Gugiatti v City of Stirling
[2001] WASCA 229
•30 JULY 2001
GUGIATTI -v- CITY OF STIRLING [2001] WASCA 229
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASCA 229 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:121/2000 | 2 MAY 2001 | |
| Coram: | ANDERSON J STEYTLER J PARKER J | 30/07/01 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed Cross-appeal allowed | ||
| A | |||
| PDF Version |
| Parties: | ALFRED ANTONIO GUGIATTI CITY OF STIRLING |
Catchwords: | Local authority Invalid building and development approvals Whether local authority negligent Approvals enjoyed for substantial period Commencement of additional unlawful activity Whether causal connection between grant of invalid approvals and loss Whether claim statute-barred |
Legislation: | Nil |
Case References: | Christopoulos v Angelos (1996) 41 NSWLR 700 Donoghue v Stevenson [1932] AC 562 G J Knight Holdings Pty Ltd v Warringah Shire Council [1975] 2 NSWLR 796 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Hull v Canterbury Municipal Council [1974] 1 NSWLR 300 Medlin v State Government Insurance Commission (1995) 182 CLR 1 Mills v Baitis [1968] VR 583 Registrar-General v Cleaver (1996) 41 NSWLR 713 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Wyong Shire Council v Shirt (1980) 146 CLR 40 Bennett v Minister of Community Welfare (1992) 176 CLR 408 CAJ Investments Pty Ltd v Lourandos (1996) 83 FCR 189 Eastern Waste Management Authority Incorporated v City of Tea Tree Gully (1996) 92 LGERA 1 Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 Kierath v City of Stirling (1985) 3 SR(WA) 43 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 McKew v Holland [1969] 3 All ER 1621 Milson Gardens Pty Ltd v North Sydney Municipal Council [1964] NSWR 926 Munchies Management Pty Ltd v Beleperio (1988) 84 ALR 700 Purkess v Crittenden (1965) 114 CLR 164 Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 Sykes v Reserve Bank of Australia (1998) 158 ALR 710 TNT Management Pty Ltd v Brooks (1979) 23 ALR 345 University of Western Australia v City of Subiaco (1980) 52 LGERA 360 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : GUGIATTI -v- CITY OF STIRLING [2001] WASCA 229 CORAM : ANDERSON J
- STEYTLER J
PARKER J
- Appellant (Respondent in cross-appeal) (Plaintiff)
AND
CITY OF STIRLING
Respondent (Appellant in cross-appeal) (Defendant)
Catchwords:
Local authority - Invalid building and development approvals - Whether local authority negligent - Approvals enjoyed for substantial period - Commencement of additional unlawful activity - Whether causal connection between grant of invalid approvals and loss - Whether claim statute-barred
Legislation:
Nil
(Page 2)
Result:
Appeal allowed
Cross-appeal allowed
Representation:
Counsel:
Appellant
(Respondent in cross-appeal)
(Plaintiff) : Mr C B Edmonds & Mr R E Sandover
Respondent
(Appellant in cross-appeal)
(Defendant) : Mr J C W Skinner
Solicitors:
Appellant
(Respondent in cross-appeal)
(Plaintiff) : Jackson McDonald
Respondent
(Appellant in cross-appeal)
(Defendant) : Corrs Chambers Westgarth
Case(s) referred to in judgment(s):
Christopoulos v Angelos (1996) 41 NSWLR 700
Donoghue v Stevenson [1932] AC 562
G J Knight Holdings Pty Ltd v Warringah Shire Council [1975] 2 NSWLR 796
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Hull v Canterbury Municipal Council [1974] 1 NSWLR 300
Medlin v State Government Insurance Commission (1995) 182 CLR 1
Mills v Baitis [1968] VR 583
Registrar-General v Cleaver (1996) 41 NSWLR 713
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Wyong Shire Council v Shirt (1980) 146 CLR 40
(Page 3)
Case(s) also cited:
Bennett v Minister of Community Welfare (1992) 176 CLR 408
CAJ Investments Pty Ltd v Lourandos (1996) 83 FCR 189
Eastern Waste Management Authority Incorporated v City of Tea Tree Gully (1996) 92 LGERA 1
Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49
Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35
Kierath v City of Stirling (1985) 3 SR(WA) 43
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
McKew v Holland [1969] 3 All ER 1621
Milson Gardens Pty Ltd v North Sydney Municipal Council [1964] NSWR 926
Munchies Management Pty Ltd v Beleperio (1988) 84 ALR 700
Purkess v Crittenden (1965) 114 CLR 164
Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225
Sykes v Reserve Bank of Australia (1998) 158 ALR 710
TNT Management Pty Ltd v Brooks (1979) 23 ALR 345
University of Western Australia v City of Subiaco (1980) 52 LGERA 360
(Page 4)
1 ANDERSON J: I have read the reasons for decision now published by Steytler J with which I agree.
2 STEYTLER J: This is an appeal and cross appeal against the decision of a Commissioner of this Court in what was described as a "trial of issues as to liability".
3 The appellant, Mr Alfred Gugiatti, owns land in Gwelup in Western Australia. The respondent (to which I shall refer as "the City", notwithstanding that it has undergone a number of changes of form and name) is a local authority. Mr Gugiatti's land falls within the locality administered by it.
4 In 1957 Mr Gugiatti wanted to build a service station on his land. Because the land was zoned residential under the City's then by-laws ("the 1955 by-laws") he was prohibited from doing so. However he asked the City (then the Perth Road Board) for approval. The City declined to give its approval. It did so, not because of the zoning, but because there were two service stations within half a mile of Mr Gugiatti's land and its by-laws prohibited the building of a service station within half a mile of an existing service station.
