Baycorp Capital Ltd v Dex Consulting Pty Limited
[2014] NSWSC 1298
•22 September 2014
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Baycorp Capital Ltd v Dex Consulting Pty Limited [2014] NSWSC 1298 Hearing dates: 24 - 28 June,1 - 5, 22 - 26 July 2013, 18 November 2011 Decision date: 22 September 2014 Jurisdiction: Common Law Before: Adams J Decision: (1) Judgment for the defendants.
(2) Costs to be determined following submissions.
Catchwords: PLANNING LAW - flood affected land - significance of probable maximum flood - need for flood evacuation - no question of principle Legislation Cited: Trade Practices Act 1974 (Cth)
Local Government Act 1993 (NSW)
Environmental Planning and Assessment Act 1979 (NSW)
Environmental Planning and Assessment Regulation 2000
Rural Fires Act 1997 (NSW)Cases Cited: Shannon Pacific v Minister for Planning [2007] NSWLEC 669 Category: Principal judgment Parties: Baycorp Capital Ltd (ACN 119 396 057) (Plaintiff)
Dex Consulting Pty Limited (First defendant)
Michael James Dutton (Second defendant)File Number(s): 2009/297619
Judgment
Introduction
Baycorp Capital Limited was registered on 24 April 2006, for the purpose of developing a site near Port Macquarie on which it was intended to erect moveable homes for sale on leased lots to persons over the age of 55 years. Mr Carter (who owned 500,000 shares out of a total issued capital of 10,947,000 shares), who said he was Victoria's largest country home builder at the time, arranged with the company to locate a site and obtain development approval for the project, with the company to finance construction (with him as project manager) and manage the site. It was agreed that Mr Carter would initially pay the cost of making the development application, building up a loan account to be paid when the project was completed and sales permitted. However, it was a crucial part of this arrangement (which was not reduced to writing) that Baycorp would not be liable to repay this money if development approval were not obtained.
In early 2006 Mr Carter found an apparently suitable block on Maria River Road, Port Macquarie and, in March 2006, Baycorp entered into a contract for its purchase, with completion to follow development approval. In August 2006, Mr Carter approached Mr Dutton (the principal of Dex Consulting Pty Limited) in respect of the development application and, on 7 September, wrote appointing him Baycorp's consultant. The precise nature of the arrangement as to the application is disputed but Mr Dutton agrees that Dex was retained as Baycorp's consultant for the purposes of seeking development approval. For reasons that do not matter, Mr Carter decided some months later to move the proposed development to a neighbouring block of land (on Shoreline Drive) and, on 1 December 2006, entered into an option arrangement for its purchase, again conditional on development approval being obtained.
The process of putting together documents for submission to the Macquarie-Hastings Council, now in relation to the Shoreline Drive property, continued and, following a number of communications between Dex and Council officers, the development application was lodged on 22 March 2007. Further communications ensued, resulting in approval being refused by the Council's Development Assessment Panel on 11 December 2011. A number of reasons were given by the Panel for refusal but those of present relevance concern the significance of potential flooding on and around the site.
Baycorp alleges that Dex warranted, in substance, that it was appropriately qualified to undertake the task for which it was retained and use all reasonable care, skill and diligence in doing so and that it "should have known or ascertained at the relevant time" that the problems with flooding, having regard to the proposed use and topography of the site and its surrounds, relevant planning instruments and legislation and the New South Wales Floodplain Management Manual and Policy, meant that the development "could never have been approved". Accordingly, Dex was negligent and in breach of its retainer "in failing to advise the plaintiff at the time of the agreement [on 7 September 2006] or shortly thereafter that the application ... would not ... receive Council approval".
The crucial question, therefore, concerns the flooding issues. Whether other considerations might have led to refusal is immaterial. It appears to have been accepted on all hands that the other issues with the application identified by the DAP were susceptible of resolution or, at least, were unresolved as at the date of refusal for reasons that it was not sought to argue could be laid at the defendants' door.
It is also contended by Baycorp that Mr Dutton represented to Mr Carter that Dex, with its employees, was suitably qualified to perform the task of consultant in connexion with the development application and that this representation was misleading and deceptive conduct within the meaning of the Trade Practices Act 1974 (Cth), giving rise to an entitlement to compensation for ensuing loss. Again, this claim (although not limited in this way in the Amended Statement of Claim) is focused on the way in which the defendants dealt with the flooding issues affecting the development. It was not contended by Baycorp that there was any relevant shortcoming as to the other complexities of the proposal.
So far as damages are concerned, these fall into two categories: the first is the money expended by Mr Carter on making the application, including obtaining reports and assessments from various experts and Dex's fees as well as the fee Mr Carter charged Baycorp for his services; and the second is for loss of the profits that Baycorp would have made by expending that money - or most of it - on developing another site as had been intended for the impugned site. It is probably worth noting, at this stage, that it is difficult to see any basis for the first claim, since the development application did not cost Baycorp anything, having regard to its arrangement with Mr Carter that it would not be liable to reimburse him unless development approval were obtained. I deal briefly with the second claim in due course.
I should mention that, shortly after the refusal of Baycorp's application, Mr Carter retained another planner (Mr Andrew Scott) and another flooding expert (Murray Dalton and Associates) through another company (Macquarie Gardens Ltd), and made another similar development application in respect of the Shoreline Drive property. So far as flooding was concerned, the flood risk assessment was not markedly dissimilar from that which was prepared by Dex, though it was somewhat more elaborate. That second application was likewise refused, again for a number of reasons including the problem of flooding.
Relevant terms and technical documents
The Flood Plain Development Manual (April 2005) was produced by the then Department of Infrastructure and Natural Resources -
"[to guide] Councils in the development and imputation of detailed local flood plain risk management plans to produce robust and effective flood plain risk management outcomes."
The forward states the "primary objective" of the Policy -
"... Is to reduce the impact of flooding and flood liability on individual owners and occupiers of flood prone property and to reduce private and public losses resulting from floods. At the same time, the policy recognises the benefits flowing from the use, occupation, and development of flood prone land.
The Policy promotes the use of a merit approach which balances social, economic, environmental and flood risk parameters to determine whether particular development or use of the flood plain is appropriate and sustainable.
In this way the policy avoids the unnecessary sterilisation of flood prone land. Equally it ensures that flood prone land is not the subject of uncontrolled development inconsistent with its exposure to flooding."
Paragraph 1.1 of the Policy states -
"The primary objective of the... Policy... recognises the following two important facts:
Flood prone land is a valuable resource that should not be sterilised by unnecessary precluding its developments; and
if all development applications and proposals for rezoned land are assessed according to rigid and prescriptive criteria, some appropriate proposals may be unreasonably disallowed or restricted, and equally, quite inappropriate, proposals might be approved."
Of considerable relevance, having regard to the topography of the site proposed for development is the Policy provision in paragraph 1.1.2 which contains the following -
"[The policy] provides for... a merit based approach to selection of appropriate flood planning levels (FPLs). This recognises the need to consider the full range of flood sizes, up to and including the probable maximum flood (PMF) and the corresponding risks associated with each flood, whilst noting that with few exceptions, it is neither feasible nor socially or economically justifiable to adopt the PMF as the basis for FPLs. FPLs for typical residential development would generally be based around the one per cent AEP flood event plus an appropriate freeboard (typically 0.5m) ..."
AEP stands for Annual Exceedance Probability which specifies the chance of a flood of a given or larger size occurring in any one year, usually expressed as a percentage. For example, if a particular height or greater of flooding has an AEP of one per cent it means that there is a 1-in-100 chance that this event will occur in any one year. In the present case, the term 1:100 year flood has been used to describe this phenomenon. Thus, in respect of the site, flooding to a height of 3.3m AHD is a flood which, in any one year, is assessed as having a one per cent chance of occurring. AHD is the Australian Height Datum, which is a measure approximately corresponding to mean sea level.
"Flood liable land" is land susceptible to flooding by a PMF event and covers the whole flood plain not just that part below the FPL. The flood planning area is the area of land below the FPL and, as the Manual describes it, "thus subject to flood related development controls". Given the prominence in this case of the PMF relating to the site, it is useful to set out the definition of this term in the Manual -
"The PMF [Probable Maximum Flood] is the largest flood that could conceivably occur at a particular location, usually estimated from probable maximum precipitation and, where applicable, snow melt, coupled with the worst flood producing catchment conditions. Generally, it is not physically or economically possible to provide complete protection against this event. The PMF defines the extent of flood prone land, that is the flood plain. The extent, nature and potential consequences of flooding associated with a range of events rarer than the flood used for designing mitigation works and controlling development up to and including the PMF event should be addressed in a flood plain risk management study [prepared by the relevant Council]".
The Manual describes -
"... Certain areas where development would reasonably be excluded... [including] areas where flood hazard is too high and cannot effectively be reduced to acceptable levels by management measures. Emergency management is an important consideration as to whether an area is too hazardous for development due to flooding e.g. islands..."
The following passage is also of particular importance in this case -
"G 9.5 islands
The formation of islands in the flood plain during a flood is a potentially dangerous situation. This is especially so when floods larger than the flood used to derive the FPL totally inundate the island ... people trapped on the island and their rescuers will be placed at undue risk. Thus the development that becomes isolated prior to ultimate inundation needs to be considered with great care."
Section 733 of the Local Government Act 1993 (NSW) protects Councils from liability in relation to (amongst other things) flood damage, subsection (4) providing the Council had acted in good faith if the impugned action or inaction was "substantially in accordance with the principles contained in the relevant Manual", here the Flood Plain Development Manual 2005. Good faith is presumed unless the contrary is proved.
The Hastings River Flood Study 2006 (HRFS) was undertaken by Pattison Britton & Partners as a preliminary step in the development of a risk management study and a consequent risk management plan by the Council. Amongst other things, the study contains a table of predicted peak design flood levels along the Hastings River. Relevantly, at the confluence of Hastings and Maria Rivers the PMF is shown as 6.8m AHD (and, interestingly, the 200 year recurrence event at only 3.9m AHD) whilst at Hibbard Ferry these measurements are respectively 6.4m AHD and 3.4m AHD. Both these points are close to the proposed development site.
The Study notes that the peak flood level estimates are based on a peak ocean level of 2.2m AHD whilst the peak 100 year recurrence ocean level is 2.6m AHD. The ocean levels are, as I understand it, relevant, since tidal influence extends for about 32kms upstream from the mouth of the Hastings River, with the Maria River being the major tidal tributary.
