Glenhaven Property Holdings Pty Ltd v Oaktwig Pty Ltd - [2008] NSWCA 154

No judgment structure available for this case.

New South Wales

Court of Appeal

CITATION: Glenhaven Property Holdings Pty Ltd v Oaktwig Pty Ltd [2008] NSWCA 154

HEARING DATE(S): 3 June 2008

JUDGMENT DATE:
3 July 2008

JUDGMENT OF: Spigelman CJ at 1; Giles JA at 153; Tobias JA at 154

DECISION: Appeal dismissed with costs.

CATCHWORDS: Local government – Housing development – Development application – State Environmental Planning Policy No 5 (SEPP5) - Professional negligence – Breach of duty in tort and contract – Test to be applied – Whether development application had a reasonable prospect of approval - Misleading and deceptive conduct – Whether reasonable grounds for making representation – Fair Trading Act 1987, s 41 and s 42 - Contract – Parties – Whether party to second contract was corporation where incorporation after first contract

LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Fair Trading Act 1987
State Environmental Planning Policy No 5

CASES CITED: Hornsby Shire Council v Malcolm (1986) 60 LGRA 429
Momentum Architects Pty Ltd v Hornsby Shire Council [2002] NSWLEC 252
Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533
Rambon Force Pty Ltd v Baulkham Hills Shire Council [2002] NSWLEC 146

PARTIES: Glenhaven Property Holdings Pty Ltd (First Appellant)
Richard Martin Walsh (Second Appellant)
Oaktwig Pty Ltd (First Respondent)
John Giles Bourke (Second Respondent)
Poswan Pty Ltd (Third Respondent)

FILE NUMBER(S): CA 40503/07

COUNSEL: D F Jackson QC and C D Freeman (Appellants)
S Bell (Respondents)

SOLICITORS: Leonard Legal (Appellants)
Webster O’Halloran & Associates (Respondents)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): 116847/04

LOWER COURT JUDICIAL OFFICER: James J

LOWER COURT DATE OF DECISION: 28 June 2007

LOWER COURT MEDIUM NEUTRAL CITATION: [2007] NSWSC 1533

CA 40503/07

SPIGELMAN CJ
GILES JA
TOBIAS JA
Thursday 3 July 2008

Glenhaven Property Holdings Pty Ltd & Richard Martin Walsh v Oaktwig Pty Ltd & John Giles Bourke & Poswan Pty Ltd

Judgment

1 SPIGELMAN CJ: This is an appeal from a decision of James J dismissing a professional negligence action against the respondents: Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533. The second appellant (“Mr Walsh”) is a property developer who proposed to obtain a consent for development on land that came to be owned by the first appellant. The first respondent is a company controlled by the second respondent (“Mr Bourke”), which conducts an architectural and design services business. Save with respect to one matter that arises on the appeal, there is no need to differentiate between the individuals and their companies. It is convenient generally to refer to the appellants collectively as “Glenhaven” and to the respondents collectively as “Oaktwig”.

2 In the proceedings below Oaktwig sought payment of its fees for the provision of architectural and design services for the preparation of two development applications made with respect to land situated at 607 Old Northern Road, Glenhaven. The appellants were held liable to the corporate respondent in the sum of $524,585.52 plus interest and costs.

3 The issues before this Court arise pursuant to a cross-claim by Glenhaven against Oaktwig alleging professional negligence and false and misleading conduct. Mr Walsh also appeals from his Honour’s finding as to the parties to the contract for the second development application.

Background Facts

4 The factual background is fully set out in the judgment of James J. Paragraphs [1]-[57] of that judgment were accepted by both parties on the appeal. It is unnecessary to set them out in full. It is, however, appropriate to highlight certain features:

· The Glenhaven land was zoned rural but, pursuant to the provisions of State Environmental Planning Policy No 5 (“SEPP5”), it was permissible for a consent authority to give approval for the construction of housing for older people.

· Mr Bourke introduced Mr Walsh to the land and advised him that the property was suitable for a SEPP5 development.

· In April 2001, Mr Bourke and Mr Walsh made an oral agreement with respect to the performance of architectural and design services for an application to Hornsby Shire Council. Mr Bourke would charge fees at the rate of $2,600 per unit in the development.

· On 27 July 2001 a Put and Call Option Deed was executed between Mr Walsh and the owners of the land at 607 Old Northern Road.

· On 11 October 2001 Glenhaven was incorporated.

· On 30 October 2001 a contract for the sale of the land was entered for a price of $1,950,000 and a deposit of 10 percent was paid.

· By the end of January 2002 Mr Bourke had completed a development application for a SEPP5 development for the erection of a retirement village comprising 140 self-contained dwellings (“the first DA”).

· On 31 January 2002 Mr Bourke forwarded an account for his architectural services on the proposed development which included a charge for 140 units at $2,600 per unit and certain other matters.

· On 28 May 2002 an amount of $50,000 was paid by Mr Walsh to Mr Bourke. This is the only payment that has been made.

· Officers of the Council recommended rejection of the application.

· Mr Blyth, a town planner, was retained on behalf of Mr Walsh by Mr Bourke and submissions were made to the Council.

· On 4 September 2002 the first DA was refused by the Council.

· An appeal was brought to the Land and Environment Court on the basis of a deemed refusal prior to the actual refusal.

· The appeal was heard by two Commissioners of the Land and Environment Court over five days between 4 November and 8 November 2002.

· On 10 December 2002 the appeal was dismissed.

· Mr Bourke prepared a further development application for a retirement village comprising 57 units. This was referred to in the proceedings as the second development application (“the second DA”). James J rejected the case based on professional negligence with respect to this development application and no appeal is brought from his Honour’s judgment in this regard.

· The only issue with respect to the second DA is the party to the contract on the Glenhaven side. James J found the party to be, or to include, Mr Walsh. The appellants contend it was the company.

· Eventually, the Council approved a third development application for 38 units.

5 SEPP5 is at the heart of these proceedings. His Honour sets out the relevant sections of the Policy. I do not find it necessary to do so at length. The essential features, for present purposes, of SEPP5 are as follows:

· The Policy is designed to encourage the provision of housing, relevantly, for older people which is of “good design”.

· SEPP5 prevails over any other environmental planning instrument that is inconsistent with it.

· SEPP5 applies not only to land that is zoned for urban purposes but also to land which adjoins land zoned for urban purposes. There is extensive residential development on the opposite side of Old Northern Road which was “adjacent” for the purposes of SEPP5. (See Hornsby Shire Council v Malcolm (1986) 60 LGRA 429 at 434, 443.)

· SEPP5 identifies certain development standards covering matters such as building height, site frontage, pathway lighting, letterboxes, private car accommodation, structure of the living room, kitchen, bedrooms, bathrooms, toilets, storage, etc.

6 Of particular significance for present purposes, with respect to the development standards, is cl 14 of SEPP5 which relevantly provides:

“14 The consent authority must not refuse consent to a development application under this Part on the grounds of:

…

(b) density and scale: if the density and scale of the buildings when expressed as a floor space ratio is

(i) 0.5:1 or less …”

7 SEPP5 also sets out design principles in order to “achieve built form that responds to the characteristics of its site and location”. The design principles are to be taken into account in an application for consent. A “site analysis” must be submitted about “the site and its surrounds” as set out in detail in the schedule to the Policy.

8 Certain of the design principles set out in cl 25 were invoked by the appellants on the appeal:

“25 Consent must not be granted for development to which this Part applies unless the consent authority is satisfied that the proposed development demonstrates that adequate regard has been given to the following principles:

(a) Neighbourhood amenity and streetscape: The proposed development should:

(i) contribute to an attractive residential environment with clear character and identity …

(iv) where possible, maintain reasonable neighbour amenity and appropriate residential character by using building form and siting that relates to the site’s land form

…

(b) Visual and acoustic privacy: The proposed development should, where practicable, consider the visual and acoustic privacy of neighbours in the vicinity and residents by:

(i) appropriate site planning, the location and design of windows and balconies, the use of screening devices and landscaping

…

(c) Solar access and design for climate: The proposed development should, where possible:

(i) ensure adequate daylight to main living areas of neighbours in the vicinity and residents and adequate sunlight to substantial areas of private open space

…”

9 Before James J and in this Court the case proceeded on the basis of a contract entered into in April 2001, of which the critical term was the implied term of reasonable care and skill. The parallel duty in tort was also invoked. A conversation which his Honour found to have occurred, and which may have given rise to a contractual term that the proposal must be for 140 units, was not relied upon by Oaktwig.

10 In or about August 2001, Mr Bourke and Mr Walsh had a conversation in which the latter said, in the context of inspecting preliminary plans prepared by Mr Bourke for about 108 units:

“We should be able to get more than that on 7 acres.

…

We need to start with as many units as possible. We can always take units out, if they don’t like them.

…

The Council may not like it but we need to get about 140 units on site to get the best return we can …

I have checked on SEPP5 and we are allowed to develop the land to 0.5FSR that is what I want to do, so proceed with the design on the basis of 140 units … because that is what the market requires.”

11 As I have said, Oaktwig did not rely on a contract to design a 140 unit proposal. However, this conversation may be relevant to the issue of breach of duty.