5 In 1958 Mr Gugiatti applied to the City for another building licence. This time he wanted to build a large steel and timber workshop on his land. He submitted a plan of the proposed workshop showing, amongst other things, the "end" elevation, the front elevation and the ground plan. The ground plan showed the words "automotive workshop" in capital letters. That was a use which was also prohibited under the 1955 by-laws. However the application was approved and, as the City knew or ought to have known he would, Mr Gugiatti built his workshop in reliance upon the City's approval. In 1959 he commenced the business of carrying out automotive repairs from the workshop. He continued this business until 31 December 1999.
6 In May 1962 the City approved of the installation, on Mr Gugiatti's land, of an industrial fuel pump and tank for private use. In May 1965 Mr Gugiatti wrote to the City, telling it that he had operated a "garage - workshop" on the land for a number of years. He asked for permission to install two petrol pumps on the land so that he could sell petrol. The City refused to give him permission.
7 Some years later, on 17 March 1976, Mr Gugiatti wrote to the City, telling it that he had been operating a "bulk and drum Ampol fuel depot"
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- behind the workshop for many years. He asked for permission to establish three 10,000 gallon underground fuel storage tanks. He said that he realised that he operated "in a non-conforming site on rural land".
8 By then the 1955 by-laws had been repealed. A scheme known as the City of Stirling District Planning Scheme No 1 was in force. Under this scheme Mr Gugiatti's land was zoned rural. The scheme did not allow rural land to be used for the purposes of a "motor repair station" or "fuel depot". However it did provide for continuance of non-conforming uses.
9 On 3 August 1976 Mr Gugiatti submitted his application for approval to install the tanks together with a plan. On 14 September 1976 the City approved his application, notwithstanding that the use "fuel depot" was not permitted under the Scheme. Its approval was expressed to be valid for a period of one year only. It said that if the development was not completed within this period a fresh approval had to be obtained before commencing or continuing with the development. It's approval was also initially expressed to be conditional on the removal of all structures within 10 years. That condition was then amended, at Mr Gugiatti's request, to make the approval conditional on a review within 10 years, although there is a dispute whether that condition was ever in fact imposed.
10 The tanks, and associated pumps, were installed within a year of the City's approval but landscaping works, which were part of the development, were not, according to the City, completed within that time. However the City did not then suggest that this invalidated its approval.
11 By early 1991 Mr Gugiatti had begun to allow his land to be used as an overnight parking area for trucks. Others complained and the City told him to stop this. He did not do so and the City took a closer look at his operations. It discovered that its approvals, given in 1958 and 1976, were invalid. It decided to prosecute him. In March 1991 he was charged with using his land contrary to the provisions of the scheme.
12 Mr Gugiatti defended the prosecution. To this end he retained solicitors and counsel, and paid their accounts. However his lawyers were unsuccessful. On 12 July 1991 he was convicted by a Magistrate in the Court of Petty Sessions. The Magistrate found that his use of his land was unlawful because the land had been zoned residential (initially) and rural (later) and that the use to which he had put it was neither of these.
13 Then, by letter dated 18 December 1996, the City told Mr Gugiatti that it required "that the current uses be removed/relocated within a period
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- of three years". On 31 December 1999 Mr Gugiatti stopped operating any business on his land.
14 A few months after receiving the letter dated 18 December 1996 Mr Gugiatti sued the City. His writ was issued on 17 April 1997. His statement of claim (filed later) alleged that the City had owed him a duty of care in 1958 and 1976 when it approved his applications. He also alleged that it had breached this duty by approving his applications "in ignorance or disregard of" the 1955 by-laws and the scheme respectively and by not telling him that the uses to which he intended to put his land were not permitted. He claimed damages. These encompassed virtually everything that he, or his lawyers, could think of, including construction costs (of the existing structures and of replacement structures), demolition costs, relocation costs, the cost of replacement land, loss of profit, lost income, damages for loss of reputation, damages for anxiety and the costs of his unsuccessful defence of the prosecution.
15 The Commissioner was asked to decide whether the City was liable to pay damages to Mr Gugiatti (if any could be proved), leaving for another day the question of how much, if anything, should be paid if the City was found to be liable. He was, for the purpose of determining the issue of liability, invited to assume (as were we) that Mr Gugiatti had suffered some damage, if a cause of action was otherwise made out.
16 The Commissioner found that the City was not liable to Mr Gugiatti. Mr Gugiatti says that he is wrong. The City, on the other hand, says that he is right, albeit it advances some additional reasons of its own why this is so. The City has also lodged a cross-appeal. The Commissioner found that, if Mr Gugiatti had had a claim, it would not have been barred by virtue of the operation of the Limitation Act 1938. The City contends that he should have found that it would have been so barred.
17 Before turning to the grounds of appeal and cross-appeal I should explain how the Commissioner reached his decision.
18 He looked firstly at the 1958 approval. This had been the responsibility of a Mr Knott, then the City's Engineer. Mr Knott has since died. Because there is no record of his reasoning, no one knows why he approved Mr Gugiatti's application on behalf of the City. However the Commissioner thought it likely that the City, through Mr Knott, had approved Mr Gugiatti's application on the assumption that there existed a lawful non-conforming use of his land for the repair of vehicles.