Even a cursory examination of the HRFS (which is all it has been necessary for me to undertake) reveals a high degree of technical complexity involving the development and analysis of hydrologic and hydrodynamic models, detailed historical data with a large number of maps showing flood water depths and velocity vectors for various flood recurrences and geographical areas within the scope of the study. In the following section I describe Mr Dutton's expertise in the technical aspects of flood assessment. This gives his opinions in this respect, particularly so far as interpretation of the HRFS is concerned, particular persuasiveness, since neither of the experts called by the parties has comparable technical qualifications or experience. Of course, it is necessary to bear in mind that he is not an independent witness. Nevertheless, given the character of the plaintiff's case, a finding that Mr Dutton's relevant views about the particular matters in issue so far as the HRFS is concerned appear to be reasonably open must be significant. I should add, in fairness that, although Mr Dutton exhibited (not unreasonably, given that his professional competence was under attack) a degree of defensiveness in his answers, I thought he was an honest witness whose evidence about technical matters reflected what he thought at the time and was a reasonable approach to the particular matter in dispute, the most crucial of which was whether a sufficient area of the subject land could be expected to remain above the PMF level to provide a refuge for the residents in that event.
Mr Dutton's qualifications
Mr Dutton's curriculum vitae was tendered. Although he was cross-examined about his qualifications and experience, it was not suggested to him that this or his claimed experience was not the fact. He holds the following qualifications -
· Bachelor of Engineering, Civil, NSW University of Technology, 1985.
· Certification (No 2493) as a NSW Municipal Engineer (Ordinance 4) in 1986.
· Chartered Member of the Institution of Engineers Australia (No 120061), "CPEng".
· NPER Registration in both Civil and Structural Engineering since 1998.
· Graduate Certificate in Environmental Engineering, 1998, UTS.
· Accredited Certifier under the NSW E P & A Act in all Civil, Structural and Subdivision areas.
· RTA accredited Road Safety Auditor since 2002.
· Member of the Institute of Public Works Engineers Australia (IPWEA), New South Wales Division.
· Member of the Local Government Engineers Association of New South Wales and the Association of Professional Engineers, Scientists and Managers of Australia (APESMA).
· Member of the Australian Conservation Foundation.
The work which his firm, the first defendant, has undertaken includes the following (within the Kempsey Shire and elsewhere) -
· Development assessment, preparation and application for a wide range of projects, such as large commercial and residential buildings, dwellings, quarries, caravan parks, intensive agricultural ventures, environmental projects, etc.
· Rezoning application preparation and pursuit for a range of lands for various uses.
· Subdivision application preparation and development and construction approval.
· Preparation of Flood Studies and other constraint definition.
· Preparation of Environmental Reports, Land Assessment and feasibility studies.
· Preparation of Bushfire Assessments & Effluent studies.
· Design of projects incorporating innovative environmental initiatives for energy reduction, efficiency, and practicality.
· Liaison with and supervision of a wide range of other specialist consultants in the fields of surveying, ecology, noise studies, traffic studies, flora & fauna assessment, soil assessment, flood studies, etc.
· Liaison with the full range of Government Departments and instrumentalities such as DECC, Planning NSW, RTA, Agriculture, Fisheries, etc.
· Liaison with all Councils in the Mid-North Coast Region.
Mr Dutton worked for 15 years with the Kempsey Shire Council and either personally prepared supervised or contributed to the preparation of a number of Council planning control policies or development control plans, including the Flood Risk Management Policy and many flood studies, plans and programs including Development Control Plans for a large number of locations and other work relating to industrial and residential land development at South Kempsey and South West Rocks. Mr Dutton pointed out in his affidavit, and I accept, that he had extensive experience dealing with flood prone land because much of Kempsey is flood prone. He also had experience preparing flood management plans and emergency management plans which provide for contingencies in the event of flood on various sites. He has, as I understand it, when in private practice, worked on a number of successful projects, which have involved lot design and planning approval applications. In this regard he listed 11 projects, together with other work for which he has prepared structural designs and drawings.
Mr Dutton left his employment with Kempsey Shire Council in 2001 to establish Dex Consulting Pty Limited which was originally called Dutton Engineering Excellence. He is a member of a number of professional associations, though these are connected with engineering, including environment engineering. Of particular significance for present purposes is his work with Kempsey Shire Council Flood Control Operations, including implementation and enforcement of the Council's policy on Flood Plain Management including preparation of flood maps, interpretations of flood studies and advice to other departments and the public on these matters, the design of flood mitigation structures such as flood gates, culverts, drains, levies and bridges, the supervision of consultants in preparation of Flood Studies and specialists designs, the operation of the Shire Flood Plain Management Committee and, during floods, management of the Macleay Flood Control System and emergency operations.
When he gave evidence, Mr Dutton described his occupation as a consulting engineer. In cross-examination he expanded his work history to include his employment for the Bellingen and Port Macquarie Councils in the mid North Coast area and as well for the City of Sydney and Marrickville Council for about 13 years, and before that with rural councils. He described himself as having 45 years of experience both working for councils and in private practice. Although he did not have formal qualifications by way of diploma or tertiary degree from a university he thought (and I do not think this can be sensibly disputed) that becoming a planner does not need these formal requirements. He said that as part of his Bachelor of Engineering Degree and his Certificate in Environmental Engineering he also studied development planning and he also had an Ordinance Four Certificate as a Shire engineer which permitted him to be a planner in some rural councils which do not have planners but do have engineers. He agreed that town and regional planning was not his principal line of work, however, this of course is not a concession that he is not qualified to undertake this work. He was cross-examined about his entry in the yellow pages with an entry under town and regional planning because, he said, that is part of what he did. He was asked about his experience with hydraulic engineering and stated -
"... Well, as I said, I have had 40 years of relevant experience. For 15 years I was Kempsey Shire's expert in hydraulic flooding and hydraulics, hydrology. I managed and set up several major flood studies and the Macleay River is a much bigger river than the Hastings, three times the size. I also worked with Hastings council, Cliff Toms, who was a Hastings council person, on some of their flood studies, because he's my neighbour. I also worked on the 2001 Floodplain Development Manual with the State Government. I was on a committee for that. So I think I have a lot of experience in flood matters."
Mr Dutton later added -
"... [As] part of my CPD requirements I have attended many flood conferences. I have presented papers at flood conferences... I have been on the panels for flood modelling and flood studies as a representative of the Local Government Engineers Association, the IPWEA, I've worked with the Public Works department in preparing at least the 2001 [Flood Plain Management Policy] document and some earlier ones..."
He said that he had experience in flood modelling by the use of computers. He was taken to Dex's webpage in which he described himself as a flood specialist and said that Dex's work involved "flood assessment and reporting, planning and development application preparation". He agreed that he had advertised himself as having the skills and qualifications to be able to handle Baycorp's development application.
In connection with questions about his familiarity with the HRFS he said that he was aware of the Study but not of its contents although he believed he had read a draft copy. He said that he did work for it. I asked him -
"Let us assume that Mr Carter had come to you ... 'this is only a concept plan we might have got this all wrong, it's what we thought was important. Will you please undertake this planning application for us?' Let's assume he said that to you. Would you have felt qualified to take that work?
A. I think so, yes your Honour."
There is some dispute between Mr Carter and Mr Dutton as to what was said, if anything, about Mr Dutton's qualifications to undertake the proposed work. On the view I take, this does not matter. Leaving aside the exact scope of Dex's retainer, I think that Mr Dutton was entitled to hold himself out as qualified to attend to the development application by way of ensuring that it was properly and competently put together with appropriate reports and submissions as to both the planning and the development aspects. The extent to which Mr Carter entrusted these tasks to him is a matter of controversy which I deal with at a later stage.
I consider that Mr Dutton had ample qualifications to undertake the work he was retained by Baycorp to do, even on Mr Carter's description of it. The evidence does not support the claim that Mr Dutton was guilty of any misrepresentation so far as his qualifications were concerned. There must judgment for the defendants as to the cause of action under the Trade Practices Act.
Mr Reinhold's qualifications
Mr Reinhold obtained a Bachelor of Arts (Geography and History) Degree at the University of New England from which he graduated at the end of 2007. In the geography part of that degree he completed planning subjects. He commenced employment with Dex in mid 2006, leaving in early November 2008 to take up employment with Kempsey Council as an area planner. Of the last four planning subjects one was completed in 2006 and the balance of three in 2007. He was employed as a student in training to assist Mr Dutton with planning work, at all times working under his supervision.
Mr Reinhold was involved in working on the development application, increasing his direct contact with Mr Carter as time went on. However, all the work that he did was done under Mr Dutton's supervision. Mr Reinhold recalled that there were important letters written from the Council setting objections and problems with the project, perhaps three or four. He said that to his personal knowledge these were discussed with Mr Carter by him. He said that he could not recall whether the discussion proceeded item by item but they were in detail. Mr Carter never said anything to him that suggested he really knew nothing about town planning and was going to leave it to Dex and asked that "you just tell me what to do".
Dex is retained
On 18 August 2006, Mr Carter called Mr Dutton and told him of the proposed development on the Maria River Road site. There is inconsequential disagreement between them as to the detail which was conveyed. Of greater significance is that Mr Dutton said that Mr Carter told him, in effect -
"My staff at Baycorp have prepared all the documents and all you have to do is submit it and then liaise with the Port Macquarie Hastings Council".
(Mr Carter emphatically denied saying anything of this kind. For reasons which will become clear, I think that Mr Dutton's account is more likely to be accurate. Indeed, generally I regard him as a more reliable witness than Mr Carter.)
They made an arrangement to meet a few days later. This occurred on 22 August 2006. (Mr Carter's affidavit places the initial conversation with Mr Dutton's office on 7 September 2006 but it is obvious from a follow up letter of 25 August 2006 that this is a mistake, which was later acknowledged by Mr Carter. The Maria River Road site was not mentioned in his first affidavit. He said, surprisingly, that he had forgotten about the site "for a while".) He and Mr Dutton agreed that they met on 22 August 2006 and that at that time Mr Carter gave Mr Dutton volume one of the project documents which Mr Dutton more or less examined. He and Mr Dutton, however, disagree as to what was then said. Mr Dutton maintains that the conversation was to the following effect -
"Carter: 'We would like to obtain development approval from the PMHC for a development on Maria River Road. I will be the Project Manager and I will arrange for the engagement of any other consultants required. I would like you to submit the development application to PMHC along with the technical reports and liaise with PMHC.'
Dutton: 'We can submit the application as you wish. However, the development is outside the normal range of permissible developments and I cannot give any guarantee of eventual approval by the council. This is a complex proposal and whether it will get approval will depend upon positive interpretations and decisions by the council.'
Carter: 'Here are some extracts from technical reports that Baycorp staff have prepared'."
He said that Mr Carter then showed him a document entitled 'Macquarie Gardens - SEPP 21 - Development Proposal - Port Macquarie - Volume 1 - Main Report, August 2006', which was discussed at length. (This document comprised two parts, one which may be described as the concept plan and the other, reports - such as environment, fauna and flora and the like - and was tendered and is referred to as "the first proposal". "SEPP" is a reference to State Environmental Planning Policies.)
