Gales Holdings Pty Ltd v Tweed Shire Council

[2013] NSWCA 382

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Gales Holdings Pty Limited v Tweed Shire Council [2013] NSWCA 382

Hearing dates:

5 June 2013

Decision date:

18 November 2013

Before:

Emmett JA at [1];
Leeming JA at [276];
Sackville AJA at [284]

Decision:

(1) The appeal be allowed in part.

(2) The cross-appeal be allowed in part.

(3) The parties bring in short minutes of order giving effect to these reasons no later than 2 December 2013.

(4) The parties file any submissions they wish to on the question of costs of the proceedings at first instance and of the appeal no later than 2 December 2013.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

NUISANCE - stormwater runoff onto appellant's land - whether unreasonable interference with appellant's use and enjoyment of its land - whether appellant tolerated alleged nuisance - relevance and effect of that toleration to whether nuisance committed

NUISANCE - whether damages in nuisance limited to consequences of the alleged nuisance that were reasonably foreseeable - whether advent of a protected species of frog was a reasonably foreseeable consequence of the alleged nuisance

STATUTORY DEFENCES - whether alleged nuisance by respondent council fell within an immunity under s 45 Civil Liability Act 2002 - whether council entitled to rely on good faith defences under s 733 Local Government Act 1993 and s 43A Civil Liability Act 2002

Legislation Cited:

Civil Liability Act 2002, ss 43A, 45
Endangered Fauna (Interim Protection) Act 1991
Environmental Planning and Assessment Act 1979, ss 5, 5A, 79B, 79C, 111, 112, Parts 4 and 5
Environmental Protection and Biodiversity Conservation Act 1999 (Cth)
Local Government Act 1993, ss 59A, 733
National Parks and Wildlife Act 1974, s 118D
Protection of the Environment Operations Act 1997, ss 120, 142A
Roads Act 1993
Supreme Court Act 1970, s 68
Threatened Species Conservation Act 1995
Tweed Local Environmental Plan 2000
Tweed Vegetation Management Plan 1999

Cases Cited:

AB v South West Water Services Ltd [1993] QB 507
Australian National Airlines Commission v Newman [1987] HCA 9; 162 CLR 466
Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; 179 CLR 520
Cambridge Water Co v Eastern Counties Leather Plc [1994] 2 AC 264
Commonwealth v Murray (1988) Aust Torts Rep 80-207
Council of the City of Liverpool v Turano [2008] NSWCA 270
Don Brass Foundry v Stead (1948) 48 SR (NSW) 482
Elston v Dore [1982] HCA 71; 149 CLR 480
Fennell v Robson Excavations Pty Ltd [1977] 2 NSWLR 486
Gartner v Kidman [1962] HCA 27; 108 CLR 12
Hargrave v Goldman [1963] HCA 56; 110 CLR 40
Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; 44 FCR 290
Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383
North Sydney Council v Roman [2007] NSWCA 27; 69 NSWLR 240
Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278; 74 NSWLR 102
Stephens v Giovenco; Dick v Giovenco [2011] NSWCA 53
Sutherland Shire Council v Becker [2006] NSWCA 344; 150 LGERA 184

Texts Cited:

Horace, Ars Poetica
Aristophanes, The Frogs

Category:

Principal judgment

Parties:

Gale Holdings Pty Limited (Appellant)
Tweed Shire Council (Respondent)

Representation:

Counsel:
TF Robertson SC; M Green; JE Lazarus (Appellant)
SR Donaldson SC; S Glascott (Respondent)
Solicitors:
Woolf Associates (Appellant)
DLA Piper (Respondent)

File Number(s):

CA 2012/108238

 Decision under appeal 

Citation:

[2011] NSWSC 1128

Date of Decision:

2012-03-13 00:00:00

Before:

Bergin CJ at Eq

File Number(s):

2005/261912

Judgment

1. EMMETT JA:

TABLE OF CONTENTS

Introduction	[2]
Gales' Claims	[10]
The Land	[26]
The Wallum Froglet	[24]
Background to the Alleged Nuisance	[41]
Development Applications in respect of the Land	[75]
The Primary Judge's Findings and Conclusions	[103]
The Issues in the Appeals	[127]
Disposition of the Issues	[129]
- Legal Principles	[131]
- Whether the Council Committed Nuisance	[145]
- North of Turnock Street	[148]
- South of Turnock Street	[166]
Conclusion as to Nuisance	[174]
Statutory Defences	[175]
- Section 733(1)(b) of the LGA 1993	[181]
- Section 45 of the Liability Act	[191]
- Section 43A of the Liability Act	[195]
Toleration	[198]
Damages and Relief	[215]
- Diminution in Value because of Wallum Froglets	[218]
- Costs of Drainage Works in 2004	[263]
- Blue Jay Circuit Works	[264]
- Treating Stormwater for the Wallum Froglet Habitat	[268]
Conclusion and Orders	[271]

1. These appeals are concerned with a colony of frogs. They are not the βάτραχοι of Aristophanes, who inhabit the marshes of the River Styx, encountered by Dionysus on his way to the Kingdom of Hades. Rather, the appeals are concerned with a colony of crinia tinnula, or Wallum froglets, which inhabit ephemeral ponds on land owned by the appellant, Gales Holding Pty Limited (Gales). It is likely that both parties to these proceedings would agree with the response of Dionysus to the croaking ("βρεκεκεκέξ κοάξ κοάξ") of the βάτραχοι:

That is to say:

"May you all utterly perish with your croaking".

1. Gales is the owner of approximately 27 hectares of undeveloped land at Kingscliff in northern New South Wales (the Land). The Land is in the local government area of the respondent, Tweed Shire Council (the Council).

1. Gales commenced proceedings against the Council in the Equity Division of the Court, claiming declarations that it had been and continued to be guilty of nuisance:

• in causing or allowing stormwater runoff to discharge directly and indirectly onto the Land; and
• in preventing and obstructing stormwater runoff from passing and flowing away from the Land.

Gales also claimed injunctions restraining the Council from causing or permitting stormwater runoff to discharge onto the Land so as to cause a nuisance and requiring the Council to take such steps to remove, or permit the removal of, any obstruction preventing stormwater runoff from passing through and flowing away from the Land. In addition, Gales claimed damages under s 68 of the Supreme Court Act 1970, for both past injury and continuing and future injury.

1. The gravamen of Gales' complaint is that the stormwater runoff that flowed onto the Land and did not adequately flow away from the Land caused its substantial wetting up, which in turn resulted in the development of a habitat for the Wallum froglet, which is a protected species.

1. Gales alleged that the habitat developed over a period of time commencing in around 1999. The result of the establishment of the habitat was that, as one of several conditions of obtaining development approval in respect of the Land, Gales will be required to set aside part of the Land as a perpetual habitat for the Wallum froglet (the Condition). It says that the Condition has resulted in a significant diminution in the value of the Land. Gales also makes other complaints of damage.

1. On 13 March 2012, for reasons published on 21 September 2011, the Chief Judge in Equity:

• declared that, on and from 4 May 2004, the Council had been and continued to be guilty of nuisance by discharging untreated stormwater from its drains onto the Land and preventing stormwater from flowing away from the Land;
• ordered the Council to pay damages of $600,000 to Gales;
• ordered that if Gales be required to maintain a habitat for the Wallum froglet, the Council pay to Gales 30 per cent of Gales' costs of treating the stormwater runoff to make it suitable for the Wallum froglet habitat up to the date of completion of either its drainage works on the Land or of the Blue Jay Circuit Scheme, whichever be the earlier;
• ordered the Council to pay to Gales damages in the sum of $150,000 for the costs of expert advice and assistance in respect of the table drain installed on the Land in 2004 and the costs of and associated with its construction;
• ordered the Council to undertake works at its own cost on the Quigan Street drainage outlets in accordance with a concept plan and specifications identified in the order; and
• ordered the Council to pay 75 per cent of Gales' costs of the proceedings.

Blue Jay Circuit is a roadway to the west of the Land, where new development has occurred. The new development incorporates drainage works that will alleviate some of the problems about which Gales complained.

1. On 13 June 2012, Gales filed a notice of appeal from that part of the orders made by the primary judge that limited the finding of nuisance to the period after 4 May 2004 and from the refusal of the primary judge to award damages for the loss allegedly sustained by reason of the ecological changes to the Land brought about by stormwater inundation. The notice of appeal sought an order substituting 19 October 1999 for 4 May 2004 as the date on which the nuisance commenced and an order that the matter be remitted to the primary judge for determination of how much the Land's value was diminished by reason of the presence of Wallum froglets and the Condition.

1. By notice of cross-appeal filed on 27 June 2012, the Council cross-appealed from that part of the primary judge's orders that involved the declaration of nuisance, the rejection of the availability of statutory defences raised by the Council to any nuisance found to exist and the awarding of damages.

Gales' Claims

1. Gales' allegations in its further amended statement of claim filed on 7 March 2011 may be summarised as follows:

• Gales has owned the Land since 1974;
• stormwater runoff currently flows directly and indirectly onto the Land from a catchment area to the Land's north, east and south;
• in 1974, stormwater runoff coming onto the Land drained to the Tweed River by the following routes:
• a natural watercourse to the Land's north (the natural water course), which flowed into the Tweed River;
• a northerly flowing open drain on the Land's western boundary (the eastern drain), which flowed into a westerly flowing open drain to the Land's northwest (the northern drain), which flowed into the Chinderah drain and thence into the Tweed River; and
• a southwesterly flowing open drain flowing from the Land's eastern boundary through the Land and then flowing west (the southwesterly drain), which flowed into the Chinderah drain and thence into the Tweed River;
• by 1984, drainage of stormwater runoff from the Land to the natural watercourse had been blocked as a result of a development to the Land's northwest (the Elouera Nursing Home);
• by 1995, the eastern drain and the northern drain had been filled in during the course of a development to the Land's west (the Noble Park Estate);
• the Council permitted the filling of the northern drain in 1995 and then failed to construct an adequate alternative drainage route;
• in 1997, the Council constructed Elrond Drive and Turnock Street across the Land with an inadequate culvert and without table drains and has failed and continues to fail to provide an adequate culvert and table drains;
• the Council failed to provide adequate access for fauna under Turnock Street and Elrond Drive and continues to fail to do so;
• the Council constructed or permitted the construction of stormwater outlets and a gutter diversion at the corner of Quigan Street and Boomerang Street (the Quigan Street outlets), discharging stormwater runoff directly onto the Land;
• the Council constructed or permitted the construction of stormwater outlets near the corner of Quigan Street, Herford Street and Cudgen Road and to the west of that intersection (the Quigan-Herford Street outlets), discharging stormwater runoff onto the Quigan Street road reserve and then onto the Land;
• in about 1994, the Council constructed or permitted the construction of two stormwater outlets at the northern corner of the Land discharging stormwater runoff directly onto the Land (the Northern Corner outlets);
• in or prior to 1996, the Council constructed or permitted the construction of a stormwater outlet near the northeastern boundary of the Land carrying stormwater runoff from Pearl Street and discharging stormwater runoff both directly and indirectly onto the Land (the Pearl Street outlet);
• in 1997, the Council constructed a stormwater outlet on Turnock Street near the Land's northeastern boundary discharging stormwater runoff directly onto the Land (the Turnock Street outlet);
• the Council has continued to allow developments whereby the volume, frequency, velocity and peak flows of stormwater onto the Land, redirected and concentrated through all of the stormwater outlets described above, was unreasonably increased;
• the Council has permitted and continues to permit urban stormwater runoff to flow onto the Land by way of those stormwater outlets, without appropriate treatment of it to maintain water quality;
• the Council has failed and continues to fail to maintain on a regular and timely basis the drains that it owns or is responsible for and that would, if properly maintained, convey stormwater away from the Land;
• the Council's acts and their cumulative effect:
• caused and causes the stormwater runoff coming onto the Land to pool and remain in and on the Land more frequently, for longer periods and in greater quantities than in its natural state;
• diverted and altered the usual and regular course of the stormwater runoff coming onto the Land;
• caused and continues to cause a decrease in the quality of the stormwater runoff coming onto the Land;
• prevented and obstructed, and continues to prevent and obstruct, stormwater runoff from passing through and flowing from the Land in the drains described above and the natural water courses in and through which stormwater had, prior to the acts of the Council, regularly passed and flowed;
• caused and continues to cause the stormwater runoff coming onto the Land to be re-directed and concentrated, and to flow onto and pass through the Land, in greater volumes and with greater velocity and frequency and higher peak flows than it would have but for the acts of the Council;
• caused and continues to cause flooding of the Land more frequently, for longer periods and in greater quantities than in its natural state; and
• caused and continues to cause ecological changes on the Land, including creation of habitats suitable for Wallum froglets;
• as a consequence of the matters alleged above, the Land was, and continues to be, physically damaged and Gales' use and enjoyment of the Land was and continues to be unreasonably interfered with;
• the matters alleged above constitute, and continue from time to time to constitute, a nuisance; and
• as a consequence of the matters alleged above, Gales has suffered, is suffering and will continue to suffer, loss and damage.

