Port Stephens Shire Council v Booth - [2005] NSWCA 323

NEW SOUTH WALES COURT OF APPEAL

CITATION: Port Stephens Shire Council v Booth & Ors; Port Stephens Shire Council v Gibson & Anor [2005] NSWCA 323

FILE NUMBER(S):
CA 40517/04
CA 40821/04

HEARING DATE(S): 16 June 2005

JUDGMENT DATE: 27/09/2005

PARTIES:
Matter No. 40517/04:
Port Stephens Shire Council - Appellant
Robert Arthur Booth and Janette Jay Booth - First Respondents
Michael William Burcher - Second Respondent
Matter No. 40821/04:
Port Stephens Shire Council - Appellant
Barry Robert Gibson & Jeanette Olivea Gibson - Respondents

JUDGMENT OF: Beazley JA Giles JA Hunt AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC795 (Newcastle), DC796 (Newcastle), DC812 (Newcastle), DC813 (Newcastle)

LOWER COURT JUDICIAL OFFICER: Sidis DCJ

COUNSEL:
In both matters:
R R Stitt QC & A M Pickles - Appellants
J Sexton SC & R Marshall - Respondents

SOLICITORS:
In both matters:
Riley, Gray-Spencer - Appellants
Carroll & O'Dea - Respondents

CATCHWORDS:
Negligence - council's approval of development and building applications - council's issue of s 149 certificates - land within zone of noise affectation in ANEF - purchasers of land from developer - discussion of duty of care owed by council to purchasers in relation to grant of approvals - whether council in breach of duty of care - whether in breach of duty of care in relation to issue of s 149 certificates - whether defence of good faith under s 149(6) made out - losses claimed included that paid more for land than true value - whether causation of loss established - whether later draft or proposed ANEF with less affectation meant no loss suffered - whether interest properly included in damages. D

LEGISLATION CITED:

DECISION:
(1) In 40517/04, grant leave to appeal and direct the filing of the notices of appeal within seven days; (2) In 40517/04 and 40821/04, appeals dismissed; (3) The claimant/appellant to pay the costs of the opponents/respondents.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40517/04
CA 40821/04
DC 795/99
DC 796/99
DC 812/99
DC 813/99
BEAZLEY JA
GILES JA
HUNT AJA
Tuesday 27 September 2005

PORT STEPHENS SHIRE COUNCIL v BOOTH & ORS
PORT STEPHENS SHIRE COUNCIL v GIBSON & ANOR

Judgment

BEAZLEY JA: I agree with Giles JA.
GILES JA: The Moffat family had been established in the Swan Bay area within Port Stephens since 1893, originally as timber cutters and then as oyster farmers. In the 1960s an oyster shed was built on their land for use in oyster processing. In the early 1970s the shed was converted into a restaurant known as Moffat’s Oyster Barn.
On 17 February 1993 a development application was lodged by Lloyd Moffat Investments Pty Ltd (“LMI”) with Port Stephens Shire Council (“the Council”) for the development of a budget level holiday cabin resort on the family’s land, to be known as Fisherman’s Village. The proposed development involved construction of forty one new cabins, to be used with an existing four cabins and the restaurant as an eco-friendly tourist facility, together with infrastructure works. The land was to be subject to a community plan subdivision in accordance with the Community Land Development Act 1989, the effect of which would be that lots in the subdivision would be sold with the purchasers having shared interests in community property. On 21 April 1993 the Council granted development consent.
At some time prior to 22 December 1993 LMI lodged a building application with the Council. It was approved on that date.
Construction of the cabins and the infrastructure works commenced. From late 1993 onwards a number of purchasers entered into contracts to purchase lots in the community plan from LMI. The community plan was registered on 27 September 1994. The purchasers “off the plan”, and other purchasers who thereafter entered into contracts to purchase lots, completed their purchases. Many of them purchased for investment, intending that their cabin(s) be rented out to persons holidaying at Fisherman’s Village.
On the registration of the community plan a neighbourhood association was constituted. It appointed Fisherman’s Village Pty Ltd (“FV”) as managing agent for the neighbourhood plan. FV also entered into agreements with purchasers to act as agent for renting out their cabins.
The Williamtown RAAF Base was situated approximately nine kilometres to the south-west of Swan Bay. Aircraft from Williamtown used the Salt Ash Weapons Range (“the Range”) for the purpose indicated by its name. The Range was situated much closer to Swan Bay, approximately two and a half kilometres to its south-west.
Until at least late 1995 aircraft noise was not a significant problem to those involved in Fisherman’s Village. Mr Moffat and others said that they were aware of aircraft in the vicinity of Fisherman’s Village, but that the noise did not affect the amenity of the site to the point of discomfort. From late 1995 the aircraft noise increased in frequency of aircraft movements and intensity of noise, although seldom if ever at weekends or at night. Guests at Fisherman’s Village complained. In late 1998 it was decided to operate Fisherman’s Village commercially only at weekends.
In early 1999 proceedings were brought against the Council by LMI, FV and the principals of LMI and FV, Mr Lloyd Moffat and Mrs Michelle Moffat (collectively, “the developers”). Later in 1999 twenty-five proceedings were brought against the Council by lot owners, including LMI and Mr and Mrs Moffat. All the plaintiffs claimed damages for negligence in the grant of the development consent and the building approval, and the lot owners also claimed damages for negligence in the issue of certificates under s 149 of the Environmental Planning and Assessment Act 1979 (“the EPA Act”).
In the statements of claim on which the proceedings went to trial, negligence was alleged -
(a)in granting the development consent and the building approval notwithstanding the situation of the land within the 25 contour in the then current Airport Noise Exposure Forecast (“ANEF”) in relation to the Range, or alternatively in granting them without conditions relating to noise attenuation required in consequence of that situation, and in failing to notify LMI that the Council’s records indicated that the land was situated within the 25 contour and consequently may become subject to noise exposure from aircraft; and
(b)as to the lot owners, also in failing to include in the s 149 certificates an accurate notation to the effect that the land was forecast to be subject to ANEF levels of 25 and above and would therefore be unacceptable for residential development and only conditionally acceptable for hotel, motel and hostel development. (A further allegation was made about a noise pollution level, but negligence in that respect appears to have fallen away and, while mentioned, was not significantly addressed in the judge’s reasons or raised on appeal.)
In February and March 2002 Sidis DCJ heard preliminary questions common to all twenty six proceedings. Her Honour’s reasons, delivered on 8 August 2002, were intituled in two of the proceedings only, one the proceedings brought by the developers and the other proceedings brought by a lot owner, but it appears to have been intended that they should determine the preliminary questions for all the proceedings. The effect of the determination was that the Council owed duties of care to the plaintiffs, and was in breach of the duties of care, in the respects alleged by the plaintiffs, and that the Council had not made out the defence of acting in good faith available under s 149(6) of the EPA Act in relation to the issue of the s 149 certificates.
In June and November 2003 the judge heard the remaining issues in four of the proceedings, all proceedings brought by lot owners other than LMI and Mr and Mrs Moffat. The lot owners were Mr and Mrs Booth (lots 24 and 25), Mr Burcher (lot 21) and Mr and Mrs Gibson (lot 15) (collectively, “the purchasers”). The remaining issues all went to damages. The judge delivered her reasons on 14 May 2004. There were four separate judgments, with much common content and adaption to the circumstances of the particular purchaser(s). Her Honour held that the purchasers were entitled to damages for diminution in the values of their lots and for consequential losses. With the addition of interest, the damages ranged (in round figures) from $98,000 to $110,000. Judgments were given in favour of the purchasers.
These are appeals from the judge’s decisions in the four proceedings. Where the damages are less than $100,000 leave is required, and should be granted. The appeals in the four proceedings encompass the determination of the preliminary questions so far as material to the purchasers, but not so far as material to the developers.
There was a procedural question, whether the judge erred in hearing and determining the purchasers’ claims in advance of the developers’ claims. The substantive questions in the appeals were whether the judge erred in -
(a)holding that in the grant of the development approval and the building approval the Council was in breach of its duty of care owed to the purchasers;
(b)holding that in the issue of the s 149 certificates the Council was in breach of its duty of care owed to the purchasers;
(c)holding that the Council had not made out the defence of good faith under s 149(6) of the EPA Act;
(d)holding that the purchasers’ losses were caused by its breaches;
(e) awarding damages for “diminution in value” of the purchasers’ lots;
(f)awarding interest on the purchasers’ damages; and
(g)awarding the purchasers costs on a solicitor/client basis from 24 October 2003 onwards.
The Council’s written submissions asserted error in making a number of findings of fact. That is sufficiently taken up in considering the substantive questions.
For the reasons which follow, in my opinion the appeals should be dismissed. It is not uncommon, in any complex case, for an appellate judge to see or express some matters differently from the trial judge. Although in my reasons I have to some extent done so, I pay tribute to the industry and analysis evident in the judge’s reasons and her careful attention to her decision-making.
The procedural question
The question was raised, and the purchasers responded to it, only in the parties’ written submissions. It was not made clear what order was sought on appeal if the Council’s submission was accepted.
On 16 June 2003, at the commencement of the hearing of the remaining issues in the purchasers’ proceedings, the Council applied for “an adjournment in order that the issues relating to the claims brought by the Moffat interests may be determined ahead of those which are listed for hearing today”. This is taken from the judge’s reasons in ruling on the application; any formal application was not in the appeal papers.
The judge related the history of the proceedings, including that on 6 November 2002 the four purchasers’ proceedings were put forward as those to be dealt with “on a preliminary basis”, as I understand it meaning prior to the other proceedings. She recorded that the Council had not objected to that proposal; that orders for the filing and service of evidence in respect of those matters had been made; that the proceedings were before her on numerous further interlocutory occasions, which she detailed; that the hearing was specially fixed, and then refixed to commence on 16 June 2003, for dates to be departed from only in exceptional circumstances; and that only on 11 June 2003 was it first suggested that it was “necessary to deal with the Moffat interests ahead of the interests of the individual unit holders”. The judge said that the argument on 16 June 2003 was “that the true cause of the losses claimed by the individual unit owners is mismanagement by the Moffats and the entities which they control that have managed Fisherman’s Village”.
The judge noted that “the issue”, as I understand it meaning the issue of mismanagement as the true cause of the loss, had not arisen recently, and -
“I remain to be persuaded that the necessity exists to take the matters in the order proposed at this late stage by the defendant. It is particularly so since today the plaintiffs in the four cases that are currently before me have informed the Court that their claims are limited to the issue of the true value of their units at the date of purchase, rather than at the date of trial, together with some minor consequential losses. Each party tells me it is ready to proceed to hear them. Should it become apparent that it will be necessary to consider the claims of the Moffats before a decision is made, then I will reconsider the matter and I will reconsider any further application which the defendant wishes to make at the conclusion of the hearing of the matters that are currently before me.”
We were not informed of any further application to the judge by the Council.
In its written submissions the Council put, with considerable elaboration, an argument which came down to the same argument as that noted by the judge. Despite the elaboration, the argument was in generalities. It was repeated that the lot owners’ financial losses were “intricately linked to the conduct of the developers and managers”, and were “influenced by the contracts into which they entered with the developers and their interests”. It was asserted that the “true cause” of the losses incurred by the lot owners was their conduct in entering into the contracts, and the conduct of FV and the directors of LMI in ceasing to let cabins on weekdays after 1998. It was said in conclusion-
“114. Questions of fact arising from the overall management and conduct of the operations of the Resort were relevant to the proceedings concerning LMI. It follows that the trial judge could not properly determine any of the lot owners’ claims until such time as the Court had heard all of the evidence pertaining to these relevant matters. For these reasons it is submitted that her Honour erred in declining the appellant’s application.”
It is difficult to see any substance in the Council’s application to the judge. If the Council wished to contend that the true cause of the purchasers’ consequential losses was their conduct in committing the letting of their lots to others and mismanagement by those others it could cross-examine, lead evidence and put submissions to that end in the purchasers’ proceedings, without the necessity for prior hearing of the developers’ proceedings. In due course it cross-examined at some length on those matters. In the result, however, it was agreed that the purchasers could recover their consequential losses if they recovered the diminutions in value of their lots; there was ultimately no issue between the parties.
Assuming some basis for the application, in my opinion no ground has been shown for error in the judge’s discretionary decision. The Council’s submissions did not suggest one of the grounds for intervention described in House v The King (1936) 55 CLR 499. Their generalities did not demonstrate error of fact or principle, but simply asserted that her Honour had come to the wrong decision. In my opinion, the decision was well open to her Honour, who also reserved to the Council the opportunity to ask her to defer her substantive decision-making until after the developers’ claims had been considered if, in the unfolding of events, her refusal of the application proved to have been inappropriate.
ANEFs and AS2021
An Australian Noise Exposure Forecast (“ANEF”) is a plan of an airport and environs on which noise exposure contours of 20, 25, 30 and 40, and sometimes an intermediate 35 contour, have been drawn. The higher the contour value, the greater the noise exposure. In areas outside a 20 contour it is generally accepted that noise exposure is not of significant concern. Between the 20 and 25 contours noise exposure emerges as an environmental problem, and it increases as the contour value increases.
The contour values designate forecast noise exposure, as distinct from noise level. Noise level is the loudness, sound frequency and duration of a noise event, measured in decibels. Noise exposure as designated by a contour value in an ANEF represents a prediction of the cumulative exposure to aircraft noise during a specified future time period. It is essentially a combination of noise level and frequency of operations, broadly on the basis that a loud noise perceived infrequently and a moderate noise perceived frequently produce similar subjective responses. The computation of the value takes into account the intersection, duration, tonal content and spectrum of audible frequencies of the noise, the forecast frequency of aircraft types and movements and the average daily distribution of aircraft movements in daytime and at night-time. The value represents a predicted daily average noise exposure during the specified future time period. ANEFs commonly forecast noise exposure for a period of a single year. Thus the 2002 ANEF later mentioned was a forecast of daily average noise exposure during 2002.
As a forecast for a future year, an ANEF does not necessarily represent the noise exposure experienced or forecast at the time the ANEF is issued or at any time prior to the stated year. The forecast noise exposure may be experienced prior to the stated year, or it may not be experienced for the stated year or at all. As an average for the year, and given the manner of its calculation, an ANEF also does not necessarily represent the noise exposure forecast to be experienced at any given time in the stated year or at any given place between the contour lines.
The Noise Exposure Forecast (“NEF”) system was developed in the United States in the 1960s, and was refined for use in Australia in the 1980s. It provided, and provides, a valuable tool for planning land use around airports. In 1985, after an initial 1977 version, AS2021-1985 (“AS2021”) was issued as the Australian standard to provide, together with the applicable ANEF, guidelines for determining whether the extent of aircraft noise intrusion made acceptable the activities to be accommodated on a site and the extent of noise reduction and type of building construction required to provide acceptable indoor noise levels for the activities. The standard did not cover the acceptability of outdoor spaces.
AS2021 provided first for identifying “Building site acceptability based on ANEF zones”. The building site would be located on the ANEF plan, and the highest value contour enclosing the site would be determined. Whether the building type was acceptable, conditional or unacceptable would be determined according to a table. Houses, home units, flats, schools, universities, hospitals and nursing homes were acceptable for less than 20 ANEF, conditional for 20 to 25 ANEF and unacceptable for greater than 25 ANEF. Hotels, motels and hostels were acceptable for less than 25 ANEF, conditional for 20 to 30 ANEF and unacceptable for greater than 30 ANEF. Public buildings were acceptable for less than 20 ANEF, conditional for 20 to 30 ANEF and unacceptable for greater than 30 ANEF. Commercial buildings were acceptable for less than 25 ANEF, conditional for 25 to 35 ANEF and unacceptable for greater than 35 ANEF. For light industrial buildings higher contour values were stated, and heavy industrial buildings were acceptable in all zones.
The notes to the table included the warning that the location of the 20 contour was difficult to define accurately, mainly because of variation in aircraft flight paths, and that the procedure for conditional acceptability could be followed for building sites outside but near the 20 contour. Note 3, referable to hotels, motels, hostels, school, universities, hospitals, nursing homes, public buildings and commercial buildings and their conditional acceptability within the relevant zones, stated that “[a]n analysis of building noise reduction requirements by an acoustic consultant should be made and any necessary noise control features included in the design of the building.”