Mr Dutton said that, after he looked through the document, the conversation continued -
"Dutton: I do not think these documents are adequate to submit to the PMHC in support of the DA. The information is not specific enough and you are required to advise the qualification of the author.
Carter: This is a sample of what we have prepared. I will have all the documents delivered to you. Just submit them as they are and I will have my staff make any changes later.
Dutton: Who prepared these reports? These are not site specific.
Carter: Baycorp staff prepared them. Baycorp has extensive, experienced staff. We are the biggest manufacturer of manufactured homes in Victoria and have undertaken similar projects to this.' He referred to another 'resort' that Baycorp had developed near Ballina, known as Pacific Blue Resort."
There was then a discussion of the retainer and Mr Carter ended the meeting saying that he would discuss the matter with the directors of Baycorp and respond in writing, sending him the remaining documents if Mr Dutton were engaged. Mr Carter left a copy of the concept plan with him.
Mr Carter's first affidavit gave an account of this conference though, as I have mentioned, mistakenly dated it as occurring on 7 September 2006 -
"On or about 7 September 2006, I had a conference with [Mr Dutton] in his office. I recall that I said to [him] words to the following effect:
'We have a proposed site on the corner of Maria River Road and Shoreline Drive, North Shore, Port Macquarie, which we are proposing to build a Retirement Resort. The Park will include a community centre, a bowling green, three tennis courts and clubhouse, nine hole golf course and clubhouse, swimming pool, gymnasium, library, general store along with parks and gardens. We want to build and permanently house 882 retired residents on the 441 sites. This is the proposal for the site.'"
He handed what he described as "various documents" to Mr Dutton but "could not recall exactly what [the] documents [were]". He recalled Mr Dutton looking at the documents. He said that he could not recall the exact words Mr Dutton said to him but their conversation took some 45 minutes. He said at the end the following exchange occurred -
"Mr Dutton: I have one qualified town planner, I am a qualified engineer and we have one architect. Between us we have all the necessary qualifications, expertise and skill to provide what you need. We would be more than happy to do the Development Application.'
Carter: What are your payment terms?
Mr Dutton: We will send you monthly invoices for the work we do and for any of the consultants that we engage for Baycorp.
Carter: Thats fine. I will leave the proposal with you then."
(Mr Dutton denied discussing his qualifications or those of his staff with Mr Carter at this or, indeed, at any other meeting. I deal with Dex's other planning employee, Mr Reinhold, later, noting for the present that I do not think he could be fairly described as a "qualified town planner". However, I do not accept the reliability of Mr Carter's evidence as to this conversation.)
Mr Carter denied that Mr Dutton said anything about the complexity of the proposal and approval depending on positive interpretations and decisions by the Council and not being able to guarantee eventual approval. He said that this evidence was a "fabrication". He said, had Mr Dutton said this to him, "I would never have agreed to proceed with the Development Application".
He also denied saying that he had extracts and technical reports prepared by Baycorp staff. In his third affidavit, replying to Mr Dutton's first affidavit, said he told Mr Dutton -
"Here is the documentation you will need for the application. I have put them together for you to help start the development application process and so you can have an idea of what the proposal is about. But if you are the experts at doing these applications and we go ahead and do business together then I will leave it to you to finish off putting together the documentation for the development application."
He said that he also told Mr Dutton -
"I am not an expert at town planning. You will need to finish what I have done and put it all together properly as you are the experts."
On 25 August 2006 a few days after his initial introduction and discussion with Mr Dutton, Mr Carter wrote to Mr Dutton enclosing a copy of what was described as the "project development application [namely, the first proposal] for your perusal", referred to discussions between Mr Ray Green (Baycorp's managing director) and Mr Matthew Owens at the Council concerning the planning attributes of the site with a suggested solution to the problem raised by Mr Owens, and concluded -
"With the information provided in this letter, you may be able to negotiate the matter through. If you can't, we need to get a written rejection from the Hastings Council as fast as possible so that we can go straight to the Land and Environment Court.
Matthew Owens has requested that if we get past this stage, a preliminary meeting should take place with the appropriate people in attendance.
He has been advised that our Town Planning Consultant, yourself, would contact him in due course."
Mr Owens had, it appeared, told Mr Green that the site could not be developed as proposed because it was zoned as rural land (the "zoning issue"). This was a debate that continued for quite some time, eventually resolved in Baycorp's favour. The precise details are immaterial but it will be necessary to make brief reference to it from time to time. Mr Carter expressed "our opinion" that Mr Owens was mistaken by reference to nearby urban land, separated from the site by the Hastings River so that it was still "adjoining" land within the definition of the word in the Local Government Act where separation by a river was said to be immaterial. It is fair to say that this letter showed some acquaintance with the relevant planning instruments and applicable legislation.
Since the plaintiff's case crucially depended on the extent to which Mr Carter relied on Mr Dutton to undertake the work necessary to obtain development approval, the fact that the conversation about what he wanted Dex to do was not contained in Mr Carter's first account of this meeting gives rise to a significant degree of scepticism about its reliability. Furthermore, in light of the problems which ultimately led to development being refused, which were evident to a greater or lesser degree from the outset, it would not be surprising if Mr Dutton had indeed suggested, in effect, that the application was an optimistic one. Mr Carter also denied saying to Mr Dutton that his staff had prepared the documents and all that was necessary was to submit it and liaise with the Council. The letter of 25 August does not suggest that Mr Dutton needed to do more than peruse the proposal and, using the information in the letter (presumably as to the zoning), "negotiate the matter through".
The letter does not suggest that the document was not to be taken at face value or ask Mr Dutton for an evaluation or about the chances of obtaining approval, let alone authorise him to make changes. In his evidence, Mr Carter agreed that his letter of the 25 August 2006 suggested "as it were, the deal is done and dusted ... okay, here's the material, go ahead". He agreed that the letter did not suggest that Mr Dutton needed to do more work. Rather all is suggested is that he needed to undertake negotiations. He was asked -
"[From the letter] It appears that your state of mind did not involve the necessity for any significant work, at least, to be done in relation to the development application?
A. That was my intention at the start then Mr Dutton got the letter and the documents [on 25 August] and rang me up and said, 'I can [the transcript has "can't" but Mr Carter said "can", as is clear from the context] get development approval with this'."
It is necessary, to appreciate the character of the document that was given to Mr Dutton, to describe its contents in a little detail. It comprised two volumes. The first (of 59 pages) described the proposal as "involving the development of a caravan park and associated facilities on a 68.4 hectare rural property located 6 km north of Port Macquarie ..." It stated -
"This application has been compiled by the staff of Baycorp Capital Ltd. The Site description, analysis description and Environmental Assessment of the key environment issues of the development have largely been prepared by Baycorp Capital Ltd with specialist input from the various consultants as relevant to the disciplines identified in this Application. Likewise, the sections on statutory planning controls and consultation have also been provided by Baycorp Capital Ltd with advice from the various representatives."
The volume goes on to provide further extensive detail of the proposal, including discussion of a number of planning considerations. The second volume, comprising various wide ranging assessments, comprised 276 pages. Taking each of the chapters in sequence, the first was the "Flora and Fauna Impact Report", August 2006, which commences -
"The report was prepared in accordance with requirements of the Threatened Species Conservation Act 1995 and Environmental Planning and Assessment Act 1979... Note that assessment of flora and fauna at the site in terms of provisions under State Environmental Policy Nos 44 and 46 are also discussed in Volume 1."
The report states the percentage of the site which had been cleared and used for grazing (approximately 30 per cent) and that the native and introduced species on the pastures included bitou bush, lantana, whisky grass, kikuyu grass, paspalum and coral trees. The drainage lines did not contain noxious weeds. The areas were inspected during "drier times" and in "wetter times". The report notes that the site included "one evident naturally occurring shallow (generally 350 millimetres in depth and varying from 2 metres to 4 metres wide) watercourse which runs from East to West and drains to the West over one adjoining property...". This watercourse was also stated not to contain noxious weeds of any kind. Under the heading "Threatened species" a list of animals is given derived from NPWS Wildlife Atlas Records but "only species that Baycorp Capital considered suitable to habitat on the site" were listed. There follows a discussion of the factors set out in s 5(a) of the Environmental Planning and Assessment Act 1979 (NSW) in respect of threatened species and, as to each of the other eight relevant factors, comments are made including the following -
"Within the study area, a number of threatened fauna species have been predicted to occur. Baycorp Capital has divided the predictive list into four categories, being species known to occur on or in close proximity to the site... [etc]".
A description of the proposed development is included, with the conclusion, "it is considered that a significant area of known habitat will not be modified or removed". The "impact assessment" evaluates the nature and scope of the proposed development and ways in which the facilities should be located to avoid areas of natural vegetation. Habitat types located on the site are described in detail, with reference to the number of specific native and introduced species. "Compensatory ameliorative measures" are described in detail. It is asserted that a "field survey" was conducted on 11 January 2006 and identifies the fauna survey methods which were implemented for both day and night searches. The vegetation was surveyed by conducting random meanders in areas initially identified by aerial photography and fauna species "recorded during the survey" are listed. A protected species list of fauna and flora was compiled, said to have been obtained from an extensive list of identified publications and it was said that "habitat resources available on the site, local records of threatened species and results of the field survey were used to determine into which category a species was placed", producing lists of more likely occurrences, possible occurrences, less likely occurrences and known occurrences. Further details of the flora and fauna listed follows with "an assessment as to whether, in the consultant's opinion, the life cycle of the species is likely to be disrupted ...". There is an extensive discussion of the protection and management of native vegetation requirements under SEPP46. Any person reading this assessment would have thought that it had been prepared, as it asserted, by consultants retained by Baycorp for the purpose of the proposed development.
The next chapter is the social impact assessment, also dated August 2006, which stated it had "been prepared in accordance with Hastings' Council Social Impact Assessment Policy." It comprises a detailed discussion of the issues. It contains a list of the proposed employees operating the site.
A flood risk assessment comes next, said to be based "on plans provided, available data, engineering judgment and approximate techniques to assess the likely hydraulic effects of the proposal". There is no description of any flood levels that might affect the site. A noise impact statement of August 2006 follows, comprising a detailed discussion of this issue with what is described as a "summary or clarification of noise control recommendations". Again this purports to be site specific and reflect Baycorp's approach to this question. The same can be said for the chapter on effluent disposal which, amongst other things, refers to the specifications of two sewerage treatment plants designed for the project, with a detailed description of the specifications and a "preliminary installation and operations Manual". The next chapter is an agricultural assessment, which contained a very detailed table of "soil test results for Baycorp Capital Limited" said to have been provided by the "Sydney Environmental and Soil Laboratory". The report ends with an impact assessment and recommendations.