12 In this regard it is pertinent to note that his Honour said, immediately after finding that this conversation occurred:

“[152] … It remains true, of course, that Mr Bourke, whose retainer I have found included advising Mr Walsh, would have been subject to an obligation, if he was of the opinion that a development application for 140 units had no reasonable prospect of succeeding, of informing Mr Walsh of that opinion.”

13 The appeal was conducted on the basis that there was such a duty in both contract and tort.

Ground 2

14 It is appropriate to deal with Ground 2 first. That ground is:

“2 (a) In determining whether the first respondent was in breach of its duty (or the implied term) to exercise reasonable care and skill in relation to the First Development Application, His Honour applied an incorrect test, namely whether the First Development Application had a chance of approval.

(b) The test which His Honour ought to have applied was whether the First Development Application had a reasonable prospect of approval by Hornsby Local [sic] Council or the Land and Environment Court.”

15 This ground is based on a reference in the report of a Mr C Young, a town planner called on behalf of Oaktwig, in which that witness said:

“This first application had in my opinion a chance of success in Court.”

16 James J quoted a number of passages from the report of this witness, including this sentence. The appellants in written submissions relied on the fact that this sentence did not use the formulation “reasonable chance of success” and was consistent with the expression of an opinion that the application had a mere or slim chance of success. The appellants submitted that this was an inappropriate test and that insofar as his Honour relied upon this passage he should be seen as applying the test.

17 It appears from numerous passages in his Honour’s judgment that he applied a test of “reasonable prospect”, as advocated by the appellants.

18 This is sufficiently clear from certain passages in his Honour’s judgment under the heading “Conclusion”:

“[219] In my opinion, I should not hold that there was no reasonable prospect of the first development application being approved by the Land and Environment Court.

…

[222] For the reasons which I have already given, I consider that a competent architect could have formed the opinion that a development having the bulk and scale of the proposed development had at least reasonable prospect of being approved by the Land and Environment Court, if not the Council.

…

[229] … Mr Bourke believed that the first development application had at least a reasonable prospect of being approved and I have held that the first development application did have at least a reasonable prospect of being approved. …

[230] In these circumstances I do not consider that Mr Bourke was under any obligation to advise Mr Walsh that a development application with 140 units had no reasonable prospect of succeeding.”

19 Ground 2 should be rejected.

Grounds 1, 3 and 4 of the Notice of Appeal

20 The thrust of the submissions on behalf of the appellants with respect to these grounds of appeal was that the evidence was so strongly in favour of a finding that there was a breach of the duty to use reasonable care and skill, that the contrary finding was not open to his Honour.

21 The grounds are:

“1 His Honour erred in holding that the first respondent was not in breach of its duty (or the implied term) to exercise reasonable care and skill in relation to the First Development Application.

…

3 His Honour erred in failing to hold that the First Development Application had no reasonable prospect of being approved by Hornsby Council or the Land and Environment Court.

4 His Honour should have held that the First Development Application did not have a reasonable prospect of approval by Hornsby Council or the Land and Environment Court by reason of, inter alia:

(a) The scale and bulk of the buildings on the First Development Application;

(b) The lack of adequate solar access to the units in the First Development Application;

(c) The overshadowing on the units in the First Development Application.”

22 As noted above, the Land and Environment Court, constituted by two Commissioners, dismissed the appeal from the Council’s rejection of the first DA. (See Momentum Architects Pty Ltd v Hornsby Shire Council [2002] NSWLEC 252.) The Court’s reasons for doing so were relied upon by the appellants but, of course, it is necessary to assess the issue of whether the first DA had reasonable prospects of success without the benefit of hindsight.

23 With respect to the characterisation of the site the Commissioners said:

“[3] Across the road, on the west side of Old Northern Road is a low-density residential area, which is part of Baulkham Hills Shire. The east (Hornsby) side of the road is rural in zoning and character. The Flower Power site is the exception. While rural by definition, it is densely built and visually prominent. Despite its name, it has virtually no landscaping.”

24 The Commissioners referred to the rural zoning and said:

“[14] … We do not think … that it is valid to criticise this proposal on the basis that it is not rural in character. If it had only half as many dwellings as it does, it would still not appear rural in character.

rural

Environmental Planning and Assessment Act 1979

25 The Commissioners set out the criticisms of the proposal in the expert evidence called for the Council. They then turned to the expert evidence in support of the appeal to that Court by Mr Blyth, to which I will refer below. The Commissioners said:

“[22] We do not accept this evidence. The fact that the built form is residential in appearance, or that the floor plans are high quality and generous, says nothing about the impact on the rural environment. Moreover, it is not correct to say that the buildings in the proposal are well separated. Elevated walkways, bridges, lift towers and staircases fill in whatever separation exists.

[23] It appears to us that Mr Blyth bases his defence of the proposal on the argument that SEPP 5 prevents a consent authority from refusing an application on the basis of Floor Space Ratio (FSR), if the FSR does not exceed 0.5:1. Therefore any development with a FSR of 0.5:1 is acceptable in character, no matter in what context it is located. We do not accept this line of reasoning. Whatever the FSR of a development under SEPP 5, it is still required to have an acceptable relationship to its surroundings. A row of dwellings 120m long would probably be out of place in most residential areas. It is grossly out of place in a rural setting.

[24] We note that, while in most residential flat buildings the circulation space is internal, in this case the lifts, stairs and corridors are placed outside the buildings. As a result they are not included in the calculation of the floor space. The exclusion from floor space calculations does not mean, however, that these built elements do not add to the apparent bulk of the building. The device may be effective in placing more dwellings on the site without exceeding the FSR of 0.5:1, but it is not effective in lessening the bulk and scale of the proposal.

[25] For the above reasons, we accept Dr Lamb’s evidence that the change in the character of the site would be so great as to adversely affect the rural character of the surrounding properties to an unacceptable degree.”

26 Once the Court had formed the view expressed at [23] that the development was “in a rural setting”, its conclusion followed quite logically. Nevertheless, it is clear that Oaktwig did not approach the first DA on the basis of such a characterisation. Whether Mr Bourke could reasonably place the reliance that he did place on the adjoining development which cannot be characterised as part of a “rural setting” is at the heart of this appeal.

27 In the expert reports before James J, and in the reasoning of the Land and Environment Court, there appear a number of detailed criticisms of the first DA. The principal focus of these criticisms in terms of establishing professional negligence is, directly or indirectly, the allegation of over-development on the particular site. Glenhaven’s case is, essentially, that the first DA never had a reasonable prospect of success because it attempted to place 140 units on the site, with all the implications that flowed from a development of such intensity on a site adjoining, as it did, development of significantly lower intensity.

28 On the issue of the intensity of the development in this Court, it is particularly pertinent that the proposal did comply “technically”, as the Glenhaven submissions in this Court said, with the directly relevant development standard, ie cl 14 of SEPP5, set out above, which states that the Council or Court “must not refuse consent … on the grounds of … density and scale … if the … floor space ratio is … 0.5:1 or less”.

The Expert Evidence

29 The expert evidence on which Glenhaven primarily relied in these proceedings was that of Mr Neil Ingham, a town planner of considerable experience. His evidence was clear that the first DA had no reasonable prospects of success before either the Council or the Court on appeal. Mr Ingham supported his opinion with detailed and cogent reasoning.

30 That the Council was unlikely to approve the application was common ground throughout. The real issue was whether there was a reasonable prospect of success on appeal to the Land and Environment Court.

31 Even a cursory inspection of the site plan for the first DA, reveals a development of considerable intensity which inevitably raised real issues about the amenity of occupants and its impact on the amenity of neighbouring properties. However, professional negligence requires a degree of inappropriateness which goes well beyond a judgment about desirability.

32 Mr Ingham’s report is the most comprehensive evidence in support of the appellants’ contention that the first DA had no reasonable prospect of success in the Court. He said, inter alia:

“It is my opinion that the development as proposed in the first development application did not have any reasonable prospect of being approved mainly due to the following factors.

· The proposed development had attached 2 storey apartment buildings with one of the buildings having a length of 127 metres and containing 26 dwelling units. Another building had a length of 95 metres containing 24 units. For some people the distance which they would be required to walk from their carparking space to their dwelling unit was up to 100 metres. In my opinion this is an unacceptable length of travel from a carparking space to a dwelling for aged or disabled persons. Furthermore the security in that movement requires people to leave the lift and move to their dwelling unit along a walkway between units of up to 60 metres.

· Secondly the proposed development, being wholly two storeys in height, does not fit within the general character of buildings in the Rural BA Zone which tend to be lower scale and much lower in density. While the development application could not be refused on the grounds of it having a floor space ratio of less than 0.5:1, the configuration of the units and their bulk and scale were grounds upon which the application could be refused. In my opinion the scale and bulk of the buildings would have ensured a refusal of the application. The length of some buildings without a break is unacceptable in the Rural BA Zone.

…

Therefore, having regard to the proposed development and the matters discussed above, it is my opinion that the development application for 140 dwelling units for aged or disabled persons as proposed in the first development application did not, at any time, have any possibility of receiving development consent.

…

… Having reviewed the first development application plans … and the amended proposal … it is in my opinion there was never any prospect of the first development application being approved by the Council or by the Court.

… Given the impact of the first development application, it is my opinion that it would be extremely difficult and unlikely for any architect to have achieved a satisfactory development of 140 three bedroom dwellings on the site.