1. There is little dispute as to the primary facts that give rise to Gales' claim. The real dispute between the parties concerns their appropriate characterisation. As a result, it has been necessary to examine the facts in some considerable detail. The principal questions are whether they show that the Council has been guilty of nuisance since 19 October 1999 and, if so, whether Gales can recover as damage the amount of any diminution in the Land's value, due to any requirement to maintain a habitat for Wallum froglets on the Land.

1. For the reasons below, I have reached the following conclusions on the principal issues. The Council committed nuisance from before 1999. The Council's statutory defences, or defences based on statutory immunities, are not made out. However, the advent of the Wallum froglets on the Land was not reasonably foreseeable to the Council as a consequence of its nuisance and so the Council is not liable in damages to Gales.

The Land

1. The Land's boundaries are shown by the pale green line on the photograph in Appendix 1 to these reasons. Turnock Street dissects the Land. Pearl Street and Kingscliff Street are to the east and Quigan Street is to the south. Turnock Street meets Elrond Drive to the southwest of the Land at a roundabout. Elrond Drive also dissects the Land. Elrond Drive runs in a northwesterly direction along the southwestern boundary of the Land north of Turnock Street. The western boundary of the Land north of Turnock Street abuts the eastern boundary of the Noble Park Estate. The Noble Park Estate's northern boundary is the site of the northern drain that is now filled in. To the north of the Land are the Elouera Nursing Home and the Kingscliff Bowls Club (the Bowling Club).

1. Prior to 1984, the drainage of the Land and of the Kingscliff area generally was as depicted in the photograph in Appendix 2 to these reasons. Stormwater drained from the Land to the Tweed River by way of the northern drain, the eastern drain, the southwesterly drain, the natural watercourse and the Chinderah drain, generally as described above (see para [10]).

1. The Land is zoned 2(c) under the Tweed Local Environmental Plan2000 (LEP 2000). The primary objectives of LEP 2000 were to identify land for urban expansion and ensure its optimal utilisation consistent with environmental constraints and the need to minimise residential landtake. A secondary objective was to allow associated non-residential developments so as to ensure that sensitive environmental areas within the zone were protected from adverse impacts. Another objective was also to promote development consistent with what are described as principles of ecologically sustainable development. The Council could grant consent for development within the zone only if satisfied that the development was consistent with the zone's primary objective, it had considered the LEP 2000's other relevant aims and objectives and it was satisfied that the development would not have an unacceptable cumulative impact on the community, locality or catchment that would be affected by it.

1. Dr Harry Segal and his wife acquired the Land in 1969. They transferred the Land to Gales in 1974. Dr Segal is a director and controlling shareholder of Gales. Since 1977, Dr Segal's son, Mr Stephen Segal, has also been a director of Gales and Mr Stephen Segal assumed the management of the Land in the late 1990s.

1. The Land was cleared of large vegetation in the 1970s and was used until the 1990s for grazing cattle and thereafter for agistment of horses. From the 1970s to the late 1990s, one could walk over the Land without any restriction by reason of flooding and the Land was not overly moist, except for one area on the Land's southeastern edge near Quigan Street. Between the 1970s and the early 1990s, one could access the Land on foot and by tractor and utility, and vehicles were never bogged.

1. Between 1971 and the 1990s, the Land was a large open area with a few scattered trees. After rainfall, some of it was damp and moist, but never sludgy or drenched with water. There was no inundation of water, except after certain flooding events. After such events the water level always returned to normal, in the sense that the Land's drains were between half and three quarters full, depending on the tide. The Land's vegetation was the same as the surrounding land, being mostly low-lying scrub, such as bottlebrush and small trees.

1. In 1978, one could travel in a small boat up the northern drain for about a third of a kilometre. At that time, the northern drain was a natural watercourse that had been dug out to make it deeper. It was about 2 to 3 metres wide when full of water and about 1.5 to 2 metres deep at kingtide. The northern drain's banks were covered in grass, sedge and native plants and it was lined with mangroves near its intersection with the Chinderah drain. The northern drain was in much the same condition in 1991 as it was in 1978. The water in the drain was at least waist-deep.

1. In 1991, there were acacias on the Land's northeastern side. There was a wet patch on the Land north of where an extension of Turnock Street was later constructed, in which there was a 2 to 3 metre area with a sandy bottom where water would rise to just below one's knees. It was a natural depression, grazed by cattle and with clusters of small trees and patches of sedge.

1. From the 1970s to the 1990s, cattle grazed on the Land and no part of it was wet, flooded or submerged. There were wallabies and kangaroos and many small trees. Once a year, the local fire brigade practised fire management skills on it.

1. In 1990 and 1991, one could drive an eleven tonne tip truck through the Land with a tractor and spraying equipment on the back of the truck, together weighing about 6 tonnes. The ground was then rock solid and the truck or tractor did not become bogged. There were then about 30 horses agisted on the Land.

1. After the Turnock Street extension was constructed in 1997, the Land's vegetation was slashed at least annually both north and south of Turnock Street, however it became necessary to use two tractors. After Turnock Street's construction, the Land became so soggy that one tractor would be bogged continuously such that the second tractor would have to pull the first out. The Land's vegetation also became thicker, with more reedy types of grass.

The Wallum Froglet

1. The Wallum froglet is a vulnerable species under the Threatened Species Conservation Act 1995 (the Threatened Species Act). It was first given protected status in 1992, when it was listed as a vulnerable and rare species in schedule 12 of the National Parks and Wildlife Act1974 (the National Parks Act). If a proposed development would significantly affect a threatened species, the Environmental Planning and Assessment Act 1979 (the Planning Act) requires a species impact statement to be prepared before the application may be considered. The development's impact on the threatened species must be assessed when determining the application. It is an offence under the National Parks Act for a person to harm any threatened species. A vulnerable species is a threatened species.

1. Five reports were prepared for either the Council or Gales between 1994 and the commencement of the proceedings. They were as follows:

(1)   In June 1994, Mr Warren's report for Gales (the First Report);

(2)   In May 1996, Woodward-Clyde's report for the Council (the Second Report);

(3)   In 1999, another report by Mr Warren for Gales (the Third Report);

(4)   In May 1999, another report by Woodward-Clyde for the Council (the Fourth Report); and

(5)   In December 2002, a report by Planit Consulting Pty Limited (Planit) for Gales (the Fifth Report).

1. In mid 1994, Gales applied to the Council for approval for clearing operations on parts of the Land covered by a tree preservation order. In June 1994, Mr James Warren, a biological and environmental consultant, provided the First Report to Gales. The First Report noted that the Land was being utilised for grazing and identified a paperbark forest and a clump of Wallum bottlebrush in the Land's south. The First Report referred to a check of local records that had identified significant threatened species recorded in the area and said that a number of endangered species might also be expected to occur in the area. Although the First Report mentioned the Wallum tree frog (Litoria olongburensis), there was no mention of the Wallum froglet, though the survey recorded that it was possible, though unlikely, that the site contained Wallum frogs. It said that if the Wallum frogs occurred they would most likely be in the perennially wet areas associated with the paperbark forests in the Land's south.

1. In March 1996, Woodward-Clyde, consulting engineers, provided a proposal to the Council for a flora and fauna assessment of the Land, including an amphibian survey utilising call recording and analysis. Woodward-Clyde said that a Queensland Museum officer would perform the call analysis and that the frog survey would be best done between August and March, during rainfall, to ensure maximal species identification. In May 1996, Woodward-Clyde produced the Second Report entitled "Flora and Fauna Assessment of a Proposed Road Deviation".

1. The Second Report referred to records indicating that certain threatened fauna, including the Wallum froglet and the Wallum tree frog, could occur either on the site of the proposed Turnock Street extension or nearby. It said that sampling efforts had tried to detect the widest possible range of species but that neither the Wallum froglet nor the Wallum tree frog was recorded. It referred to reports that both species were particularly sensitive to alterations in water chemistry and were found only in oligotrophic waters. The term "oligotrophic" refers to lakes or ponds with low levels of nutrients and high levels of dissolved oxygen. The Second Report also said that the Wallum froglet had been recorded in a piggery effluent drain, suggesting that it was more adaptable than previously thought.

1. The Second Report said that the Wallum froglet would most likely occur along the drain south of the proposed roundabout, where other frogs were recorded. An appendix to the Second Report noted that the Wallum froglet had not been recorded during site surveys but that it may be present in a drain south of the study area. The appendix also recorded that the development's effect on the Wallum froglet life cycle was minor in respect of breeding and foraging and that there was no effect on its migration or movement.

1. In 1998, Gales retained Mr Warren to perform a preliminary flora and fauna assessment of the Land, including searches for significant fauna habitats. Mr Warren produced the Third Report based on his observations and findings from a July 1998 survey. It recorded that a single Wallum froglet had been heard in flooded grassland in the southeast of the Land, south of Turnock Street. It noted that Woodward-Clyde, in the Second Report done in 1996, had said it failed to record the species but that the species could possibly occur along the table drain that the Turnock Street extension crosses. The Third Report also referred to Woodward-Clyde's opinion in the Second Report that it was unlikely that the Turnock Street extension would have a significant impact on a local population of Wallum froglets.

1. The Third Report said that based on habitat availability and other surveys of the immediate area, the population would be restricted to the small areas of low-lying paperbark vegetation in the Land's southeastern and in the paperbark swamps to the Land's south. It said that the drain running through the northern part of the Land was subject to saline intrusion and was highly unlikely to provide a suitable habitat for the Wallum froglet, while the rest of the area was generally elevated and was not suitable for the species.

