Harrison v City of South Perth - [2004] WADC 155

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: HARRISON -v- CITY OF SOUTH PERTH [2004] WADC 155

CORAM: HH JACKSON DCJ

HEARD: 19-22 JANUARY 2004 & 15-18 MARCH 2004

DELIVERED : 22 JULY 2004

FILE NO/S: CIV 1972 of 2001

BETWEEN: PAULINE HARRISON
Plaintiff
AND
CITY OF SOUTH PERTH
Defendant

Catchwords:

Negligent misrepresentation - Property subdivision - Inducement - Reliance - Economic loss

Legislation:

Nil

Result:

Claim dismissed

Representation:

Counsel:

Plaintiff: Mr P R MacMillan
Defendant: Mr M I Handcock

Solicitors:

Plaintiff: Mackinlays
Defendant: Mullins Handcock

Case(s) referred to in judgment(s):

Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 71 ALJR 448
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225
Perre v Apand Pty Ltd (1999) 198 CLR 180

Case(s) also cited:

Firewatch Australia Pty Ltd v Courtney Fire Authority [1999] FCA 761
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli case) (1988) 79 ALR 83
Kyriacou & Bonhomie Pty Ltd v Kogarah Municipal Council & Antoniades (1995) 88 LGERA 110
Nauru Local Government Council v Australian Shipping Officers Assoc (1978) 34 FLR 281
San Sebastian Pty Ltd v Minister Administering Environmental Planning Act (1986) 162 CLR 340
Poseidon Ltd & Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
South Australia v Johnson (1982) 42 ALR 161
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
Woollahra Municipal Council v Sved (1996) 40 NSWLR 101

HH JACKSON DCJ:

Background

The plaintiff is a married school teacher of mature years. She and her husband lived in Mt Pleasant. She was at all material times the owner of a piece of land numbered 219 Coode Street, Como on a corner of Thelma Road and Coode Street. The property is within the City of South Perth.
The property was 620 square metres in area. On it was erected a modest house let to tenants.
As the plaintiff and her husband approached retirement they considered possible investments to provide therefore.
She says the City of South Perth gave her wrong advice in or about January 1999 as to whether the property at 219 Coode Street could be subdivided and that as a result she did not subdivide it and thereby lost money. She seeks damages.

Claim

Her statement of claim pleads as follows:
"2.At all material times, the Defendant:
(a)is the City of South Perth being a local government duly constituted under the provisions of the Local Government Act 1995 and was a body corporate capable of being sued in its name and style.
(b)had and exercised the power to make by‑laws relating to and regulating buildings and town planning and development within the district of the City of South Perth … and
(c)was, inter alia, engaged in trade or commerce in that it was and continues to be in the business of supplying information and/or advice to members of the public relating to planning and developing of buildings and land within the district of the City of South Perth ...
3.On 5 November 1991 the Plaintiff became the sole proprietor of a property situate at 219 Coode Street, Como … and being more particularly described as Certificate of Title Volume 11 Folio 143A ('the Como Property').
4.In or about January 1999 the Plaintiff became interested in the possibility of sub‑dividing and redeveloping the Como Property for investment purposes.
5.In or about January 1999 Mr Hegarty from Develop West on behalf of the Plaintiff made enquiries with the Defendant concerning the subdivision of the Como Property.
6.Upon being informed by Mr Hegarty from Develop West that the Como Property could not be subdivided the Plaintiff made thorough enquiries herself.
7.In furtherance of these enquiries the Plaintiff attended personally with her husband at the City of South Perth Council Offices in or about January 1999.
8.The enquiries made by the Plaintiff were conducted with a town planning officer attached to the City of South Perth Council.
9.The Plaintiff made due diligent enquiries concerning whether the Como Property would be able to be subdivided and developed.
10.In answer to the said enquiries the Defendant, by its servants or agents during the Plaintiff's attendance at the Defendant's office, inter alia, orally represented and advised the Plaintiff, that:
(a)she could not sub‑divide the Como Property as the minimum size for a dwelling was of 333 square metres of land; and
(b)there was to be a new planning scheme implemented by the Defendant which would require all new dwellings in the Defendant's municipality to be situated on at least 500 square metres of land.
11.On making the representations referred to in paragraph 10 the Defendant intended and well knew or ought to have known that the Plaintiff, would rely on the said representations and decide not to redevelop the Como Property for sale and profit.
12.The making of the representations referred to in paragraph 10 above constituted conduct in trade and commerce by the Defendant which was misleading and deceptive, or which was likely to be misled or deceive in contravention of s52 of the Trade Practices Act 1974, in that the said representations were false not hereinbefore particularised which false representations induced the Plaintiff to not subdivide the Como Property but to sell the Como Property as is and by reason thereof to suffer loss and damage, particulars of which will be supplied after discovery and interrogatories.
13.Further or alternatively, the representations referred to in paragraph 10 above constitute misstatements made by or on behalf of the Defendant negligently, in that the said misstatements were made by the Defendant's servant and/or agent when that servant and/or agent possessed special skill or knowledge concerning the said representations, or were otherwise in a special relationship with the Plaintiff and with the intention that the information conveyed would determine whether the Plaintiff proceeded with her intention and in doing so the Defendant by its servant and/or agents failed to use reasonable care to ensure the accuracy of the said representations.
PARTICULARS OF NEGLIGENCE
(a)The Defendant's servant and/or agents believed, alternatively, never had reason to believe, alternatively never ought to have believed, that the representations were in fact accurate.
(b)The Defendants failed to provide the Plaintiff with accurate information relating to the requirements necessary to subdivide the Como Property.
(c)The Defendant failed to inform the Plaintiff of the true facts as pleaded in paragraph 14 below.
(d)In making the said representations, the Defendant failed to investigate or properly investigate the information contained therein.
(e)Failed to ensure the advice proffered by its servants or agents was complete advice as admitted by the Defendant in a letter to the Plaintiff dated 3 August 2000.
(f)Failed to ensure the Defendant had an appropriate policy to ensure the advice proffered by its agents or servants was adequately supervised.
14.In truth and in fact, the said representations and each of them, were false and untrue, inaccurate and misleading in that the Como Property was capable of being subdivided into two single dwellings totalling even though the Como Property was only 620 square metres.
PARTICULARS
The plaintiff refers to and relies on the particulars contained in par 13 above.
15.By open letter dated 3 August 2000, the Defendant by its servant and/or agent R.H. Bercov manager of City Planning admitted that the said representation as pleaded by the Plaintiff at paragraph 10(a) of the Statement of Claim herein was made and that the advice was incomplete and was made by a temporary officer employed at the material time by the Defendant.
16.By the same open letter as pleaded in paragraph 15 the Defendant by its servant and/or agent R.H. Bercov further indicated that a process had been put in place 'to ensure that a similar situation does not happen again'.
17.At the trial of this action the Plaintiff will rely on the said letter referred to in paragraph 15 herein for its full meaning and effect.
18.By reason of the matters pleaded in paragraph 14 above, the Plaintiff has suffered substantial loss and damage.
PARTICULARS
(a)On or about 23 December 1999 the Plaintiff sold the Como Property for the sum of $265,000 in the belief the Como Property was not capable of being subdivided.
(b)The Como Property has since been subdivided into two separate properties being 219 and 221 Coode Street, Como with square metre areas of 288m² and 332² respectively.
(c)The Plaintiff was denied the opportunity of subdividing and redeveloping the Como Property.
(d)The Plaintiff has been deprived of the profit which could have been derived from the sale of two new single group dwellings on the Como Property.
[The statement of claim then sets out various alternative quantifications of damages]
19.Further or alternatively, the Defendant's conduct as referred to in paragraphs 10, 13 and 14 was misleading and deceptive or likely to mislead and deceive and thereby in contravention of S10(1) of the Fair Trading Act 1987 (W.A.) and which has accessorised loss and damage to the Plaintiff.
PARTICULARS
The Plaintiff refers to the Particulars provided in paragraph 18 above."

