Loulach Developments Pty Ltd v Roads and Maritime Services

[2019] NSWSC 438

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Loulach Developments Pty Ltd v Roads and Maritime Services [2019] NSWSC 438

Hearing dates:

22, 23, 24 and 25 October 2018

Decision date:

18 April 2019

Jurisdiction:

Common Law

Before:

Leeming JA

Decision:

1.   Judgment for the defendant.

 

2.   In the event that either party seeks some special order as to costs, the parties are to supply agreed short minutes of order, or alternatively the orders for which they contend and submissions and any evidence in support, within 14 days of today.

 

3.   In the absence of any application under order 2 above being received by my Associate within 14 days of today, the plaintiff is to pay the defendant’s costs.

 4.   The exhibits are to be returned.

Catchwords:

LIMITATION PERIODS – negligence – when causes of action first accrued – developer incurred material wasted expense, but only sued for lost profit – wasted expense incurred more than six years before proceedings commenced, at time when profit was prospective – significance of plaintiff confining claim to lost profits – significance of interest sought to be protected by common law – cause of action on first representation statute barred – defendant failed to establish plaintiff incurred material loss from second representation prior to six years before proceedings commenced – cause of action on second representation not statute-barred

 

NEGLIGENCE – duty – novel duty of care – pure economic loss to developer from negligent misstatement by statutory authority to council – significance of assumption of responsibility, reliance and vulnerability – whether duty inconsistent with or sat ill with statutory obligations applicable to authority – no duty found in relation to second representation

 

NEGLIGENCE – duty – scope of duty – first representation made directly by statutory authority to developer – whether representation went beyond question asked – whether representation outside scope of duty of care – first representation within scope of duty of care

 

NEGLIGENCE – breach – whether at time representations were made there was extant proposal to widen or realign road – significance of historical documents – significance of failure to give testimonial evidence – significance of concession that proposal had at some stage been abandoned – breach made out

 

NEGLIGENCE – causation – whether developer had established it would have acted differently had there been no breach – causation not established

 

NEGLIGENCE – special statutory power – whether statutory authority was exercising special statutory power when responding to council – Civil Liability Act 2002 (NSW) s 43A considered – s 43A inapplicable

  NEGLIGENCE – damages – plaintiff’s case depended on “Desired Development” being built – damages calculated by reference to hypothetical profit calculations of Desired Development and actual development – whether plaintiff established any chance of Desired Development being approved – no fall-back case for wasted expenditure – damages case not made out

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5B, 5D, 5E, 43, 43A, Part 4
Commonwealth Aid Roads Act 1969 (Cth)
Environmental Planning and Assessment Act 1979 (NSW), ss 62, 64, 65, 66, 67, 96, 149
Land Acquisition (Just Terms Compensation) Act 1991 (NSW)
Limitation Act 1969 (NSW), ss 14, 63
Local Government Act 1919 (NSW), s 342Y
Main Roads Act 1924 (NSW), s 27E
Road Transport Legislation Amendment Act 1999 (NSW)
Transport Administration Act 1988 (NSW), s 52A
Interim Development Order No 1 – City of Parramatta, cl 4
Liverpool City Centre Local Environmental Plan 2007, cl 22B
Parramatta City Centre Local Environmental Plan 2007, cl 22B
Parramatta Local Environmental Plan 1989, cll 3, 9
Penrith City Centre Local Environmental Plan 2008, cl 26
State Environmental Planning Policy 11
State Environmental Planning Policy (Infrastructure) 2007, cll 2(f), 104, Division 17, Schedule 3
State Regional Environmental Plan No 28 – Parramatta

Cases Cited:

Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1
Awabakal Local Aboriginal Land Council v Minister Administering the Crown Lands Act [2008] NSWLEC 124
Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18
Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11
Blatch v Archer (1774) 1 Cowp 63
Bowen and Another v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394
Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36
CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390; [2009] HCA 47
Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258
Chief Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34
Christie v Purves [2007] NSWCA 182; (2007) Aust Torts Reports 81-899
Commonwealth of Australia v Cornwell (2007) 229 CLR 519; [2007] HCA 16
Council v Shortland Management Services (2003) 57 NSWLR 173; [2003] NSWCA 156
Curtis v Harden Shire Council (2014) 88 NSWLR 19; [2014] NSWCA 314
D’Agostino v Anderson [2012] NSWCA 443
Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364
Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127
Darnley v Croydon Health Services NHS Trust [2018] UKSC 50, [2018] 3 WLR 1153
Deloitte & Touche v Livent Inc [2017] 2 SCR 855; 2017 SCC 63
Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167
Forster v Outred & Co [1982] 1 WLR 86
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145
Hunter Health District v McKenna (2014) 253 CLR 270; [2014] HCA 44
Ku-ring-gai Council v Chan (2017) 224 LGERA 330; [2017] NSWCA 226
L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 150 CLR 225; [1981] HCA 59
Loulach Developments Pty Ltd v Roads and Maritime Services [2018] NSWSC 1402
Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; [2000] HCA 61
Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 571; [1968] HCA 74
Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1
NRAM Ltd (formerly NRAM plc) v Steel [2018] UKSC 13; [2018] 1 WLR 1190
Playboy Club London Ltd v Banca Nazionale del Lavoro SPA [2018] UKSC 43; [2018] 1 WLR 4041
Roads and Traffic Authority of New South Wales v Refrigerated Roadways Pty Ltd (2009) 77 NSWLR 360; [2009] NSWCA 263
Robinson v Chief Constable of West Yorkshire Police [2018] AC 736; [2018] UKSC 4
San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; [1986] HCA 68
Scarcella v Lettice (2000) 51 NSWLR 302
Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] SGCA 37; [2007] 4 SLR 100
Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59
Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55
Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18
Weber v Greater Hume Shire Council [2019] NSWCA 74
Wells v Council of the City of Orange (No 2) [2017] NSWSC 510
Woollahra Municipal Council v Sved (1996) 40 NSWLR 101
Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12

Texts Cited:

P Cane, Tort Law and Economic Interests (OUP, 1991)
Land and Property Information, “A Brief History of the Records of the Registrar General” (March 2013)
D Tan and Y Goh, “The Promise of Universality” (2013) 25 Singapore Academy of Law Journal 510
R H Burke, “History of Commonwealth Grant legislation Relating to Roads and Road Transport 1902-1972”, Occasional Paper No 8 (1977)
RFV Heuston and RA Buckley, Salmond and Heuston on the Law of Torts (Sweet & Maxwell, 21st ed, 1996)

Category:

Principal judgment

Parties:

Loulach Developments Pty Ltd (Plaintiff)
Roads and Maritime Services (Defendant)

Representation:

Counsel:
T S Hale SC and D Hume (Plaintiff)
N Kidd SC and N Eastman (Defendant)

  Solicitors:
Madison Marcus (Plaintiff)
Makinson d’Apice (Defendant)

File Number(s):

2015/167414

Publication restriction:

None

Judgment

1. LEEMING JA: On the northern edge of the Parramatta CBD, at the corner of Pennant Hills Road and Albert Street, there is a distinctive, modern multi-storey building, with 3 basement car park levels, comprising 55 apartments and 3 commercial tenancies. The developer was the plaintiff, Loulach Developments Pty Ltd. Construction was complete by around July 2012, and the large majority of the units have been sold, apparently realising a considerable profit. An aerial view of the building as constructed is below (the long street frontage is Pennant Hills Road, while the building’s shadow falls onto Albert Street):

2. The red line superimposed onto the photograph depicts how the building’s footprint does not occupy the entirety of the site. The site comprises lots 11 and 12 in deposited plan 1052593, but the building has been erected solely on lot 11. The land adjoining Pennant Hills Road within the red line identifying the site, which now forms an extra-wide footpath, is lot 12.

3. In August 2008 and January 2009, when Loulach was pursuing development consent to build on lot 11, the defendant’s predecessor the Roads and Traffic Authority (the RTA) confirmed in writing that lot 12 was required for a road. Those statements constituted the “first representation” and the “second representation”.

4. Loulach contends that at those times (and indeed, for many years earlier) lot 12 was not required for a road. Loulach contends that the RTA owed it a duty of care when it made the first and second representations, and that the RTA failed to take reasonable care when it did so. Loulach further contends that if it had been told that the RTA no longer required lot 12, then it would have obtained rezoning of lot 12 and applied for and obtained development consent to build a mixed use building occupying the whole of its site, rather than merely lot 11, and that it would have made greater profits from that building than the one which was in fact constructed. Loulach claims damages in excess of $5,000,000.

Overview

Overview of Loulach’s involvement in the site, and the creation of lots 11 and 12

5. Loulach was incorporated in 1996. Shortly thereafter, Loulach and Mondray Pty Ltd lodged a development application with Parramatta City Council for the construction of a residential flat building containing 40 apartments and car parking on land surrounding the site. Consent was granted and that building was constructed on the land hatched on the diagram below (which was the location map for the 1996 development application; the land which is the subject of the litigation is shaded yellow).

6. The words “Prop Road Widening” where the land joins Pennant Hills Road, indicated on that plan, anticipate the central issue in this litigation.

7. Later, in 2000, Loulach and Mondray applied for, and obtained, development consent to build another residential flat building on the land at the corner of Pennant Hills Road and Albert Street, albeit one which was much less tall than that which was constructed in 2012. A condition of the 2000 consent was that the strip of land along the boundary of Pennant Hills Road, which for more than three decades had been designated for road widening, be dedicated to the council. Although the building authorised pursuant to that consent was never constructed, the subdivision required by the dedication occurred, resulting in Loulach and Mondray lodging deposited plan DP 1052593, which created lots 11 and 12. Lot 12 was some 399m2, while lot 11 was some 1051m2. The deposited plan also stated that:

“Lot 12 is required for road and after construction will be dedicated as public road under section 10 of the Roads Act 1993.”

8. The 2000 consent lapsed. Loulach bought out Mondray’s interest in lots 11 and 12 in 2006. After a rezoning of the land in 2007, Loulach obtained consent to build the much taller combined commercial/residential flat building which has now been constructed wholly on lot 11. This consent, unlike that granted in 2000, did not include a condition for the dedication of lot 12, which Loulach continues to own to this day.

The first representation

9. Blueprint Property Pty Ltd is owned by family members of the people who own Loulach, and assists Loulach’s property development business. In early August 2008, Blueprint completed and lodged a “Property Information Inquiry Form” with the RTA. The form stated that Loulach was the owner of lots 11 and 12 and that Blueprint was acting for it, and asked:

“Owner wants to develop site, need to know time factor for road widening”.

10. The form was addressed to the attention of Mr Russell Steele and added:

“* Please include ‘time factor’”.

11. The form stated that a cheque in the amount of $27.00 was enclosed herewith. The form appears to have been sent in an “express post” envelope, with the tracking receipt stuck to the copy that was tendered in evidence. The form was completed in handwriting, by a number of hands (at least three, possibly more). Mr Simon Loulach said that none of the handwriting was his; I accept that evidence.

12. Mr Loulach’s evidence when cross-examined on the topic was that shortly beforehand, he had had a conversation with an officer of Blueprint (Mr Khater) as follows:

“Like I was saying before, I have had – I had a discussion with Mr Leba Khater, and he explained to me that he couldn’t understand why there would be a road widening order on the property, and he is a valuer by trade, and he does a lot of work with RMS, and he was asked ... he suggested that maybe we should ... before we submit a DA to put them in for property information inquiry form to ascertain whether or not RMS required the land.”

13. The reference to what Mr Loulach had been saying before was to this evidence:

“Q. What you wanted to know was the timing as to when the road widening was likely to take place. Correct?

A. So – that’s not correct because if you look at the timing of the property enquiry form, it sort of coincides with the date of the design competition completion, so we were ready to get – put our submission in for the DA, and at roughly around the same time, we – we said, ‘Okay, let’s figure out if the RMS still want this piece of land.’ So, the – that was the intention of it. Maybe it wasn’t communicated correctly to ... (not transcribable) ... or maybe it didn’t write down the correct purpose of the enquiry form. But regardless, it - it served the same purpose in determining whether or not you – the RMS still required the land or not which is the sole purpose of the enquiry form.”