If for the building type the site was conditionally acceptable, AS2021 provided for further steps to be taken. The process was complex, and the complexities were greater than the following brief description suggests. The aircraft types normally operating at the airport, distance coordinates describing the position of the site relative to the airport, and the maximum noise levels (note, noise levels) to which the site would typically be exposed would be determined according to the aircraft types and the distance co-ordinates. Then the reduction in noise level appropriate for building type, with regard also to the particular activities, would be determined, and then the construction requirements to achieve the noise level reductions for the building or various parts of the building. As note 3 indicated, these further steps would typically require professional assistance.
The 2002 ANEF and associated matters
The materiality of noise affectation from aircraft movements, and of ANEF forecasts, to the Council’s land use decisions was well appreciated. Noise affectation from aircraft movements at Williamtown was not in issue in the proceedings; the relevant affectation was from use of the Range. It was common ground that the NEF system could be and was appropriately applied to noise exposure from use of the Range as well as from use of an airport.
There was reference in evidence to a 1985 NEF issued by the Department of Defence (“the Department”), it seems about 1976, in which the site of the future Fishermans Village was between the 25 and 30 contours. There was also reference to a 1990 NEF, it seems issued about 1982, with the site again between the 25 and 30 contours. The table on the two plans differed from that in AS2021 earlier mentioned; it permitted a hotel or motel between the contours without special requirement for acoustic controls, although recommending that residential use should not take place and housing density should be kept to a minimum.
In 1983 the Council’s then Deputy Shire Planner and its Shire Clerk gave evidence before a Parliamentary Standing Committee on Public Works enquiring into facilities for the FA-18 Hornet aircraft at Williamtown. The Shire Clerk stated in his evidence that the Council had decided that no further residential subdivisions would be permitted in area within the 20 or 25 ANEF contours. The Committee’s report included that it would be prudent to “not further compound the noise problem and to develop and rigidly enforce land use zonings of the area around Salt Ash falling at the very least within the 25 ANEF which are compatible with the existence of the range and which reflect land use planning advice implicit in the ANEF system.” It was indicated that there should not be approval of residential land use between the 25 and 30 contours, and that between the 20 and 25 contours planning authorities may consider the incorporation of noise control features in the construction of residences.
In 1989 the Council commissioned a report from Caleb Smith Consulting Pty Ltd (“the Caleb Smith report”). According to the report, the “noise measuring exercise” was instigated by the residents of Swan Bay. As later appears, the report was not made known to the Council’s planning staff. Mr Bowman, a councillor, was present; the report was addressed to the Shire Clerk. An FA-18 aircraft was provided by Williamtown RAAF.
Noise levels were recorded on 21 September 1989 at Lot 232 Moffats Road, Swan Bay, sometimes referred to as Mr Whitehair’s property. The evidence did not establish with precision where the measurements were taken in relation to the future Fisherman’s Village, but it was within the 20 contour on the 2002 ANEF later issued. After discussing the measured noise levels, and taking account of the fact that four aircraft were normally involved in flying the same profiles within the same time period, the Caleb Smith report said that the result would be “30 dB(a) over the extreme limit of noise exposure for residents of the rural area of Swan Bay”.
On 27 February 1992 the Department sent to the Council the plan for a draft ANEF for Williamtown “incorporating civil and military operations to the year 2000”. It said that the ANEF for the Range was being produced separately.
On 13 August 1992 the Department sent to the Council the plan for a draft ANEF for the Range, incorporating the earlier draft ANEF for Williamtown. The covering letter described it as “covering forecast military operations to the year 2002”, and said that it was “proposed that both ANEF’s will be valid to the year 2002”. It said that the draft was provided for the Council’s assistance in land use planning for the area, and drew attention to the “Building Site Acceptability Table”.
On 21 October 1992 the Department sent to the Council the plan for the final ANEF for Williamtown and the Range, the covering letter again describing it as “covering forecast military operations to the year 2002” (“the 2002 ANEF”). There were the same references to land use, planning and the table. The 2002 ANEF showed 20, 25, 30, 35 and 40 contours. Most of the site of the future Fisherman’s Village was between the 25 and 30 contours; a small part was between the 20 and 25 contours, just over the 25 contour line, but all the purchasers’ lots were between the 25 and 30 contours. Endorsed on it was a table, in content identical with the table in AS2021 earlier mentioned, noting “Building site acceptability based on ANEF zones”.
On 16 February 1993 the Department of Planning wrote to the Council recommending that it consider adopting a specific policy concerning the construction of new residential buildings in areas located within greater than the 20 ANEF contour. This caused the Council’s Strategic Planning Manager to prepare a discussion paper, which included under “Current situation” -
“In relation to control of development, Council currently plays only a notification or advisory role in that: -
1.1)Section 149 Zoning Certificates issued on land within the ANEF 25 contour contain the following statement:-
Council’s records indicate that the land may be subject to noise exposure. It is recommended that further enquires be directed to the Director General, Facilities Division, Environment & Heritage Section, Air Force, Department of Defence, PO Box E33, Queen Victoria Terrace, Canberra ACT 2600
It is acknowledged that the above statement can be improved upon in terms of additional information and to cover all land within the ANEF 20 contour as well. Action is currently being instigated to implement these changes.
1.2)Any development consents issued provide advice that the proposed development is on land within the ANEF 25 contour.
This will be expanded to cover all land within the ANEF 20 contour now that the information is available.” (emphasis added)
Under “Possible strategies” the discussion paper postulated applying construction standards “to all developments within effected [sic] areas” as conditions of development and building approvals, by setting development standards in its planning instruments. It questioned matters of costs, reasonableness, enforcement and “does the noise issue really need any more than 149 notification, given that people are aware they are buying land effected [sic] by ANEF and proceed knowingly?”
The Council replied to the Department of Planning on 29 July 1993, enclosing a copy of the discussion paper and advising that it proposed to review its “Planning Instrument” and -
“3)Council currently provides notification pursuant to Section 149 of the Environmental Planning and Assessment Act 1987 in relation to ANEF 25 affected land and is about to review the wording and expand the area of notification to the ANEF 20 affected areas.”
The grant of development consent
The land was zoned Rural “A” in the Port Stephens Local Environmental Plan 1987. “Tourist facilities” were permissible with the Council’s consent, the relevant definition being -
“ … an establishment providing for holiday accommodation or recreation and may include a boat shed, boat landing facilities, camping ground, caravan park, holiday cabins, hotel, house boat, marina, motel, playground, refreshment room, water sport facilities or a club used in conjunction with any such activities”.
The development application was for a mixture of single, double and three bedroomed cabins. The construction of the cabins was described -
“These cabins are to be constructed in timber framing and timber roof trusses with timber cladding externally and plasterboard lining to the internal areas with paint finish. The main roof and porch roof are to be in colourbond metal roofing with facia boards. The porch and adjacent walkways are to be constructed on timber poles with timber planking and timber handrails/balustrades all treated and stained.”
The development application was approved by the Council under delegated authority by its Development Assessment Panel (“the Panel”). The members of the Panel were the Manager of Development Services, Mr Warnes; the Senior Health and Building Surveyor, Mr Meredith; and the Senior Engineer. Mr Warnes gave evidence; Mr Meredith and the Senior Engineer did not.
Prior to the time of the approval the Council had entered zones from the 2002 ANEF on its “constraints map”. An affidavit by Mr Warnes annexed a copy of the constraints map. The judge said that it was not clear whether it was the current map or the map as at the date of assessment of the development application. The map indicated only the 20 and 25 contours from the 2002 ANEF.
The Panel was not aware of the Caleb Smith report. Notwithstanding that it was addressed to the Shire Clerk, Mr Warnes believed that the report had been prepared at the direction of the then mayor and “the mayor had his own purposes for that”, and said that it “was never disseminated to the staff via the mayor”. The Council’s evidence did not explain this further.
In assessing the development application, Mr Warnes recognised that the proposed development was between the 25 and 30 contours. From the permitted use of tourist facilities, he placed it in the building type “hotels, motels, hostels” in the table on the 2002 ANEF. According to the table and AS2021 the building type was conditionally acceptable, and according to AS2021 further steps were required with a view to construction requirements to achieve appropriate noise level reductions for the building or various parts of the building. Mr Warnes did not take the further steps set out in AS2021. He considered imposing noise attenuation conditions, but concluded that that should not be done.
In his affidavit Mr Warnes accepted that noise affectation was relevant to his assessment, but said that AS2021 was not a mandatory consideration and noise attenuation measures were not essential if the site was a tourist facility. He maintained that, because he knew of the site and its surrounds and that the Range was only used “intermittently”, it was unnecessary for him to obtain advice to address the impact of existing and potential noise. (However, he described it as noise “from adjoining properties”). Although he knew that the site was “largely within the 25 ANEF contour”, he took into account that the site was not to be used for permanent occupation and that a condition was to be imposed restricting operation; that as a tourist facility the occupancy was unlikely to exceed 60 per cent; that as a tourist facility with a focus on outdoor activities noise attenuation measures “were unlikely to make a difference to the occupants of the cabins from time to time”; that the use of the Range at the time was and was forecast to be intermittent; that alternative flight paths were available; that he was not aware of complaints from Swan Bay residents in relation to the operations of the Range; and that Mr Moffat had not raised “any concern about the viability of the proposed development by reason of aircraft noise”.
Mr Warnes also said in his affidavit that, if he had known of the Caleb Smith report, it would “not have advanced my assessment”, because it was not “specific to the subject site” and AS2021 “makes it clear that only where no ANEF exists would it be necessary to make an individual assessment of noise on a particular site”.
In his oral evidence Mr Warnes said that, at the time of the assessment and when he appreciated that the site was conditionally acceptable, he asked Mr Meredith’s advice. He said -
“A. The advice was generally that it’s difficult to actually exclude aircraft noise in accordance with the Australian standard because it was mitigated by a significant number of factors. In his mind it certainly did centre of [sic; on] the fact of the ability of the builder, his workmanship, the person that was supervising the work, the maintenance of the building and in fact the use of the building that those measures could become ineffective if a door was left open or a window was left open and therefore there was some difficulty as to whether or not the standard would achieve what it was set out to do.”
So far as appears, Mr Warnes took the matter no further with Mr Meredith or anyone else. He agreed that there was “not a single piece of paper in Council’s files which makes any note or reference in relation to the impact of aircraft noise for this development”, and that there was no record of a “real attempt by any officer of Council to consider the impact of aircraft noise in relation to this development application”.
While maintaining that knowledge of the Caleb Smith report would not have affected his assessment, Mr Warnes agreed in cross-examination that the report said there was a serious noise impact for the house in question and that “if aircraft flew in the same manner over another house that it would be likely that the same serious noise impact could result”. He also agreed -
“Q. What I’m putting to you though is that if, as a result of looking at the ANEF contours, you came to the view that there may be adverse noise impact over Fisherman’s Village – do you understand that proposition?
A. Yes.
Q. Then if you had no other information, apart from the ANEF report and the Caleb Smith report of 1989, it would be a fair assumption that if there was aircraft activity over Fisherman’s Village of the same type that had been recorded in 1989 over Mr Whiteair’s [sic] property, then there would be a very severe noise impact on Fisherman’s Village?
A. Yes.”
He agreed that the noise as described in the Caleb Smith report would make residential development unacceptable, and hotel, motel or hostel development unacceptable except with appropriate noise attenuation conditions.
Mr Warnes’ overall position was that, although he knew that the Fisherman’s Village site was largely between the 25 and 30 contours and was regarded as unacceptable for residential development and acceptable only on appropriate conditions for hotels, motels and hostels, it was a matter for the Council’s discretion whether conditions would be imposed, and -
“ … I did make a decision and I believe that I was acting competently when I made the decision in looking at all of the issues relating to the application and my knowledge of the ANEF as shown on the plans.”
The development consent was granted subject to a number of conditions, including that with the exception of two of the cabins “all lots proposed must not be occupied by any proprietor or occupier of that particular lot for longer than forty two (42) consecutive days or on aggregate of one hundred and fifty (150) days in any twelve (12) months, such period to be calculated from the date of the first occupation of a lot”. The two cabins could be occupied permanently. One condition dealt with sound transmission for dividing walls, but none addressed construction of the cabins with a view to attenuation of exposure to aircraft noise.
Contrary to what appeared as the current situation in the discussion paper earlier mentioned, see the emphasised portion, the development consent did not provide advice that the proposed development was on land within the ANEF 25 contour. It said nothing about ANEF forecasts or noise exposure from aircraft.
The grant of building approval
The grant of building approval on 22 December 1993 was subject to a number of conditions, none addressing construction of the cabins with a view to attenuation of exposure to aircraft noise. Nothing was said of ANEF forecasts or aircraft noise exposure. The grant of building approval was touched on but lightly in the evidence. It seems to have been common ground that the Council did not consider noise affectation or whether to impose noise attenuation conditions.
Construction of Fisherman’s Village
Mr Moffatt gave evidence, which the judge implicitly accepted, that he was unaware that the site of Fisherman’s Village was between the 25 and 30 contours, and exposed to the forecast aircraft noise, until a time in 1998. Although his solicitors had received the s 149 certificate dated 28 September 1993 to which I shortly refer, he had either not read what it said about an ANEF or had not appreciated its significance. He said that, if he had known of the situation of the site between the contours he would have made enquiries and taken advice, and that if he had been told of the conditional acceptability for hotel, motel and hostel development he would not have proceeded with the development of Fisherman’s Village.
The development did proceed. The cabins were constructed in the manner indicated in the development application. According to an expert called on behalf of the purchasers, there was “no possibility” that the proposed building construction could achieve the internal noise levels required for the conditionally acceptable building type of hotels, motels and hostels under AS2021. According to an expert called by the Council, for most of the site the construction would have needed to be “in the order of solid concrete or masonry brickwork with double glazing and mechanical ventilation”. I do not think it was seriously disputed that this was incompatible with proceeding with a budget level eco-friendly development.
The s 149 certificates
The purchasers all engaged Mr Ross Williams as their solicitor for the purchases. Mr and Mrs Booth exchanged contracts for lots 24 and 25 on 24 December 1993; Mr Burcher exchanged contracts for lot 21 on 7 April 1994; Mr and Mrs Gibson exchanged contracts for lot 15 on 7 April 1994. The contracts were completed in late 1994 or early 1995.
An annexure to each of the contracts was a s 149 certificate issued by the Council to LMI’s solicitors dated 28 September 1993. It can readily be inferred that it was obtained in order that it be annexed to contracts provided to intending purchasers, and that the Council was aware that it was likely to be used in that manner.
The certificate said, after setting out other information -
“PART I: RESTRICTIONS ON DEVELOPMENT DUE TO THE LIKELIHOOD OF LANDSLIP, BUSHFIRE, FLOODING, TIDAL INUNDATION, SUBSIDENCE OR ANY OTHER RISK –
___________________________________________________
1. …
5. Council’s records indicate that the land is contained within the Australian Noise Exposure Forecast (ANEF) 20 contour and consequently may be subject to noise exposure from aircraft. Standards and measures which can be adopted to minimise the impact of noise on buildings are detailed in ‘Australian Standard 2021-1985: Acoustics – Aircraft Noise Intrusion – Building Siting and Construction’. Information as to the extent of the ANEF 20 contour is available from Council’s Community Planning Department”.
Immediately prior to completion of the purchasers’ contracts Mr Williams obtained updated s 149 certificates. In his evidence he identified them by their reference numbers; they do not seem to be in the appeal papers. It was not suggested that they were materially different from the certificate annexed to the contracts.

