there was merely a proposal for road widening, and the caution expressed in San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 359; [1986] HCA 68 as to the difficulty in imposing a duty where what is represented is something less than a “solid and unalterable basis for action”. This does not stand in the way of the imposition of a duty owed by the RTA. The land was zoned consistently with its future use as a road. The existing zoning materially impacted upon how the land might be developed, and I would infer that the reality or otherwise of the proposal would be highly significant if any attempt were made to rezone the land.

5. [50]

   RMS did not dispute the correctness of the following statement of principle, on which Loulach relied, by Meagher JA (with whom McColl JA and Sackville AJA agreed) in Ku-ring-gai Council v Chan (2017) 224 LGERA 330; [2017] NSWCA 226 at [77]:

6. [51]

   Here there was both reliance and assumption of responsibility. The inquiry form and Mr Steele’s response establish a clear case of the voluntary assumption of responsibility by the RTA in respect of a particular, identified landowner, Loulach. Further, the inquiry manifested an ostensible intention to rely on the response for a “serious purpose” (“Owner wants to develop site, need to know time factor for road widening”). The language of “serious purpose” may be traced to statements in Shaddock at 253 by Mason J (Gibbs CJ referred to similar effect to the “gravity of the inquiry” at 236), in Tepko by Gaudron J at [74] and by Kirby and Callinan JJ at [146] and ultimately to Barwick CJ’s reference to “in connexion with some matter of business or serious consequence” in Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 571; [1968] HCA 74.

7. [52]

   But it is not enough merely to conclude that the RTA owed Loulach a duty to take reasonable care. Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; [2000] HCA 61 illustrates the point. The undoubted duty owed by an occupier of land to an entrant who suffered physical injury while on the land, did not extend to liability for physical injury sustained by a tenant’s employee from an attack by unknown assailants in the carpark after the owner had turned off the lighting. Gleeson CJ framed the inquiry thus at [17]:

8. [53]

   Hayne J made the same point at [102], although his Honour used the language of the “extent” of the duty. Likewise, “scope” is a familiar term used to describe the area within which a fiduciary must not acted self-interestedly: see for example Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559; [1995] HCA 18 and Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 206, although other terms are also deployed. For example, Bryson J referred to “the defined area”, outside which “a person under a fiduciary duty retains his own economic liberty”: Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 at 15. While the terminology may vary, the point is that some conduct by a person subject to a duty may nonetheless fall outside its operation.

9. [54]

   RMS advanced two submissions in support of its case that the first representation fell outside the scope of any duty. Principally, it emphasised that Blueprint’s question was as to the “time factor”, seemingly directed to whether any work would be undertaken by RMS in the near future. It was said that while the RTA was under a duty to take reasonable care in answering that question, the duty did not extend to the answer as to whether there was a road widening or realignment proposal at all, something about which (and this was the second submission) Loulach and its agent Blueprint were already fully aware.

10. [55]

    I accept neither submission. I cannot accept RMS’s submission that its duty to take reasonable care did not extend to the question whether there was a road widening or realignment proposal at all. If there was no such proposal, because the possibility which had resulted in the zoning and separate lot many years before had been abandoned, then the inquiry as to “time factor for road widening” had to be answered differently. Test the matter this way. An answer “not in the next decade” which did not engage with whether or not there was an extant road widening or realignment proposal may have been literally true, but it was apt to be materially incomplete if in fact there was no extant road widening proposal. RMS’s submission as to the claimed narrow scope of the duty invites the Court to conclude that although a duty to take reasonable care lest Loulach suffers economic loss would be owed in relation to advice when the road widening or realignment was to take place, no such duty was owed in relation to advice whether road widening or realignment was to take place at all. I do not consider that such a delineation would be sound in principle. No authority was cited to support such a narrow approach.

11. [56]

    In relation to RMS’s second submission, I accept that Loulach and Blueprint were labouring under the belief that there was an extant road widening proposal. That is how the land had been zoned, after all, for at least 30 years, and Loulach had been involved in the decision in around 2003 to create lots 11 and 12 in accordance with the condition of the council’s consent. But I do not regard this as excluding a duty of care. As Loulach submitted, a person “labouring under a misapprehension as to the true facts does not make them less vulnerable to a representation confirming that representation”. It would be passing strange if a duty were owed to a purchaser of the site who lacked knowledge of the dealings in 2000 and 2003 which led to the creation of lots 11 and 12, but no duty was owed to Loulach. More generally, the primary mechanism which tends to be employed by the law to restrict claims in such circumstances is causation, not existence of a duty of care.

12. [57]

    Hence I conclude that, as Loulach alleges, in making the first representation in the RTA’s 19 August 2008 letter, it assumed a duty to Loulach to take reasonable care in relation to the provision of information and advice in that letter, including as to the existence of a road widening proposal.

Existence of duty – second representation

1. [58]

   There is of course no “test” or “touchstone” or “general principle” governing when a duty of care should be imposed on a relationship. The Australian recognition of the inutility of “proximity” in Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59 esp at [48] has more recently been mirrored in the United Kingdom Supreme Court in Robinson v Chief Constable of West Yorkshire Police [2018] AC 736; [2018] UKSC 4 at [21] (Lord Reed JSC) and Darnley v Croydon Health Services NHS Trust [2018] UKSC 50, [2018] 3 WLR 1153 at [15] (Lord Lloyd-Jones JSC). Indeed, the fact that other common law jurisdictions, such as Canada (Cooper v Hobart [2001] 3 SCR 537; 2001 SCC 79, and see now Deloitte & Touche v Livent Inc [2017] 2 SCR 855; 2017 SCC 63 at [22]-[45] and [140]-[150]) and Singapore (Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] SGCA 37; [2007] 4 SLR 100 at [71]-[73]), presently cling to a universal test (or perhaps more accurately a universal framework: see D Tan and Y Goh, “The Promise of Universality” (2013) 25 Singapore Academy of Law Journal 510 at 512-514), is a notable divergence in the structure of the law of negligence.

2. [59]

   In the United Kingdom, there is a negative rule that pure economic loss is not recoverable unless there is a special relationship between the claimant and defendant arising out of an assumption of responsibility: NRAM Ltd (formerly NRAM plc) v Steel [2018] UKSC 13; [2018] 1 WLR 1190 at [18]-[24]. In Playboy Club London Ltd v Banca Nazionale del Lavoro SPA [2018] UKSC 43; [2018] 1 WLR 4041 Lord Sumption JSC said at [7] that it was fundamental to this way of analysing the duty that the defendant was assuming a responsibility to an identifiable (although not necessarily identified) person or group of persons. But a broader approach prevails in Australia.

3. [60]

   Contrary to submissions which are sometimes made, the analysis of the so-called “salient features” does not inevitably involve a consideration of all 17 of the matters identified in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [103]. The existence or non-existence of a duty of care does not turn on a “tick a box” approach. Enumerating a list of factors can sometimes distract from the fact that a legal test is essentially evaluative. I respectfully agree with what Fullagar J said, in a different context, in Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 193, as to not slavishly checking off the factors, “as if one were counting spots on some strange creature to see if it was indeed the species of leopard illustrated in the picture book.”

4. [61]

   As Allsop P said at [104] — the paragraph immediately following the Stavar enumeration — the list “provides a non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content”. In a case such as this, where the plaintiff has suffered pure economic loss flowing from a negligent representation to the consent authority for a pending development application, the four most significant features in the evaluative inquiry are (a) assumption of responsibility, (b) reliance, (c) vulnerability and (d) inconsistency with the statutory regime.

5. [62]

   The representation was not made to Loulach (or its agent). Nor was it made in response to a request from Loulach (or its agent). It was made to the council, as part of its assessment of Loulach’s application for development consent. In terms of assumption of responsibility, the position is quite different from the RTA’s response, on its own form and after accepting an administrative fee, to Blueprint in August 2008.

6. [63]

   Secondly, reliance is important. “[I]n cases of negligent misstatement, such as Tepko Pty Ltd v Water Board, reasonable reliance by the plaintiff on the defendant authority ordinarily will be a significant factor in ascertaining any relevant duty of care”: Gummow and Hayne JJ, with whom Gaudron J agreed, in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 at [149], applied by the Court of Appeal in Newcastle City Council v Shortland Management Services (2003) 57 NSWLR 173; [2003] NSWCA 156 at [75]. An applicant for development consent will have already formulated its application, which was being assessed by the consent authority. It did not occur in the present case, but the consent authority might in some cases grant consent, having taken into account the submission from the RTA, without even consulting the applicant any further. Thus there seems to be no necessary reason why the response from the RTA need be disclosed to the applicant. (If the consent authority were minded to refuse consent, or impose a condition adverse to the applicant, by reason of what the RTA said, it might be expected that it would be brought to the applicant’s attention. But that need not be so). But the question whether or not the RTA was subject to a duty to take reasonable care enforceable on the part of an applicant for development consent when it responded to the council seems unlikely to depend on whether the council disclosed the response to the applicant. It is difficult to see reliance sufficient to generate a duty of care on the part of a person who did not seek and might at least in theory never learn of the RTA’s submission.

7. [64]

   I also find it difficult to see how Loulach was especially vulnerable. The outcome of the application was in the hands of the local council. The local council might accede to or reject what the RTA suggested. If the local council acceded to the RTA’s submission, then the applicant enjoyed a right of appeal to the Land and Environment Court. However, it must be acknowledged that the information about whether there was an extant widening or realignment proposal was peculiarly within the knowledge of the RTA.

8. [65]

   But the weightiest consideration is the inconsistency, or at least tension, between the posited duty of care and statute. The council was obliged, by cl 104 of the Infrastructure SEPP, to give prompt notice of Loulach’s application to the RTA. This obligation was part of a suite of provisions in Division 17 of that SEPP dealing with development on or adjacent to roads and road corridors. The development proposed by Loulach was a “traffic-generating development” (at least by reason of the fact that it contained more than 50 car spaces: see the second item in Schedule 3 of the SEPP). The Infrastructure SEPP had only relatively recently come into force when Loulach applied for development consent, but a clause analogous to cl 104 had also been central to the precursor, SEPP 11. The essential structure of both was a directive to consent authorities (a) to notify the RTA, (b) not to determine applications until 21 days after the RTA had been notified, and (c) to take into account any submission from the RTA. Plainly enough, if the obligations imposed upon the council and the right conferred upon the RTA were to be meaningful, the RTA was required to provide a response within 21 days.