Defence

The defendant pleads the following defence:
"1.The Defendant does not admit paragraph 1 of the Statement of Claim.
2.The Defendant admits paragraphs 2(a) and 2(b) but does not admit paragraph 2(c) ...
3.The Defendant admits paragraph 3 …
4.The Defendant does not admit paragraphs 4, 5, 6, 7 and 8 ...
5.The Defendant denies paragraph 9 ... At the material time, the Como Property was located within a residential zone with an R Code density of R30 which meant that:
(a)A minimum land area of 270m²and an average land area of300m² was required for a single house development; and
(b)A minimum land area of 333.3m² was required for a grouped dwelling (or strata title) development.
The Como Property comprised a land area of approximately 620m².
6.The Defendant denies paragraph 10 ...
7.The Defendant denies paragraph 11 … and says further that:
(a)Even if the advice pleaded in paragraph 10(a) … was given, which is denied, the proposition that all dwellings within the district of the City of South Perth were required to be on blocks with a minimum of 333.3m² of land is so broad a statement and so obviously incorrect that the Plaintiff ought not have relied upon it; and
(b)Even if the advice pleaded in paragraph 10(b) … was given, which is denied, then the proposition that all new dwellings within the district of the City of South Perth were required to be located on at least 500m² of land was so broad a statement and so obviously incorrect that the Plaintiff ought not have relied upon it.
8.The Defendant denies paragraphs 12, 13 and 14 ...
9.Other than to admit that the Defendant, by its servant Mr R H Bercov wrote to the Plaintiff by letter dated 3 August 2000, the Defendant denies paragraph 15 …
10.The Defendant admits paragraph 16 ...
11.The Defendant does not need to plead to paragraph 17 ...
12.The Defendant denies paragraph 18 … and says further:
(a)On or about 14 June 1999, as part of the process of listing and selling the Como property, the plaintiff's real estate agent, Geoff Sweeny, advised the plaintiff at his office of the subdivision potential of the Como property;
(b)On 19 July 1999 the Plaintiff accepted an offer for the sale of the Como Property in the sum of $265,000 (the 'Offer and Acceptance') subject to the condition that the purchaser obtain all necessary statutory approvals for a proposed development of the Property on or before 90 days from acceptance ("the Development Condition");
(c)On or about 19 July 1999 Geoff Sweeny advised the plaintiff at her home, that the Development Condition related to a potential subdivision of the Como property;
(d)On or about 12 October 1999 the Plaintiff agreed to extend the Development Condition by a further 60 days, and
(e)As a result of the matters pleaded in paragraph 12(a) to 12(d) inclusive, the Plaintiff knew that the Como Property was capable of being developed by way of subdivision and accepted that the sale price of $265,000 was fair and reasonable in the circumstances.
13.The Defendant denies paragraph 19 ...
14.The Defendant denies that the Plaintiff is entitled to the relief sought or any relief."
Without evidence or submissions counsel for the defendant did not pursue in closing the question whether any advice given by the defendant even orally and free of charge was made in the course of trade or commerce. In view of my other findings the issue becomes irrelevant.

The property

The plaintiff was in 1999 the registered proprietor. The property had on it a modest home. She had let the premises to tenants through agents Winslade & Lawrence.
She and her husband lived in their own home in Mt Pleasant.

Plans for retirement

By 1999 the plaintiff and her husband were approaching retirement. She was a school teacher and says that various colleagues had talked of investing in land and developing it for sale at a profit as a way of financially providing for their own retirement. Neither she nor her husband had any significant experience of real estate, town planning, land development or like matters. However, they discussed the possibility of such investments between them and decided to investigate it further. What then happened forms the issue in these proceedings.

Step one – consulting Mr Hegarty

The plaintiff and her husband say that in early January 1999 they consulted Mr Hegarty of Ross North Homes or Develop West in Mt Pleasant. There are differences in their recollections. The plaintiff says they both saw him personally at his office. They said they were thinking about a unit development and asked if his firm helped locate suitable land. He talked generally about what a suitable block of land for development was – ideally a corner block in a good location. They then mentioned their own block. After learning that they did not know if it could be subdivided, he said he would enquire and let them know. He gave them a brochure and his business card. In the brochure were also additional pages setting out a specification list "as at 28 February 1998" and a price list dated "9 January 1997". She and her husband looked at the brochure and its contents later and agreed upon "a medium priced development but of a good standard". She
"decided looking at the brochure on the medium-priced houses which I think were four-bed roomed and had garages, somewhere around $65,000.
But you didn't decide on any particular house at that stage? ---Not at that stage, no.
Because as I understand your evidence the brochure led you to believe that you could build what you thought was a suitable home or two homes on the block for a price of around $65,000 each?---Yes."
From the list they preferred the "Waterford" and the "Woodvale". They also obtained a brochure from Dale Alcock which they read.
A few days later, however, Mr Hegarty rang and advised that "the South Perth Council Planning Department had told him that the land could not be subdivided". They had thought prior to this advice that the land would be good to use "for development. For building units and then selling them"
One difference between the evidence of the plaintiff and that of her husband is that she asserted that prior to speaking to Mr Hegarty she had not considered the property she owned as a possibility to be subdivided and developed. She had had no idea that it could be subdivided. Only after Mr Hegarty discussed the issues was the Como property considered.
The plaintiff's husband gave evidence that he and the plaintiff had been considering either the financial benefits which might accrue from land subdivision and construction and sale of units either on the plaintiff's land at Como or elsewhere. They went to see Mr Hegarty of Ross North Development at his office in Mt Pleasant.
"In relation to a block for development was there any discussion?---Yes, because at one stage we sort of said, well, we could buy a block and then it was sort of mentioned that the best block you want is in a reasonable suburb and ideally a corner block, and we looked at each other and said, 'We've got one.'
…
How did the conversation develop in relation to that matter?---He asked us about the block, where it was, that sort of thing and what more did we – how far did we want to go with this really at that stage.
What did you say?---Well, we were very keen and he offered to find out if the block was suitable.
In what respect?---If it could be subdivided.
Did you and your wife agree that he should do?---Yes, we did.
Did he provide you with any documents in the course of your meeting, paperwork - - -?---We got some brochures of houses and prices and that sort of thing
He identified exhibit 3. He and his wife were pleased with the ideas presented and agreed on medium sized and priced houses as ideal.
During 1998 they had put their Mt Pleasant house on the market in order to "do other investments". Mrs Harrison denied that the reason the Mt Pleasant property had been on the market in the months before was to fund development of the Como property. Prior to seeing Mr Hegarty, Mr Harrison said they were interested in subdividing land and building houses or units on the land for sale. However, Mr Hegarty rang him and advised that he had rung the City of South Perth and that the Como property was not big enough to subdivide.
Cross‑examined Mr Harrison agreed that prior to seeing Mr Hegarty he had considered redevelopment of 219 Coode Street as a possible avenue of investment and that his wife and he would be fairly conservative in investing. He agreed that given their failure to sell their family home any development would require external funding. After giving Mr Hegarty the address of the property and his advice that he had contacted the City of South Perth, and that the property could not be subdivided they had decided to check for themselves. The news from the City was disappointing. The question of investing in land development was not subsequently pursued either at 219 Coode Street or elsewhere. The experience of what then happened to 219 Coode Street had put them off. There was no other event to which he attributed their inaction.
Mr Harrison agreed that when Mr Hegarty had provided house price lists he had realised the prices were basic prices with additional items and variations to be added.

Mr D S Hegarty

Mr Hegarty was called by the plaintiff. In 1999 he was an investment manager employed by DevelopWest. He described his work as basically selling various types of housing on behalf of Ross North Homes. He regularly provided advice to persons seeking to invest by building houses. The firm designs houses for specific lots and arranges brokers to work out financing. If the block was not able to be subdivided he would seek to introduce the potential developer to alternative available land. He would retain phone and contact details in such a case and contact them in case appropriate opportunities arose. He advised "many thousands" of people seeking advice as to acquisition of land for subdivision and development. Of thousands of telephone responses to his firm's advertisements only three to five per cent meet him, of which 60‑70 per cent own their own land. Usually these are lots on which is built an old house suitable for demolition.

Some sought advice as to development of a block that they owned already:
"If they had the land already, it made our job a little easier".
With the question of subdivision in relation to a block to be acquired or a block that a customer already owned, what was your usual procedure?---Well, the first thing, you'd ask them basically have they a contour survey of the property because we wouldn't do – Ross North wouldn't do a sketch without basically having a contour survey. That would actually show you where the sewerage was, the lie of the land, trees – anything that might be relevant – to even pegs gone - - -
But with the question of subdivision, whether the block was subdivisible or not, how did you proceed in relation to that?- - -Well, if I didn't know the R codes, basically I'd check with the shires by either a phone call – more than likely a phone call. They would then tell me the R coding of it and possibly the size. From that I'd determine – we had charts. The R code standard charts would say, you know, an R20 was, you know, 450 square metres per block and so on and so on.
So you would often make inquiries of the relevant local authority?---All the time. If the people asked me, I'd – that's one way you get their name, to go back to them basically. You'd get their contact names and numbers. You'd ring them back and say, "Yes, it is possible" or "No, it's not."
And of course if it wasn't possible, then there was no investment opportunity or business for you?---Well, there was no income for me, no. It basically depends on maybe the questions I've asked too. If it's – you know, if it's stratable, green titleable, vacant strata'd, survey strata'd – there's so many different aspects of development. If it's a house behind a house …"
He had no recollection of meeting the plaintiff or her husband, or of making an inquiry on their behalf. Shown exhibit 3 he said that had the brochure been sent out it would have included a covering letter. Had it been collected, it would not. He was familiar with the City's R codes, a copy of which he kept in his office, and with the standard tax map or street plan map : See exhibits 26 and 27. He was shown on exhibits 25 and 27 the location of 219 Coode Street Como shown on exhibit 27 as Lot 1 on the corner of Thelma Street and Coode Street as containing 620 square metres but could not recall any inquiry concerning it.
As to any inquiry he might make on behalf of potential developers it "really depends on …the questions you ask the shire…or what questions were asked to us originally to ask the shire …" "If it was just a phone inquiry or someone has just come in for a couple of minutes, maybe I didn't even go to the block. But normally once people proceed, I would normally either meet them at the block or – again it all depends on what questions I was asked and so on". A corner block was advantageous for subdivision purposes given access to two streets. However, issues included contours, sewerage, existing buildings and costing. His practice was always to ask the local authority the size of the lot and the R code related to it. He did not have the current town planning zone details in his office. The lot size and the applicable R code used in conjunction with the R codes table gave a good indication of the subdivisibility of the lot although there might still be other factors. With corner lots, for example, truncated corners might be added to lot size. If enquiry at the local authority was positive, his practice was to prepare a sketch of a possible development to show potential clients. This involves such issues as land contours, sewerage and bores, and again inquiry would be needed of the local authority.
However, the exact inquiry and sequence of events might depend on the potential developers wishes.
The City of South Perth R 30 rating applied to 219 Coode Street. The zoning meant that that for group dwellings, which he indicated meant strata titled developments, a minimum lot size of 333.3 square metres applied, but for single house or "green title" lots, a minimum of 270 square metres, but an average per lot of 300 square metres. In broad terms a 620 square metre lot with an R 30 zoning within the City of South Perth, could be subdivided as two single lots on "green" titles. However, subdivision into such lots was "a lot more expensive" than creation of strata lots because of issues such as sewerage, power and fencing.
Given the lot size and R 30 zoning, he would have been surprised had he been informed by the City of South Perth that the lot could not be subdivided as two single lots. Local authorities from time to time provide information which he thinks incorrect, and he then makes further inquiry of them.
Given that the plaintiff already owned the property at 219 Coode Street and also with her husband, the Mt Pleasant property, the lot size and R coding and its corner location, the plaintiff would have been a potentially very good client.
He said the price list forming part of exhibit 3 was updated from time to time and he very much doubted that in January 1999 he would have given out a 1997 price list. The standard specification document dated 28 February 1998 could have still been distributed in 1999 however. It was however, very rare for houses listed therein to be built with those specifications. Site costs such as sewerage, power and telephone could add in excess of $20,000 for subdivision into single lots in 1999, perhaps up to $40,000. Reticulation, landscaping and boundary fencing was extra as was demolition. Items not included in the standard specification included floor coverings, clothes line, letterbox, light fittings, outside paving, kitchen tiles and wall painting. Other items might be upgraded.
Variations and additional requirements by owners for carports, garages, storerooms, firewalls or parapet walls were common.
Other upgrading in an area such as Como might include roof gables, sloping sills, window mouldings, upgraded and extra doors, air conditioning, larger sinks and cupboards, or higher roof pitch.
Goods and sales taxes were introduced in July 2000. Building prices started to rise some months before that in anticipation of it.

Comment

The evidence that Mr Hegarty gave is not tainted by any suggestion of self‑interest. It is surprising that if the plaintiff and her husband met him as they say, he neither remembers or, more significantly, made or kept any contact or contact details given the obvious desirability of the plaintiff as a potential client. More significantly again it would be surprising if given his background, he had been told by the City of South Perth that 219 Coode Street could not be subdivided, he would not have been surprised and made efforts to confirm that, given the lot size, R coding, corner position and the plaintiff's situation as an owner – developer with assets and income. Further suspicion is raised by his evidence as to the price list produced by the plaintiff.

Visiting the City of South Perth

The plaintiff said she and her husband wanted to check with the City of South Perth that the "block could not be subdivided" and that they "could not develop units on it". During January 1999 they visited the City offices and asked to speak to someone from the planning department. A young man, probably in his early twenties came out to see them.
"I said to him that I owned the block at 219 Coode Street and I would like to know if it could be subdivided …
He just said, 'Just hold on a moment', and he disappeared behind the screens. A few minutes later he returned and he was carrying a large map … He said to us could we move down to the far end of the counter …
When we got down there – because there was no people down there – he spread the map out and he asked me to repeat the address, which I did. He located that block on the map. He looked at it and said, 'It's 620 square metres.' He said, 'No, you can't subdivide that'. He said that the minimum size for a dwelling was 333 and ours – or mine was 620. It couldn't be subdivided. There could only be a single dwelling put on that land. He then proceeded to say that there was a new town planning scheme in the pipeline and in the future it would be worse and he used the word 'worse' because in the future the minimum lot size would be 500 square metres, so I said to him then 'Well, you mean then I can't do anything with it?" and he said 'No. Sorry.'
Nothing more was said. They were given no identifying information and no printed material, and simply accepted what they had been told.
She was unable by looking at a staff photograph, to positively identify anyone as being the person who gave the advice. Nor could she identify the maps he had used in reaching the advice she said he had given. One was a map of the area from which he correctly identified the land. She did not recall him referring to an R 30 zoning. He had only referred to the map.
"The officer said to you that your property was zoned for a single house, for a single dwelling, didn't he?---He did.
Is it possible, Mrs Harrison, that the officer said to you that your property cannot be strata'd?---No. He said it cannot be subdivided.
Do you know that under the R codes your property is zoned under R30 for a single house. Do you understand that now?---I know it's zoned for a single house, certainly."
The plaintiff said she understood the difference between strata title and 'green' title.
"The officer went on to discuss with you, in your evidence, that there was a new town planning scheme coming into being?---That's what he said, yes."
She agreed that she knew this was not yet in force and only in draft so that it could be altered. The officer had said that in future under such a scheme a minimum of 500 square metres per lot might be imposed.
She agreed that she knew that the lot at 36 Thelma Street was of a similar size and so assumed that it probably could not be subdivided either.
She said that the officer had only said that the block was 620 metres and was for a single dwelling. He had not referred to R Codes, or when referring to the proposed new scheme to another map. She said it had not occurred to her to ask for advice in writing. She said that she had never inquired or been informed as a ratepayer by, the City of South Perth as to the progress of its proposed new town planning scheme.
Like his wife, Mr Harrison was unable to recognise the man from a staff photograph published by the City of South Perth : exhibit 24.
The plaintiff's husband gave evidence to the same effect. The young male officer in the planning department:
"pointed it – found it on the plan and then told us that the block was too small to subdivide. He said that the block was 620 square metres and to subdivide you had to have 333 square metres.
Did he say anything else to you about the issue - - -?---He said soon it's going to get worse and it's going up to 500 square metres.
Did you or your wife say anything else to him once he had told you that?---We thanked him and that was about it.
Did he provide you with any printed documents of any sort?---No."
They had not pursued the idea any further.
Neither the plaintiff or her husband identified a map as that looked at by them to identify their lot to the planning officer. Mr Harrison thought it to be a larger version of exhibit 25. He said at one point that his wife told the officer her lot was 620 square metres in area, but later that the officer had told them so.
Exhibit 25 is a reduced version of the City of South Perth's town planning scheme maps. It does not indicate lot sizes. Neither of them gave evidence that the officer had looked at or shown a tax map or any other document.
The defendant called Mr R H Bercov the City of South Perth Town Planner since 1984 and Manager of Development Services, a position assuming responsibility for both the town planning and building departments, since November 2003. He confirmed that during 1999 the City of South Perth Town Planning Scheme No 5 had been in force, and that by 1998 plans were being made to introduce a new Town Planning Scheme No 6. A draft was circulated to residents in about September 1998. The R codes are contained in a separate document which is incorporated into the relevant Town Planning Scheme by reference, the expression R Code being an abbreviation of Residential Design Codes or previously Residential Planning Codes. Those codes are widely adopted by local authorities in Western Australia and set out a matrix of R Codes and land areas for different land uses.
The code number generally equates to the number of permissible dwellings per hectare or 10,000 square metres of land although there are minor variations. At the relevant time a single house always stood on a separate lot or "green title". Grouped dwellings were commonly referred to as strata title. Subdivision may refer to either type of developments. There are no alternatives. On land zoned R 30 the City provides for single dwellings on lots of not less than 270 square metres provided the average across the created lots was not less than 300 square metres. A grouped dwelling or strata title subdivision required not less than 333.3 square metres per dwelling. In the City of South Perth Scheme there was no discretion in the local authority to vary these minima.
The proposed Town Planning Scheme No 6 incorporated a new system of dual density coding in some areas of the City. By this a lower density coding might be increased to a higher density one if certain criteria were met : Exhibit 35. Under the proposal 219 Coode Street fell within a dual density coding, R 15‑30 : Exhibit 36. An R 15 density coding would mean that a subdivisional single dwelling development would require a minimum lot size of 555 square metres with an average of not less that 666.6 square metres per site, although if certain criteria were met, these requirements could be reduced to a higher density R 30 coding. Only R 17.5 and R 20 codings provide for minimum lot sizes of 500 square metres.
Mr Bercov first became aware of the plaintiff's concern when her letter was received in April 2000. He inquired of every planning officer then employed by the City as to whether the officer could recall the plaintiff's inquiry, but could not identify anyone who did. Temporary staff were employed at various times but only one at a time. There were 5 to 8 permanent staff. At that time verbal and telephone inquiries were not recorded. In 1999 he estimated that 20‑80 zoning and subdivision inquiries were made daily. His written response to the plaintiff, exhibit 14, was made after exhaustive enquiries.
"The second sentence in that last paragraph reads,…
'My inquiries to currently employed staff confirm that the incomplete advice was provided by a temporary officer who is no longer employed by this council?
…
why did you say that?---I said it because the letter from Mrs Harrison stated that she had received incorrect advice. I had confirmed to my entire satisfaction that advice did not originate from any of the then serving officers. Taking Mrs Harrison's statement as presumably being correct by a natural assumption, by projection I assumed that the only explanation was that it must have been, must have been a temporary officer, a temporary officer no longer employed with the city, that is.
Did you have a suspicion of a particular officer yourself who may have given the advice or some advice to Mrs Harrison?---Whether I'd call it a suspicion, I'd hazarded a guess as to one particular officer that it might have been.' "
He later received a letter dated 17 October 2000 from the plaintiff's solicitors exhibit 37. This was the first time specific reference had been made to the plaintiff's inquiry having been made in January 1999. The officer he had suspected had not then been employed at the City.
Cross‑examined he said that he should not have assumed the plaintiff's letter to be factually correct, but that on that assumption the advice she said she had received would have been incomplete and wrong. He also agreed that it was of critical importance to ensure that accurate and reliable information on such matters is given to ratepayers. He encourages staff "to exercise extreme diligence and to encourage inquiries to seek the information in writing if they are going to rely on it." There was no such policy of encouraging written advice in place in 1999.
The plaintiff also called a former planning officer of the City, Mr T Priest. In January 1999 his position was temporary, becoming permanent in 2000. He regularly received inquiries in person or by telephone as to possible land subdivision. He was familiar with the R Code system and had access to the existing Town Planning Scheme No 5 and the proposed Scheme No 6 and used the documents daily. In addition he had access to "tax maps" which showed lot sizes. These were stored behind the counter and available to identify the land and lot area. He confirmed Mr Bercov's evidence as to the subdivisional provisions and potential relevant to 219 Coode Street. He had no recollection of any inquiry from the plaintiff or Mr Harrison.
Ms Sarah Brown was called by the defendant. She commenced employment at the City in December 1998 and was made a permanent officer at about Easter 1999. Her evidence confirmed some of the evidence of Mr Bercov and Mr Priest but added nothing of significance.

Comment

Put together with the evidence of Mr Hegarty's inquiry being met with wrong advice the plaintiff's evidence suggests the City of South Perth twice gave incorrect advice. That would be surprising. Again a number of difficulties arise accepting the plaintiff's case. She and her husband had no experience of planning and subdivision. A lot might turn on the exact question asked and the reply given. There might also be issues of comprehension of the answer. Clearly the suggestion in the plaintiff's case suggests error by the planning officer. Nothing however, was in writing. Their evidence as a factual level is that they did not know the lot size. The officer brought out a map from which he identified the lot and lot size. No mention however, is made of a second document to identify the relevant R Code. That is also surprising. When complaint was made by letter also I note that no date was given as to the date of the oral inquiry, nor to the officer.

Mr Sweeny

Five months or so later the plaintiff said she received a letter from Mr Geoff Sweeny of Roy Weston Real Estate in South Perth: exhibit 4. In terms the letter said that that firm had customers genuinely seeking property "in your street" suitable for redevelopment, on a cash sale basis and prepared to "make a decision within 48 hours of inspecting the property". Whilst some effort was made to paint the letter as dishonest, it is clearly unspecific as to other details and addressed to the plaintiff at her Mt Pleasant address. The plaintiff acknowledged that she had received similar types of letters in the past which she had ignored. This time she phoned and made an appointment to see Mr Sweeny. The land represented "quite a lot of money … tied up and was not producing very much income."
A few days later she spoke to Mr Sweeny on his own at his offices.
"He told me that he had people who owned the house next door at 36 Thelma Street - - -
Next door to the property you owned?---Yes.
Yes?---He said they wanted to buy one of the blocks on either side and they particularly wanted the corner block. Their plan was to build two units on 36 Thelma Street and a new larger house on the corner block. In order to do that they would need the combined land area of the two blocks.
… I said that, you know, certainly it was a proposition because I couldn't subdivide it so I might as well sell it.
Did you say anything else to Mr Sweeny at that stage? ---Well, I said that I don't have to sell it. I don't desperately need the money and, you know, I was not prepared to haggle, so if I did sell it, it would be take it or leave it; a non-negotiable price."

Mr Sweeny sent a letter: exhibit 5, this time referring to the precise property and assessing its value "in the range of $250,000‑$260,000 with an asking price of $269,000."
She and her husband then "looked at real estate agents' windows in Como and South Perth to get some idea of the property values."
There followed one, two or perhaps three meetings with Mr Sweeny all in June 1999 and on 14 June she signed an authority to sell: exhibit 6. Because Mr Sweeny had said that the purchasers would need the combined land area of the two blocks, she had assumed that 36 Thelma Street was not sufficiently large enough to be subdivided in order to put two units on it.
Exhibit 6 lists the price at $269,000 showing the property as zoned residential with land area of "620". Orally they agreed she would accept $265,000. During their meeting Mr Sweeny "was saying that he had a client, there would be no advertising for the property, there would be no For Sale board put outside the property and there would be no open house situations. He said it will be kept very quiet and nobody would know". This was his suggestion and the sale was eventually so handled.
She then received information from Winslade & Lawrence which upset her. She later received from them a copy of a letter to them from Mr Sweeny dated 15 June 1999 advising them that Roy Weston had "received an unsolicited exclusive listing" of the property and seeking details of the tenancy: exhibit 7. Mr Sweeny explained to her that he had had to send the letter "because it was the law".
Cross-examined the plaintiff said that prior to seeing Mr Sweeny she had no real idea of the value of the block. It was however, her sole substantial investment.
She denied that when she met Mr Sweeny, possibly with Mr Harrison, that Mr Sweeny told her 36 Thelma Street had recently been listed with him and that he had seen the opportunity of selling 219 Coode Street also. She said he said the clients had already purchased 36 Thelma Street. She said that an advertisement they had seen in his office window listing a property for $250,000 appeared to be of 36 Thelma Street. She had not seen a newspaper advertisement for that property published on 19 June 1999: exhibit 21.
She denied that it had been her suggestion that any sale be made without advertising or disturbing the tenants. Mr Sweeny had said he had already got the listing for 36 Thelma Street and would effectively use that as a means of attracting purchasers to 219 Coode Street. The new owners of 36 Thelma Street particularly wanted to acquire her corner block.
She agreed she had received a letter from Mr Sweeny on 16 June 1999: exhibit 22. It read in part:
"As discussed there will be no marketing or advertising at this point. Letter has been sent to Winslade & Lawrence regarding the listing of the property."
She said she was not surprised that it took until 19 July for an offer to be made because Mr Sweeny had said that he was going away for three weeks. She had not known that he had 36 Thelma Street and other properties open for inspection in the area each weekend during that time.
She denied that Mr Sweeny had said that he could see benefit in joining 36 Thelma Street and 219 Coode Street to create a four unit subdivision. Nor did he tell her that 36 Thelma Street could be itself subdivided, that he had sold 36 Thelma Street for $250,000, and that the purchaser was not a developer and not interested in 219 Coode Street. She said she did not know 36 Thelma Street could be subdivided.
She agreed that she thought $265,000 was a fairly good price for 219 Coode Street but only as a single residential block, given what she knew of the sale of 36 Thelma Street.
The planning approval condition had, she had thought, related to approval by the City of plans for a total redevelopment of 36 Thelma Street and 219 Coode Street.
Mr Sweeny had not said that either 36 Thelma Street or 219 Coode Street could be subdivided singly, nor mentioned four unit development together. She had understood that 36 Thelma Street would be redeveloped together with 219 Coode Street as a single lot.
Re-examined the plaintiff said the offer and acceptance she signed on 19 July 1999 was, as far as she could recall, in the same terms as exhibit 23. She said she did not learn the name of the nominee purchaser, Silverose Holdings Pty Ltd, until later. There are a number of differences between exhibit 8 and exhibit 23 although they bear the same date, but substantively exhibit 23 does not name the nominee purchaser whereas exhibit 8 does.
This is one of the issues raised late in the proceedings which bedevilled the trial, but in the end assists little in resolution of the real issues.
Mr Harrison said that when Mr Sweeny's letter of 3 June 1999 arrived, after they had been told 219 Coode Street could not be subdivided, the fact that the letter spoke of an interested cash buyer with a decision within 48 hours of inspection prompted them to list it for sale. They did not however, seek out alternative development sites even though sale of 219 Coode Street would provide a source of cash funds. Nor did they do so at any time after receiving the settlement funds in December 1999. The funds were used elsewhere.
He said he had assumed that reference in the letter to purchasers seeking a property suitable for redevelopment was a reference not to subdivision but to building a new house.