The issue of a certificate involved the generation of a draft certificate by a computer based system which automatically incorporated the information concerning aircraft noise where appropriate. The draft was then checked against the constraints map by a member of the Council’s staff. There was no evidence as to the checking of the certificate issued to LMI and attached to the contracts, or of the later certificates.
Prior to receipt of the 2002 ANEF, s 149 certificates issued by the Council contained information as to noise exposure in respect of properties within the 25 contour. In July 1993 it was decided to extend this practice to properties within the 20 contour, see the extract from the discussion paper earlier set out. From Mr Warnes’ evidence, prior to July 1993 the computer based system had been programmed to refer to the 25 contour even if the property was within a higher contour, and when it was decided to extend the practice to the 20 contour it was reprogrammed to refer to the 20 contour even if the property was within a higher contour.
Mr Warnes at one point referred to this as ”a warning of potential aircraft noise for all properties within the 20 ANEF contour line”. The reasoning appears to have been that an indication that the property was within the 20 contour carried with it that the property might be anywhere within that contour, including within one of the contours of higher value. Mr Warnes said that he thought it appropriate to describe land between the 25 and 30 contours as land within the 20 contour because -
“A. It’s a notion that if you were to draw a line around the airport or the weapons range activities that the encompassing contour where noise impacts are said to start is encompassed within and contained within the 20 ANEF, it goes up inside but it is all contained within that 20 contour.
Q. So because it is literally correct it is an appropriate way in which to describe it in a 149 Certificate, is that your position?
A. Well it was a terminology that was used by myself and planners in relation to this matter and might I say in relation to other matters.”
Mr Warnes was asked about the like terminology used in relation to flood susceptibility. The Council’s studies identified land affected by a one in ten years, a one in twenty years, and other such flood events, but the constraint maps showed only land affected by a one in a hundred years flood event. The Council’s certificates disclosed only affectation by a one in a hundred years event, and Mr Warnes said that he thought people would inquire whether the land might also be affected by a one in ten years or a one in twenty years flood event “because the one in hundred event is a large event”. He said also -
“Q. So that did it follow from your view about the appropriate way of identifying the ANEF contours that it’s sufficient to identify land which is within the one in a hundred year flood event, even if it also is within an area which is within a one in twenty year flood event?
A. Yes.
Q. And do you think that the average person in the street would understand that that’s how it should be read or interpreted?
A. I don’t know but I would think that an average person in the street would have difficulty with not only the issue of the flood but also the aircraft noise exposure and especially in the aircraft noise exposure issue, they were invited to make inquiries of council.”
Ms Westing, who was a senior officer of the Council from mid-1995 and in 1995-6 its Manager Sustainable Development, said that the Council had never identified contours affecting land other than the 20 ANEF contour for the principal reason that “there has been no adopted policy applying a distinction between planning controls applying to land in the different ANEF zones”, and that the Council’s practice was “to identify an issue that may affect the use of the property”.
It is convenient to note at this point the Council’s subsequent practice.
At a meeting in November 1995 with officers of the Department and the Department of Planning it was suggested that the Council could amend its s 149 certificates. Suggested amendments included that the land was within the 20 to 25 ANEF contours or “greater than 25”, as the case may be, with reference in the first case to incorporating noise control features in dwelling construction and in the second case to construction of “houses, home units, flats and caravan parks (dwellings)” being unacceptable.
This was not done. At an expanded meeting in February 1996 Ms Westing said the Council would amend its certificates “if mandatory controls are adopted”, meaning restrictions in its planning instruments.
In September 1996 a discussion paper was prepared directed to how the Council should deal with aircraft noise. The recommendations included that “in the 20-25 ANEF contours, Council retain its noise advisory system and not introduce mandatory building controls”. The Council resolved to defer future land use decisions pending an updated ANEF, which was then anticipated early in 1997.
A draft 2005 ANEF was issued in May 1997. The Council amended its certificates to refer in all certificates to the draft ANEF and, if applicable, state that the land was within the ANEF 20 contour “or above”.
The certificates were amended again in April 1998, but remained to like effect. If the land was within an ANEF zone, the certificate read -
“‘Council’s records indicate that the land, or part of the land, is affected by the Australian Noise Exposure Forecast (ANEF) 20 or above and is likely to be exposed to noise from aircraft. Standards and measures which can be adopted to minimise the impact of noise in buildings in some cases are detailed in Australian Standard 2021-1994: Acoustics – Aircraft Noise Intrusion – Building Siting and Construction. Information as to the extend of the ANEF 20 or above contour is available from Council’s Strategic Planning Section and you are advised to make further enquiries.’”
Question (a): Breach in granting approvals
Before the judge the Council disputed that it owed the purchasers a duty to take reasonable care in the determination of the development application and the building application. Her Honour held to the contrary, referring in particular to Albert Shire Council v Bamford (1997) 97 LGERA 33 and Armidale City Council v Alec Finlayson Pty Ltd (1999) 104 LGERA 9. She considered that those cases showed that the exercise of a power by a local authority relating to the regulation of the development of land would give rise to a duty of care to a subsequent purchaser, and that the Council owed the purchasers a duty of care -
“(1)To inform itself adequately of the risk to the land of exposure to aircraft noise;
(2)To determine, in the light of that information, whether the development application and building approval should be rejected or whether they should be approved only on condition that specified noise attenuation requirements be complied with;
(3)Prior to determination of the development application and building approval, to inform the developers of the manner in which the land was affected by the 2002 ANEF and of the requirements of AS 2120-1985.”
The judge rejected the Council’s submission, founded on City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94 and Central Coast Leagues Club Ltd v Gosford City Council (Giles J, 9 June 1998, unreported), that a breach of the duty of care could only be found if the decision to grant the applications without noise attenuation conditions had been irrational or arrived at in an improper manner; effectively that Wednesbury unreasonableness had to be found. She accepted that she should nonetheless not lightly find negligence in exercising the discretion to grant development consent and building approval, or to grant them in the absence of conditions directed at noise attenuation.
For reasons explained at some length, her Honour held that -
“12.9… two fundamental errors were made in the process of the exercise of discretion to grant the development consent:
(1)the under estimation by the Development Assessment Panel of the extent to which the 2002 ANEF indicated that the land was likely to be affected by aircraft noise. This was the result of a misunderstanding of the methodology of the ANEF system and an absence of information about the likely exposure of the land to aircraft noise.
This misunderstanding existed notwithstanding the information which the Development Assessment Panel could have assessed from the defendant’s files or from AS2021-1985 which would have indicated the need to seek qualified technical advice before determining the development application.
(2)the application of the town planning term tourist facility in assessing as appropriate, without conditions addressing noise attention [sic: attenuation], the development application against the requirements of AS2021-1985 rather than the consideration of the elements of the proposal and the activities which were actually proposed.
12.10These errors could have been avoided by consulting an appropriately qualified expert or by requiring the developers to do so.”
The judge expressed her conclusion -
“12.15 Findings on Breach of the Duty of Care
I find the defendant in breach of its duty of care to the developers and to the lot owners for the following reasons:
(1)The defendant failed prior to the determination of the development application and building application to inform itself sufficiently of the extent of the risk of likely exposure of the land to aircraft noise in order to make any proper assessment of whether the development proposed was suitable for land within the 2002 ANEF 25-30 contours and ought to be approved;
(2)the same failure led the defendant to determine that the development consent and building approval should be issued in the absence of conditions directed at the attention [sic: attenuation] of the effects of aircraft noise.
(3)the result was that the determinations to grant the development consent and the building approval were ill informed and ill considered and the defendant acted in an entirely improper manner.”
The Council did not dispute on appeal that it owed the purchasers a duty to take reasonable care in the determination of the application. Its submissions focussed on the grant of development approval. It said that -
(i)it was a matter for the Council’s discretion whether to grant or withhold approval and on what conditions, such that it could not be in breach of its duty of care unless its decision was Wednesbury unreasonable;
(ii)the duty of care owed to purchasers was discharged if, although it granted approval without noise attenuation conditions, it warned prospective purchasers of the noise affectation through the issue of s 149 certificates; and
(iii)in any event, the judge was in error in her holding of breach of the duty of care.
(i) Discretion
The Council was determining a development application made to it under the provisions of the EPA Act. By s 90, it was obliged to take into consideration such of the matters in that section as were relevant to the development, it being common ground that the exposure to aircraft noise was a relevant matter. By s 91 it was obliged to determine the application, by granting consent, either conditionally or subject to conditions, or by refusing consent.
The Council was exercising a statutory power, one which it was obliged to exercise in one of the ways in s 91. It could not stand mute, and it entered upon the exercise of the power. The present question is not the existence of a duty of care, acknowledged as one owed to the purchasers, but its nature. It attracted the principle described by Dixon CJ and McTiernan, Kitto and Taylor JJ in Caledonian Colleries Ltd v Speirs (1957) 97 CLR 202 at 220 as -
“ … the well-settled principle … that when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely to be occasioned, by their exercise, damages for negligence may be recovered”.
The test of exercise of a statutory power with reasonable care has been noted or adopted, sometimes the course of determining whether there was a duty of care, in relation to a stevedoring authority’s power to regulate the performance of stevedoring operations (Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at [5], [34]-[35], [62], [360]), a council’s exercise of a power to require that work be done upon premises to make them safe (Pyrenees Shire Council v Day (1998) 192 CLR 330 at [120], [177], [423]), and a council’s power to inspect buildings in the course of erection (Sutherland Shire Council v Heyman (1985) 157 CLR 424, at 436-7, 458-9, 484, 509). In Voli v Inglewood Shire Council (1963) 110 CLR 74 a council was held liable for negligence in the examination and approval of plans and specifications for a building (although it was the building owner). In Wollongong City Council v Fregnan [1982] 1 NSWLR 244 a council was held liable for negligence in granting building approval; the negligence was approving without informing the applicant of a danger of slippage, the land being in the council’s slippage register, and it was said that the council failed to take proper care in performance of its duty to consider the danger of slippage (at 248; see also 253).
In Alec Finlayson Pty Ltd v Armidale City Council (1994) 51 FCR 378 the trial judge held a council liable for negligence in granting subdivision approval and then development approval. The negligence was approving although the council knew that the land was significantly contaminated. It was said, with reference to Caledonian Colleries Ltd v Speirs, that the council was obliged to exercise its approval power with reasonable care (at 411), and that it had not done so by imposing any condition, giving a warning or any other means (at 412). On appeal in Armidale City Council v Alec Finlayson Pty Ltd the duty of care was upheld, and it was said (at [32]) that the holding of breach of duty was clearly open and “[g]iven the serious public health hazard, the Council’s duty could only have been completely discharged by an outright refusal of the application, or at least a refusal except upon acceptance and performance by the applicant for approval of appropriate remediation conditions”. I will return to this case; for present purposes, the test was the exercise of reasonable care, not Wednesbury unreasonableness.
See also Albert Shire Council v Bamford, again to which I will return, in which a council was held liable for negligence in granting subdivision approval and approval to carry out building work on a test of whether it took reasonable care; the land was unstable and unsuitable for building, and it was held that the council should have been aware of the instability.
There is good reason for not testing negligence by Wednesbury unreasonableness. The law of torts serves a different purpose from that providing public law remedies. In Pyrenees Shire Council v Day Gummow J referred to translation of the public law “may” into the common law “ought”, and to principles of tortious liability being “formulated primarily for operation in the field of private law” (at [122]-[123]. In Crimmins v Stevedoring Industry Finance Committee Kirby J said (at [217]-[218] -
“[217] From time to time judges have expressed concern that the imposition of a duty of care upon a public authority might cut across discretions which that body enjoys by statute, or impose upon it economic and other imperatives which judges and juries might be ill-equipped to evaluate. Importation of a common law duty could distort the performance of the functions of the statutory body in the attempt to avoid private actions. Judges have therefore sought to devise formulae to restrict the supplementation by the common law of the enforcement machinery provided in a statute. Some have resorted to the fiction of what Parliament “intended” to be the mechanism of enforcement. Others have applied public law criteria to evaluate whether a right of action at common law can coexist with the statute. This was the way in which Brennan CJ approached his decision in Pyrenees Shire Council v Day. Whilst that approach has distinguished supporters it did not find favour with the majority of this Court in Pyrenees. It has also been expressly rejected by the unanimous opinion of the House of Lords.
[218] In X (Minors) v Bedfordshire County Council, Lord Browne-Wilkinson remarked, with the concurrence of all of the participating Law Lords:
‘ ... I do not believe that it is either helpful or necessary to introduce public law concepts as to the validity of a decision into the question of liability at common law for negligence. ... [I]t leads, in my judgment mistakenly, to the contention that claims for damages for negligence in the exercise of statutory powers should for procedural purposes be classified as public law claims and therefore ... should be brought in judicial review proceedings’.
Smith v Eurobodalla Shire Council [2005] NSWCA 29 concerned a claim for negligence in approving the construction of a house. McClellan AJA, with whom Mason P and Santow JA agreed, referred at [104] to a public authority’s duty to act “with appropriate care”, citing Sutherland Shire Council v Heyman at 447 (Gibbs CJ), 460 (Mason J), 479 (Brennan J) and 509 (Deane J). The Council submitted that this was “the Wednesbury test”. I am unable to agree. Gibbs CJ did refer to negligence in the improper exercise of a discretion, but his Honour had stated the duty as a duty to give proper consideration to whether it should exercise its powers and was doing no more than recognise what he called “a large element of policy or discretion”. At the other pages their Honours’ language was fully consistent with a common law duty of care; for example, Brennan J referred to a person, whether a statutory authority or not, being “bound to do what is reasonable to prevent the occurrence of the injury unless statute excludes the duty”.
The Council did not revive its reliance in this context on City of Botany Bay Council v Jazabas Pty Ltd. This is understandable. So far as the case involved a claim for negligence in the grant of development approval, as distinct from the issue of a s 149 certificate and the answer to an inquiry, Mason P (with whom Beazley JA relevantly agreed), adopted the reasons of the trial judge. The trial judge had said (Jazabas v Botany Council [2000] NSWSC 58 at [191]) that “save in the circumstances where the Council may have acted in an irrational or entirely improper manner” it was open to it to grant the approval, and that in his view it was not negligent in doing so. The holding was that there was no negligence. His Honour did not equate negligence with an irrational or entirely improper decision.
The Council submitted that its position was supported by my observations in Central Coast Leagues Club Ltd v Gosford City Council. I held that the council owed the club a duty to take reasonable care in the approval of plans for extensions to its premises. In rejecting that the duty was “as broad as ensuring that the premises were safe”, I distinguished between the Council’s approval function subject to reasonable care and its specific discretionary functions which could be challenged for Wednesbury unreasonableness. The case is in fact against the Council.
As was pointed out by Gaudron J in Crimmins v Stevedoring Industry Finance Committee at [34], a common law duty in relation to the exercise or non-exercise of a body’s powers “only imposes a duty to take those steps that a reasonable authority with the same powers and resources would have taken in the circumstances in question”. Subject to any statutory overlay, however, discharge of the duty requires that the authority act with reasonable care. The test for negligence in the Council’s approval of the development application and the building application is not Wednesbury unreasonableness.
(ii) Discharge of the duty

For the reasons later given, the s 149 certificates were misleading and did not adequately warn prospective purchasers of the noise affectation. Their inadequacy was the product of the Council’s then practices. Therefore, even if the content of the duty of care was as the Council submitted, the duty of care was not discharged. But I do not accept that the content of the duty of care was as the Council submitted.
Although a duty of care owed to the purchasers was conceded, it is material to ask why the Council came under a duty of care.
In Armidale City Council v Alec Finlayson Pty Ltd land was used by Hasell for industrial purposes involving significant contamination. While the land was still owned by Hasell, the council rezoned it for residential purposes. Hasell sold the land to Basia. The council granted Basia consent to subdivide part of the land into residential lots. Basia sold the balance of the land to Finlayson. The council granted Finlayson consent to subdivision of the balance into residential lots. Finlayson effected its subdivision, and constructed and sold homes on some of the lots; it also purchased from Basia some of Basia’s lots and did the same. When the contamination was revealed, Finlayson suffered loss.
The trial judge, Burchett J, had asked whether the council when it came to consider the initial and subsequent development applications, owed a duty of care to “the owner of the land, to a known prospective purchaser of parts of the land, or to other persons who might acquire parts of the land or lots into which it was to be subdivided pursuant to the Council’s approval of the particular development application” (FCR at 401). He had enquired into a relationship of proximity, as was the then approach to finding a duty of care, and had regarded as a “fundamental feature” that by approving the development application the council “created a danger, thereby subjecting itself to a duty of care for the safety of others” (at 409-10). His Honour had also regarded as a “highly relevant factor” the concept of “reliance, by those who may be affected, on the public authority to take reasonable care”, and had said (at 412) -
“The complexity of modern life continually places citizens in situations where, in a practical sense, they have to rely on the due performance of functions by authorities in circumstances in which lack of care may create or permit hidden hazards. In City of Kamloops v Nielsen (supra, at 674), Wilson J described the citizen's "ever-increasing reliance on public officials" as "a feature of our age". Applying this consideration to the present case, the applicant, buying part only of the land, had no practical means either of investigating or of remedying the contamination of the whole area. Yet the applicant would be affected by contaminants both on the land it acquired and on adjacent parcels. It had to rely on the Council to have approved the development with due care. Indeed, it had no means of knowing or reason to suspect what was in the soil to excite a particular need for that care. According to Mr Hegarty, the signs were actually covered over by the gravel in 1985. The Council's officers knew that covering was deceptive, but the ordinary purchaser would not, and the Council should have taken the position of potential purchasers into account: cf Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 at 300. Nor could the Council have thought a purchaser would obtain, at great expense, chemical analyses of land in a residential subdivision. It is a situation where, of necessity, the functions of the Council, in approving development of the subdivision, must be seen as supplanting private responsibility, to use Mason J's phrase.
In my opinion, the existence of a relevant duty of care has been established in respect of each of the decisions upon the development applications involved in this case.”
By the time of the appeal to the Full Court proximity had fallen from favour in finding a duty of care, see Hill v Van Erp (1997) 188 CLR 159 and later cases. The Full Court (Beaumont, Moore and Merkel JJ) nonetheless upheld the duty of care owed to Finlayson. Their Honours said (at [27]) -
"[27] As was contended for on behalf of Finlayson, the following considerations point to the existence of a relationship between Finlayson and the Council that was so close, that a duty upon the Council of care arose on these undisputed facts:

To the Council’s knowledge, pockets of contamination were randomly located on the land and were hidden under a deceptive gravel surface.
So far as the Council knew, the applicants for residential subdivision development approval (first Basia, later Finlayson) were unaware of the contamination risk.
The Council could not have thought that purchasers of the land would have thought that there was a contamination problem, or would have had the means, or even the idea, of obtaining expensive technical analyses of the land.
Here there were both physical proximity and, from Finlayson’s perspective, latent defects, yet the Council knew that the gravel surface was deceptive (see Hawkins v Clayton (1988) 164 CLR 539 per Deane J (at 577)).
The Council had before it an application for residential subdivision which could not proceed without its consent.
It must have been apparent to the Council that, if it approved the subdivisions, the overwhelming probability was that the subdividers, unaware of the contamination problem, would sell the resulting blocks to purchasers, who would also be unaware of the problem, and that the blocks would ultimately be used for residential purposes.
The Council knew that the use of the land for residential purposes had the potential to cause serious harm to the occupiers of the land.
The Council had a statutory obligation to consider whether the land was suitable for residential subdivision, regard being had to risks such as contamination.
Without incurring expense or delay, the Council had only to look to the information in its own records and to the specific knowledge of its officers in order to appreciate that it could not conclude that the land was suitable for residential subdivision.
The Council’s approval of the development applications proceeded, in fact, without the need to resort to any “policy” considerations.
It must have been obvious to the Council that the subsequent discovery of the contamination had the potential to cause economic loss to the purchasers of the land.
It must also have been obvious to the Council that the subsequent discovery of the contamination in land sold to local residents by a firm such as Finlayson (known to the Council as a local builder/developer) in consequence of the approval given to its subdivision application, had the potential to damage severely Finlayson’s reputation as a competent and responsible builder/developer and the community’s willingness to deal with him.”

It is not easy to transpose to the present case these features on which a duty of care was said to arise. The essentials, however, were the council’s knowledge of the contamination, the applicants’ ignorance of the contamination and the unlikelihood that purchasers would become aware of the contamination from their own investigations, the potential for economic loss to the purchasers and the ease with which the council should have appreciated that the land was not suitable for residential subdivision. So far as the council was held liable to Finlayson as a subsequent purchaser, its duty of care very much rested on the vulnerability to risk of injury which has come to be regarded as of key importance in cases such as Perre v Apand Pty Ltd (1999) 198 CLR 180 and, in relation to whether an engineer owed a duty of care to the subsequent purchaser of a building, Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515.
The vulnerability lay in the approvals making contaminated land available to be sold to a subsequent purchaser which was unlikely to become aware of the contamination from its own investigations. A like basis for a duty of care owed to a subsequent purchaser can be seen in Albert Shire Council v Bamford. The council granted subdivision approval and approval to carry out building work to a developer. The purchasers bought their land from the developer. On appeal, it was not in dispute that the council had been negligent in the grant of building approval. The principal issue on appeal was whether the council had been negligent in the grant of subdivision approval, and the trial judge’s holding that it had been negligent was affirmed. The purchasers were therefore entitled to increased damages. The duty of care was not in dispute, as was noted in the reasons of Pincus JA and Thomas J, but the reasons of McPherson JA included -
“The effect of approving a subdivision puts into circulation something which, in that form, is for the first time capable of being bought and sold, or in other words, dealt with as a merchantable commodity. Viewed in that way, the Council’s action may be compared to that of the manufacturer in Donoghue v Stevenson [1932] AC 562 who, by fabricating a commodity and making it available for distribution to the public, comes under a duty of care to persons who sustained damage through negligence in the course of manufacturing it.”
Although it was not put in this way, the Council’s position was in substance that a prospective purchaser’s vulnerability could be accommodated by a warning of noise affectation, via a s 149 certificate; the issue of a s 149 certificate was therefore sufficient to discharge the duty of care. It sought to distinguish Albert Shire Council v Bamford on the basis that the risk in that case was a risk of physical injury, which was properly to be met by preventing the development of the contaminated land; in the present case, it said, the risk of exposure to aircraft noise was properly met by a warning.
Albert Shire Council v Bamford is not readily distinguishable in the same manner, and for Armidale City Council v Alec Finlayson Pty Ltd itself the risk to Finlayson was not a risk of physical injury. I do not accept the Council’s position.
Although the appeals were not concerned with the duty of care owed to LMI, it can not be overlooked in considering the duty of care owed to the purchasers; cf Woolcock Street Investments Pty Ltd v CDG Pty Ltd at [14], explaining Bryan v Maloney (1995) 182 CLR 609 as dependent on the builder owing a duty of care to the first owner of the house. Proper attention to the 2002 ANEF and AS2021 was required in the exercise of reasonable care in considering the development application, in the discharge of the duty of care owed to LMI prior to and apart from the duty of care owed to prospective purchasers from LMI. LMI would not be warned by a s 149 certificate. The Council’s own practice, according to the discussion paper, was to advise with the development consent that the proposed development was within the 25 contour, later the 20 contour, although this was not done in the case of LMI’s development consent. So far as prospective purchasers were concerned, although according to conveyancing practice most would obtain a s 149 certificate, there was no certainty that all would do so, and just as the duty of care owed to LMI would protect it from putting onto the market the defective commodities of land with inappropriately constructed cabins, so also the duty of care owed to prospective purchasers protected them by preventing the defective commodities coming onto the market. The land was not like a medication which could be used safely or unsafely, so that a duty of care was satisfied by instructions as to use. The time for reasonable care, in the interests of prospective purchasers as well as LMI, was in the consideration of the development application and the building application, so that the approvals were not given without appropriate noise attenuation conditions.
(iii) Breach of the duty of care
I do not accept the Council’s submission that the judge was in error in her holding of breach of the duty of care. In explaining why that is so, I make further reference to Mr Warnes’ and other evidence.
The judge’s explanation of the “two fundamental errors” (see her Honour’s para 12.9 earlier set out) included that the Council -
“12.2 … failed to appreciate the extent to which the development of the land was likely to be affected by aircraft noise in two respects:
(1)the Development Assessment Panel did not take into account the history and information contained in the defendant’s files replete with warnings of the consequences of allowing residential development in areas within the ANEF 20 contour or above; and
(2)the defendant did not make available to the Development Assessment Panel the 1989 Caleb Smith report. In this respect, I accept the evidence of Mr Ishac that this report, although not specific to the land, would have provided to the Development Assessment panel some guidance as to the noise levels recorded in a rural area affected by the ANEF 20 contour.
12.3 Notwithstanding the assertions of Mr Warnes that there was no misunderstanding of the ANEF system by the Development Assessment Panel, it became very clear in the course of his evidence that members of the Panel mistakenly understood the 2002 ANEF to provide a forecast of aircraft noise for the 10 year period from 1992 to 2002. On this basis the Panel relied on conditions prevailing at the time of assessment of the development application and building application to reach the conclusion that the development consent and building approval should be granted and that conditions addressing noise attenuation were not warranted.
The level of confidence appeared to be such that no consideration was given to the need to alert the developers to the 2002 ANEF, to the advisability of seeking qualified technical advice as to the implications of the 2002 ANEF or to the conditions which might appropriately be applied as recommended by AS2021-1985.”
Her Honour considered that the Council failed to do what s 90 of the EPA Act required because of an “uninformed and mistaken understanding of the implications of the 2002 ANEF in respect of which they had taken no appropriately qualified advice”, including that the Panel inappropriately used the concept of a tourist facility when the development proposal “incorporated many characteristics of residential development” and was for substantially increased intensity of development at odds with the situation within the 25 contour.
Relatively early in his cross-examination Mr Warnes agreed “that an ANEF forecast for 2002 was a forecast for the entire 10 year period”. At a later point he said that he appreciated that the 2002 ANEF was a forecast for a period of time 10 years in the future; he explained -
“Q. I think you said this morning you thought it applied for each of the ten years?
A. No what I said as I understood that it was cumulative and it would go to that point but there was nothing to suggest that it couldn’t reach that level in year 1, year 2, year 3 or subsequently it could drop off because it was all dependent on the operations of the RAAF. There was no reason why those flight levels and numbers couldn’t have been achieved in year 3 or 4. It was certainly the advice given to me that the usage of the range was going to be constant and the aircraft weren’t going to change in that 10 year period.”
The Council submitted that, in her Honour’s reference to “a misunderstanding of the methodology of the ANEF system” in her para 12.9(1), the judge had wrongly found that Mr Warnes misunderstood the methodology, and that his evidence in the passage last set out showed that he did understand it. There was more evidence than these passages, and on a reading of the evidence as a whole I consider that the judge was entitled to come to the view she did. I do not think that, in her para 12.9, the judge was referring solely to the ANEF being a forecast for noise exposure during a specified future time period. The essential misunderstanding was equating the noise exposure as Mr Warnes understood it in 1993 – the intermittent use not generating complaints – with the forecast noise exposure. That lay behind Mr Warnes’ first answer, and was not overcome by his later explanation. As the judge said, he did not appreciate that the conditions which prevailed in 1993 were not those which were forecast to apply in 2002. Hence there was the under-estimation to which the judge referred, an under-estimation because the Panel failed to address the 2002 ANEF on its own merits. It is not irrelevant that Ms Westing understood that the 2002 ANEF was an expression of aircraft noise valid from 1992 to 2002.
The Council knew that the site was largely between the 25 and 30 contours, and was only conditionally acceptable for the building type Mr Warnes considered appropriate. Whether it was the appropriate building type, given the nature of the development and despite the condition restricting occupation to 42 consecutive days or an aggregate of 150 days in any twelve month period, may be passed over for the moment. Any exercise of reasonable care required that AS2021 be followed through, with attention to construction for noise level reduction and the imposition of noise attenuation conditions.
Ms Smith was well experienced in land use planning, including in the assessment of development applications. She gave evidence that it would be standard planning practice to seek an understanding of the effects of the Range on the development, by obtaining and interpreting ANEF information and obtaining acoustical advice, and that if the Council had properly considered the development application it would most likely have been refused. She thought that the proposed use of the cabins for up to 150 days “encroaches upon residential use”. In her view, a prudent planner would advise the developer of the ANEF forecast “and what this may mean for the future of the site”, and AS2021 should have been followed so that the development was not permitted without noise attenuation measures.
Mr Meredith’s advice as recounted by Mr Warnes was rather confusing, but the fact that Mr Meredith appears to have told Mr Warnes that noise attenuation would not be easy was not a reason to go no further. The nature of the proposed Fisherman’s Village, as known to the Council, was closer to that of a residential development than the building type hotels, motels, and hostels, as is evident from the permissible occupation for 42 consecutive days or an aggregate of 150 days in any twelve months, and two of the cabins could be permanently occupied. At the least, this heightened the need properly to give attention to construction for noise level reduction. In the manner I have indicated, Mr Warnes was unduly influenced by his understanding of the noise exposure as at 1993.
To this may be added that, at a corporate level, the Council failed to provide to the Panel the information in the Caleb Smith report. Despite what Mr Warnes said, it was relevant to the assessment of the development application and should have been provided to the planning staff, amongst other things because it gave a good indication of the noise level to which properties in the ANEF zones would be exposed if the forecast came to fruition. It was directly relevant as an indication of noise level in the steps dictated by AS2021, which should have been considered. It was likely to, and certainly should have, negated any view that the forecast position, if it came to pass, would not affect the amenity of the site of Fisherman’s Village and that noise attenuation did not require further consideration. Ms Smith said, agreeing with the acoustical consultant Mr Ishac, that since the report identified unacceptable noise levels at a nearby property within the 20 contour, a reasonable assumption would be that the noise levels would be of even greater concern to occupants of a development within the 20 contour; she would have taken it into account accordingly.