9. [66]

   There must have been a large number of traffic-generating developments throughout New South Wales each year. Further, traffic-generating developments were apt to include some of the largest and most complex developments in the State. The policy in the SEPP contemplated a 21 day response, irrespective of the complexity of the development, and irrespective of the number of other applications notified by consent authorities across the State at the same time.

10. [67]

    The aim of the Infrastructure SEPP was, relevantly, to provide for consultation with relevant public authorities during the assessment process: cl 2(f). The Infrastructure SEPP fell short of making the concurrence of the RTA a precondition to the grant of development consent. In other words, although the RTA could make a submission opposing a development, even then that would not preclude consent from the consent authority, nor was the consent authority required to put in place the conditions suggested by the RTA.

11. [68]

    There is, to say the least, a tension between the obligation imposed on the RTA to provide submissions conducive to safety and efficient traffic management on the one hand, and the economic interests of the applicant for development consent, particularly an applicant which was a profit-seeking developer. As RMS submitted:

12. [69]

    Generally speaking, the more onerous the conditions, the less profitable the development. Some of the conditions proposed by the RTA were apt to cost Loulach money, if they were accepted by the council. For example, the RTA noted in paragraph 3 that “The location of parking bays 23 and 46 are not desirable as there may be conflicts between vehicles accessing these spaces and vehicles on the adjacent ramp”. Paragraph 11 stated that “The proposal only allows for a SRV, it is desirable to provide for an 8.8 metre vehicle, ie for garbage removal”. Altering the configuration would cost time and money, and it is certainly possible that, say, altering the layout so as to permit vehicles larger than an SRV (“Short Rigid Vehicle”) would impose a constraint which might in turn reduce the space available for other purposes.

13. [70]

    It is difficult to see how the common law would impose a duty upon the RTA to take reasonable care lest its suggestions expose Loulach to expense, where the statutory regime invited the RTA to employ its expertise to provide advice as to the safety and efficiency of the built structure, and its impact on traffic during the construction phase.

14. [71]

    On one view, the duty alleged by Loulach clashes directly with the purpose evidently designed to be effected by the mechanism in the Infrastructure SEPP applicable to traffic-generating developments: cf Sullivan v Moody at [62] and Hunter Health District v McKenna (2014) 253 CLR 270; [2014] HCA 44 at [31]. On another view, the regime created by the Infrastructure SEPP, while falling short of a direct clash, sits very uneasily with a duty to take reasonable care to prevent pure economic loss to the applicant for development consent: see CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390; [2009] HCA 47 at [41], [52] and [55] and Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364 at [161] and [191]-[192].

15. [72]

    While it is reasonably foreseeable that the RTA’s response would be seen by the applicant, that falls short of being sufficient to impose a duty: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 at [127] and the cases there cited. Bearing in mind the absence of any assumption of responsibility, any direct reliance and the at best attenuated way in which Loulach was vulnerable, and, especially, the statutory regime, I conclude that the RTA did not owe a duty to Loulach to take reasonable care when responding to the council’s reference of the development application to it.

Breach

1. [73]

   I now deal with breach of duty in relation to both duties alleged by Loulach (assuming, favourably to it, that a duty of care applied to the second representation). Section 5B of the Civil Liability Act provides:

2. [74]

   Thus, in contrast with the evaluative so-called “calculus” formulated by Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12, the outcome of which is a binary determination of whether or not there has been a breach of duty, Loulach will fail unless it establishes each of the matters contained in paragraphs (a), (b) and (c). The position, however, is more nuanced than that, because it is difficult to see how the determination of a “not insignificant risk” within the meaning of s 5B(1)(b) can be made without regard to both the probability of the risk eventuating and the likely seriousness of the risk, and if that be so, then the consideration of s 5B(2)(a) and (b) is not confined to an analysis of the s 5B(1)(c) steps which a reasonable person would take, but also to the s 5B(1)(b) determination of a not insignificant risk. Such subtleties regularly recur when judge-made law is transposed into a statute. However, these complexities do not arise in the present case, in light of the parties’ commendably focussed approach to breach, albeit one which was driven, it might be inferred, by the forensic choices made by RMS.

3. [75]

   RMS did not call Mr Steele, the author of the 19 August 2008 letter. Nor did RMS call either Mr Doug Moore, the senior land use planner who signed the RTA’s letter to council dated 30 January 2009, or the assistant planner, Ms Angela Malloch, to whom any inquiries were suggested to be directed and who, it may be inferred, was its primary author. Nor did RMS adduce evidence that those people were unavailable.

4. [76]

   Moreover, RMS did not adduce any direct evidence of the steps which were in fact taken by anyone involved in making the first and second representations (working papers, a draft letter or even the usual practice of those persons).

5. [77]

   Instead, an elaborate attempt was made by RMS to adduce evidence of the information systems in place in 2008 and 2009, to which resort would have been had when responding to an inquiry of this nature. That attempt led to a large factual dispute, namely, whether there was, in mid 2008 and early 2009, an extant proposal on the part of the RTA to widen or realign Pennant Hills Road using lot 12. The parties treated the entirety of the question of breach as standing or falling on this issue. That is to say:

   1. (1)

      RMS did not contend that the risk of harm to Loulach was not foreseeable, or insignificant. Nor did RMS say that even if in truth there was no road widening or realignment proposal in 2008 or 2009, it should not be found negligent for the failure to take further precautions to prevent the incorrect information being supplied in the first and second representations.

   2. (2)

      Conversely, Loulach accepted that if indeed there were an extant road widening or realignment proposal in 2008 and 2009 which affected lot 12, it had failed to make out any material misrepresentation.

6. [78]

   Loulach submitted that there was no road widening or realignment proposal in 2008 or 2009. It relied upon three matters. The first was the failure on the part of the RTA to call testimonial evidence from anyone directly involved in creating the proposal or preparing the letters dated 19 August 2008 and 30 January 2009 which stated that there was a proposal.

7. [79]

   The second was a letter from RMS dated 5 November 2013, years after the event. That letter was written in response to letters from Loulach’s former solicitors directed towards the question of compensation for the acquisition of lot 12, and to a meeting held on 20 August 2013 between RMS and Loulach. The letter stated as follows:

8. [80]

   Loulach relied upon the first sentence of the passage reproduced above in support of the proposition that there was no extant proposal to widen or realign the road in 2013, from which it may be inferred that the same was true in 2008 and 2009.

9. [81]

   Loulach added that the senior acquisitions officer who signed that letter, Mr Awindra Prasad, had not been called to explain why what he said was incorrect, and indeed had been involved in the litigation, witnessing some of RMS’s affidavits.

10. [82]

    RMS said that the 2013 letter was written more than five years after the event, and that there had been a material change of circumstances. It relied upon three paragraphs in the same letter which preceded those reproduced above:

11. [83]

    RMS submitted that in light of the change in classification of Pennant Hills Road, no inference could confidently be drawn from what was said in 2013 as to its status in 2008 and 2009. That submission has force. But it is double-edged. Very little is known from the evidence as to the circumstances in which the road came to be reclassified.

12. [84]

    Thirdly, and most elaborately, Loulach advanced submissions as to the status of documented efforts to realign and widen Pennant Hills Road in the late-1960s and early-1970s. It said that they, in effect, withered on the vine in light of opposition from the council. RMS contended that the same documents supported a finding that there had been a road widening or road realignment proposal.

13. [85]

    These cannot be described concisely, but go to a central aspect of the litigation. I turn to them below.

14. [86]

    In the 1960s and 1970s, planning for road widenings and road realignments took place using a document known as a “Roll Plan”. Mr Neil Forrest, who had worked for RMS for some 34 years, since 1984, gave evidence that:

15. [87]

    Those matters may readily be inferred from the face of the document itself. However, RMS’s case extended to the converse submission, which was that the fact that a proposed scheme appeared on a Roll Plan was itself evidence that the proposal remained extant. Loulach disagreed. Loulach said, with respect correctly, that the Roll Plan was not some form of title. That said, it is natural for institutions which are required to take long term positions on the development of land to maintain records which comprehensively record the institutional position. The country, parish and town maps which were maintained by government from very early days in the colony’s history are examples: see “A Brief History of the Records of the Registrar General” (March 2013), published by Land and Property Information, pp 13-14. An example mentioned by me during the hearing, may be seen in Awabakal Local Aboriginal Land Council v Minister Administering the Crown Lands Act [2008] NSWLEC 124 at [39] and [93]. Those matters were not of course in evidence in this trial, but I refer to them only by way of example of what might otherwise readily be inferred by anyone who chose to think about how an organisation with responsibilities to plan decades ahead might organise its records.

16. [88]

    There was uncontroversial evidence that in around 2010 the information on the Roll Plan was transferred onto an electronic database known as “PIMS GIS”. That system seems to have permitted a skilled user to search a site, and also readily to obtain access to the other primary records of decision making which were annotated on the Roll Plan. It is not quite clear how an officer would have interrogated the information in 2008 or 2009, but nothing substantive will turn on that for present purposes.

17. [89]

    The current Roll Plan maintained by RMS for the intersection of Church Street, Pennant Hills Road and Albert Street is (a computerised image of what was originally) “Roll Plan 532”. That document contains an immense quantity of information, and is central to the litigation. It is reproduced as an annexure to these reasons.

18. [90]

    First, it will be seen that lot 12, on the north eastern corner of the intersection of Pennant Hills Road and Albert Street, is shaded pink, as is the balance of the eastern portion of the land on that block adjoining Pennant Hills Road. The land shaded pink is divided from the balance of the land by a green line. Nearby, there is an annotation as follows (it is the red text in the top right corner of the plan):

19. [91]

    There are five other similar annotations on the plan recording proposals. Every other approval included a file number reference next to the words “LAND ACQN FILE”.

20. [92]

    Before turning to the submissions based on that annotation it is convenient to say something about three of the other approvals recorded on the Roll Plan.

21. [93]

    First, one of the other approvals has been struck through, in a way which is suggestive of an approval being revoked or abandoned. It is worthwhile explaining this in a little detail, given the issues in this trial. The approval is in black text on the middle of the left hand side of the plan, near the word “CEMETERY”. The striking through is in red. The approval identifies a date of 11 March 1960, a file 354.1137, and a “LAND ACQN FILE” of 354.1597. Near that annotation (below it, adjoining Church Street) there may be seen an annotation on the plan identifying an adjustment to the boundary of Church Street. The words state:

22. [94]

    It may be inferred that a decision was made to approve a scheme to widen Church Street in 1960, that the decision was documented in file 354.1137, and that a file for that acquisition, numbered 354.1597, was opened, but that at a time unstated on the Roll Plan the proposal was abandoned.