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19 There was, in 1958, a house on the land. This was occupied by Mr Gugiatti's brother. Mr Gugiatti's brother used the property to repair his friends' vehicles (but not those of the general public) for reward. However the Commissioner was disinclined to think that Mr Knott had assumed that the proposed workshop was to be used for this purpose only. He inferred that the workshop was understood as being intended to be used for commercial purposes. He did so because of its size and because one of the conditions of the City's approval of its construction was that Mr Gugiatti had to comply with "all requirements of the Board's Health [(sic) Inspector] and Chief Inspector of Shops & Factories".
20 The Commissioner accepted evidence to the effect that it was, in 1958, the City's practice to refuse applications for building licences for buildings to be erected for prohibited uses. Because of this, and because of his finding that the City had understood that the workshop was intended to be used for commercial purposes, the Commissioner reached his conclusion that it was more likely than not that the City had granted Mr Gugiatti's application on the assumption (which had not been induced by Mr Gugiatti) that there existed a lawful non-conforming use of the land for the repair of vehicles. He doubted, not unreasonably in my opinion, that the City had expected Mr Gugiatti to build his workshop but not to use it unless and until he had successfully applied for rezoning of his land. Also, counsel for Mr Gugiatti had (rightly, as the Commissioner found) disavowed any suggestion that the City had deliberately flouted the 1955 by-laws.
21 The Commissioner said (par 40) that it was a reasonable inference that Mr Knott had reached his conclusion about the existence of a lawful non-conforming use "without close enquiry". He also said, later in his reasons (par 78), that "Mr Knott's investigation of the basis on which ... [Mr Gugiatti's] application in 1958 might be supported was inadequate, even careless ... ". However he found that Mr Knott (and therefore the City) had not been negligent.
22 This last finding was based upon the conclusion, arrived at by the Commissioner, that there was not much of a risk that Mr Gugiatti would suffer loss if the approval should turn out to have been invalidly given. His Honour had earlier said (par 40) that it might be inferred that Mr Knott believed that, if the City accepted that a lawful non-conforming use of the land as a workshop existed, and if it issued a building licence accordingly, the City would not go back on its decision. He also said (par 78) that the City seemed then to have had a policy of dealing with doubtful cases on the "sympathetic" basis that it would honour decisions
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- made by it once acted upon. In these circumstances, his Honour found (par 78), a reasonable person in Mr Knott's position "would have considered the risk that the ... [City] would be guilty of a volte face to be small as in the event it turned out to be". He also did not think that such a person "would have taken precautions against the risk that what happened ... in the 1990s might occur at that stage".
23 The Commissioner then turned to the 1976 application. He had earlier found that Mr Gugiatti had appointed a representative of Ampol, Mr Robert Anderson, to apply to the City on his behalf for permission to locate the fuel tanks underground. Mr Anderson said in evidence that he had believed, in 1976, that Mr Gugiatti had "a non-conforming use right in relation to the land". He said that he "believed he had obtained this view from the City['s] ... officers" during discussions preceding the making of the application. It was he who had drafted Mr Gugiatti's abovementioned letter dated 17 March 1976. That letter read, in part, as follows:
"I have been operating a bulk and drum Ampol fuel depot at the rear of this site for many years and on the front of the lot is a workshop which your council approved in 1958 ... . I realise that I operate in a non-conforming site on rural land and therefore I would be prepared to enter into a legal agreement to remove these tanks in 10 years time if such a condition was required by your Council."
24 After mentioning this letter, the Commissioner considered the role which three of the City's officers, Messrs Bruce Gardner, John Glover and Stuart Johnson had played in respect of the 1976 application. Mr Gardner was then a Development Control Officer in the City's Planning Department. Mr Glover was the City's Director of City Planning. Mr Johnson was the City's Chief Planning Officer. Mr Gardner had prepared a report dated 8 April 1976 in which he had said that Mr Gugiatti's "land had a non-conforming use right as a fuel depot and workshop". He said, in evidence, that Mr Glover and Mr Johnson had probably told him this. The Commissioner found (par 62) that all concerned readily accepted, without investigation, that Mr Gugiatti had these non-conforming use rights. In particular, he said, Mr Gardner and Mr Johnson did not investigate the matter at all.
25 The Commissioner did "not think that a positive finding should be made that one of Mr Glover, Mr Johnson or Mr Gardner told Mr Anderson before 17 March 1976 that such rights subsisted" (par 61).
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- However he assumed (par 79) that one of the City's officers told Mr Anderson, before 17 March 1976, that Mr Gugiatti had non-conforming use rights in respect of the land. He then went on to find that the City had not been negligent. His reasons for this were as follows (par 80):
"Again, what actually happened is important. The change in the manner of conducting the fuel depot business was addressed by the defendant in the belief that the existing business was lawful, which Mr Anderson's letter of 17 March 1976 would have reinforced. The decision to grant the application was initially conditional on removal of all structures within 10 years and then on a review within 10 years. Again, the risk that the defendant would take steps to prevent the operation of either business on the land within 10 years was small. Ampol bore the cost of construction of the tanks and pumps. (It would have been easy for Ampol to ascertain that sale of fuel commenced after the 1955 by-laws came into effect). In the event the plaintiff used the tanks for about 23 years and the workshop for about 41 years. Mr Johnson and Mr Gardner did not know about the by-laws published in 1932 [these were the 1955 by-laws] and failed to make factual enquiries because they believed that the plaintiff had non-conforming use rights. They intended to honour those rights for at least 10 years and taking the other matters mentioned in this paragraph into account, I find that the defendant was not negligent in 1976."