14. No such account had been contained in Mr Loulach’s affidavit, which merely recorded that there had been a conversation and that the form was by way of a submission of “a request for issue of a section 149 certificate”. It was put to Mr Loulach that his oral evidence was “entirely fictitious”, which he denied.

15. By letter dated 19 August 2008, Mr Steele on behalf of the RTA responded to Blueprint, stating that:

“The Roads & Traffic Authority (RTA) requires the whole of Lot 12 DP 1052593 for the widening of Pennant Hills Road. No date has been set for this work to commence, however it is unlikely to occur within the next ten (10) years.

No part of Lot 11 DP 1052593 is required by the RTA.”

16. The letter gave further advice about the impact of the road proposal upon the property’s development potential, and drew attention to the rights of landowners under the Land Acquisition (Just Terms Compensation) Act1991 (NSW).

17. The representation that the whole of Lot 12 was required for the widening of Pennant Hills Road was the “first representation”.

The second representation

18. Loulach lodged a development application in late 2008 which was referred to the RTA. During the assessment of that development application, by letter dated 30 January 2009, the RTA advised Parramatta City Council that it had reviewed the development application, and made 20 comments, the first of which was as follows:

“Land at the corner of Pennant Hills Road and Albert Street (Lot 12 DP 1052593) is affected by a Road Widening Order as notified in Government Gazette No. 25 dated 17/03/1967 and as shown by pink colour on the attached image.

Therefore, there are no objections to the development proposal on property grounds, provided any new buildings or structures are erected clear of the land that is required for road.”

The remaining 19 paragraphs recommended conditions concerning traffic management and carparking. The “attached image” was of DP 1052593, with the entirety of Lot 12 shaded. The representation in the RTA’s letter of 30 January 2009 was the “second representation”.

19. Contrary to the RTA’s letter, the 1967 road widening order did not apply to Loulach’s land. Nor did any other road widening order. (As will be seen below, the gazettal in fact applied to nearby land adjoining Church Street.)

20. To anticipate some of the issues which will be considered below, the RTA’s letter to the council falls to be assessed in three quite distinct ways.

1. First, it may be distinguished from Mr Steele’s letter dated 19 August 2008, and not only insofar as it is addressed to Parramatta City Council, rather than to Loulach’s agent Blueprint, but also in that it is a response to a mandatory request for submissions made pursuant to cl 104(3) of State Environmental Planning Policy (Infrastructure) 2007. That bears upon whether in responding to the consent authority, the RTA became subject to a duty to take reasonable care.

2. Secondly, there is a hotly contested issue as to whether in incorrectly stating that the land was affected by the road widening order gazetted in 1967, there was any causative breach of duty. RMS maintains that the statement was substantially correct, insofar as there was in February 2009 a realignment proposal affecting the land. This is an intensely factual issue, turning on an understanding of the historical records maintained by RMS and the way in which proposals were recorded, amended and abandoned.

3. Thirdly, RMS seeks to rely upon s 43A of the Civil Liability Act 2002 (NSW) and says that the RTA was exercising a “special statutory power” when it responded to the council’s request, which could not be considered to be unreasonable.

21. Considering its importance, it is somewhat remarkable that the evidence did not establish precisely how Loulach came to be aware of the RTA’s 30 January 2009 letter. However, its substance was included verbatim in the council’s assessment report, and it is plain that Loulach became aware of it prior to the development consent issuing.

22. There was some opposition to Loulach’s application for consent. On the basis that five objections, one of which was a petition containing 11 signatures, had been received following the public consultation, a site view was held on 2 May 2009. One of the concerns expressed at the site view was recorded in the assessment report as follows:

“Concern was raised whether the applicant was aware that the RTA had proposed road widening on the Pennant Hills frontage.

The applicant confirmed that they were aware of the proposal for road widening and have designed the proposal to accommodate this should the RTA move forward with the road widening.”

23. The council’s assessment report recommended granting consent, subject to no fewer than 100 conditions. The same report reproduced the entirety of the RTA’s letter of 30 January 2009. On 9 June 2009, the council granted consent to the development application, following which the building presently on the land was constructed. It is either 13 or 14 storeys high (the consent and letter enclosing the final occupation certificate each refer to 14 storeys; other documents in evidence refer to 13 storeys; nothing turns on this). The building did not extend onto lot 12. Just less than 6 years later, on 5 June 2015, Loulach filed a statement of claim in which it sued RMS for breach of duty to take reasonable care in respect of the 19 August 2008 letter and the 30 January 2009 letter.

23. The date on which Loulach’s cause of action accrued is significant, because RMS relied on s 14(1)(b) of the Limitation Act 1969 (NSW), following an amendment permitted by me, over Loulach’s opposition, some seven weeks prior to the trial: Loulach Developments Pty Ltd v Roads and Maritime Services [2018] NSWSC 1402.

Overview of the elements of Loulach’s cause of action and RMS’s defences

25. Loulach alleges that in making the first and second representations, the RTA assumed a duty to Loulach to take reasonable care in relation to the provision of information and advice, which duty had been breached by failing to take reasonable steps to confirm the accuracy of each of the first and second representations. It was alleged that had the duty not been breached, Loulach would have applied for a rezoning of lot 12 to “B4 mixed use”, which would have led to the Minister’s amending the LEP accordingly, and Loulach’s applying for and obtaining consent to build a different development of 65 apartments, 5 commercial premises and 2 levels of underground parking (“the Desired Development”) on both lots 11 and 12, which would have been more profitable to it.

26. Damages are complicated. Loulach does not seek to prove its actual costs or actual revenue from the building which it built. Instead, by reference to a “Desired Development” which extends onto lot 12 which it says it would have obtained consent to build and would have built, it has obtained opinion evidence from a quantity surveyor and a valuer to the effect that its profit would have been more than $5,000,000 greater than the profit it in fact generated.

27. RMS made some admissions in its amended defence, and abandoned other points by the end of the hearing. RMS admitted that it had succeeded to the liabilities of the RTA. It admitted that the RTA had been wrong to say in the second representation that lot 12 was affected by a road widening order. A partial defence based on the proportionate liability provisions of Part 4 of the Civil Liability Act had been abandoned in advance of the hearing.

28. By the end of the hearing, RMS had also abandoned defences based on s 43 of the Civil Liability Act and contributory negligence. It had confined its defence based on a “special statutory power” within the meaning of s 43A of the Civil Liability Act to the second representation. It had in substance admitted that it owed a duty of care to Loulach in responding to the 6 August 2008 information request, but denied that the scope of that duty extended to the present status of proposals for widening or realignment of Pennant Hills Road, as opposed to the timing of any construction works.

29. Otherwise RMS put in issue all remaining aspects of Loulach’s claims. It denied that it owed any duty of care to Loulach when it wrote to the council in February 2009. It denied that there was any breach of duty insofar as the substance of both representations was correct, based on its contention that there was an extant proposal involving the widening of Pennant Hills Road in 2008 and 2009. It denied that any breach of duty had caused loss to Loulach. It denied that Loulach would have sought rezoning, or obtained rezoning, or applied for a different development consent, or been granted consent for a different building, and it denied that Loulach had suffered any of the loss claimed. As will be seen below, RMS did not merely put Loulach to proof, but advanced a positive case in respect of each of those issues; this was the subject of extensive expert evidence. Finally, RMS alleged that the whole of Loulach’s cause of action was statute barred by reason of s 14(1)(b) of the Limitation Act 1969 (NSW).

30. Accordingly, the principal issues which arise are as follows:

1. the scope of the duty of care owed by the RTA to Loulach when making the first representation (essentially, whether the acknowledged duty extended to the representation which was in fact made);

2. whether the RTA owed a duty of care to Loulach when making the second representation to the council – this was regarded by both parties as a novel tortious duty of care;

3. whether there was in fact a proposed widening or realignment proposal in mid 2008 or early 2009 on lot 12 – this is a question of fact, and was treated as determinative of the question of breach;

4. whether any breach of duty caused Loulach damage, which is to be determined in accordance with ss 5D and 5E of the Civil Liability Act;

5. whether s 43A of the Civil Liability Act applied to the second representation;

6. whether either or both of Loulach’s causes of actions was statute barred, and

7. what was the quantum of damages suffered by Loulach (this includes a suite of sub-issues, and was the subject of architectural, town planning, quantity surveyor and valuation evidence).

Structure of the balance of these reasons

31. The questions of breach and damage are very factually intensive, in contrast with the issues as to duty and causation and RMS’s defences of s 43A and the Limitation Act. Rather than summarising all of the evidence, and making findings on parts which are contested in isolation from the treatment of the legal issues, I think it is preferable to summarise the (uncontroversial) evidence as to the history of the land and its zoning and then to descend immediately into the issues which arise, parts of which can be done quite concisely, and then to deal with the evidence at the same time as the parties’ submissions and my resolution of the issues arising.

Title and zoning history of the land

32. The details of the changing descriptions of the land are relevant, but only peripherally so, insofar as they permit an understanding of references in (a) the planning and zoning instruments and (b) the historical documents (addressed in the section of these reasons dealing with breach) relating to the proposed widening and realignment of Pennant Hills Road in the 1970s.

33. Prior to 24 March 1969, the land at the corner of Pennant Hills Road and Albert Street comprised two lots, lot 1 in DP 166828 (known as 2 Pennant Hills Road) and lot 1A in DP 401279 (known as 4-6 Pennant Hills Road). On 24 March 1969, DP 237613 was registered. That deposited plan stated that various lots, including relevantly lots 3 and 4, “delineated hereon are required for road widening and there is no objection to such data being shown as road on certificate of titles for adjoining land after acquisition”. Lots 3 and 4 were created from lots 1 and 1A, respectively, and comprised thin strips of land, 4¼ perches and 6¾ perches respectively, adjoining Pennant Hills Road, wholly within but narrower than, lot 12.

34. Four years later, DP 561268 was registered, creating lots 13 and 14 in generally the same areas as lots 3 and 4, but allowing for a greater area for the road. This deposited plan had a similar annotation as to the lots (relevantly, lots 13 and 14) being required for road widening. It is mentioned in internal documents, and in a letter to the former landowners, in January 1974 (referred to below).

35. In 1994, DP 127190 was registered, which caused land in volume 7020 folios 8, 9 and 10 to become lot 1 in that deposited plan. For present purposes, little turns upon this, save to understand the 2003 subdivision which created lots 11 and 12. The most important land for present purposes was lots 13 and 14 in DP 561268.

36. In April 1999, a development application was lodged with Parramatta City Council for a 4 storey/part 5 storey 18 unit residential development with some commercial units and underground parking. Council granted development consent to that application on around 10 August 2000. Although it was accepted that that consent was never substantially commenced, and lapsed, there are two aspects which are relevant to the present proceedings.

1. First, during the assessment process, on 3 February 2000, the RTA sent a letter to the council which identified lot 14 in DP 561268 and stated:

“The subject property is affected by the Authority’s road proposals in the manner shown by red colour on the attached copy of deposited plan 561268.

However, the Roads and Traffic Authority has no objections, on planning grounds, to the proposed development providing that any new buildings or structures are erected clear of the land required for road widening.”

2. Part of the “attached copy” of deposited plan 561268 with red shading is reproduced below.

3. Secondly, condition 26 of the 2000 consent required part of the site to be dedicated for road widening as indicated on DP 561268, in accordance with the RTA’s letter. In partial compliance with that condition, on 2 June 2003 the then co-owners of the land, Loulach and Mondray Pty Ltd, lodged DP 1052593. That was a plan of subdivision which subdivided lot 1 in DP 127190 and lot 1 in DP 166828 to create 2 lots, which were lot 11 (with the area of 1051 m2) and lot 12 (with an area of 399.8 m2). Lot 12 corresponded to lots 13 and 14 in DP 561268, being the land adjoining Pennant Hills Road. The plan stated that “lot 12 is required for road and after construction will be dedicated as public road under section 10 of the Roads Act 1993.” However, the land was not dedicated.