23. [95]

    Secondly, another of the approvals has a note “PROPOSED ABANDONMENT OF PREVIOUSLY APPROVED BOUNDARY ‘L’-‘M’”. (This is the approval closest to the bottom right corner of the plan.) That suggests a process of some formality which applied when a proposal was abandoned.

24. [96]

    Thirdly, the Roll Plan contains another annotation, not struck out, to the west of the intersection (it is the closest annotation to the yellow and black circle “486”):

25. [97]

    Its significance is twofold. First, it will be seen that the same land acquisition file number may be given to more than one realignment. Secondly, the annotation picks up the gazettal mentioned in the second representation, and is suggestive as to how that representation came to be made. That page of the NSW Government Gazette of 17 March 1967 contained a notification by the Commissioner for Main Roads that:

26. [98]

    Section 27E of the Main Roads Act 1924 (NSW) authorised the Commissioner, if he proposed to apply the “re-alignment method of acquisition” to submit a plan of the proposal to the Governor and to serve it upon landholders. If the Governor approved, and notification was gazetted then by reason of s 27E(6), then

27. [99]

    Each of the three deposited plans mentioned in the gazettal was in evidence. Deposited Plans 229,890 and 238,898 depict Church Street further to the north-west than its intersection with Pennant Hills Road and Albert Street. Deposited Plan 230,897 reaches the northern side of the intersection of Church Street and Pennant Hills Road and Albert Street. Lots 1-11 appear on the eastern side of Church Street between Factory Street and the corner of Pennant Hills Road, with lot 11 cutting into the Roman Catholic Cemetery on the opposite side of Pennant Hills Road from Loulach’s land. Lot 12 is at the corner of Church Street and Factory Street, while lots 13-20 are on the western side of Church Street between Factory Street and Albert Street. These lots represent a proposed widening of Church Street to the north (or north-north-west) of the intersection. It is clear that the realignment shown on these three deposited plans does not extend to Loulach’s land, and therefore that the prohibition in s 27E(6) was inapplicable, at least insofar as it might be based on the 1967 gazettal.

28. [100]

    Hence RMS accepted that what had been said in the second representation was incorrect. The 1967 gazettal did not affect Loulach’s land. But RMS maintained that the error was not material, because in fact Loulach’s land was affected by a different road widening or realignment proposal, one formally made some four years later, on 9 September 1971.

29. [101]

    RMS’s case was straightforward. It pointed to the annotation on the Roll Plan reproduced above which related, inter alia, to Loulach’s land, and noted that it remained extant on the Roll Plan, from which it was to be inferred that it was extant in 2008 and 2009.

30. [102]

    A card on the file numbered 13/354.1445 that the Chief Engineer (Urban) approved on 9 September 1971 a plan identified as 13c2932A for the “Intersection with Church St – 184 and Albert St North Parramatta”, to be effected by “Boundaries Negotiation”. The approval was described thus:

31. [103]

    There is another document recording the approval, as follows:

32. [104]

    The Chief Engineer, also sometimes described as the “Engineer-in-Chief”, was Mr E Mullin. The stamp “APPROVAL No” in the bottom right corner, which has been completed “71/54”, is suggestive, at least to my eyes, of a register of approvals for each year, of which that recorded in this memorandum was the 54th. If so, that would mean there were approximately 6 approvals each month. But there was no direct evidence about any such register.

33. [105]

    The reference at the bottom of the page to the plan having been “charted” on 23 November 1971 is borne out by a separate document (Ex D, p 29) which bears that date and shows the approximately 6½ perches which came to become lot 12. It appears to correspond with the 6½ perches comprising lot 4 of DP 237613 created in 1969, mentioned above.

34. [106]

    The significance of the revision of the plan 13c2932A is explained by another document:

35. [107]

    An internal administrative document (Ex D, p 15) records that an approval card was created on 6 October 1971. The document also suggests that individual acquisition files should be created, but that there was some uncertainty about this, because there has been handwritten the words “Land Acquisition file if none in existence 13/354.1515?”. However, another document (Ex D, p 21) records “Please establish a new file” with number 13/354.1507 for the acquisition of part of the land owned from “Phozzie, Joseph and Naamen MALOUF (Tenants in Common)”, described as “SH 13 – Intersection with MR 184 – Church St and Albert St” and “Part of Lot 1 Sec no 42” pursuant to Widening Plan No 13.5.254 and Proposed channelisation 13/354.1445.

36. [108]

    An internal memorandum from the Assistant Valuer dated 28 January 1972 referring to the 9.9.71 approval identified 6 lots, including 13/354.1506 “Acq from Dr NG Malouf” and 13/354.1507 “Acq from Messrs NG, JM and PA Malouf” (Ex D, p 9). Another document, which appears to be a layout sketch dated 9 June 1960 (Ex D, p 10) identified the subject land on the Albert Street corner as owned by NG Malouf and identified as 13/354.1506, while the neighbouring land to the north was 13/354.1507 and is shown as owned by “Phozzie, Joseph and Naamen Malouf”. Those file numbers are also found in red on the Roll Plan. The land at the corner of Albert Street and Pennant Hills Road is marked “NG Malouf 13/354.1506” while that immediately to the north along Pennant Hills Road is “P, J, N Malouf 13/354.1507”.

37. [109]

    Returning to the 28 January 1972 document, the Assistant Valuer estimated the cost of acquisition of all 6 parcels of land at $100,000, but then continued:

38. [110]

    Other documents refer to “C.A.R. Funds”, which I would read as references to funds made available pursuant to what was then the Commonwealth Aid Roads Act 1969 (Cth). The history of federal aid in this area is summarised by R H Burke, “History of Commonwealth Grant legislation Relating to Roads and Road Transport 1902-1972”, Occasional Paper No 8 (1977), published by the Bureau of Transport Economics.

39. [111]

    However, the 28 January 1972 document bears a handwritten annotation dated 7 February 1972:

40. [112]

    It is important to note that Mr Mullin, the Chief Engineer, was the man who had authority to authorise the 9 September 1971 proposal, and so his advice plainly carried weight.

41. [113]

    Almost two years later, on 1 November 1973, the Chief Engineer signed a memorandum stating that some land at the intersection of Church Street, Albert Street and Pennant Hills Road (also known as State Highway 13) had been included in Construction Programme 19/19 and was “Likely to be programmed in one year” (Ex D, p 8).

42. [114]

    A memorandum dated 10 January 1974 (Ex D, p 26), whose subject included lots 1 and 2 in DP 561264 and lot 14 in DP 561268, and which was said to be in response to the Engineer-in-Chief's minute dated 7 January 1974, stated:

43. [115]

    The part copy which appears to have been attached (it bears the number 0013.354.G but the balance has been cut off) identifies two boundaries on the eastern side of Pennant Hills Road: an “Approved Boundary” and a “Proposed Road Boundary following discussions with Council Officers”. Both cut into the lots adjoining the eastern side of Pennant Hills Road, but the latter cuts further in than the former (Ex D, p 27).

44. [116]

    It is not clear whether the 7 January 1974 minute was in evidence. However, a sketch dated 23 November 1971 and numbered 6542 is at Ex D, p 29. No area shaded pink is obvious. However, there is a single proposed new boundary, which would take away “Abt 8½ p” from the land owned by the Maloufs, and “Abt 6½ p” from the land on the corner. (It may be that the approximately 15 perches proposed to be acquired corresponds with the 399 m2 of what was to become lot 12.)

45. [117]

    By letter dated 18 January 1974 (Ex D, p 7), with subject including “Acquisition of Lot 13 in Deposited Plan 561268”, the Maloufs were advised that the part of their property shown on DP 561268 was required. They were advised that the Department would meet the cost of their legal fees and a qualified valuer.

46. [118]

    But there was shortly to be a volte-face from the Department. An internal memorandum to the Engineer-in-Chief, with the same subject written in response to receipt of a copy of the 18 January 1974 letter to the Maloufs, stated that the intersection “is at present functioning satisfactorily” and that “it may be some time before the properties are required for the reconstruction of Pennant Hills Road” (Ex D, p 6). A second matter was that an amended widening scheme for Pennant Hills Road fronting properties north of Church Street was recommended for approval on 5 December 1973 (Head Office file ETS 13/354.1445), and the sketch accompanying the minute under reference did not agree with the boundaries on this amended plan. It was therefore recommended by the Divisional Engineer that

47. [119]

    Accordingly, by letter dated 5 September 1974, the Maloufs were told that the Department’s proposals for the intersection of Pennant Hills Road and Church Street had been reviewed and “the precise effect on your land may not be known for some time” and that “it is desirable that acquisition action be left in abeyance until such time as a firm decision is reached in this matter”: Ex D, p 24. The subject to the letter included reference to “Acquisition of Lots 1 and 2 in deposited Plan 561264 and Lot 14 in Deposited Plan 561268”. The letter, and especially, the internal memorandum (“ultimately required land”) speaks of abeyance, not abandonment.

48. [120]

    The 9 September 1971 approval was subject to the concurrence of, inter alia, the council. So far as I can see, there is nothing in the evidence suggesting that concurrence was sought or given in the following three years. That is consistent with Mr Mullin’s note of 7 February 1972 (“not required for 3 years”).

49. [121]

    I shall not attempt to describe the correspondence between the Department and the council over this period in full. There are complexities resulting from the variations in the proposal (including as to whether Albert Street was to end in a cul-de-sac and the extent to which the western side of Pennant Hills Road was to be widened), and on some occasions it is not quite clear which aspect of the current proposal is being mentioned. The Department consistently approached the Council for its concurrence (such as by its letters of 28 September 1971 and 18 July 1974) and Council seems generally to have refrained from resolving to endorse the proposal but rather directed the Town Clerk to “seek clarification” (letter of 7 December 1971), such requests sometimes including the council's objection to aspects of the proposal (letter of 11 April 1972) and, in the face of non-responses from the Department, wrote a series of “please explain” letters noting that no response had been received (letters of 22 February 1973, 22 March 1973).

50. [122]

    There is a letter dated 31 July 1973 advising that the council concurred in one aspect of the proposal (permitting a left turn into Albert Street, but even this concurrence was conditional). This appears to have proceeded, leading to an internal memorandum dated 7 February 1974 from the Divisional Engineer addressing that new layout, which was numbered 0013.354.GS.0609. The memorandum added:

51. [123]

    It will be seen that that accords with what the Maloufs were told later in 1974.