The professionals advising the client in this matter should have undertaken a site analysis of the site prior to the preparation of any conceptual plans and should have prepared a conceptual development on the site to determine the likely impacts of the development prior to undertaking the preparation of detailed plans. This, in my opinion, would have illustrated the extreme difficulty (if not impossibility) of preparing an application that would be likely to be approved by the Council or the Court.”

33 Mr Ingham also said:

“… I would have certainly advised the client in respect of the first development application to not proceed to appeal as I believe the development application had no chance of success.”

34 It is convenient to deal now, as James J did, with the other expert evidence said to support, in various respects, the comprehensive analysis by Mr Ingham.

35 Mr Ian Glendinning is a town planner who assisted Mr Bourke with the second DA. He played no role in the first DA. In his evidence he said:

“I note that at paragraph [25] of the Judgment in the First L & E Proceedings, the Court came to the view that the design of the development would ‘adversely affect the rural character of the surrounding properties to an unacceptable degree’ … The Court also found at paragraphs [26]-[34] that the development did not comply with the requirements of clauses 25(b) and (c) of SEPP 5. Clause 25(b) required that a development should provide neighbours with visual and acoustic privacy. Clause 25(c) required adequate sunlight to the main living areas of residents and neighbours and to substantial areas of private open space.

These problems were always going to arise with a design which sought between 132 and 140 two storey dwellings having regard to the site characteristics [of the] Glenhaven property and were evident to me from the first occasion I reviewed the plans.”

36 Glenhaven contended in this Court that James J gave inadequate weight to the opinion expressed by Mr Glendinning, especially to what he said was his reaction when he first saw the plans to the first DA in 2002. His Honour came to the conclusion that Mr Glendinning’s opinion was formulated with the benefit of hindsight after seeing the Council Report and the Court judgment.

37 In my opinion, James J was correct to give limited weight to Mr Glendinning’s opinion for the reasons he gave. First, Mr Glendinning expressly admitted that in 2002 he had given, at best, cursory consideration to the plans for the first DA. His initial reaction, even if accepted as having occurred, could not be given much weight. Secondly, Mr Glendinning’s evidence that he had formed the view that even the second DA allowed for too many units (ie 57) was rejected by his Honour on credit grounds. That conclusion was justified as Mr Glendinning had made comments in writing supportive of the second DA at the time it was submitted, but gave evidence on affidavit that he had at that time formed the opinion that the second DA had no reasonable prospect of success.

38 His Honour’s finding on credit must impinge on the weight that his Honour, or this Court, can attribute to Mr Glendinning’s recollection of what he thought in 2002 about the first DA. In any event what he said about that was that it was evident to him from the first occasion that “problems were always going to arise”.

39 In my opinion, James J was also correct to conclude that insofar as Mr Glendinning gave expert evidence of opinion relevant to prospects of success of the first DA, this was determined to a substantial degree by the advantage of hindsight. Indeed, the structure of his affidavit is based, in large measure, on the reasons for judgment in the Land and Environment Court. His references to the first DA were few and more by way of aside than analysis. His primary focus was on the second DA with respect to which he expressed the opinion that it had no reasonable prospect of success. This opinion was not supported by Mr Ingham and there is no appeal from the decision of James J in that respect.

40 I agree with James J that Mr Glendinning’s evidence on the first DA provides little, if any, weight to support the evidence of Mr Ingham.

41 Mr Martin Pickrell, an architect, also gave evidence in support of Glenhaven. He prepared the, ultimately successful, third development application. He said:

“I would never have prepared any Development Application under SEPP 5 in relation to the Glenhaven Property containing more than 41 dwellings. Had I been requested by a client to prepare a design for the Glenhaven Property as part of a SEPP 5 Development Application with any more than a maximum of 50 dwellings (being 2 and mostly 3 bedroom dwellings with double garages where possible), I would have informed the client that there was little or no possibility of such a design being approved by Council having regard to the size and physical characteristics of the Glenhaven property and the rural character of the surrounds. Had I been instructed to prepare a design on the Glenhaven Property with 132 or 140 dwellings, I would have had no hesitation in informing a client that there would be no reasonable possibility of the Council approving such a design and it ought not even be considered. I believe that preparing such an application would have been a waste of time and expense. I would have strongly advised against such an application being prepared.”

42 As this passage makes clear, Mr Pickrell’s evidence was directed to the possibility of approval by the Council. No one ever thought that likely. His Honour set out Mr Pickrell’s express evidence that he had no opinion about whether the Court was likely to approve such a development. Mr Pickrell’s reasoning was, and is, pertinent on substantive issues and James J referred to it. It is of some, albeit limited, assistance on the issues before this Court.

43 One element in the appellants’ submission that the burden of the evidence was strongly against the finding that his Honour made was the fact that, Mr Young, as stated above, did not support the respondents’ case because he failed to give evidence in terms of the correct test, namely, that of a “reasonable prospect of success”. His evidence, the appellants submit, should be understood as a reference to “a prospect, however slim” of success “because the application complied with the technical requirements of SEPP5”.

44 Mr Young’s report was filed in response to the report of Mr Ingham on behalf of the appellants. Mr Young addressed himself to the same questions as those identified by Mr Ingham. The first such question was in the following terms:

“Did the First Development Application have any reasonable prospect of being approved given that it sought permission to erect 140 double storey dwellings or in relation to the design generally?”

45 It was in this context that Mr Young said the following:

“In my experience both as a Council officer and consultant I would not say that an application is certain of approval or rejection at Council or the Land and Environment Court even if it complied with the objective aspects of the relevant controls.

In my view this application complied with the technical aspects of SEPP5.

The Court found it did not comply with the subjective conditions of rural character and internal amenity. These are matters for the subjective consideration of either the Council or the Court.

a chance of success

46 Mr Young turned his attention to the questions posed for, and answered by, Mr Ingham in which Mr Ingham made a number of observations to which Mr Young responded. Those observations by Mr Ingham included, to repeat:

“Having reviewed the first development application, plans and amended plans and information accompanying the original proposal and the amended proposal … it is in [sic] my opinion there was never any prospect of the first development application being approved by the Council or by the Court.

…

Given the impact of the first development application, it is my opinion that it would be extremely difficult and unlikely for any architect to have achieved a satisfactory development of 140 three bedroom dwellings on the site.

…

The professionals advising the client in this matter should have undertaken a site analysis at the site … This, in my opinion, would have illustrated the extreme difficulty (if not impossibility) of preparing an application that would be likely to be approved by the Council or the Court.”

47 Mr Young’s response to this part of Mr Ingham’s report was as follows:

“In regards to the series of questions under (c) on page 13 of his report I generally agree with his comments except for the absolute negative of ‘never’. As stated above I consider the application had a chance in light of its compliance with the technical requirements.”

48 There is some force in the appellants’ submission that, insofar as Mr Young accepted the terminology of “extremely difficult and unlikely” or “extreme difficulty (if not impossibility)”, as set out above, his use of the words “a chance” may not have amounted to a “reasonable chance”.

49 However, Mr Young is a town planner and not a lawyer. With respect to the first passage referred to above, he was responding to Mr Ingham’s reply to a question as to whether or not the first DA had “any reasonable prospect of being approved”. If it was intended to submit that Mr Young was limiting his evidence and response to a mere chance or a slim chance rather than a “reasonable chance”, it should have been put to him. It was not.

50 He was, however, cross-examined with respect to the part of his report that consisted of summary and conclusions, which was as follows:

“Having read all the information provided and based on my experience as a Council officer and consultant I conclude:

1 That the first and second applications had very little chance of approval from Council considering Councils [sic] concerns over SEPP5 developments in rural areas.

a chance of success

3 The amendments to the first development application did not substantially improve the potential for approval in either Council or the Court.

4 The second development application being significantly amended to the first application and addressing the matters of refusal from the Court had a strong chance of success and a stronger chance with further amendments to access.

5 I am of the opinion that both applications are competent applications.” [Emphasis added]

51 The cross-examination was, relevantly, as follows:

“”Q If you just go to your summary and conclusions at section 10 of your report you will see that you seem to accept that the first and second DAs had very little chance of approval from council considering their concerns over SEPP 5 developments in rural areas and that’s your opinion, isn’t it?

A That’s my opinion, yes.

Q And you say, and this is the significant point of difference between you and Mr Ingham, is it not – in paragraph 2 you say it had a chance of success?

A Yes.

Q Now again just focusing on your opinions there at paragraph 1 and 2, when you give a client advice concerning the merits of a development applications it’s your experience that clients are not interested in whether a development application technically complies with the legislative requirements, are they?

A Many clients are and in my experience they want to know first off whether or not it does technically comply. There is an expectation that it will technically comply. Then they will balance up the merits of the subjective issues.

Q That’s right, but, for example, a development application can be prepared that technically complies but has little chance of success?

reasonable chance

52 Mr Young’s reference to a case of “technical” compliance giving rise to an expectation of “a reasonable chance of success” does suggest that he may have been using the terminology “chance of success” in his report in the sense of a “reasonable chance”. Such ambiguity as exists has not been resolved, but it cannot be said that Mr Young lends no support to the analysis of Mr C Blyth, the expert primarily relied on by the respondents. Mr Young’s analysis of the issues supports both sides in different respects.