1. On 28 May 1999, Woodward-Clyde produced the Fourth Report entitled "Statement of Environmental Effect - Flora, Fauna and Fire Hazard Assessment" in relation to the Council's proposed construction of a library near the Land. The Fourth Report said that the Wallum froglet had been detected in a brief field survey. It said that the Wallum froglet had been recorded on the site of the proposed library (the Library site), though most of its habitat was off the Library site in the adjoining areas and adjacent land on either side of the Turnock Street extension, that is to say, on the Land. The Fourth Report said that given the already disturbed nature of the Library site, the proposed development was unlikely to affect any native species such that it would be at risk of extinction.

1. The Fourth Report said that the Wallum froglet north of the Library site would need to be protected from indirect changes to water quality resulting from the development. It noted that the Wallum froglet had been recorded in areas adjacent to the Library site and just inside the Library site near the Turnock Street-Cudgen Road roundabout. It said that the species appeared to be restricted to the closed fernland habitat on either side of the Turnock Street deviation and that its habitat on the Library site was marginal and of low significance, given the proportionately more suitable habitat in adjacent areas, including on the Land.

1. The Fourth Report said that it was possible that the range of the species varied according to environmental conditions, such as rainfall and disturbances. It said that its largest detected grouping was between the area east of Turnock Street and the new residential area to the north. Additional groupings of the species were detected northwest of the Turnock Street roundabout and south of Turnock Street in the areas surrounding the roundabout.

1. Gales retained Planit to provide an assessment of the Land's vegetation in connection with its development proposals. In October 2001, in that assessment, Planit made passing reference to the fauna in the wider area. While the Wallum froglet was not the subject of the assessment, the Wallum froglet's physical features and habits were described and its scientific name mentioned in a table.

1. In December 2002, Planit produced the Fifth Report, which was a detailed flora and fauna investigation of the Land. The Fifth Report's methods included diurnal frog call identification and nocturnal surveys. It said that the paperbark forest within the neighbouring land's southern portions was the primary habitat for amphibians. The largest populations of frog species on the Land were recorded in areas with suitable breeding habitat for two protected species.

1. The Fifth Report stated that following extensive rainfall events in March 2002, Wallum froglets were recorded calling in a small area in the Land's southwest adjacent to the Turnock Street roundabout. It stated that given the extensive cleared areas on the Land adjacent to that small area, the Wallum froglet had not relocated into that small area, but rather had lain dormant in that area's soil and had resurfaced after the groundwater table had been recharged by the rainfall events. The Fifth Report concluded that the Wallum froglet was located mainly in the neighbouring land, also owned by Gales, rather than on the Land. It noted that the Council had failed to record the Wallum froglet within the area during its ecological assessments conducted prior to the construction of the Turnock Street extension.

1. The Fifth Report said that following the Council's failure to record the species, the Turnock Street extension had severed a movement corridor of the species that, at that time, connected parts of the Land north of Turnock Street to drainage corridors that ultimately connected to suitable breeding grounds for the species on the southern portions of the neighbouring land. The Fifth Report said that a Wallum froglet population existed on the Land in 2002, but that it was predominantly confined to the most suitable habitat in the southern portions of neighbouring land adjacent to the Land. That is to say, the Fifth Report by Planit said that though part of the Wallum froglet population existed on the Land, most of it was not on the Land, but rather on neighbouring land with a more suitable habitat.

1. On 12 May 2003, Mr Peter Parker of Environmental Consultants Pty Limited advised the Council that Planit, in the Fifth Report of December 2002, had failed to undertake a proper eight-part test with respect to the Wallum froglet. Mr Parker advised that Planit had incorrectly assumed that the Wallum froglet would not be significantly affected by Gales' development proposals, despite a road having been constructed through its core habitat and the future effects of the proposed developments, including the pumping onto the Land of 98,000 cubic metres of fill and the construction of drainage works for a proposed shopping centre that would drain onto the remaining Wallum froglet habitat. Mr Parker advised that there would be significant hydrological changes or changes to nutrient status. Mr Parker attached a chart noting that while Planit had heard less than five calls of the Wallum froglet, his survey conducted on only two, days, 29 April 2003 and 5 May 2003, had recorded more than 1000 calls.

1. On 11 August 2003, Planit informed Gales that there had been significant ponding on the Land north of Turnock Street and that the area was unable to drain because of the design of the culverts under Turnock Street. The ponding was generally greater than 30cm and in some areas standing water was still present after several months. Planit observed that the population sizes of all frog species, including the Wallum froglet, had increased within the area as a result of what it described as "ongoing suitable conditions, likely breeding and potential immigration from other populations on site (as a result of flooding)".

Background to the Alleged Nuisance

1. On 31 July 1974, Dr Segal wrote to the Council saying that he considered that the Council must accept responsibility for the large drains that opened directly onto the Land, which were causing severe localised drainage problems. On 27 August 1974, the Council replied saying that the Council did not then have sufficient funds to consider drainage through the Land. The Council said that while it accepted that drainage from Kingscliff streets discharged onto the Land, the Land was a natural watercourse or collection area. It said that it might consider the matter further when considering development proposals in the area.

1. On 15 March 1994, Mr Henley of the Council met with Mr Martin Findlater of Martin Findlater & Associates Pty Limited, who were consulting engineers for the Noble Park Estate development. Mr Henley said that he was not happy with how the northern drain had been dealt with. He recorded that either the outlet drain had to be widened or the overland flow path cleared and levelled.

1. Ian Hill & Associates Pty Limited, consulting engineers, was retained by the Bowling Club and the Elouera Nursing Home. On 21 April 1994, Mr Ian Hill wrote to the Council concerning the rear of the properties north of the Noble Park Estate. He pointed out that the northern drain had been filled in and a recent inspection revealed ponding along the Noble Park Estate's northern boundary. He said that little cognisance appeared to have been taken of the upstream catchment of Pearl Street, Kingscliff Street, the land between those streets and the Noble Park Estate. On 17 June 1994, Mr Hill again wrote to the Council, repeating that the northern drain had been filled in and seeking the Council's advice as to what remedial action would be implemented before the next wet season.

1. On 14 September 1994, the Council was provided with a copy of a report prepared by Ian Hill & Associates entitled "Drainage of Kingscliff Street Site" (the Hill & Associates Report). The Hill & Associates Report recorded that in 1993 the northern drain was filled in during the construction of Noble Park Estate. It stated that no allowance had been made for escape of stormwater under the roadway and that a 1200mm diameter concrete pipe (the 1200mm pipe) had been installed, which was supposed to carry stormwater north and west of the Noble Park Estate.

1. The Hill & Associates Report concluded that the 1200mm pipe was under capacity for a once in five year storm event and no provision at all had been made for a once in a hundred year storm event. It asserted that the design of the 1200mm pipe ignored the Council's own drainage strategy for Kingscliff and that the installed drainage system had not been constructed as designed. It said that, as a result, the Bowling Club and the Elouera Nursing Home would be more subject to flooding than before the construction of the Noble Park Estate.

1. On 2 February 1995, the Council wrote to Hill & Associates saying that it had spoken with Mr Findlater, who designed the drainage for the Noble Park Estate. The Council said that Mr Findlater was to submit a number of options for the Council's consideration. On 1 March 1995, the Council informed Mr Findlater that no further approval or consents would be given for the further development of the Noble Park Estate until a drainage solution and its funding had been agreed upon. The Council's letter to Mr Findlater pointed out that the original stormwater design did not adequately cater for the once in a hundred year storm event. On 2 March 1995, the Council wrote again to Mr Findlater, saying that no fresh development application for the Noble Park Estate would be determined until the upstream drainage issues had been resolved.

1. Mr Findlater responded on 9 March 1995, suggesting an amendment to the Council's Development Control Plan 9 (DCP 9), providing for a nominal area of one hectare for future multipurpose open space/flood retention/wetland filter to be reserved east of the Noble Park Estate. That suggestion was an alternative to a proposed 20-metre-wide open channel along the Noble Park Estate's northern boundary. In effect, Mr Findlater proposed, for the Noble Park Estate's benefit, for which he was acting so that it could be further developed, that one hectare of the Land be used as a retention basin. The Council's documentation uses the words "detention" and "retention" interchangeably to refer to Mr Findlater's proposal. In referring to documents and discussions, I have used the same word as the primary judge, notwithstanding the apparent inconsistency. Nothing appears to turn on the distinction, if there be one.

1. Following internal Council communications in March 1995 about the suggested retention basin, the Council wrote to Gales on 23 March 1995 saying that now that preparation of the Kingscliff drainage strategy plan had been prepared and the drainage issues investigated, it was proposed to recommend that DCP 9 be amended to allow for a stormwater retention basin of about one hectare within the Land and to allow for the possible joint use of the retention basin as a water quality control pond and passive recreation area. That is to say, the Council indicated to Gales, before constructing the Turnock Street extension, but after the Council had become aware of the filling in of the northern drain and its replacement by the inadequate 1200mm pipe by the Noble Park Estate developer, that it intended to amend DCP 9 so as to implement Mr Findlater's proposal, being to use one hectare of the Land as a stormwater basin to solve the drainage problems caused by the filling in of the northern drain and thus allowing for further development of the Noble Park Estate.

1. Gales retained Mr Gary Peacock, a director of Outline Planning Consultants Pty Limited, town planners, to assist it in reviewing DCP 9. On 5 May 1995, the Council wrote to Mr Peacock saying that it wanted to work closely with him in reviewing DCP 9. The Council said that DCP 9 required significant review and accepted that Mr Peacock's proposal for a steering committee or working group to be established was a sound approach. Subsequently, Mr Peacock met with Council officers in relation to the likely impact on the Land of West Kingscliff's roads and drainage infrastructure needs.

1. Gales also retained Mr Ray Sargent, a civil and structural engineer, to assist it in assessing the Council's proposal for a retention basin on the Land. Mr Sargent met with a Council officer in September 1995 and undertook a detailed inspection of the Land to assess drainage.

1. On 27 September 1995, the Council resolved to prepare an amendment to DCP 9. The Council noted that it had become apparent after completion of the early stages of the Noble Park Estate that a drainage problem existed in relation to developed land upstream of the Noble Park Estate. The Council noted that a possible solution to the problem involved the construction of a retention basin on the Land. It was concluded that the way to resolve the problem promptly was to prepare and exhibit amendments to DCP 9 and to make further efforts to ascertain Gales' views on the matter.

1. On 18 December 1995, the Council wrote to Mr Hill, informing him that "agreement" had been reached for the creation of "a stormwater/flood retention basin adjacent to the culvert in question". Curiously, there was no mention of the fact that the proposed retention basin was on the Land and that Gales had not agreed to it. The "agreement" referred to was apparently an agreement that the Council made with Mr Findlater, without reference to Gales, solving the Noble Park Estate's development problems by using the Land as a retention basin.

1. On 23 November 1995, the Council wrote to Mr Peacock, informing him that there would be no immediate action to proceed with the proposed amendment of DCP 9 and observing that, as Gales was now "formally aware" of the need for a retention basin, it would be necessary to obtain a formal assurance from Gales that a prospective purchaser of the Land would be notified that one hectare of it was not to be filled and had to remain available for drainage retardation. There was no evidence that the Council ever pursued further a formal assurance from Gales.

1. In late 1995, the Council proposed to construct the Turnock Street extension across the Land, so that it would function as a distributor road. Gales agreed to sell a portion of the Land at an agreed valuation. The Council had to comply with s 111 of the Planning Act and consider whether the construction would require an environmental impact statement under s 112 of that Act. The Council told Gales that it wished to proceed with an environmental assessment and, in late December 1995, Gales provided its consent for the Council to enter the Land to carry out site survey work associated with the proposed extension. Mr Peacock provided the First Report, which Mr Warren produced for Gales, to the Council to assist it with its assessment.