52. [124]

    The council’s concurrence was once again sought by the Department of Main Roads by letter dated 18 September 1974 (Ex D, p 46). An undated letter which (from what follows) I would infer was dated 12 November 1974 from the council declined to give that concurrence. After dealing with two other aspects of road realignment or widening, it stated that the council “does not agree with the treatment proposed for the intersection of Albert Street with Church Street” (Ex D, p 45).

53. [125]

    The next document in evidence was a response by the Department dated 17 June 1975, which does not clearly deal with the presently relevant aspect of the council’s response, and evidently attached a plan which is not in evidence. Nevertheless, it concluded:

54. [126]

    The council’s further response to that letter, dated 15 July 1975, signed by the Town Clerk, was as follows (Ex D, p 42):

55. [127]

    The “ring road system” was not otherwise explained. The Town Clerk wrote a follow up letter (seemingly, in April 1976), referring to “subsequent verbal advice from Officers of your Department” (the substance of which was left unstated) and stating that he did “not appear to have received any further advice as to date” (Ex D, p 41).

56. [128]

    Loulach maintained a general objection to what might be derived from the historical documents mentioned above. I disagree. The documents are the best evidence of the formulation of decisions made half a lifetime ago. I find that in September 1971 approval was given to take steps to acquire the land which is now lot 12 for the purpose of altering the boundary of Pennant Hills Road, something which is shown by the contemporaneous documents, and recorded as an annotation on the Roll Plan. I also find (and I understood this to be common ground) that no later than November 2013, that proposal had been abandoned (as Mr Prasad advised Loulach).

57. [129]

    It follows that at some point in the intervening 42 years the proposal was abandoned. When?

58. [130]

    I find that it was abandoned prior to 2008. (In fact, I incline to the view that it was abandoned decades prior, although it is not necessary for me to go so far for the purposes of this litigation.) I make that finding for three reasons.

59. [131]

    There was no real evidence going to the process which was in place within the Department of Main Roads and its successors in the 1970s, 1980s and 1990s as to the way in which a proposal was abandoned. As noted above, some of the annotations on the Roll Plan suggest that, at least in some cases, there may have been a relatively formal process, including giving notice that a proposal was to be abandoned. There is nothing to suggest that the 9 September 1971 approval was ever formally revoked.

60. [132]

    However, the approval on which RMS relied, that made on 9 September 1971, was expressly conditional. It was subject to the concurrence of three other parties, one of which was the council. The conditionality of the approval was sufficiently significant for it to be recorded in the terms of the decision and on the face of the Roll Plan. Yet for more than thirty years so far as the evidence discloses, the council’s concurrence was never obtained, and indeed when steps were taken to obtain it, the council was hostile to the proposal.

61. [133]

    True it is that there are (unsurprisingly) gaps in the documentary record, but it seems clear that in the ensuing five years, the council was opposing the proposals for the intersection. Perhaps more significantly, the Department of Main Roads was proceeding throughout the period on the basis that the concurrence of the council was required. That is to say, there is nothing to suggest that the Department unilaterally removed the self-imposed qualification upon its own proposal.

62. [134]

    I have had regard to the fact that the proposal was sufficiently concrete for at one stage a letter to be written to the then owners advising that part of their land was to be acquired. The evidence is entirely silent as to the attitude of the landowners to that proposal. For whatever reason, they were told later that the proposal was “in abeyance”.

63. [135]

    Those considerations do not materially detract from the expressly conditional nature of the proposal, and the absence of any evidence to suggest that the condition (namely, the council’s concurrence) was ever obtained.

64. [136]

    I have also had regard to Mr Forrest’s evidence, which I admitted over Loulach’s objection, to the effect that it was “rare” for road widening proposals to be abandoned (first affidavit, paragraph 16; second affidavit, paragraph 9(a)). He was not cross-examined on that evidence. However, the opinion is of diminished weight, insofar as it did not have regard to the conditionality of the particular proposal, or the particular history of opposition from the council to which I have referred. Mr Forrest gave slightly stronger evidence concerning abandonment of proposals at paragraph 12(a) of his second affidavit, but it suffers from the same deficiency, as well as from the second point mentioned below.

65. [137]

    Secondly, the fact that the annotation remains on the Roll Plan (to this day) is not to the point. It is known that no later than November 2013 the proposal had lapsed. If there was any reason to diminish what was said without qualification in Mr Prasad’s letter, it was not demonstrated by RMS. Merely to establish that no formal revocation of the proposal could be found (which was a point made by another witness called by RMS) is not the point, and serves to highlight the discrepancy between the Roll Plan and the November 2013 letter. Accordingly, at least to that extent, it is clear that the information in the Roll Plan is incomplete. There may be other deficiencies as well. I am not sure what weight to give to the absence from the annotation on the Roll Plan of a Land Acquisition File. On one view it suggests the record may be imperfect. On another view, it tends to corroborate the fact that any negotiations with the Maloufs did not get very far. But, as Loulach submitted, it is sufficient for present purposes to rely on the November 2013 letter.

66. [138]

    Thirdly, the ways in which the proposal was treated within RMS and its predecessor organisations, and in particular how it was treated in 2008 and 2009, was something peculiarly within the knowledge of RMS. So too, if the proposal were only abandoned after the road was reclassified, rather than in the preceding three decades, that was something peculiarly within the knowledge of RMS. Very considerable effort has been directed by RMS to seeking to make out its case indirectly, without calling any officers with direct knowledge of what occurred. I agree with Loulach’s Blatch v Archer submission:

67. [139]

    In theory, the abandonment of the proposed widening or realignment might not be dispositive of the question of breach. It remained for Loulach to establish that reasonable steps taken before making the first and second representations would not have yielded the truth. However, as noted above, RMS advanced no separate case based on its taking reasonable precautions. I am content to proceed on the parties’ common position that the elements of s 5B were made out.

68. [140]

    I find that Loulach has demonstrated that the RTA breached the duty of care it owed when it made the first representation, advising that it required the whole of lot 12 for road widening in 2008. Had I formed the view that the RTA owed a duty of care to Loulach when it made the second representation, I would have found that it breached that duty too.

Causation

1. [141]

   Let it be assumed, favourably to Loulach, that the RTA owed it duties to take reasonable care which were breached by either or both of the first and second representations. Section 5D of the Civil Liability Act applied. The onus of proof lay with Loulach in accordance with s 5E. It was for Loulach to demonstrate to the civil standard what would have occurred if the RTA had taken reasonable care in making the first and second representations.

2. [142]

   On those premises, if the RTA had not breached its duty, it would have concluded that there was no subsisting road widening order and no subsisting road widening proposal applicable to lot 11. What would then have occurred? It is necessary to address each representation separately.

3. [143]

   Loulach submits that the RTA would have responded to Blueprint’s inquiry form to the effect that there was no subsisting road widening order or proposal and that it would not have written that there was such an order (opening written submissions, para 132(c)). That amounts to two ways of saying the same thing. But it conflates two different points. True it is that a non-negligent response from the RTA would not have asserted that lot 12 was required for road widening. It does not follow that the RTA would positively have asserted that there was no subsisting road widening order or proposal. It is to be borne in mind that the inquiry it was answering was as to the “time factor”. It may or may not have chosen to volunteer that the long-standing proposal, reflected in the zoning, no longer applied.

4. [144]

   The conflation is even clearer in relation to the second representation. Loulach once again submits that the RTA would have responded to the council’s request to the effect that there was no subsisting road widening order or proposal and that it would not have written that there was such an order (opening written submissions, para 137(c)). It is to be borne in mind that, in contrast with Blueprint’s inquiry form, the council had asked the RTA for its submission on all aspects of the proposed development. Most of the RTA’s letter to the council dealt with suggestions for aspects of the development as were relevant to traffic. While I readily accept that the RTA would not, had it not breached the duty upon which this analysis is premised upon, have said that lot 12 was required, it by no means follows that the RTA would have positively represented that lot 12 was not required.

5. [145]

   In other words, there is to say the least a real chance that:

   1. (1)

      in response to Blueprint’s inquiry, the RTA would merely have said something to the effect of “Lot 12 is not required in the short to medium term”;

   2. (2)

      in response to the council’s inquiry, the RTA would have provided all of the information it in fact provided in paragraphs 2-20 of its letter, and simply said nothing as to lot 12.

6. [146]

   The latter is a stronger possibility than the former, because Blueprint’s inquiry was specifically directed to the “time factor” associated with the possibility of road widening work, while the council’s inquiry was as to the whole of the development. However, it is not necessary to resolve the likelihood of either of those responses being made. That is because I can proceed on the assumption, favourable to Loulach, that the RTA responded to Blueprint and to the council to the effect that there was no relevant road widening order or road widening proposal. What would then have occurred?

7. [147]

   Loulach contends that it would, as a rational profit-maximising developer, have applied to rezone lot 12, and would have applied for and obtained consent to build a more profitable building on the whole of the site.

8. [148]

   Loulach advanced that case through its only lay witness, Mr Simon Loulach. Mr Loulach described himself as a “manager” of Loulach and “effectively its Chief Executive Officer”. He said he had been the manager of Loulach since approximately 2004. He also said that Blueprint Properties was owned, in part, by an entity which in turn was owned by his father and his two brothers.

9. [149]

   Mr Loulach described his “general practice” regarding the development of sites as one which was directed to the maximisation of profits. He said that generally profits were maximised by constructing the greatest number of apartments. His rule of thumb was to take the land size, floor space ratio and maximum permissible height, work out the maximum total square meterage available for apartments and divide by 90 so as to yield the number of apartments which would maximise profit. He said that, “in general”, and “where possible”, he would participate in a design competition process where doing so would permit a higher FSR. He also said that he was conscious that sometimes profit could be maximised by reducing the cost of construction. He gave an example that sometimes building more apartments might require more car spaces, resulting in a need for a further basement level, which might more than offset the additional revenue from the additional apartments. He observed that as a general proposition it was desirable from a profit perspective to minimise the number of floors of basement parking, because basement parking was expensive to build.

10. [150]

    Mr Loulach gave evidence that on at least one occasion, he had caused Loulach to make an application under (former) s 96 of the Environmental Planning and Assessment Act to modify a consent. He said that in late 2006, the “Loulach Group” purchased a site at Castle Hill which already had the benefit of development consent. A modification application was submitted to increase the number of 3 bedroom units and reduce the number of 2 bedroom units with a view to yielding a higher overall profit. The application was permitted and, although the modification required the installation of an extra lift at an additional cost of approximately $100,000, Mr Loulach’s view was that the overall profit would still increase by approximately $375,000. He said that that is in fact what occurred.