37. Turning to the planning restrictions applicable to the land, at least for the last 40 years, the land which has become lot 12 has been zoned for the purposes of a road. The zoning and other planning constraints applicable to the land which is now lot 11 have varied. That occurred as follows (taken from the history to which the parties’ planning experts agreed).

38. On 1 June 1979, the Minister made Interim Development Order No 1 – City of Parramatta under s 342Y of the (former) Local Government Act 1919 (NSW). This order zoned lots 13 and 14 of DP 561268 5(c2) Special Uses (County Road Widening Purposes).

39. On 21 July 1989, the Minister made the Parramatta Local Environmental Plan 1989 (City Centre), which relevantly replaced the Interim Development Order (cl 4(2)) and which zoned lots 13 and 14 “9(e) Reservations (Arterial Road Reservation)” (Ex 6, Tab 10). Under that zoning, the only development which was permitted with consent was “arterial road widening; arterial roads; utility installations (other than gas holders or generating works)”, and all other purposes were prohibited. The same LEP zoned the balance of Loulach’s land as 3(f) (City Centre Zone).

40. On 20 August 1999, State Regional Environmental Plan No 28 – Parramatta commenced, providing that the 1989 LEP no longer applied to the site. The area which became lot 12 was described as “Land reserved for road widening see clause 72”. The Height Map and the Floor Space Ratio Maps showed a maximum height of 15 metres and a maximum FSR of 2:1 for the land which became lot 11.

41. Highly significantly for the purposes of this litigation, on 21 December 2007, the Minister made the Parramatta City Centre Local Environmental Plan 2007. It may be noted that Loulach bought out its co-owner in 2006, shortly before the 2007 LEP was made. It may be inferred that the 2007 LEP was preceded by the statutorily mandated processes of consultation with affected public authorities, a draft being provided to the Director General, certification by the Director General, public exhibition and consideration of submissions (as required by (former) ss 62, 64, 65, 66 and 67 of the Environmental Planning and Assessment Act 1979 (NSW)). The evidence does not disclose whether Loulach was involved in that process, or when it first learned of the altered planning controls upon its land.

42. By the time the 2007 LEP commenced, lots 11 and 12 had been created. Lot 12 was zoned “SP2 Infrastructure”. Lot 11 was designated a “Key Site”. The maximum building height increased to 40m, and the FSR increased to 4:1.

43. The Key Site designation attracted the operation of cl 22B of the new LEP. That clause prevented development on a Key Site, if the capital value exceeded $1 million, unless an architectural design competition which was consistent with the City Centre Development Control Plan had been held in relation to it (subject to a presently irrelevant qualification in cl 22B(5)). Further, cl 22B(6) authorised the consent authority to grant consent to a building on a Key Site which exceeded the floor space ratio or the height by up to 10%, but only if “the design of the building or alteration is the result of an architectural design competition” and the Director General’s concurrence had been obtained. This became referred to as the “bonus” height or FSR. Clause 22B(8) provided that an architectural design competition was to be conducted in accordance with procedures approved by the Director General from time to time.

44. Design competition provisions such as cl 22B seem to have originated in the Sydney CBD, and are found in the Liverpool and Penrith LEPs (see Liverpool City Centre Local Environmental Plan 2007, cl 22B and Penrith City Centre Local Environmental Plan 2008, cl 26). So far as I am aware, they were relatively unusual provisions in the New South Wales planning and design regime in 2008 and 2009.

45. Although the architectural design competition imposed a new precondition to Loulach developing the site, it is obvious that the relaxation of the height and FSR restrictions amounted to the potential for the land to be exploited much more profitably than had previously been the case. As will be seen below, Loulach was not slow in seeking to take advantage of the new regime.

Scope of duty applicable to first representation

46. Although RMS denied it owed a duty to take reasonable care in the provision of advice in its letter of 19 August 2008, and maintained that stance in its closing written submissions, it did so only briefly, reflecting the difficulties confronting the proposition. In oral address counsel initially passed over this issue entirely. Following an exchange, I understood RMS to have accepted that it owed a duty to take reasonable care in responding to Loulach’s agent, but denied that it was required to take reasonable care, in answer to a request for the “time factor”, in relation to whether this road was in fact required for road widening.

47. It is as well as a matter of transparency to reproduce the exchange:

“HIS HONOUR: Is this a submission ultimately about scope? Your predecessor gets a formal enquiry, ‘Need to know time factor for road widening.’ You respond saying, ‘Don’t worry, not in the next decade.’ If it turns out that in fact you’re digging up the street right next door in a year’s time just when the developer wants to do their development, and that causes all sorts of loss, and it turns out you were negligent in saying not before a decade, are you saying there was no duty owed? Because that strikes me as a difficult submission.

KIDD: Well, no. I’m not saying that but that’s not this case.

HIS HONOUR: I accept that. That’s why I say it’s scope. I understand you at the moment to say you don’t accept there was a duty to take reasonable care about whether this road was in fact required for road widening.

KIDD: Yes.

HIS HONOUR: You do accept – I’m putting this very crudely - you do accept there was a duty to take reasonable care in answering the very question you were asked to answer. Something like that.

KIDD: Yes. No, I - we accept what your Honour said, with respect, and we say, well, no one is suggesting that what we said as regards the timing was incorrect so as to be a causally effective breach, if any.

...

HIS HONOUR: ... I understand that, therefore, to be an issue about scope of duty, rather than existence of duty.

KIDD: Yes.”

48. If I am wrong about the effect of the exchange, I would in any event conclude that the RTA was under a duty to take reasonable care in responding to the Property Information Inquiry Form. The negligent provision of information by a statutory authority to a private person who was evidently intending to rely upon it was held to give rise to a duty in L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 150 CLR 225; [1981] HCA 59. A duty was held to arise in similar circumstances (an inquiry through a non-statutory mechanism to a council on a matter known to be important to the inquirer) in Woollahra Municipal Council v Sved (1996) 40 NSWLR 101 at 126-127 (Clarke JA) and 146 (Cole JA). There is nothing like the factors which were influential in Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 (the practice of the Board not to supply information leading to the estimate of cost being supplied to two local Members of Parliament which was then passed on to the plaintiff, and the fact that the Board was “kept in the dark” by the plaintiff as to the significance of the estimate of the cost of a water connection: see at [46]-[49]).

49. I have borne in mind the fact that at its highest there was merely a proposal for road widening, and the caution expressed in San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 359; [1986] HCA 68 as to the difficulty in imposing a duty where what is represented is something less than a “solid and unalterable basis for action”. This does not stand in the way of the imposition of a duty owed by the RTA. The land was zoned consistently with its future use as a road. The existing zoning materially impacted upon how the land might be developed, and I would infer that the reality or otherwise of the proposal would be highly significant if any attempt were made to rezone the land.

50. RMS did not dispute the correctness of the following statement of principle, on which Loulach relied, by Meagher JA (with whom McColl JA and Sackville AJA agreed) in Ku-ring-gai Council v Chan (2017) 224 LGERA 330; [2017] NSWCA 226 at [77]:

“The presence of reliance and assumption of responsibility can provide an exception to the general rule that damages are not recoverable for pure economic loss, even if that loss is reasonably foreseeable: Woolcock at [22]; Brookfield at [127]. The most familiar example is the negligent misstatement cases, which depended on proof of ‘known reliance (or dependence) or the assumption of responsibility or a combination of two’: Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1; 2001 [HCA] 19 at [73]–[75] (Gaudron J). In Tepko, the plurality (Gleeson CJ, Gummow and Hayne JJ) at [47] (citing Barwick CJ in Evatt at 571) described the features of the ‘special relationship’ in which the law will import such a duty of care as requiring that ‘the speaker realize or the circumstances be such that [it] ought to have realized that the recipient intends to act upon the information or advice’ in connection with some matter of business or serious consequence and that the ‘circumstances must be such that it is reasonable ... for the recipient to seek, or accept, and to rely upon’ the information or advice.”

51. Here there was both reliance and assumption of responsibility. The inquiry form and Mr Steele’s response establish a clear case of the voluntary assumption of responsibility by the RTA in respect of a particular, identified landowner, Loulach. Further, the inquiry manifested an ostensible intention to rely on the response for a “serious purpose” (“Owner wants to develop site, need to know time factor for road widening”). The language of “serious purpose” may be traced to statements in Shaddock at 253 by Mason J (Gibbs CJ referred to similar effect to the “gravity of the inquiry” at 236), in Tepko by Gaudron J at [74] and by Kirby and Callinan JJ at [146] and ultimately to Barwick CJ’s reference to “in connexion with some matter of business or serious consequence” in Mutual Life & Citizens’ Assurance Co Ltdv Evatt (1968) 122 CLR 556 at 571; [1968] HCA 74.

52. But it is not enough merely to conclude that the RTA owed Loulach a duty to take reasonable care. Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; [2000] HCA 61 illustrates the point. The undoubted duty owed by an occupier of land to an entrant who suffered physical injury while on the land, did not extend to liability for physical injury sustained by a tenant’s employee from an attack by unknown assailants in the carpark after the owner had turned off the lighting. Gleeson CJ framed the inquiry thus at [17]:

“That an occupier of land owes a duty of care to a person lawfully upon the land is not in doubt. It is clear that the appellant owed the first respondent a duty in relation to the physical state and condition of the car park. The point of debate concerns whether the appellant owed a duty of a kind relevant to the harm which befell the first respondent. That was variously described in argument as a question concerning the nature, or scope, or measure of the duty.”

53. Hayne J made the same point at [102], although his Honour used the language of the “extent” of the duty. Likewise, “scope” is a familiar term used to describe the area within which a fiduciary must not acted self-interestedly: see for example Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559; [1995] HCA 18 and Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 206, although other terms are also deployed. For example, Bryson J referred to “the defined area”, outside which “a person under a fiduciary duty retains his own economic liberty”: Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 at 15. While the terminology may vary, the point is that some conduct by a person subject to a duty may nonetheless fall outside its operation.

54. RMS advanced two submissions in support of its case that the first representation fell outside the scope of any duty. Principally, it emphasised that Blueprint’s question was as to the “time factor”, seemingly directed to whether any work would be undertaken by RMS in the near future. It was said that while the RTA was under a duty to take reasonable care in answering that question, the duty did not extend to the answer as to whether there was a road widening or realignment proposal at all, something about which (and this was the second submission) Loulach and its agent Blueprint were already fully aware.

55. I accept neither submission. I cannot accept RMS’s submission that its duty to take reasonable care did not extend to the question whether there was a road widening or realignment proposal at all. If there was no such proposal, because the possibility which had resulted in the zoning and separate lot many years before had been abandoned, then the inquiry as to “time factor for road widening” had to be answered differently. Test the matter this way. An answer “not in the next decade” which did not engage with whether or not there was an extant road widening or realignment proposal may have been literally true, but it was apt to be materially incomplete if in fact there was no extant road widening proposal. RMS’s submission as to the claimed narrow scope of the duty invites the Court to conclude that although a duty to take reasonable care lest Loulach suffers economic loss would be owed in relation to advice when the road widening or realignment was to take place, no such duty was owed in relation to advice whether road widening or realignment was to take place at all. I do not consider that such a delineation would be sound in principle. No authority was cited to support such a narrow approach.

