Quzag v Gunning Shire Council

[2005] NSWSC 970

Reported Decision: 142 LGERA 77
(2005) Aust Torts Reports 81-812

New South Wales

Supreme Court

CITATION:	Quzag v Gunning Shire Council [2005] NSWSC 970
HEARING DATE(S):	5-7 July, 8-9 August 2005
JUDGMENT DATE :	30 September 2005
JURISDICTION:	Common Law Division
JUDGMENT OF:	Studdert J
DECISION:	Verdict and judgment for the defendant. Costs reserved.

CATCHWORDS:	Local Government - sale of land by council for unpaid rates - whether duty of care owed by council to landowner - whether statutory cause of action available - whether liability in negligence - statutory interpretation.
LEGISLATION CITED:	Corporations Act, s 420A Crown Lands (Continued Tenures) Act Factories, Shops and Industries Act, s 27 Interpretation Act, s 9 Local Government Act, ss 114, 672, 673, 712, 713, 715, 716, reg 13 Noxious Weeds Act, ss 20, 26 Valuation of Land Act
CASES CITED:	Caledonian Collieries Limited v Speirs (1956-57) 97 CLR 202 Crimmins v Stevedoring Industry Finance Committee (1999-2000) 200 CLR 1 Gomez v State Bank of New South Wales (2001) FCA 1059 Graham Barclay Oysters Pty Limited v Ryan (2003) 194 ALR 337 Hawkesbury Valley Developments Pty Limited v Custom Credit Corporation Limited (1994) 8 BPR 15,581 Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537 Newcastle City Council v Shortland Management Services (2003) 57 NSWLR 173 Sovar v Henry Lane Pty Limited (1967) 116 CLR 397 Sutherland Shire Council v Heyman (1984-85) 157 CLR 424 Ultimate Property Group Pty Limited v Lord (2004) 60 NSWLR 646
PARTIES:	Mustafa Quzag (Plaintiff) Gunning Shire Council (Defendant)
FILE NUMBER(S):	SC 20010/00
COUNSEL:	C. Ward (Plaintiff) G. Curtin (Defendant)
SOLICITORS:	Tetlow Jansen & Doyle (Plaintiff) Phillips Fox (Defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

STUDDERT J

Friday 30 September 2005

20010/00 MUSTAFA QUZAG v GUNNING SHIRE COUNCIL

JUDGMENT

1 HIS HONOUR: The plaintiff, Mustafa Quzag, has brought these proceedings against the defendant, Gunning Shire Council, following the sale of the plaintiff’s property by the council for unpaid rates. It is the plaintiff’s contention that the property was sold for less than its market value and that as a consequence he has suffered loss and damage entitling him to an award of damages in this Court.

2 The defendant has denied liability. However, before considering the way in which the claim has been pleaded and the issues of law that arise, it is necessary to describe the factual background, the circumstances in which the property came to be sold and the manner in which that sale occurred.

The sale of the plaintiff’s land

3 The plaintiff acquired the subject property in about 1981 for the sum of $175,000. The property covers an area of some 450 hectares, or nearly 1100 acres. It comprises Lots 40, 130, 161, 182 and 185 and part of Portion 242 of the Parish of Mundoonen, Shire of Gunning. It is located some sixteen kilometres from Gunning and seventy-five kilometres from Canberra. The land was purchased as vacant land but the plaintiff’s evidence was that he carried out improvements and work on the land. Three bores were sunk, a shearing shed was constructed, a market garden was developed over some fifty acres, fencing was done and dams were constructed. Photos in evidence depict a significant dam in existence on the property as at May 1999.

4 According to the plaintiff, at the time he purchased the property it was heavily infested with a weed known as serrated tussock. The plaintiff’s evidence was that he did substantial work in an endeavour to rid the property of this weed. How successful his endeavours were is a matter to which I will return later.

5 The plaintiff fell into arrears in respect of the payment of rates levied on the subject property, and by letter dated 22 October 1997 the council advised the plaintiff that the amount then outstanding was $14,520.58, and that if that amount was not paid or arrangements made for payment before 31 October 1997 the account would be referred to the collection agency for legal action. In the absence of a response satisfactory to the defendant, Mr Bell, as the Finance and Administration Manager, recommended that the council initiate the necessary process to sell the land for unpaid rates and charges. That recommendation was adopted.

6 Mr Bell, who gave evidence in this cause, instructed the council’s solicitor to initiate proceedings for sale.

7 On 13 November 1998 a notice was placed in the Government Gazette giving notice of the proposal to sell the property and two other properties in respect of which rates were also unpaid. The notice was in the terms following:

“NOTICE is hereby given that Council will, pursuant to sections 713 and 715 of the Local Government Act, 1993 (N.S.W.) offer for sale by auction the land described as follows: Parish of Mundoonen, Lots 40, 130, 161, 182 and 185, D.P. 754130; and Parish of Mundoonen, Part Portion 242, registered proprietor M. Quzag; Village of Collector, Lot 10; D.P. 793491, registered proprietor F. Hengst; Parish of Kildare, Lot 250, D.P. 754125, registered proprietors S.C. & K.M. Hollis. The auction shall occur within three (3) to six (6) months of the date of publication of this notice. All persons who have an interest in the land should contact Council’s legal representatives at the address below no later than 15th January 1999. Authorised by resolution of Council on 21st September 1998. Dated 10th November 1998. K. BALIAN, c.o. Karl Balian & Co., Level 3, 410 Church Street, North Parramatta, N.S.W. 2151 (D.X. 28335, Parramatta), tel.: [phone].”