1. On 29 July 1996, Mr Sargent, who was then acting for the Council after having been retained by Gales in 1995, provided to the Council several plans showing the major drainage outlet points for the Turnock Street and Elrond Drive area. The documents illustrated the expected position after the construction of the proposed road works and future site filling works. The reference to future site filling works seems to be a reference to future filling of the Land. Mr Sargent's letter to the Council said that after construction of the Turnock Street extension, the low-lying areas to the north of Turnock Street would drain to an identified outlet, which was to be sized to drain the selected storm event over the catchment without causing flooding to existing developed areas. A sketch included with the letter referred to the total catchment area north of the proposed Turnock Street extension as 41.64 hectares and recorded that three 1500mm pipes would be constructed where the Elrond Drive culvert was subsequently constructed. However, those three 1500mm pipes were never constructed.

1. On 9 August 1996, Mr Sargent, who by that time had been retained again by Gales, provided to Gales a report entitled "Proposed Stormwater Quality Improvement Scheme for West Kingscliff, Tweed Shire" (the 1996 Sargent Report). The 1996 Sargent Report proposed that a system be instituted to catch the first flush of stormwater runoff from the catchment and retain it in ponds for a sufficient time for the water quality to improve prior to discharge. It concluded that treating the stormwater runoff in that way would improve the quality of the final downstream water outflow by up to 50 per cent. It also said that that would be a significant improvement on the existing drainage system, which contained no formal structures for removing contaminants from runoff apart from sedimentation action within the main drains.

1. On 23 August 1996, Gales provided its consent for the Council's development application in relation to the proposed extension of Turnock Street through the Land. Construction began thereafter.

1. On 3 September 1996, Mr Hill, acting for Elouera Nursing Home and the Bowling Club, resumed communication with the Council in relation to the 1200mm pipe, which had replaced the northern drain. On 11 November 1996, the Council replied to Mr Hill saying that until filling of the Land, there should be an adequate retention area available to satisfy flood drainage. The Council's letter said that prior to any development of the Land, the trunk drainage system would have to be resolved and that the need for a retention basin was being addressed.

1. On 12 November 1996, the Council wrote to the Bowling Club saying that while the Land remained at its present level there should be an adequate retention area available "to satisfy flood damage", presumably intending to refer to flood drainage. It repeated that prior to any development of the Land, the trunk drainage system would have to be resolved. The Council's letter said that it was fully aware of the drainage needs and that final resolution of the details could not be predicted, as they largely related to action by Gales.

1. The primary judge concluded that the irresistible inference from the above correspondence was that the Council had concluded that until the Land was filled, it would be used as a retention area for flood drainage. There is no evidence that Gales ever consented to such a use or was even asked to consent to it.

1. On 24 March 1997, Gales provided to the Council a signed consent for the Council to enter upon the Land to construct the Turnock Street extension. The letter included a requirement that fencing be erected to ensure that the cattle on the Land did not escape. The newly constructed Turnock Street extension was officially opened on 9 December 1997.

1. On 12 June 1998, Gales agreed to provide funding in the sum of $21,156 to the Council for the preparation of a drainage and water quality study by WBM Oceanics. Gales drew the Council's attention to its previous undertakings to notify Gales how the proposed drainage system, including the retention basin, would work and pointed out that the Council had not done so. Gales also said that a final decision on the stormwater scheme for the area was still outstanding.

1. On Mr Peacock's recommendation, Gales engaged Mr Bill Knobel of Knobel Consulting Pty Limited, consulting engineers, to assist with monitoring a master drainage study for West Kingscliff and any follow-up engineering work, such as landfill, road design, services provision and drainage. On 21 July 1998, Mr Knobel wrote to WBM Oceanics confirming concern regarding drainage at the northern end of the Land, adjacent to the Elouera Nursing Home and the Bowling Club. The letter pointed out that there appeared to be no outlet for a once in a hundred year storm event through the Noble Park Estate. Mr Knobel also asked WBM Oceanics to examine the requirements for drainage under Elrond Drive and Turnock Street.

1. On 4 August 1998, Mr Peacock and Mr Knobel, on behalf of Gales, met with Council officers and representatives of WBM Oceanics. Mr Peacock and Mr Knobel suggested that the Council reduce the proposed drainage through the Land. It was noted that Gales wished to submit a development application for landfill immediately after completion of WBM Oceanics' study.

1. The minutes of the Council's meeting on 19 April 2000 noted that WBM Oceanics had completed its report on drainage management for the Kingscliff catchment and that the report would guide the drainage strategy in the West Kingscliff area. The Council resolved that an amendment be made to DCP 9 incorporating that drainage strategy. However, notwithstanding that resolution, DCP 9 was apparently not amended. On the other hand, the Council subsequently informed Gales that the Land could not be developed before the amendment of DCP 9.

1. During 2000, Gales objected to a proposed expansion of the Kingscliff shopping centre. On 14 November 2000, Gales complained that there had been no discussion of Gales' submission concerning draining discharge onto the Land. Gales asserted that the authority to discharge stormwater onto the Land was fundamental to the proposed expansion and yet that no such authority existed. The meeting of the Council held on 15 November 2000 noted that, in its present form, the proposal was likely to increase peak flows and pollutant concentrations across the Land to the southwest. The Council also noted that the shopping centre expansion proposal would increase the impervious cover to almost one hundred per cent of the site, decrease the stormwater runoff's time of concentration and result in substantially increased peak stormwater flow rates. The Council noted that to accommodate once in a hundred year flows and to minimise the increase of nuisance to downstream owners, it would be necessary to limit discharge from the site.

1. The Council initially refused the application for consent to the expansion of the Kingscliff shopping centre. However, at the Council's meeting of 20 December 2000, it was approved subject to a condition that stormwater discharge onto the Land would be limited to pre-development rates and evenly distributed across the southern boundary by means of a low spillway.

1. On 6 March 2001, Council representatives and Gales met. The meeting noted that Knobel Consulting was examining significant external drainage entering the Land and that further discussions were to be held once drainage outlets and paths had been established through the various parts of the Land. It was recognised that there was a need to treat existing stormwater from the Kingscliff township before it entered the main drainage system and that land may have to be made available for that to take place.

1. Representatives of Gales and the Council met again on 5 April 2001 in relation to planning for West Kingscliff. The Council's record of the meeting stated that the western side of Pearl Street, the side closest to the Land, was at a lower level than that to which West Kingscliff would be filled and that the Council had some significant potential stormwater liabilities relating to the planning, design and construction of the Land. Mr Knobel commented that he and the Council had worked productively together. The Council's record noted that the fill on the Land would be permeable material to assist water quality management. Mr Knobel said that some significant drainage occurred from the existing Kingscliff township onto the Land. He reinforced that drainage management and treatment was a significant issue for the Council in terms of future liabilities and expenditure. The Council's record stated that Gales and the Council should work together to work out solutions for the total sub-catchment and to agree upon drainage and water quality outcomes. The Council's record stated that considerable flexibility was still available in the design of the drainage and water quality systems in the vicinity of the junction of Elrond and Turnock Streets. The Council's record ended by saying that Mr John Henley, a Council officer, "acknowledged the residual liability".

1. On 24 August 2001, Gales received notice concerning an inspection of the Land. The notice included a statement to the effect that the large drain running east-west to the Chinderah flood drain had been filled. That is clearly a reference to the northern drain. That was the first time Gales became aware that the northern drain had been filled.

1. In November 2001, Mr Knobel reported to Gales that, in addition to managing stormwater generated by the development of its own land, Gales had also inherited the management of stormwater generated by surrounding urban development, which was discharged directly onto the Land. Mr Knobel said that the Council had acknowledged its liabilities in that regard. That appears to be a reference to the meeting of 5 April 2001 at which Mr Henley is recorded as having acknowledged the Council's "residual liability".

1. Mr Knobel's report concluded that the Turnock Street extension had effectively dammed all stormwater generated within the catchment. Mr Knobel also concluded that the damming effect of the Turnock Street extension was compounded by the fact that the culverts under Turnock Street were too low for the Land to drain freely. That is a reference to the fact that the extension of Turnock Street was on an embankment and the culverts under the extension were constructed at a level that would only be effective once the Land was itself at a higher level once it was filled. Until filling of the Land, the Turnock Street culverts were too high to drain water from the Land north of Turnock Street, compounding the damming of the stormwater runoff that drained onto the Land.

1. On 22 January 2002, Gales wrote to the Council concerning a draft amendment proposed for the LEP 2000. Gales said that the Council's previous planning decisions had resulted in the northern drain servicing the land north of Turnock Street being filled in. It said that recent studies showed that filling in the northern drain, along with other stormwater being directed onto the Land, presented great problems. Gales requested that there be discussions with the Council "to seek solutions". On 7 February 2002, the Council wrote to Gales saying that the appropriate manner in which to progress matters would be for consultants acting for Gales and the Council's staff to work together.

1. Council representatives met on 18 July 2002. A memorandum in relation to the meeting referred to the Council's resolution of 27 September 1995 to amend DCP 9 to incorporate a retention pond on the Land. It said that despite much correspondence on the issue with Gales, Gales did not agree for such works to be carried out on the Land. It recorded that solving the drainage issue might cost in excess of $1,000,000. It reported several options and then suggested, as a possible strategy, that Gales be informed that it was Gales' problem to deal with upstream drainage, as the problem would only occur if the Land north of Turnock Street were filled. It suggested that Gales could provide "detention storage" on the Land or purchase land from the Bowling Club. There is no evidence that these views were conveyed to Gales.

Development Applications in respect of the Land

1. On 19 December 2002, Gales lodged a development application for a proposed shopping centre on the Land. By internal memorandum of 27 February 2003 (the February memorandum), a Council officer recommended that the application be refused. The February memorandum recorded that about 12 hectares of developed land upstream of the Bowling Club drained through a stormwater pipe system, which ran through the Bowling Club and then west, including through pipes under Blue Jay Circuit, to the Chinderah drain. That is clearly a reference to the 1200mm pipe, which replaced the northern drain. The Council had known since 1995, as evidenced by its communications with Mr Findlater, that the drainage problems were caused by the filling in of the northern drain by the Noble Park Estate development. It was for that reason that DCP 9 was amended so the Land could be used as a stormwater retention basin.

1. The February memorandum said the 1200mm pipe was only designed for a once in 5 year storm event and that excess flows went to unfilled land, including the Land. It said that Gales' shopping centre application would "incrementally eliminate detention storage in" the Land, while Gales' proposed filling would eliminate all of it. It said that the combined effect of filling the Land and granting the shopping centre application, without any compensatory measures, would be to eliminate drainage capacity for a greater than once in 5 year storm event and cause flooding of land and property. It said that it could be argued that the Land was the natural area for runoff discharged from the foreshore dune area and acted as a natural detention basin for that area.

1. The February memorandum referred to Gales' proposal for dealing with the external drainage by creating a north-south open drain extending from the Bowling Club land in the north to the southwestern drain south of Turnock Street, including a new drainage structure under Turnock Street. The February memorandum suggested Gales' development application be refused because it:

• failed to demonstrate that the proposed drainage systems and proposed landform would be compatible with the ultimate development of the West Kingscliff area;
• failed to demonstrate that the proposed stormwater quality treatment measures were compatible with the ultimate stormwater treatment strategies for the West Kingscliff area;
• did not provide a lawful point of discharge for major and minor stormwater runoff from the proposed development; and
• failed to assess the environmental impacts of filling the site and the impact on amenity of persons along any potential haul routes.