In 2003 the Department commissioned GHD to prepare a new ANEF for Williamtown and the Range. GHD’s report noted that “[t]he current, endorsed 2002 ANEF for [the Range] is included in the 2002 ANEF for Williamtown and was produced in 1992”, and that the Hawk aircraft had replaced the Macchi and it was “therefore appropriate that a new ANEF be published”. The report proposed a 2012 ANEF in which Swan Bay appears to be within, but only just within, the 20 contour.
The Council did not challenge on appeal the judge’s acceptance of valuation evidence. It submitted that the differences between the values and the contract prices should not have been awarded as damages, because the Department had published a new noise contour map showing Fisherman’s Village in the 20-25 ANEF contour so that the purchasers were -
“ … at the date of the trial and remain, in the same position that they claimed that they believed they were in at the date of purchase. That is, that they each owned cabins in the Resort that are unaffected by an adverse noise forecast requiring the provision of noise attenuation”.
The new noise contour map on which the Council relied at this point was the 2011 ANEC, although the Council equated it with an ANEF. It referred also to the proposed 2012 ANEF, changing from one to the other rather indiscriminately; that proposal was not shown to have gone beyond the GHD report. It is not clear to me that, or the extent to which, the 2011 ANEC or the proposed 2012 ANEF had entered the public domain, although the purchasers’ submissions did not include that no account could be taken of them because they had not.
The submission was again put in two ways. The first was that the purchasers’ losses were contingent losses only, although not because it was necessary that the lots be sold in order to establish a loss, but because the purchasers had in fact not sold their lots and suffered losses but continued to hold them when the subsequent publication of the new noise contour map meant that they were no longer exposed to sale at a loss. The second was that the subsequent publication of the new noise contour map meant that no losses had been suffered. I do not understand the submissions to have gone to the consequential losses, although it was not entirely clear, but it is difficult to see how they could negate the consequential losses or at least the entirety of them.
As to contingency, the Council relied on Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Murphy v Overton Investments Ltd (2004) 216 CLR 388. The contingency there in question was different from the relevance of the later noise exposure forecasts to the purchasers’ losses. The purchasers suffered losses immediately they purchased their lots, in the difference between the prices paid for their lots and the lots’ then values. The present question is rather one of ascertaining the values of the lots in quantifying the loss, and whether and how in doing so there is taken into account the subsequent event of the 2011 ANEC or the proposed 2012 ANEF. The High Court made plain in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 that contingency as considered in Wardley Australia Ltd v Western Australia and Murphy v Overton Investments Ltd was a different matter, see below.
As to the subsequent publication of the new noise contour map, the Council again relied on Kizbeau Pty Ltd v W G & B Pty Ltd and also on HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd; the latter case was decided after the judge’s reasons of 14 May 2004.
In Kizbeau Pty Ltd v W G & B Pty Ltd Kizbeau had purchased a motel business relying upon a representation by WG & B that an upstairs portion of the premises could lawfully be used for seminars and conferences. Conditions in a council permit prevented this use, and the representation was false. Damages were assessed as the difference between the value of the business at the date of purchase and the price paid. Relevantly, it was held that it was necessary to take into account that Kizbeau had in fact used the upstairs portion for seminars and conferences, and had after a time obtained an amendment to the conditions of use whereby, subject to a limitation of numbers, the upstairs portion could lawfully be used for seminars and conferences.
In the joint judgment of Brennan, Deane, Dawson, Gaudron and McHugh JJ it was said (at 291) that, although the value of the thing acquired was to be assessed at the date of the acquisition, subsequent events “may be looked at insofar as they illuminate the value of the thing as at that date”, although only those subsequent events “that arise from the nature or use of the thing itself” as distinct from subsequent events “that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement”. Their Honours said (at 295) that in arriving at the value of the business the valuer should have considered the likelihood that the conditions of use might change, even if they had not been changed when he valued the business, and that “[a]rmed with the knowledge that the conditions in the town planning permit have been changed, the Federal Court was bound to act upon that knowledge even though the change in the conditions occurred after the date of sale”.
This was further explained in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd. In April 1977 Astonland purchased a shopping arcade in reliance on HTW’s valuation, which it was held should have been qualified by informing the reader that the effect on rental income of a rival shopping centre then under construction was uncertain. The trial judge awarded damages measured by the difference between the price paid by Astonland and the value of the shopping arcade at the end of 1998, after the rival shopping centre had been operating for the better part of a year. It was held that this was incorrect, and that Astonland’s loss did not await the establishment and a year of trading of the rival shopping centre; but that in ascertaining the value of the shopping arcade in April 1997 it was necessary to take into account how the uncertain effect on rental income was known to have evolved into certainty. The result in that case would have been to increase the damages, because the value so arrived at would have been less than the value at the end of 1998.
In the joint judgment of Gleeson CJ and McHugh, Gummow, Kirby and Heydon JJ it was said (at [28]) -
“If the plaintiff had learned the day after entering the contract to buy the Plaza, or the day after completing that contract, that the defendant's conduct had been misleading in the sense ultimately found by the trial judge, it could have started proceedings then and there. There was unchallenged evidence from Mr Dodds that on either of those dates the plaintiff was in fact worse off as a result of the defendant's breach, since the market value was less than the price. It was not necessary to wait for nearly two years to ascertain that some loss had been suffered. The plaintiff could have found out at once that it had bought something which was worth less than that which it had agreed to pay and did pay. It could have recovered at least the difference between the price paid for, and the market value of, the Plaza. The limitation period would have begun to run.”
Their Honours went on to say (at [29]-[30]) that the case was not like Wardley Australia Ltd v Western Australia or Murphy v Overton Investments Ltd, and that Astonland had not been exposed to a contingent loss but had suffered an actual loss. The Council’s submission as to contingency can not stand with this.
Their Honours accepted Astonland’s submission that the correct measure of damages, apart from consequential losses, was to deduct the value of the shopping arcade at the date of purchase from the purchase price, and in assessing that value to bear in mind post-acquisition events. They said that the approach of subtracting value from price was flexible, and that -
“[36]     One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and ‘market value’, but price and ‘real value’ or ‘fair value’ or ‘fair or real value’ or ‘intrinsic’ value or ‘true value’ or ‘actual value’ or what the asset was ‘truly worth’ or ‘really worth’ or ‘what would have been a fair price to be paid … in the circumstances … at the time of the purchase’. This distinction is sometimes difficult to draw, but it is old and fundamental.
[37]     A second qualification flows from the first. The distinction between a value which answers one of the tests just stated and market values means that market values — the prices actually obtainable in market sales — may be disregarded if they are ‘delusive or fictitious’ because they are the result of ‘a fraudulent prospectus, manipulation of the market or some other improper practice on the part of the defendant’. There are other reasons why the law does not limit recovery by reference to market value — the amount for which the plaintiff might have sold the assets acquired. One is that, subject to mitigation issues, the plaintiff is ‘not bound to sell them’. Another is that there may not be a market. Another is that the market is mistaken on some basis other than manipulation. It is common to speak of shares being undervalued (or overvalued) by the market.
[38]     The last point is supported by another matter to which Dixon J [in Potts v Miller] referred, in the context of shares:
‘[T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.’
He referred to Sir James Hannen’s observation in Peek v Derry -
‘[S]ubsequent events may shew that what the shares might have been sold for was not their true value, but a mistaken estimate of their value.’
Dixon J continued:
‘[L]ooking back from subsequent events to the earlier state of the company it may appear that at the time the shares were taken the assets of the company did not correspond in value to the money paid.’
[39]     In the same way, in Kizbeau Pty Ltd v W G & B Pty Ltd this Court pointed out that, in many fields of law, assessments of compensation or value at one date are commonly made taking account of all matters known by the later date when the court's assessment is being carried out. This has been so in relation to the remarriage of widows, the termination of a dependency by early death after the date from which damages were to be assessed, the death of a person having a claim for personal injuries which was unexpectedly early and unrelated to those injuries, rises in wage rates, assessing the value of reversionary life interests which never came into possession, valuing annuities, and assessing compensation for the acquisition or destruction of property rights. The limpid words of Lord Macnaghten about the duty of an arbitrator in determining compensation are far too well known to escape repetition:
‘Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?’
The significance of Kizbeau Pty Ltd v W G & B Pty Ltd is that it endorsed that approach in relation to s 82 of the Act when the court is assessing damages by comparing the price and the real value of the asset at the date of the acquisition.” (citations omitted)
Importantly, their Honours explained when post-acquisition events were to be taken into account, saying -
“[40] Finally, although the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. ‘If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be “independent”, “extrinsic”, “supervening” or “accidental”, then the additional loss is not the consequence of the inducement’." (citations omitted)
This explanation was illustrated. Their Honours considered that the fall in value of the shopping arcade was “not independent, extrinsic, supervening or accidental”, but “lay in circumstances crucial to the value of the Plaza at the time when the plaintiff acquired it – the current building, and the impending opening, of the Beach Road Shopping Centre” (at [41]). They considered that the rental levels, and therefore the value, of the shopping arcade were “doomed from the start – ‘pregnant with disaster’ – because so long as the building of the Beach Road Shopping Centre continued the loss was inevitable”, and compared the shopping arcade to a horse which died of a latent disease inherent in its system at the time of its purchase, as distinct from one which died of a disease contracted after the purchase (at [43]).
The valuer had valued the shopping arcade as at April 1997 taking into account the “serious risk” of the rival shopping centre being completed as having an “impact on the market at that time”. In their Honour’s view, the court should go further. Their Honours said (at [44]-[46]) -
“… In carrying out valuations, [the valuer] had to take account of risks so far as the market perceived them to be present realities at the date at which value was to be fixed. The task of valuation is to be conducted without hindsight — that is, without knowledge of events which have not happened by the date at which the value is to be ascribed, though they have happened by the date on which the valuation takes place. That task is different from the task of assessing loss, because the latter task is to be conducted with hindsight.
[45] Thus, in assessing damages in this case, the court is not limited to the assessment of risk as at 28 April 1997, but is entitled to take account of how those risks had evolved into certainties at dates after the date on which the comparison of price and true value was being made. The market values Mr Dodds arrived at may well have been entirely accurate; if so, they demonstrated not that he was in error, but that the market assessment of the risk was erroneous. In short, the market value in 1997 was not a ‘true value, but a mistaken estimate of … value’.
[46] Figures worked out by analysing what willing but not anxious buyers and willing but not anxious sellers would agree on, without taking account of subsequent events, may correspond with market value; but they do not necessarily correspond with true value because the market can operate under some material mistakes. In particular, some material factor may not be apparent to it. A mistake of this kind, it seems likely, was present here. Though the market value on 21 April 1997 was $400,000, and in July 1997 it was $375,000, one matter was not apparent then which was apparent later. The trial judge found that $130,000 was ‘the value of the land more or less since it became apparent that tenants were largely unavailable except at minimal rentals.’ That unavailability was an inevitable consequence of the Beach Rd Shopping Centre once it was completed, but the perception of the likely effect of that completion was obscure in 1997, and only became clearer from the latter part of 1998 on.” (citations omitted)
The essence of their Honours’ reasoning was that, although it may not have been operating in the market to reduce the value of the shopping centre as at April 1997, a factor material to the true value (as distinct from the market value) of the shopping arcade was the inherent vulnerability of the shopping arcade to the competition of the rival shopping centre under construction at the time of purchase. The inevitable manifestation of that vulnerability, as it had come to be known, could be taken into account, and the valuer fell short of taking it into account because he paid regard to a risk rather than the known consequence.
The circumstances of the present case are in my opinion quite different. When the purchasers purchased their lots, there was no doubt the possibility that changes in aircraft types and usage of the Range would bring changed noise affectation for the site of Fisherman’s Village. The evidence did not show that, at that time, any change would be for the better rather than for the worse; indeed, the draft 2005 ANEF demonstrates the possibility that it would be for the worse. It is still by no means certain that it will be for the better. The 2011 ANEC has the status only of a study, not an examined and approved ANEF, and the proposed 2012 ANEF may not be adopted. Whatever aircraft types and usage of the Range lies behind the 2011 ANEC or the possible 2012 ANEF would, even if the ANEC came to adoption as an ANEF or the proposed 2012 ANEF became an adopted ANEF, be open to further change, either with better or with worse consequences for noise affectation. Neither the 2011 ANEC nor the proposed 2012 ANEF is anything like the inevitable manifestation of the inherent vulnerability of the shopping arcade in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd.
The values of the of the purchasers’ lots as at the dates of their purchases would have reflected the market’s understanding of, amongst other things, the possibility that noise affectation from use of the Range might change, for the better or for the worse. The Council’s submission was not that the valuer had failed to take into account the possibility that it might change for the better. It was that the mere fact of the 2011 ANEC or the proposed 2012 ANEF meant that the purchasers were now in the positions they claimed they believed they were in at the dates of their purchases, and so they had suffered no loss. Kizbeau Pty Ltd v W G & B Pty Ltd and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd do not support that, nor do they support an argument that the diminutions in value were nil because the real values of the lots, as distinct from their market values, were shown by subsequent events to have been the same as the prices paid for them. The Council did not call valuation evidence to the effect that a market informed of the 2011 ANEC or the proposed 2012 ANEF, and thus with any mistake of the kind afflicting the valuer in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd corrected, would have paid for the lots the prices the purchasers in fact paid. Perhaps on reasoning different from that of the judge, I do not think the Council has shown error in the judge’s assessment of diminutions in value.
Question (f): Interest
Again the Council’s submissions, and the purchasers’ response to them, were only in the parties’ written submissions. It is far from clear that the Council’s grounds of appeal were sufficient to carry their submissions. The purchasers did not take any point.
When the judge delivered her reasons on 14 May 2004 she stated her assessments of damages; taking Mr Burcher’s proceedings as an example, $22,207.50 for diminution in value of his lot and $37,925 for consequential losses. Her Honour adjourned the proceedings to 21 May 2004 for submissions on interest and costs and the making of final orders.
The appeal papers did not show what occurred on 21 May 2004. The final orders appear to have been made on 28 May 2004. In Mr Burcher’s proceedings, the judgment was for $98,802.50. I understand it to be common ground that the additional $38,670 was interest included in the judgment pursuant to s 83A of the District Court Act 1973 (“s 83A interest”).
It is not evident that s 83A interest was in contest at the trial. If it was the judge’s reasons setting out the competing submissions and her resolution of them should have been available; none were provided. It may be that, for that reason alone, the Council’s submissions should not be entertained. In any event, they should not be accepted.