8 On 18 November 1998 a similar notice was published in the “Goulburn Post”.

9 On 19 November 1998 the solicitor for the defendant wrote to the plaintiff in the terms following, sending copies of such letter to three different address in the Australian Capital Territory:

“We act on behalf of Gunning Shire Council and we have been instructed to offer for sale the above lots pursuant to Sections 713 and 715 of the Local Government Act 1993 for unpaid rates and charges.
We *enclose for your information copy of notice placed in the NSW Government Gazette on 13 November 1998 of the proposed sale. The notice has also been placed in the Goulburn Post on 18 November 1998.
It is anticipated that the above lots will be offered for sale within three (3) to six (6) months.
Pursuant to section 715(2), if all outstanding rates and charges are paid to council, or an arrangement satisfactory to Council for payment is entered prior to the sale , Council must not proceed with the sale.
If you intend to settle the outstanding rates and charges, you must contact this office immediately upon receipt of this letter.
The sale will otherwise proceed and pursuant to section 718 of the Act, any purchase money will be applied first to council’s costs in connection with the sale, and second, rates and charges due to Council.”

10 On behalf of the defendant, Mr Bell engaged Ray White Real Estate to act as agents on the sale of the property and that approach led to the signing by Mr Bell, on behalf of the defendant, of an agency agreement with the agent on 19 April 1999. Mr Bell approached that estate agency through Mr James McAleer, with whom he had had some professional acquaintance and a sporting association. Mr Bell coached a rugby team in Goulburn with which Mr McAleer played.

11 Mr McAleer gave evidence of having formulated a marketing strategy, and the document outlining that is Annexure H to Mr Bell’s affidavit. Advertisements concerning the sale were placed in the “Goulburn Post”, “The Land” newspaper, the “Sydney Morning Herald” and the “Canberra Times”. There were advertising broadcasts over Radio 2GN and some 500 brochures were printed to be provided to persons who inquired.

12 According to Mr McAleer, there was a high level of interest in the property. The arrangement put in place was that the property was to be listed for sale by auction at the defendant’s council chambers on the evening of 27 April 1999, with the auction to commence at 6.30 pm. The property was sold at that auction for $200,000 after Mr McAleer had expressed the opinion as to the probable selling price as being from $150,000 to $200,000. That opinion is recorded in Exhibit D, a document headed “Sales Inspection Report and Agency Agreement”. It will be necessary to return to this document presently.

13 Mr Bell outlined in paras 27-29 of his affidavit what happened to the proceeds of sale. After deductions for rates and other charges outstanding, some money was paid to a mortgagee bank and the balance of $100,402.92 was paid into this court pursuant to an order made by Bryson J in proceedings in the Equity Division in March 2001.

14 The plaintiff sought, unsuccessfully, to prevent the sale achieved at auction from proceeding to finality by the lodgement of a caveat, but that effort failed when, on 13 October 1999, Hodgson CJ in Eq, as he then was, refused the plaintiff’s application to extend the caveat then in place.

15 In the proceedings before this Court, the essential complaint made by the plaintiff is that the property was sold well under market price and in circumstances that entitle him to relief in damages. This brings me to a consideration of the plaintiff’s claim as pleaded.

The claim as pleaded

16 The plaintiff sues for breach of statutory duty and in negligence.

17 The scheme and the provisions of the relevant sections of the Local Government Act assume paramount importance, not only in determining whether the plaintiff has a cause of action based upon a breach of statutory duty, but also in determining whether, having regard to the relevant statutory provisions, there is available to the plaintiff a right to sue in actionable negligence.

18 As to the availability of an action based upon breach of statutory duty, the frequently cited dicta of Kitto J in Sovar v Henry Lane Pty Limited (1967) 116 CLR 397 at 405 are in point. Sovar concerned the availability of a statutory cause of action to a person injured in consequence for a failure to securely fence in compliance with s 27 with the Factories, Shops and Industries Act. Kitto J said this:

“…the question whether a contravention of a statutory requirement of the kind in question here is actionable at the suit of a person injured thereby is one of statutory interpretation. The intention that such a private right shall exist is not, as some observations made in the Supreme Court in this case may be thought to suggest, conjured up by judges to give effect to their own ideas of policy and then ‘imputed’ to the legislature. The legitimate endeavour of the courts is to determine what inference really arises, on a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and generally the whole range of circumstances relevant upon a question of statutory interpretation.”

19 Whilst the remarks of Kitto J were made in the context of consideration of a claim for damages for personal injury as opposed to the present claim which is essentially a claim for economic loss, his Honour’s remarks nevertheless stress the importance of seeking to determine the intention of the legislature in the terms of the statute. It may be, of course, that a legislative intention to provide a statutory cause of action for a person who has suffered economic loss is to be less readily inferred than an intention to provide a statutory cause of action for a person who has suffered personal injury. Whether this be the case or not, the focus has to be upon the provisions of the statute to determine whether a statutory cause of action is provided.

20 As to the availability of an action in negligence, there are many statements of principle indicating that the conferral of statutory powers carries with it the responsibility to exercise such powers with reasonable care.

21 In Caledonian Collieries Limited v Speirs (1956-57) 97 CLR 202 Dixon CJ, McTiernan, Gitto and Taylor JJ said (at 220):

“…the well settled principle applies 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.”