1. On 5 March 2003, Jim Glazebrook & Associates Pty Limited, town planners and development consultants, wrote to the Council on behalf of Gales. The letter referred to the discharge of polluted stormwater from the Council's stormwater drainage system onto the Land and said that there had been little evidence that the long-term implications of the unlawful discharge onto the Land had been objectively and properly considered. Further, the letter said, the Council's officers had not properly nor meaningfully considered the environmental and strategic planning issues, nor had the Council initiated discussion and negotiations with Gales. The letter asserted that those matters had culminated in the preparation of a new draft DCP 9 without prior reference to, or discussion or consultation with, Gales, despite the Council's undertaking to work cooperatively with Gales. The letter said that the new draft DCP 9 had been prepared without awaiting the comprehensive studies being prepared for Gales, about which the Council had known throughout their gestation. The letter asserted that the new draft DCP 9 had been presented without awaiting the studies and without the benefit of any similarly comprehensive studies by the Council. The letter also asserted that the Council had failed to address stormwater management issues.

1. The letter then said that Gales was "no longer prepared to permit the unlawful discharge of concentrated stormwater flows" from the Council's existing drainage structures onto the Land. After asserting the Council's awareness of the importance of drainage and water quality management, the letter said that Gales required the Council to identify immediately all points of illegal discharge of stormwater onto the Land and to take measures to prevent that discharge within 90 days.

1. On 18 March 2003, the Council responded to the letter of 5 March 2003, saying that the proposed amended DCP 9 would address all of the necessary planning and engineering issues, including strategic drainage issues. The Council also said that it was unaware of any unlawful discharge points as alleged in the letter and that Gales would be fully consulted in completing DCP 9.

1. On 11 April 2003, Gales' proposed development of the Land was designated as a "controlled action" under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (the Environmental Protection Act). The Commonwealth Department of Environment and Heritage (the Environment Department) told Gales that the Land contained an important population of Mitchell's Rainforest Snails and that it considered that site works were likely to affect important habitat for the snail if adequate controls were not in place. The Environment Department said that any works associated with the development approval for a shopping centre potentially affecting the habitat of the snail could not commence until approval had been given under the Environmental Protection Act.

1. In mid 2003, a blockage of the Elrond Drive culvert was observed. When the culvert was constructed, a small area was damaged and a wooden prop was placed in the pipe while new concrete was put in to replace the broken area. As at 9 May 2003, the wooden prop was apparently still in place and masses of accumulated grass had collected around it, causing the blockage. Unlike the Turnock Street culvert, the Elrond Drive culvert was low enough, even without filling of the Land, to act as a drain for stormwater from the Land north of Turnock Street. Following the construction of Turnock Street, there was no way for stormwater to drain from the Land north of Turnock Street other than through the Elrond Drive culvert.

1. On 4 May 2004, Gales' solicitors wrote to the Council asserting that the Turnock Street extension effectively acted as a dam, even for small storm events. The letter said that adequate under-road and lateral drainage was required to ensure that unnatural ponding did not continue to occur on the Land north of Turnock Street. It asserted that the circumstances described constituted an unreasonable interference with the reasonable use and enjoyment of the Land and as such amounted to a legal nuisance. It said that Gales required that the Council urgently review the problems caused by the construction of Turnock Street through the Land, with a view to the Council making alterations to the drainage to stop the unnatural ponding occurring. The letter said that that should be carried out in consultation with Dr Steve Webb, a hydrologist retained by Gales.

1. The primary judge regarded the letter of 4 May 2004 as being critical as to the time at which the Council was first guilty of conduct that constituted a nuisance in relation to the Land. Her Honour concluded that the Council had not been guilty of nuisance before receiving that letter. It will be necessary to return to that question below.

1. On 12 May 2004, Mr Knobel, on behalf of Gales, gave the Council permission to enter the Land to re-establish the outlet to the stormwater drainage discharging from Cudgen Heights. The Cudgen outlets drained onto the Land south of Turnock Street. Mr Knobel requested that the Council provide an inventory of all existing stormwater pipes discharging onto the Land.

1. On 14 May 2004, Gales' solicitors wrote to the Council reporting on a number of matters. First, the letter referred to a Council drain at the eastern end of Turnock Street, which was discharging water onto the Land, and alleged that the discharge of water substantially interfered with the reasonable use and enjoyment of the Land. The letter said that Gales would hold the Council responsible for all loss and damage suffered as a result of the discharge of the water. The letter also invited the Council to inspect the Land to make an assessment.

1. The letter then referred to the filling of the northern drain and asserted that Gales had become aware of the filling "in recent times". That appears to be a reference to the notice to Gales of 2 August 2001. The letter also correctly asserted that the Council's solution to the drainage problem was, in the short term, to let the stormwater from the Kingscliff urban area flow onto the Land and, in the long term, provide for a retention basin on the Land. The letter complained that the Council had failed to require the Noble Park Estate developer to rectify the drainage problem that it had created by the filling of the northern drain and that the deliberate concentration of water on the Land was plainly unlawful. The letter repeated Mr Knobel's request for an inventory of all stormwater drainage paths onto the Land and asked for it to be provided within 10 days.

1. On 18 May 2004, a meeting took place between representatives of Gales and of the Council concerning the drainage issues. Gales' representatives informed the Council's representatives that Gales preferred that an open drain similar to the northern drain be re-established. The Council apparently did not regard that to be a realistic option, for both cost and political reasons.

1. On 6 July 2004, the Council responded to Gales' solicitors' letters of 4 May 2004 and 14 May 2004. The Council said that development of the Land would require significant filling to raise it above flood level and that that filling, as well as previous filling and drainage work, would irreversibly change the natural landform and thus the natural drainage patterns of the area. After referring to WBM Oceanics' report on drainage issues in West Kingscliff, the Council said that its officers were meeting regularly with Gales' representatives to develop and progress planning for the Land. The letter asserted that there was significant agreement on key drainage issues and that it was expected that the final outcome of the meetings between the Council and Gales would be a drainage strategy that was equitable and acceptable to both parties.

1. At a Council meeting on 4 August 2004, the Council noted that a comprehensive plan for the Land was essential and that the sooner such a plan was created the better. It was proposed that a small technical group be established to complete a comprehensive draft structure plan for the Land and to report to the Council by the end November 2004. The Council also noted that DCP 9 required a major review, particularly with respect to the Land. That was the third decision by the Council that DCP 9 should be reviewed. The Council had previously decided that DCP 9 should be amended in light of drainage issues in 1995 and 2000.

1. On 3 November 2004, Gales wrote to the Council saying that Gales had been trying to develop the Land and build a supermarket centre in West Kingscliff for many years. The letter said that that required the Land to be filled and that the most critical component was drainage for the Land on either side of Turnock Street. The letter asserted that information recently made available to Gales identified that the cause of the drainage problems was alteration in the natural drainage flow. The letter also asserted that the reason that Gales had not built a shopping centre was that the Land could not be filled until the drainage problems were resolved.

1. The letter of 3 November 2004 said that Gales intended to submit a development application for filling the area north of Turnock Street in about the first week of December 2004. The letter said that a critical component of that development application would be how the waterflow external and upstream from the Land, which previously flowed through the northern drain, might be handled, possibly by flowing southward across the Land. The letter requested an urgent meeting with the Council to determine a final outcome of the drainage strategy.

1. On 9 November 2004, the Council was told that Gales' development application for a shopping centre could not be supported because of its potential impacts on threatened species and their habitat and that whether the development was a controlled action under the Environmental Protection Act would be determined.

1. On 11 November 2004, Jim Glazebrook & Associates, acting for Gales, wrote to the Council, referring to the request in Gales' letter of 3 November 2004 for an urgent meeting. The letter asserted that Gales had incurred significant losses and costs due to the drainage problems and had investigated possible technical solutions to the conveyance of upstream waterflows. The letter said that Gales would be prepared to consider "certain options" involving the Land, subject to appropriate consideration, financial or otherwise. The options were not specified.

1. By letter of 24 November 2004, the Council informed Gales that it had to address several issues arising from the fact that Gales' development application was non-compliant with the Council's "adopted drainage strategy". The letter said that that strategy included the dedication of a 50 metre wide easement for drainage and associated linear parkway use. The letter said that any departure from the Council's drainage strategy must be justified and, in particular, must demonstrate that it would be consistent with the provision of adequate drainage for the entire catchment in its ultimate development form.

1. In late 2004 or early 2005, Gales lodged a development application to fill the Land north of Turnock Street and to construct a shopping centre south of Turnock Street. On 31 January 2005, the Council wrote to Gales in response to that development application, saying that its lodgement was "pre-emptive" given all the studies and planning required for the location. The letter said that, "it has been decided to report to Council on the process needed to review and replace the existing Development Control Plans (DCPs) for Kingscliff with options (including [Gales'] option) for the development of the area, especially greenfields sites adjacent to the existing town centre".

1. On 7 February 2005, the Environment Department told Gales that its development application had been referred to it for a decision as to whether approval was needed under the Environmental Protection Act. The Environment Department told Gales that it had decided that its proposed development was a "controlled action" and so could not continue without approval under Pt 9 of that Act.

1. The Council did not grant development approval to fill the Land and construct a shopping centre. Gales therefore appealed to the Land and Environment Court against the deemed refusal of its development application. In the proceedings in the Land and Environment Court, the Council contended successfully that a species impact statement was necessary before the development applications could be determined.

1. A court-appointed expert was instructed to ascertain whether the Wallum froglet or its tadpoles were able or likely to use "in the context of genetic interchange" any of the drains under any of the roads on the Land, or cross any of the roads surrounding the Land in order to move between those portions of the Land north of Turnock Street, south of Turnock Street and west of Elrond Drive. The expert concluded that the Wallum froglets could traverse pipes under Turnock Street and Elrond Drive but that there was little likelihood of them doing so. The expert also concluded that the Wallum froglets could cross both Turnock Street and Elrond Drive, with a reasonable chance of success, between the hours of midnight and 6 am.

1. On 26 May 2005, Gales' solicitors told the Council that they had been instructed to commence proceedings against it for nuisance and negligence in relation to the drainage problems on the Land and consequent changes in the ecology and difficulties in developing the Land as a result of the Council's acts and lack of action. The solicitors referred to the filling of the northern drain, the manner in which Turnock Street was constructed and the Council's conduct in relation to the surrounding developments. The proceedings at first instance were commenced later in 2005.

1. On 14 July 2008, the Land and Environment Court granted development consent for Gales' proposed development, subject to certain conditions, including the Condition that Gales set aside part of the Land as a perpetual habitat for the Wallum froglet. The Condition stipulated that the consent would not operate until Gales satisfied the Council of various matters, including the following:

• the production of a Wallum froglet management plan;
• monitoring and reporting in relation to various matters including climatic conditions, water quality and hydrology;
• a requirement that the results of the monitoring be given to the Council at the end of each season, with a final report after 12 months with conclusions regarding Wallum froglet numbers, population fluctuations, number of breeding events and observations of water quality and the length of the time there was standing water;
• a requirement for a stormwater network with two separate water quality treatment criteria, one being for the Wallum froglet habitat and the other for all other stormwater; and
• that the fill was of adequate quality and if it had a shell grit content in excess of 1 per cent, an impermeable barrier was to be placed within the fill batter for the Wallum froglet precinct.