" ... True it is that he secured better terms but he failed to obtain competent legal or planning advice. He agreed to run the risk that after 10 years he might, without compensation, be required to cease all business activities on the land. When that period had elapsed he started a new and apparently objectionable activity on the land, that of providing overnight parking for
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- large trucks. He did that without obtaining advice and apparently persisted (perhaps stubbornly) in the use, despite complaints and at least one demand that he should cease providing parking for trucks. It was the use of the land for that purpose which, as he said, 'triggered' the prosecution in 1991."
27 The Commissioner went on to find (par 83) that, because Mr Gugiatti's conduct with respect to the provision of overnight parking facilities for trucks had "triggered" the prosecution, this had broken the chain of causation.
28 Finally, although it was unnecessary to his Honour's decision, the Commissioner turned to consider the question of limitation. He said (par 85) that it seemed to him that the invalidity of the approvals in 1958 and 1976 was reasonably ascertainable during 1976 and 1977 when approval for the installation of the underground tanks was sought. At that time, he said, the question of landscaping was in dispute and the need for rezoning was known to Mr Gugiatti. However, his Honour said (par 86):
" ... [H]ad the plaintiff's case on breach of duty and causation succeeded, I would have found against the defendant on the limitation question on another point ... . The defendant's adoption in 1994 of the State Ombudsman's recommendation that an attempt should be made to obtain the rezoning of the land to permit its use for workshop purposes and a fuel depot was accepted by the defendant, and only abandoned in 1996. Moreover, one would expect a local authority which has issued invalid planning approvals which have been acted on to rectify the position, so far as that can be done consistently with proper planning principles. Those considerations lead me to the conclusion that the situation was not plainly irretrievable on 17 April 1991, six years before the date of issue of the writ of summons."
29 Mr Gugiatti's grounds of appeal run to five pages. It is enough to say of them that they contend that the Commissioner should have found that the City had been negligent in approving each of the 1958 and 1976 applications and that his Honour was wrong in finding that Mr Gugiatti's conduct had broken the chain of causation.
30 The notice of contention contains six pages of grounds. These are said to provide additional reasons (to those relied upon by the
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- Commissioner) why his Honour's decision might be affirmed. They come down to the following five propositions:
1. Mr Gugiatti did not rely upon the building licence given to him pursuant to the 1958 application, or upon any representation arising from that licence, in using the workshop for business or commercial purposes.
2. There was not implicit, in the grant of the 1958 building licence, any representation that the workshop could be used for business or commercial purposes. Rather, it is a reasonable inference that Mr Gugiatti's application was granted upon the basis that the workshop would be used for the continuation of the existing use of the land for "private" automotive repairs.
3. Mr Gugiatti did not rely, or did not reasonably rely, on the City's approval of the installation of the fuel tanks in putting his land to use as a fuel depot.
4. Mr Gugiatti did not rely, or did not reasonably rely, on the City's approval in installing the underground tanks on the land because that approval lapsed in 1977 due to non-compliance with the conditions thereof.
5. No compensable damage was suffered by Mr Gugiatti in reliance on the City's approval of the installation of the fuel tanks having regard for his existing unlawful use of the land as a fuel depot.
32 I will deal first with the appeal.
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33 There are some well recognised principles which are applicable.
34 The first goes back to what was said by Lord Atkin in Donoghue v Stevenson [1932] AC 562 at 580. His Lordship there said that a person must take reasonable care to avoid an act or omission which might reasonably be foreseen to be likely to injure persons who are so closely or directly affected by it that the actor ought reasonably to have them in contemplation as being so affected when directing his or her mind to that act or omission.
35 Then, in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, the House of Lords accepted the proposition that the law will imply a duty of care when a person seeking information from a second person possessed of a special skill trusts that second person to exercise due care, and that second person knew or ought to have known that reliance was being placed on his or her skill and judgment (at 486, per Lord Reid; 502, per Lord Morris; and 514, per Lord Hodson).
36 These (and other) principles were applied, in Hull v Canterbury Municipal Council [1974] 1 NSWLR 300, to a situation in which the defendant council approved an application to build a motel on land which the plaintiffs proposed to purchase. The plaintiffs thereafter incurred expense in reliance upon the approval only to find that it was invalid. They claimed damages. Nagle J found that, by reason of the proximity of the parties, the defendant owed a duty of care to the plaintiffs. He said (at 310) that they were so closely and directly affected by the act of the defendant council in notifying them that the necessary approval to the development had been granted that it ought reasonably to have had them in contemplation as being affected by its acts or omissions in granting such approval. It was, he said (ibid), "reasonably foreseeable that they might be injured if the defendant through its negligence wrongly indicated that approval to erect a motel on the subject land had been granted".
37 The reasoning in Hull was applied by Yeldham J to circumstances which arose in G J Knight Holdings Pty Ltd v Warringah Shire Council [1975] 2 NSWLR 796. The defendant council had there given a consent to the plaintiff's development application which was later found to be a nullity because it involved an impermissible change of use in the land. His Honour said (at 805) that he did not think that it was laying down too broad a principle of liability to say that a council which acts negligently in the course of administering a town planning scheme is liable in damages to someone injured thereby. He found that the defendant council, in approving the plaintiff's application, had erroneously represented to the
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- plaintiff that it could construct its proposed structure and use it for its intended purpose. He said (at 806) that the consent which the council gave amounted, not only to building approval, but also to development approval. He said also (at 810) that, not only should the council not have approved the building plans, but it should also have told the plaintiff that its proposed use was prohibited. He considered (ibid) that the plaintiff was entitled to act as it did in reliance upon the approval given and, to the extent to which it did so, and suffered damage as a consequence, it was entitled to succeed.
38 When these principles are applied to the present case it seems to me that they lead inevitably to a finding of liability on the part of the City.