22 Then, in Sutherland Shire Council v Heyman (1984-85) 157 CLR 424 at 458 Mason J, as he then was, said:

“It is now well settled that a public authority may be subject to a common law duty of care when it exercises a statutory power or performs a statutory duty. The 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 (Caledonian Collieries Ltd. v. Speirs (1957) 97 C.L.R. 202, at pp. 219-220; Benning v. Wong (1969) 122 C.L.R. 249, at pp. 307-308) has been applied mainly to private Acts. However, it has been frequently applied in Australia to public authorities, notably public utilities, exercising powers under public statutes: Sermon v. Commissioner of Railways (1907) 5 C.L.R. 239, at pp. 245, 254; Essendon Corporation v. McSweeney (1914) 17 C.L.R. 524, at p. 530; Metropolitan Gas Co. v. Melbourne Corporation (1924) 35 C.L.R. 186, at pp. 193-194, 197; South Australian Railways Commissioner v. Barnes (1927) 40 C.L.R. 179; Cox Bros. (Australia) Ltd. v. Commissioner of Waterworks (1933) 50 C.L.R. 108; South Australian Railways Commissioner v. Riggs (1951) 84 C.L.R. 586, at pp. 589-590; Voli v. Inglewood Shire Council (1963) 110 C.L.R. 74, at pp. 88, 89, 100; Birch v. Central West County District Council (1969) 119 C.L.R. 652. While some early statements of the principle suggest that the power given by statute is conditioned upon it being exercised without negligence so that negligent exercise amounts to an excess of authority (McSweeney (1914) 17 C.L.R., at p. 530; Metropolitan Gas Co. (1924) 35 C.L.R., at p. 197), the better view has always been that the cause of action in negligence arises under the principle by virtue of a breach of a duty of care existing at common law: Geddis v. Proprietors of Bann Reservoir (1878) 3 App. Cas. 430, at pp. 455-456; London and Brighton Railway Co. v. Truman (1885) 11 App. Cas. 45, at p. 61; Fullarton v. North Melbourne Electric Tramway and Lighting Co. Ltd. (1916) 21 C.L.R. 181, at pp. 199-200; (1984) 157 CLR 424 at 459 East Suffolk Rivers Catchment Board v. Kent [1941] A.C. 74, at pp. 88-89; Riggs (1951) 84 C.L.R., at pp. 589-590. And at least since the decision in Fisher v. Ruislip-Northwood Urban District Council and Middlesex County Council [1945] K.B. 584, esp. at pp. 592-593, 615, 619-620, it has been generally accepted that, unless the statute manifests a contrary intention, a public authority which enters upon an exercise of statutory power may place itself in a relationship to members of the public which imports a common law duty to take care.”

23 In Crimmins v Stevedoring Industry Finance Committee (1999-2000) 200 CLR 1 McHugh J, at 29 (paras [61]-[62]), when considering the position of the Australian stevedoring industry authority and whether it owed a common law duty of care to the plaintiff waterside worker, said this:

“The correct approach in determining whether a statutory authority owes a duty of care is to commence by ascertaining whether the case comes within a factual category where duties of care have or have not been held to arise. Employer and employee, driver and passenger, carrier and consignee are a few examples of the many categories or relationships where, absent statute or contract to the contrary, the courts have held that one person always owes a duty of care to another. Frequently, a statutory authority will owe a duty of care because the facts of the case fall within one of these categories. The authority may, for example, be an employer or occupier of premises or be responsible for the acts of its employees, such as driving on a public street.
[62] There is one settled category which I would have thought covered this case: it is the well-known category ‘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’ Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202 at 220, per Dixon CJ, McTiernan, Kitto and Taylor JJ.. Similarly, in Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 458., Mason J, citing Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202 at 219-220., said that ‘[i]t is now well settled that a public authority may be subject to a common law duty of care when it exercises a statutory power or performs a statutory duty.’"

24 However, the manner of expression of a statutory power may be indicative of an intention to exclude a right to sue in negligence and may be inconsistent with the existence of such a right.

25 The decision of the Court of Appeal in Newcastle City Council v Shortland Management Services (2003) 57 NSWLR 173 is illustrative of this. Section 114(1) of the Local Government Act 1993, since repealed, provided:

“114. (1) The council must give notice of an application for approval to erect a building to the persons who appear to the council to own the land adjoining the land to which the application applies if, in the council’s opinion , the enjoyment of the adjoining land may be detrimentally affected by the proposed building after its erection.”

26 In Shortland Management the judge at first instance determined that the plaintiff had a cause of action when the council did not give notice of a building application which permitted the extension of a dwelling house that interfered with the plaintiff’s view. The decision at first instance was reversed in the Court of Appeal, where it was held s 114 in the context of the legislative scheme excluded any common law duties of care with respect to the formation of an opinion under s 114.

27 Spigelman CJ, with whose judgment the other members of the Court of Appeal agreed, remarked upon the content of s 114, saying (at p 185 [57]):

“…the provision for determining who is to receive notice is not expressed as an objective standard, but in terms of a subjective opinion on the part of the Council. Mason P emphasised the subjective nature of the trigger in Hamman [a reference to Hamman v Lake Macquarie City Council [1999] NSWCA 82] (at [7], [18] and [30]). This was a mechanism deliberately adopted to restrict the possibility of judicial review. It is not consistent with that objective to impose a common law duty of care on a Council with respect to the formation of the opinion.”