11. [151]

    At paragraphs 22-32 of Mr Loulach’s affidavit, a case was advanced as to Loulach’s reliance upon the first representation in the 19 August 2008 letter. This was central to part of Mr Loulach’s cross-examination and, in light of its concision, and the criticisms that were made of Mr Loulach’s credibility and reliability, it is best reproduced verbatim.

12. [152]

    Mr Loulach’s affidavit referred to the letter dated 8 January 2009 from the RTA to the council which contained the second representation but said nothing as to his reliance upon it or indeed when it came to his attention. Otherwise, Mr Loulach’s affidavit described the process of obtaining consent, commencing construction following obtaining a construction certificate dated 6 May 2010 which was completed in around July 2012. The construction certificate discloses that the application for it had been received by the accredited certifier on 23 March 2010 and the estimated cost of building works was $11 million. The occupation certificate was issued on 4 July 2012.

13. [153]

    Mr Loulach stated that Loulach “has, to date, made a profit of $11,247,000.00 from carrying out the development”. Mr Loulach stated that that figure was calculated by adding the sale prices of the 53 apartments which had been sold to date and subtracting from that sum the figure shown in a quantity surveyor report which Loulach had provided to banks for the purpose of obtaining funding. He added that Loulach had decided, for the time being, to hold back from selling the remaining two apartments and three commercial tenancies.

14. [154]

    No substantiation was provided for those calculations, perhaps for the good reason that they formed no part of Loulach’s case for damages. Save for one exception, none of the contracts for sale was in evidence. How Mr Loulach treated GST in his calculations was entirely unexplored (both in Mr Loulach’s affidavit, and in his cross-examination). The front page of the single contract for sale which was in evidence established that lot 37 had been sold as a taxable supply to which the margin scheme applied. It would seem that no allowance was made for the acquisition and holding costs of the land, or the cost of financing construction. Over a period exceeding two years.

15. [155]

    Further, although a quantity surveyor report was attached to Mr Loulach’s affidavit, he confirmed in cross-examination that that was not the report to which he had referred in his calculation of profit. Thus, neither the revenue generated from apartment sales, nor the cost of construction were even stated, let alone substantiated, in Mr Loulach’s affidavit. It is convenient to note immediately that the profit of $11.247 million (to which must be added the five unsold lots), vastly exceeds the hypothetical profit relied upon by the plaintiff’s experts as part of its damages calculations. RMS invited considerable scepticism to be given to the plaintiff’s damages calculations by reason of this discrepancy, to which I shall return below.

16. [156]

    Mr Loulach was cross-examined for around one and three-quarter hours. I formed a favourable impression of some aspects of his oral testimony. He freely and candidly made concessions when confronted with documents, especially those relating to the process of obtaining development consent in 2007 and 2008. He further agreed that in 2007, after Loulach had bought out Mondray for $1.38 million funded at least in part by bank debt, virtually no income was earned from the site and it was costing Loulach significant amounts of money in holding costs and bank interest. He confirmed that he was aware of the commencement of the new Parramatta City Centre LEP in December 2007 which increased the height limit from 15 metres to 40 metres and the FSR from 2:1 to 4:1 and that from around Christmas 2007 he took steps to progress the development of the site as quickly as possible. However, for the reasons given below, there are parts of his evidence which I do not accept.

17. [157]

    Mr Loulach was then taken through the documents relating to the architectural design competition which the plaintiff had organised in 2008. The essential chronology was as follows. The LEP was gazetted on 21 December 2007. Apparently in the remaining ten days of December 2007, a draft design competition brief was provided to the council. By letter dated 3 January 2008, the council advised that the draft brief could not be endorsed until 11 amendments had been made, one of which was that the reservation along the Pennant Hills Road frontage had not been mentioned. The letter concluded:

18. [158]

    Loulach responded by letter dated 15 January 2008, signed by Mr Loulach, attaching a revised competition brief which stated by way of overview that:

19. [159]

    There was no suggestion in any of the documents of the possibility of a rezoning of lot 12 and Mr Loulach confirmed that:

20. [160]

    Mr Loulach maintained that he was “pretty sure” that an application which did not win the design competition could nonetheless have obtained consent, although it probably would not receive the benefit of the height or FSR incentive. He accepted that his understanding in 2008 was that if the bonus for FSR or building height was to be obtained, it would be necessary to make a development application using the design that won the design competition.

21. [161]

    There appears to have been a meeting between Mr Loulach and two council representatives on 5 February 2008 where a revised draft design brief was discussed. That led to a further letter from the council in which it was recommended that the brief be re-submitted with further changes. One was an acknowledgement of the site as a “gateway”, being of high visual prominence that sets the scene from the northern approach to the city centre. That occurred and the language suggested by the council officers was copied almost verbatim and is found on the front page of the competition brief finally submitted, which was endorsed by the council on 22 April 2008. The timeframe for the competition was 1 week for a site visit and any queries from entrants with responses distributed to all entrants in the following week, then 6 weeks for the preparation of submissions and 3 weeks for jury deliberation and preparation of a design competition report. All invited entrants were to receive a sum of $10,000 upon receipt of their submission. The first prize winner would receive an additional $36,000, the second prize an additional $18,000 and the third prize an additional $6,000.

22. [162]

    The process of endorsing the design competition brief and other steps appears to have been in accordance with the Director General’s Design Excellence Guidelines which were made applicable by cl 22B of the 2007 LEP; in any event, no contrary submission was made.

23. [163]

    Mr Loulach confirmed that his intention was to lodge a development application seeking consent to develop the site in accordance with the winning design as chosen by the design competition jury.

24. [164]

    The 3 invited firms presented their entries at a meeting held on 7 July 2008. In accordance with the brief, all entrants had designed buildings which were confined to lot 11. The minutes of the meeting record that one entrant said that its plans show typical street planting “as he was unsure how long it would take for the RTA to carry out street works”. Another entrant is recorded as saying that it was a “very difficult site”. The ultimately successful entrant, Zhinar Architects, stated that because the site was “tight”, he did not know where to add the 10 per cent bonus.

25. [165]

    The jury’s comments commenced with the statement “the jury were generally disappointed with the quality of the competition submissions”. The minutes also record that the jury were “concerned about awarding the competition given the standard of the entries”. However, they were agreed that the proposal which demonstrated the greatest promise was from Zhinar. Ultimately, although not until 31 October 2008, Zhinar was named as the contest winner.

26. [166]

    Having been taken through this documentation, Mr Loulach agreed that as at the end of July 2008, there was no intention of making a rezoning application and no proposed development involving 65 apartments, 5 commercial tenancies and 2 floors of basement parking:

27. [167]

    It was in that context that Mr Loulach was asked as to the circumstances in which Blueprint caused an inquiry to be made of the RTA. Mr Loulach then denied that his purpose was seeking information as to the likely timing:

28. [168]

    Mr Loulach was then directed to paragraph 29 of his affidavit and confirmed that the 19 August 2008 letter confirmed what he had originally though, which was that development was not possible on lot 12.

29. [169]

    Mr Loulach was also confronted with paragraph 30 as follows:

30. [170]

    Mr Loulach came close to accepting that the gravamen of the evidence on reliance as set out in [22]–[32] of his affidavit was incorrect. There is no suggestion in any of contemporaneous documents of some “Desired Development” with 65 apartments, 5 commercial tenancies and 2 floors of basement parking. There is no suggestion of any consideration for a rezoning of lot 12. And there is no suggestion in any of the contemporaneous documents that it was only upon receipt of the 19 August 2008 letter that Mr Loulach formed the view that development could not occur on lot 12.

31. [171]

    To the contrary, the entirety of the architectural design competition, in which Mr Loulach was personally involved, and at a level of detail (including drafting the various iterations of the brief, down to including the words which confined development to lot 12, attending with council officers, and attending the architects’ presentations) is antithetical to any such account. So too is Mr Loulach’s evidence in cross-examination that his intention was for the winning design to be the subject of a development application, because the terms of the design brief precluded any such winning design from extending to lot 12.

32. [172]

    The formality of Mr Loulach’s affidavit is entirely out of keeping with his fluent but colloquial spoken English, and his error-prone contemporaneous written communications, even in formal documents such as later drafts of the competition design brief. I infer that the wording of the affidavit reflects a deal of attention by persons other than the deponent.

33. [173]

    I do not accept the case advanced in paragraphs 22-32, that the “Desired Development” was abandoned upon receipt of the first representation. Those paragraphs reflect a reconstruction, years after the event, which omitted reference to the design competition which preceded Blueprint’s making an inquiry of the RTA.

34. [174]

    Accordingly, I reject the account in Mr Loulach’s affidavit of the significance of the 19 August 2008 letter. Nor do I accept Mr Loulach’s oral evidence as to the purpose of the inquiry made in August 2008 by Blueprint.

35. [175]

    RMS said that that was sufficient to resolve the litigation. As Mr Kidd put it, “Why should your Honour have to consider a factual causation case which is contrary to the factual causation asserted by the plaintiff’s effectively CEO in his affidavit?” However, I do not accept that Loulach confined itself such that its causes of action stood or fell based on an acceptance of Mr Loulach’s affidavit. After all, Mr Loulach did not even address reliance on the second representation.

36. [176]

    Contrary to RMS’s submission, my rejection of Mr Loulach’s testimonial evidence is not necessarily fatal to Loulach’s case. Mr Loulach’s evidence about profit maximisation is inherently plausible, and indeed not challenged. Although there was evidence from one of the experts that some developers strongly believed in design excellence and were prepared to sacrifice profit to some extent in order to achieve it (amongst other things, thereby enhancing their reputation), there is no suggestion that Loulach fell in that category. By making that statement, I mean no criticism of Loulach or those who control it; it is entirely lawful to be a profit maximising developer, and some serve a socially useful purpose.

37. [177]

    It is entirely plausible that, had the RTA disclosed that it had no need for lot 12 for road widening or road re-alignment purposes, then, at least, Loulach would have considered whether to have applied for a rezoning to permit a different development on the site, extending to lot 12.

38. [178]

    However, the difficulty faced by Loulach here is of its own making. Loulach chose to advance a particular way in which it relied on the RTA’s negligently made representation through testimonial evidence. For the reasons I have given, I have rejected that account.