56. In relation to RMS’s second submission, I accept that Loulach and Blueprint were labouring under the belief that there was an extant road widening proposal. That is how the land had been zoned, after all, for at least 30 years, and Loulach had been involved in the decision in around 2003 to create lots 11 and 12 in accordance with the condition of the council’s consent. But I do not regard this as excluding a duty of care. As Loulach submitted, a person “labouring under a misapprehension as to the true facts does not make them less vulnerable to a representation confirming that representation”. It would be passing strange if a duty were owed to a purchaser of the site who lacked knowledge of the dealings in 2000 and 2003 which led to the creation of lots 11 and 12, but no duty was owed to Loulach. More generally, the primary mechanism which tends to be employed by the law to restrict claims in such circumstances is causation, not existence of a duty of care.

57. Hence I conclude that, as Loulach alleges, in making the first representation in the RTA’s 19 August 2008 letter, it assumed a duty to Loulach to take reasonable care in relation to the provision of information and advice in that letter, including as to the existence of a road widening proposal.

Existence of duty – second representation

58. There is of course no “test” or “touchstone” or “general principle” governing when a duty of care should be imposed on a relationship. The Australian recognition of the inutility of “proximity” in Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59 esp at [48] has more recently been mirrored in the United Kingdom Supreme Court in Robinson v Chief Constable of West Yorkshire Police [2018] AC 736; [2018] UKSC 4 at [21] (Lord Reed JSC) and Darnley v Croydon Health Services NHS Trust [2018] UKSC 50, [2018] 3 WLR 1153 at [15] (Lord Lloyd-Jones JSC). Indeed, the fact that other common law jurisdictions, such as Canada (Cooper v Hobart [2001] 3 SCR 537; 2001 SCC 79, and see now Deloitte & Touche v Livent Inc [2017] 2 SCR 855; 2017 SCC 63 at [22]-[45] and [140]-[150]) and Singapore (Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] SGCA 37; [2007] 4 SLR 100 at [71]-[73]), presently cling to a universal test (or perhaps more accurately a universal framework: see D Tan and Y Goh, “The Promise of Universality” (2013) 25 Singapore Academy of Law Journal 510 at 512-514), is a notable divergence in the structure of the law of negligence.

59. In the United Kingdom, there is a negative rule that pure economic loss is not recoverable unless there is a special relationship between the claimant and defendant arising out of an assumption of responsibility: NRAM Ltd (formerly NRAM plc) v Steel [2018] UKSC 13; [2018] 1 WLR 1190 at [18]-[24]. In Playboy Club London Ltd v Banca Nazionale del Lavoro SPA [2018] UKSC 43; [2018] 1 WLR 4041 Lord Sumption JSC said at [7] that it was fundamental to this way of analysing the duty that the defendant was assuming a responsibility to an identifiable (although not necessarily identified) person or group of persons. But a broader approach prevails in Australia.

60. Contrary to submissions which are sometimes made, the analysis of the so-called “salient features” does not inevitably involve a consideration of all 17 of the matters identified in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [103]. The existence or non-existence of a duty of care does not turn on a “tick a box” approach. Enumerating a list of factors can sometimes distract from the fact that a legal test is essentially evaluative. I respectfully agree with what Fullagar J said, in a different context, in Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 193, as to not slavishly checking off the factors, “as if one were counting spots on some strange creature to see if it was indeed the species of leopard illustrated in the picture book.”

61. As Allsop P said at [104] — the paragraph immediately following the Stavar enumeration — the list “provides a non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content”. In a case such as this, where the plaintiff has suffered pure economic loss flowing from a negligent representation to the consent authority for a pending development application, the four most significant features in the evaluative inquiry are (a) assumption of responsibility, (b) reliance, (c) vulnerability and (d) inconsistency with the statutory regime.

62. The representation was not made to Loulach (or its agent). Nor was it made in response to a request from Loulach (or its agent). It was made to the council, as part of its assessment of Loulach’s application for development consent. In terms of assumption of responsibility, the position is quite different from the RTA’s response, on its own form and after accepting an administrative fee, to Blueprint in August 2008.

63. Secondly, reliance is important. “[I]n cases of negligent misstatement, such as Tepko Pty Ltd v Water Board, reasonable reliance by the plaintiff on the defendant authority ordinarily will be a significant factor in ascertaining any relevant duty of care”: Gummow and Hayne JJ, with whom Gaudron J agreed, in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 at [149], applied by the Court of Appeal in Newcastle City Council v Shortland Management Services (2003) 57 NSWLR 173; [2003] NSWCA 156 at [75]. An applicant for development consent will have already formulated its application, which was being assessed by the consent authority. It did not occur in the present case, but the consent authority might in some cases grant consent, having taken into account the submission from the RTA, without even consulting the applicant any further. Thus there seems to be no necessary reason why the response from the RTA need be disclosed to the applicant. (If the consent authority were minded to refuse consent, or impose a condition adverse to the applicant, by reason of what the RTA said, it might be expected that it would be brought to the applicant’s attention. But that need not be so). But the question whether or not the RTA was subject to a duty to take reasonable care enforceable on the part of an applicant for development consent when it responded to the council seems unlikely to depend on whether the council disclosed the response to the applicant. It is difficult to see reliance sufficient to generate a duty of care on the part of a person who did not seek and might at least in theory never learn of the RTA’s submission.

64. I also find it difficult to see how Loulach was especially vulnerable. The outcome of the application was in the hands of the local council. The local council might accede to or reject what the RTA suggested. If the local council acceded to the RTA’s submission, then the applicant enjoyed a right of appeal to the Land and Environment Court. However, it must be acknowledged that the information about whether there was an extant widening or realignment proposal was peculiarly within the knowledge of the RTA.

65. But the weightiest consideration is the inconsistency, or at least tension, between the posited duty of care and statute. The council was obliged, by cl 104 of the Infrastructure SEPP, to give prompt notice of Loulach’s application to the RTA. This obligation was part of a suite of provisions in Division 17 of that SEPP dealing with development on or adjacent to roads and road corridors. The development proposed by Loulach was a “traffic-generating development” (at least by reason of the fact that it contained more than 50 car spaces: see the second item in Schedule 3 of the SEPP). The Infrastructure SEPP had only relatively recently come into force when Loulach applied for development consent, but a clause analogous to cl 104 had also been central to the precursor, SEPP 11. The essential structure of both was a directive to consent authorities (a) to notify the RTA, (b) not to determine applications until 21 days after the RTA had been notified, and (c) to take into account any submission from the RTA. Plainly enough, if the obligations imposed upon the council and the right conferred upon the RTA were to be meaningful, the RTA was required to provide a response within 21 days.

66. There must have been a large number of traffic-generating developments throughout New South Wales each year. Further, traffic-generating developments were apt to include some of the largest and most complex developments in the State. The policy in the SEPP contemplated a 21 day response, irrespective of the complexity of the development, and irrespective of the number of other applications notified by consent authorities across the State at the same time.

67. The aim of the Infrastructure SEPP was, relevantly, to provide for consultation with relevant public authorities during the assessment process: cl 2(f). The Infrastructure SEPP fell short of making the concurrence of the RTA a precondition to the grant of development consent. In other words, although the RTA could make a submission opposing a development, even then that would not preclude consent from the consent authority, nor was the consent authority required to put in place the conditions suggested by the RTA.

68. There is, to say the least, a tension between the obligation imposed on the RTA to provide submissions conducive to safety and efficient traffic management on the one hand, and the economic interests of the applicant for development consent, particularly an applicant which was a profit-seeking developer. As RMS submitted:

“The relevant statutory function and power required RMS to give paramount consideration to maintaining traffic safety for the benefit of the public. The performance of that function and exercise of that power by making a submission to Council under clause 104(3) is incompatible with the existence of a private law duty to take reasonable care to avoid economic loss to a developer resulting from that submission. The existence of such a private law duty would give rise to inconsistent obligations in the performance of the statutory function or conflicting claims upon the exercise of the statutory power.”

69. Generally speaking, the more onerous the conditions, the less profitable the development. Some of the conditions proposed by the RTA were apt to cost Loulach money, if they were accepted by the council. For example, the RTA noted in paragraph 3 that “The location of parking bays 23 and 46 are not desirable as there may be conflicts between vehicles accessing these spaces and vehicles on the adjacent ramp”. Paragraph 11 stated that “The proposal only allows for a SRV, it is desirable to provide for an 8.8 metre vehicle, ie for garbage removal”. Altering the configuration would cost time and money, and it is certainly possible that, say, altering the layout so as to permit vehicles larger than an SRV (“Short Rigid Vehicle”) would impose a constraint which might in turn reduce the space available for other purposes.

70. It is difficult to see how the common law would impose a duty upon the RTA to take reasonable care lest its suggestions expose Loulach to expense, where the statutory regime invited the RTA to employ its expertise to provide advice as to the safety and efficiency of the built structure, and its impact on traffic during the construction phase.

71. On one view, the duty alleged by Loulach clashes directly with the purpose evidently designed to be effected by the mechanism in the Infrastructure SEPP applicable to traffic-generating developments: cf Sullivan v Moody at [62] and Hunter Health District v McKenna (2014) 253 CLR 270; [2014] HCA 44 at [31]. On another view, the regime created by the Infrastructure SEPP, while falling short of a direct clash, sits very uneasily with a duty to take reasonable care to prevent pure economic loss to the applicant for development consent: see CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390; [2009] HCA 47 at [41], [52] and [55] and Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1; [2014] NSWCA 364 at [161] and [191]-[192].

72. While it is reasonably foreseeable that the RTA’s response would be seen by the applicant, that falls short of being sufficient to impose a duty: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 at [127] and the cases there cited. Bearing in mind the absence of any assumption of responsibility, any direct reliance and the at best attenuated way in which Loulach was vulnerable, and, especially, the statutory regime, I conclude that the RTA did not owe a duty to Loulach to take reasonable care when responding to the council’s reference of the development application to it.

Breach

73. I now deal with breach of duty in relation to both duties alleged by Loulach (assuming, favourably to it, that a duty of care applied to the second representation). Section 5B of the Civil Liability Act provides:

“5B General principles

(1)   A person is not negligent in failing to take precautions against a risk of harm unless:

(a)   the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and

(b)   the risk was not insignificant, and

(c)   in the circumstances, a reasonable person in the person’s position would have taken those precautions.

(2)   In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):

(a)   the probability that the harm would occur if care were not taken,

(b)   the likely seriousness of the harm,

(c)   the burden of taking precautions to avoid the risk of harm,

(d)   the social utility of the activity that creates the risk of harm.”

74. Thus, in contrast with the evaluative so-called “calculus” formulated by Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40; [1980] HCA 12, the outcome of which is a binary determination of whether or not there has been a breach of duty, Loulach will fail unless it establishes each of the matters contained in paragraphs (a), (b) and (c). The position, however, is more nuanced than that, because it is difficult to see how the determination of a “not insignificant risk” within the meaning of s 5B(1)(b) can be made without regard to both the probability of the risk eventuating and the likely seriousness of the risk, and if that be so, then the consideration of s 5B(2)(a) and (b) is not confined to an analysis of the s 5B(1)(c) steps which a reasonable person would take, but also to the s 5B(1)(b) determination of a not insignificant risk. Such subtleties regularly recur when judge-made law is transposed into a statute. However, these complexities do not arise in the present case, in light of the parties’ commendably focussed approach to breach, albeit one which was driven, it might be inferred, by the forensic choices made by RMS.

75. RMS did not call Mr Steele, the author of the 19 August 2008 letter. Nor did RMS call either Mr Doug Moore, the senior land use planner who signed the RTA’s letter to council dated 30 January 2009, or the assistant planner, Ms Angela Malloch, to whom any inquiries were suggested to be directed and who, it may be inferred, was its primary author. Nor did RMS adduce evidence that those people were unavailable.

76. Moreover, RMS did not adduce any direct evidence of the steps which were in fact taken by anyone involved in making the first and second representations (working papers, a draft letter or even the usual practice of those persons).