28 The Chief Justice continued (at paras [59]-[60]):

“[59] The basic restriction on development without approval was not imposed to serve the private interests of those who may be affected by development. Those restrictions serve the public interest. The purpose of notice under Pt 1 of Ch 7, Div 4, specifically s 114, also serves a public, not a private, purpose. It ensures that citizens have a reasonable opportunity of influencing decisions which affect them. No citizen is given any right to prevent or even inhibit decisions which have adverse effects on their interests. The only right is the opportunity to make submissions which the Council must take into account.
[60] In such a context public remedies, including electoral sanctions and judicial review, albeit of limited scope, were intended to cover the field. Common law duties are, in my opinion, excluded.”

29 Later, at p 187, his Honour cautioned that the dicta referred to by the primary judge from Caledonian Collieries and from Sutherland Shire Council v Heyman did not stand for the proposition “that the exercise of any statutory power necessarily gives rise to a common law duty of care”.

30 Then, at [74]:

“In each case, the statutory regime and the circumstances of the exercise, or failure to exercise, a power must be analysed to determine whether a duty of care has arisen. In the case of conduct leading to personal injury, it can be said that there is a broad range of statutory powers which gave rise to a duty of care of settled scope. That is not so with respect to the harm alleged in the present case.”

31 The Chief Justice proceeded then to refer to a passage in the joint judgment of Gummow J and Hayne J in Graham Barclay Oysters Pty Limited v Ryan (2003) 194 ALR 337 at p 375 [146]-[149], a passage with which Gaudron J agreed (at p 354 [58]). The statement of principle in their Honours’ judgment is of direct relevance for present purposes:

““[146] The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.
[147] Where the question posed above is answered in the affirmative, the common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute. In some instances, a statutory regime may itself, in express terms or by necessary implication, exclude the concurrent operation of a duty at common law. An example is provided by Sullivan v Moody (2001) 183 ALR 404; 75 ALJR 1570. The court there said:
‘The statutory scheme that formed the background to the activities of the present respondents was, relevantly, a scheme for the protection of children. It required the respondents to treat the interests of the children as paramount. Their professional or statutory responsibilities involved investigating and reporting upon, allegations that the children had suffered, and were under threat of, serious harm. It would be inconsistent with the proper and effective discharge of those responsibilities that they should be subjected to a legal duty, breach of which would sound in damages, to take care to protect persons who were suspected of being the sources of that harm.’
[148] However, contrary to submissions put on behalf of the Attorney-General for Western Australia (as an intervener in this Court),the discernment of an affirmative legislative intent that a common law duty exists, is not, and has never been, a necessary pre-condition to the recognition of such a duty. This may be contrasted with the action for breach of statutory duty, the doctrinal basis of which is identified as legislative intention (Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 459-61; 131 ALR 422 at 456-7).
[149] An evaluation of whether a relationship between a statutory authority and a class of persons imports a common law duty of care is necessarily a multi-faceted inquiry. Each of the salient features of the relationship must be considered. The focus of analysis is the relevant legislation and the positions occupied by the parties on the facts as found at trial (Pyrenees Shire Council v Day (1998) 192 CLR 330 at 377 [126]; 151 ALR 147 at 181-2). It ordinarily will be necessary to consider the degree and nature of control exercised by the authority of the risk of harm that eventuated (Howard v Jarvis (1958) 98 CLR 177 at 183; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 550-2, 556-7; 120 ALR 42 at 62-3, 66-7); the degree of vulnerability of those who depend on the proper exercise by the authority of its powers (Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551; 120 ALR 42 at 62; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 24-5 [44]-[46], 38-9 [91]-[93], 40-1 [100]; 167 ALR 1 at 12-13, 24-5, 25-6; and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute (Sullivan v Moody (2001) 183 ALR 404 at 416-17 [55]-[62]; 75 ALJR 1570 at 1580-1). In particular categories of cases, some features will be of increased significance. For example, in cases of negligent misstatement, such as Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 16-17 [47], 23-4 [76]; 178 ALR 634 at 645-6, 651, reasonable reliance by the plaintiff on the defendant authority ordinarily will be a significant factor in ascertaining any relevant duty of care.
[150] The factor of control is of fundamental importance in discerning a common law duty of care on the part of a public authority (Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551-2; 120 ALR 42 at 62-3; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 24-5 [43]-[46], 42-3 [104], 61 [166], 82 [227], 104 [304], 116 [357], 167 ALR 1 at 12-13, 27, 42, 59, 77-8, 87; Brodie v Singleton Shire Council (2001) 206 CLR 512 at 558-9 [102], 180 ALR 145 at 174). It assumes particular significance in this appeal. This is because a form of control over the relevant risk of harm, which, as exemplified by Agar v Hyde ((2001) 201 CLR 552 at 562 [16], 564 [21], 581-2 [81]-[83]; 173 ALR 665 at 669-70, 671, 685-6) is remote, in a legal and practice sense, does not suffice to found a duty of care.”

32 I have regard to the statements of principle in the authorities cited above in turning to consider the relevant provisions of the Local Government Act1993 and their significance and in order to determine whether the plaintiff has available to him a cause of action on one or other or both of the foundations he has advanced.

33 The statutory authority provided by the Local Government Act authorising the sale of land for unpaid rates and charges is to be found in Chapter 17.

34 It is noteworthy firstly to consider Div 1 of Chapter 17, which provides the opportunity for proceedings to be brought in the Land and Environment Court to remedy or restrain a breach of the Act.

35 Section 672 defines a breach of the Act for the purposes of Pt 17 and s 673 enables proceedings to be brought, inter alia, by a council seeking an order to remedy or restrain a breach of the Act. Such proceedings are to be brought in the Land and Environment Court. Section 674 provides the opportunity for any person to bring proceedings in the Land and Environment Court for an order to remedy or restrain a breach of the Act.