53 When Mr Bourke became aware of Council objections to the first DA, which objections included town planning considerations, he contracted Mr Blyth to assist with a submission to Council. For an architect, that step was entirely appropriate. Mr Bourke was an architect and Mr Blyth was a town planner. The areas of expertise overlap but are, in important respects, distinct. Mr Blyth’s skill and experience was not challenged. Mr Bourke was entitled to rely on him, although I note that Oaktwig did not suggest that such reliance discharged its own duty.

54 Mr Blyth prepared a report dated 23 July 2002 which was submitted to the Council in response to the criticisms of Council officers. Mr Blyth also gave evidence as an expert witness on the appeal from the refusal of the first DA in the Land and Environment Court. Regrettably, his report and evidence in that court was not tendered before James J. Only brief excerpts are set out in the judgment of the Land and Environment Court. Finally, Mr Blyth gave evidence before James J.

55 An important issue on this appeal is whether Mr Blyth’s analysis and opinions were sufficient to support the opinion Mr Bourke held to the effect that the first DA had a reasonable prospect of success in the Court, when weighed in the balance against the other expert evidence in the overall context in which Oaktwig discharged its duty of skill and care.

56 Mr Blyth’s report of 23 July 2002 stated, most relevantly:

“In response to the matters referred to in the recommendation for refusal of the application we say as follows:

1 Loss of Class 3 Agricultural Land

…

adjoins

It does not permit such development on any other land such as for example land to the rear of the subject site which would not be adjacent to urban land. The establishment of SEPP 5 housing on this site does not mean that all sites abutting it are then automatically complying sites, through leapfrogging.

As such the ‘loss’ of 2.899ha out of the entire area of land zoned rural in Hornsby cannot be regarded as significant nor as a precedent for the loss of rural land or the rural character of the area generally.

…

7 Non Compliance with SEPP No. 5

(a) Diversity of housing.

The assertion that the development does not provide the diversity of housing SEPP 5 requires is entirely incorrect. The SEPP is written from stand point that within the state at present there is insufficient housing that is designed to suit older persons and persons with a disability.

The subject proposal provides 140 dwellings that will assist in reducing the current deficiency and as such contributes effectively to the diversity sought. Note that in the recent Land & Environment case Smith –v- Hornsby Council at 35- 39 Berowra Waters Rd, Council ran this same issue and were unsuccessful, the Court consenting to the proposal.

(b) Height and scale of building B & D and provisions of Cl.25(a)

Again the buildings in the proposal are medium density housing and represent a different character to what might otherwise be found in the locality. This is said however noting the suburban residential development opposite and the large nursery with a front bitumen car park adjoining.

In view however of the large setbacks, heavily landscaped environment of the site and the two storey scale the overall development of the site has been proposed to more than address the design and locational parameters of SEPP 5.”

57 He concluded:

“(g) The proposal is not of good design as required by Cl.3(1)(c)

Simply for all the reasons mentioned in this report and those matters addressed in the report of other consultants accompanying this resubmission, we are of the opinion that the proposal is unquestionably of good design as sought by the SEPP.

Council has not provided any sustainable evidence to the contrary.”

58 And:

“In conclusion we state that we have reviewed the DA submission and drawings and read the officers report in this matter and the recommendation for refusal. In looking at those matters listed for refusal and then by reference to the actual situation we cannot understand and certainly do not agree with the conclusions reached.

We believe in the circumstances of the case and with the benefit of the additional consultant’s reports accompanying this submission, that the proposal requires an urgent comprehensive review by Council.”

59 Mr Blyth’s evidence to the Land and Environment Court is not in evidence. However, the judgment of that Court states:

“[17] Dr R Lamb, a visual analyst retained by the council gave evidence on visual impact. The applicant’s expert was Mr C Blyth, a consultant planner. Dr Lamb and Mr Blyth differed in their assessment of the character of the surrounding area. Mr Blyth took his cue from the adjoining Flower Power site and the residential development across the road, while Dr Lamb considered that the majority of the surrounding area was rural in character. We agree with Mr Blyth that the Flower Power site is a hard and dominant development. However, this is the only development of its kind visible from the subject site. Its existence is not a reason to extend the un-rural character further.

…

[21] Mr Blyth, on page 19 of his statement, commented on the issue of rural character, amenity and streetscape:

The built form is typically residential in its design appearance and proposes high quality generous floor plans with variety in size and style, in a two-storey built form. The form of the development enhances amenity through having well separated building enabling large landscaped separations between buildings and to the streetscape reducing scale and enhancing the landscaped setting of the development. The development will in my opinion undoubtedly have character and identity and will provide and [sic] attractive residential environment for future occupants.”

60 That court rejected this evidence, as it was entitled to do. However, the relevant issue for present purposes is the content and reasonableness of the opinion, not whether it was the correct or preferable view.

61 In his affidavit in these proceedings Mr Blyth said, most relevantly:

“There are a number of quite dense and higher retirement villages located on Old Northern Road in the district closer to Castle Hill and in other locations in the Hills district. Indeed, such developments require large land holdings and there are few locations where such sized landholdings can be otherwise found.

To this extent the proposal could also be concluded as a development not uncommon in the district. Again the fact of the proposal on the abutting land for 130 dwellings in 2 storey buildings (ultimately approved) is also required to be taken into account when considering the character of the locality.”

62 And:

“The proposal was in full compliance with the development standards of SEPP No. 5 and site analysis was undertaken by the architect. That site analysis revealed that there was a proposal for 130 dwellings immediately abutting, that the subject site was highly disturbed by deep filling from a dam excavation and had been subject to excavation at the rear associated with a former use of the land by Flower Power.

The existence of the very large commercial operation carried on by Flower Power and residential development opposite in Baulkham Hills further gives weight to the conclusion that the nature and character of what was once a rural area is changing.”

63 He concluded:

“In my opinion the development is one that could and should have received development consent. The proposal complied with the technical requirements of SEPP No. 5.”

64 James J expressly rejected an attack on Mr Blyth’s credit. In large measure, the issues before James J and in this Court involve a choice between Mr Ingham’s opinion and that of Mr Blyth. Each is supported to some degree by the evidence of others. Furthermore, contemporaneous statements and the objective circumstances must be given appropriate weight. Nevertheless, it was appropriate for James J to identify the objections raised by Mr Ingham and to consider the different conclusions of Mr Blyth.

65 In this regard it is, in my opinion, of some significance that Mr Blyth expressed his views at or about the time of the alleged breach of duty and maintained his opinion. His evidence was not affected by the subtle, but real, effect of hindsight arising from the reasons of the Land and Environment Court when rejecting the appeal.

66 Glenhaven submitted that Mr Blyth’s evidence should be taken as directed only to “technical” compliance with SEPP5, most relevantly compliance with cl 14 and the 0.5:1 floor space ratio. He did expressly refer to compliance with technical requirements. However, his reasons, set out above, indicate that his opinion was not based on that factor only. The suggestion that it was so based was not put to him in cross-examination.

67 To refer only to his 23 July 2002 report, written at about the time of the alleged breaches by Oaktwig:

· He noted the adjacent residential development and rejected the proposition that the proposal would affect the rural character of the area;

· On density and scale he drew attention to the residential development and the Flower Power site;

· He asserted that the proposal was of good design; and

· He expressly disagreed with conclusions on such matters expressed by Council officers.

68 He maintained his position in subsequent statements. The Commissioners in the Land and Environment Court appear to have interpreted Mr Blyth as focussing on “technical” compliance. This Court does not have the evidence on which that conclusion, expressed in terms of its “appearance” only, was based. That interpretation is not consistent with the evidence before this Court.

69 Mr Blyth’s analysis and opinion was entitled to be taken into account by Mr Bourke at the relevant time. It was also entitled to be given significant weight by James J.

The Conduct of Oaktwig

70 His Honour expressly held that Mr Bourke believed that the first DA had a reasonable prospect of success in the Land and Environment Court. This finding is not challenged. His Honour rejected Glenhaven’s case that that belief constituted a contravention of his duty of care and skill in contract or tort.

71 It is particularly important in the context of an allegation of professional negligence to have regard to the contemporary articulated reasons advanced by Mr Bourke for pursuing the first DA. Furthermore, from July 2002 those reasons were reinforced, in substantial measure, by the support he received from Mr Blyth, as set out above. To the extent that Mr Bourke’s opinion was supported at the time by cogent and rational reasons, it is more likely that his conclusion should be found to be within the range of legitimate professional opinion. Such reasons are not affected by the effects of 20:20 hindsight.

72 The approach which Mr Bourke adopted with respect to the first DA on the critical issue of scale and development in a rural zone was apparent in the Statement of Environmental Effects of January 2002. It said:

“Neighbouring properties are predominantly of a residential nature. The residential language in this area along Old Northern Road makes this subject site ideal for the proposed S.E.P.P. 5 development. The suitability of the subject site for a S.E.P.P. 5 development also extends to the social requirements of the area with a growing ageing population.

…

We believe that the site is well located and appropriate for residential retirement unit development in accordance with the provisions of S.E.P.P. 5.”

73 He went on to say:

“The area is predominantly residential in character consisting of large single and two storey dwelling houses.”

74 He addressed all the detailed design requirements of SEPP5 and s 79C(1) considerations and concluded, relevantly:

“The proposed development … [p]rovides a low level of impact on the amenity of neighbours.”