The Council submitted that the purchasers had not lost the use of their money, because despite paying too much for their lots they had received a return from letting the cabins out. It asserted that, at least to an extent, the rental return fulfilled the purchasers’ expectations, and that to the extent it did not it was necessary to show that the lack of return was due to the Council’s negligence. It is unclear whether this complaint could go beyond interest on the diminutions in value.
The purchasers’ consequential losses took account of their rental return. To continue with the example of Mr Burcher’s proceedings, his consequential losses were calculated as -
$
Purchasers costs
Mortgage interest   41,459
Fees and other costs     4,591
   46,050
Outgoings   16,246
Future costs   5,411
Rents received   (29,782)
     37,925
The Council’s submission is misconceived. The damages represented money lost to the purchasers, being the overpayments for their lots and their net consequential losses after allowing for rentals, the loss being caused by the Council’s breaches of duty. The partial rental return provides no reason for declining to allow s 83A interest on the damages.
The Council submitted that the purchasers still had their lots, that the lots had “potentially increased in value” and the increase in value “may well overwhelm any overpayment … as at the date of purchase”, and that to award interest on the damages “would be potentially to overcompensate them”. Again, it is unclear whether this complaint could go beyond interest on the diminutions in value.
The submission is again misconceived. If the purchasers are entitled to damages representing (relevantly) money lost to them by overpayment for their lots, notwithstanding that the lots may now or hereafter be of increased value, in law they have been deprived of the money lost to them and have been entitled to the damages since they purchased their lots. There is no error of principle in allowing s 83A interest on their damages. If a fortuitous increase in value known at the time of judgment could provide grounds for exercising the discretion against an award of s 83A interest, and I should not be taken to endorse the possibility, the judge’s exercise of discretion as such has not been challenged.
The purchasers’ consequential losses included interest on the money they borrowed to purchase their lots. This was not challenged on appeal. The Council submitted that s 83A interest should not have been awarded on the interest component of the damages. It submitted that the purchasers borrowed money rather than invest their own money, were “for the most part … not deprived of their money that they were otherwise entitled to”, and that to award s 83A interest on the interest component “would be to over compensate them and pay double interest”. It referred to Degman Pty Ltd (in liq) v Wright (1983) 2 NSWLR 348 and H T W Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd.
The submission is erroneous. The starting point is that the purchasers’ losses included the money they paid as interest on their borrowings – whether that money was correctly wholly recoverable need not be gone into. The purchasers were deprived of their own money, the money they paid as interest on their borrowings. So far as there was s 83A interest on the interest they paid on money borrowed to purchase the lots, there was not double interest, but interest on a loss which had been suffered by payment of interest on borrowings.
Degman Pty Ltd (in liq) v Wright is not in point. It was relevantly concerned with whether a mortgagee could recover from a guarantor interest on the mortgage principal under s 94 of the Supreme Court Act 1970, or only interest at the mortgage rate. It was held that, on the construction of s 94, it could not recover interest under that provision because it was recovering a debt on which interest was payable as of right. Whether or not the decision is correct in this respect, that is not this case.
In H T W Valuers (Central) Qld Pty Ltd v Astonland Pty Ltd the plaintiff recovered as damages the difference between the price paid for the shopping arcade and its value, trading losses, and some purchase and refurbishment costs. The judge awarded interest under an equivalent to s 83A on the trading losses and the costs, but said (Astonland Pty Ltd v HTW Valuers [2001] QSC 380 at [53]), “Since the trading losses in this case include interest on the funding for the purchase of the Plaza it seems to me to be inappropriate to award interest on any part of the primary loss”.
In concluding that the judge’s error in not taking into account subsequent events in arriving at the true or real value of the shopping arcade was balanced by errors in the other direction, in the High Court their Honours said -
“[54] A further error, also relating to interest, arose from the trial judge's endeavour to avoid double counting. He refused to allow "interest on the funding for the purchase of the Plaza" on the ground that it was included in the trading losses. This would be correct if the whole of the $485,000 had been borrowed. … ” (emphasis added)
The Council submitted that their Honour’s endorsement of the refusal to allow interest if the purchase price had been borrowed supported its position. This was a misunderstanding of the case. The reason why interest was not to be awarded on the borrowed amount of the purchase price was that the trading losses included interest on the funding. Interest was awarded on the trading losses, and there would have been double recovery. Because the trading losses included interest on the funding and interest was allowed on the trading losses, however, interest was in fact awarded on the interest component of the damages. The case is against the Council, rather than supporting its position.
Question (g): Costs
The Council’s written submissions stated, after the submissions dealing with interest -
“The effect of her Honour’s decision to grant interest to the respondents was that in each case the award of damages exceeded the offers made under Part 19A of the District Court Rules. Her Honour then made an order for costs on a solicitor/client basis because the damages exceeded the offers made by the plaintiffs and served on 20 October 2003. If the Court accepts the submissions made above that the respondents are not entitled to interest on the whole of the sum, then the Court should also overturn the trial judge’s decision to award costs on a solicitor/client basis from 24 October 2003 onwards.”
The purchasers’ written submissions stated the amount of the offers made and pointed out, referring to figures, that -
(a)in Mr and Mrs Gibson’s proceedings the damages exceeded the amount of the offer without the inclusion of the s 83A interest; and
(b)in the other proceedings it would be necessary to overturn the inclusion of the s 83A interest on both the diminution in value and the consequential losses in order that the judgments be for less than the amounts of the offers.
It is unfortunate that the Council’s submissions did not go more fully into the consequences of error as to interest; it would appear that, even if the s 83A interest was excluded, different costs orders would by no means be appropriate. As it is, the basis for intervening as to costs has not been made out.
The result
In my opinion, each of the questions should be decided adversely to the Council. The Council was liable to the purchasers in negligence in relation to the grant of the development approval and the building approval, and as well in relation to the issue of the s 149 certificates. If it had made out the defence of good faith under s 149(6) of the EPA Act, the alternative basis for its liability would have remained. No error has been shown in the assessment of damages or the award of interest.
I propose the orders -
(1)In 40517/04, grant leave to appeal and direct the filing of the notices of appeal within seven days;
(2)In 40517/04 and 40821/04, appeals dismissed;
(3)The claimant/appellant to pay the costs of the opponents/respondents.
HUNT AJA: I agree with Giles JA.
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LAST UPDATED: 27/09/2005