36 Passing to Pt 2 Div 4 of Chapter 17, s 712 makes provision for the recovery of unpaid rates and charges. It is unnecessary for present purposes to set out the text of s 712 which enables recovery proceedings to be brought within twenty years from the date when the rate or charge became due and payable: s 712(1). Recovery proceedings can be brought against the same person whether in respect of the same or different land in a single action: s 712(2). Service of a rates and charges notice may not be challenged after a period of ten years from the date of service of the notice: s 712(6). Proceedings for the recovery of any rate or charge by the enforcement of the charge it comprises on the land are not to be taken in any court except proceedings under Div 5: s 712(7).

37 Division 5 makes provision for the sale of land for unpaid rates and charges. Section 713 is of central significance in considering the plaintiff’s claim based upon breach of statutory duty since it affords the statutory authority for such sale. I set this provision out in full:

“ 713 Sale of land for unpaid rates and charges
(1) For the purposes of this Division, a rate or charge is overdue if:
(a) in the case of vacant land, it has remained unpaid for more than one year, or
(b) in the case of any other land, it has remained unpaid for more than 5 years, from the date on which it became payable.
(2) A council may, in accordance with this Division:
(a) sell any land (including vacant land) on which any rate or charge has remained unpaid for more than 5 years from the date on which it became payable, and
(b) sell any vacant land on which any rate or charge has remained unpaid for more than one year but not more than 5 years from the date on which it became payable, but only if:
(i) the council obtains a valuation of the land from the Valuer-General, and
(ii) the total amount of unpaid rates or charges on the land exceeds the valuation, and
(iii) the council sells the land within 6 months after the date when the council received the valuation .
(3) The council must not sell any such land unless the general manager or the public officer certifies in writing:
(a) what rates and charges (including overdue rates and charges) are payable on the land, and
(b) when each of those rates and charges was made and how it was levied, and
(c) when each of those rates and charges became payable, and
(d) what amounts are payable by way of overdue rates and charges on the land, and
(e) what amounts are payable by way of rates and charges (other than overdue rates and charges) on the land.
(4) The council may, in the case of adjoining parcels of land (whether in the same or different ownerships) each of which may be sold under this Division:
(a) sell them separately or as a single parcel and under whatever conditions of sale it considers proper, and
(b) do such things as it considers appropriate for the purpose of selling the land at its full value.”

38 The power conferred by s 713(2) is a discretionary power. The word “may” conveys this meaning. Section 9(1) of the Interpretation Act 1987 so provides:

“(1) In any Act or instrument, the word ‘may’ if used to confer a power, indicates that the power may exercised or not, at discretion.”

39 It is to be observed that the council in the present case proceeded upon the basis that rates or charges had remained unpaid for more than five years and purported to act under s 713(2)(a).

40 Section 713(3) made provision for the necessity of a certificate addressing the various matters in (a), (b), (c), (d), and (e).

41 Section 713(4) provided the council with a discretion to determine in the case of adjoining parcels of land whether to sell them separately or as a single parcel, determining the conditions of sale it considered proper: s 713(4)(a).

42 Again, in the case of adjoining parcels of land, the council, in the exercise of its discretion, was empowered to do what it considered appropriate for the purpose of selling the land at its full value: s 713(4)(b).

43 Curiously, it is to be observed that the discretionary power provided by s 713(4)(b) is only expressly conferred where the council is considering the sale of adjoining parcels of land.

44 “Parcel of land” in relation to rateable land means a portion or parcel of land separately valued under the Valuation of Land Act 1916 (see the dictionary of the Act).

45 “Rateable land” is defined as land “that is rateable to an ordinary rate or a special rate or both” (again, see the dictionary).

46 Section 492 of the Act enables a council to levy ordinary rates and special rates.

47 It is to be observed in the present case that there were separate valuations for part of Portion 242 on the one hand and Portions 40, 185, 186, 130, 182 and Part of Portion 242 (see Valuer General’s valuation, p 19, Exhibit 2) and there was also a discrete valuation for Lot 242 (see Exhibit 2, p 41).

48 Hence, the council had a discretion under s 713(4), but a discretion which was restricted by reference to the available valuations in para 47 above. On the other hand, it would have been impractical to sell any parcel which did not have a discrete Certificate of Title.

49 Section 715 imposes a mandatory requirement upon a council before selling land to take the steps addressed in sub-s (1):

“(1) Before selling land under this Division, the council must:
(a) fix a convenient time (being not more than 6 months and not less than 3 months from the publication in a newspaper of the advertisement referred to in paragraph (b)) and a convenient place for the sale, and
(b) give notice of the proposed sale by means of an advertisement published in the Gazette and in at least one newspaper, and
(c) take reasonable steps to ascertain the identity of any person who has an interest in the land, and
(d) take reasonable steps to notify each such person (and the Crown, if the land concerned is owned by the Crown) of the council’s intention to sell the land under this Division.”

50 Section 715(2) defines circumstances in which a council cannot proceed with the sale:

“(2) If, before the time fixed for the sale:
(a) all rates and charges payable (including overdue rates and charges) are paid to the council, or
(b) an arrangement satisfactory to the council for payment of all such rates and charges is entered into by the rateable person,
the council must not proceed with the sale.”

51 Section 716 provides for the manner of sale. The sale has to be by public auction unless such an auction fails:

“(1) Any sale of land under this Division must be by way of public auction, except as provided by this section.
(2) Land that fails to sell at public auction may be sold by private treaty.
(3) Land may be sold under this Division to the council, a councillor, a relative of a councillor, a member of staff of the council or any relative of a member of staff of the council in the case of sale by public auction, but may not be so sold in the case of sale by private treaty.”