77. Instead, an elaborate attempt was made by RMS to adduce evidence of the information systems in place in 2008 and 2009, to which resort would have been had when responding to an inquiry of this nature. That attempt led to a large factual dispute, namely, whether there was, in mid 2008 and early 2009, an extant proposal on the part of the RTA to widen or realign Pennant Hills Road using lot 12. The parties treated the entirety of the question of breach as standing or falling on this issue. That is to say:

1. RMS did not contend that the risk of harm to Loulach was not foreseeable, or insignificant. Nor did RMS say that even if in truth there was no road widening or realignment proposal in 2008 or 2009, it should not be found negligent for the failure to take further precautions to prevent the incorrect information being supplied in the first and second representations.

2. Conversely, Loulach accepted that if indeed there were an extant road widening or realignment proposal in 2008 and 2009 which affected lot 12, it had failed to make out any material misrepresentation.

Overview of submissions

78. Loulach submitted that there was no road widening or realignment proposal in 2008 or 2009. It relied upon three matters. The first was the failure on the part of the RTA to call testimonial evidence from anyone directly involved in creating the proposal or preparing the letters dated 19 August 2008 and 30 January 2009 which stated that there was a proposal.

78. The second was a letter from RMS dated 5 November 2013, years after the event. That letter was written in response to letters from Loulach’s former solicitors directed towards the question of compensation for the acquisition of lot 12, and to a meeting held on 20 August 2013 between RMS and Loulach. The letter stated as follows:

“At this meeting the company representatives were again advised that RMS does not need Lot 12 for any current or future road works and is not the responsible acquiring authority. However, in order to assist the owners, RMS was prepared to consider whether terms of agreement between the RMS could be quickly resolved. RMS as advised at the meeting was, subject to a prompt agreement, prepared to offer an amount of $100,000 for the subject land should the owners wish to sell it to RMS. Subject to the company being prepared to make a claim for this amount then RMS would seek formal approval to complete the sale on these terms.

However, as the RMS’s proposal was rejected by the company representatives at the meeting it is advised that as RMS is not the acquiring authority for lot 12, it is suggested that your client contact PCC to discuss any acquisition proposal.” (emphasis added.)

80. Loulach relied upon the first sentence of the passage reproduced above in support of the proposition that there was no extant proposal to widen or realign the road in 2013, from which it may be inferred that the same was true in 2008 and 2009.

81. Loulach added that the senior acquisitions officer who signed that letter, Mr Awindra Prasad, had not been called to explain why what he said was incorrect, and indeed had been involved in the litigation, witnessing some of RMS’s affidavits.

82. RMS said that the 2013 letter was written more than five years after the event, and that there had been a material change of circumstances. It relied upon three paragraphs in the same letter which preceded those reproduced above:

“On receipt of Blueprint’s further submission and upon perusal of the PCC letter, RMS carried out further investigations. The investigations again confirmed that the classification of the section of Pennant Hills Road between Church Street, North Parramatta and the James Ruse Drive interchange at North Rocks was revoked as a ‘Main Road’. This section of Pennant Hills Road was declared ‘Secondary Road Number 2114’ vide notification in Government Gazette Number 38 of 12th March 2010. A copy of the Gazette Notice is attached for your perusal.

RMS wrote to PCC on 1st February 2013 advising that the designation of Lot 12 in Deposited Plan 1052593 as SP – classified road should be removed from PCC’s Local Environment Plan. It seems that the PCC officer who wrote the letter dated 16th May 2013 was not aware of the road reclassification or the RMS letter of 1st February to PCC.

A meeting with representatives of Loulach Developments Pty Ltd and Blueprint Property was held on the 20th of August 2013 where the status of the road classification was explained.”

83. RMS submitted that in light of the change in classification of Pennant Hills Road, no inference could confidently be drawn from what was said in 2013 as to its status in 2008 and 2009. That submission has force. But it is double-edged. Very little is known from the evidence as to the circumstances in which the road came to be reclassified.

84. Thirdly, and most elaborately, Loulach advanced submissions as to the status of documented efforts to realign and widen Pennant Hills Road in the late-1960s and early-1970s. It said that they, in effect, withered on the vine in light of opposition from the council. RMS contended that the same documents supported a finding that there had been a road widening or road realignment proposal.

85. These cannot be described concisely, but go to a central aspect of the litigation. I turn to them below.

The Roll Plan and other RMS records

86. In the 1960s and 1970s, planning for road widenings and road realignments took place using a document known as a “Roll Plan”. Mr Neil Forrest, who had worked for RMS for some 34 years, since 1984, gave evidence that:

“A Roll Plan records any proposed schemes, including widening, channelisation and realignments. The procedure at RMS is that, in the event that planning in respect of infrastructure assets changes, the Roll Plan is updated to reflect the changes.”

87. Those matters may readily be inferred from the face of the document itself. However, RMS’s case extended to the converse submission, which was that the fact that a proposed scheme appeared on a Roll Plan was itself evidence that the proposal remained extant. Loulach disagreed. Loulach said, with respect correctly, that the Roll Plan was not some form of title. That said, it is natural for institutions which are required to take long term positions on the development of land to maintain records which comprehensively record the institutional position. The country, parish and town maps which were maintained by government from very early days in the colony’s history are examples: see “A Brief History of the Records of the Registrar General” (March 2013), published by Land and Property Information, pp 13-14. An example mentioned by me during the hearing, may be seen in Awabakal Local Aboriginal Land Council v Minister Administering the Crown Lands Act [2008] NSWLEC 124 at [39] and [93]. Those matters were not of course in evidence in this trial, but I refer to them only by way of example of what might otherwise readily be inferred by anyone who chose to think about how an organisation with responsibilities to plan decades ahead might organise its records.

88. There was uncontroversial evidence that in around 2010 the information on the Roll Plan was transferred onto an electronic database known as “PIMS GIS”. That system seems to have permitted a skilled user to search a site, and also readily to obtain access to the other primary records of decision making which were annotated on the Roll Plan. It is not quite clear how an officer would have interrogated the information in 2008 or 2009, but nothing substantive will turn on that for present purposes.

89. The current Roll Plan maintained by RMS for the intersection of Church Street, Pennant Hills Road and Albert Street is (a computerised image of what was originally) “Roll Plan 532”. That document contains an immense quantity of information, and is central to the litigation. It is reproduced as an annexure to these reasons.

90. First, it will be seen that lot 12, on the north eastern corner of the intersection of Pennant Hills Road and Albert Street, is shaded pink, as is the balance of the eastern portion of the land on that block adjoining Pennant Hills Road. The land shaded pink is divided from the balance of the land by a green line. Nearby, there is an annotation as follows (it is the red text in the top right corner of the plan):

“(A) PLAN 13c2932A SUBJECT TO CONCURRENCE OF POLICE TRAFFIC BRANCH DEPT OF MOTOR TRANSPORT & COUNCIL

(B) AMENDED BOUNDARY SHOWN [green line]

(C) ACQUISITION BY NEGOTIATION OF LAND REQUIRED

APPROVED BY C.E. (URBAN)

DATE: 9-9-71 FILE: 13/354.1445

PLAN: 13c2932A

LAND ACQN FILE [this was left blank]

PS No 71/54”

It may be noted that where I have written “[green line]” there was a green line. Next to the words “LAND ACQN FILE” there was a gap. Other documents show that “C.E. (URBAN)” is a reference to the “Chief Engineer (Urban)”.

91. There are five other similar annotations on the plan recording proposals. Every other approval included a file number reference next to the words “LAND ACQN FILE”.

Three other approvals on the Roll Plan

92. Before turning to the submissions based on that annotation it is convenient to say something about three of the other approvals recorded on the Roll Plan.

93. First, one of the other approvals has been struck through, in a way which is suggestive of an approval being revoked or abandoned. It is worthwhile explaining this in a little detail, given the issues in this trial. The approval is in black text on the middle of the left hand side of the plan, near the word “CEMETERY”. The striking through is in red. The approval identifies a date of 11 March 1960, a file 354.1137, and a “LAND ACQN FILE” of 354.1597. Near that annotation (below it, adjoining Church Street) there may be seen an annotation on the plan identifying an adjustment to the boundary of Church Street. The words state:

“Widening Scheme approved 11.3.1960

File 354.1137”

94. It may be inferred that a decision was made to approve a scheme to widen Church Street in 1960, that the decision was documented in file 354.1137, and that a file for that acquisition, numbered 354.1597, was opened, but that at a time unstated on the Roll Plan the proposal was abandoned.

95. Secondly, another of the approvals has a note “PROPOSED ABANDONMENT OF PREVIOUSLY APPROVED BOUNDARY ‘L’-‘M’”. (This is the approval closest to the bottom right corner of the plan.) That suggests a process of some formality which applied when a proposal was abandoned.

96. Thirdly, the Roll Plan contains another annotation, not struck out, to the west of the intersection (it is the closest annotation to the yellow and black circle “486”):

“RE-ALIGNMENT (M.R. ACT) No 244

‘LAND ACQUISITION’ FILE No 354.1597

‘RE-ALIGNMENT ACTION’ FILE No 354.1768

MAIN ROADS ACT RE-ALIGNMENT

Gazette No 25 of 17-3-67 folio 919

Effective date 17-3-67”

97. Its significance is twofold. First, it will be seen that the same land acquisition file number may be given to more than one realignment. Secondly, the annotation picks up the gazettal mentioned in the second representation, and is suggestive as to how that representation came to be made. That page of the NSW Government Gazette of 17 March 1967 contained a notification by the Commissioner for Main Roads that:

“In pursuance of the provisions of section 27E of the Main Roads Act, 1924-1965, The Commissioner for Main Roads who proposes to cause the alignment of parts of Main Road No 184 – Church Street, between North Rocks Road and Pennant Hills Road (State Highway No 13) within the City of Parramatta, to be realigned pursuant to Division 1 of Part VB of the Main Roads Act, 1924-1965, and to apply the realignment method of acquisition to the lands affected by such realignment, being the lands described in the Schedule hereto, hereby notifies that plans of the proposal have been approved by His Excellency the Governor, with the advice of the Executive Council, and that such plans (catalogued as 184.S.281, 184.S.283 and 184.S.284 in the Department of Main Roads and lodged with the Registrar General’s Department on 10th June, 1966, as to part and on 16th September, 1966 as to the remainder and numbered as Deposited Plans 229,890, 230,898 and 230,897 respectively) may be inspected at the Department of Main Roads and copies of such plans may be inspected at the Parramatta City Council Chambers, Parramatta.

SCHEDULE

Lots 21-29 inclusive, Deposited Plan 229,890.

Lots 5-27 inclusive, Deposited Plan 230,898.

Lots 1-20 inclusive, Deposited Plan 230,897.

DMR 354-1,768”

98. Section 27E of the Main Roads Act 1924 (NSW) authorised the Commissioner, if he proposed to apply the “re-alignment method of acquisition” to submit a plan of the proposal to the Governor and to serve it upon landholders. If the Governor approved, and notification was gazetted then by reason of s 27E(6), then

“the owner of any land or building or work affected by such re-alignment shall not construct, build, place, reconstruct, rebuild, replace, or repair any building or work or portion of a building or work standing upon the land between the old alignment and the new.”

99. Each of the three deposited plans mentioned in the gazettal was in evidence. Deposited Plans 229,890 and 238,898 depict Church Street further to the north-west than its intersection with Pennant Hills Road and Albert Street. Deposited Plan 230,897 reaches the northern side of the intersection of Church Street and Pennant Hills Road and Albert Street. Lots 1-11 appear on the eastern side of Church Street between Factory Street and the corner of Pennant Hills Road, with lot 11 cutting into the Roman Catholic Cemetery on the opposite side of Pennant Hills Road from Loulach’s land. Lot 12 is at the corner of Church Street and Factory Street, while lots 13-20 are on the western side of Church Street between Factory Street and Albert Street. These lots represent a proposed widening of Church Street to the north (or north-north-west) of the intersection. It is clear that the realignment shown on these three deposited plans does not extend to Loulach’s land, and therefore that the prohibition in s 27E(6) was inapplicable, at least insofar as it might be based on the 1967 gazettal.

100. Hence RMS accepted that what had been said in the second representation was incorrect. The 1967 gazettal did not affect Loulach’s land. But RMS maintained that the error was not material, because in fact Loulach’s land was affected by a different road widening or realignment proposal, one formally made some four years later, on 9 September 1971.

The 9 September 1971 annotation

101. RMS’s case was straightforward. It pointed to the annotation on the Roll Plan reproduced above which related, inter alia, to Loulach’s land, and noted that it remained extant on the Roll Plan, from which it was to be inferred that it was extant in 2008 and 2009.

102. A card on the file numbered 13/354.1445 that the Chief Engineer (Urban) approved on 9 September 1971 a plan identified as 13c2932A for the “Intersection with Church St – 184 and Albert St North Parramatta”, to be effected by “Boundaries Negotiation”. The approval was described thus:

“Plan 13c2932A Subject to concurrence of Police Traffic Branch, Dept of Motor Transport and Council

Boundaries as shown in red

Acquisition by negotiation of land required. PT C.A.R.”

103. There is another document recording the approval, as follows:

104. The Chief Engineer, also sometimes described as the “Engineer-in-Chief”, was Mr E Mullin. The stamp “APPROVAL No” in the bottom right corner, which has been completed “71/54”, is suggestive, at least to my eyes, of a register of approvals for each year, of which that recorded in this memorandum was the 54th. If so, that would mean there were approximately 6 approvals each month. But there was no direct evidence about any such register.

105. The reference at the bottom of the page to the plan having been “charted” on 23 November 1971 is borne out by a separate document (Ex D, p 29) which bears that date and shows the approximately 6½ perches which came to become lot 12. It appears to correspond with the 6½ perches comprising lot 4 of DP 237613 created in 1969, mentioned above.

106. The significance of the revision of the plan 13c2932A is explained by another document:

“The Divisional Engineer previously submitted a layout plan 13c2932 for this intersection and was advised on 21st April, 1971 that the layout was satisfactory subject to amendment at Albert St (east). Three possible amendments were suggested. The preferred treatment was to cul-de-sac Albert Street. However, as there as a Post Office on the corner which could have had access problems, two less desirable alternatives were also suggested.

The Divisional Engineer has advised in his memorandum of 1st July 1971 that the Post Office is being relocated to a different site so the anticipated access difficulties will not arise. The only practicable alternative is the one which closes Albert Street. He has therefore amended plan 13c2932 accordingly, renumbered it 13c2932A and submitted it for approval.”

Documents recording events after the 9 September 1971 approval

107. An internal administrative document (Ex D, p 15) records that an approval card was created on 6 October 1971. The document also suggests that individual acquisition files should be created, but that there was some uncertainty about this, because there has been handwritten the words “Land Acquisition file if none in existence 13/354.1515?”. However, another document (Ex D, p 21) records “Please establish a new file” with number 13/354.1507 for the acquisition of part of the land owned from “Phozzie, Joseph and Naamen MALOUF (Tenants in Common)”, described as “SH 13 – Intersection with MR 184 – Church St and Albert St” and “Part of Lot 1 Sec no 42” pursuant to Widening Plan No 13.5.254 and Proposed channelisation 13/354.1445.

108. An internal memorandum from the Assistant Valuer dated 28 January 1972 referring to the 9.9.71 approval identified 6 lots, including 13/354.1506 “Acq from Dr NG Malouf” and 13/354.1507 “Acq from Messrs NG, JM and PA Malouf” (Ex D, p 9). Another document, which appears to be a layout sketch dated 9 June 1960 (Ex D, p 10) identified the subject land on the Albert Street corner as owned by NG Malouf and identified as 13/354.1506, while the neighbouring land to the north was 13/354.1507 and is shown as owned by “Phozzie, Joseph and Naamen Malouf”. Those file numbers are also found in red on the Roll Plan. The land at the corner of Albert Street and Pennant Hills Road is marked “NG Malouf 13/354.1506” while that immediately to the north along Pennant Hills Road is “P, J, N Malouf 13/354.1507”.

109. Returning to the 28 January 1972 document, the Assistant Valuer estimated the cost of acquisition of all 6 parcels of land at $100,000, but then continued:

“Funds will need to be made available from the allocation for property acquisitions in the County of Cumberland. C.A.R. Funds could apply.

Please advise if acquisition action should be initiated in the light of the present funds position.”

110. Other documents refer to “C.A.R. Funds”, which I would read as references to funds made available pursuant to what was then the Commonwealth Aid Roads Act 1969 (Cth). The history of federal aid in this area is summarised by R H Burke, “History of Commonwealth Grant legislation Relating to Roads and Road Transport 1902-1972”, Occasional Paper No 8 (1977), published by the Bureau of Transport Economics.

111. However, the 28 January 1972 document bears a handwritten annotation dated 7 February 1972:

“Mr Mullen [sic] advised not required for 3 years. Defer action for at least 6 months.”

112. It is important to note that Mr Mullin, the Chief Engineer, was the man who had authority to authorise the 9 September 1971 proposal, and so his advice plainly carried weight.

113. Almost two years later, on 1 November 1973, the Chief Engineer signed a memorandum stating that some land at the intersection of Church Street, Albert Street and Pennant Hills Road (also known as State Highway 13) had been included in Construction Programme 19/19 and was “Likely to be programmed in one year” (Ex D, p 8).

114. A memorandum dated 10 January 1974 (Ex D, p 26), whose subject included lots 1 and 2 in DP 561264 and lot 14 in DP 561268, and which was said to be in response to the Engineer-in-Chief's minute dated 7 January 1974, stated:

“Further to my conversation with the Principal Surveyor and Property Officer on 8th instant, attached is a part copy of plan No 0013.354.GS.0609 which was submitted for approval on 5th December, 1973 on Head Office papers 13/354.1445.

This revised layout followed a re-examination of the area taking into consideration the approved boundaries, minimal widening through St Patrick’s cemetery (and Belmore Park) and proposals for widening Pennant Hills Road northwards.

It is recommended that acquisition action in respect of land in part filed plan 166828, shown by pink colour on sketch No 6542 attached to your minute under reference, be withheld pending approval to the revised boundary.” (underline in original)

115. The part copy which appears to have been attached (it bears the number 0013.354.G but the balance has been cut off) identifies two boundaries on the eastern side of Pennant Hills Road: an “Approved Boundary” and a “Proposed Road Boundary following discussions with Council Officers”. Both cut into the lots adjoining the eastern side of Pennant Hills Road, but the latter cuts further in than the former (Ex D, p 27).

A. To get it to the DA, you mean?

Q. Yes.

A. It would've been, I don’t know, about 100 grand, around there.”

208. That evidence is inherently plausible, and I accept it.

209. After the development application was lodged, further funds were spent prior to consent being granted. The council’s assessment report identified, for example, a revised draining plan and a construction management plan which were sought by the council on 2 April 2009 and, it may be inferred, were provided on 7 May 2009 (the report notes that “Additional information submitted to Council” on that date). Mr Loulach did not recall those reports, but accepted that “if they requested it, we would have provided it”.

210. Loulach had a series of responses to this, succinctly encapsulated in oral submissions in reply:

“[F]irstly, Loulach does not sue for the cost of preparing development application, for the development application. Secondly, interelatedly, the interest which the duties of care arose to protect was not Loulach’s interest in not wasting money on a development application. Thirdly we say Loulach’s case is that it was always going to spend money on a development application whether on the sub-optimal development or the desired development and the damage is not the expenditure of money on the development application, but as we say, the fact that the development that was constructed was a sub-optimal one. And fourthly, until development consent was given, it could not be said with any certainty that the misrepresentations had caused any loss, and consent might be refused for reasons wholly unrelated to the RMS misrepresentations.”

211. I do not accept that these submissions are an answer to a Limitation Act defence based on the first representation.

212. First, the question posed by s 14(1)(b) does not turn on the particular heads of damages a plaintiff claims or does not claim. It looks to the plaintiff’s cause of action, and asks when that cause of action first accrues: D’Agostino v Anderson [2012] NSWCA 443 at [7] where Bathurst CJ collected earlier authorities. In Hawkins v Clayton (1988) 164 CLR 539 at 587; [1988] HCA 15, Deane J said that “A cause of action in negligence is complete when the damage caused by the breach of duty is sustained. It is at that time that, in the ordinary case, the cause of action ‘first accrues’”.

213. Put differently, a plaintiff suing on a cause of action for which damage is the gist cannot escape the operation of the statute merely by declining to sue for heads of damage which have been suffered more than six years before commencement, and confining its claim to those heads of damage that were suffered within time. As Hodgson JA said in Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262 at [26]:

“once there is actual loss, even if there is also the chance of further loss, a plaintiff must commence proceedings within the appropriate limitation period, and can obtain damages reflecting actual loss suffered plus damages reflecting the chance of any further loss.”

214. Loulach’s second point seemingly invokes what was said in the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 527; [1992] HCA 55 (which principles were reiterated in Commonwealth of Australia v Cornwell (2007) 229 CLR 519; [2007] HCA 16 at [16]-[17]):

“Economic loss may take a variety of forms and, as Gaudron J noted in Hawkins v Clayton ((1988) 164 CLR 539 at 600-601), the answer to the question when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission. The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected (See Cane, Tort Law and Economic Interests (1991), pp 16-17). With economic loss, as with other forms of damage, there has to be some actual damage (Forster v Outred and Co [1982] 1 WLR at 94). Prospective loss is not enough.”

215. The passage in Professor Cane’s work cited (at 16-17) categorises the types of economic interests protected by the law of negligence as follows:

“There are at least four different types of economic loss or damage which may flow from interference with or invasion of economic interests. The first consists in reduction of (the value of) existing assets: for example, damage to physical property or the incurring of out-of-pocket expenses. Often the law compensates for such reduction in terms of the value of the affected assets; in the case of physical property, the law sometimes compensates in terms of the cost of restoring the assets to their former state. The second type of loss consists in the interruption of a stream of income which the plaintiff expected would continue uninterrupted: earnings or profits are the typical examples. Such loss may or may not be consequential upon physical damage to property. … The third type of economic loss consists in the failure to realize or obtain some increase in one’s assets which was expected to materialize in the future: for example, failure to obtain an expected legacy under a will – this type of loss is often referred to as the loss of an expectation. The fourth type of ‘loss’ is only loosely so called because it consists in an accretion to the assets of the defendant.”

216. In the present case, the loss falls within both the first and the third categories. Loulach seeks to limit its claim to the losses falling in the third category. However, as RMS submits, it cannot do that. Some of the losses within the first category, namely, the expenses incurred in the development application process, occurred more than six years prior to the commencement of proceedings, with the result that the entirety of the claim is statute-barred.

217. I do not regard the High Court in Wardley as purporting to lay down as a rule that each type of “economic interest” reflects a distinct cause of action. To the contrary, damages in actions for negligence will not uncommonly include more than one category of the losses described by Professor Cane. The analysis required by s 14(1)(b) does not turn on the “interest” protected by the common law duty to take reasonable care. It turns upon when the cause of action first accrued. There can be no dispute that wasted expenditure (expenditure which would not have been incurred, which did not advance approval for the Desired Development) incurred in reliance on a negligent misrepresentation is a head of recoverable damages. Once a class of economic loss is recognised as being recoverable following a particular species of negligent act or omission, then the ordinary rules as to the accrual of a cause of action apply. Indeed, in Wardley, the joint judgment proceeded to quote at 529, without any apparent disapproval, the proposition stated by Dunn LJ in Forster v Outred & Co [1982] 1 WLR 86 at 99:

“[I]n cases of financial or economic loss the damage crystallises and the cause of action is complete at the date when the plaintiff, in reliance on negligent advice, acts to his detriment.”

218. Thirdly, it may be accepted that Loulach would always have spent money on a development application. But that is not to the point. Insofar as Loulach spent money prosecuting the development as constructed, it spent funds which it would not have spent had it been constructing the Desired Development. The evidence did not descend to the detail of the extent to which the funds expended by Loulach would have been spent in order to make and prosecute a development application for its Desired Development, or would have been thrown away in the event that consent for the Desired Development was obtained. But the development for which consent was obtained was substantial, and the funds spent were substantial, and there is no reason to doubt that a not insignificant amount would have been wasted expenditure had Loulach been able to obtain its Desired Development. There must inevitably be expenditure thrown away at the level of detailed plans and reports if an applicant for development changes its preferences. For example, none of the planning or engineering work involving the third level of underground car parking which was actually done could ever have contributed to giving approval for the Desired Development.

219. I am conscious that the onus rests on RMS to make out the facts sufficient to establish is limitation defence: Segal t/as Segal Litton & Chilton v Fleming at [27]. In Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289 at [14] (a claim for pure economic loss), Handley JA with the agreement of Powell and Giles JJA said:

“In order for the plaintiffs’ cause of action to be complete, the plaintiffs’ actual damage must be ‘measureable’ (Wardley (at 531)), or, in the words of Lord Reid in a personal injuries case (Cartledge v E Jopling & Sons Ltd [1963] AC 758 at 772) the damage must be ‘beyond what can be regarded as negligible’.”

220. To similar effect is the statement of Ipp JA (with whom Beazley and Campbell JJA agreed) in Christie v Purves [2007] NSWCA 182; (2007) Aust Torts Reports 81-899 at [40]:

“The general rule can be stated as follows. For economic loss (as with other forms of damage) to be sustained, there has to be some actual, measurable damage that is beyond what can be regarded as negligible. While prospective loss, alone, is not enough, a cause of action of negligence will accrue when the plaintiff first suffers any actual damage of the kind described. The cause of action will then be regarded as having accrued, even if some of the plaintiff’s damages are prospective. The plaintiff may then claim for the actual damages that have been incurred and should quantify and claim for the prospective damages (such as, for example, future loss of profits).”

221. So too here. Even though the parties chose to run this litigation without disclosing Loulach’s financial position or the actual costs of the building which was construed, the inherently plausible fact that Loulach incurred costs which amounted to wasted expenditure after the first representation was confirmed by the admissions made by Mr Loulach in cross-examination. Loulach’s cause of action on the first representation accrued when it suffered actual non-negligible measurable damage in preparing the development application, and the fact that it only claims damages for the future loss of profits does not alter that fact.

222. Fourthly, I do not accept that Loulach could not sue RMS until development consent had been granted. It was said that the money spent by Loulach could not be said to have been wasted as a result of anything RMS did or failed to do, if the development consent was ultimately refused for particular reasons. It could sue for the wasted expenditure on the development application which, on its case, it would not have made (in the case of the first representation) or which it would not have prosecuted (in the case of the second representation). Loulach could have brought a claim prior to development consent being granted, on the basis that it never would have pursued a sub-optimal development were it not for the RTA’s misrepresentation. I do not see how the loss is “contingent” in the relevant sense.

223. Loulach may be seeking to bring to bear an argument that if, say, it sued for the misrepresentation in advance of obtaining development consent, then RMS might defend the claim saying that development consent would never be granted. I do not regard that submission as sound. Damages are assessed in 2019 with the benefit of knowledge acquired after the event, and whether or not a limitation defence is made out insofar as it turns upon damages is determined on the same basis.

224. Finally, I am conscious of the fact that on some occasions the same breach of duty can give rise to different causes of action. This may occur when there is independent causation of separate losses, such as the two subsidences caused by the defendant’s negligence in Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127. This is a question of fact and degree. In Bowen and Another v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 at 424, Cooke J said (in the context of a property damage claim), after quoting a passage from Salmond on Torts:

“Presumably, however, it is a question of fact and degree whether damage is sufficiently distinct to result in a separate cause of action. On the evidence in the present case it seems to me that the damage suffered by the building was not truly continuous; and that between the slight damage during the McKays’ ownership and the considerable damage after the Bowens bought there were a difference and an interval marked enough to justify treating the latter damage as distinct.”

225. The passage quoted (as it appears in the most recent edition of Salmond (21st ed, 1996) says:

“Both on principle and on authority (Maberley v Peabody & Co [1946] 2 All ER 192) it seems that when an act is actionable only on proof of actionable damage, successive actions will lie for each successive and distinct accrual of damage. But where the damage sued for in the second action is not in reality distinct from that sued for in the first, but it merely a part of it or consequential upon it, it cannot be recovered. In other words, compensation for the first damage includes compensation for all the ulterior consequences of that damage whether already accrued or not, but it does not include compensation for entirely distinct damage accruing from the defendant’s act independent of the damage first sued for.” (at 552-553)

226. It is plain that those principles are inapplicable here. I did not understand Loulach to seek to answer the limitation defence on this basis.

227. With respect to the second representation, the position is different. The onus rests upon RMS to establish measurable and non-negligible loss in the period between 30 January 2009 and 5 June 2009. RMS cannot quantify any amount which was spent by Loulach in that period. Still less can it quantify any amount which can be shown to have been thrown away. I would accept from the rather flimsy evidence in the council’s assessment report that in April and May 2009 some further reports were provided to the council. However, there is no sound basis to conclude either that those reports resulted in Loulach incurring a non-negligible expense or that they were wholly thrown away in the event that the “Desired Development” were approved. It is not unheard of for a consultant retained on a project to provide an amended report or plan without making an additional charge for doing so.

228. I conclude that RMS has failed to discharge its onus of proving that the plaintiff suffered measurable, non-negligible loss after the second representation on 30 January 2009 and prior to the commencement of the limitation period on 5 June 2009. Accordingly, while Loulach’s first cause of action is statute-barred, the second is not.

Damages

229. I am conscious of the obligations of a judge at first instance to make contingent findings or at least to explain why it is inappropriate to do so: see the authorities collected in Chief Commissioner of State Revenue v Adams Bidco Pty Ltd [2019] NSWCA 34 at [3]-[4].

230. Loulach’s case on damages was based on obtaining a rezoning of lot 12 and then obtaining consent to build and then constructing its “Desired Development”. There was agreement between the parties’ quantity surveyors that the construction cost of the Desired Development was $15,803,549 (excluding GST). The same experts reached near agreement on what they regarded as the cost of constructing the development actually built. Loulach’s expert concluded an amount of $16,520,674 (excluding GST) while RMS’s expert concluded it was $15,721,621 (excluding GST). Both exercises were conducted on the basis that both buildings were built commencing in 2010, and included rates and costings as of that date, essentially, based on the indexation contained in a standard publication (“Rawlinsons”). The difference is attributable to the fact that Loulach’s quantity surveyor included certain costs relating to the building’s façade (certain cladding and louvres) and anti-raid bollards. These higher quality finishes were not found on the Desired Development, which had a rendered and painted concrete finish.

231. Both experts agreed that the Desired Development would have been quicker to build, which was estimated to save some $460,000. The Desired Development had only two rather than three underground car parking levels.

232. Separate valuation experts retained by the parties agreed on what the revenue would have been from the actual development and from the Desired Development. Those amounts were (after accounting for selling costs and GST) $23,483,816 from the actual development and $27,369,594 from the Desired Development.

233. The valuers accounted for reduced land holding costs and interest expenses and the reclaiming of GST in ways which need not be explained, but were agreed, reaching an agreed “Gross Development Profit” from the Desired Development of $8,067,676. The dispute as to the cost of the actual development was the main driver of the difference between the Gross Development Profit from the development actually made. Loulach estimated this at $2,770,963; RMS at $3,730,983.

234. Loulach sued for the difference between the profit on the Desired Development and the profit on the actual development, which was some $5.3 million (on the figures from its experts) and some $4.3 million (on the figures from RMS’s experts).

The dispute as to the construction costs of the actual building

235. RMS’s expert, Mr Tony Makin, explained why he deducted some adjustments from the costs of the actual development. He said that he did so “in order to compare the developments on a like for like basis”. He said that the curtain walling and the Alucobond finish were “a more expensive wall finish that the render finish included in the [Desired Development]”, and the louvre detail was an added enhancement in the building as constructed. Mr Makin was not ultimately required for cross-examination.

236. Loulach submitted that it was wrong for RMS’s expert to deduct costs relating to the façade (cladding, curtain walling, louvres) and anti-raid bollards. It was said that “One does not assess the cost of the Actual Development by deducting from it all the features it has but which do not appear in the Desired Development”.

237. The dispute between the parties as to the the “notional” construction cost (based on the façade, louvres and bollards) is more fundamental than it might appear.

238. An essential integer of Loulach’s claim for damages was the profit it had actually made (and therefore the sales revenue it had actually derived and the construction and other costs it had actually incurred) on the building it had actually constructed. None of that material, which must have been available, was adduced by either party. Rather than establish the costs which it had in fact incurred, the revenue which it had in fact derived and the profit which it had in fact achieved, Loulach left this to expert opinion.

239. That had the benefit of permitting the experts to fairly readily reach agreement as to the lower costs and greater revenue from the (necessarily hypothetical) Desired Development as compared with the (artificially hypothetical) costs and revenue from the actual building. RMS said this was a matter which called the entire exercise into question:

“The expert evidence fails to prove the actual profits Loulach derived from the construction and sale of the actual development, and therefore cannot prove that the profits Loulach might have earned from the Desired Development would have been greater. As stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970: “… all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”. See also ASIC v Hellicar (2012) 247 CLR 345 at [250]-[256]. Where precise evidence is obtainable, the court naturally expects to have it: Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422 at 438.

The resulting assessment of profit from the Actual Development of $2.770 million is very materially below the profit from the Actual Development that Mr Loulach swore [affidavit at [40]] was earned from the actual development of more than $11.247 million. This very large disparity gives rise to serious doubts that the theoretical assessment of the profit from the Actual Development bears any resemblance to the actual profit earned by the plaintiff.”

240. Loulach responded by stating that RMS had not objected to the experts’ opinions as irrelevant and by adding:

“there is no inherent reason why actual cost cannot be proved by calling an expert in cost assessment. The cost assessor’s opinion is evidence of the actual cost. The costs assessor’s expertise is in assessing cost, whether cost that has been incurred or cost that might be incurred. In some (perhaps many) cases, it will be more helpful to the Court to obtain a pithy expert estimate of actual cost than to receive a cache of business records.”

241. I remain troubled by this. In principle, I accept that it is possible to prove construction costs historically incurred by asking a quantity surveyor to give an opinion based on appropriate assumptions. It is possible to prove revenue actually made by asking a valuer to give an opinion based on appropriate assumptions. And in the present case, where Loulach has not in fact sold all of the lots in the development it has built, some hypothetical opinion evidence is necessarily required if there is to be a comparison with the Desired Development.

242. However, not only is there no evidence of actual costs or actual revenue, there is no evidence at all before me of why it is impracticable to prove Loulach’s actual costs or actual revenue. That is to say, there is no evidence explaining why the best evidence of costs and sales has not been made available. Instead, as RMS points out, there is the glaring discrepancy between Mr Loulach’s statement of profit of more than $11 million from the actual building with the expert’s figures being only a fraction of that amount. The discrepancy must have been obvious to Loulach in advance of the trial. Yet no step was taken to explain how Mr Loulach came to have that view (which might be attributable to error, or excluding components of the cost).

243. It may be that an examination of the history of the litigation would shed light on this. I do not know whether there was discovery, or whether subpoenas were sought as to the actual costs incurred, and the actual revenue derived, by Loulach. On the view I take, it is not necessary for me to take this any further.