A traffic impact report appears next, again specifying the site, describing the existing site condition containing a map, referring to traffic counts on Maria River Road and a report "prepared 7 June 2006" setting out information as to resident vehicle ownership and trips made to and from 94 retirement villages. Predictions of vehicle use are also contained and a number of tables providing detailed information including access roads are photographed and described, together with a detailed account of the availability of two ferry services giving access to Port Macquarie from the project side of the Hastings River.
A detailed geotechnical assessment, including soil test results for Baycorp provided by "Sydney Environmental and Soil Laboratory" is included (identical results to those already referred to). A detailed analysis of examples of ground water taken from the water table is included. The next chapter deals with drawings of the new home and infrastructure buildings. There is a landscape assessment which involves detailed descriptions of the site. A sewage treatment plan is outlined together with a desalination plant report containing details of the proposed plant and its use, followed by a fire assessment and mitigation report. This report also contains detailed information of the site and the location and character of the buildings to be developed on it. A public safety and construction assessment is next dealing with, amongst other things, the way in which building on the site will be controlled to avoid negative impacts on surrounding property. The next chapter is an ecologically sustainable development report, in substance referring to other relevant assessments to which I have already referred. This assessment concludes as follows -
"Cumulative Impacts
Under the issue of cumulative impacts, it would appear that the most obvious areas to address are impacts on flood behaviour, water quality, geotechnical, traffic and access, visual impacts and noise. The proposed development has been redesigned a number of times during this EIS process. It is considered that the final layout, in conjunction with the recommended mitigation measures and safeguards outlined in this EIS, will result in no adverse cumulative impacts on the local environment."
A list of "mitigation measures" is included, relating to water quality, archaeological discovery during earth moving, flooding, flora and fauna, noise, erosion and sediment control, landscaping, traffic and parking, effluent disposal, dust and public safety are summarised. There is also a proposal for developing an environmental management plan. The product demand analysis contained the lists of statistics as to potential occupiers, describing what was said to demonstrate the demand for the housing proposed in the development.
The proposal concluded with a "Director's Statement" signed by two directors -
"The Directors of Baycorp Capital Ltd, whose names appear below and who authorized the lodgement of this Development Application with the Hastings Council, accept responsibility for the information contained herein. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Development Application is in accordance with the facts and does not omit anything likely to affect the import of such information. This Application has been signed by Directors of Baycorp Capital Ltd."
This statement speaks for itself. Mr Carter said it was inserted at the insistence of the directors. He said -
"I was going to go to a town planner and the directors of the company said they put that in there so that the town planner or anyone else could see that they stood behind it ... It's taken out of a prospectus for a float, for a public company float of which Mr Ray Green is a chartered accountant ..."
Astonishingly, not a word of this was said to Mr Dutton. However, although in cross-examination Mr Carter said that the sewerage treatment plan information was provided by a consultant, the report concerning the desalination plant was done by an expert, the soil test results were obtained by Baycorp from Sydney Soil Laboratories, (from samples taken on the site by him), he said the rest of the document was just downloaded from the internet. Although he co-ordinated the preparation of the project document he had not read 90 per cent of it. He said he had co-ordinated the preparation of the report, having written about 20 per cent of it - that part which related to the type of development such as it being a caravan and how many houses and so on were proposed - the rest of it, he said, "was just downloaded off the internet by 'some young bloke working for me at Baycorp Capital and Mr Ken Stevenson who later became Managing Director'". Although it read that Baycorp was going to do this or that, he said, "It is easy to download it all and then make it applicable to us, it's simple". He had said, by preparing the document he thought he would "make myself a hero by saving a lot of money ... in terms of planning". He was asked -
"Q. So how was it that you thought you'd make yourself a hero, if you didn't even know what was in the document?
A. Well if I've got the Ray Green's word and other people helping me with this, downloading stuff, assembling it into a book and I take it to a town planner and then I've saved a lot of money, because half the work is done, so I thought, and the truth is that this is so vague and just useless."
In short, Mr Carter is as I understand him suggesting that at the time he thought he had done "half the work" and only later found out that it was worthless. As to later finding out that it was worthless, I believe him. However, when he brought this document to Mr Dutton he believed he had indeed done most of the work, as he certainly gave Mr Dutton to understand. He agreed he never suggested to Mr Dutton that he could or should not rely on the statements in the assessments or that much of the material had simply been collected from other development applications on the web even though the assessments read as genuine and applicable to the site and that any person who read them would think that what they said had been done had in fact been done. He conceded in cross-examination that he told Mr Dutton, "my staff at Baycorp have prepared all the documents" (which is along the lines of the directors' statement, though that also refers to experts). As to telling Mr Dutton that the assessments had not actually been done by relevant experts he said, "I couldn't, I haven't read it. I just handed him the whole thing. I never said 'yes' and I never said 'no'." It was "all given to Mr Dutton as a first draft of which he could take sections out if he wanted to use it towards a development application". However, this account is not in any of his affidavits nor is it hinted at in the letter of 25 August and I think he opportunistically added this detail.
Mr Carter said that, when he sent the letter of 25 August to Mr Dutton, he "had already asked [Mr Dutton] to carry out an assessment of the 77 Maria Road proposed land before [Baycorp] proceeded any further because I needed to be convinced that a development application would be successful so neither myself or [Baycorp] would waste any money". There had been no reference in his earlier affidavit to any request to Mr Dutton to make an assessment as to the likelihood of success, nor is there any suggestion that he needed to be convinced of success, nor is such a request made in the letter of 25 August, which comprises the first written indication of what Baycorp wanted Dex to do. However, he had stated that about three weeks after their first meeting (mistakenly said to be 7 September) Mr Dutton told him, in effect, "I can get you the development approval for the proposed Retirement Resort on the land you have. Do you want to come in and see me to discuss this further". Mr Dutton denied ever making such a statement. To have given such an assurance would have been very foolish, especially since Mr Carter had not sought it. (Indeed, a striking characteristic of Mr Carter's attitude to the subsequent negative suggestions by Council officers and his own planning solicitor, Mr Donnellan, is Mr Carter's consistent omission to ask Mr Dutton what he thought the chances were of success.) This issue needs to be considered also in the light of the retainer agreement that I am satisfied Mr Dutton forwarded to Mr Carter for execution on a number of occasions (dealt with below) which contains a specific term declining to give any guarantees of success. I am satisfied that Mr Carter never asked Mr Dutton for an assessment of the likelihood of obtaining development approval and that no assurance of success was given by Mr Dutton at any time.
It is often the case that the surest guide to the truth is the logic of events and contemporaneous material of one kind or another even, accepting of course, that people can act illogically, documents can be written in haste or under a misapprehension or without close attention. As to this initial stage of the process, however, it seems to me that both the logic of events and the contemporaneous documents to which I have referred strongly support Mr Dutton's account and tells against that of Mr Carter. It seems to me that the only reasonable interpretation of the letter of 25 August, taken with the apparently genuine character of the document, as verified by the directors of Baycorp, which Mr Carter expected Mr Dutton to accept, is that the first proposal was to be sent on to the Council in accordance with the instructions that had, on Mr Dutton's account, earlier been conveyed to submit the document as it was, with changes to be made as required by the Council. I accept the evidence of Mr Dutton that his role at this point involved collating and lodging documents for the development application, which had for the most part been prepared by Baycorp. He understood (I think because of the 25 August letter) that Mr Carter wanted to proceed with a proposal to develop a site on the North Shore of the Hastings River, whether or not the Council approved it.
The first proposal goes to the Council
The next significant matter was the delivery by Dex on 11 September (under cover of a letter dated 7 September 2006) to the Council of the first proposal for development of the Maria River Road site as a caravan park. Although the letter refers to Baycorp's instructions to submit a development application (and the Directors' Statement so describe it) Mr Dutton refers to the document as "an extensive environmental review and justification for the project" and undertook to provide further information if it were necessary. The latter also attached a discussion of the relevant planning requirements and legislation, concluding with the suggestion that "the proposal is permissible under the SEPP21, subject to the Council's approval and conditions".
Mr Carter agreed in cross-examination that he received a copy of this letter at about the time it was sent. I have already pointed out that the letter of 25 August referred to perusal and did not, in my opinion, suggest or authorise any amendment. Mr Carter said, however, that Mr Dutton was supposed to review the report before it was sent to the Council, although he agreed that there was no written communication to the effect it should not have been forwarded without review and amendment. He did not suggest that the letter of 25 August had this implication. Furthermore, Mr Carter said he never asked for a copy of the document which had been sent to the Council on behalf of Baycorp, even though he claimed that he never expected that the document which he provided to Mr Dutton (after some wavering, with the letter of 25 August) would go to the Council without other material being added. Nor did he ask what changes had been made. His explanation was that this was "only a pre-lodgement meeting" (I think he meant "communication", not "meeting"). Mr Carter agreed that, when he read the letter, he understood that the document which had been forwarded to the Council was the same as that he had provided to Mr Dutton, without significant change. Yet he made no inquiry of Mr Dutton for an explanation for this lack of amendment in what he knew was, in large part, a mere dummy. This is because he assumed, as I see the matter, there would be no significant change.
The only sensible explanation for Mr Carter's conduct, taken as a whole, is that, as Mr Dutton said, he was not asked to make his own assessment of the proposal or of the documentation, but was instructed to forward it to the Council unchanged as the basis for negotiation through to approval. This conclusion follows from my rejection of the reliability of Mr Carter's evidence in favour of Mr Dutton's contradictory account. The nature of the evidence in dispute, and the emphatic way in which Mr Carter expressed his recollection also leads me to doubt his candour, although I do not go so far as to make a positive finding of dishonesty. Nevertheless my doubts about his evidence in respect of the matters so far discussed are relevant to my assessment of the reliability other evidence he has given about other aspects of the case.
On 14 September 2006 Mr Owens, the Council's planning manager, wrote to Dex with reference to the submission. It is sufficient to observe that Mr Owens pointed out that volume one did not "adequately address the requirements for a development application" and listed a number of matters requiring amendment. Briefly, the amendments required a "rigorous assessment of the proposal in relation to the Environmental Planning and Assessment Act 1979 and the approvals required by this Act", pointing out that the submitted documents simply inserted the provisions of the Act without addressing relevant parts of the Act. It was also necessary to provide a "rigorous assessment of the proposal in respect of Schedule 3 to the Environmental Planning and Assessment Regulation 2000 particularly in relation to the sewer treatment and effluent storage and reuse". It was necessary also to provide a "complete assessment of the provisions of SEPP21 (caravan parks), SEPP36 (manufactured home estates), SEPP44 (koala habitat protection), SEPP55 (contaminated land) and any other relevant SEPP with careful consideration being given to the interrelationship between these SEPPs, other Acts, especially the Rural Fires Act 1997 (NSW) and development control. The documents did not address the Hastings Local Environmental Plan 2001, specific issues such as flora and fauna and bush fire were insufficiently detailed and assessment reports prepared by suitably qualified persons needed to be submitted. Bush fire asset protection zones also needed attention. Mr Owens inferred from the form of the document that it appeared "to have been prepared for a concept plan application under Part 3A of Environmental Planning and Assessment Act" but that part of the Act did not apply; a development application required more than statements of intent. He indicated the list was not complete. It may be worth noting nevertheless that flood issues were not referred to. The letter concluded as follows -
"The above matters, plus any other relevant issues, MUST be addressed prior to submission of any development application to the Council. The preliminary review of the submitted documents suggests that, if an application was submitted as proposed it would be rejected by Council as incomplete and returned to the applicant. It should also be noted that, based on the submitted documents, it is still questionable that the proposed development is permitted in the locality ..."