39. [179]

    It would have been open to Loulach to provide an alternative basis for causation. It could, at least in theory, have adduced evidence to explain why it would have been rational of it, in August 2008 or February 2009, to have chosen to apply to rezone lot 12 and pursue a more profitable development.

40. [180]

    In August 2008, that would have involved some or all of the following evidence:

    1. (1)

       Loulach’s financial position at the time, including the holding costs for the site (part of which it had recently acquired from Mondray);

    2. (2)

       such other development opportunities as Loulach had at the time, which might rationally have occupied Loulach’s expertise and available funds;

    3. (3)

       the likely attitude of the council, which had gone through a design competition process, aspects of which appear to have been regarded by it as less than satisfactory, to a developer who turned around and sought to start again. Would the council have insisted upon a further design competition? If so, would the council have required different parameters?

    4. (4)

       timing: would the council have insisted that no steps be taken under a new design competition until the rezoning occurred, assuming it occurred. How long would that take? What would be the holding costs incurred by Loulach in the meantime?

    5. (5)

       profit: would the additional delay (which was inevitable) and additional costs (some of which were inevitable; others would turn on the council’s attitude) be outweighed by the possibility of additional profit?

    6. (6)

       the attitude of those financing Loulach. It is unknown how Loulach in fact financed the construction which occurred. It is equally unknown to what constraints Loulach would have been subject for a different, delayed development.

41. [181]

    That is a perhaps overly elaborate way of making a simple point. Loulach had, in August 2008, an opportunity to make a deal of profit out of a recently rezoned parcel of land of which it had long borne the holding costs. With the benefit of hindsight, it may be seen that Loulach moved as speedily as it could to realise the profit which accompanied the rezoning. Would Loulach have delayed longer and spent more time and money to seek to exploit a different development which extended to lot 12, in an effort to make a larger profit? The possibility that it might have been rational to do so cannot be excluded. But it is for Loulach to make out its case, and the way in which Loulach has conducted this litigation leaves all of the questions outlined above unanswered.

42. [182]

    I do not accept that it was a “no-brainer” for Loulach to seek a rezoning of lot 12. To the contrary, I accept RMS’s submission that this would have been a very complicated commercial decision, and that Loulach has failed to adduce evidence of the matters which would enable the Court to be satisfied on the balance of probabilities that such a decision would have been made. It summarised this aspect of its case as follows:

43. [183]

    RMS pointed to a further factor. As it turned out, the FSR of the development approved by the council included lot 12. There was a suggestion that this had occurred by mistake, as to which I do not express a view. The consequence was that, perhaps unusually, proceeding on the basis that lot 12 would be rezoned would not lead to a large increase in the gross floor area permitted for development. As Mr Kidd put it:

44. [184]

    Against this, Loulach made two inter-related submissions. It was said that the expert evidence established that there was a substantially more profitable alternative development had its footprint extended over lot 12, and this was obvious and indeed substantially undisputed. When confronted with the certainty of delay and additional expense that would have been involved, it was put that none of those uncertainties had been put to Mr Loulach, and so could not be relied upon in final submissions, invoking Browne v Dunn. It was said to be unfair, in accordance with what was said in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1.

45. [185]

    I do not accept this response. I do accept that a developer could make more money out of a constrained site such as that owned by Loulach, other things being equal, if the footprint could extend onto lot 12 rather than being confined to lot 11. One fewer level of underground car-parking is an obvious example of the ability to save costs and thereby make more profit. I likewise accept that the capacity to enjoy greater profits from the larger footprint would have been readily apparent to Mr Loulach.

46. [186]

    However, I do not accept that the position is as simple as described by Mr Hale. The position advanced by RMS is not that Loulach was not a profit-maximising developer. It is more nuanced. It bears in mind that there is real value in time savings and certain outcomes. A profit maximising developer might readily choose to seek approval for a development which had already won a design competition, especially if that “bird-in-the-hand” appeared to be highly profitable, rather than undergo delay and uncertainty in a rezoning and further application. As RMS observed, there is reason to believe that Loulach’s holding costs of its land had significantly increased, since it had borrowed funds to buy out Mondray and was now bearing the entirety of the expenses including the cost of the debt which funded the acquisition. Ultimately, RMS’s submission, which I have accepted, does not detract from Loulach behaving rationally and in a way which maximises its profit. Rather, it simply emphasises the undoubted truth that it was for Loulach to establish to the civil standard what it would have done, and highlights the way in which Loulach has sought to run this case while putting forward hardly any evidence of the financial constraints and alternative options for deploying capital and debt-finance available to it at the time.

47. [187]

    Loulach has failed to persuade me that, had it been told in August 2008 that lot 12 was not required by the RTA, it would have done anything differently from what it in fact did.

48. [188]

    Loulach’s difficulties are all the greater in relation to the second representation. At that time, Loulach was much closer to obtaining the benefit of a consent from the council. It had spent much more money (the holding cost of the land and the cost of obtaining the consent), and was so much closer to realising any profits from the development for which it had applied for consent. On any view of the matter, the case for changing course in February 2009 and seeking a rezoning and a modified consent was less powerful than it would have been six months earlier. For the same reasons, Loulach has failed to persuade me that had it learned in February 2009 that lot 12 was not required by the RTA, it would have done anything differently.

49. [189]

    Those findings are dispositive of the entirety of the proceedings.

Section 43A

1. [190]

   Section 43A of the Civil Liability Act relevantly provides:

2. [191]

   RMS contended that s 43A applied to the RTA’s 30 January 2009 letter to the council, because:

3. [192]

   Loulach’s first response was that this had not been pleaded. That, so far as it goes, is true (something appears to have gone wrong with the way in which this part of the defence has been formulated). However, in paragraph 56 of RMS’s opening submission supplied (in accordance with directions made by me) well before the hearing, on 12 October 2018, RMS articulated with precision how it relied on s 52A. No objection was made throughout the hearing to this way of putting RMS’s reliance on s 43A.

4. [193]

   Mr Hale’s oral submissions focussed on the substance of the matter, rather than the pleading point, and for good reason. Section 43A was plainly in play on any view of the defence, and the way in which RMS contended that it had been exercising a special statutory power was, so far as I can see, a pure question of law. I would conclude that the parties are to be taken to have joined issue on the narrow basis articulated by RMS in its opening submissions supplied in advance of the trial: Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 287; [1990] HCA 11.

5. [194]

   Turning to the merits of the defence, I do not accept RMS’s submission. While undoubtedly the RTA is a “public or other authority”, a special statutory power for the purposes of s 43A is a power: “(a) that is conferred by or under a statute, and (b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority.” I do not accept that either paragraph is made out.

6. [195]

   The RTA was providing a submission to the council, in accordance with the notice provided to it pursuant to the Infrastructure SEPP, to which the council was required to have regard. The occasion for the RTA to be informed of the application, and to make a submission, was created by statute, namely, the provisions of the Infrastructure SEPP. But that is not the statute on which RMS relies, and for good reason. The question posed by s 43A is whether the liability is based on the exercise or non-exercise of a special statutory power: see Curtis v Harden Shire Council (2014) 88 NSWLR 19; [2014] NSWCA 314 at [244]. The fact that the opportunity to write was created by statute is not to the point. Precisely the same may be said of any objector to a proposed development, who has been informed of the proposal through the statutory obligations to notify.

7. [196]

   RMS relies on s 52A of the Transport Administration Act 1988 (NSW). But the liability for which RMS as the successor of the RTA is sued is what is said to flow from its letter to the council dated 30 January 2009. The source of its power to write the letter dated 30 January 2009 was not s 52A. That section did not purport to confer a power in the Hohfeldian sense, namely, something whose exercise would affect the rights of another. Section 52A(2)(c) provided that:

8. [197]

   In Roads and Traffic Authority of New South Wales v Refrigerated Roadways Pty Ltd (2009) 77 NSWLR 360; [2009] NSWCA 263 at [368], Campbell JA said with the agreement of the other members of the Court that the erection of screens on a bridge owned by the RTA was not the exercise of a statutory power: “Rather, it is a property right”. Campbell JA went on to observe that if the screens had obstructed the roadway, it would have been necessary for the RTA to exercise some statutory power, to deny ordinary members of the public the rights they enjoyed under s 5 of the Roads Act to pass along the bridge. However, it was not shown that the screens denied members of the public that right. The writing of a letter is a fortiori not an exercise of a special power.

9. [198]

   Another way of examining the position is that RTA’s letter to the council was the exercise of exactly the same right that others could exercise in relation to Loulach’s pending application for development consent. The council was required to take into account all submissions it received. There is nothing “special” in the sense required by s 43A. Contrast the reasoning as to the carrying out of road work, which only the defendant could lawfully perform, in Wells v Council of the City of Orange (No 2) [2017] NSWSC 510 at [137]-[148].

10. [199]

    More recently that analysis has been confirmed by Weber v Greater Hume Shire Council [2019] NSWCA 74 at [44]-[50]. Especially significant is the distinction drawn at [47] by Basten JA, with whom Gleeson JA and Sackville AJA agreed (at [201] and [211]):

11. [200]

    Still further, I further note that s 52A was inserted in 1999 by the Road Transport Legislation Amendment Act 1999 (NSW) (Schedule 2.49 item [4]). One difficulty with RMS’s submission is that the RTA was doubtless responding to local councils and the Minister for traffic-generating development prior to 1999 under SEPP 11.

12. [201]

    Thus, as Loulach submitted, the power to make a submission to the council was neither conferred under statute, nor was it of a kind which persons generally are not authorised to exercise without specific statutory authority. This defence is not made out, without the occasion for addressing the difficulties introduced by the introduction of a test taken from a public law context into this area, noted by Bathurst CJ in Curtis at [5].

Limitation defence

1. [202]

   The proceedings were commenced on 5 June 2015. The limitation period is 6 years. Section 14(1)(b) of the Limitation Act relevantly provides:

2. [203]

   Section 63 goes further and extinguishes the cause of action on the expiration of the limitation period, subject to various other provisions.

3. [204]

   RMS submitted that insofar as Loulach lost a valuable commercial opportunity to implement its “Desired Development”, that was lost no later than 22 December 2008 when it applied for consent to construct the actual building erected on its land. In response, Loulach maintained that its damage was not a lost commercial opportunity; instead, it was the failure to derive profit from selling apartments. Loulach also submitted that the lodging of a development application did not in any event deny to it the commercial opportunity to implement the Desired Development, because an application could be withdrawn and even if consent were granted, the consent need not be acted upon. Loulach cautioned against seeking any identifiable “loss of a commercial opportunity” as damage: Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 at [37]-[38].