52 It is to be observed that the requirement of sale by auction expressed in s 716(1) is mandatory, subject to the opportunity for sale by private treaty in the circumstances addressed in s 716(2).

53 I return to s 713(4). It was submitted on behalf of the plaintiff that there ought to be imputed to the legislature an intention to confer a statutory cause of action for the breach of an obligation to ensure that full value is obtained for a property sold pursuant to s 713.

54 Having considered the various provisions of Chapter 17, I find myself unable to infer such a legislative intention or to read into s 713 the interpretation for which the plaintiff here contends. It would have been simple enough for the legislature to have expressly stated that in any sale of land for unpaid rates, the council must take all reasonable steps to ensure the land is sold at its full value. The legislature did not do this. The legislature could have expressed a duty of care in terms similar to the duty imposed on a controller exercising a power of sale of property under s 420A of the Corporations Act 2001. That section provides:

“ 420A Controller’s duty of care in exercising power of sale
(1) In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for:
(a) if, when it is sold, it has a market value—not less than that market value; or
(b) otherwise—the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold.

(2) Nothing in subsection (1) limits the generality of anything in section 180, 181, 182, 183 or 184.”


The Local Government Act contains no provision similar to s 420A.

55 Indeed, I remarked earlier upon the limitation upon s 713(4) in referring only to contemplated sales of adjoining parcels of land. Even then, I do not consider that the legislature has exposed a council to a statutory cause of action in circumstances to which that sub-section applies. The decision-making mechanism in the subsection, like the decision-making mechanism of the former s 114 considered in Shortland Management (supra), was not expressed by reference to an objective standard but by reference to a subjective standard. Whether the council makes a decision to sell adjoining parcels separately or not is a matter for the council to determine in the exercise of its discretion. What conditions are set is to be determined by the council such as “it considers proper”: s 713(4)(a). The council is empowered by the sub-section “to do such things as it considers appropriate” for the purpose of selling the land at its full value: s 713(4)(b). The decision-making mechanism expressed in the sub-section is inconsistent with any legislative intention to expose a council to a liability in an action for breach of statutory duty. Still less then, does the sub-section convey the notion of the existence of such an intention where the sale of adjoining parcels is not in contemplation.

56 The submission that s 713(4) gives rise to a statutory cause of action in the present case is accordingly rejected.

57 There are other statutory provisions upon which the plaintiff has pleaded reliance:

(a) s 713(2)(a);

(b) s 713(3);

(c) reg 13 of the Regulations made pursuant to the Act;

(d) s 715(2)(b).

58 As to (a), the contention is that there were no rates unpaid for more than five years at the time of sale.

59 The plaintiff relies upon a letter written by his solicitor to the solicitors for the council on 21 April 1999 (see p 21 of Exhibit 2). In that letter the plaintiff’s solicitor confirmed a proposal to pay to the council the sum of $7500 within the next seven days and then to offer security for the payment of the balance due for rates, interest and costs. It was pointed out in the letter that there were a number of securities over the property already: there was a mortgage to the Commonwealth Bank for between $45,000 and $50,000 and there was a caveat in favour of the plaintiff’s wife to secure an amount of $100,000. The proposal was rejected by the council.

60 It is conceded by Mr Curtin that a payment of $7500 had it been made would have sufficed to pay what had been owing for more than five years, but the offer was not a payment nor was it a tender. What was proposed was proposed as part of an overall scheme concerning the plaintiff’s total indebtedness. Section 713 has to be considered with s 715.

61 Where rates remain unpaid for more than five years, the power of sale under s 713 is enlivened. However, if before the time fixed for the sale all rates and charges payable, including overdue rates, are paid to the council or, alternatively, an arrangement satisfactory to the council for payment of all rates and charges is made, then the council must not proceed with the sale. Section 715(2) so provides. However, if between the time that the decision to sell is made and the actual sale, some payment of rates is made but not sufficient to discharge the total indebtedness, then s 715 does not prevent the council from proceeding with the sale. Moreover, whether an arrangement for payment of the rates enlivens s 715(2) depends upon whether or not the arrangement proposed is satisfactory to the council. This involves a decision-making process of the council which, as I understand the legislative scheme and the language of the section, is not open to challenge in the proceedings presently before the Court.

62 The evidence establishes that at the time the council resolved to sell the plaintiff’s property there were rates that remained unpaid for more than five years. That remained the position at the time the property went to auction and the certificate completed by Mr Bell in purported compliance with s 713(3) of the Local Government Act discloses that the indebtedness for unpaid rates as at the date of sale was in a substantial sum.

63 Dr Ward submitted that the form of the certificate prepared by Mr Bell did not comply with s 713(3). The certificate, a copy of which appears at p 82 of Exhibit 2, contains a number of columns. The reader can see from the first column the date of the levy. The third column sets out the amount. The fifth column sets out the interest component. The eighth column sets out the total of interest and amount, and the ninth column provides a running total. One can readily see from reading the document when levies occurred and the running total, and one can readily see what rates were overdue for a period of five years.

64 The complaint is made that s 713(3)(d) is not complied with because the certificate does not state what amounts are payable by way of overdue rates and charges on the land.

65 In my opinion, the certificate at p 82 of Exhibit 2 affords sufficient compliance with the requirements of the sub-section subject to consideration of the further issue which Dr Ward has raised in written submissions in reply to written submissions received from Mr Curtin after the hearing concluded.