It appears that, on 15 September 2006, Mr Owens spoke to Mr Dutton by telephone and followed up with an email concerning the delivery to Council of two boxes of the same documents which had been previously provided reiterating that lodgement of any application without addressing the outstanding issues would be rejected and the documents returned. An hour or so after this email was sent, Mr Dutton responded, with a copy to Mr Carter and Mr Green, suggesting some confusion about the relevant LEP and "some typing errors", promising that the points of concern would be addressed and details of the qualifications and methodology of the various environmental specialists whose reports were contained in the forwarded material would be obtained. Mr Owens responded promptly on the same afternoon by email addressed to Mr Dutton, copied to Mr Carter and Mr Green, giving further information about the appropriate LEP and pointing out, as I understand, that it was necessary that the reports in the other volume or volumes should be summarised in the main report and demonstrate how these findings are consistent with the statutory requirements. This email attached his letter of 14 September. Mr Owens also referred to the fact that the "Volume 1 - Main Report" (ie, the first proposal) was "the same document that was submitted to the Department of Planning in relation to the concept plan under Part 3A [of the Environmental Planning and Assessment Act1979]". So much for the document being a draft for Mr Dutton's examination and amendment. Mr Carter did not tell Mr Dutton about the approach to the Department of Planning.
In cross-examination Mr Carter denied receiving the letter of 14 September, adding that if he had read it, he had "forgotten about it and ... wouldn't understand it back then anyway". At all events, he was taken to the letter and asked if he would have understood from it that there was a big problem with the application, to which Mr Carter "I would have understood that the application I did up was useless". Since this was indeed its effect, it is difficult to accept that he either forgot the letter or did not understand it. Although Mr Carter and Mr Green were, as I have mentioned, copied into these emails (as appears on their face) he denied receiving Mr Dutton's email even though it was addressed to him. He agreed that he got emails from Mr Dutton all the time and said that he had no idea why he had not received this particular email. Mr Owens' email which was copied, as I have said, to Mr Carter and Mr Green, referred to the "attached letter", namely the letter dated 14 September 2006. There was some argument about this matter which I do not intend to rehearse. It seems to me, given Mr Carter's central role in the entire process, in the ordinary course one would expect very important correspondence of this kind - it was, after all, the first communication by the Council about the proposal - to have come to his attention, one way or another and he would certainly have enquired about it. I do not accept his evidence that he had not received Mr Owen's email forwarding the letter. When asked whether he was "very interested to know what the Council thought" of the proposal he said, "No, not at all" - he was only interested in what Mr Dutton had said to him. This is not credible. Mr Carter's said the issues raised in Mr Owens' latter and the ensuing emails were not "serious problems at all [but] it was a matter of doing up a proper development application, not my silly stuff".
On 18 September 2006 Mr Carter sent to Mr Dutton a planning certificate under s 149 of the Environmental Planning and Assessment Act dated 2 December 2005, with a note saying that he would give Mr Dutton a call "in due course so that we can work out what is required and what is not". Mr Carter's note stated that the purpose of sending the certificate "is so we can ascertain exactly what reports are required and what are not, as part of the development application, pointing out that the certificate indicates, as he understand it, that a fauna and flora report was not required". As indicated, Mr Owens' letter referred to the need for a flora and fauna report, strongly suggesting that Mr Carter had seen his letter.
A planning certificate must include "such matters relating to the land to which the certificate relates as may be prescribed" (s 149(2), not presently relevant) and may "include advice on such other relevant matters affecting the land of which it may be aware" (s 149(5)). Sub-section 149(7) provides that, for the "purpose of any proceedings for an offence against this Act or the regulations which may be taken against a person who has obtained a planning certificate or who might reasonably be expected to rely on that certificate, that certificate shall, in favour of that person, be conclusively presumed to be true and correct". However, contrary to the view expressed by Mr Warnes (an expert called by Baycorp, whose evidence I deal with in due course), this is not the only function of a certificate issued under this provision, as sub-secs 149(2) and (5) make clear. Although plainly not in any sense conclusive, advice given by the Council in such a certificate is a representation of the fact asserted. The point of noticing the certificate here is the following information, listed as details required to be given under sub-sec 149(2) -
"Part of the land is flood liable land, being land likely to be inundated in the 1 in 100 year flood as identified on mapping held in the office of Council.
Council has by resolution adopted a Policy on Flooding and there is likely to be limitations on development as set out in the Policy.
Council has set a minimum floor level of 800mm above the estimated 100 year flood level for all habitable rooms.
The hundred year flood level in the vicinity is estimated to be RL 3.4m AHD. The likely depth of inundation in a 100 year flood can be ascertained by reference to ground levels which should be obtained from a registered surveyor."
As to the zoning problem raised by Mr Owens, Mr Carter said that Mr Dutton suggested he should "hire a solicitor experienced in town planning to get permissibility sorted out". This being so, Mr Carter could scarcely have thought that Mr Dutton was assuring him that there was no problem, at least with permissibility. Furthermore, until that matter was, as Mr Carter put it "sorted out" Mr Carter could not be confident that the development application could get approval.
On 19 September 2006 Mr Dutton wrote to Mr Carter commenting on Mr Owens' letter of 14 September 2006 (mistakenly said to be dated 7 September 2006). Mr Dutton said, in respect of the "rigorous assessments" which were required that he believed this had been done in the assessment document which, however, would be checked and expanded. The notion of "concept plan" was accepted as mistaken and some amendments made to bring it into line with the requirement for a Statement of Environmental Effects (SEE). Concurrence from the Rural Fire Service was required and Mr Dutton said that he had requested a quote for this work. He pointed out that it was necessary to apply to the Minister for Planning to obtain the Director General's requirements for the development which might concentrate on sewerage disposal but other aspects as well including extensive environmental reporting, advertising and public consultation. As to the issue concerning the interrelationship of the various SEPP requirements, Mr Dutton said that SEPP44 (koalas) needed to be addressed by the expert on the site and the SEPP (seniors living) needed to be addressed in respect of safety, bush fire, access etc. which is something Mr Dutton said he could do. He pointed out that the technical reports needed to be supported by the qualifications and certifications of the specialists, specific intentions needed to be specified for all requirements such as those relating to the flood prone areas and effluent disposal areas rather than a promise to assess these matters at a later stage, the effluent disposal section was inadequate in a number of respects specified by Mr Dutton and the Users Manual which had been provided was inadequate as to those matters, volume one (the main report) needed to "be rewritten to be an overview and summary of all the technical aspects" and the satisfactory responses and requirements to satisfy everyone involved, requiring a "lot more examination and detailing" of these matters, and there were several other matters such as signage which could be addressed. Mr Dutton pointed out that the s 149 Certificate raised issues as to the site being flood prone, the acid sulphate soils, "critical habitat", minimum floor levels or habitable rooms, and an assessment made for the presence of any poisons, oil, fuel spills and other contamination made, and issue of bush fires addressed. Mr Dutton raised additionally the need for a detailed site survey to allow plotting of the flood level of 3.4 metres and determination of flood free areas, if any, which might have effects for the appropriate effluent disposal and plotting of required bush fire buffers and other areas. He concluded by pointing out that an EIS was required to the size and nature of the sewerage collection, holding and disposal systems and that "your technical specialists [needed] to review their reports in line with Council requirements for actual proposals to comply with regulations of other bodies, NPWS, RFS, RTA etc. not just vague intentions". Mr Dutton undertook to obtain quotations for a fire assessment and arrange for a site survey. Mr Carter agreed that he received this letter but, although its clear tenor is that Baycorp needed to address most if not all of the identified points and implied that Mr Dutton, at the end, would collate all the material and present the case, Mr Carter said that he understood that Mr Dutton was to make the amendments to the text addressing the other concerns raised by Mr Owens.
Mr Dutton said that on 19 September 2006 he sent to Mr Carter by mail to his post office address an engagement agreement in respect of the development proposal, a copy of which was exhibited to his affidavit. This agreement is in conventional terms, providing for such matters as payment of fees and disbursements, termination, billing arrangements and lien pending payment. It also (significantly) provided -
"Outcomes
We have experienced great success in obtaining positive results for our clients, but cannot warrant or guarantee outcomes where these are dependent on determinations or influenced by other parties."
Mr Carter denied ever receiving this document. Mr Dutton concedes that he did not get it back from Mr Carter executed or otherwise. Mr Carter said, in his third affidavit, with particular reference to the clause set out above, that had he received such a letter of engagement he would not have retained the defendants, repeating that Mr Dutton had told him, sometime in September 2006 "I could get you the development approval for the proposed retirement resort on the land you have". I do not accept any of Mr Carter's evidence about this matter. Firstly, I think it is very probable indeed, almost certain, that this letter of engagement was indeed sent and, hence received by Mr Carter. Furthermore, I do not accept that Mr Carter genuinely thought that Mr Dutton had guaranteed success or would do so. Mr Dutton's suggested verbal assurance is, I note, completely at odds with what is contained in what is clearly his conventional terms of engagement. Given the complexity of the development proposal and the relevant considerations, involving a number of government departments, not only would it have been extremely foolish for anyone in Mr Dutton's position to have guaranteed success but even such an assurance would not have been relied on by anybody with the slightest degree of commercial sophistication and Mr Carter had a great deal more sophistication, than this. Such a guarantee would necessarily have been so remarkable that, if Mr Carter indeed was going to rely on it for the purpose of expending substantial sums of money, I do not doubt that he would have attempted to get it in writing.
Mr Dutton said that not only had he sent the engagement agreement but that he asked Mr Carter on several occasions to sign and return it. Mr Carter said this did not happen. I accept Mr Dutton's evidence on this point.