1. Blue Jay Circuit is part of the road system within the Noble Park Estate adjacent to the Land. The Council has proposed stormwater augmentation works in relation to a drainage scheme for Blue Jay Circuit. The review of environment factors in respect of those works recognised that surplus flows greater than a once in 5 year storm event flow downstream, by default, onto the Land, as the inlet capacity is exceeded. The Council's proposed stormwater works include an upgrade of the 1200mm pipe. It is common ground that those works will adequately address Gales' problems caused by increased stormwater runoff onto the Land. The Court was informed during the hearing of the appeal that the works have now been completed. That fact is material to any relief to which Gales may be entitled as a consequence of the nuisance found by the primary judge.

The Primary Judge's Findings and Conclusions

1. The primary judge found that, between 1974 and 2009, stormwater runoff draining onto the Land from the northern sub-catchment areas increased by 200 per cent. The 1200mm pipe provided inadequate drainage compared to that provided by the northern drain before it was filled in. Some of the additional stormwater runoff would not have flowed onto the Land had the northern drain not been filled or had the 1200mm pipe been adequate. However, the amount of the additional stormwater runoff caused by the filling of the northern drain and the inadequacy of the 1200mm pipe could not be precisely calculated.

1. The construction of the Turnock Street extension in 1997 made the Land wetter because the additional stormwater runoff was effectively dammed by the embankment of the Turnock Street extension, such that it could only escape to the southwest through the Elrond Drive culvert. The storm water runoff could not flow under Turnock Street because Turnock Street was constructed without ground level culverts. Instead, culverts were constructed under Turnock Street higher than ground level so that they would be at the right level when the Land north of Turnock Street was filled. The path and rate of the flow of stormwater runoff wetted up the Land, causing ponding. Had the Council constructed ground level culverts under Turnock Street, the additional stormwater runoff could have drained through them.

1. Mr Sargent's original drawings produced for the Council in relation to the Turnock Street extension proposed three 1500mm pipes in the vicinity of the Elrond Drive culvert. However, the Council constructed the Elrond Drive culvert with only a single 900mm pipe, which given the ineffectiveness of the overly high Turnock Street culverts had to meet the drainage requirements of all the additional stormwater flowing onto the Land from the north resulting from the filling in of the northern drain and the inadequacy of the 1200mm pipe. Had the Turnock Street culverts been functional, by being at the existing level of the Land, the 900 mm Elrond Drive culvert may have been adequate to meet those considerable drainage requirements. Without the Turnock Street culverts being functional, it was clearly inadequate and ponding was the result.

1. The primary judge concluded that ephemeral ponding probably occurred on the Land even before the construction of the Turnock Street extension, such that it cannot have been the sole cause of the ephemeral ponding. That is to say, even without the Turnock Street extension, the additional stormwater runoff would have caused ephemeral ponding on the Land. It is of some significance that there cannot be a Wallum froglet habitat without ephemeral ponding. However, her Honour did not consider that it was of particular significance that there was ephemeral ponding before construction of the Turnock Street extension.

1. There was an issue as to whether the wetting up of the Land north of Turnock Street due to inadequate drainage was a cause, the sole cause or the dominant cause of the creation of a Wallum froglet habitat. The primary judge found that the combination of species and the structure of the vegetation communities indicated that the Wallum froglet habitat was created after 1997. The flourishing of sphagnum moss on the Land north of Turnock Street evidenced the wetness of the Land. The wetting up contributed to the creation of the Wallum froglet habitat, but was probably not the only factor. Slashing was probably also a contributing factor, as it affects the structure of plant communities by reducing the height of all but groundcovers and enables new growth. However, slashing, without wetness, could not have caused the creation of the habitat. Thus, the primary judge found that the wetting up was probably the dominant factor in the creation of the Wallum froglet habitat, but that slashing was a subsidiary contributing factor.

1. The primary judge held that, consistently with the notion of give and take, a neighbour may tolerate an interference with the enjoyment of land for various reasons and that that toleration, an indicium of which is a lack of complaint, may be taken into account as evidence of there being no unreasonable interference with the enjoyment of land. Her Honour appears to have concluded that a neighbour cannot claim damages for any interference it tolerated before complaining about it. Where it has acquiesced in the violation of its right of enjoyment of its land but changes its approach to that violation, it must inform the alleged wrongdoer that toleration has ceased and can only then claim damages.

1. The primary judge found that, notwithstanding the 30-year relationship between Gales and the Council, during which they communicated regularly with each other, Gales never complained in writing before its letter of 4 May 2004. While its letter of 31 July 1974 suggested that the Council should take responsibility for the severe localised drainage problems, her Honour did not consider that that letter made a claim of unreasonable interference with Gales' enjoyment of the Land. Her Honour observed that Mr Glazebrook's letter to the Council of 5 March 2003, saying that Gales was no longer prepared to permit the unlawful discharge of concentrated stormwater runoff flows onto the Land, did not refer to any unreasonable interference to Gales' enjoyment of the Land. Her Honour considered that the letter suggested that before 5 March 2003 there was alleged unlawful discharge of concentrated stormwater runoff onto the Land but that, for whatever reason, Gales permitted it. However, that permission was withdrawn by the letter of 5 March 2003.

1. The primary judge considered that Gales' priorities in relation to the Land up to 5 March 2003 accommodated the flow of stormwater runoff onto the Land without complaint. Her Honour observed that the Land had to be filled before any development could occur. Accordingly, Gales' daily use of the Land, by grazing and later agistment, was temporary until the Land was developed. Her Honour noted that Gales took part in many meetings and retained numerous consultants to assist it, and at times the Council, in achieving some sensible and consensual drainage plan for the Land. Her Honour considered that Gales' attitude was that it would tolerate the stormwater runoff so long as those discussions and meetings were pursued to achieve a sensible and workable drainage plan for the Land. However, after 5 March 2003 Gales was no longer prepared to tolerate the discharge of stormwater runoff onto the Land. On 4 May 2004, Gales asserted for the first time that the Council's conduct in constructing the Turnock Street extension, which increased the wetting up of the Land, constituted an unreasonable an interference with its enjoyment of the Land.

1. The primary judge found that, between 2003 and 2008, parts of the Land were inundated such that one could not walk comfortably through those parts because of water. Her Honour also found that the untreated stormwater runoff from the Council's drains was of a different quality from the rainwater that fell onto the Land during storms. The stormwater runoff discharging from the drains came from various sources, including the rooves and downpipes of buildings in the surrounding catchment areas. That stormwater runoff consequently contained the usual impurities of surface water collected in that way.

1. Data collected over the period from December 2007 to November 2009, at four locations in the designated Wallum froglet habitat and at three stormwater outlets draining from the surrounding urban areas, demonstrated that the untreated stormwater runoff on the Land differed significantly from the water quality requirements imposed on Gales by the conditions of the 2008 development consents. The "mean observed value" of the water within the Wallum froglet habitat was significantly above the requirements imposed by those conditions for all except two parameters. Her Honour accepted that that was evidence of pollutants in the stormwater runoff and found that stormwater runoff flowing naturally onto the Land from the Pearl Street catchment carried pollutants of the type Gales complained of. Her Honour also found that the stormwater runoff was the result of increased urbanisation of the catchment areas and that there were pollutants in it.

1. Gales contends that the scope of the primary judge's factual enquiry was erroneously confined and that it did not take into account what a reasonable council in the Council's position would have foreseen, having regard to the statutory framework described above. Gales complains that the primary judge found that an invasion of a colony of Wallum froglets was not reasonably foreseeable and that that is the very loss in question and the precise manner of its occurrence. That, it says, should not be the test of what damage should be foreseen. Gales complains that her Honour impermissibly determined what was foreseeable based on hindsight reasoning, rather than reasoning from the status quo ex ante. It says that, instead, her Honour should have postulated the kind of damage and the general manner of its occurrence. A defendant will be liable for any type of reasonably foreseeable damage, even in the most unusual case, unless the risk is so small that a reasonable person would, in all of the circumstances, feel justified in neglecting it. Gales says that a defendant takes the plaintiff and the plaintiff's land in its existing condition and cannot complain that the defendant's unreasonable interference causes more damage than expected because the land is especially vulnerable. It says that the defendant is liable, even if the damage was much greater in extent than was foreseeable.

1. Gales contends that the primary judge ought to have considered whether it was foreseeable that stormwater inundation would cause physical and ecological changes to the Land, which would impede its future development and lessen its value. What should have been foreseen was that the Land would become habitat for moisture-loving species, including threatened species, and that filling the Land would remove that habitat unless enough of the Land was preserved to sustain a local population of the species. Gales asserts that foresight was an explicit requirement of the Council's duty under the Planning Act and of principles of ecological sustainability. The Council knew at all times that Gales intended to fill the Land and that Gales had to fill the Land before it could be developed for any particular purpose. It says that the Council must have been well aware of the regulatory barriers against filling that inundation would have triggered. Indeed, the Council rejected the first application for consent to fill the Land in 2003 because of the drainage problems that it itself had created. The Council argued in the Land and Environment Court in 2005 that the Land could not be filled because the Wallum froglet had triggered a requirement for a species impact statement. Gales says that the Council knew precisely the vegetation species that were endemic to the Land, the vegetation communities and the threatened species that were capable of inhabiting those communities, if restored to ecological functioning by the creation of habitat.

1. Gales asserts that a reasonable council, responsible for drainage and ecological approvals, properly qualified and alert, should have foreseen that there was a real risk of additional development constraints from ecological change. It says that, in confirmation of that foresight, the Council rejected Gales' development application in 2003 for those very reasons. In 2005 and 2008, the Council argued for the rejection of later development applications because of constraints caused by the inundation. The Council relied upon those constraints to the detriment of Gales' development proposals, yet claims in the present proceeding, inconsistently, not to have foreseen those outcomes before early 2003, despite its statutory duty to foresee adverse environmental risks when assessing development proposals, and to avoid them in its own activities, for example, as a drainage authority by their operation of s 111 and s 112 of the Planning Act and its ecologically sustainable development obligations under the LGA 1993.

1. Gales asserts that, well before the conduct about which it complains, the Council knew of the ecological significance of wetlands and routinely evaluated applications for development by reference to ecological considerations, including habitat preservation, and used specialist information concerning the presence and habitat requirements of endangered fauna. Gales says that, by those activities, the Council should have been acutely aware of the drainage characteristics of the area, the existence of ponding or wetting up and the effect of that wetting upon habitat changes and the advent of opportunistic amphibians and their ability to colonise rapidly in a suitable area. Gales asserts that even school-aged children know that frogs require water to breed, that tadpoles change in water to juvenile frogs and that terrestrial frogs require moisture for survival. It says that it would be well known that, if one builds a pond, even in the centre of a city, frogs are likely to inhabit it.

1. While the primary judge found that the Council considered whether Wallum froglets were on the Land, which might be harmed by the proposed construction of Turnock Street, her Honour found that investigations suggested that there was no froglet population of any significance in that area. Gales complains that that is beside the point. The construction of Turnock Street promoted conditions of increased periods of ephemeral ponding to the north of Turnock Street and there was evidence as to the ability of Wallum froglets to colonise a suitable area rapidly. That, Gales says, demonstrated how the Council could readily have foreseen the creation of habitat if it had properly considered the effects of its decision to treat the Land as a detention basin, being an adjunct to its drainage system.

1. Gales complains that the primary judge failed to consider six critical matters in determining remoteness as follows:

• the Council had actual knowledge, from early environmental studies, of the presence of Wallum froglets in the vicinity of the Land;
• the Council knew that the Wallum froglet was threatened, that its habitat components included ephemeral ponding and that its presence would impede land development;
• the Council intentionally used the Land as a retention basin;
• the wetting up of the Land created suitable conditions for a viable population of Wallum froglets: while appropriate vegetation was necessary, the essential element was the presence of ephemeral ponding;
• the Council, not Gales, was responsible for the delay in developing the Land, because of its failure to revise DCP 9 and to adopt a drainage strategy for the Kingscliff area to enable Gales to fill the Land; and
• the Council failed to follow the advice of its own engineer to provide three culverts to permit excess stormwater inundating the Land to flow away.

1. As to the first critical matter, Gales points to a publication of the Environment Protection Authority in 1993, the purpose of which was to disseminate widely reliable information about the current state of the environment and the factors that endangered it. The publication explained that habitat modification could occur through changed hydrological regimes. The possibility that the wetting up of land could lead to significant ecological change is, Gales says, uncontroversial and was accepted by the primary judge. However, Gales says, the Council had many more reports specifically identifying the presence in the area of Wallum froglets and describing their habitat requirements. It knew that wetlands were susceptible to changes in the water table caused by drainage works and that restoration to wetland condition would encourage threatened species to relocate. Turnock Street was completed in 1997.

1. Gales says that there are several earlier studies that predicted the presence of or surveyed Wallum froglets in the area as follows:

• The Fourth Report of 1999, provided by Woodward-Clyde to the Council in conjunction with the development of a library and community facilities by the Council immediately adjoining the Land.
• The Vegetation Management Plan, which recommended restoration of wet vegetation because of its high conservation significance for, inter alia, amphibian fauna.
• In April 2002, in the Fifth Report, Planit identified a small number of Wallum froglets close to the Turnock Street and Elrond Drive roundabout.
• The Council's ecological consultant, Mr Parker, heard large number of Wallum froglets in the vicinity of Turnock Street in April and May 2003.

Gales says that those studies indicate that, if the Council were acting reasonably, it would have at the very least been put on notice of the real possibility of the association of Wallum froglets with the conditions that came to take hold after the construction of Turnock Street. It says that the same studies would have alerted the Council to the suitable habitat on the Land, and the capacity for colonisation of restored habitat by fauna populations.

1. The third critical matter is that the Council consciously used the Land as a retention basin. It knew that, if it allowed development, it would have to find some alternative retention basin, although it intended to impose that obligation on Gales. The Council knew that it was wetting up the Land and that it needed that state of affairs to continue because it had no other means of stormwater disposal and was not prepared to fund any alternatives. The Council believed that it was a problem for Gales and Gales could buy adjoining land to solve the problem, but the Council would not pay for it. In those circumstances, Gales says, her Honour's finding that the research would not have alerted either party to the prospect of the invasion of a colony of Wallum froglets was not open. Gales asserts that the Council was aware, or ought to have been aware, of the likelihood of an invasion of Wallum froglets, since they were discovered in the area, their behaviour and habitat requirements were known and the Council's actions created perfect conditions for the species to thrive on the Land.

1. In relation to the fifth critical matter, the Council controlled Gales' ability to develop the Land. Any attempt by Gales to develop the Land had the practical effect of depriving the Council of its retention basin. Since the Council had not sought to regularise that position by, for example, acquiring an easement, there was no incentive on the parts of its officers to revise DCP 9 or to bring about a situation where Gales might fill and develop the Land. Having regard to the evidence as to the attempts by Gales to develop the Land for a shopping centre and other purposes, Gales contends that it was not open to the primary judge to find that the delay in filling the Land was not reasonably foreseeable by Council. That, Gales says, is precisely what the Council's documents show.

1. In relation to the last critical matter, Gales says that if the Council had paid attention to the advice it received that three 1500 mm pipes were required under Elrond Drive to meet the once in a hundred year flood event, significant stormwater events would have been relieved more quickly, and the opportunities for ephemeral ponding over an extended period would have been reduced. Accordingly, it says, it was not open to the primary judge to hold that the risk was not reasonably foreseeable by the Council that development of the Land would be delayed or that the only deficiency in relation to the drainage through Turnock Street was the use of elevated culverts.

1. There are good answers to those specific contentions. The environmental studies furnished to the Council gave no indication that a material expansion of the Wallum froglet population was likely. Further, the Council's decisions that affected the drainage of the area north of Turnock Street could not reasonably have been recognised as likely to bring about significant habitat changes, let alone changes conducive to the establishment of a substantial additional population of Wallum froglets. There was no evidence to suggest that the Council was aware at any time before 2004 that difficulties were being encountered in keeping the Land well drained. There is no basis for the suggestion that the Council caused delay to preserve the availability of a retention basin. It was open to Gales to submit a drainage proposal that accommodated the limited capacity of the 900mm pipe under Elrond Drive. It could have done so by providing a retention basin or by making alternative adequate provision, as contemplated by the drainage plan incorporated in DCP 9.

1. There is no basis for suggesting that the Council should have had in mind the prospect of a Wallum froglet migration when it authorised the Noble Park Estate development or when it considered what action should be taken in response to the shortcomings in the 1200mm pipe, installed after the filling of the northern drain. The primary judge correctly rejected that proposition. As her Honour found, the research over the years would not have alerted either party to the prospect of an invasion of a colony of Wallum froglets. The research identified a single call in 1998, two years after the construction of Turnock Street, at a time when there was anticipation that Gales would fill the Land in the not-too-distant future. Her Honour found that the Council did consider whether Wallum froglets were present on the Land, which might be harmed by the proposed development and the construction of Turnock Street. Those investigations suggested clearly that there was no Wallum froglet population of any significance in the area.

1. The primary judge accepted that the Council expected that Gales would seek to develop the Land sooner rather than later. That expectation was the reason for constructing Turnock Street with the culverts approximately halfway up the embankment, to accommodate the Land as filled. If Gales were correct in its submissions, that the risk was foreseeable, the Council would have had to anticipate that the filling of the Land would be delayed by a measure of years and that the increase in stormwater runoff onto the Land would not only be impeded by the absence of the culverts at ground level but would also be impeded to the extent that ephemeral ponding would not only occur but would remain for necessary periods of five to six weeks in summer or some months in winter.

1. The increase in the Wallum froglet population was not foreseeable. The identification of the habitat requirements of the Wallum froglet, and other threatened species, is plainly a matter of considerable complexity. The differing opinions expressed by Mr Warren concerning the habitat requirements of the Wallum froglet are evidence of that complexity. The information regarding Wallum froglets contained in reports provided to the Council in advance of the construction of Turnock Street made no mention of ephemeral ponding of six weeks' duration. Mr Warren's reports did not foreshadow that shallow ephemeral ponding on the Land could lead to the establishment of a population of Wallum froglets. That material indicates that it is unrealistic to suggest that the Council ought to have recognised and responded to the risk.

1. There was no evidence of any information being available to the Council suggesting that any of the approvals or actions about which Gales complains was likely to result in the creation of a habitat materially different from that which had existed for many years and which in some way would be more conducive to the survival of the Wallum froglets. Dr Webb's assessment of ephemeral ponding confirms that habitat suitable for moisture-loving species has always been available in abundance. However, the 1980 report prepared for Gales and submitted to the Council stated that the draft Tweed Coast Plan showed that there were no flora and fauna species on the Land that required or warranted protection.

1. The First Report did not mention the Wallum froglet and stated that cane toads were likely to inhabit the Land and that they displace native frogs. The First Report stated that it was possible, through unlikely, that the Land contained Wallum frogs. The Second Report noted that the Wallum froglet was not recorded during site surveys but that it may be present in a drain south of the relevant area and that the effect of the development on the life cycle of the Wallum froglet was minor in respect of breeding and foraging. It said that there was no effect on migration and movement of the Wallum froglet. The Third Report said that a single Wallum froglet was heard calling from flooded grassland in the southeast of the southern part of the Land. It said that that population would be restricted to the small areas of low-lying paperbark vegetation and in the intact paperbark swamps to the Land's south, which did not include the land north of Turnock Street. Her Honour correctly concluded that the risk was not reasonably foreseeable in all the circumstances.

1. There may be a further question as to whether any of the diminution in value is attributable to the actions and conduct of the Council after 19 October 1999, being the date six years before the commencement of the proceedings. The Council's conduct about which Gales complains began well before that time. The Land had already been wetted up by then. Even if the colony of Wallum froglets were not established by then, ecological changes to the Land caused by the Council's impugned conduct had occurred by then. On that basis, arguably all of Gales' damage occurred 6 years before the commencement of the proceedings. If so, Gales would be barred from recovery of that damage. However, that is not a matter raised by the Council's defence.

Cost of Drainage Works in 2004

1. The Council says that no case has been made out that the 2004 drainage works were required to abate any nuisance created by the Council. Alternatively, the Council relies on the statutory immunity referred to above. Both of those responses must be rejected for the reasons given above. That is to say, the Council has been guilty of nuisance and is not entitled to rely on the statutory immunities.

Blue Jay Circuit Works

1. This head, being the award of damages concerning additional drainage required as a consequence of the inadequate capacity of the 1200mm pipe, is connected with the Blue Jay Circuit Scheme. It appears to have been common ground that the completion of the Blue Jay Circuit scheme would increase substantially the drainage of water that would previously have been taken away by the northern drain. Further, the completion of the Blue Jay Circuit Scheme was expected to reduce the cost of developing the Land.

1. The Council asserts that the sum of $600,000 awarded was not the subject of any evidence and that the question of the cost of drainage that may be required was not addressed. Quantity surveyors were asked to agree on the cost of an additional quantity of pipe work on the assumption that the Blue Jay Circuit Scheme did not proceed. That request produced the estimate of $600,000. However, the Council asserts that no attempt was made to demonstrate what additional pipes or other drainage infrastructure would in fact be required to facilitate development of the Land, without the benefit of the Blue Jay Circuit Scheme. The Council says that the evidence adduced was confined to comparing the cost of drainage of the Land with the conditions imposing a requirement for a habitat for the Wallum froglet and the cost of drainage of the Land without such a requirement. However, the question did not address the cost of drainage, on the assumption that the Blue Jay Circuit Scheme proceeded and was completed, as compared with the cost of drainage without the Blue Jay Circuit Scheme.

1. In circumstances where the primary judge refused a mandatory injunction in relation to the Blue Jay Circuit Scheme, but recognised that the Council may proceed with it, it was erroneous to order damages in the sum of $600,000 for an alternative drainage scheme. It would be for Gales to demonstrate that it actually incurred any expense in endeavouring to mitigate the nuisance by preparing plans for the construction of the alternative drainage scheme.

1. Since it is now common ground that the contingency of development of the Land before completion of the Blue Jay Circuit Scheme will never eventuate, this head of damage should not stand. A more appropriate order would have been that the Council be required to reimburse Gales for the additional cost of drainage incurred due to the filling of the northern drain, if the Blue Jay Circuit Scheme did not proceed. However, as the Scheme will now proceed, Gales will incur no additional cost if and when it develops the Land. Accordingly, the appropriate course is simply to set aside the order for damages in the sum of $600,000.

Treating Stormwater for the Wallum Froglet Habitat

1. This head of damage concerns the primary judge's finding that the Council was liable for a proportion of the costs of treating the stormwater incurred before the completion of drainage work by Gales or the completion of the Blue Jay Circuit Scheme. Her Honour fixed that proportion as at one-third. Gales asserts that the Council did not challenge construction and overall water treatment costs during the hearing. It says that the primary judge's conclusion was open on the evidence and reflected a judicial assessment of the increased volumes of Council stormwater channelled onto the Land.

1. The Council complains first that the order involved an arbitrary identification of the proportion of stormwater for which the Council was responsible. Secondly, it proceeded on the assumption, which the Council says was unfounded, that additional stormwater runoff associated with the inadequacy of the 1200mm pipe affected the cost of measures required to preserve water quality for the habitat of the Wallum froglet. The Council says that, in the absence of evidence for that assumption, the award of damages cannot stand.

1. This head of damage appears to be in the same category as the claim for diminution in the value of the Land by reason of the establishment of the Wallum froglet colony. It would be recoverable if it had been foreseeable. I have concluded that the establishment of the colony was not foreseeable. A fortiori, the consequences of that establishment were not foreseeable. The order relating to this head of damage must be set aside.

Conclusion and Orders

1. The primary judge correctly concluded that the actions and conduct of the Council over a considerable period of time constituted a nuisance in relation to the Land. However, her Honour wrongly concluded that the nuisance did not occur until 4 May 2004. Gales is entitled to succeed in its action for nuisance from the date that is six years prior to the commencement of the proceedings. Gales is entitled to appropriate relief in relation to that nuisance.

1. The appropriate relief would include injunctive relief. However, Gales' claim for damages for diminution in the value of the Land because of the requirement to provide and maintain a habitat for Wallum froglets must fail, as must its claim for the cost of water treatment measures because of the habitat. While there is a causal connection between that diminution and the Council's conduct that Gales complained about, it was not reasonably foreseeable by the Council as a consequence of that conduct.

1. The orders requiring Council to pay $600,000 and to contribute to the cost of treating stormwater should be set aside. However, the head of damages relating to the 2004 drainage works should stand.

1. It follows from the above that both the appeal and the cross-appeal should be allowed in part. The parties should be directed to bring in short minutes of orders to give effect to the conclusions outlined above. The parties should also be directed to file written submissions on the question of the costs of the trial at first instance and of the appeal, in the light of those conclusions.

1. Accordingly, I propose the following orders:

(1) The appeal be allowed in part.

(2) The cross-appeal be allowed in part.

(3) The parties bring in short minutes of order giving effect to these reasons no later than 2 December 2013.

(4) The parties file any submissions they wish to on the question of costs of the proceedings at first instance and of the appeal no later than 2 December 2013.

1. LEEMING JA: I have had the considerable advantage of reading Emmett JA's reasons in draft. They enable me to express my conclusions very concisely. First, I agree with Emmett JA, for the reasons that he has given, that the Council has committed nuisance. Secondly, I agree that damages for nuisance, even if the nuisance is intentional, are limited by what is reasonably foreseeable, but I wish to add to the reasons his Honour has provided. Thirdly, I agree that the Council has failed to make out its statutory defences, although I prefer to take a narrower approach to some of the reasoning supporting that conclusion. Fourthly, I agree with Emmett JA's reasons as to the remaining heads of damages.

1. Gales submitted that reasonable foreseeability ought not to be a restriction upon the damages ordered following intentional nuisance, and that this Court ought not to follow what had been said by Lord Reid in Overseas Tankship (UK) Ltd v Miller Steamship Company Pty Ltd [1967] 1 AC 617 at 640. Although that statement was not essential to the appeal, Lord Goff said of it that it "has nevertheless settled the law to the effect that foreseeability of harm is indeed a prerequisite of the recovery of damages in private nuisance, as in the case of public nuisance": Cambridge Water Co v Eastern Counties Leather Plc [1994] AC 2 264 at 301. It was treated as having that effect in this Court in Fennell v Robson Excavations Pty Ltd [1977] 2 NSWLR 486 at 492 (Glass JA, with whom Samuels JA agreed). The same proposition was applied in Sutherland Shire Council v Becker [2006] NSWCA 344; (2006) 150 LGERA 184 at [137] by Bryson JA with whom Mason P agreed.

1. Shortly after Cambridge Water was delivered, the High Court decided in Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 that much of the so-called rule in Rylands v Fletcher had been absorbed by the principles of negligence. Although that decision preserved a distinction between negligence and nuisance, and there are difficulties sustaining the reasoning today to the extent it is based on proximity, Burnie Port Authority does not assist the appellant's submission. Indeed, the joint reasons referred at 537 to the development, in the context of private nuisance and the development of the modern law of negligence, of "a requirement closely resembling, or perhaps even amounting to a requirement of foreseeability of relevant damage in the event of the escape of the dangerous substance". The reasons also noted Holmes' view in The Common Law that "foreseeability of the likelihood of harm is the unifying element of tortious liability".

1. Gales did not point to any decision of the High Court which required a departure from what has consistently been treated as a limitation upon liability for nuisance, nor did it suggest that the decisions in this Court which have applied what was said in Wagon Mound No 2 were clearly wrong. To be fair, the submission was put concisely, not least because Council maintained that it could only be treated as a formal one. I do not consider that it is open to this Court to accept it, in light of the state of existing authority, which in any event I am far from persuaded is clearly wrong. "Reasonableness" in a variety of senses has long been a restricting element of nuisance (see the examples given by Jordan CJ in Don Brass Foundry Pty Ltd v Stead (1948) 48 SR (NSW) 482 at 486-487); it follows that considerations of coherence do not demand a test other than reasonable foreseeability for that subset of nuisances which are intentional as opposed to negligent. Gales submitted that intentional tortious conduct amounting to nuisance is qualitatively different from non-intentional conduct, but the fact that exemplary damages are available in an appropriate case (for example, Commonwealth v Murray (1988) Aust Torts Rep 80-207 and see AB v South West Water Services Ltd [1993] QB 507 at 523) tends to undercut the force of Gales' submission.

1. The largest component (by far) of Gales' damages claim reflects the costs incurred and loss in value of the land attributable to the establishment of the Wallum froglet colony. Is that too remote? Consistently with the assimilation of the tests in negligence and nuisance, it will suffice for the plaintiff to establish that harm of the kind suffered was reasonably foreseeable: Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383. But, as Windeyer J there pointed out (at 402), the obvious difficulty of that "comfortable latitudinarian doctrine" is that it leaves the criterion for classification of kinds or types of harm undefined and at large. The same point was made by Allsop P (with whom Tobias AJA agreed) in Stephens v Giovenco; Dick v Giovenco [2011] NSWCA 53 at [5]: the test "leaves unresolved the level of abstraction or particularity". This issue arises acutely in this appeal.

1. It may readily be accepted that it was reasonably foreseeable that the land would "wet up" following the discharge of stormwater onto it, but in my opinion that is insufficiently particular to permit Gales to recover damages occasioned by the establishment of a Wallum froglet colony. Nor would I accept that it is sufficient for Gales to establish that wetting up was reasonably foreseeable, such that the land "would become the habitat of moisture-loving species, including threatened species". The kind of loss of which Gales complains in this respect is that which is occasioned by the operation of the Threatened Species Conservation Act 1995 upon the planning regime, which has led to the need to investigate and preserve habitat for the froglet. It was not necessary for Gales to establish that it was reasonably foreseeable that Council's nuisance would give rise to the creation of a habitat of the particular vulnerable species, but it was necessary to establish the reasonably foreseeable possibility that some vulnerable species might establish itself and so engage the provisions of the Threatened Species Conservation Act. However, approaching the question at that level of abstraction gives Gales scant comfort. For the criterion for a species or ecological community being recognised under that legislation is that it is facing a "high", "very high" or "extremely high" risk of extinction in New South Wales in the medium-term, near future or immediate future respectively: ss 10 and 12. Even the establishment of a new colony of a species which is merely vulnerable (that is to say, facing a high risk of medium-term extinction in New South Wales) is unlikely, absent special circumstances, to be a reasonably foreseeable possibility; that after all is precisely why the species is vulnerable.

1. The primary judge found as a matter of fact that the prospect of the establishment of a Wallum froglet colony was not a reasonably foreseeable risk: at [425]-[429]. Although it was submitted that her Honour had impermissibly reasoned backwards from the actual event which had occurred as opposed to harm of the kind suffered, her Honour's reasoning included reference in [425] to the complexity of the problem having regard to the range of threatened species in the locality, and recorded the Council's rhetorical question (which pithily illustrates the complexity of the inquiry) whether Council was required "to balance in its mind whether to preserve a wet environment conducive to frog survival or create a dry environment for the survival of the threatened Mitchell's Rainforest Snail". Equally importantly, the nature of the test for remoteness, in its application to the facts of this case, was that Gales for forensic reasons was reduced to showing the reasonable foreseeability of a Wallum froglet colony. If that could not be shown, it was unlikely that Gales could show that it was reasonably foreseeable that some threatened species might establish itself on the land. The focus in her Honour's reasons on the Wallum froglet reflected the submissions made by Gales at first instance and on appeal, and does not disclose error. Emmett JA has addressed more elaborately the question of why the establishment of habitat of an endangered species was not reasonably foreseeable, including in respect of six critical matters of which Gales complained (at [250]-[261]), with which reasoning I agree.

1. I agree with Emmett JA's conclusions rejecting the Council's statutory defences, essentially because the nuisance came about because Council directed stormwater runoff onto Gales' land. That conduct is outside the scope of the statutory defences. In particular, I agree that the civil liability for which Gales contended was not "based on" Council's exercise or failure to exercise a statutory power within the meaning of s 43A of the Civil Liability Act 2002. Accordingly, it is not necessary for me to express a view as to whether Council's approval powers are a "special statutory power". In relation to s 45, Gales' claim was in large measure not based upon an alleged failure to carry out or to consider carrying out work. As is indicated by its heading ("Special non-feasance protection for roads authorities"), s 45 is directed to what would formerly have been described as cases of non-feasance, rather than misfeasance: see North Sydney Council v Roman [2007] NSWCA 27; 69 NSWLR 240 at [156]. Further, I agree with the primary judge and Emmett JA that to the extent that the claim was based on non-feasance (such as the blocking up of the Elrond Drive culvert), then the culvert was not a roadwork. (The fact that the reasons in Council of the City of Liverpool v Turano [2008] NSWCA 270; 164 LGERA 16 at [182] record an agreement between the parties to the contrary is of no weight.) Finally, the primary judge proceeded on the basis that if s 733 of the Local Government Act 1993 applied, then the Council had not established that its conduct was in good faith: at [414]-[417]. Her Honour correctly noted that good faith must be more than honest ineptitude: Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290. I agree with what Emmett JA has written in relation to s 733, and in particular the absence of challenge to the critical findings at [414] on which her Honour's conclusion was based.

1. SACKVILLE AJA: I agree with the orders proposed by Emmett JA. I also agree with his Honour's reasons, subject to the qualification, stated by Leeming JA, with whose judgment I agree.

Appendix 1 - PDF

Appendix 2 - PDF

Amendments

11 February 2014 - reference to paragraphs [262-273] changed to [250-261]

Amended paragraphs: 282

19 November 2013 - corrected quote

Amended paragraphs: 2

Decision last updated: 11 February 2014