4. [205]

   All of Loulach’s responses are sound. I further note that RMS’s submission based on a commercial opportunity cannot apply to the cause of action based on the second representation, which post-dated the application for development consent. But the fundamental problem is that the Limitation Act picks up the precise technical language of common law, and asks when a cause of action first accrued, and labelling a plaintiff’s claim with the vague term “commercial opportunity” does not assist. As Loulach submitted, it may distort the analysis of causation to speak of the loss of a chance; RMS’s submission based on the loss of a commercial opportunity discloses an analogous distortion of the application of the statute of limitations. In oral submissions, I understood RMS to accept that part of its submissions in this respect were “based on a slight misconception as to how the case is put”. I reject this part of RMS’s limitation defence.

5. [206]

   However, RMS also advanced a submission based on Loulach’s expenditure following the representations. Insofar as Loulach spent funds on the actual development, rather than the “Desired Development”, RMS submitted that that was actual loss which meant that its cause of action had accrued.

6. [207]

   RMS elicited evidence from Mr Loulach in cross-examination that the plaintiff had spent some $100,000 in preparing the development application prior to 22 December 2008:

7. [208]

   That evidence is inherently plausible, and I accept it.

8. [209]

   After the development application was lodged, further funds were spent prior to consent being granted. The council’s assessment report identified, for example, a revised draining plan and a construction management plan which were sought by the council on 2 April 2009 and, it may be inferred, were provided on 7 May 2009 (the report notes that “Additional information submitted to Council” on that date). Mr Loulach did not recall those reports, but accepted that “if they requested it, we would have provided it”.

9. [210]

   Loulach had a series of responses to this, succinctly encapsulated in oral submissions in reply:

10. [211]

    I do not accept that these submissions are an answer to a Limitation Act defence based on the first representation.

11. [212]

    First, the question posed by s 14(1)(b) does not turn on the particular heads of damages a plaintiff claims or does not claim. It looks to the plaintiff’s cause of action, and asks when that cause of action first accrues: D’Agostino v Anderson [2012] NSWCA 443 at [7] where Bathurst CJ collected earlier authorities. In Hawkins v Clayton (1988) 164 CLR 539 at 587; [1988] HCA 15, Deane J said that “A cause of action in negligence is complete when the damage caused by the breach of duty is sustained. It is at that time that, in the ordinary case, the cause of action ‘first accrues’”.

12. [213]

    Put differently, a plaintiff suing on a cause of action for which damage is the gist cannot escape the operation of the statute merely by declining to sue for heads of damage which have been suffered more than six years before commencement, and confining its claim to those heads of damage that were suffered within time. As Hodgson JA said in Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262 at [26]:

13. [214]

    Loulach’s second point seemingly invokes what was said in the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527; [1992] HCA 55 (which principles were reiterated in Commonwealth of Australia v Cornwell (2007) 229 CLR 519; [2007] HCA 16 at [16]-[17]):

14. [215]

    The passage in Professor Cane’s work cited (at 16-17) categorises the types of economic interests protected by the law of negligence as follows:

15. [216]

    In the present case, the loss falls within both the first and the third categories. Loulach seeks to limit its claim to the losses falling in the third category. However, as RMS submits, it cannot do that. Some of the losses within the first category, namely, the expenses incurred in the development application process, occurred more than six years prior to the commencement of proceedings, with the result that the entirety of the claim is statute-barred.

16. [217]

    I do not regard the High Court in Wardley as purporting to lay down as a rule that each type of “economic interest” reflects a distinct cause of action. To the contrary, damages in actions for negligence will not uncommonly include more than one category of the losses described by Professor Cane. The analysis required by s 14(1)(b) does not turn on the “interest” protected by the common law duty to take reasonable care. It turns upon when the cause of action first accrued. There can be no dispute that wasted expenditure (expenditure which would not have been incurred, which did not advance approval for the Desired Development) incurred in reliance on a negligent misrepresentation is a head of recoverable damages. Once a class of economic loss is recognised as being recoverable following a particular species of negligent act or omission, then the ordinary rules as to the accrual of a cause of action apply. Indeed, in Wardley, the joint judgment proceeded to quote at 529, without any apparent disapproval, the proposition stated by Dunn LJ in Forster v Outred & Co [1982] 1 WLR 86 at 99:

17. [218]

    Thirdly, it may be accepted that Loulach would always have spent money on a development application. But that is not to the point. Insofar as Loulach spent money prosecuting the development as constructed, it spent funds which it would not have spent had it been constructing the Desired Development. The evidence did not descend to the detail of the extent to which the funds expended by Loulach would have been spent in order to make and prosecute a development application for its Desired Development, or would have been thrown away in the event that consent for the Desired Development was obtained. But the development for which consent was obtained was substantial, and the funds spent were substantial, and there is no reason to doubt that a not insignificant amount would have been wasted expenditure had Loulach been able to obtain its Desired Development. There must inevitably be expenditure thrown away at the level of detailed plans and reports if an applicant for development changes its preferences. For example, none of the planning or engineering work involving the third level of underground car parking which was actually done could ever have contributed to giving approval for the Desired Development.

18. [219]

    I am conscious that the onus rests on RMS to make out the facts sufficient to establish is limitation defence: Segal t/as Segal Litton & Chilton v Fleming at [27]. In Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289 at [14] (a claim for pure economic loss), Handley JA with the agreement of Powell and Giles JJA said:

19. [220]

    To similar effect is the statement of Ipp JA (with whom Beazley and Campbell JJA agreed) in Christie v Purves [2007] NSWCA 182; (2007) Aust Torts Reports 81-899 at [40]:

20. [221]

    So too here. Even though the parties chose to run this litigation without disclosing Loulach’s financial position or the actual costs of the building which was construed, the inherently plausible fact that Loulach incurred costs which amounted to wasted expenditure after the first representation was confirmed by the admissions made by Mr Loulach in cross-examination. Loulach’s cause of action on the first representation accrued when it suffered actual non-negligible measurable damage in preparing the development application, and the fact that it only claims damages for the future loss of profits does not alter that fact.

21. [222]

    Fourthly, I do not accept that Loulach could not sue RMS until development consent had been granted. It was said that the money spent by Loulach could not be said to have been wasted as a result of anything RMS did or failed to do, if the development consent was ultimately refused for particular reasons. It could sue for the wasted expenditure on the development application which, on its case, it would not have made (in the case of the first representation) or which it would not have prosecuted (in the case of the second representation). Loulach could have brought a claim prior to development consent being granted, on the basis that it never would have pursued a sub-optimal development were it not for the RTA’s misrepresentation. I do not see how the loss is “contingent” in the relevant sense.

22. [223]

    Loulach may be seeking to bring to bear an argument that if, say, it sued for the misrepresentation in advance of obtaining development consent, then RMS might defend the claim saying that development consent would never be granted. I do not regard that submission as sound. Damages are assessed in 2019 with the benefit of knowledge acquired after the event, and whether or not a limitation defence is made out insofar as it turns upon damages is determined on the same basis.

23. [224]

    Finally, I am conscious of the fact that on some occasions the same breach of duty can give rise to different causes of action. This may occur when there is independent causation of separate losses, such as the two subsidences caused by the defendant’s negligence in Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127. This is a question of fact and degree. In Bowen and Another v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 at 424, Cooke J said (in the context of a property damage claim), after quoting a passage from Salmond on Torts:

24. [225]

    The passage quoted (as it appears in the most recent edition of Salmond (21st ed, 1996) says:

25. [226]

    It is plain that those principles are inapplicable here. I did not understand Loulach to seek to answer the limitation defence on this basis.

26. [227]

    With respect to the second representation, the position is different. The onus rests upon RMS to establish measurable and non-negligible loss in the period between 30 January 2009 and 5 June 2009. RMS cannot quantify any amount which was spent by Loulach in that period. Still less can it quantify any amount which can be shown to have been thrown away. I would accept from the rather flimsy evidence in the council’s assessment report that in April and May 2009 some further reports were provided to the council. However, there is no sound basis to conclude either that those reports resulted in Loulach incurring a non-negligible expense or that they were wholly thrown away in the event that the “Desired Development” were approved. It is not unheard of for a consultant retained on a project to provide an amended report or plan without making an additional charge for doing so.

27. [228]

    I conclude that RMS has failed to discharge its onus of proving that the plaintiff suffered measurable, non-negligible loss after the second representation on 30 January 2009 and prior to the commencement of the limitation period on 5 June 2009. Accordingly, while Loulach’s first cause of action is statute-barred, the second is not.

Damages

1. [229]

   I am conscious of the obligations of a judge at first instance to make contingent findings or at least to explain why it is inappropriate to do so: see the authorities collected in Chief Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34 at [3]-[4].

2. [230]

   Loulach’s case on damages was based on obtaining a rezoning of lot 12 and then obtaining consent to build and then constructing its “Desired Development”. There was agreement between the parties’ quantity surveyors that the construction cost of the Desired Development was $15,803,549 (excluding GST). The same experts reached near agreement on what they regarded as the cost of constructing the development actually built. Loulach’s expert concluded an amount of $16,520,674 (excluding GST) while RMS’s expert concluded it was $15,721,621 (excluding GST). Both exercises were conducted on the basis that both buildings were built commencing in 2010, and included rates and costings as of that date, essentially, based on the indexation contained in a standard publication (“Rawlinsons”). The difference is attributable to the fact that Loulach’s quantity surveyor included certain costs relating to the building’s façade (certain cladding and louvres) and anti-raid bollards. These higher quality finishes were not found on the Desired Development, which had a rendered and painted concrete finish.

3. [231]

   Both experts agreed that the Desired Development would have been quicker to build, which was estimated to save some $460,000. The Desired Development had only two rather than three underground car parking levels.

4. [232]

   Separate valuation experts retained by the parties agreed on what the revenue would have been from the actual development and from the Desired Development. Those amounts were (after accounting for selling costs and GST) $23,483,816 from the actual development and $27,369,594 from the Desired Development.

5. [233]

   The valuers accounted for reduced land holding costs and interest expenses and the reclaiming of GST in ways which need not be explained, but were agreed, reaching an agreed “Gross Development Profit” from the Desired Development of $8,067,676. The dispute as to the cost of the actual development was the main driver of the difference between the Gross Development Profit from the development actually made. Loulach estimated this at $2,770,963; RMS at $3,730,983.

6. [234]

   Loulach sued for the difference between the profit on the Desired Development and the profit on the actual development, which was some $5.3 million (on the figures from its experts) and some $4.3 million (on the figures from RMS’s experts).