On 22 September 2006 Mr Dutton emailed Mr Carter, copying Mr Green, stating that he had reviewed what was now called the SEE document (the first proposal) and Mr Owens' comments, adding "we probably need a bit more work and rewriting of the document if they are going to accept it". He pointed out that he believed "the development is designated due to the size of the sewerage system and the fact that it is flood prone, but that needs to be assessed". On the same day Mr Dutton sought a quotation for a bush fire assessment from a relevant expert and, on 26 September 2006 wrote to Mr Carter discussing whether the proposal could be classified as a "designated development" within the meaning of Schedule 3 to the EPA regulations 2000 and the consequences of such a classification, which carried with it the need for additional reports and fees. Classification depended (as I understand the letter) on, amongst other things, the distance between the sewerage system and existing dwellings and the positioning of the sewerage system on the flood prone land and other relevant criteria which he related to the proposal. He "strongly" suggested that a survey of the property to prove the development was not flood prone and otherwise did not come within the criteria for a designated development should be undertaken. He pointed out that, at all events, the Council would require a survey and "highly detailed plans, reports and studies, many of which would incorporate at least some elements of a registered survey". He said that a flood statement was likely to be necessary and referred to the need to deal with the disposal of treated waste.
On 10 October 2006 Mr Dutton emailed Mr Owens (copied to Mr Carter and Mr Green) to inform him -
"My clients have rewritten most of their Statement of Environmental Effects to reflect the changes in the proposal since those reports were written. They are now supported by declarations from the various specialist consultants."
He added -
"[Baycorp] would like to submit the application as a "rural tourist facility" as it is in a rural area and will contain tourist recreational facilities (golf course, tennis, bowls, etc.) with some ancillary accommodation (initially perhaps 50 cabins to limit sewer output) and based on the rural, scenic and natural attributes of the locality that appears to be permissible under the zoning and HLEP
They would also like council to consider rezoning the site to a zone which would permit the ultimate rural caravan park they have in mind.
Can you please advise on the likelihood of success or make any comments?"
Mr Owens responded on 13 October 2006 (copied to Mr Carter and Mr Green) indicating that he doubted the proposal conformed with the definition of a Rural Tourist Facility and thought that the definition of "Tourist Facility in the LEP" better described the proposal but such a facility was not permitted by the 1(a1) zone (applying to the land). Mr Owens expressed concern that "this is the third name change for the proposal". He said the documents demonstrated the proposal was a "manufactured home estate or tourist facility" both of which uses were not permitted in the zoning. On the same day Mr Dutton sent an email to Mr Owens (copied to Mr Carter and Mr Green) repeating that the proposal has changed a great deal from the original "manufactured homes estate" so that there were now to be "only as many manufactured homes in the estate as permitted", reducing the "original proposal ... for 550 homes ... [to] around 50 or whatever is permissible under the zone to suit effluent disposal needs, Schedule 3 flooding etc". He discussed the distinction between a tourist facility and a "rural tourist facility" and concluded -
"... if manufactured homes are not permitted they will not be put there.
If this proposal cannot be accepted as a "rural tourist facility" in this zone, please advise would allow the application so we can proceed with a rezoning application.
I would advise my clients that we will submit the application as a "rural tourist facility" as soon as possible."
Mr Owens responded (copied to Mr Carter and Mr Green) in substance saying that he could only comment on the information which he had at hand and that, if the development application was lodged, the Council could undertake a full assessment and would notify of any problems.
When Mr Carter was taken to these emails, he said that he did not recall any of the information adding, "I certainly wouldn't be submitting it as a tourist facility so I couldn't have got this". He could not think of any reason why he would not have got it, then stated -
"A. ... I just don't remember it. I acknowledge that I probably did get it but I don't remember it".
So far as Mr Dutton mentioning the desire to submit the application as a rural tourist facility Mr Carter said that he could actually have told him to indicate that and agreed that it represented a very significant change to the development but maintained that he had no recollection of it. Mr Carter said that the Statement of Environmental Effects had not been rewritten and that he knew nothing about Mr Dutton's suggestion that this had been done. He said he knew nothing about the SEE being "now supported by declarations from the various specialist consultants". Nor did he know anything about asking the council to consider rezoning which would permit the "ultimate rural caravan park they have in mind". At the end of this evidence I asked him -
"Q. So what you are suggesting, as I understand it, is Mr Dutton without authority and knowing you would never agree to it, sought a rural tourist facility approval limited to 50 cabins knowing that that was totally different to your original proposal and never consulted you about it?
A. Not at all.
Q. He never did. Is that what you're saying?
A. Yes.
Q. How would you not discover eventually - lets assume what the Council did?
A. Mr Dutton would have to tell me, wouldn't he?
Q. And you think -
A. I wouldn't agree to it, no. This defeats the whole purpose of what I was trying to achieve with a retirement village."
When it was pointed out to him that he had not responded to Mr Dutton's proposal he replied -
"I haven't seen this before. Today is the first day I've seen it. I know my email address is on the back and I know I probably should have received it. I've never received this before.
His Honour:
Q. But not only was it sent to you, it was sent to Mr Ray Green who was a director of the company?
A. Maybe Mr Ray Green negotiated this with Mr Dutton. I don't know. I didn't.
Q. I see. So had he negotiated it on behalf of Baycorp?
A. He could have.
Q, Then it follows that Mr Dutton would have been complying with the instructions of the plaintiff?
A. That is correct. If he had have. And that discussion never took place between Ray Green and myself. Not ever. I would have remembered this. It is totally radically different to what I wanted to achieve. Not only that, these documents weren't rewritten. There's no two versions of them."
Mr Carter's evidence was that he spoke to Mr Green every two or three days about the proposal. He suggested, as the cross-examination on this subject continued, that he was aware from Mr Reinhold's affidavit (Mr Reinhold was an employee of Mr Dutton at the time and a witness in the trial) that Mr Dutton's computer was not working properly at about this time. A difficulty with this explanation is that it is clear that Mr Owens received Mr Dutton's emails since he replied to them. Mr Carter agreed that the emails indicated that there was a fundamental change to the entire scheme to something that he did not want at all. Mr Carter was taken to his third affidavit, sworn in response to that of Mr Dutton of 18 October 2011. Mr Dutton's affidavit came with six or seven volumes of documents to which he referred. Mr Carter's affidavit responded to many of those documents and denied receiving a number of them, including for example the letter of engagement. He agreed that, if he were of the view that he had not received any of the documents exhibited to Mr Dutton's affidavit, he would have said so and, if he did not deny receiving it, he accepted that it had been sent to him. He was taken to the paragraph that specifically referred to the emails passing between Mr Dutton and Mr Owens between 10 and 13 October 2006. He said that when he read the particular paragraph (52) of Mr Dutton's affidavit he was aware that he did not get any of these emails and he did not know why he did not state this in his own affidavit, explaining, "I must have missed it". He agreed that, if Mr Green received these emails, he would have spoken to Mr Carter about them but he did not do so.
He accepted that Mr Dutton's making a specific reference to the email exchange in his affidavit meant that he regarded it as an important fact but said that he did not bother checking the documents. When asked why, he responded, "I have no idea, I just didn't". At the end of the cross-examination on this subject matter, Mr Carter was asked -
"Q. In respect of all of these 13 October 2006 emails you can't rule out whether you got them or not though can you Mr Carter?
A. No I cannot. To be honest, maybe I got them and don't remember them or I didn't take any notice of them, I don't know. I've never seen them before that I recall. That's all I can say. I don't understand that because I always went through all my emails properly as a proper business person did and I don't understand if I did receive them how I could have missed them. I just don't understand."
I asked Mr Carter whether he still had the computer containing the email communications with Mr Dutton but he said the "computer is in the tip somewhere... I bought another one since". This proposed change is not important of itself. I have set out the relevant material to demonstrate the significant unreliability of Mr Carter's recollection, for whatever reason.
The site is changed and the second proposal put to Council
Baycorp had exchanged contracts for the purchase of the Maria River Road Property in March 2006. In substance, the contract was an option and followed a handwritten informal option signed in January 2006 with one member of the family who owned the property. For reasons that do not matter, Mr Carter decided he would look for another site. In the result he agreed to buy the 125 acre block next door. The first deed of option over the Shoreline Drive Property was executed on 1 December 2006.
The site is about a kilometre north and east of the Hastings River, which flows southeasterly before turning east for a kilometre or so then turning south towards Port Macquarie and the sea.
In the meantime, on 19 October 2006 Mr Donnellan, a solicitor specialising in planning law, who was retained by Mr Carter on 16 October, sent him a lengthy email concerning the first proposal. Mr Carter said that he was retained to look at issues of permissibility, namely whether the development was going to be designated or integrated. Mr Carter said that he was aware of this particular email. In it Mr Donnellan reported on discussions he had with Mr Owens in which Mr Owens agreed that caravan parks were not prohibited on rural 1(a1) zoned land if they were for permanent occupation. He also reported discussions about development for the purpose of a rural tourist facility. Mr Carter agreed that this would only have arisen because he asked Mr Donnellan to take the question up. Of course, doing so was consistent with the previous email exchange which Mr Carter said he had not received. Mr Carter was asked -
"Q. Well why would you have raised it if it wasn't in your mind at the time?
A. I have no idea.
Q. Well one answer is, because it was raised by the emails to which have been brought?
A. I've got to tell you, I don't remember those emails at all and I don't remember anything about rural tourist [facility] but I know this letter and I had not noticed "rural tourist facility" in there before. I've never seen this before."
"If this site kept rising and kept rising to higher ground we would not be here talking about an evacuation route.
Where we've got a problem is this is an island, as the PMF comes up it envelopes it and all of a sudden the people are standing in water and that water may only be up to their ankles or it could be up around their waist or up around their chins. And once that happens the SES are obliged to come and rescue them.
This is where the state government says through its Flood Plain Development Manual, think long and hard about whether you want to do this council, because it puts people's lives at risk, it adds to costs and, by the way council, if you haven't thought about this right, we won't indemnify you and you will wear the cost of loss of life, loss of property."
Aside from the fact that this rather overstates the effect of s 733 of the Local Government Act, it will be seen that the problem only arises where there is no safe evacuation to shelter on the site. By the way, Mr Warnes apparently misunderstood the Murray Dalton flood risk assessment as not suggesting that staying onsite was an option but relied only on early evacuation which, he said, was the opposite of what had been originally proposed by Mr Dutton's flood risk assessment. It is true that Dalton proposed that the park should (or, rather, could) be evacuated early, before flood waters made vehicle movements difficult. The assessment noted that flood peak reached the site 64.5 hours after commencement of the storm and the Bureau of Meteorology issues flood warnings with a minimum of 20 hours evacuation time available prior to access being cut by flood waters. Dalton's assessment said the owner of the site had arranged with helicopter services to supply two helicopters during a flood event when the ferry services would be inoperable, as set out in the Resort Operations Manual which was attached to the application. Furthermore, it was proposed that the owner would have an SES specification 6m flood boat permanently available onsite which would be handled by suitably trained personnel in the event of a flood. The assessment noted that evacuation by vehicles was effectively prevented once flood depths exceeded 1.5m on the access road to the ferry and that ferries ceased to operate at this level. Staged hydrographs showed 20 hours before the flood peak reached the site for the 1:20, 1:50 and 1:100 year events and 22 hours before the peak for the PMF. In the event of residents being isolated on the site, the development had a shop with adequate supplies with additional supplies able to be brought in by using the flood boat or the helicopter service. It was also proposed that an emergency generator would be available to maintain power supply. Accordingly, Mr Warnes understanding in this regard was a misreading of the proposal, which did not envisage that all residents would be evacuated from the site. Mr Warnes criticised the Dalton proposal on the basis that it was based upon the view that the site was a low to medium flood risk when, in fact, it was a high flood risk because the evacuation route was over a high hazard area. However, that route only became high hazard after the time that it was proposed evacuation could and would occur, the danger being the velocity of water coming through the Hastings River which needed to be crossed in order to reach high ground.