66 These further submissions were prompted by content of the certificate appearing after the relevant entries concerning rates. The first of these entries is “Weed Control”. The second item was “Court Costs”.

67 The defendant took action against the plaintiff in the exercise of powers conferred under the Noxious Weeds Act for failure to control serrated tussock on the property. Indeed, there were prosecutions against the plaintiff and the company known as Mundoonen Pastoral Company in November 1994 and again in August 1995. The plaintiff was convicted in 1994 of failure to control the serrated tussock and an appeal in April 1995 was dismissed. The later prosecution in August 1995 again proved successful and again resulted in fines of the plaintiff and the Pastoral Company. Once again, an appeal proved to be unsuccessful.

68 The fine imposed in the earlier prosecution was paid in part only and the fine imposed at the later prosecution was unpaid.

69 According to Mr Bell (see para 24 of his affidavit) the weed control figure in the certificate related to weed control carried out by the council on the property “on or about 23 October 1998”. Section 20 of the Noxious Weeds Act authorises a council to control noxious weeds and s 26 of the statute entitles the council to recover reasonable expenses and to recover interest. Such items are to be a charge on the land: s 60.

70 However, Dr Ward has submitted that s 60 did not have the effect of making a penalty imposed by the Local Court a charge on the land recoverable by the council. Fundamentally this is because a penalty upon a prosecution was not payable to the council.

71 The certificate refers to “court costs”. There is an item of $3000 referable to Yass Court and there is an item of $10,250 referable to Wollongong Court. The certificate does not indicate how those “court costs” items are made up, but when the relevant certificates of conviction which appear at pp 14 and 15 of Exhibit 2 are read in conjunction with Annexure Q to the affidavit of Mr Bell, it does seem that the actual penalties imposed by the court are components of the total sum set out under the heading “court costs” in the certificate. I accept the submission that the certificate is incorrect to the extent that it includes penalties imposed by the court.

72 However, I do not consider that this error in the certificate invalidates it. The error has the effect of there being an overstatement of the total payable by way of rates and charges but it does not affect the accuracy of the particulars as to outstanding rates. Whilst it is recognised in Logue v Shoalhaven Shire Council (1979) 1 NSWLR 537 in an action concerning the Local Government Act 1919 that an error might be of such a magnitude that the notice was not really a notice at all (see the judgment of Hutley JA at 541-542), this is not such an error.

73 Moreover, the evidence satisfies me that the reason why the plaintiff did not pay the rates that were due was a financial inability to do so. Not only do I conclude that the error in the form of the certificate did not invalidate the sale, but I also conclude that it was not causative of the failure by the plaintiff to pay what was properly due.

74 As to (c), it is submitted on behalf of the plaintiff that there was a breach of reg 13 of the relevant regulations under the Local Government Act 1993. Regulation 13 provided:

“13. An advertisement under section 715(1) of the Act notifying a proposed sale of land for unpaid rates or charges is to contain the following information:
(a) that the council proposes to sell the land for unpaid rates or charges at public auction;
(b) the name of the auctioneer and the proposed place, date and time of the auction;
(c) the persons known to the council to have an interest in the land;
(d) the amount of rates and charges unpaid for more than 5 years from the date on which they became payable and the amount of any interest accrued;
(e) the amount of any other rates and charges payable and unpaid and the amount of any interest accrued;
(f) the total amount due;
(g) that, if all rates and charges payable (including overdue rates and charges) are not paid to the council or an arrangement satisfactory to the council is not entered into by the rateable person before the time fixed for the sale, the council will proceed with the sale.”

75 It is clear that the notice placed in the Government Gazette on 13 November 1998 (see para 7 above) did not comply with the requirements of the regulation. Whilst the notice referred to ss 713 and 715, they did not spell out that the council proposed to sell the land for unpaid rates and charges; it did not identify the auctioneer nor the proposed place, date and time of the auction; it did not address the requirements of reg 13(d), (e), (f) and (g) either.

76 I do not understand it to be contended on behalf of the plaintiff that the failure to comply with reg 13 invalidated the sale. What then was the significance of the failure of compliance? Dr Ward submitted that the defects in the notice had the consequence that the plaintiff was unable to clearly identify the sum of money required to prevent the sale process.

77 The evidence does not support a finding that the plaintiff was prevented from paying what was due and necessary to stop the sale because he did not know how much to pay. No such inference is warranted by reference to the letter from Mr Pappas to which earlier reference has been made (Exhibit 2, p 79).

78 Dr Ward submitted that the evidence did establish that the necessary tender would have been made if the notice had been expressed in a form that complied with reg 13. I am quite unable to accept that submission. The evidence to which Dr Ward drew attention in seeking to support the submission was evidence at T 99-102 in the course of the cross examination of the plaintiff. The plaintiff said (T 102) that his solicitor advised him to pay the money before the auction. He said that he paid

“Thousand in cash to my lawyer’s trust and asked my lawyer to tell the council lawyer there is another $3300 with the Goulburn Lands Department for the subdivision which I cannot sell, they can have, which is leave me short of about $2300 to pay all my rates.”

79 I take that answer to mean that he paid his solicitor $1000 to be applied towards payment of rates and pointed to the availability of $3300 with the Goulburn Lands Department and the need for him to find another $2300. That answer seemed to acknowledge an indebtedness for overdue rates of $6600, and that is the approximate amount which was due for rates outstanding for more than five years. However, it is clear from that answer that the plaintiff was not in a position immediately to make that payment to the council.