75 Obviously, a significant element of advocacy is involved in preparing such a document. However, his emphasis on the residential character of the neighbouring development receives support from Mr Blyth. The Commissioners of the Land and Environment Court gave greater emphasis to the low density development to the east and south of the site, rather than to the medium or greater density to the west and north. Both are relevant, but it is difficult to infer professional negligence from the fact of giving more weight to one than to the other.

76 After receiving the adverse Council Report on the first DA, Mr Bourke instructed Mr Blyth to prepare his report. He also prepared a Reply to Issues Raised in Council’s Report in July 2007 (“the Reply”).

77 The Reply made the following observations:

· “S.E.P.P. 5 applies to all land in the state of New South Wales. The policy prevails over local council policy. Legal opinions have been obtained which fully support the view that the application must be considered and assessed by Council under S.E.P.P. 5. No exemption on the basis of Rural Land applies.”

· “‘Flower Power’ operates as a retail and restaurant premises right next door to the proposed development looking onto the same water feature and landscaping setting. The health and safety requirements for this retail section of ‘Flower Power’ indicate that the impact of local activities are acceptable.”

· “The small agricultural holdings proposed and established in the current zoning do not promote viable agriculture. Land in this location is too valuable for agricultural use and is at present used for luxury homes. The site is close to Castle Towers Shopping Centre and Dural Shopping Centre and has services available for residential development. Farming or agriculture would not be economically viable on such valuable land that has urban infrastructure and services headworks available and surrounding it.”

· “One side of Old Northern Road is zoned residential and has normal housing development along it.

‘Flower Power’ is located next door to the proposed development. Indeed the building next door is a retail business with a restaurant and coffee shop and supermarket.”

· “We disagree with Council that the subject site is ‘productive agricultural land’. There is no evidence of existing agricultural production on the site.”

· “Land use in the area along Old Northern Road at Glenhaven is predominantly residential.

Although the area 50 years ago was agricultural in character today there is little evidence of agricultural land use. Council’s rural zoning does not reflect the true nature of the Glenhaven area. There is no ‘real’ conflict of land use.

…

As discussed previously the predominant land use in the Glenhaven area is residential and the tendency for the future is definitely for more residential use and greater population density to utilise existing infrastructure and services.

The site is ideally suited for housing or over 55’s and for persons with a disability as it is located close to essential services, Castle Towers shopping centre, Dural shopping centre, bus services and medical and dental services.

An inspection of the site shows the ideal location to be on relatively level land with an almost level street frontage. The site is right next door to a pleasant coffee shop and restaurant at ‘Flower Power’.

We could well ask the question: ‘Where would we find a better S.E.P.P. 5 site to build housing for older people or people with a disability?’

Does the proposal fit in the locality?

We believe that the proposal fits perfectly into the locality for reasons as stated.”

· “The state government has set out strategies to house aged and disabled persons in specially designed housing. The need far exceeds the supply according to state government statistics. Local Councils are encouraged to support these community needs through the implementation of S.E.P.P. 5 developments of this type to house older people and people with a disability. The public generally support the need for special housing and it is clearly in the public interest to support the construction of this special type of housing as a community need.

S.E.P.P. 5 provisions in legislation over rule Council’s Rural Strategy and Agricultural ‘Strategic Plan’. We have already established that the site is not used for agriculture.

The value of land in the area prohibits ‘farming’ or ‘agricultural production’ being economically viable except for ‘tax’ deductible ‘hobby farming’.”

78 In a letter to Mr Walsh in July 2002, Mr Bourke reiterated the views expressed in the Reply on this issue:

“1. LOCATION: Council is critical of the location however we believe that the location is ideal for housing over 55’s and disabled persons. You could not find a better large site ideally suitable for this type of development. The site is located close to Castle Towers and Dural Shopping Centre and on main bus routes within 400 metres of the site. Several other retirement villages are located in the vicinity.

2. AGRICULTURAL LAND: This misleading excuse is manufactured by Council. The zoning of the land does not reflect current use which is characterised by large homes on small acreage. No agriculture has been carried on in this area for at least 20 years. Agriculture is not financially viable in the area on relatively small properties (in terms of modern agriculture) which are valued at more than a million dollars each. The two horses kept on the property are to mow the lawn. The horses belong to a neighbour. The current owner is an earthmoving contractor and stonemason and keeps excavation machinery and trucks on the property. There is no evidence of ‘productive agriculture’.”

79 He concluded:

“Notwithstanding the critical attitude of Council we feel that the proposed development is very well located and does provide attractive housing for aged and retiring persons and persons with a disability. The design also incorporates many features such as indoor heated swimming pool, crochet lawn, library, craftsroom, common rooms, gymnasium, shop with administrative centre which will provide community support and services such as a private mini bus service in keeping with a modern high standard development of this size and type.

We feel that the site is ideally suited to S.E.P.P. 5 development and is perhaps the best site of the size available for such a development in Hornsby Shire.”

80 One of the criticisms made by Glenhaven in this Court is that Mr Bourke focussed on mere “technical” compliance, namely the floor space ratio standard.

81 The first Statement of Environmental Effects of January 2002, prepared by Mr Bourke, relied expressly on, inter alia, cl 14 as a “standard which cannot be used as grounds for refusal”.

82 Subsequently, in response to criticism by Council officers, Mr Bourke forwarded the Reply which stated:

“Density scale and height are criticised by Council. However proposals under S.E.P.P. 5 are prohibited from being refused by Council on these grounds:

· If the F.S.R. of the proposal is less than 0.5:1

· The height is less than 8 metres.

· Buildings near adjoining boundaries must be not more than 2 storeys in height. [S.E.P.P. 5, Clause 13]

S.E.P.P. 5 sets out standards which cannot be used as grounds for refusal: Hornsby Council has apparently ignored this clause. [Copy of Clause 14 of S.E.P.P. 5 is provide[d] for the reader’s information – refer Annexure ‘A’]

Clause 14 clearly states that Council must not refuse consent on various grounds including building height, density and scale if the floor space ratio is less than 0.5:1. Clause 14 contains several sub parts which are linked with the word ‘or’ and concludes with the note: ‘The provisions of this clause do not impose any limitations on the grounds on which a consent authority may grant development consent.’

However, the comment made in Council’s Report [P.L.N. 214/02] page 26 states:

‘Although the proposed development complies with the height requirement and the floor space ratio in quantitative terms, the proposal is an overdevelopment of the site having regard to the site characteristics and the size and scale of Buildings B and D.’

This statement goes directly against the S.E.P.P. 5 provisions of Clause 14 in terms of part (a) and part (b).

Council’s experts have not had due regard to the provisions of Clause 14 of S.E.P.P. 5 or the ‘note’ referred to at the bottom of Clause 14.”

83 At that time Mr Bourke also wrote to Mr Walsh:

“7. BULK & SCALE: Council’s criticism of bulk and scale should have regard to requirements of S.E.P.P. 5 which prohibit criticism on these grounds where the F.S.R. is less than 0.5:1 as is the case of this proposed development. Building heights also comply with the strict requirements of S.E.P.P. 5. Council has not interpreted the height correctly.”

84 It does appear that Mr Bourke adopted an approach based on a particular interpretation of cl 14 to the effect that rejection based on density and scale was impermissible.

85 However, in his original Statement of Environmental Effects, Mr Bourke addressed each of the clauses of SEPP5 and each of the considerations required to be taken into account by s 79C(1) of the Environmental Planning and Assessment Act. It cannot be said that he was content to proceed only on the basis of “technical” compliance with, relevantly, the floor space ratio provision.

Issues on the Appeal

86 In this Court, Glenhaven relied on four of the matters to which Mr Ingham referred in reaching his opinion that there was no reasonable prospect of success. These were:

(i) The scale and bulk of the buildings in a rural zone;

(ii) Solar access for units;

(iii) Overshadowing; and

(iv) Loss of privacy.

87 James J dealt with each of these matters after setting out the evidence of all of the other expert witnesses. His Honour’s judgment was structured by the issues propounded by Mr Ingham. This was entirely appropriate as this evidence was the most complete statement of Glenhaven’s case. Contrary to the written submission of Glenhaven in this Court, this does not mean that his Honour failed to have regard to the extent to which Mr Ingham’s evidence and opinion was supported by the other witnesses. He summarised their evidence before turning to deal with the issues identified by Mr Ingham.

88 I have set out above a summary of the expert evidence on the issue of bulk and scale in a rural zone.

89 James J referred to the provisions of SEPP5, especially the density and scale provision in cl 14, and on this matter his Honour said:

“[189] As the Land and Environment Court said in its judgment, SEPP 5 would appear to have been mainly drafted for the assessment of housing in residential areas (judgment para 15) and failed even to mention the word ‘rural’. The Court said that SEPP 5 did not provide any guidance for designing medium density housing in a rural environment.

[190] These features of SEPP 5 are unsurprising. SEPP 5 applied only to land zoned for urban purposes or adjoining land zoned for urban purposes.

[191] In the present case, I consider that Mr Bourke could reasonably have considered, as he did, that any rural character of the surrounding properties had been substantially affected by the Flower Power development which the Land and Environment Court found to be ‘densely built and visually prominent’, ‘hard and dominant’ and with ‘virtually no landscaping’ and by the residential development along the other side of Old Northern Road.

[192] SEPP 5 commenced on 14 February 1998. There is no reference in the judgment of the Land and Environment Court to any previous decision on a SEPP 5 development application. I infer that there was no previous decision on SEPP 5 to guide Mr Bourke.