7. [235]

   RMS’s expert, Mr Tony Makin, explained why he deducted some adjustments from the costs of the actual development. He said that he did so “in order to compare the developments on a like for like basis”. He said that the curtain walling and the Alucobond finish were “a more expensive wall finish that the render finish included in the [Desired Development]”, and the louvre detail was an added enhancement in the building as constructed. Mr Makin was not ultimately required for cross-examination.

8. [236]

   Loulach submitted that it was wrong for RMS’s expert to deduct costs relating to the façade (cladding, curtain walling, louvres) and anti-raid bollards. It was said that “One does not assess the cost of the Actual Development by deducting from it all the features it has but which do not appear in the Desired Development”.

9. [237]

   The dispute between the parties as to the the “notional” construction cost (based on the façade, louvres and bollards) is more fundamental than it might appear.

10. [238]

    An essential integer of Loulach’s claim for damages was the profit it had actually made (and therefore the sales revenue it had actually derived and the construction and other costs it had actually incurred) on the building it had actually constructed. None of that material, which must have been available, was adduced by either party. Rather than establish the costs which it had in fact incurred, the revenue which it had in fact derived and the profit which it had in fact achieved, Loulach left this to expert opinion.

11. [239]

    That had the benefit of permitting the experts to fairly readily reach agreement as to the lower costs and greater revenue from the (necessarily hypothetical) Desired Development as compared with the (artificially hypothetical) costs and revenue from the actual building. RMS said this was a matter which called the entire exercise into question:

12. [240]

    Loulach responded by stating that RMS had not objected to the experts’ opinions as irrelevant and by adding:

13. [241]

    I remain troubled by this. In principle, I accept that it is possible to prove construction costs historically incurred by asking a quantity surveyor to give an opinion based on appropriate assumptions. It is possible to prove revenue actually made by asking a valuer to give an opinion based on appropriate assumptions. And in the present case, where Loulach has not in fact sold all of the lots in the development it has built, some hypothetical opinion evidence is necessarily required if there is to be a comparison with the Desired Development.

14. [242]

    However, not only is there no evidence of actual costs or actual revenue, there is no evidence at all before me of why it is impracticable to prove Loulach’s actual costs or actual revenue. That is to say, there is no evidence explaining why the best evidence of costs and sales has not been made available. Instead, as RMS points out, there is the glaring discrepancy between Mr Loulach’s statement of profit of more than $11 million from the actual building with the expert’s figures being only a fraction of that amount. The discrepancy must have been obvious to Loulach in advance of the trial. Yet no step was taken to explain how Mr Loulach came to have that view (which might be attributable to error, or excluding components of the cost).

15. [243]

    It may be that an examination of the history of the litigation would shed light on this. I do not know whether there was discovery, or whether subpoenas were sought as to the actual costs incurred, and the actual revenue derived, by Loulach. On the view I take, it is not necessary for me to take this any further.

16. [244]

    To return to the million dollar question as to the bollards and louvres and other features, I do not think that Loulach can have its cake and eat it. Its case is based on a comparison between two hypothetical exercises. The louvres and bollards which were actually installed turn out to constitute a significant proportion of the total hypothetical costs (more than 5% of the total). Loulach invites me to infer that that may be used to measure the diminution in profit which it has sustained. If I am to accept the logic of the exercise advanced by Loulach, which eschews regard to actual costs and actual revenue and actual profits, it is wrong to attribute an extra $1,000,000 profit to the Desired Development because that development has no louvres and bollards while the building actually build incorporates them. The point of the exercise is to value the loss suffered by Loulach for failing to exploit the opportunity to build on lot 12. The unchallenged evidence of Mr Makin accords with my own views, namely, that including the cost of those finishes detracts from an apples versus apples comparison.

17. [245]

    The result is that I proceed on the basis that Loulach’s Gross Development Profit (incorporating interest costs and GST) on the Desired Development would have been: $8,067,676 - $3,730,983 = $4,336,693.

18. [246]

    So far as the evidence discloses, Loulach retains lot 12 to this day. If the Desired Development had occurred, it would have been sold. Loulach accepts that it must account for this. It relies on an offer by RMS to buy it for $100,000. That is a relatively low amount, but reflects the fact that it is now highly problematic to exploit that land. I accept that submission.

19. [247]

    Further, in its closing submissions, Loulach accepted that “some contingencies should be deducted from this to reflect: (i) the possibility that an amended design would be necessary to reflect design jury feedback; (ii) the possibility that a variation from FSR standards would not be approved; (iii) the possibility for delays causing increased interest costs.” I turn to these issues now.

20. [248]

    RMS makes a series of further points. First, the Desired Development could not be built until lot 12 was rezoned, and it was agreed that a rezoning would take 12-18 months. This has at least three consequences.

    1. (1)

       Loulach would have incurred additional holding costs;

    2. (2)

       Loulach’s construction costs would have been incurred in a later year, and would likely be higher;

    3. (3)

       Loulach’s realisation of profit would be delayed.

21. [249]

    The first and second were explored at trial. The third may not have been, but it is real (and might exceed the first and second). Deriving an immediate profit is, other things being equal, more valuable than deriving the same profit 12-18 months later. An apples versus apples comparison would make allowance for the net present value of the delayed profit derived from the Desired Development. The evidence did not expose the discount rate. If anything turned on this, I would take the analysis further, but on the view I take, it is unnecessary to do so.

22. [250]

    Secondly, RMS pointed to the risks associated with the Desired Development, as follows:

23. [251]

    Those risks fall into different categories. On the premise of the exercise, which is that RMS advised that it did not require lot 12 for road widening, then I agree with Loulach that the analysis should proceed on the basis that a rezoning would more likely than not occur, and that no specific deduction should be made for the contingency that it might not have.

24. [252]

    Likewise, there are the ordinary risks that construction would be delayed or costs might blow out (there might be months of inclement weather, or the property market might collapse). These are the sorts of imponderable considerations in any counter-factual hypothesis, such as are regularly required in the assessment of damages. These can be accommodated in a discount for contingencies. I understood Loulach to acknowledge as much.

25. [253]

    That deals with the matters identified by RMS in paragraphs (a), (e), (f) and (g) above. However, there are risks of a different character, which are specific to the particular facts of Loulach’s case, in paragraphs (b), (c) and (d). Clause 22B(4) of the 2007 LEP was applicable. It relevantly provided that:

26. [254]

    RMS observes that there is no evidence that the Desired Development would ever have been entered in, let alone succeed, in any architectural design competition, and submits that there is good reason why this Court should conclude that it would not be entered.

27. [255]

    Zhinar, the ultimately successful architect in 2008, prepared the “Desired Design” drawings. However, RMS submitted that there was no evidence from the Zhinar architect saying that the Desired Development was a design that would have been submitted in a design competition.

28. [256]

    There was a divergence of views as to the FSR on the Desired Development. The “development summary” on the design claims an FSR of 4.4:1. However, RMS’s expert Mr Dickson performed his own calculations and said that the FSR was 4.75:1. There was evidence that there was some debate in the industry as to how to calculate something as basic as FSR, having regard to matters such as kitchen, bathroom and toilet exhausts. There was no evidence (or, at least, neither party pointed to evidence) as to how the council would have calculated FSR in 2009 or 2010. I do not propose to resolve that issue, because once again on the view I take, nothing turns on it.

29. [257]

    An FSR of 4.4:1 was the absolute maximum permitted under the new LEP and included all of the 10% “bonus”. RMS pointed to evidence that the Desired Development fell far short of being a design which would have won the competition. RMS’s architect Mr Olson expressed the following opinions:

30. [258]

    I regard that opinion as inherently plausible. It was maintained in cross-examination. Mr Olsson said that “a building much taller than nine storeys would be necessary to be approved”. A deal of his cross-examination was directed to this. The cross-examiner pointed to the absence of a requirement in the LEP that the gateway sites contain tall buildings, and to the fact that the “bonus” could be directed to FSR rather than height. Mr Olsson conceded as much. However, in response to the questions that there were ways other than height to achieve the desired “gateway” on Loulach’s land, Mr Olsson gave this evidence:

31. [259]

    That evidence accorded with the opinion of Loulach’s architect, Mr Dickson, that:

32. [260]

    There is a further, separate problem with the Desired Development: cross-ventilation. Cross-ventilation is important in designing high density residential buildings. This was explained by Mr Olsson as follows:

33. [261]

    I did not understand that evidence to be controversial. Mr Olsson was not cross-examined on it. Mr Dickson took the view that whether or not the Desired Development would win a design competition was peripheral.

34. [262]

    True it is, as Loulach submits, that any development application will likely go through a series of refinements during the course of the assessment process. It is also possible (although I do not express a concluded view) that consent might be given to a design which did not win a design competition. I can contemplate for example a case where the jury was split, and it was accepted that there were two outstanding, and very different, leading candidates. In such a case, I am willing to proceed on the basis that the design which came a very close second could be approved by the council.

35. [263]

    But Loulach’s Desired Development did not, according to the expert evidence, have any realistic chance of achieving success. Nor did it have any realistic chance of achieving a close second. The expert evidence accords with my own impression of the merits of the design. It is a design whose purpose is to maximise profit. It is not a gateway building. And it does not even comply with the cross-ventilation standard.

36. [264]

    I accept that on the premises which underlie the analysis in this part of the judgment, Loulach suffered some loss by reason of the representations. However, Loulach expressly eschewed a case based on the wasted expenditure on the development application. It had no fall-back case for calculating the lost profit if some other plan had won the design competition. Such other plan would have been materially different from the Desired Development, and there is no sufficient basis in the evidence to determine what loss of profit — if any — Loulach would sustain.

37. [265]

    Had it been necessary to determine damages, I would have found that Loulach had not established any of its claimed damages.

Orders

1. [266]

   For those reasons I find RMS breached a duty it owed to Loulach to take reasonable care in making the first representation, but that the breach did not cause Loulach any loss, that Loulach’s claim is statute-barred, and in any event Loulach has not made out its case for damages. I find that RMS did not owe a duty to Loulach to take reasonable care when making the second representation. If I am wrong about that, I would conclude that that duty was likewise breached, but that likewise it did not cause any loss, and that Loulach has not made out its case for damages.

2. [267]

   The proceedings must be dismissed. If there is a basis to depart from the usual exercise of the discretion as to costs, the orders below permit that to occur either consensually, or by a further determination on the papers.

3. [268]

   I make the following orders: