Highland County Pty Ltd v City of Newcastle; Highland County Pty Ltd v Asquith & de Witt Pty Ltd; Asquith & de Witt Pty Ltd v City of Newcastle

[2008] NSWDC 304

CITATION:	Highland County Pty Ltd v City of Newcastle; Highland County Pty Ltd v Asquith & de Witt Pty Ltd; Asquith & de Witt Pty Ltd v City of Newcastle [2008] NSWDC 304
HEARING DATE(S):	10-13 December 2007, 21-24 April 2008
JUDGMENT DATE:	22 December 2008
JURISDICTION:	Civil
JUDGMENT OF:	Sidis DCJ
DECISION:	On the claim against Newcastle City Council, plaint No 249/03 1 Verdict for the defendant. 2 The plaintiff is to pay the defendant’s costs of the proceedings. On the claim against Asquith & de Witt, plaint No 145/06 1 Verdict for the defendant. 2 The plaintiff is to pay the defendant’s costs of the proceedings. 3 Verdict for the cross defendant on the cross claim. 4 The cross claimant is to pay the cross defendant’s costs of the cross claim. On both actions: 1 The orders for costs are suspended until 6 February 2009 to allow any party to list the proceedings for further argument in respect of those orders. 2 The exhibits will be retained until 6 February 2009 or until further order. Reasons published.
CATCHWORDS:	POWERS OF COUNCIL UNDER S 94 OF ENVIRONMENTAL PLANNING & ASSESSMENT ACT 1979 - negligent misstatement - conduct of council staff in proposed funding arrangement - whether in the nature of information or advice - terms of retainer of town planner - implied terms - whether loss or damage suffered - measure of damage
LEGISLATION CITED:	Environmental Planning & Assessment Act 1979
CASES CITED:	Allsands Pty Ltd v Shoalhaven City Council (1993) 29 NSWLR 596 Astley v Austrust Ltd (1999) 73 ALJR 403 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 Heydon v NRMA (2000) 51 NSWLR 1 San Sebastian Pty Ltd v Minister Administering the Environmental Planning Act (1986) 162 CLR 340
PARTIES:	249 of 2003 Highland County Pty Ltd (Plaintiff) The Council of the City of Newcastle (Defendant) 145 of 2006 Highland County Pty Ltd (Plaintiff) Asquith & de Witt Pty Ltd (Defendant-Cross claimant) The Council of the City of Newcastle (Cross defendant)
FILE NUMBER(S):	Newcastle 249/03 & 145/06
COUNSEL:	R J Marshall (Plaintiffs) P T Taylor SC - JTG Gibson (Defendant - Cross Defendant - Council of the City of Newcastle) S Glascott (Defendant-Cross Claimant Asquith & de Witt Pty Ltd)
SOLICITORS:	Bilbie Dan (Plaintiffs) Moray & Agnew (Defendant - Cross Defendant - Council of the City of Newcastle) DLA Phillips Fox (Defendant-Cross Claimant Asquith & de Witt Pty Ltd)

JUDGMENT

The Claims

1 The plaintiff, Highland County Pty Limited, claimed against Newcastle City Council, the defendant in proceedings 249/03, for losses it claimed to have suffered in reliance upon representations made by the Council in the course of the development by Highland County of land at Fletcher, a Newcastle suburb. The basis of the claim was negligent misstatement by the Council concerning its powers under s 94 of the Environmental Planning and Assessment Act 1979.

2 Highland County claimed against Asquith & de Witt Pty Limited, the defendant in proceedings 145/06, breach of contract and breach of duty of care in the performance of the professional town planning services that it provided to Highland County. The basis of the claim was that Asquith & de Witt failed to advise Highland County of the limits on the exercise by the Council of its powers under s 94 of the Act.

3 The Council denied liability, loss or damage and claimed contributory negligence by Highland County.

4 Asquith & de Witt denied liability, loss or damage and claimed contributory negligence by Highland County and cross claimed against the Council, claiming contribution or indemnity.

Chronology

5 Highland County was one of a number of companies associated with the County Property Group Pty Limited. The claims arose out of the development by Highland County of land at Fletcher, a suburb within the local government area administered by the Council.

6 The County Projects Group acquired six options to purchase land from Dr Brian Hardie on 31 March 1995. The options covered an area of 63 hectares of land adjacent to Minmi Road. This land together with other land holdings of Dr Hardie and Coal & Allied was situated within one water catchment area. A creek, into which water from surrounding areas drained, ran through the land under option.

7 The land included in the six options was estimated to be capable of development into 600 residential lots. There was potential for development of other parts of the Dr Hardie’s land for residential purposes but little prospect of similar development of the Coal & Allied land.

8 The potential for development of Dr Hardie’s land into a substantial area of residential housing caused the Council to consider issues related to stormwater run off and water quality that would affect the catchment both within the area of potential development and downstream where water from the catchment flowed into the Wentworth Creek and the Hexham Wetlands.

9 In 1995 County Management engaged Patterson Britton & Partners Pty Limited, consultants, to prepare a conceptual stormwater management strategy based upon the development of the land within the six options. Patterson Britton reported in July 1995, proposing that provision be made within the creek bed for six control ponds of varying sizes.

10 On 10 October 1995 the Council adopted Development Control Plan 42. The Development Control Plan came into force in February 1996. It dealt with the land covered by the six options and adopted the Patterson Britton stormwater drainage concept plan.

11 Highland County exercised two of the options.

12 The first related to the land in certificate of title folio identifier 22/860243, known as Super Lot 1. Highland County lodged a development application for the subdivision of Super Lot 1 on 14 May 1996.

13 The second related to the land in certificate of title folio identifier 21/860243, known as Super Lot 2. Highland County lodged a development application for subdivision of Super Lot 2 on 28 November 1996.

14 Development consents were issued on 28 July 1996 and 26 February 1997. The development consents provided for subdivisions substantially as detailed in Development Control Plan 42.

15 Further development of the stormwater drainage design was undertaken by Patterson Britton and refinements were made after discussion with the Council’s consultants WBM Oceanics Australia.

16 As a result of further discussions agreement was reached between Highland County and the Council that the stormwater drainage and water control requirements for the development of the land covered by the six options and by Development Control Plan 42 would be met by the provision of one water quality control pond on land to be transferred to the Council.

17 The Council’s agreement to the proposal was set out in a letter to Highland County dated 30 June 1997. It provided for the transfer to the Council of lots 34 and 35 in deposited plan 869101 and for the classification of that land as Operational Land during the period in which the water quality control pond and various recreational facilities and other embellishments were to be constructed by Highland County. The transfer of the land was accepted as meeting condition 17(b) of the first subdivision/development consent imposing a requirement for s 94 contributions for local open space. The letter also stated:

The value of future works to be carried out on the subject land will be considered in determining the extent to which Section 94 contributions for subsequent stages of the estate are satisfied.

18 Title to lots 34 and 35 was registered in the Council’s name on 1 December 1997.

19 The Council approved the design philosophy for the water quality control pond in July 1997 and authorised the commencement of detailed design. Subdivision work proceeded with a temporary arrangement to deal with stormwater. Arrangements were made with Dr Hardie to access areas of his land upon which part of the proposed water quality control pond was to be constructed.

20 The County Projects Group did not exercise any of the remaining four options. Mr McMurray agreed that by the end of 1996 it was accepted that Highland County would probably not proceed to exercise the remaining options although until the end of 1997 it had not abandoned entirely the prospect that it would develop some of the land covered by those options.

21 The Council required that Highland County draft a s 94 contributions plan to deal with the levying of contributions required to reimburse it for the additional costs incurred in building a water quality control pond that exceeded the needs generated by the area of land under development by Highland County. For the purpose of providing an example of the requirements of the plan, Mr Brett Stein, a town planning officer of the Council, provided to Mr McMurray a copy of a s 94 contributions plan adopted by the Council to fund the construction of a roundabout at Beresfield.

22 Highland County retained Asquith & de Witt to prepare the draft s 94 contributions plan.

23 The Council approved the engineering drawings for the water quality control pond in February 2000 and construction work commenced in late April 2000. Construction work was completed in June 2000.

24 The draft s 94 contributions plan was submitted to the Council in April 2000. It followed very closely the model provided by the Beresfield roundabout plan.

25 The plan was placed on public exhibition in September and October 2000.

26 A document, presumably sourced from the Council, undated and the author of which was not identified, indicated that legal advice was sought from the Council’s solicitors in February 2001 in respect of the draft s 94 contributions plan.

27 On 5 July 2001 the Council wrote to Highland County advising:

Newcastle City will not be proceeding with implementation of a Section 94 Contributions Plan for the water quality control pond constructed by the County Property Group at Fletcher.

28 The letter stated that the Council had legal advice to the effect that it could not legally create the proposed s 94 plan.

The claim against Newcastle City Council

29 Highland County’s claim against the Council was:

1 The Council proposed and then required through the development consents issued on 23 July 1996 and 26 February 1997 that Highland County provide an integrated stormwater strategy through the construction of a single water quality control pond capable of accommodating all predicted stormwater from the land within the catchment.

2 The Council represented that it would adopt a contributions plan in the exercise of its powers under s 94 of the Act that would permit it to secure contributions from other landowners who would benefit from the provision of the single water quality control pond and to reimburse Highland County for the additional costs of constructing the water quality control pond.

3 In reliance upon this representation Highland County entered into a deed dated 8 May 2000 with Dr Hardie that was varied in March 2001 and constructed the water quality control pond thereby incurring additional cost.

4 The s 94 contributions plan as proposed was beyond the power of the Council.

5 On 5 July 2001 the Council advised Highland County that it did not propose to proceed with the s 94 plan because it was beyond power.

30 It was apparent that the Council and Highland County proceeded on the bases that the proposed transaction was of mutual benefit, that it could be validly implemented and that the Council’s staff fully intended that a s 94 contributions plan would be placed before the Council with strong prospects that it would be adopted.

31 It was also apparent that at the time of conception of the proposed transaction, the parties proceeded on the assumption that Highland County would develop the remainder of the land covered by Development Control Plan 42, making the adjustment of s 94 contributions a relatively simple exercise. Mr McMurray agreed that the Council was never informed that Highland County had abandoned its development prospects for the balance of the catchment.

The power issue

32 It was conceded by Highland County that if the Court found that the Council had power to enter into proposed the transaction its claims against the Council must fail.

33 As a preliminary issue therefore it was necessary to identify the terms of the proposed transaction as established by the evidence.

34 Those terms were contained in:

1 The Council’s letter to Highland County dated 30 June 1997, providing for dedication to the Council of part of Highland County’s land with the right of entry for the purpose, inter alia, of:

ii) constructing water quality control ponds, associated drainage structures and pipe work in accordance with details to be approved by Council;

2 The draft Newcastle City Council Section 94 Contributions Plan as amended 2000 relating to Blue Gum Hills that provided for contributions to be based on the cost to Highland County of $808,715 of construction of the water quality control pond and stated:

Facilities have been provided up-front and are required as soon as initial development commences. Facilities have been provided by development and will be recouped by Council as development proceeds to the extent of development (consistent with council’s credit policy as detailed in Section 2.11). Contributions will be indexed each quarter (as detailed in Section 2.8).

35 The result was, consistent with Mr McMurray’s evidence and not challenged by the Council, that the arrangement with Highland County involved:

1 Transfer to the Council by Highland County of part of its land.

2 Highland County having a right of access to the land for the purpose of constructing the water quality control pond.

3 Collection by the Council of s 94 contributions from subsequent developers of land within the catchment that would be applied to reimburse Highland County for part of the costs it incurred in constructing the water quality control pond that were additional to those it would have incurred had it met the stormwater and water quality control needs generated by its development of Super Lots 1 and 2.

36 Highland County’s claim was based on the principles set out by Priestley JA in Allsands Pty Limited v Shoalhaven City Council (1993) 29 NSWLR 596 where he made the following points concerning s 94 of the Act:

1 In recouping costs of existing public amenities or services, the calculation of the contribution to be paid by an applicant for development consent was to be made by reference to the actual cost, plus interest, to a council of the provision of the amenity or service rather than a figure arrived at by depreciating its current day value as an asset or the current day cost of construction.

2 The principle was explained by Justice Priestley at 606/607:

The monetary contribution to be made by the applicant for consent is a cash amount; this of course is a fairly neutral consideration, but fits in with the cash notions carried by the words that follow it. The first of these is “recoupment”, which in its context carries a strong idea of getting back something paid out. The other word, “cost”, also usually carries the meaning of an amount paid out. Other meanings of the words are available in particular contexts, but there is nothing in the relevant context of the section which to me plausibly suggests anything other than the requirement of a contribution to be made by an applicant for consent “towards” (which in its context I take as meaning calculated by reference to) the amount paid out in providing the public amenities or services. (at pages 606/607)

3 S 94(2A), now s 94(3), referred to the historical cost of the amenity or service, being the amount the Council actually paid out.

4 The cost to the Council did not include expenditure of subsidies received from State Government agencies. At 608 Justice Priestley said:

Contribution towards recoupment of cost seems to me to be directed towards cost actually borne by the Council. Section 94 entitles the Council as the provider of the amenity or service to impose conditions requiring contributions towards recoupment of the costs. In cases where, by arrangement with the government, the Council was never liable to anyone for payment of part of the cost of a work, the power to impose a condition requiring contribution towards recoupment of cost cannot be referable to a cost not incurred by Council.

37 It was acknowledged by the Council that it did not have power to levy contributions under s 94 to meets costs of infrastructure for which the Council itself was not liable. The Council argued that Highland County’s claim must fail because, consistent with the opinions of Mr Mackay and Mr Brindle, town planning experts, the Council could have exercised that power by accepting liability for the additional costs of constructing the water quality control pond in a number of alternative ways.

Findings

38 The document put forward by Highland County for adoption by the Council dealt with only part of the proposed transaction and, standing alone, it imposed no liability on the Council to meet any part of the costs of constructing the water quality control pond. It therefore infringed the principles set out in Allsands and could not validly be adopted by the Council.

39 The result was that the Council did not have power to enter into the transaction represented solely by the s 94 contributions plan that was before the Council when it withdrew from the transaction.

40 To arrive at a position where the Council could validly reimburse Highland County its additional costs it was imperative that in some form it accepted liability for those costs. Had this step been taken, the Council could, as agreed by Mr Mackay and Mr Brindle, validly proceed with the proposed s 94 contributions plan. There was no evidence that the Council proposed to do this before or after July 2001.

41 The result is that I find that the Council did not have the power to proceed with the s 94 contributions plan.

Negligent Misstatement

42 The negligence pleaded against the Council was that:

1 It held out to Highland County that it had special knowledge.

2 It was aware that Highland County relied on its advice in respect of the s 94 contributions plan.

3 It represented that if the water quality control pond was built by Highland County, the Council would adopt a s 94 contributions plan.

4 It owed Highland County a duty to give accurate advice concerning its powers under s 94 of the Act to impose conditions of consent in the nature of compulsory capital contributions towards the construction of the water quality control pond upon subsequent developers of land within the catchment.

43 The breach of the Council’s duty of care was said to be wrongly advising Highland County that the s 94 contributions plan was within its power. In order to succeed in its claim therefore it was necessary that Highland County establish precisely the terms of the advice given by the Council and that the advice was wrong.

44 Highland County’s claimed that the Council’s negligent misstatement arose out of the following:

1 The Council had expertise in the preparation of s 94 contributions plans and employed staff whose functions were to prepare and steer such plans through the Council.

2 The Council represented that it would adopt a s 94 plan that would be valid notwithstanding that it did not involve the Council’s acceptance of liability for the cost of the water quality control pond.

3 The Council provided Highland County with a copy of the Beresfield roundabout contributions plan as a guide or precedent to what was required.

4 The Council was aware that Highland County relied on its advice in proceeding with the construction of a water quality control pond to service the whole catchment.

5 The Council failed to alert Highland County to problems with the proposed transaction.

6 Had it been told, Highland County would have obtained advice on its alternatives either as to the form that the transaction should take or as to the infrastructure required to meet only the requirements of its own development.

7 Mr McMurray was an experienced developer with access to appropriate professional consultants and accustomed to liaising with appropriate government authorities.

8 Alternatives were available and a person with Mr McMurray’s experience could have arrived at a solution.

Findings

45 Neither the law nor the evidence supported Highland County’s position.

46 In San Sebastian Pty Limited v Minister Administering the Environmental Planning Act (1986) 162 CLR 340 at 372 Brennan CJ set out the elements, all of which must be satisfied, to establish that a defendant owed a duty of care in making a statement or giving advice. These principles were repeated by him in Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241. They were:

1 The representor gave information or advice on a serious or business matter.

2 The advice was given with the intention to induce the representee to act on it.

3 The duty of care arose in such circumstances where three conditions exist:


(a) the representor knew or ought to have known that the representee would trust in his or her special competence to give that information or advice;

(b) it was reasonable for the representee to accept and rely on the information or advice;

(c) it was reasonably foreseeable that the representee was likely to suffer loss if the information was incorrect or the advice unsound.

47 The evidence did not establish that the Council gave information or advice on the elements of the transaction necessary to put in place a valid s 94 contributions plan.

48 The evidence was that a Council officer, Mr Stein, suggested that a s 94 contributions plan would be the appropriate means by which Highland County could recover reimbursement of its additional costs. Aside from providing a copy of the Beresfield contributions plan as a model for the form of the plan to be adopted by the Council, it was clear that it was left to Highland County to undertake the work necessary to put before the Council a s 94 contributions plan that it could validly adopt.

49 I do not accept that merely by passing on to Highland County the Beresfield plan, the officers of the Council with whom Highland County dealt directly represented that they had particular expertise.

50 Highland County did not establish that it relied on the special competence of any Council employee to give information or advice in respect of s 94 contributions plans. Highland County sought its own specialist advice by retaining Asquith & de Witt to undertake the specialised task of preparing the contributions plan.

51 It could not be said that it was reasonable that Highland County rely on the limited information or advice provided to it by the Council’s planning officers.

52 As to foreseeability, the risk that materialised in this case was that the Council would not proceed because it could not validly do so. I reject the proposition that the risk that Highland County would submit a s 94 contributions plan that could not validly be adopted was foreseeable.

53 I find therefore that the Council did not in the circumstances of this case breach any duty of care that it owed to Highland County in respect of the information or advice given by its planning officers concerning the s 94 contributions plan.

54 The claim against the Council fails.

55 For the same reasons, the cross claim brought by Asquith & de Witt against the Council fails.

The Claim against Asquith & de Witt

56 Asquith & de Witt did not advise Highland County that the s 94 contributions plan it prepared was beyond the power of the Council and that therefore it was futile to pursue it unless the Council accepted liability for the cost of the water quality control pond.

57 Asquith & de Witt’s position was that the only issue between it and Highland County for the purposes of a claim in contract or tort was whether its retainer included an implied term that advice of this nature was to be provided. It relied on the reasons given in Astley v Austrust Ltd (1999) 73 ALJR 403 to argue that the emphasis should be placed on the term services and that in this case it was not retained to provide services of the kind claimed by Highland County. Not only did Highland County not seek advice in relation to its agreement with the Council, it relied on officers of the Council in relation to the validity of the proposed arrangement.

58 Reference was also made to the reasons of McPherson AJA in Heydon v NRMA (2000) 51 NSWLR 1 to the effect that a professional adviser is not required to advise on matters going beyond the limits of his or her retainer. In this case, it was said, Asquith & de Witt’s retainer was limited to the exercise of reasonable care and skill in the preparation of the s 94 contributions plan.

The retainer

59 Highland County instructed Asquith & de Witt for advice concerning the s 94 contributions plan because Mr McMurray understood that such plans involved planning concepts requiring a planner to have an understanding of the Environmental Planning and Assessment Act. Asquith & de Witt, in particular Mr Wright, had been retained on prior occasions by the County Property Group on planning matters.

60 Mr McMurray met with Mr Wright on 8 December 1999. Mr McMurray told him that he needed specialist town planning advice and assistance concerning the s 94 contributions plan. Mr Wright said that he had the required experience.

61 Mr McMurray informed Mr Wright that it was Highland County’s intention to build the larger water quality control pond and to recoup the additional costs from future developers, that Mr Brett Stein of the Council told him to proceed with a s 94 contributions plan and to use the form of plan adopted for the Beresfield roundabout.

62 Mr McMurray said that he did not tell Mr Wright or any other Asquith & de Witt employee that the Council would pay Highland County for the water quality control pond.

63 On 14 December 1999 Highland County wrote to Asquith & de Witt stating:

We are looking for a fee proposal to prepare a s 94 plan and I have enclosed a pro-forma provided by Brett Stein.

64 The letter also stated that Mr Stein agreed that a s 94 contributions plan could be prepared to accommodate the construction of a water quality control pond to service Highland County's development and additional land held by the vendor.

65 At the time of the approach from Highland County Mr Wright was employed by Asquith & de Witt as a senior planner. The Council previously employed him as a planner processing development applications. He agreed that he had experience in the implementation of 94 contributions plans.

66 Mr Wright's evidence concerning the conversation with Mr McMurray was:

He said that County Property Group had been involved in a number of meetings with Council, that's Newcastle City Council, at which the topic that was discussed was the matter of how County Property Group might be recompensed for - to receive a refund as an effect of developing a water quality control facility at Fletcher. County was - Mr McMurray indicated that County were concerned that they had established a facility that was larger than what would be serviced by their own individual development and that they were looking to receive a refund, again, from other developers who might develop at some time in the future within the catchment. Mr McMurray also said that there had been numerous meetings between County and Council at which that matter was discussed and that an agreement had been reached on how County might receive -

…

Mr McMurray said that an agreement had been reached in terms of how they might be partly refunded some of the cost associated with the construction and delivery of the water quality control pond. Mr McMurray also said that the form in which that agreement would take would be a section 94 contributions plan, and he requested that Asquith & de Witt prepare a fee proposal to prepare such a plan, and as part of the instruction from Mr McMurray, he said, he made it very clear --

…

I was to keep it simple; and I was simply to document the agreement that had been reached previously between County and Newcastle City Council.

(Transcript 22.4.08, 324-325)

67 On 24 December 1999 Mr Wright on behalf of Asquith & de Witt forwarded to Highland County a quotation of $1,700 to prepare the plan and a report to Highland County.

68 In its submissions Asquith & de Witt accepted that it was aware that:

1 agreement had been reached between Highland County and the Council;

2 the agreement related to the recoupment by Highland County of the cost of building a larger water quality control plan; and

3 the recoupment mechanism was to be accommodated by way of a s 94 contributions plan.

What Mr Wright did

69 The evidence was that Mr Wright discussed the s 94 contributions plan with Mr Stein before preparing his quotation of $1,700. He spoke with Ms Deborah Scott who said an agreement had been reached between the Council and Highland County that the Council would implement a s 94 contributions plan for the water quality control pond to enable Highland County to recoup some of the construction costs for the water quality control pond.

70 Mr Wright said he had these conversations for three reasons:

1 to confirm that there was an agreement;

2 to ascertain what the agreement was; and

3 to confirm that Asquith & de Witt had sufficient skills to deliver the form of agreement reached.

71 The Council officers confirmed that the Council was happy to have a s 94 contributions plan prepared and implemented to make good the commitments made.

72 On 18 April 2000 Mr Wright forwarded to Highland County his first draft of the s 94 contributions plan. He advised at that time that the plan was prepared as an annexure according to the Council's requirements and that he had investigated the credit policy applying to s 94 contributions. On 19 April 2000 the draft was submitted to the Council.

73 Mr Wright said he was not further consulted concerning the s 94 contributions plan.

Expert town planning evidence

74 Mr Brindle was retained to give evidence on behalf of Asquith & de Witt.

75 His opinion was that the terms of the retainer did not require Asquith & de Witt to do more than prepare the s 94 contributions plan and that that those terms did not reasonably require Asquith & de Witt to draw to Highland County’s attention the limits on the Council’s powers under s 94 for the following reasons:

1 Asquith & de Witt were engaged to undertake a specific task, namely to draft the document representing the s 94 contributions plan.

2 The proposal for the s 94 contributions plan was the Council's and it was therefore reasonable to assume that the Council would accept liability by making appropriate arrangements with Highland County.

3 The separate arrangements with the developer were not required to be incorporated into the s 94 contributions plan.

4 Although Asquith & de Witt would be aware of the limits on the Councils powers, acting reasonably, it would assume that Highland County was sufficiently experienced to be aware of when legal input was required. Highland County had access to legal advice on other aspects of the development and could have consulted its lawyers on this aspect.

76 Mr Brindle also said that the draft plan prepared by Asquith & de Witt was technically correct and was prepared with the care and skill appropriate to a specialised town planner.

77 He agreed with Mr Mackay that under a properly structured agreement there were many options by which infrastructure could be funded once a s 94 contributions plan was in place. This meant that it was not necessary to state in the s 94 contributions plan who was responsible for the cost of the facility. Preparation of such an agreement was not the role of the town planner but one to be undertaken by legal advisers.

78 He said that, having regard to Mr McMurray's extensive experience of land development and subdivision including dealings with councils and retaining experts and lawyers, it was not reasonable that Asquith & de Witt be required to advise further than the preparation of the s 94 contributions plan itself. Mr Brindle agreed that he was unaware of the extent to which Highland County or Mr McMurray were experienced in the preparation of s 94 contributions plans.

79 Mr Brindle agreed that a developer who was building infrastructure while the contributions plan was under preparation would be exposed because the plan was not in place. A town planner, if advice on this aspect was sought, would tell the developer not to start work until the s 94 contributions plan was in place. He did not accept that, in the context of the of the services for which Asquith & de Witt was retained, Mr Wright was required to volunteer this warning rather than respond to a specific request.

80 Mr Mackay, the expert town planner retained for Highland County, held a different opinion.

81 In some respects Mr Mackay's evidence appeared to be inconsistent and contradictory. However on closer inspection it was apparent that his opinion was that a planner acting with reasonable skill in early 2000 should have understood the relevant law, including that which required the Council to accept liability for the costs that were to be recouped, and further that in this case a town planner, acting reasonably, would advise Highland County to obtain legal advice.

82 My understanding of his reasoning in arriving at this opinion was that in general terms:

1 It was implicit where the cost of infrastructure was included in the s 94 contributions plan that it was council's responsibility to provide the infrastructure. If the council was prepared to include infrastructure that it would have to provide in the s 94 contributions plan, the council accepted responsibility for its cost. How the infrastructure was provided was a matter for the council's private arrangement and was not within the realm of the service provided by a town planner.

2 It was implicit in the adoption of a s 94 contributions plan that the council was the responsible authority for the provision of the works and would ultimately make some arrangement to ensure, at its cost, that the work would be done.

3 The council must in some way accept responsibility.

4 A competent town planner would have to be satisfied that the work incorporated in the s 94 contributions plan was a council responsibility, that the appropriate nexus existed and that timing for the provision of the infrastructure was dealt with.

5 In an unusual situation where work was to be done by a developer on land not owned by it or the council, a town planner would make inquiry and obtain a good understanding of the agreement between the council and the developer intending to undertake the works involved in providing the infrastructure dealt with in the s 94 contributions plan.

83 I do not accept the proposition argued by Asquith & de Witt that Mr Mackay expressed the opinion that the adoption of a s 94 contributions plan without more imposed on a council the liability for the payment for the cost of providing the infrastructure dealt with in the plan.

Findings

84 Mr Wright was aware, through planning work that he had undertaken on behalf of the County Property Group in the past, of Mr McMurray’s experience in land development. He agreed that he did not have any knowledge of the extent to which Mr McMurray had been involved in the preparation of s 94 contributions plans.

85 Mr Wright was aware, through his employment with the Council, that the Council employed officers who undertook the specialised task of preparing s 94 contributions plans. Mr Wright acknowledged that he was not such a specialist. He did not consult the Council’s specialist.

86 Mr Wright was aware of the manual issued by the Department of Planning concerning s 94 contributions plans. The manual drew attention to the Allsands decision. There was no evidence that he consulted the manual in the course of undertaking the exercise of preparing the s 94 contributions plan.

87 Mr Wright was aware of the decision in Allsands and of its implications to the exercise by councils of their powers under s 94.

88 Mr Wright did make inquiry concerning the existence of an agreement. He learned through these inquiries that an arrangement had been entered into for the construction by a developer of infrastructure on land, part of which was not owned by the Council or the developer. He agreed that this was an unusual arrangement. He confirmed that he understood that the s 94 contributions plan that he was asked to prepare was to allow Highland County to recoup part of its costs.

89 He confirmed that Mr McMurray made it clear that Highland County would pay all of the construction costs. He did not know by what arrangement the Council was to pay Highland County. He understood that this had been sorted out and resolved between Highland County and the Council before he received his instructions. Mr McMurray did not show him any written agreement, but made it clear that he was to implement what was agreed and he was not to second-guess Highland County’s decision to enter into this arrangement.

90 None of the information provided to Mr Wright as a result of his inquiries indicated that the Council accepted responsibility for any of the costs of construction of the water quality control pond. Through his conversations with Mr McMurray, Mr Stein and Ms Scott, he was informed only that Highland County was building the water quality control pond at its cost and that the Council would facilitate recoupment of part of that cost by collecting and passing on levies from future developers.

91 Mr Wright was aware that Highland County proposed to commence construction of the water quality control pond before the Council formally adopted the s 94 contributions plan.

92 S 94 does not operate in a vacuum. In my view, it is necessary that a town planner, held out as having sufficient expertise to prepare s 94 contributions plans, have some appreciation of the statutory context within which s 94 operates. Mr Wright did not deny that he had some level of appreciation of this context.

93 I find that it was reasonable to imply into the terms of the retainer upon which Asquith & de Witt was engaged by Highland County that a planner of the skill and competence represented to be held by Mr Wright, told only that an agreement was in place between Highland County and the Council, would not assume that the agreement was one that would validly support the document that he produced.

94 I find that at the very least Asquith & de Witt’s retainer reasonably required that Mr Wright:

1 warn Highland County against proceeding with construction work before the s 94 contributions plan was in place;

2 inform Highland County of the statutory complexities involved in the adoption and implementation of council’s powers under s 94; and

3 recommend that Highland County obtain legal advice on its proposed arrangement with the Council.

Reliance

95 Asquith & de Witt contended that Highland County did not rely on the service it provided but rather relied on the officers of the Council in its dealings concerning the s 94 contributions plan.

96 There was clear evidence of reliance by Highland County on Asquith & de Witt to provide competent town planning advice. The very reason for consulting Asquith & de Witt was to obtain advice in an area recognised by Highland County as requiring specialised attention.

DAMAGES

97 Highland County claimed as its loss the amount that it would have recovered through s 94 levies on the development of the remaining land within the catchment. It was agreed that, if all levies had been imposed and recovered Highland County would have recouped one half of the cost of $651,000 incurred in constructing the water quality control pond. Highland County also claimed interest at the rate of 10% from January 2001, being the date upon which it made the final payment for the construction cost.

98 The issues that arose under this heading were:

1 Whether any loss or damage was in fact suffered as a result of the default by Asquith & de Witt.

2 If so, how the measure of that loss or damage was to be calculated.

3 Whether interest was payable.

4 The deduction, if any, to be made for contributory negligence on the part of Highland County.

Issue 1 – Loss

99 The defendants argued a number of bases upon which they claimed that Highland County had failed to establish that it suffered loss or damage as a result of the Council’s decision not to proceed with the s 94 contributions plan.

Incorrect legal advice

100 They argued that the cause of the loss was that incorrect advice was given to the Council by its lawyers. This was based on the evidence of Mr Mackay and Mr Brindle that the Council could validly enter into an arrangement involving the s 94 contributions plan that made provision for the required element of Council liability.

101 There was no error in the legal advice provided to the Council. The proposal as it stood at the time the draft s 94 contributions plan was submitted by Asquith & de Witt did not encompass the elements referred to by Mr Mackay and Mr Brindle. It offended the principles set out in Allsands. For that reason, the s 94 levies, if the contributions plan were adopted, would have been invalidly based.

No guaranteed outcome

102 The defendants pointed out that Highland County had no guarantee that the Council, even if its officers recommended it, would adopt the s 94 contributions plan or would levy the contributions provided for in the plan.

103 In response to public exhibition of the proposed s 94 contributions plan, the Council received submissions from Dr Hardie and Mr Denshire, who claimed to represent parties having an interest in the future development of the remainder of Dr Hardie’s land. Mr Denshire objected strongly to the plan on the basis that Dr Hardie had already contributed by making land available for the purpose of constructing the water quality control pond.

104 I considered it more than probable that the Council would have adopted the s 94 contributions plan if it had been properly structured. Mr Stein and Ms Scott confirmed to Mr Wright the arrangements that were agreed to by them on behalf of the Council. The water quality control pond represented the preferred option of Council’s planning officers for managing the effects of development within the catchment on downstream watercourses.

105 There was, however, substantial merit in the argument that Highland County had no assurance that it would in fact recoup any part of its additional cost through the levy of s 94 contributions on future developers. Mr McMurray acknowledged that the imposition of s 94 levies was a matter involving an exercise of discretion by the Council.

106 In the absence of such assurance, it could not be said that loss or damage was suffered.

Alternatives to the water quality control plan

107 Mr McMurray’s unchallenged evidence was that he told Mr Wright that Highland County proposed to commence construction of the water quality control pond immediately after the draft s 94 contributions plan was submitted to the Council. He said that if Highland County had been advised that the Council needed to accept direct liability for the costs that were involved in providing a facility that met more than the requirements generated by Highland County’s development, construction of the water quality control pond would not have been commenced. An alternative solution would have been sought.

108 Although Mr McMurray on a number of occasions stated that Highland County would have considered returning to the six pond strategy adopted by Development Control Plan 42, there was no evidence to support its practicality, cost, convenience or consequence to the development. It has therefore been disregarded as a possible alternative.

109 The strategy favoured by Highland County at the time of the hearing was a two pond system designed by Mr Staniland, consulting engineer, to accommodate only the requirement for stormwater control generated by Highland County’s development. The experts agreed that this required water storage of 8,500 cubic metres for water quality purposes and 20,000 cubic metres for detention storage.

110 Mr Staniland proposed two ponds at the western end of the gulley leading to the area in which the water quality control pond was constructed.

111 Mr Jamieson, consulting civil engineer, raised a number of criticisms of the two pond strategy that indicated to him that it was not a practical alternative to the provision of a single pond in the basin. The criticisms fell into two categories: those directed at design features of the strategy and those said to indicate that Highland County for various reasons would not have adopted this strategy in any event.

Compliance with Council standards

112 Mr Jamieson considered that the two pond strategy would not meet the stormwater control standards set by the Council. Those standards required that specific percentages of sediments transported by stormwater be deposited in the ponds before the water flowed downstream and that the rate of flow be decreased. Mr Staniland acknowledged that modelling had not been undertaken to confirm that the Council’s standards would be met but stated that he was confident that the two pond strategy was designed to the same standards as those provided for in the water quality control pond. Mr Staniland’s confidence that the two pond strategy would have been approved by the Council was based on the Council’s approval of a similarly designed system for a nearby development at Nikkinba.

Unsuitable fill

113 In the course of construction of the water quality control pond unsuitable fill was found by the contractor in areas that were required to support the dam wall and the embankment that in turn supported an area of landscaping and roads within the development, in particular Loch Ness Drive. More unsuitable fill was located in areas of the water quality control pond that were designed as deep areas for the purpose of trapping sediment. Highland County claimed that the cost of construction of the water quality control pond included the sum of $141,155, an amount by which it was necessary to vary the contract price to cover the cost of removing and replacing the unsuitable fill.

114 At the time of commencement of construction of the water quality control pond, Highland County was unaware of the substantial additional cost that would be incurred in removing and replacing unsuitable fill.

115 There was a debate between the experts on the question of whether unsuitable fill would be encountered in the area proposed by Mr Staniland for the two pond strategy. It was Mr Staniland’s contention that unsuitable fill would not be encountered if the water control infrastructure was moved further to the west, but if encountered, the quantities involved would be minimal. Mr Jamieson, consulting engineer, considered that considerable quantities would be encountered, although of lesser quantity than that encountered in constructing the water quality control pond.

No realistic alternative

116 It was agreed by the experts that there would be minimal difference in cost if a smaller pond were constructed in the same location as the water quality control pond. The defendants argued that the two pond strategy was developed with the benefit of hindsight and that, realistically, ignorant of the extent to which the discovery of large quantities of unsuitable fill would add to the cost of a smaller water quality control pond, Highland County at the time the Council withdrew from the arrangement involving the s 94 contributions plan, was committed to the construction of a stormwater control facility in the same location because:

1 The single pond strategy was pursued notwithstanding that by 1996 Highland County had abandoned any prospect of developing the balance of the land within the catchment. This was because Highland County by 1999 was of the view that the capacity required for its own development was similar to that required for the entire catchment. The capacity required for Highland County’s development alone meant that the only practical solution was to build a single pond in the position selected for the water quality control pond.

2 The water quality control pond was the focus of the open space provisions of the Highland County development. It was featured in the Statement of Environment Effects that supported the development applications and advertising material designed to promote sales of the land where it was described as:

…a permanent lake, extensive landscaping, wild life refuge island, jetties and waterside gazebo, neighbouring playground and picnic and barbeque facilities.

3 Access to Dr Hardie’s land was required to construct even the two pond strategy or a smaller water quality control pond and Highland County could only obtain Dr Hardie’s consent by committing to build the larger pond. This was evidenced by the deed of 8 May 2000 in which Highland County agreed to construct the larger water quality control pond at no cost to Dr Hardie.

4 In the absence of the cost of removing the unsuitable fill, the cheapest option available to Highland County was to construct the smaller pond in the location selected for the water quality control pond.

5 Construction of the smaller pond would have commenced in this area in April 2000 and, on locating unsuitable fill, Highland County would have been forced to continue construction in that location or redesign the strategy for water control for which, to that point, had taken it four years to secure the Council’s approval.

6 Redesign of the water control infrastructure would necessitate redesign of the landscaping and the layout of the subdivision.

117 Thus, it was contended regardless of s 94 considerations, it would not have been economically viable for Highland County to adopt the two pond strategy proposed by Mr Staniland.

118 Mr Staniland’s response accepted that his design was prepared in the knowledge that unsuitable fill was encountered in the area where the water quality control pond was located. He said he would have expected to find unsuitable fill and would not have built the pond there. He was not concerned that some redesign of the layout of the subdivision would be required because it was minimal. He did not anticipate hurdles in securing Council’s approval because of his experience in obtaining approval to a similar design at Nikkinba.

Findings

119 The difficulty with Mr Staniland’s response was that it was hypothetical. He was not retained at the time the water quality control pond was designed and when discussions concerning the standards it was required to meet took place between Patterson Britton and the Council.

120 Highland County did not consult Mr Wright until December 1999. By that stage its plans for the water quality control pond were well advanced as was its promotion of the development. It did not know at the time construction of the water quality control pond commenced the extent to which its cost would be escalated by site conditions.

121 I therefore accept the defendant’s arguments. I find that most probably Highland County, if told before construction of the water quality control pond commenced that the proposal to recoup part of its cost through s 94 levies could not be pursued, would have constructed a smaller water quality control pond in the same location and at similar expense.

122 The claims against the Council and Asquith & de Witt fail because Highland County has not established that it suffered loss or damage for the following reasons:

1 There was no assurance that the Council would levy s 94 contributions upon future developers of the balance of Dr Hardie’s land.

2 There was at the time Highland County retained Asquith & de Witt no realistic alternative available to Highland County but to construct a smaller pond in the same location as that selected for the water quality control pond. The cost of the smaller pond was the same as that incurred in constructing the water quality control pond.

123 I proceed to assess the quantum of the claim in the event that this matter proceeds further.

Measure of Damage

124 Mr Jamieson pointed to areas of the costing provided by Highland County that he considered indicated that the cost of the water quality control pond was overstated and that the cost of the alternative two pond strategy was understated.

The claimed cost of the water quality control pond

125 Mr Jamieson identified a number of items that he considered were wrongly attributed to the cost of construction of the water quality control pond. He was subsequently satisfied that some of those items were related to the water quality control pond.

126 He maintained that the cost of the water quality control pond as claimed by Highland County should be reduced by $12,000 relating to an area of landscaping measuring 5,700 square metres to the north of Loch Ness Drive. Mr Staniland’s response was it was impossible to construct the full water quality control pond unless the work north of Loch Ness Drive was carried out.

127 I was not satisfied that any adjustment to the claim in respect of this item was warranted.

128 Mr Jamieson rejected the claim that $141,155 represented a cost to Highland County of removal of the unsuitable fill. Mr Jamieson’s objection to this part of the claim was based on a misunderstanding concerning the nature of the fill and its position on the site. Having accepted that construction of the water quality control pond necessarily involved the removal of some unsuitable fill, Mr Jamieson calculated that only 2,000 cubic metres was required to be removed and not the 9,226 cubic metres claimed by Daracon Engineering.

129 Mr Jamieson’s calculations concerning the quantities required to be removed appeared to be based on his assumption that the removal of unsuitable fill related only to the areas where a stable base was required to support the dam wall, the landscaped area and Loch Ness Drive. The evidence indicated that unsuitable fill was also removed from areas within the water quality control pond that were required by the pond designers, Patterson Britton, to be excavated to provide extra depth and achieve the required level of sedimentation control

.

130 The extra cost claimed by the contractor was certified for payment and there was no evidence that this claim for variation of the contract price did not arise from the removal of unsuitable fill in the course of the construction of the water quality control pond.