39 In my opinion each approval was one of both the building (or, in the case of the tanks, installation) and the use. The position could hardly have been otherwise. There would be little purpose in Mr Gugiatti building a large automotive repair workshop if he could not repair automobiles in it. There would be even less point in his installing underground fuel tanks if he couldn't store fuel in them or pump fuel from them. Moreover, I have mentioned, so far as the 1958 application was concerned, that the evidence established that the City's then practice was to refuse applications for building licences for buildings to be erected for prohibited uses. The Commissioner appears also to have accepted (par 32) evidence given by an employee of the City, Mr Kevin Hewison, to the effect that a separate procedure for dealing with applications for development approvals did not exist.
40 It also seems to me that, in giving the approval in each case, the City owed Mr Gugiatti a duty to exercise due care. It is an agreed fact that it knew or ought to have known that he would or might, in each case, rely upon the approval to construct or install the structure or structures in question. It was in my opinion also reasonably foreseeable, in each instance, that Mr Gugiatti might be injured if the City, through its negligence, invalidly approved the construction or installation of the structure or structures in question.
41 As to the 1958 approval, the fact is that, under the 1955 by-laws, the workshop proposed to be built by Mr Gugiatti could not lawfully be used by him for its intended purpose. Neither Mr Knott, nor anyone else on behalf of the City, could then have confidently expressed the opinion (and see, in this respect, the comments of Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47) that, if an invalid approval was to be granted, and if the invalidity should subsequently be discovered, nothing,
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- or nothing adverse to Mr Gugiatti's interest, would be done about it. Council officers come and go. New policies are, from time to time, adopted. In these circumstances there could be no confidence that the invalidity of the approval would not ultimately work to Mr Gugiatti's detriment. Once that is accepted, as in my opinion it should be, it follows from the Commissioner's finding (with which I respectfully agree), that Mr Knott's (and therefore the City's) investigation was "inadequate, even careless", that the City was negligent in 1958.
42 For similar reasons it seems to me that the City was negligent in 1976. Once again, its conduct was inadequate and careless. I have earlier mentioned the Commissioner's finding that its officers made no investigation at all and simply assumed that Mr Gugiatti had non-conforming use rights. There was, in my opinion, an appreciable risk of injury to Mr Gugiatti if the approval should turn out to have been invalidly granted. He could then have no guarantee that he would be able to use the fuel tanks installed on his land for their intended purpose. While it may be so, as the Commissioner found, that the City, in 1976, intended to "honour" Mr Gugiatti's "non-conforming use rights" for at least 10 years, that was upon the assumption (which did not originate from Mr Gugiatti) that he had those rights. There was nothing to say what the City might do, perhaps through different officers, at some time in the future if it should turn out that the approval had not validly been given.
43 I am also, with due respect, unable to accept that there was any break in the chain of causation brought about by Mr Gugiatti's use of his land as an overnight truck stop. That Mr Gugiatti (who did not know that the approvals were invalid) attracted attention to himself and to his land by permitting some objectionable activity on the land could not, in my respectful opinion, be said, upon any basis, to have broken the chain of causation. It merely precipitated that which was always prone to happen in circumstances in which Mr Gugiatti, because of the City's negligence, did not know what it was that he might be precipitating. It seems to me that, notwithstanding Mr Gugiatti's conduct, the City's negligence should, as between it and Mr Gugiatti, and as a matter of commonsense and experience, properly be seen to have caused any loss or damage suffered by Mr Gugiatti as a consequence of his reliance upon its approvals (see Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 6).
44 I should say also that I am not persuaded by any of the matters raised on behalf of the City in its notice of contention.
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45 As to the first of them, counsel for the City relied upon evidence to the effect that Mr Gugiatti had received advice from others in contending that he did not rely upon the building licence in using the workshop for business purposes. I have mentioned that Mr Gugiatti's first application (for approval of the erection of a service station on the land) was refused because of the proximity of his land to existing service stations. The evidence disclosed that Mr Gugiatti was thereafter advised by either a parliamentarian or a councillor to apply for permission to build a workshop on the land instead. He did so. In these circumstances, counsel for the City contends, the Commissioner should have found that his belief that he could use the workshop for his business was based upon the advice he received from the parliamentarian or councillor and not upon his reliance upon the building licence itself.
46 There is, in my opinion, no substance to this proposition. Mr Gugiatti may well have been influenced by external advice received by him to the effect that he should apply for approval to build a workshop instead of a service station. That advice may have led him to believe that an application of that more limited kind would be granted. However the fact remains that, without the City's approval, he could not have built, or used, the workshop. That being so, even if he did rely on what was said to him by others, he must inevitably have relied, ultimately, upon the approval of the City itself.
47 As to the second proposition, I am entirely unable to accept the argument that there is a reasonable inference that the building licence was granted upon the basis that the workshop would be used for the continuation of the existing use for private automotive repairs and that its grant consequently did not amount to any representation that the workshop could be used for business or commercial purposes. Even a fleeting examination of the plan submitted to the City for approval discloses that the workshop was to be a very substantial building (spanning some 240 square feet, to use the language of the time, and having two large sliding doors). That fact alone tends against the inference that anyone might sensibly have thought that it was to be used for purely private purposes. More importantly, I have earlier mentioned that the floor plan of the proposed workshop was labelled with the words "automotive workshop" in capital letters. I have also said that one of the conditions of approval was that Mr Gugiatti should comply with the requirements of the City's Health Inspector and its Chief Inspector of Shops & Factories. Mr Hewison said, in his evidence-in-chief, that the imposition of this condition reflected, in his experience, an awareness that a commercial use was intended (although his evidence was less clear in
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- the course of cross-examination and Mr Johnson said in evidence that the Chief Inspector of Shops & Factories inspected "all non-residential buildings"). These factors make it reasonably plain, in my opinion, that, as the Commissioner has found, the City understood that Mr Gugiatti intended to use the workshop for commercial purposes. I should add, in any event, that there was no evidence that the City even knew of the existing private use at the time at which it approved Mr Gugiatti's application.