[193] In February 2003 the Land and Environment Court, subject to certain conditions, allowed an appeal against the refusal of a development application for a SEPP 5 development on the adjoining land 599-601 Old Northern Road. Allowances must be made for differences in the areas and topography of 607 Old Northern Road and 599-601 Old Northern Road. However, it is noteworthy that the design which the Land and Environment Court approved for a SEPP 5 development on 599-601 Old Northern Road included about 130 units and included a row of buildings about 240 metres in length.”

90 It now appears that there was in fact at least one relevant prior decision of the Land and Environment Court, but it is of limited significance for present purposes. I will refer to it below. As noted his Honour gave particular emphasis at [191] to the adjoining development.

91 His Honour concluded:

“[222] For reasons which I have already given, I consider that a competent architect could have formed the opinion that a development having the bulk and scale of the proposed development had at least a reasonable prospect of being approved by the Land and Environment Court, if not the Council.

…

[228] I do not consider that it has been shown that the first development application had no reasonable chance of being approved by the Court and, consequently, I do not consider that Mr Bourke should have realised that the first development application had no reasonable prospect of being approved.

[229] As regards the second particular of negligence which I identified, that Mr Bourke failed to advise Mr Walsh that the first development application had no reasonable prospect of being approved, Mr Bourke believed that the first development application had at least a reasonable prospect of being approved and I have held that the first development application did have at least a reasonable prospect of being approved. I have found that Mr Walsh said that he wanted as many as 140 units; that Mr Bourke told Mr Walsh about problems with the site and about the antipathy of the Council to SEPP 5 developments; and that Mr Walsh then instructed Mr Bourke to proceed with the preparation of a design with 140 units.

[230] In these circumstances I do not consider that Mr Bourke was under any obligation to advise Mr Walsh that a development application with 140 units had not reasonable prospect of succeeding.”

92 The issue of solar access to the units arose because of the express inclusion of this matter as one of the “design principles” in SEPP 5 (cl 25 (c)) set out at [8] above. A note to that clause mentions AMCORD, being the Australian Model Code for Residential Development, as the reference for what is appropriate in this regard.

93 On this subject Mr Ingham said solar access was “a matter of significant concern” and added:

“ … the solar access for a large number of units within the site is extremely poor. The walkway providing access to the upper level units ensured that not only was there shadow created by units adjoining other units to the north but also that the walkway created very significant overshadowing of the courtyards and living rooms of buildings to the south. This is a matter which must be taken into consideration and must be satisfied in accordance with the provisions of SEPP 5. SEPP 5 refers to AMCORD which has a section dealing with daylight and sunlight (page 162 and 165). In a section in 4.3 dealing with the following criterian [sic] is cited. (see Appendix ‘C’.)”

94 The evidence in this regard was set out and dealt with by James J as follows:

“[198] At p 164 AMCORD it is stated:-

‘In temperate and cool-temperate climates a substantial proportion of dwellings should be designed to have good access to sunlight to private open space in the cooler months. It is acknowledged that there would be design difficulties if all housing were required to meet this criterion’.

[199] At p 165 it is sated that an acceptable solution would be:-

‘In temperate and cool-temperate climate zones sunlight to at least 50% (or 35 m² with minimum dimension 2.5 m whichever is the lesser area) of the principal area of ground level private open space of adjacent properties is not reduced to less than 2 hours between 9am and 3pm on June 21.’

[200] At p 165 it is stated that a performance criterion is:-

‘Buildings are sited and designed to provide adequate daylight to habitable rooms and in temperate and cooler climates winter sunlight to ground level private open space of new and neighbouring dwellings.’

[201] In oral evidence Mr Ingham said that the lower level of ‘a substantial proportion of dwellings’, as referred to on p 164 of AMCORD would be about 70%. Mr Ingham had not made measurement to determine what proportion of the dwellings in the first development application would have met the AMCORD standard but he doubted whether it was as high as 70%.

[202] In a report annexed to his affidavit Mr Blyth said that ‘there were 98 of the 132 dwellings (74%) with access to northern light and sun unaffected by any of the proposed walkways’.

[203] The Land and Environment Court in para 31 of its judgment accepted the evidence of the Council’s expert to the effect that 25% of the dwellings did not comply with the AMCORD guidelines, which would appear to indicate that 75% of the dwellings did comply with AMCORD guidelines.”

95 On the evidence it appears that there was compliance with the design principle for solar access by the adoption of AMCORD. This appears to me to be similar to the technical compliance with the 0.5:1 floor space ratio. The adequacy of solar access remains, however, a particular manifestation of the contention that the first DA involved over-development of the site.

96 As James J noted:

“[143] … The number of units was directly related to the size of the development and had ramifications for such matters as solar access and privacy.”

97 His Honour concluded:

“[223] The solar access of the dwellings in the development met the AMCORD guidelines referred to in SEPP 5, that a substantial proportion of dwellings should have access to sunlight to their private open space. Neither the Council nor the Court referred to any lack of adequate daylight.”

98 With respect to issues (iii) and (iv) – overshadowing and privacy- Mr Ingham said:

· “Finally the proposed development in the first development application did not provide outdoor recreation space attached to each of the units which was significantly without overshadowing in mid winter. The units to the north of other units cast considerable shadow onto the open space and the walkways on the upper level cast additional shadowing onto that open space. This overshadowing, in my opinion, was simply unacceptable and did not accord with the requirements of SEPP 5.

· A fifth matter of concern with the application related to the extent of privacy loss for people living within the development. The upper level walkways between rows of apartment buildings provided the opportunity for people moving along those walkways to not only look down into the private courtyards of each adjacent building but also produced a lack of privacy within the living rooms of many of the units. AMCORD elements 5.5 (page 166) makes the following comments. (see Appendix ‘E’).

‘Planning for privacy beings at the site planning stage when the privacy needs of both residents and neighbours influences the location of dwellings and the placement of windows and private open space.’

In the same section dealing with privacy AMCORD states that the objective for privacy may be achieved by application of the performance criteria listed below which are as follows.

‘P2 Direct overlooking of main internal living areas and private open spaces of other dwellings is minimised by building layout, location and design of windows and balconies, screen devices and landscape, or remoteness. Effective location of windows and balconies to avoid overlooking is preferred to the use of screen devices, high sills or obscured glass. Where these are used, they should be integrated with the building design and have minimal negative effect on residents’ or neighbours’ amenity.’

In terms of visual privacy AMCORD suggests that acceptable solutions for privacy area:-

‘A2.1 Habitable room windows with a direct outlook to the habitable room windows in an adjacent dwelling within 9 m:

· are offset from the edge of one window to the edge of the other by a distance sufficient to limit views into the adjacent windows;

· have sill heights of 1.7 m above floor level; or

· have fixed obscure glazing in any part of the window below 1.7 m above floor level.

AND

A2.2 Outlook from windows, balconies, stairs, landings, terraces and decks or other private, communal or public areas within a development is obscured or screened where a direct view is available into the private open space of an existing dwelling.

If screening is used, the view of the area overlooked must be restricted within 9 m and beyond a 45° angle from the plane of the wall containing the opening, measured from a height of 1.7 m above floor level (see Figure 4).

No screening is required where:

· windows are in bathrooms, toilets, laundries, storage rooms or other non-habitable rooms and they have translucent glazing or sill heights of at least 1.7 m;

· windows are in habitable rooms and they have sill heights of 1.7 m or more above floor level or translucent glazing to any part of a window less than 1.7 m above floor level.’

The proposed development does not satisfy this requirement.”

99 In his 29 July 2002 report Mr Blyth commented on Council officers’ observations on these issues with respect to two groups of units in the plan:

“(d) Units in Groups B & D are too close together causing issues of privacy and overshadowing

Looking firstly at Group B the separations of opposing dwellings at the party wall is an absolute minimum of 9.0m between dwellings 5/6 and 21/22. This increases between all other units to commonly 12m, 13, and up to 16m between dwellings 27/28 and 23/24.

The Amcord recommended design standard of 9.0m between windows in habitable rooms must be remembered. This is achieved and in the majority of cases far exceeded.

On this point we also note the building separation standard of the Hornsby Medium Density Multi unit housing DCP which is 5.0m, far less than what is proposed in this scheme for similar two storey development.

There will be some overshadowing of units located on the southern side of [sic] development in mid winter however the staggered nature of the building forms has minimized those affected.

Again we emphasize the fact that all the proposed dwellings have a northern orientation and that the separation of those units in question from the dwelling to their north is between 9m – 16m ensuring that there will be ample light available. Additionally we note that the shadow drawings indicate that many of the subject ground floor units will receive sunlight at between late morning and 12:00pm in mid winter, noting that units 24 – 40 appear unaffected by shadow.

With respect to Group D we make the same observations. All units are oriented to the north in order to maximize solar access opportunities. The separations between units along the north south access are:

1. Between the central and southern block from 15m – 23m;

2. Between the central and northern block generally 16m;

3. An absolute minimum of 11m between dwelling[s] 34 & 36, and between dwellings 47 & 26.

These separations are generous and far exceed the recommended standards of Hornsby Council’s medium density DCP and Amcord.

The shadow diagrams confirm that throughout the middle part of the day, either side of noon, that sunlight is available to all dwellings.

To conclude on this point we also note that the development is a village environment with community facilities that the residents will be able to use for recreation of both the formal and informal varieties. This would include areas that receive sunlight at all times.

Further we note the specific provisions of Cl.25(c)(1) which speaks of the provision of ‘adequate daylight to the main living areas … of residents’ and conclude that there can be no question that the development complies. We again refer to Smith –v- Hornsby where Council was defeated on a similar submission suggesting non compliance in this regard.”

100 James J treated the overshadowing as another way of expressing the solar access issue. (See Red AB 95 at [211]) Implicitly his Honour applied his reasoning accepting compliance with the AMCORD guidelines in this respect.

101 On the subject of privacy, James J said:

“[214] In para 33 of its judgment the Land ane Environment Court noted that the applicant intended to provide obscure glass screens on one side of the elevated walkways. The Land and Environment Court appears to have accepted that this step, which, although not the preferred solution, was a solution expressly recognised in AMCORD, might be successful in preventing people looking down from the walkways into courtyards. However, the Court considered that the placing of the glass screens would prevent residents from enjoying the view in a rural area.

[215] Accordingly, the ground actually relied on by the Court was not the lack of privacy from persons looking down from the walkways but the blocking of residents’ views.”

Assessment

102 This appeal does not raise any issue of law. This Court is asked to reverse James J’s conclusion that Mr Bourke’s failure to realise and/or advise that the first DA did not have a reasonable prospect of success was in breach of his professional duty of skill and care. This conclusion was a matter of judgment involving an overall assessment of a range of matters, each of which itself involves issues of fact and degree on which reasonable minds may differ. That must also be true of the overall judgment.

103 Glenhaven’s submission focused on the four interrelated elements of the first DA – bulk and scale, solar access, overshadowing, privacy – referred to above. Although the first received primary emphasis, the ultimate assessment, requires consideration of the cumulative effect of all four elements. Although this could involve weighing incommensurable factors, in my opinion, they are each particular manifestations of an overall proposition that the first DA constituted manifest over-development of the site. The Glenhaven case was that this was so to such a degree that it ought to have been apparent to an architect exercising professional skill and judgment that the first DA had no reasonable prospect of success in the Court.

104 In the context of applications for development consent, the scope and range of relevant considerations is so wide as to permit considerable divergence in any professional’s ability to assess prospects of success.

105 Indeed as Mr Ingham said:

“I am constantly being asked to provide advice as to the probability of success of development applications which proceed to appeal. I am always very careful to ensure that I do not give specific advice in relation to this matter. The people who hear appeals are people with particular opinions and biases, as we all are, and the possibility of success at appeal depends very often on the individual who hears the appeal. The advice which I provide relates to my opinion given 38 years’ experience in dealing with planning appeals and having been involved in well over one thousand appeals. Barristers who work in this area of law also provide advice but their advice is also very measured.”

106 The ability to make predictions about prospects of success is even further attenuated in the case of a provision which no relevant expert suggested had any pertinent analogy in the practice of councils or the case law of the Court.

107 A particular difficulty with respect to predicting the likely approach of any consent authority, at the time of the alleged breach of duty, concerns the terminology in which cl 14 is expressed. It states, in the case of a development with a floor space ratio of 0.5:1 or less, a consent authority “must not refuse consent … on the grounds of … density and scale”.

108 It is unusual to find a provision in an environmental planning instrument expressed in these terms. I am not aware of another such provision. The Court’s attention was not drawn to any other examples or to relevant practice and case law. This formulation appeared in the equivalent of cl 14 in the original of SEPP 5 when promulgated in 1982, but there does not appear to be any relevant case law. A provision in these terms is quite different to the usual provision which provides that consent must not be granted unless minimum or maximum standards are met: see, for example, cls 13(1), 13A(1), 24(1) and 25 of SEPP5.

109 Furthermore, it is by no means obvious how a “must not refuse” formulation interconnects with the usual provision setting out a list of matters to which regard must or may be had. In the event, the view was taken in the reasons of the Land and Environment Court, which has been accepted as common ground in the present proceedings, that consideration of the usual list of matters to which regard must be had by a consent authority under s 79C of the Environmental Planning and Assessment Act could override the specific development standard on density and scale.

110 The reconciliation with the terminology of “must not refuse consent … on the grounds of”, suggested on this appeal, was that it was open to the Land and Environment Court to take into account density and scale issues when deciding to refuse consent, but not if that was the sole reason for rejection. However, it is rare for a consent authority to ever refuse consent for a single reason.

111 At the time of the alleged breach by Oaktwig, there was, in my opinion, room for doubt as to the weight that density and scale issues would be given in a decision-making process constrained by cl 14.

112 I do not believe that Mr Bourke was clearly wrong to proceed on the basis that the intensity of the development in terms of the number of units and the height of the proposed buildings was not entitled to significant weight in a decision-making process constrained by cl 14. His error, if any, appears to me to turn on the interpretation of cl 14, which raises legal issues beyond his area of expertise.

113 As I have set out at [25] above, par [23] of the judgment in the Land and Environment Court stated that it appeared that Mr Blyth proceeded on the basis that any development with a floor space ratio of 0.5:1 was “acceptable”. This Court does not have the basis for this finding. It is not, as I have indicated, consistent with his other evidence. In any event, the Court rejected that approach on the basis that a “development is still required to have an acceptable relationship to its surroundings”, which the Commissioners characterised as “a rural setting”.

114 At [24], also quoted above, the Commissioners went on to describe aspects of the development as not “lessening the bulk and scale of the proposal”. This reasoning does not clearly reject the proposal on the basis of “bulk and scale”. This lack of specificity may well have reflected uncertainty about the meaning of the words “must not refuse consent … on the grounds of” in cl 14.

115 The judgment of the Land and Environment Court then expressed the view that SEPP5 appeared to have been drafted with residential land primarily in mind. No doubt a provision such as cl 14 can be so regarded. Nevertheless, SEPP5 did not only apply to urban land, it applied to land adjacent to urban land including land in a rural zone.

116 On the basis of the materials before the Court, this case was only the second case of this character to come before the Land and Environment Court. The first was handed down on 30 August 2002, shortly before the appeal on the first DA was heard in that Court in November. That judgment, whilst indicative, is not clearly applicable. (See Rambon Force Pty Ltd v Baulkham Hills Shire Council [2002] NSWLEC 146.) It may well be that there were other cases in which the land adjoining a residential zoning was zoned “non urban”, rather than “rural”, but no such cases were drawn to this Court’s attention or to the attention of the Commissioners when they considered the appeal.

117 It may not have been as clear in mid 2002, as it now appears, in hindsight, how the Land and Environment Court would balance the specified development standards, which do appear more applicable to a residential area, against the impact on the amenity of adjoining land which is differently zoned. In the present case that judgment was made even more difficult by the existence of intensive development on the adjoining rural land, ie the Flower Power site, to which both Mr Bourke and Mr Blyth gave express emphasis.

118 One critical issue relevant to bulk and scale is the character of the neighbourhood. On the evidence there appears to be two contrasting positions which, in large measure, involve alternative perspectives. If one looks east and south from the site, there is significant open space, although it is stretching the terminology to describe the vista as “rural”. If one looks north and west, there is medium density built form, even more intensive in the case of the Flower Power site. No doubt both perspectives are open and it may be that on a merits assessment both need to be taken into account. However, it was not, in my opinion, impermissible for a professional to emphasise one or other perspective.

119 As set out above, both Mr Bourke and Mr Blyth did emphasise the medium density adjoining development, as did James J. The Commissioners of the Land and Environment Court focused on development in the rural zone, other than the Flower Power site. Mr Ingham, whose report was written after that decision, adopted the same emphasis.

120 In his report Mr Ingham noted that although SEPP5 prevailed over the Hornsby Local Environmental Plan 1994, nevertheless: “some consideration must be given to the desirability to the objective of providing compatible land uses which ‘maintain the agricultural and rural environment of the area’ … some consideration would need to be given to the rural character of the locality so that the character of the locality was not simply ignored”.

121 As I have already quoted, on the issue of density and scale he said the proposal: “does not fit within the general character of buildings in the Rural BA Zone” and “the length of some buildings without a break is unacceptable in the Rural BA Zone”.

122 It is noteworthy that Mr Ingham does not qualify these remarks in any way by the existence in that zone of the Flower Power development, which plays no role in his assessment of density and scale. Nor does the adjoining residential development, the existence of which is the only reason SEPP5 applies to the subject land at all, play any part in his analysis.

123 In his Reply of July 2002 to the Council officers report, Mr Bourke sets out a case, as quoted above, which addresses the issues raised in this appeal in a manner which is reasonably comprehensive and supports the position he adopts with relevant argument. It elaborates the assertion about the character of the neighbourhood set out in the earlier Statement of January 2002. This Reply was supported by the contemporaneous report of Mr Blyth, which Mr Bourke commissioned for that purpose.

124 One does not have to agree with the reasoning in order to conclude that Mr Bourke had an arguable case, capable of convincing others, including the Land and Environment Court.

125 Each of the specific matters – solar access, overshadowing and privacy – was dealt with rationally and cogently by Mr Bourke and Mr Blyth at the time. I agree with the reasons of James J on these matters.

126 I agree with the conclusion of James J that, in the circumstances of dealing with a State Planning Policy upon which there was no relevant precedent in the Land and Environment Court, it was reasonable for Mr Bourke to form the view that an appeal had a reasonable prospect of success.