131 I was not satisfied that any adjustment to the claim in respect of this item was warranted.

The estimated cost of the two pond strategy

132 Mr Staniland estimated the cost of construction of the two pond design at $217,375 and consultants’ fees at $78,946, resulting in a total cost of $296,321.

133 This estimate did not take account of the additional costs involved in removing unsuitable fill, redesign of the layout of the subdivision, and the potential reduction in yield as a result of this redesign.

134 The estimate also failed to take into account the cost of securing Dr Hardie’s consent to the use of part of his land in order to construct the two pond design.

Redesign

135 Mr Jamieson noted that as designed the high point of Loch Ness Drive would direct water flows into the proposed two ponds at a point close to the dam wall so that the water would remain in the pond for insufficient time to deposit sediment before reaching the wall.

136 Mr Jamieson also considered that the two pond strategy required a substantial redesign of Highland County’s development to reshape the bed of the creek and redesign of the layout of the subdivision to realign Loch Ness Drive and other roads. This, he said, would result in reduction in lot sizes and lot yield.

137 Mr Staniland accepted that some redesign of contours would be required to direct water flow to the western end of the gulley. He said this would require only minimal revision of contours to relocate the high point of Loch Ness Drive further to the east.

Fill

138 Mr Staniland calculated the quantity of unsuitable fill likely to be encountered in the area proposed for the two pond strategy to be between 100 and 200 cubic metres. Mr Jamieson calculated that that the two pond strategy would involve removal of at least 900 cubic metres. The additional cost was not calculated by the experts. At the rate of $28 per cubic metre charged by Daracon Engineering Pty Limited for removal and replacement of unsuitable fill for the water quality control pond, between $2,800 and $25,200 would be added to the cost of the two pond strategy.

Dr Hardie

139 It was unfortunate that Dr Hardie’s illness made it not possible to obtain evidence from him of the attitude he would have taken to the construction on his land of any part of the water control infrastructure required to service Highland County’s development while he remained potentially exposed to s 94 levies to deal with the need for water control infrastructure generated by the development of the remainder of his land. Mr McMurray said that, in the past, he had a good relationship with Dr Hardie and they had previously managed to negotiate mutually acceptable settlements of their differences. He was confident that he could have done so in order to accommodate the six pond or two pond strategies.

140 Mr McMurray pointed to the revised arrangements entered into with Dr Hardie in the deed dated 26 March 2001. This deed provided that Dr Hardie grant easements rather than dedicate land as previously agreed for the water quality control pond. In return, the deed obliged Highland County to undertake various works on or for the benefit of Dr Hardie’s land. These works were not costed. There was no provision in the deed that dealt with the question of whether Dr Hardie or those interested in the future development of his land had withdrawn their objections to the proposed s 94 contributions plan.

Findings

141 There were strong prospects that, having regard to the extent of unsuitable fill found in the area of the water quality control pond, some quantities would be located where it was proposed to place the two pond design.

142 Some redesign would be required, involving design costs and the cost of additional earthworks. The redesign would potentially reduce the yield from the development.

143 A notional cost must be added take account of the terms upon which Dr Hardie would agree to allow access to his land.

144 These factors have not been costed. In the absence of evidence of the amounts involved, I have estimated the additional cost to be between $50,000 and $100,000. I have added to the estimated cost of the two pond strategy the mid point figure of $75,000.

145 I find that the estimated cost of the two pond strategy was $371,321.

Interest

146 Highland County claimed that in addition to the actual costs recovered through the mechanism of s 94 of the Act, it would have recovered interest from future developers. It claimed interest at the rate of 10% from January 2001, the date at which it had paid all of the expenses involved in the construction of the water quality control plan.

147 The claim for interest was not pleaded or particularised. It was therefore not dealt with in evidence. For this reason alone it is rejected.

148 A further reason for rejection of the interest claim was that the s 94 contributions plan that was placed on public exhibition, and therefore likely to be recommended for adoption by the Council, did not provide for the payment of interest.

Contingency

149 As already noted, if damages and interest were to be allowed, it would be necessary to reduce the sum allowed against the contingency that the Council decided not to levy all or part of the contributions provided for in the s 94 contributions plan.

150 I have reduced the damages claimed by 25 per cent to take account of this contingency.

Contributory negligence

151 Highland County proceeded with work on the water quality control pond before the s 94 contributions plan was finalised and without any written agreement concerning the recoupment of its additional costs.

152 In this respect, even if Highland County was not aware of the limitations on the operation of s 94 and of the need to obtain legal advice, it took a risk such that there was contributory negligence on its part.

153 I have determined that this negligence contributed to the loss and damage suffered by Highland County to the extent of 25 per cent.

SUMMARY

154 The claim of negligent misstatement against the Council is dismissed.

155 The cross claim brought by Asquith & de Witt against the Council is dismissed.

156 Asquith & de Witt breached its contract with and duty of care to Highland County in the performance of the town planning services it was retained to provide.

157 Highland County failed to establish that it suffered loss as a result of the breaches of Asquith & de Witt.

158 Had Highland County succeeded in its claims, its loss and damage would be assessed as follows:

Cost of water quality control plan
$651,000

Less: Cost of 2 pond design
$371,321 = 279,679

Less contingency of 25%
$69,920 = 209,759

Less deduction for contributory
Negligence: 25%
$52,440 = $157,319

ORDERS

159 On the claim against Newcastle City Council, plaint No 249/03

1 Verdict for the defendant.

2 The plaintiff is to pay the defendant’s costs of the proceedings.

160 On the claim against Asquith & de Witt, plaint No 145/06

1 Verdict for the defendant.
2 The plaintiff is to pay the defendant’s costs of the proceedings.
3 Verdict for the cross defendant on the cross claim.
4 The cross claimant is to pay the cross defendant’s costs of the cross claim.

161 On both actions:

1 The orders for costs are suspended until 6 February 2009 to allow any party to list the proceedings for further argument in respect of those orders.
2 The exhibits will be retained until 6 February 2009 or until further order.

162 My reasons are published.

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