48 As to the third proposition, it seems to me, once again, to be quite plain that Mr Gugiatti did rely upon the City's approval in putting his land to use as a fuel depot after 1976. It may be so that he had previously used the land for that purpose without having obtained approval. However that cannot alter the fact that he did seek approval in 1976 for the installation of underground fuel tanks. Quite obviously, those tanks were installed upon the faith of that approval. They would not have been installed had the City declined to grant approval upon the ground that the proposed use (or, for that matter, the existing use) was unlawful.
49 Counsel for the City also contended that the Commissioner should have found that the application was not one for approval of the use of the land as a fuel depot but only one for approval of the physical works involved in installing the underground fuel tanks. I have already said that the building approval necessarily conveyed, at least implicitly, a development approval. There could be no point in Mr Gugiatti building underground storage tanks if he could not use them.
50 The fourth proposition relied upon what was said to be Mr Gugiatti's non-compliance with the conditions subject to which the installation of the underground storage tanks was approved. It was said that, because he did not comply with these conditions (or one or more of them), he could not be said to have relied upon the City's approval in installing the tanks. I am afraid that I do not understand this proposition. Whether Mr Gugiatti did or did not comply with all of the conditions of the City's approval, the fact is that he did install the tanks on the strength of that approval. Moreover, the City made no attempt to have him remove the tanks, or cease using them, merely because he had not complied with one of the conditions. Nor, as I have said, did the City suggest that its approval had lapsed or been nullified as a consequence of Mr Gugiatti's failure to comply with a condition or conditions.
51 The fifth, and last, proposition is that to the effect that no compensable damage was suffered by Mr Gugiatti in reliance upon the
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- City's 1976 approval, having regard for his existing unlawful use of the land as a fuel depot. This proposition, as it was developed in argument, relied upon what had been said by the Full Court of the Supreme Court of Victoria in Mills v Baitis [1968] VR 583. In that case the plaintiff had unlawfully (under the terms of the Town and Country Planning Act 1961 (Vic)) carried on business as an automotive engineer from premises in a residential zone. He was injured in a car accident as a consequence of the negligence of the defendant and was incapacitated from working for four months. He sought (and obtained) compensation for his lost earnings. On the appeal the court held that there was nothing in the statute which indicated an intention to disentitle the plaintiff from recovering damages for lost earnings, even though his activities (which were otherwise lawful) were prohibited in the particular area. Moreover, there was no causal connection between the unlawful conduct of the plaintiff's business and the defendant's negligence. Consequently, the court held, public policy did not require that the plaintiff should not be entitled to recover damages for loss of his earnings.
52 Counsel for the City suggests that there is, in this case, a causal connection between Mr Gugiatti's unlawful conduct in the use of his land as a fuel depot, the City's negligence in granting approval in relation to that use of the land and the damages sought, with the result that, on the authority of Mills v Baitis, he should not be awarded any damages.
53 It seems to me that there is no substance to this submission, if I understand it correctly. Mr Gugiatti's claim for damages, insofar as it relies upon the City's conduct in approving the 1976 application, rests upon the proposition that he installed underground tanks in reliance upon the approval, which was negligently given, in circumstances in which he would not have done so had he known (as he would have done if the City had not been negligent) that the use of those tanks was unlawful. The fact that he had previously laboured under the mistaken impression that the use of the land as a fuel depot was lawful, and had acted upon that assumption, seems to me to be entirely irrelevant to the case as pleaded, whether on the authority of Mills v Baitis or otherwise. The Commissioner did not find that the City granted its approval only because of the fact of Mr Gugiatti's prior use of the land and that it was reasonably misled because of that use. He found that it had arrived at a wrong decision because it had made no investigations at all into the lawfulness or otherwise of the proposed use. It was that failure to investigate which was, in my opinion, negligent and it was that negligence which resulted in any damage which might have been caused to Mr Gugiatti as a
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- consequence of his installation of the underground tanks in reliance upon the City's approval.
54 That brings me to the cross-appeal which, as I have said, touches upon the limitation issue.
55 Before dealing with the Commissioner's reasoning in respect of this issue, I should mention a rather curious feature of the case. Mr Gugiatti has commenced two actions, each having an identical statement of claim. The first was that to which I have earlier referred, which was commenced on 17 April 1997. The second was commenced on 18 April 2000. It seems that the second action was commenced as a consequence of the concern of those advising Mr Gugiatti that there might be substance to a defence raised by the City in par 20(b) of its defence in the first action. That paragraph reads as follows:
"[U]ntil such time as the Plaintiff ceased to put the land to the use of an automotive workshop and fuel depot the Plaintiff did not suffer the damage particularised at sub-paragraphs 23(a), (b), (c), (d), (e), (f), (i) or (j) of the Statement of Claim and accordingly no cause of action had accrued against the Defendant in respect of such damage as at the date of commencement of this action and no cause of action in respect of such damage did accrue against the Defendant until the Plaintiff ceased to put the land to the use of an automotive workshop and fuel depot ... "
- The two actions were consolidated by an order made by the Commissioner on 19 April 2000.
56 That brings me to the Commissioner's reasons and to the grounds of cross-appeal.
57 I have mentioned that his Honour, while finding that the invalidity of the approvals in 1958 and 1976 was reasonably ascertainable during 1976 and 1977, was satisfied that Mr Gugiatti's claims were not statute barred at the date of issue of the first writ because the situation was not then "plainly irretrievable" as there then remained the prospect that his land might be rezoned.
58 I have also mentioned that the City, in its cross-appeal, makes two alternative propositions. It is convenient to deal with the second of them first. That is the proposition that, if the Commissioner was right in finding that Mr Gugiatti's loss was still contingent on 17 April 1991, then
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- his Honour should have found that it remains so because it is still possible for Mr Gugiatti's land to be rezoned.
59 There is, in my opinion, no substance to this proposition. It plainly cannot apply to any damage suffered by Mr Gugiatti in the form of legal costs paid by him in respect of his prosecution in 1991. If those costs are ultimately found to have been incurred as a consequence of the City's negligence in granting one or both of the 1958 and 1976 approvals, Mr Gugiatti will, to that extent, have suffered damage regardless of whether his land is or is not rezoned. More importantly, it was, by the time of issue of the second writ, abundantly plain that the prospect of rezoning, if it still existed, was not going to help Mr Gugiatti. He had, by then, been ordered to cease the uses in question and he had done so. If, as he contends (in par 23 of his statement of claim), that has caused him loss and damage (a matter still to be decided), then this loss and damage can hardly be described as having then still been contingent.
60 That leaves the first proposition, being that to the effect that the Commissioner should have found that the limitation period commenced in 1976 or 1977.
61 It seems to me, with respect, to be a difficult, and unwise, endeavour to decide questions of limitation before deciding what, if any, damage has been suffered as a consequence of the breaches of duty of which a plaintiff complains. Actual damage is a necessary element of liability for the tort of negligence. Exposing someone to risk is not actionable if the risk is averted before harm is done or if what is feared never comes to pass for some other reason. That being so, it is, of course, necessary to ascertain what actual damage was suffered by a plaintiff as a consequence of the commission of the tort, and when, before deciding whether or not the cause of action which so came into being is barred.
62 The Commissioner appears to have been faced with an order, made by a Registrar of the Court by consent of the parties on 11 August 1999, to the effect that there was to be tried as a preliminary issue, together with the issue of the City's liability to Mr Gugiatti, the issue whether Mr Gugiatti's cause of action had not yet accrued or was statute barred by virtue of the Limitation Act.
63 In the course of embarking upon this issue the Commissioner asked counsel for Mr Gugiatti to explain what was said to have been the damage suffered by Mr Gugiatti. We were told by Mr Gugiatti's counsel (and this is supported by the transcript contained within the appeal books) that his
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- response was that this damage was essentially twofold. He contended that there was, firstly, what he described as damage in the form of a lost opportunity. This contention was to the effect that, had Mr Gugiatti been told that an automotive workshop business could not be run on his land, he would have set up that business elsewhere. Counsel for Mr Gugiatti put it in this way to the Commissioner (transcript at 372):
"Our case has to be that there was a block of land out there waiting for us; that if we had been denied use of this land [the land upon which Mr Gugiatti built his workshop] we would have gone and bought that other block of land and that if you compare our position now with our position as it would have been had we proceeded with that alternative purchase, we are out of pocket by X and our loss is X."
Secondly, counsel for Mr Gugiatti said, there was damage in the form of the costs incurred by Mr Gugiatti in respect of the unsuccessful defence of the prosecution.
64 As to the first of these two heads of claim, the Commissioner accepted (par 30) Mr Gugiatti's evidence that, if he had been told in 1958 that he could not lawfully conduct an automotive workshop business on his land, he would have established a workshop at some other location.
65 His Honour returned to this issue later in his reasons.
66 He referred, first (par 69), to the particulars of loss and damage pleaded in par 23 of the statement of claim, quoting them as follows:
"(a) Construction costs of the existing structures erected pursuant to the building licence approval and fuel tank approval;
(b) relocation costs for plaintiff's existing business;
(c) demolition costs for buildings and fuel structures on the land;
(d) loss of profit as a result of relocation;
(e) construction cost of replacement buildings and fuel tank structures on new premises;
(f) cost of land for replacement premises;
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- (g) damage to reputation and anxiety caused by prosecution in Court of Petty Sessions;
(h) legal costs in defending prosecution in Court of Petty Sessions;
(i) alternatively (excepting (b) - (f) herein) loss of the value of the plaintiff's business;
(j) damage for loss of income to the plaintiff."
67 The Commissioner then said (par 70) that he had, during the trial, raised with counsel for Mr Gugiatti the question whether "what Mr Gugiatti had to prove was what his position would have been had he followed some other course rather than to erect the workshop and to construct the underground tanks on the land." His Honour went on to say (par 71):
"The plaintiff then gave evidence to the effect that had he been informed in 1958 that he could not carry on a workshop business on the land, he would have established such a business on other land where such a use was permitted. He also deposed to having been in a financial position to take that course. The plaintiff also said that he envisaged that when he retired he would pass the business on to a son. That evidence raises the question whether by reason of negligence on the part of the defendant the plaintiff has lost the commercial opportunity of establishing and operating businesses on land with appropriate zoning (which it may safely be assumed would have been available in the metropolitan area). Whether the value of such an opportunity would have exceeded the value of use of the land for commercial purposes actually carried on [sic] the land from 1959 to 1999 (adjusted to take into account respective costs of establishment and respective residual land values) is a matter of quantification which I am not required to address."
68 As to the legal costs incurred by Mr Gugiatti, the Commissioner found (par 19) that Mr Gugiatti's solicitor and counsel rendered accounts in July 1991 and that Mr Gugiatti paid them.
69 It seems to me that there can be little doubt as to the proposition that, if Mr Gugiatti is entitled to damages in the form of the legal costs paid by him in July 1991, his claim in that respect was not barred at the time of the issue of the first writ, less than six years later, on 17 April 1997.
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70 However Mr Gugiatti's remaining claims raise a number of difficulties. It does not, with respect, disclose a great deal to say that these might be categorised as amounting to a "lost opportunity" claim. Much depends on what are said to be the components of such a claim. If, as counsel for Mr Gugiatti put it in argument to us, the "central element" of the claim is the loss of an opportunity to build up a business or businesses on other land (and this claim does not leap out from the pleaded particulars of loss and damage), then it may be that that opportunity was lost in 1958, when Mr Gugiatti built his workshop, or in 1976 and 1977, when Mr Gugiatti installed his underground tanks, depending upon the nature of the opportunity which is said to have been lost. If, on the other hand, the claim is, for example, one for relocation costs or for loss of profit as a result of relocation (and I say nothing as to the merit of that, or any other, claim), then it may be that those costs or losses were or will be incurred, if they have been or will be incurred at all, after 31 December 1999, on which date Mr Gugiatti ceased the existing uses in accordance with the City's directive. It must be appreciated in this respect that, when regard is had to the particularised heads of damage pleaded in the statement of claim, it becomes apparent that more than one cause of action has been pleaded, leaving open the prospect that some heads of claim might be found to be barred by the operation of the Act and others not. That makes it inappropriate to consider these claims on some "global" basis for limitation purposes. Rather, in my opinion, regard must be had to each individual head of claim.
71 In considering when a cause of action accrues it must also be remembered that, with economic loss, as with other forms of damage, there has to be some actual damage and that prospective loss is not enough. (See Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527, per Mason CJ and Dawson, Gaudron and McHugh JJ.) Still further, it must be borne in mind that detriment, in a general sense, has not universally been equated with the legal concept of "loss or damage" and, in many instances, the disadvantageous character or effect of events cannot be ascertained until some future date when their impact upon events as they unfold becomes known or apparent (see Wardley, above, ibid and at 540, per Deane J). Also, for so long as the prospect of damage remains contingent, it may be unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. As was pointed out by Mason CJ and Dawson, Gaudron and McHugh JJ in Wardley, above at 533, if an action is commenced before that time, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred and the plaintiff will run the risk that damages will be
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- estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. That being so, their Honours said (ibid), in such cases it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled.
72 While it is possible to enunciate applicable principles, so far as they appear from the case law, it is, as this case demonstrates, at best undesirable and at worst impossible to apply them in circumstances in which there is little or no evidence as regards the actual damage sustained by the plaintiff and, in my opinion at least, inadequate particularisation, even, of what those damages might be. In Wardley, above at 533, Mason CJ and Dawson, Gaudron and McHugh JJ warned of the danger of any such exercise in the following terms:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
73 While these are not interlocutory proceedings, the decision to separate the trial of the issues of liability from those relating to damages should have had the consequence that the limitation issues were left over for decision until after evidence of the alleged loss and damage had been given and not heard and determined at the same time as the determination of the issue of liability. While the Commissioner was, as I have said, faced with the fact of a consent order in this respect, it was, in my respectful opinion, always open to him to vary that order, which was merely procedural in nature, once the difficulty of giving effect to it became apparent.
74 In all of these circumstances it seems to me that the cross-appeal should succeed to the extent that the Commissioner's findings on the limitation issue should be set aside. Without having heard evidence in support of properly particularised claims of loss and damage, it was, as I have said, inappropriate and impracticable to decide which claims were contingent and which were not at the date of the issue of the first writ (or, for that matter, at the date of issue of the second writ, if any claims were
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- then still contingent) and, if so, in what sense they were contingent. I have already said that Mr Gugiatti's claims could not be looked at, in this context, as if they amounted only to one "global" claim.
75 Counsel for the City, in written submissions lodged since the conclusion of argument on the appeal, urged upon us the proposition that, if we were to overturn these findings, the Commissioner made an additional finding to the effect that the loss suffered by Mr Gugiatti was reasonably ascertainable in 1976 and 1977 and that this finding, which has not been challenged by any ground of appeal, necessarily carries with it a finding that that loss must have been incurred prior to the date upon which it could have been ascertained. However the Commissioner made no such finding. What he found was, as I have said, that the invalidity of the approvals was reasonably ascertainable in 1976 and 1977. The more important question, for present purposes, is that of when each item of actual loss and damage occurred (cf, in this respect, Christopoulos v Angelos (1996) 41 NSWLR 700 at 705 and 711 and Registrar-General v Cleaver (1996) 41 NSWLR 713 at 721). As I have already said, that question can only be decided after evidence has been led in support of properly particularised claims of loss and damage.
76 In all of the circumstances I would allow both the appeal and the cross-appeal. So far as the appeal is concerned, I would quash the decision of the Commissioner and substitute for it a decision in favour of Mr Gugiatti on the issue of liability. So far as the cross-appeal is concerned, it seems to me that the Commissioner's findings on the limitation issue should be set aside and that there should be a direction that those issues should be left over for determination once all of the evidence on the damages claims has been heard.
77 PARKER J: I have read the reasons for decision now published by Steytler J with which I agree.
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