244. To return to the million dollar question as to the bollards and louvres and other features, I do not think that Loulach can have its cake and eat it. Its case is based on a comparison between two hypothetical exercises. The louvres and bollards which were actually installed turn out to constitute a significant proportion of the total hypothetical costs (more than 5% of the total). Loulach invites me to infer that that may be used to measure the diminution in profit which it has sustained. If I am to accept the logic of the exercise advanced by Loulach, which eschews regard to actual costs and actual revenue and actual profits, it is wrong to attribute an extra $1,000,000 profit to the Desired Development because that development has no louvres and bollards while the building actually build incorporates them. The point of the exercise is to value the loss suffered by Loulach for failing to exploit the opportunity to build on lot 12. The unchallenged evidence of Mr Makin accords with my own views, namely, that including the cost of those finishes detracts from an apples versus apples comparison.

245. The result is that I proceed on the basis that Loulach’s Gross Development Profit (incorporating interest costs and GST) on the Desired Development would have been: $8,067,676 - $3,730,983 = $4,336,693.

246. So far as the evidence discloses, Loulach retains lot 12 to this day. If the Desired Development had occurred, it would have been sold. Loulach accepts that it must account for this. It relies on an offer by RMS to buy it for $100,000. That is a relatively low amount, but reflects the fact that it is now highly problematic to exploit that land. I accept that submission.

247. Further, in its closing submissions, Loulach accepted that “some contingencies should be deducted from this to reflect: (i) the possibility that an amended design would be necessary to reflect design jury feedback; (ii) the possibility that a variation from FSR standards would not be approved; (iii) the possibility for delays causing increased interest costs.” I turn to these issues now.

The extra costs attributable to delay

248. RMS makes a series of further points. First, the Desired Development could not be built until lot 12 was rezoned, and it was agreed that a rezoning would take 12-18 months. This has at least three consequences.

1. Loulach would have incurred additional holding costs;

2. Loulach’s construction costs would have been incurred in a later year, and would likely be higher;

3. Loulach’s realisation of profit would be delayed.

249. The first and second were explored at trial. The third may not have been, but it is real (and might exceed the first and second). Deriving an immediate profit is, other things being equal, more valuable than deriving the same profit 12-18 months later. An apples versus apples comparison would make allowance for the net present value of the delayed profit derived from the Desired Development. The evidence did not expose the discount rate. If anything turned on this, I would take the analysis further, but on the view I take, it is unnecessary to do so.

Risks

250. Secondly, RMS pointed to the risks associated with the Desired Development, as follows:

“[N]one of the calculations take into account risks, including:

(a)   the risk that the rezoning of Lot 12 necessary to enable the Desired Development to proceed would not have been procured;

(b)   the risk that the Desired Development would not have been a design submitted by an entrant in an architectural design competition required to be undertaken by the relevant planning controls;

(c)   the risk that the Desired Development would not have won any architectural design competition required by the applicable planning controls;

(d)   the risk that Council would not have granted development consent for the Desired Development;

(e)   the risk that the Desired Development would not be constructed in accordance with the assumed construction program;

(f)   the risk that there was a cost blowout such that the cost of construction of the Desired Development assessed by the Quantity Surveyors was not correct;

(g)   the risk that the gross realisation values that the valuers assessed for the Desired Development would not have been achieved in the market place.”

251. Those risks fall into different categories. On the premise of the exercise, which is that RMS advised that it did not require lot 12 for road widening, then I agree with Loulach that the analysis should proceed on the basis that a rezoning would more likely than not occur, and that no specific deduction should be made for the contingency that it might not have.

252. Likewise, there are the ordinary risks that construction would be delayed or costs might blow out (there might be months of inclement weather, or the property market might collapse). These are the sorts of imponderable considerations in any counter-factual hypothesis, such as are regularly required in the assessment of damages. These can be accommodated in a discount for contingencies. I understood Loulach to acknowledge as much.

Difficulties from cl 22B and the design competition

253. That deals with the matters identified by RMS in paragraphs (a), (e), (f) and (g) above. However, there are risks of a different character, which are specific to the particular facts of Loulach’s case, in paragraphs (b), (c) and (d). Clause 22B(4) of the 2007 LEP was applicable. It relevantly provided that:

“Consent must not be granted to the following development to which this Plan applies unless an architectural design competition, that is consistent with the City Centre Development Control Plan has been held in relation to the proposed development ...”.

254. RMS observes that there is no evidence that the Desired Development would ever have been entered in, let alone succeed, in any architectural design competition, and submits that there is good reason why this Court should conclude that it would not be entered.

255. Zhinar, the ultimately successful architect in 2008, prepared the “Desired Design” drawings. However, RMS submitted that there was no evidence from the Zhinar architect saying that the Desired Development was a design that would have been submitted in a design competition.

256. There was a divergence of views as to the FSR on the Desired Development. The “development summary” on the design claims an FSR of 4.4:1. However, RMS’s expert Mr Dickson performed his own calculations and said that the FSR was 4.75:1. There was evidence that there was some debate in the industry as to how to calculate something as basic as FSR, having regard to matters such as kitchen, bathroom and toilet exhausts. There was no evidence (or, at least, neither party pointed to evidence) as to how the council would have calculated FSR in 2009 or 2010. I do not propose to resolve that issue, because once again on the view I take, nothing turns on it.

257. An FSR of 4.4:1 was the absolute maximum permitted under the new LEP and included all of the 10% “bonus”. RMS pointed to evidence that the Desired Development fell far short of being a design which would have won the competition. RMS’s architect Mr Olson expressed the following opinions:

“In my opinion, the ‘desired development’ would not have been successful as it is not a ‘gateway’ building. It is not tall enough and is not distinctive enough in its height or its architectural expression to be any different to other nearby 9 storey buildings. It is not tall enough to create a gateway building that is symmetrical with the 14 storey building opposite, on the S-E corner of Church Street and Albert Street.

The Design Competition Brief (Appendix A) states on page 1 that ‘the subject site is regarded as a “gateway” site having a high visual prominence from the northern approaches to the Parramatta CBD; the site in effect marks the commencement of the CBD environment.’ The Design Jury Selection Criteria (Appendix B) includes a criterion that the design ‘Performs as a gateway building, contributes to skyline etc.’

The Design Jury said of the Zhinar design that ‘the bonus of additional height (40m +10%) is warranted, to allow a more elegant solution to the glass top of the tower form.’ The Jury requested that the design be amended to have a more vertical, rather than square, glass box on the top of the building. The Jury says that ‘the proposal attempts to celebrate the corner and the prominent location of the site ...’. The Jury says ‘the glass lantern offers a different expression to the top of the building and is a new solution for Parramatta. The design does appear responsive to the different outlooks and orientations’.

Regarding the relationship of the proposed tower to the scale of surrounding buildings, the Jury says of the winning scheme by Zhinar ‘the proposal changes the scale of the surrounding buildings which is intended by the controls.’ (my emphasis). This is a clear statement that, where the planning controls allow a height of 40m on the subject site, and lower heights on adjoining sjtes, that the City of Parramatta intends that buildings be built to at least 40m high (or higher, given the 10% bonus) and not 28m or 9 storeys in the ‘desired development’.”

258. I regard that opinion as inherently plausible. It was maintained in cross-examination. Mr Olsson said that “a building much taller than nine storeys would be necessary to be approved”. A deal of his cross-examination was directed to this. The cross-examiner pointed to the absence of a requirement in the LEP that the gateway sites contain tall buildings, and to the fact that the “bonus” could be directed to FSR rather than height. Mr Olsson conceded as much. However, in response to the questions that there were ways other than height to achieve the desired “gateway” on Loulach’s land, Mr Olsson gave this evidence:

“Q. ... [O]ne of the means by which one can design a building which might attract attention as being a higher quality building would be to design the building so as to celebrate the corner - namely to build a lower building right to the corner so it is seen for some distance and identified as a superior building?

A. I don’t believe that would be make a gateway development for many reasons. The fact is that it would be the same height as existing buildings adjoining; which is not the intention of the key sites legislation. The intention is that the - the - different to these - to the adjoining nine storeys buildings and that - and that a taller building is obviously going to be much more visible and much more the creator of a gateway.”

259. That evidence accorded with the opinion of Loulach’s architect, Mr Dickson, that:

“The ‘optimal’ design before the court appears to be undertaken for a valuation purpose and was not undertaken to meet a design competition brief. The design demonstrates that additional floor space can be achieved with a lower built form.”

260. There is a further, separate problem with the Desired Development: cross-ventilation. Cross-ventilation is important in designing high density residential buildings. This was explained by Mr Olsson as follows:

“Regarding the environmental design performance of the competition winning building, the Design Jury said that a positive aspect of the design was that ‘the proposal as amended in response to the concerns expressed by the Jury achieves reasonable unit layouts and an improved ground floor. The dual cores deliver good cross-ventilation’. By my calculations (Appendix C), the percentage of cross ventilated apartments in the tower design is 82% (Appendix D). I have also calculated the percentage of cross-ventilated apartments in the ‘desired development’ and only 43% of apartments are cross-ventilated (Appendix E). This is an important difference, as the design and the subsequent Development Application would have been assessed under the SEPP 65 legislation for residential development, which includes the Residential Flat Design Code. The minimum requirement for the percentage of cross-ventilated apartments was 60%. The relatively poor performance (43%) of the ‘desired development’ would have meant, in my view, that it would not have won the competition. If a scheme with only 43% cross-ventilation was presented to the Design Excellence Advisory Panel it would have been strongly criticised, to the extent that the whole design would have had to be changed to have greater than 60% cross-ventilated apartments.”

261. I did not understand that evidence to be controversial. Mr Olsson was not cross-examined on it. Mr Dickson took the view that whether or not the Desired Development would win a design competition was peripheral.

262. True it is, as Loulach submits, that any development application will likely go through a series of refinements during the course of the assessment process. It is also possible (although I do not express a concluded view) that consent might be given to a design which did not win a design competition. I can contemplate for example a case where the jury was split, and it was accepted that there were two outstanding, and very different, leading candidates. In such a case, I am willing to proceed on the basis that the design which came a very close second could be approved by the council.

263. But Loulach’s Desired Development did not, according to the expert evidence, have any realistic chance of achieving success. Nor did it have any realistic chance of achieving a close second. The expert evidence accords with my own impression of the merits of the design. It is a design whose purpose is to maximise profit. It is not a gateway building. And it does not even comply with the cross-ventilation standard.

264. I accept that on the premises which underlie the analysis in this part of the judgment, Loulach suffered some loss by reason of the representations. However, Loulach expressly eschewed a case based on the wasted expenditure on the development application. It had no fall-back case for calculating the lost profit if some other plan had won the design competition. Such other plan would have been materially different from the Desired Development, and there is no sufficient basis in the evidence to determine what loss of profit — if any — Loulach would sustain.

265. Had it been necessary to determine damages, I would have found that Loulach had not established any of its claimed damages.

Orders

266. For those reasons I find RMS breached a duty it owed to Loulach to take reasonable care in making the first representation, but that the breach did not cause Loulach any loss, that Loulach’s claim is statute-barred, and in any event Loulach has not made out its case for damages. I find that RMS did not owe a duty to Loulach to take reasonable care when making the second representation. If I am wrong about that, I would conclude that that duty was likewise breached, but that likewise it did not cause any loss, and that Loulach has not made out its case for damages.

267. The proceedings must be dismissed. If there is a basis to depart from the usual exercise of the discretion as to costs, the orders below permit that to occur either consensually, or by a further determination on the papers.

268. I make the following orders:

1.   Judgment for the defendant.

2.   In the event that either party seeks some special order as to costs, the parties are to supply agreed short minutes of order, or alternatively the orders for which they contend and submissions and any evidence in support, within 14 days of today.

3.   In the absence of any application under order 2 above being received by my Associate within 14 days of today, the plaintiff is to pay the defendant’s costs.

4.   The exhibits are to be returned.

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Roll Plan Annexure (1.49 MB, pdf)

Amendments

18 April 2019 - Hearing dates: year inserted.

Decision last updated: 18 April 2019