Mr Warnes added that the Dalton proposal amounted to a private evacuation plan from the point of view of the SES, a matter to which the Flood Plain Development Manual refers in an appendix dealing with emergency response planning for floods. That appendix deals with the role of SES and the development of a State Flood Plan, a Division Flood Plan (for each SES division) and a local flood plan for each local area with a significant flood problem. Dealing with local flood plans, the appendix stipulates a large number of considerations which need to be covered, including in relation to evacuation, defining the "mechanics of likely evacuation operations" dealing with such things as -
"- numbers of door knockers required to deliver warning;
- the capacity of evacuation routes and the problems of bottlenecking and low point inundation;
- the time available to complete the evacuation before inundation occurs or evacuation routes are lost;
- the transport resources which will be needed and the identification of reception (evacuation) centre sites."
So far as private flood plans are concerned, the appendix states -
"Private or site specific planning refers to the preparation of arrangements aimed at dealing with the impact of flooding on a particular business or household. The SES supports the idea of owners and occupiers of premises in areas of flood risk having a plan for what they should do to prepare for and respond to flooding. To this end, the SES promotes this practice in community and business education activities and continues to develop information to guide the community when they choose to prepare a private flood plan."
However, it is pointed out that private flood plans are "unreliable as a long term risk mitigation measure" since floods are highly variable and planning assumptions about available flood warning time and likely consequences may be mistaken. Furthermore, "businesses and households will have a much lower capacity to undertake the necessary training and practice and so... [their] plans... will be much more prone to failure." In addition, the Manual deprecates the practice of Councils imposing development consent conditions that require site specific plans including those requiring the application to seek SES endorsement of the plan. The SES, for the reasons given, cannot effectively evaluate plans of this kind and, at all events, has no resources for doing so.
Although, as a general approach, it is fair to say that a part of the Dalton proposal involved a private flood plan, in fact its primary focus was on the kind of evacuation which would at all events be sensible, using the roads and ferry services while they were available and staying on the site, neither of which to my mind are private plans within the meaning of the relevant parts of the Manual. It may be otherwise in respect of the suggested use of the flood boat and the helicopters for the possible emergency. However, this issue is one in respect of which reasonable minds might differ. After all, Mr Brown considered that this part of the Manual is concerned with ensuring quality in planning processes at a local level in developing a flood plan but not with an evacuation plan such as was part of the assessment proposed by Dalton. As I understand him, Mr Brown considered that a private flood plan as deprecated in the Manual is a community flood plan which does not involve the SES, the local council, State agencies, Commonwealth agencies, volunteer organisations and the local community as distinct from a particular plan developed by a developer seeking approval for a particular site.
Mr Brown's opinion was ultimately that the material before the Council was insufficient to obtain approval but there were still ways in which the identified problems could have been dealt with and, as a matter of fair judgment, the Council might have been able to approve it. He accepted, however, that approval was unlikely because, as the matter ultimately went to the DAP, the applicant had not provided sufficient information to justify approval. I should mention in fairness, that Mr Brown's view, at least, when he commenced his evidence, was that evacuation to the north utilising Maria River Road was potentially available. Although it appeared that parts may have been flood affected in a 1:100 event and possibly in a PMF, that could not be confirmed without a survey of the road which was not undertaken. As to this, Mr Warnes view was that, having driven along the road he could see that it was, in parts, at a height, (the river being in view) which must necessarily result in its inundation.
In the end, Mr Brown's position fairly appears from the following -
"MORAHAN: The plan that was put forward by Dex to the council was that the people remain in situ, wasn't it?
BROWN: Yes. They would evacuate in part to the building on site, which was the emergency building that was going to be provided. I think it was a community building on the property which would have food and supplies, that sort of stuff, in the building itself."
MORAHAN: And that was a totally impractical suggestion also, wasn't it?
BROWN: I disagree with that. I think that's not a bad solution to the whole process. You need to look at the time in which this area is ... flood affected [which would permit early evacuation following warning of the incoming flood water]."
...
I think the Patterson Britton report, it talks about the floods. Now [it does not take account of the fact that], three phenomenons must occur at the same time. I'm quite sure that's been said in these proceedings at this stage [It had, by Mr Dutton.] One is you have a flood within the Hastings River itself combined with floods coming down from Kempsey, so you can actually get a flood in Kempsey not affecting Port Macquarie. So you have got to have those two at the same time and with a king tide of 2.2 coming at the same time. All three must be at the same time, which would be pretty rare. So you can have a flood in Kempsey that can come down the Maria River but not affect the Hastings River or Port Macquarie."
Mr Brown acted upon the assumption (fully justified in my view but, from his point of view an assumption) that the refuge area was above the PMF. So far as the Dalton assessment was concerned, Mr Brown thought that reasonable minds could differ about whether it was acceptable; he thought it was and, although the Council might differ on the issue, that was just something which occurred from time to time with development applications.
Mr Warnes' answer to the last point made by Mr Brown was -
"... I certainly don't know about the issue of flooding in the Kempsey catchment, but the flood study that I understand was done for the Hastings River was simply on the Hastings River and that indicated the likelihood of flooding in this river system, which includes Maria River, the Hastings River and there's another tributary there that also floods, and the plans show, well, this is the floodplain in these different events and their expectation is these are the likely happenings. If you are going to have a flood event in the Hastings you are also likely to have a flood event in the Maria River."
Mr Warnes was taken to the Dalton proposal which, as I have mentioned, showed an area of filling and regrading in respect of a community area above the PMF. He agreed that if the PMF of 6.7m AHD was correct, the proposal did not fall fowl of the Flood Plan Manual. He said -
"Yes, assume we can fill that part, everything would be fine. My view would be certainly that would be one way of dealing with the issue."
However, he pointed out that this did not address the medical emergency problem which might require evacuation and thus fall back onto the SES for the boat or helicopter. Given, however, the proposal that the development would have its own flood boat and there were arrangements for chartering helicopters (even accepting that this is a private evacuation plan in a sense), although one can accept that the Council might not accept this solution, it is far from certain to my mind that it would do so. Indeed, Mr Warnes implied on later cross-examination that the problem of emergency evacuation was not decisive since he returned to arguing that, in fact, the PMF was not as stipulated by Dalton or, for that matter the Council because, on his view, it did not included allowances for global warming and the inherent uncertainties of attempting to measure PMF. I have already dealt with the global warming point and it is evident, as to the second qualification, that the PMF is, for all its potential uncertainty, the relevant figure. It seems to me, also, that there was no sound evidentiary basis for Mr Warnes opinion that the Council would adopt what I might call his extreme conservative position although, that is not to gainsay that such a position was an unreasonable one.
Mr Warnes was taken to the point that, until the Blackcreek survey was done, not enough was known about the site to have determined the application could not succeed -
"MORAHAN: Mr Warnes, just on that point, do you have any comment in respect of that survey point, just that survey point?
WARNES: If you talk about the methodology about the planner bringing on board a project for a development site, I do a thing which I call a desktop analysis.
MORAHAN: I am not asking about that.
WARNES: No, this is where I am going to. I do a desktop analysis and find out what publicly available information there is, and having looked at that say look, these issues rates large in relation to the potential for your development. In the circumstances of this matter I did that exercise. I said, well, what was there publicly available to the applicant at the time that this application was made. One of those foremost in my mind was the Hastings River Flood Study, and I go to the Hastings River Flood Study and I see in the PMF the whole of the site is inundated. I go to the Hastings River Flood Study and I see from the mapping that Maria River Road is in fact set in the 1:20 year flood, which is very early in the flood process. I see its set even further in the 1:100, but the idea is the evacuation is at the early stages of the flood. I certainly didn't have access to the information in the Dalton report that shows that in fact flood access to the Maria River Road and the ferries cut out even earlier in the process than the 1:20, but if I go to 30 in the Hastings River Flood Study shows the levels of inundation likely to occur in that precedent flood.
HIS HONOUR: I don't think you're quite answering the question. I think the question boils down to this. Were you able to draw a sufficient conclusion about the evacuation problem from publicly available material or would you, as Mr Brown has said, really need a survey to deal with that question before you could give a reasonably certain answer?
WARNES: I was just about to go to that. As I was going to say, because I went to figure 30 in the flood study and I could approximate the location in red of the Maria River Road on the 1:20 and I can see it goes into a flood area of zero to 1 metre, 1 metre to 2 metres, that without having any survey, without any need for recourse to survey, this is information that said to me it wasn't available. There's no need to carry out 35 kilometres of survey of a road. I think I also made the comment earlier yesterday that I drove out there and had a look and I could see standing at the side of Maria River Road I could see the river. There was no disparity between the two. With onsite observations and simply going to this plan I wouldn't have put the client to any cost of a survey for the road.
MORAHAN: Do you agree with that, Mr Brown?
BROWN: The plans we looked at are very broad brushed with no information whatsoever.
MORAHAN: They do have information.
BROWN: They have information, but they don't have much detail all the way through."
Thus, an important point of difference is that Mr Warnes considered that the HRFS maps showed the land was inundated in a PMF whilst Mr Brown did not accept this, a view which was shown to be correct by the Blackcreek surveys. They also differed as to the need to obtain a survey of the Maria River Road, to see whether in fact the HRFS map was accurate in showing that parts were in the flood plain, which Mr Warnes accepted, and Mr Brown did not for technical reasons. I am not in a position to resolve their difference as to this, but it does not seem to me that the matter is beyond a reasonable difference of opinion.
Mr Dutton's approach
Mr Dutton had some knowledge of the North Shore and was aware that there were some flooding problems and access problems with the ferry which was the sole access and he thought that this would raise difficulties in getting approval. He said that he was not well aware, I take it of the extent and nature of the flooding problem, but was concerned about it as likely to be a relevant issue. The flood report provided by Baycorp in its proposal documents on the Maria River Road referred to the 1:100 year flood levels with an escape path through the road network to Maria River Road for storm events up to this level. Of course, this had been, unknown to Mr Dutton, been cut and pasted from some other development application. I have mentioned Mr Dutton's visit to the Maria River Road site.
Mr Dutton said that on 11 January 2007 he commenced preparation of flood assessment for the site. For this purpose he telephoned the Council and, on making known that his enquiry was about the flood level on a particular site, was put through to someone in the engineering department who told him that the predicted 1:100 year flood level is 3.3m AHD and the property seemed to have negligible flood velocity. Although some criticism has been levelled at his choice at this measure for the 1:100 year flood, it seems to me that his enquiry was a reasonable one and he was entitled to rely on the response. Furthermore, the HRFS supports this level, once adjustment is made for the position of the site. He was also informed at the time that there was no flood management or evacuation plan for the North Shore area. Mr Dutton said that he referred to the HRFS, including the maps which showed the predicted extent of flooding in the 1:100 year flood and the extreme flood and also the flood development Manual to ensure that his report was generally in accordance with it. He noted, as it was reasonable for him to do so, the policy objective of avoiding unnecessary sterilisation of flood prone land. He also examined Google earth photographs and also maps available from the NSW Government (LPI), the Port Macquarie Topographic Map, the s 149 Certificate and the survey plan which he had been given by Mr Carter on which he drew in blue a line representing the 1:100 year flood level at 3.3m AHD. I should note that, at the pre-lodgement meeting held on 23 January 2007 there was a discussion of the flooding and the minutes refer to the "need to detail how a site would cope with isolation in extreme flood (e.g. 2 - 3 weeks without road access, power, water desalination or onsite treated effluent disposal)". There may have been some uncertainty about the meaning of the term "extreme flood". In later references it has been taken to refer to the PMF but I think, at this time, it was intended to refer to the 1:100 year flood event, as stated by Mr Dutton in his emailed report to Mr Carter about the meeting on 24 January 2007.
Mr Dutton's reaction to the Council officer's views was that he did not necessarily agree with them since there had been no detailed survey done as to the flood levels over Maria River Road whilst the plans in the HRFS were stated to be approximations based on aerial photographs rather than surveys. Accordingly, he thought a survey would need to be done to determine if or when road access to the north would be cut off in a flood and a consideration given to improvement of the road if it were necessary. It seems to me that, as an initial response, this was reasonable, although it did not take on the problem of the possible PMF level. The Edwards survey was plainly inadequate and it was sometime before the Blackcreek survey was available. In my opinion, Mr Dutton was entitled to take the view that the survey and site maps ultimately provided to the Council together with his explanations at least permitted the Council to approve the development subject, of course, to its other requirements being met.
Mr Dutton was subject to a critical cross-examination about his permitting, as it were, this plan to go to Council despite its many problems. It is important to note that the development application for the second proposal was made some time after the first submission of Baycorp's proposal. It was plainly designed to see what Council's response to the concept. It was not therefore to the point to criticise Mr Dutton for doing what his client insisted he should do, as I am satisfied he did. Mr Dutton described it as a concept report not submitted to a company for a development application but as a forerunner to a development application. Indeed, the Council's planning manager, Mr Owens, responded on 14 September with a helpful analysis of the concept plan.
Mr Dutton's evidence is that the 1:100 year flood is known as the "peak flood level" and is not a reference to the PMF which is, Mr Dutton said rarely discussed or used. His assessment refers to a "predicted flood level" which is the language used by the Council officer whom he consulted, but he understood it to mean the 1:100 year flood level. Mr Dutton said that he looked at the Flood Plain Development Manual which required the Council to have regard to the PMF but that he thought that, though it was one of their requirements, it was not necessarily insurmountable, it was more the concern about the 1:100 year flood level which needed to be addressed. Mr Dutton's view was that the Council, in effect, glances at the PMF but regarded the 1:100 year level as the crucial matter: although the Council must have regard to the PMF, the question is what importance is placed on it. Mr Dutton (reasonably) regarded it as "a very important premise of the policy ... that all flood prone land is a valuable resource and should not be sterilised by necessarily precluding it from development and all development applications should be considered on their merits". Mr Dutton appreciated that the Manual's reference to flood prone land is to land susceptible to flooding in a PMF event, which was, he said, a big step from previous studies which all referred to the 100 year flood "as being more or less the limits of flood prone liability".
Mr Dutton agreed that in December 2006 he was aware that the Council would apply a very rigorous approach in respect of the safety of people on the development which would involve looking closely at flooding and evacuation. He said that he suspected that the Council would look at the PMF as an overview of how it affected the site in conjunction with any evacuation if it was needed. He was aware, after April 2007 when the Port Macquarie Hastings LGA Flood Policy became available, that it provided -
"caravan parks and manufactured housing reliant upon evacuation through high hazard floodway or high hazard storage conditions will not be supported by council."
The earliest version of the concept plan proposed -
"A flood management strategy will be prepared and implemented in the event of a flood warning being issued by the State Emergency Services. The strategy will include evacuating all residents and non-essential personnel from the site and the safe storage of equipment and machinery above the flood level."
Of course, this was Baycorp's proposal. In Mr Dutton's first flood assessment, as has been pointed out, it was said -
"With the warning time possible of at least 24 hours and the fact that all residential areas will be flood free there should be no need for evacuations or for major emergency preparations".
Mr Dutton agreed (as is obvious at all events) that in this assessment he did not address what might need to happen in a PMF event. He said that it was later addressed when Council brought it to Dex's attention. Although it appears that there was some early view that helicopters might be used to evacuate at least some of the residents in the event of a flood, it was later proposed as being available for emergency medical evacuations, a view with which Mr Dutton said he tended to agree though (as I understand it, early in the piece) he did not think it was a "very firm idea". There was also a suggestion made to Council on Mr Dutton's instigation and he had hoped with SES support that there would be an SES flood control centre constructed on the site, which would be above the PMF level where all flood and emergency operations on the North Shore could be controlled and co-ordinated together with at least one, possibly two, flood boats complying with SES specifications, there being at the time no SES presence on the North Shore. Mr Dutton thought that, as a package, the proposed flood plan may have been acceptable to Council.
Mr Dutton was taken to the September 2007 site plan based on the Blackcreek Engineering survey. He pointed out that although that site plan indicated a line at 6.4m AHD, it did not matter if the appropriate measurement was 6.7m AHD because this was still achievable, the difference not being significant. The plan which ultimately went to Council in 2008 was, in Mr Dutton's view a preliminary plan which was capable of change. He said -
"A. ... I would have expected Council to condition us, to condition any approval to say or defer commencement to say you need to satisfy us that there is sufficient area on the site for the emergency accommodation of residents plus a certain number of [the] public.
Q. You knew that it was highly unlikely that in relation to public safety, the safety of these people on the site in an emergency situation, that the Council would allow a deferred consent?
A. No, I didn't know that.
Q. You seriously thought that they would allow a deferred consent on something such as this?
A. Yes, it's reasonable. It has happened before, in my experience."
Mr Dutton said that the plan was "a negotiating plan", and this was made clear to the Council, one way or another.
Mr Dutton thought that the Council's knowledge of the property was "very flimsy" and given that the s 149 Certificate said that the land was not flood prone, which he thought was wrong, he also was of the opinion that Council's survey or whatever it was relying on was incorrect. Mr Dutton's view, supported by the Blackcreek surveys was that a significant part of the site was above the PMF and further proposed filling would expand that area to create a safe refuge in a PMF. It was not therefore a flood island in the sense in which the term was used by the Council. (Much of the cross-examination on this point was therefore confusing because this distinction was not appreciated. That it is important is clear from the references (mentioned above) by the Council to its understanding that the land would be inundated in a PMF.)
Mr Dutton was cross-examined as to why, in his flood assessment report he made no reference to the HRFS or the Flood Plain Development Manual. He said that this was because it was assessment and not a risk assessment, which could not be undertaken because, at that time in February 2007 he had no survey or, at least, no appropriate survey. Reference to the HRFS and the Manual would have been appropriate in a risk assessment. The point seems to me to be an obvious one. Both the HRFS and the Flood Plain Manual refer to flood levels at various degrees of likelihood. Unless a survey of the land was available which showed the AHD contours at informative heights, neither of those documents were capable of being addressed. In my view Mr Dutton was saying no more than this and it was no more than common sense.
Although the flood issue was not specifically raised in the 21 points made in the Council's letter of 5 April 2007, as at the date of that letter Mr Dutton agreed that the flooding issue concerns raised by the Council at the pre-lodgement meeting were substantial and outstanding. Mr Dutton said that it appeared to him that, following the pre-lodgement meeting, their concern about flooding became a little relaxed since it was not referred in the letter of 5 April 2007. He thought that, if Council were as concerned about flooding as they intimated in the pre-lodgement meeting, it could have been raised specifically in the letter and, as it was, it was not really raised again until November. However, he said (candidly) that he was not particularly relieved because he understood that flooding was still an issue, certainly as to the significance of the PMF.
Mr Dutton explained in his evidence that the Council's calculation of the PMF in the area close to the site (6.8m AHD at the junction of the Maria and Hastings rivers) was incorrect and there was an error in the model for that area since a lot of the water flows to the north and not all to the south, as the flood study assumed and, accordingly, he chose another site as the appropriate indicator, being Hibbard Ferry, at which the PMF was 6.4m AHD. Mr Dutton said that he later adopted the 6.7m AHD as the PMF line for the January 2009 site plan because of the Council's insistence on this level. Mr Dutton's reference to the run off to the north in the Maria River which he thought was wrongly ignored in the study was derived from his experience of the area.
Conclusion
I am satisfied that, although it may be that the application was unlikely to have been approved, it was not inevitable that it would have failed on the flood issue. The risk of a PMF significantly affecting the site was slight. Although the HRFS appeared to show inundation in such an event, it was reasonable to wait until a survey was obtained before determining the actual flood risk. A substantial area of safe refuge was proposed and would have been available, with the necessary safeguards as to food, power, sewage, shelter and provisions. With an adequate flood warning (likely to be made) many residents could leave the site for Port Macquarie while the ferry was still operating providing they did so within a few hours. The adequacy of helicopter and/or flood boat evacuation for medical emergencies was very much a matter of judgment.
In my judgment it was not at all impossible that a Council in the position of the Hastings-Port Macquarie Council would have regarded the development (if it were otherwise appropriate) as approvable, given the policy stated in the Flood Development Manual about development even in flood prone areas. I do not accept that the plaintiff has established that the development "could never have been approved".
Accordingly, there must be judgment for the defendants.
Damages
I have already set out the arrangements between the plaintiff and Mr Carter in respect to the payment of the cost of the development application. It follows that, the development having been refused, Baycorp is under no obligation to pay Mr Carter that cost and, therefore, has suffered no loss under this head. As to the claim for loss of profits, this is complex and problematical for Baycorp to prove. In light of my judgment on liability, I do not propose to undertake this exercise.
Orders
I make the following orders -
(1). Judgment for the defendants.
(2). Costs to be determined following submissions.
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Amendments
02 October 2014 - typographical error
Amended paragraphs: 157
Decision last updated: 02 October 2014
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