127 These grounds of appeal should be dismissed.

Grounds 5 and 6

128 In the alternative to its claim in contract and tort, Glenhaven pursued a case on the basis of false and misleading conduct. The relevant grounds of appeal are:

“5 His Honour erred in holding that [the] first respondent and second respondent had reasonable grounds for making an implied representation that a development application with 140 units had a reasonable prospect of being approved by the court, if not the council. (‘representation’)

Fair Trading Act

129 These grounds of appeal relate to only one of a number of representations originally pleaded. Glenhaven does not appeal from his Honour’s dismissal of its case on the other representations.

130 The relevant representation as pleaded was that Mr Bourke represented to Glenhaven that:

“(g) SEPP5 requirements would permit up to 140 double storey dwellings on the Glenhaven property.”

131 His Honour held with respect to this matter:

“[305] The issue with regard to alleged representation (g) is whether a representation, that a development application with as many as 140 units had a reasonable prospect of being approved by the Court, if not the Council, was made.

[306] Mr Bourke disputed having made such a representation. However, Mr Bourke accepted when giving oral evidence that, if he had been of the opinion that a development with 140 units was not ‘feasible’, he would have been obliged to so advise his client Mr Walsh and he should not have proceeded to prepare a document application with 140 units. I consider that by not advising Mr Walsh that a development with 140 units was not ‘feasible’ and by proceeding to prepare a development application with 140 units, Mr Bourke did impliedly represent to his client that a development application with 140 units, or at least a development application with only a few units taken away from 140 units, had at least a reasonable prospect of being approved by the Court, if not the Council.”

132 His Honour went on to hold that Mr Walsh must be taken to have relied at least in part on the representation. However his Honour concluded:

“[310] As to representation (g), for reasons similar to those I gave for holding that there was no breach of the term to use reasonable care and skill, I hold that Mr Bourke had reasonable grounds for making representation (g). These grounds included the terms of some of the provisions of SEPP 5 including clauses 3,4,5, 10 and 14; the effect on any rural character of the property and surrounding properties of the existing Flower Power development and the residential development on the other side of Old Northern Road; and the AMCORD guidelines referred to in SEPP 5.”

133 In this Court Glenhaven emphasised the fact that the representation case was different from the contract and tort case in one respect. By reason of the provisions of s 41(2) of the Fair Trading Act 1987 the onus of proof that Mr Bourke had reasonable grounds for making a representation as to a “future matter” was shifted to him. In the tort and contract case the onus of proof for breach was, of course, upon the appellants.

134 I doubt whether the representation as formulated does relate to a “future matter” within the meaning of s 41(1). It is not a statement as to what the Council or the Court is likely to do. It is a statement of the then existing state of affairs as at the date that the representation was made and an accurate one at that. It is not apparent that Oaktwig ran this point before James J.

135 James J focused on the issue of “reasonable grounds for making the representation”. This assumes that it was a representation on a future matter which shifted the onus of proof under s 41(2).

136 In my opinion, his Honour was correct to determine that Mr Bourke had reasonable grounds for making the representation. This was based on the specific terms of SEPP5, as his Honour indicated, of which the most significant term with respect to the pleaded representation was cl 14, which expressly permitted up to 140 units on the site. The pleaded representation, even if treated as a future matter, says no more than SEPP5 “would permit” 140 units. It obviously does.

137 His Honour’s reasons go beyond that to encompass the basis upon which his Honour found that there was no breach of the duty of skill. In his judgment at [310] his Honour referred, in an abbreviated manner, to each of the findings he had earlier made with respect to the contract and tort case. I have set these out above. For the reasons I have given above dealing with the claim in professional negligence, in my opinion, his Honour was correct to conclude that Mr Bourke had reasonable grounds for making the representation on this broader basis also.

Grounds 7 and 8

138 It is only with respect to the identification of parties that there is any appeal from his Honour’s judgment dismissing the appellants’ case with respect to the second DA. These grounds of appeal are:

“7 His Honour erred in holding that the second DA agreement was entered into between the second appellant and the first respondent.

8 His Honour ought to have held that the second DA agreement was entered into between the first appellant and the first respondent.”

139 There is no challenge to his Honour’s finding that Mr Walsh was the relevant party to the first agreement that led to the first DA. The absence of such a challenge is explicable in large measure on the basis that, at the time of that agreement, Glenhaven had not even been incorporated. However, the appellants seek to distinguish the second agreement, which was entered into in December 2003, on the basis that, by that stage, Glenhaven had been incorporated.

140 Although Glenhaven made a substantial amount of profit on the development, it is not clear what its present financial position is. This is potentially a matter of significance because of the evidence in the proceedings, relevant to other issues of dispute, and accepted by his Honour, about Mr Walsh’s threats directed to another person who had been engaged in a professional capacity. Mr Walsh said:

“You can sue Glenhaven properties if you like – it’s a $2 company and I can fuck you around for three years.”

141 This is one of the matters that his Honour took into account in expressing reservations about Mr Walsh’s credibility.

142 On the issue of parties to the second DA agreement, His Honour took into account the fact that Glenhaven had been incorporated between the time of the first and second agreements, but concluded:

“[273] In my opinion, there being no evidence of its being expressly agreed that Glenhaven Properties Holdings Pty Ltd and not Mr Walsh should be the client, I should hold that Mr Walsh remain the client or at least one of the clients.”

143 In my opinion this conclusion was correct in the circumstances. There was no evidence of any change in the identity of the parties. Both Mr Bourke and Mr Walsh gave direct evidence of the conversations constituting the second agreement. Nothing said suggested that the parties would differ.

144 Glenhaven relied on the way in which the invoice relating to the second application was addressed. That was as follows:

“Mr Richard Walsh

Sydney Prestige Developments Pty Ltd

(Glenhaven Properties Pty Ltd)”

145 Sydney Prestige Developments Pty Ltd was another corporation that was under Mr Walsh’s control.

146 The final invoice for the first DA was dated 30 January 2002. It was addressed in the identical manner to that in which the invoice for the second DA was addressed as set out above. Other invoices for the first DA were addressed in a similar manner.

147 There is no differentiation between the first and second DAs in this regard. In each case Glenhaven Properties is identified in brackets. It is clear that at some stage the intention that it would be the owner of the property was made known to Mr Bourke. That says nothing, however, about the parties to the contract.

148 The fact that the invoices for each of the first and second DAs is addressed personally to Mr Walsh is of significance.

149 The appellant relied on the fact that the Statement of the Environmental Effects and supporting plans for the second DA had marked on them “For Glenhaven Properties Pty Ltd”. Again, the Statement of Environmental Effects and the plans for the first DA were marked in the same way.

150 A DA may only be made by the owner or with the consent of the owner of the land to which the application relates which was Glenhaven: Environmental Planning and Assessment Regulation 2000, cl 49(1). The fact that it was so identified in the documentation to the Council does not carry any implications for the identity of the parties to the contract.

151 In my opinion his Honour was correct to conclude that, in the absence of any express or implied variation of the parties, Mr Walsh remained a, and quite probably the, contracting party to the second DA agreement.

Conclusion

152 The appeal should be dismissed with costs.

153 GILES JA: I agree with Spigelman CJ.

154 TOBIAS JA: I agree with the Chief Justice.

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Citations

Glenhaven Property Holdings Pty Ltd v Oaktwig Pty Ltd [2008] NSWCA 154

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

3

Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533

Momentum Architects Pty Ltd v Hornsby Shire Council [2002] NSWLEC 252

Rainbow Force Pty Limited v Baulkham Hills Shire Council [2002] NSWLEC 146

CITATION:	Glenhaven Property Holdings Pty Ltd v Oaktwig Pty Ltd [2008] NSWCA 154
HEARING DATE(S):	3 June 2008
JUDGMENT DATE:	3 July 2008
JUDGMENT OF:	Spigelman CJ at 1; Giles JA at 153; Tobias JA at 154
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	Local government – Housing development – Development application – State Environmental Planning Policy No 5 (SEPP5) - Professional negligence – Breach of duty in tort and contract – Test to be applied – Whether development application had a reasonable prospect of approval - Misleading and deceptive conduct – Whether reasonable grounds for making representation – Fair Trading Act 1987, s 41 and s 42 - Contract – Parties – Whether party to second contract was corporation where incorporation after first contract
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Fair Trading Act 1987 State Environmental Planning Policy No 5
CASES CITED:	Hornsby Shire Council v Malcolm (1986) 60 LGRA 429 Momentum Architects Pty Ltd v Hornsby Shire Council [2002] NSWLEC 252 Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533 Rambon Force Pty Ltd v Baulkham Hills Shire Council [2002] NSWLEC 146
PARTIES:	Glenhaven Property Holdings Pty Ltd (First Appellant) Richard Martin Walsh (Second Appellant) Oaktwig Pty Ltd (First Respondent) John Giles Bourke (Second Respondent) Poswan Pty Ltd (Third Respondent)
FILE NUMBER(S):	CA 40503/07
COUNSEL:	D F Jackson QC and C D Freeman (Appellants) S Bell (Respondents)
SOLICITORS:	Leonard Legal (Appellants) Webster O’Halloran & Associates (Respondents)
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	116847/04
LOWER COURT JUDICIAL OFFICER:	James J
LOWER COURT DATE OF DECISION:	28 June 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	[2007] NSWSC 1533