The sale of the property

The plaintiff said that in mid July she received from Mr Sweeny an offer and acceptance form: exhibit 8. The offer form was signed by a Mr Allabadi "and/or nominee" offering to purchase for $265,000. Two conditions were added to the proforma document.
"4.This offer is subject to the purchasers obtaining all necessary statutory approvals for the plans and specifications for the proposed development to the property on or before 90 days from acceptance. The purchasers' covenants to use the purchasers best endeavours to obtain the said approvals.
5.The nominee is Silverose Holdings Pty Ltd."
Mr Sweeny told her that because she "was technically the owner … that [she] would have to sign approving the plans on the block and he said South Perth Council would be in touch with [her]." Her understanding from his previous discussion was that this related to a "total development using the block at 36 Thelma Street" and 219 Coode Street. She said she did not understand it to refer to subdivision of 219 Coode Street.
Her evidence is that she received the version, exhibit 33, under cover of a letter from Mr Sweeny, exhibit 34. Exhibit 33 does not nominate or identify the nominee purchaser.
She later received a letter from Mr Sweeny dated 25 August 1999: exhibit 9, advising that finance had been arranged and that "we are now waiting for the Council approvals."
Towards the end of the 90 days, she said she inquired and was told by the City of South Perth that no plans had been submitted relating to 219 Coode Street. She telephoned or visited Mr Sweeny but he was not available. She spoke to a "Lena":
"She said they're having some problems with their plans and as an alternative would I be prepared to sell a strip of land at the end of the garden instead of selling the whole block. She told me that if I sold that strip of land it would increase the size of the block on 36 Thelma Street and it would provide access from the block into Coode Street. My husband was there at the time because he advised me not to sell it, and I wouldn't have done anyway, so we rejected that offer."
When Lena spoke to her no specific area of land was mentioned nor any price discussed. The plaintiff simply said no to the idea.
As an alternative Lena then asked for a 60 day extension. By letter dated 11 October 1999 Mr Sweeny wrote enclosing a Variation of Contract for: exhibit 10 and exhibit 63. This provides in part:
"The Vendor/s and Purchaser/s AGREE to vary the contract as follows:-
Settlement date shall be within 14 days of all necessary statutory approvals for the Plans and Specifications for the proposed development to the property on or before 60 days from acceptance of this variation to the contract."
It makes no mention of 36 Thelma Street and had been signed by the purchasers. The plaintiff signed it on 12 October adding "No further extension of time will be considered without a price increase." She returned it to Mr Sweeny's office. In mid‑November she again asked the City of South Perth if plans had been submitted, and again was told they had not. She did nothing more. Subsequently Lena rang asking when the tenants were leaving and saying the purchasers had waived the planning approval condition. The plaintiff asked for written confirmation and received a fax, exhibit 11, dated 24.11.1999.
Settlement was effected on 22 December.
Mrs Harrison was recalled to give further evidence on 15 March following the adjournment of the trial from January. Her evidence was essentially concerned with her knowledge of, and execution of, exhibits 8, 23 and 33, all being photo‑copies of an Offer and Acceptance albeit clearly different in a number of ways, relating to the sale of 219 Coode Street by the plaintiff to Silverose Nominees Pty Ltd for $265,000. Their creation and execution was the subject of evidence by Mr Sweeny. It is clear that the methods used by him in their creation caused confusion and in the end, suspicion and is to be deprecated. It may also be capable of being used as a method to avoid applicable stamp duty. The evidence of those matters here is not relevant to any issue which I need to consider other than that it is said to go to credibility. In the end though, I draw no adverse inferences from it. Neither the plaintiff nor Mr Sweeny could give convincing evidence of the sequence of events leading to the existence of three different versions of the Offer and Acceptance. Nothing now turns on the differences.
The plaintiff agreed in cross-examination that she had been angry with Mr Sweeny. Her view was that he had lied to her. She believed he had known the block could be subdivided. However, he had not told her so. She had paid him over $8,000 in fees. However, she did not complain to him or about him to any authority nor taken any proceedings.
Mr Harrison gave evidence that after his wife received Mr Sweeny's letter of 3 June 1999 they discussed it on the basis that the block could not be subdivided. They were interested. He thought he had met Mr Sweeny twice with his wife:
"We talked about selling the house, the price that we wanted, the no need to put the sale signs.
Anything else?---Those types of things. Just – we were very keen because he said he – it was going to be so easy because he had a cash buyer ready to, sort of, go.
Yes?---Who wanted to knock down our house, or the house, and build a house there.
H.H. JACKSON DCJ: Sorry. He said that he a (sic) cash buyer who wanted to knock down the house?---Yes.
MacMILLAN, DR: And build a house there?---And build a house there.
Did he say anything in respect of that issue?---He said it was the next-door neighbours and that they were going to build as house on 219 Coode Street block and then put, sort of, granny flat or units on the one next door.
Did he tell you which property he was referring to when you say, "the one next door"?---In Thelma Street."
As it was the next-door neighbour who was to purchase and in order to avoid upsetting the tenant's there was to be no advertising or signs.
"Did you understand that to be the existing, or old neighbours, or a new purchaser of the neighbour's house?---I don't think he said but I thought – I understood it to be the existing ones.
Did it strike you as odd that if the neighbours wanted your house they wouldn't have asked you for it and avoided paying some thousands of dollars in commission?---Not really because I think most people go through real estate agents.
Did it occur to you as odd that Mr Sweeny was telling you information that was going to pay him a commission and you could have gone around – having learned the information he gave you … the neighbours yourself and saved them some commission and perhaps got a better deal yourself?---It didn't cross my mind.
…
Did Mr Sweeny, at any stage, tell, say in your hearing, that the property at 219 Coode Street was subdivisible?---He said it wasn't subdivisible."
They agreed a non-negotiable asking price of $265,000. He had seen the letter of 9 June: exhibit 5, and the authority to sell: exhibit 6. After the signing of an offer and acceptance he was aware of a condition relating to planning approval being obtained by the purchasers from the City of South Perth. He said he had believed this to be for the building of a house based on what Mr Sweeny had said. Mr Sweeny had said prior to signing that the purchasers "were going to knock down the house … on 219 Coode Street, put a house there and then build a unit or granny flat on the next door block "meaning 36 Thelma Street."
Later, he said, there had been an extension of the time for approval. He and his wife had gone to the offices of Roy Weston South Perth and a lady named Lena had told them that there had "been a problem or something and they were interested in buying just a strip of land where a garage was standing which would mean that the house would still be there but they [meaning the next door neighbours) could put a driveway up the back" of 219 Coode Street to give access to 36 Thelma Street from Coode Street. His wife had not agreed but had agreed to an extension of the time for planning approval for completion of the sale of 219 Coode Street.
Mr Harrison said that after receiving Mr Sweeny's letter of 3 June they made inquiries of local land values and were not surprised on receiving the appraisal dated 9 June. When Mr Sweeny said the neighbours were interested in acquiring 219 Coode Street, Mr Harrison thought he referred to persons who had recently acquired 36 Thelma Street. His impression had been that a house would be built on 219 Coode Street with a unit or granny flat on 36 Thelma Street. He did not know, nor did they enquire, why it had taken 6 weeks for a signed offer to be made. He thought the house on 219 Coode Street was to be demolished and did not know if Mr Sweeny had asked for the key and for inspection. There had been no mention of a four unit development on 36 Thelma Street and 219 Coode Street. There was no mention either of using Mr Sweeny's listing of 36 Thelma Street to attract buyers to 219 Coode Street and thereby avoiding advertising. They had seen an advertisement for 36 Thelma Street in Mr Sweeny's window.
"So … didn't it strike you as odd that this person who is looking to buy your property is now selling his own?---Never really crossed my mind.
…
Didn't strike you as odd that the person who was this buyer of your property, potential buyer of your property, is now selling his or her own?---People buy and sell a lot or used to buy and sell lots."
Mr Sweeny had not spoken of having a listing for both properties. Mr Harrison said he was not aware that Mr Sweeny had homes open on four consecutive weekends in June and July or what price 36 Thelma Street had sold for. He confirmed his wife's evidence about what Lena had said. He was not concerned about the delays in settlement.
He said that Mr Sweeny had volunteered that 219 Coode Street was not subdivisible. When they learned in February or March 2000 that that information was incorrect they had not contacted him.
Mr G P Sweeny, the owner and principal of Roy Weston South Perth and a real estate agent and lecturer in real estate matters at TAFE and Canning College, and formerly a surveyor was called by the defendant. He had worked as a real estate agent in the Como and South Perth areas since 1995 and by 1999 was familiar with the relevant town planning and land subdivision requirements. He had copies of the "tax maps" and R codes in the office. He also kept a diary and a daybook, and the receptionist kept a message book. Relevant entries from each were tendered: exhibit 58.
Initially his firm had obtained a listing authority to sell 36 Thelma Street. This caused him to be interested in a listing of 219 Coode Street as by joining the two lots, it was possible to create a four unit development. He agreed that the letter of 3 June, written to the plaintiff was misleading in asserting that his firm had an identified buyer ready to make an offer. On 4 June 1999 his message book records a message from the plaintiff for him to ring her. On 9 June he sent her an appraisal of the value of the property based on sales evidence of older homes in the area. An appointment was made for her to call which she did and a listing was prepared and signed in the office on 14 June.
He had no actual memory of their conversation. He described his usual practice:
"General practice is the first thing that we talk about is price, the second thing is about the offers, the next thing we talk about is the zoning, the rental, if it's a rental property. When we fill in the authority … that's the brief that we – how we talk to the people. You just go down through that, through the property, where it can be done, what we can do with it. I've written there, Mrs Harrison, they were away for the school holidays. They were very, very clear that he didn't want to lose their tenant.
Whereabouts on the form does it say they didn't want to lose their tenant?----It's not on the form.
All right. Do you have independent recollection of that?----Well, just the way I was told to market the property.
H.H. JACKSON DCJ: Do you remember that?---Yes, I do. We weren't allowed to put any signs up, we weren't allowed to disturb the tenants. Mrs Harrison didn't want to lose her income. That was our instructions.
HANDCOCK, MR: Yes. Do you have any other independent recollection of things that you discussed now that you're talking about those issues?---Well, probably the most important thing is that we didn't really want access to the property because it was going to be sold as a development site. It might have been picked up by an investor who would hold it and later on develop but - - -
Do you recall discussing that with Mrs Harrison?---Yes, I do. The terms of our authority is, you know, very strict in what we have to do.
Yes?---When you can't market or anything like that.
Yes?---But that really wasn't a concern to me because of the – we were just going to contact all the developers and sell it off like that.
He had obtained a listing of 219 Coode Street. He obtained an Offer to Purchase from Mr Allabadi but after 1 September dealt with Ms Ann Elieff. On 27 July the purchaser paid a deposit. On 24 August the purchaser signed confirming that the special condition relating to finance had been fulfilled: exhibit 59. He confirmed that with the plaintiff.
He hoped to sell 219 Coode Street and 36 Thelma Street together to a developer by advertising the latter and directing inquiries also to 219 Coode Street. He wrote to Winslade and Lawrence, the managing agents:
"The practice at those times – our rules of practice is that if we listed a property that was managed by another agent we would have to notify them within 24 hours or if you didn't do that you had to pay them 50 per cent of the commission."
He was criticised on credibility grounds for writing in the letter to Winslade and Lawrence that the listing he had was an unsolicited exclusive listing. Whether or not that was accurate is another matter I think which fails to address the issues before me.
He confirmed that in advertising 36 Thelma Street the zoning or lot size had been mentioned because "all the developers and everyone looking for property to develop … they understand that it is a development site … a duplex development; a two‑unit site."
The house at 36 Thelma Street was "a character home built in the 1930s. It was debatable whether people would renovate or subdivide." On the other hand the house at 219 Coode Street was "just nothing that any developer would keep; any developer. They would just demolish it." The land at 219 Coode Street was slightly smaller and on a corner with a school opposite a bus route on one side, and vehicle lights turning the corner at night. On the other hand, it was easier to develop.

The property at 36 Thelma Street had been open for inspection on successive weekends throughout June with little interest from purchasers.
On 14 July he received an Offer to Purchase 36 Thelma Street for "the Allabadis who were working for Silverose". That was not accepted and the property was sold to Mr and Mrs Nixon. Only one offer was made for 219 Coode Street, that made by Mr and Mrs Allabadi for $265,000. He rang the plaintiff, then called at her Mt Pleasant home in the evening. He was there about an hour. He had no memory of their conversation:
"I would have gone through the offer, explained money, finance and any conditions and it was a very simple offer as far as I was concerned. I know that there was no counter‑offer and everything was – I think we exceeded what we expected to get.
HANDCOCK, MR: in terms of the conditions do you recall what the conditions were? There was finance and you said council approval?---Yes, that's correct. Council approval for development to take place.
…
HANDCOCK, MR: Do you have an independent recollection of discussing the council condition for development approval with Mrs Harrison?---Not 100 per cent.
Can you tell the … court what your practice would have been in discussing with Mrs Harrison such a clause?---Well, I usually allow about one hour to present an offer for everyone to make sure that I have explained everything, all the conditions before people sign it that they know what they are signing. In this case – we are dealing with educated people, it was very clear to me that Mrs Harrison knew what I was presenting to her.
Did you know what the development was that was proposed in the development condition?---Only that there would be a, what we call a duplex development meaning two.
And the buyer would receive from the council approval to do that?---Yes, that's correct. There was a time limit on that.
You knew that?---Yes."
He said the condition relating to the purchasers obtaining statutory approvals was a standard one used by his firm and that his practice would have been to explain that to the plaintiff. The plaintiff signed exhibit 23 and later re‑signed, this time exhibit 8 after the identity of the nominee purchase had been clarified.
Apart from recording the dates of various relevant meetings and events, his records record inter alia the plaintiff's displeasure at his having contacted her managing agents.
He wrote to her seeking a 60 day extension of time for approval of "the development and plans for the proposed development on the property."
He said he had no knowledge of telling the plaintiff or Mr Harrison that the purchasers were having difficulty with their plans and of asking them if they would agree to sell only a strip of their land at the rear to provide access to 36 Thelma Street, or that the purchaser of 219 Coode Street also owned 36 Thelma Street. This is another issue which could only go to credibility.
Cross‑examined he agreed that the purchaser may not have signed the Offer and Acceptance in the office of Roy Weston South Perth. His evidence is that after the identity of the ultimate purchaser and its ACN number became known, that is after 13 August, the Offer and Acceptance was re‑executed and is now exhibit 8 but that he dated it 19 July. Asked about that issue and the stamp duty issues, he said that there was no doubt in his mind that the Allabadis were acting as agents in the initial purchase because Mr Allabadi had spoken of receiving a fee for his work in acquiring the land. He knew they were not the purchasers. He also agreed that he may have met the plaintiff once as well as speaking to the plaintiff by telephone before meeting her to sign the Offer and Acceptance. Re‑examined about diary entries he agreed he probably met her on 8 June.
He was asked about the role of Lena King then a sales coordinator in the office, but not at the time of the trial:
"---Booking, advertising, booking signage, preparing paperwork for all sales representatives for signing, doing title searches, you know just all the necessary paperwork.
…
Is it possible that she dealt with Mr and Mrs Harrison as to the extension of time on the planning condition on 219 Coode Street?---No.
Are you certain of that?---Yes … I don't think it's possible.
Mr Sweeney, is it possible notwithstanding that your signature is on the relevant letter that Lena King actually spoke with the Harrisons in relation to that issue?---There's a possibility she answered a telephone call but she wouldn't give any instructions. She would put something in the message book.
And if the Harrisons came into your office and you weren't available, is it possible that Lena King may have spoken with them on that issue?---No. …
Well, are you absolutely certain of that or is it a possibility that you can't remember?--- Lena King is not the receptionist. She didn't sign her works behind closed doors, so to speak. They may have spoken to the receptionist. If I wasn't there, a message would have been given to me, passed on, but it's just too hard to see Lena King mixing with the public.
So what you are saying is, it's unlikely, but it's not impossible? ‑‑‑It's pretty unlikely."
Mr S Mahmoud was a director of the purchaser of 219 Coode Street, Silverose Holdings Pty Ltd, a property development company. He said the company acquired the property in July 1999 as nominee through Mr and Mrs M Allabadi who negotiated its purchase.
"They said, 'if you're interested,' you know, 'you can take over' because he wanted actually to buy two properties next to each other and he failed to get the other one, so it wasn't too good for him to have that one."
The company had been looking for some 3 or 4 months in the Como and South Perth for property to subdivide and develop. 219 Coode Street was its first such development. On 1 November another director, Ann Elieff signed an application for planning consent from the City of South Perth. The company had investigated but decided for economic reasons against the possibility of building "two single storey" houses on the subdivided lots. Time was running out under the Offer and Acceptance and time for approval had to be extended. He did not know how that had been arranged. They eventually subdivided the land and built two two-storey units. Construction finished in about January 2000. Demolition and the costs of subdivision amounted to $26,000. Mr Mahmoud provided his own labour for 2 months and then for 1 to 3 days per week to reduce costs. The Coode Street unit sold in October 2001 and the other in March 2002. Silverose Holdings Pty Ltd lost money on the development.
Cross‑examined Mr Mahmoud agreed that the company had not been registered until 13 August 1999: exhibit 54. Mr Allabadi had made all the purchase arrangements. His own memories of dates and documentation were extremely uncertain. He had never met the plaintiff or Mr Sweeny.
An application for planning consent was subsequently made by Silverose Pty Ltd in respect of 219 Coode Street in November 1999: exhibit 38. It described the proposed development as being two town houses. Consent was granted: exhibit 39. Mr Bercov said that the consent was incorrectly expressed as being for two grouped dwellings. Later the consent was amended to correctly consent to development of two single houses: exhibits 40 and 41.
The defendant called Mr G H Grayston, a retired architect, who with his wife had owned the 36 Thelma Street property between September 1995 and 14 September 1999 as an investment property. He had given Mr Sweeny an authority to sell it for $265,000 on 29 May 1999: exhibits 44 and 45. He had been aware that potentially the property could be subdivided given the zoning. That was discussed with Mr Sweeny and taken into account in fixing the price. It had also been discussed with the City of South Perth previously. The authority to sell listed its area as 637 square metres. He had considered subdividing it himself:
"I felt that the property maintained more value by leaving the house on it because it gave the opportunity to a prospective buyer of retaining the house and developing it as a single block which is always an option, rather than demolishing the house and subdividing it."
The property was advertised for sale on 19 June 1999: exhibit 21, for $269,000 with his agreement and showing the R 30 zoning, and on 26 June 1999: exhibit 46 showing the lot area. On 3 July it was advertised for $259,000: exhibit 47, and on 10 July for $250,000: exhibit 48. On 14 July he received an offer from Mr M Allabadi: exhibit 49. The purchaser reserved the 'right to rescind this contract if the purchasers are unable to enter into an unconditional contract to purchase 219 Coode Street Como within 21 days of acceptance.' The offer in the end was not accepted after unsuccessful negotiations about the price. Later another offer was made on 18 July by a Mr and Mrs Nixon for the asking price of $250,000: exhibits 50, 51 and 52. Settlement was effected on 14 September: exhibit 53.
Mrs Lena King was called by the defendant. She was employed at Roy Weston South Perth for 10 years until July 2003 as a secretary and office assistant. She did not recall on any occasion being involved in negotiating an extension of time on a contract, although from time to time she was present when documents were signed. She recalled the names of the Allabadi's but did not recall meeting the plaintiff or her husband, or discussing an extension of time or a contract with them. Her memory was not recalled by being shown a copy of the plaintiff's chronology of events. She was involved in dealing with clients only in simple tasks requested of, and explained to her by the sales representatives. On occasion she also acted as receptionist. Her task however, essentially was to process files and paperwork.

Comment

There are some matters of a factual nature arising from contrasts in evidence between that of the plaintiff and of Mr Sweeny. In general, it can be said that the plaintiff impliedly and expressly accused Mr Sweeny not merely of incompetence but of dishonesty. This ranges from an attack on the wording of his initial letter to the plaintiff and of his letter to Winslade and Lawrence, to an assertion that he hid from the plaintiff the subdivisional potential of their land, and the nature of his involvement in selling the land and the adjoining land, and quite separately, assertion that he was party to fraud on the State revenue.
There are however, again difficulties in accepting the plaintiff's position. The price achieved for 219 Coode Street compared with that achieved for 36 Thelma Street, given Mr Grayston's evidence, suggests that it was sold and purchased for subdivisional approval. So also does the existence of the special condition on the offer and acceptance concerning approval. The plaintiff's account of agreeing to sell because of the existence of a known cash buyer contracts with her inaction when an offer was slow to arrive and her agreement to extend time for approvals.
Despite extensive examination about the times, dates, places and sequence of execution of the various documents, exhibits 8, 23 and 33, in the end I can draw no useful conclusions therefrom as to the issues to be decided by me. Similarly I am left with no useful conclusions as to Mr Sweeny's evidence arising from either the criticised letters or the issue of stamp duty. The issue of a conversation with Lena King is puzzling, but adds little to the issues before me whichever view is taken of that evidence. I am left with the conclusion that Mr Sweeny gave honest evidence to the best of his ability. No motive was shown as to why he would mislead the plaintiff. Rather the contrary. I do not accept that he led the plaintiff or her husband to believe the property at 219 Coode Street could not be subdivided either positively or by omission.
Given her various, now expressed concerns, it is strange that she has at no stage either complained to Mr Sweeny or about him to any authority.

The complaint to the City and its reply

The plaintiff drove past the property in February or March 2000 and noticed that two concrete slabs were being laid, indicating the property had been.
subdivided. She was furious and went to the City offices again, asking to speak to someone from the planning department to make a complaint. She spoke to a woman who told her the land was subdivisible and to make any complaint in writing. She wrote, exhibit 12, on 25 April:
"I wish to register a complaint about South Perth City Council Planning Department.
I was the owner of the premises situated at 219 Coode St, Como. During 1999, I considered developing the block using the Ross North Building Company. A representative telephoned the Planning Department and was informed that the land was zoned for a single dwelling only. Shortly afterwards I visited the Council offices and saw a young man from Planning who produced a large map and told me that the block was zoned for a single dwelling.
On the advice that I could not subdivide and develop the land I sold it. I now find that two residences are being built on the land. When I asked at the Council Office how this was possible, I was told that the area was divisible and that I was given the wrong information not once but twice. The incompetence of the Planning Officers on two separate occasions has cost me thousands of dollars, either in the sale of the block or as a developer.
I trust you will investigate this matter and inform me of your findings at your earliest convenience."
She received a formal reply dated 1 May 2000, exhibit 13, and a substantive reply dated 3 August 2000 from Mr Bercov, the City Planning Manager: exhibit 14:
"Firstly, I confirm that the abovementioned lot is zoned Residential with R30 density coding under the current Town Planning Scheme No. 5 and that the lot area is 620 sq.metres. Single Houses require an average of 300 sq.metres of land per lot (minimum of 270 sq.metres), while Grouped Dwellings require 333.3 sq.metres of land per lot. This means that 2 Grouped Dwellings could not be permitted, however, 2 Single Houses are permitted, based on the actual lot area.
Any enquirer between September 1998 and August 1999 also should have been advised that the site was proposed to be rezoned to R15/30 under the proposed Town Planning Scheme No. 6. During that period, Council's Planning Policy No. P34 required the Planning Officers to consider the proposed new density coding if it was lower than the existing coding. This necessitated consideration of the proposed R15/30 coding. Under the proposed No. 6 Scheme, the specified performance criteria to qualify for R30 density development make subdivision into two Single House lots difficult, although not impossible. Under those criteria, whether the lot was subdivisible or not, depended on several design aspects.
Regarding the advice you received prior to selling the land, it is difficult to determine who gave this incomplete advice. My enquiries to currently employed staff confirm that the incomplete advice was provided by a temporary officer who is no longer employed by this Council. Regardless of this, I regret that the particular officer's advice was incomplete, and I have taken steps to ensure that a similar situation does not occur again."
I accept Mr Bercov's evidence, outlined earlier, as to the intent and background to this letter. She then engaged solicitors in this matter.

The plaintiff's intentions concerning use of the land and reliance on advice from the defendant

The plaintiff is required to prove that the defendant knew or ought reasonably to have known that the information or advice was being communicated to the plaintiff for a purpose likely to lead the plaintiff to rely on it and resulting therefrom to enter or decline to enter into a course of conduct of the kind actually entered into. Without that there is no duty of care. It is not sufficient for the plaintiff to show a reasonable foreseeability of such reliance: Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 71 ALJR 448. If such a duty of care arose the plaintiff must prove the defendant to have been in breach thereof by reason of its negligence.
The plaintiff's evidence is that she had been interested in subdividing the block and either building two homes on the subdivided lots or selling the lots, not of leasing units to tenants, that she would not have sold the land as she did had she known the land was subdivisible, and that she sold it as she did relying on the advice of the defendant that the block could not be subdivided. She had never considered renovating the existing house on the block.
Cross-examined the plaintiff agreed that the development of the site in this way required the borrowing of bank funding.
The plaintiff agreed that during 1999 she had not pursued the question of a subdivision or land development although during that time the only change had been she said, that she had been advised that the Como property could not be subdivided. She said it was simply not pursued at that time. Other work commitments arose. After receiving the letter from Mr Sweeny in June they were involved in the sale of the Como property. Settlement did not occur until late December. By that time they were disillusioned with the real estate investment. She was not prepared to invest in other things until the proceeds of sale came through. She was aware of the risks involved in selecting the right block and the right development, at the right price, but was not actively considering the matter.
Since the events of 1999 neither the plaintiff nor her husband have been involved in any real estate investment or development. She agreed that from the sale they had received cash which could have been so used but that their experience in this matter had made real estate development unattractive and they had invested elsewhere. The experience had been unpleasant.

Comment

The plaintiff's investment history since these events of course may be explicable by what she says was her experience therein. However, its effect is also to raise real issues as to whether had she been given correct advice by the City of South Perth, she would have been induced thereby, in reliance on it, to enter into subdivision development and sale of the land. The evidence at trial makes it clear that the mere fact of sub‑divisibility is but the first step before many other hurdles are also overcome. Mr MacMillan accepts that any damages could only be for loss of a chance. I would rate that chance as having been no better than one in three. Even if the plaintiff established her claim on liability the next question would be whether she has suffered any loss.
A question in any event would arise as to whether as a matter of law, such advice in such circumstances could give rise to a duty of care and the possibility of reliance by the plaintiff.
On the authority of the High Court of Australia's decision in L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225, I think the answer must be no. I do not accept the distinction made by counsel for the plaintiff that in the present case the advice was given by an unidentified officer in person at the defendant's offices rather than by telephone. Nothing was sought for or put in writing. There is no evidence, in any event, that the defendant or its officer was or should have been aware that reliance was likely to be placed on the advice. It was put to me by Mr MacMillan that the general approach to this issue was affected by the various judgments in Perre v ApandPty Ltd (1999) 198 CLR 180 to which he referred me. I do not find the case decisive on the question here before me. Esanda Finance Corp Ltd v Peat Marwick Hungerfords (supra) is more helpful but I think supports the defendant.
In light of my other findings however, those issues fall away.

Provisional assessment of damages

I do not propose to canvas in detail in these reasons the very considerable body of evidence – oral and written – taken in respect to valuation matters.
Cross-examined the plaintiff agreed that from previous experience with their Mt Pleasant home valuation is not an exact science. She also agreed that she and her husband are not risk-takers and before embarking on it, would want to be meticulous in ensuring that any venture would return a profit. She agreed that there were risks involved in such ventures.
Mr Harrison, like the plaintiff, acknowledged the risks of investing in land redevelopment projects, their lack of experience and conservative instincts in money matters.
Subsequently the new owners of the land built and sold two individual houses on the subdivided lots. The house on the lot known as 219 Coode Street was advertised for sale at $475,000, that at 221 Coode Street for $485,000: exhibit 15.
It is apparent that in looking at the commercial feasibility of land development, a number of key variables are involved. One is the pre‑subdivision value of the land, another is the costs of demolition, subdivision, and site works. Then there are various possible forms of developments – sale as vacant lots, or as single storey, or two storey houses. In the latter cases there is the cost of building, itself made up of many variable items in each case, including interim or holding charges and the costs of advertising and sale. The expected sale prices must be estimated. Finally from any gross profit must be deducted an appropriate allowance for taxation.
Mr D M Hall, a certified practising valuer, was called by the plaintiff. He had prepared reports dated 11 February 2002, exhibit 28, and an undated supplementary report, exhibit 29. He also produced a graph of Perth House Prices 1972 ‑ 2002, exhibit 30, an alternative assessment of the profitability of development on 219 Coode Street, exhibit 31, and a chart entitled analysis of a selection of known sales as at 19 July 1999.
Exhibit 28 concluded that a fair and reasonable profit margin for the development of single dwellings on a subdivided 219 Coode Street was $44,000 and valued the unsubdivided land value of 219 Coode Street at the relevant time at $290,000.
Revised figures reducing the unsubdivided land value to that achieved by the plaintiff of $265,000 increased the reasonable profit margin to $65,000‑$69,000. In general Mr Hall can be said to have been more conservative in assessing the costs of development than Mr Hegarty and more optimistic than Mr Johns or Mr Logan, called by the defendant.
A good deal of court time was spent on the issue of whether Mr Hall was correct in this valuation. Frankly, given the inexact and opinion‑based nature of land valuation, I am not persuaded that his opinion can be described as either correct or incorrect. Given the other findings I have made however, it becomes immaterial.
Mr Hall made efforts to cost not only the land value, but subdivision, demolition, site works, building and fitting out costs and to estimate sales returns on the two resulting lots in a variety of vacant, single storey and double storey modes. These are all estimates. They are made further uncertain by the lack of knowledge and experience of the plaintiff and her husband and then necessary reliance on third party advisers, and the vagueness of their plans or intentions.
The defendant called Mr A S Johns, a real estate agent with experience also as an investor, land developer and project manager, who was active in 1999. He gave evidence of some of the key risks for undertaking small land subdivision projects – costs include land acquisition, survey, demolition, building, and interest holding costs. The length of time involved in the development affects the latter as do interest rate changes. He estimates a period of nine to 12 months. The state of the property market both varies over time and is difficult to judge both as to price and other variables. Of course taxation is usually payable on any profits. He described an industry standard in budgeting for a new small subdivision project as aiming for 20 per cent gross return on expenditure. He did not accept that the valuations and calculations provided by Mr Hall or Mr Logan were sufficient to justify a subdivision of 219 Coode Street for sale as vacant lots or development thereon either of single storey or double storey houses in 1999. The expected gross percentage returns were too low, and "some costs … were probably not taken into account". Asked about the costs of subdivision including demolition, sewerage and site costs, he said these varied and could be expected to be more or less than $20,000. A project management fee on a small project could be $10,000 to $15,000. He would expect a first time developer to spend 150 to 200 hours or more of their own time on the project:
"Probably longer; either that or they are going to have to engage somebody else to do it, because there is a lot involved in subdivisions and the average person coming in off the street, they have a very steep learning curve over the first development, …".
Cross‑examined he did not agree with Mr Hall's view that an estimated gross return of five to eight per cent on a small subdivision project would be sufficient for the project to be viable. He did not accept Mr Hall's figure for expected site costs of $5,000 or Mr Logan's of $7,500. His evidence on this is closer to that of Mr Hegarty and Mr Mahmoud.
Mr P J Logan, a licensed valuer, was called by the defendant. He specialises in valuation of subdivisional land and is also involved in some small scale building. His reports are exhibits 65, 66 and 67. He retrospectively valued 219 Coode Street as at 19 July 1999 at $275,000 as a potential subdivision site, and at $250,000 as a single residential lot. The actual sale price of $265,000 was explicable only on the basis of sale with subdivisional potential.
As to the viability of building projects at that time, he commented:
"… one of the particular circumstances of the market place in 1999 and 2000, was the fact that GST was looming to commence in July 2000; thus there was a lot of risk‑building activity happening in certain locations. There was, sort of, an urgency to complete projects and there was a cost‑push on projects and I guess, you know, there was uncertainty as to when you'd finish a project. So in my judgment unless a project was showing a reasonable good profit, I think there would be some prudency in, sort of, reconsidering a development proposal."
He made estimates of the profitability of various development possibilities of using 219 Coode Street. Essentially he regarded potential gross returns as too low to justify the risks involved in such developments at the time.
Only a simple subdivision into two vacant lots was financially feasible at the time for an owner‑developer of 219 Coode Street, given the risks of the construction process at the time.
He agreed that in suburban land valuation at the time, a margin of error of up to five per cent either way was reasonable in many cases. He allowed for the costs of demolition, survey and subdivision through to title, an amount of $15,000.
In terms of the cost of building two houses on the subdivided land he disagreed with Mr Hall about the appropriate technique and information to be used in estimating costs and also in respect of the actual resulting figures in a number of respects.
The market in land for development flattened after December 1999 because of the then forthcoming introduction of the Goods and Services Tax. The market for unit development sites and projects dropped in late 2000 and did not recover until late 2001.

Comment

It is difficult to assess the plaintiff's prospects of making a profit from any subdivisional development of the land into which she had entered. In fact Silverose Holdings Pty Ltd did so and lost money. At best, a profit might have been made but given the plaintiff's inexperience that would probably have been modest. Any award of damages would then have to take account of taxation liability. Provisionally, were liability to be established I would allow $15,000.

Conclusions

The plaintiff's case to be sustained would require findings that:
1.Mr Hegarty, for whatever reason, provided her with wrong information;
2.The City of South Perth did likewise; and
3.That Mr Sweeny did not disclose otherwise.
Failing all three, the plaintiff's claim that she relied on the City's negligently wrong advice would fail. Such a coincidence of events is highly unlikely. The plaintiff and her husband were then and at trial inexperienced and to a degree naïve in these matters. There has I find been a degree of confusion and reconstruction and perhaps wishful thinking in their understanding of events.
The onus is on the plaintiff to satisfy the Court on the balance of probabilities. I am not satisfied to that standard that the City gave such advice as that for which the plaintiff contends in answer to the question for which she contends. Nor am I satisfied that a duty of care arose. Even if it had, given the evidence of Mr Sweeny, which I accept, the terms of the offer and acceptance, and the price achieved for the land, I am not so satisfied that any such advice if given, was relied upon. The other matters of difficulty discussed under the Comment headings above reinforce that conclusion.
Nor am I satisfied that had the plaintiff been so reliant she would have embarked upon such a subdivision development and even if she had she may but only have made a modest profit for which I have made a provisional assessment of damage.

Costs

I will hear from counsel about costs. The case was characterised by a good deal of unhelpful and unnecessary evidence and took longer than it should at trial.