80 He gave evidence in cross examination (T 103) that he gave his solicitor $10,000 for land rates. I do not accept that this was so. The answer was inconsistent with what he had said at T 102 and it is inconsistent with the content of the receipt, Annexure L to his affidavit, a trust account receipt for the sum of $10,000, which indicates that the money was received in relation to the then pending action against the Commonwealth “for costs and disbursements”. The sum was not being held for payment to the council for outstanding rates.

81 Hence I conclude that the failure of the council to comply with reg 13 did not cause a failure by the plaintiff to make the payment necessary to stop the sale of his property.

82 It has not been contended that a strict compliance with reg 13 may have had the effect of the achievement of a better price at auction. Nor do I think it likely that it would have done so. On the contrary, such a notice as complied with reg 13 would have conveyed the notion that the auction was likely to be in the nature of “a fire sale”. In any event, any interested reader of the notice of 13 November 1998 would have been alerted to the fact that the property was going to be sold for overdue rates by the reference in the notice to ss 713 and 715 of the Local Government Act, if that reader consulted those sections.

83 Nor do I consider in the absence of evidence to this effect that the failure to identify the auctioneer and the proposed place, date and time of the auction so far in advance of such date would have impacted upon the price obtained.

84 It is next submitted that the defendant failed to comply with s 715(2)(b) in that there was an arrangement proposed by the plaintiff through his solicitor in the letter dated 21 April 1999 (p 79 of Exhibit 2) which was an arrangement that ought to have been regarded by the council as a satisfactory arrangement for the purposes of the sub section.

85 Section 715(2)(b) expressly contemplates “an arrangement satisfactory to the council”. Whether a proposal advanced is such an arrangement is a matter for the council to determine. It seems to me that the language chosen in the sub section indicates clearly that the legislature did not intend the issue to be revisited by reference to some objective standard, and certainly not in proceedings in this jurisdiction.

86 In any event, the proposal that was being advanced did not offer the prospect of immediate discharge of the plaintiff’s total indebtedness and there were already encumbrances affecting the plaintiff’s title to the land, as the letter from Mr Pappas revealed. Having regard to the evidence, the council’s reaction to the proposal was understandable.

87 For the reasons stated above, I do not consider that the plaintiff has established a cause of action arising by reference to s 713(2)(a), s 713(3), reg 13 of the regulations made pursuant to the Act, or s 715(2)(b).

88 The plaintiff next asserts that the defendant, contrary to the requirements of s 715(1)(a) failed to fix a convenient time and a convenient place for the sale. There is no dictionary definition of “convenient” in the Act and the word is to be given its normal meaning. A convenient place is therefore to be considered to be a place which is easily accessible, and a convenient time is to be considered in a similar way.

89 So far as the time to be appointed is concerned, the Act contemplates a time which is not less than three months from the date of the Gazettal notice and not more than six months from that date. In this case, the time for the auction was set within that time frame.

90 The time appointed for the auction was 6.30 pm on Tuesday 27 April 1999. The venue for the auction was the Council Chambers of the defendant.

91 Dr Hutcheson, who has lectured in real estate at the University of New South Wales for twenty-five years, said that the market area for this property was Canberra. He considered the property to be the sort of property that retired service officers would buy, and also public servants. He said that the price was cheaper than the cost of land in Deakin in Canberra. He said it “screams out to you that it [Canberra] is a better location than Gunning.” This was in the context of the selection of a venue for the sale. As to the time of the sale, namely 6.30 pm on a Tuesday night, Mr Hutcheson gave these responses to questions in cross examination:

“Q. In terms of day of week and time you have no criticism of 6.30pm on a Wednesday night?
A. I have not.

Q. You have no criticism of 6.30pm on a Tuesday night?
A. A bit of criticism.

Q. I am sorry?
A. It is not a traditional night, it is not a traditional day, but not a heavy criticism, no.”

92 Mr Munnings, who has been an estate agent for six years, gave the valuation of the plaintiff’s property upon which the plaintiff here places primary reliance. Like Dr Hutcheson, he considered the “natural market” for the property to be Canberra. He considered that it would be preferable to conduct an auction at any time of your choosing in Canberra rather than an auction held at 6.30 pm in the evening at the council chambers in Gunning (T 55). However, Mr Munnings considered that he would strongly advise a vendor against auction in Canberra. He said his preference would be to conduct the auction on site (T 68). He was, however, against sale by auction at all. In his experience there has not been a successful rural property auction in the last five years (T 55).

93 Mr Bell gave evidence that the defendant selected the location of the auction and he considered the location to be

“a centralised point for the shire, so it allowed people to come from all over the shire, to come into the council chambers, everyone knows where they are, so there was no issue in finding them.” (T 136)

94 Having considered the evidence of Dr Hutcheson, the evidence of Mr Munnings, the evidence of Mr Bell and the evidence of Mr McAleer, it seems to me that the most advantageous site for the conduct of the auction was a matter about which minds might reasonably differ. However, the obligation imposed by s 715(1)(a) was not an obligation to select the most advantageous time and place for the auction but “a convenient time” and “a convenient place”. I am not persuaded, having reflected upon the evidence, that in selecting the council chambers in Gunning and the time of 6.30 pm on a Tuesday night for the auction, the council failed to meet the requirements of s 715(1)(a).

95 The plaintiff claims that the defendant was negligent in the various respects particularised under para 23 of the second further amended statement of claim, and I propose to consider the matters there raised seriatim. In considering each of these matters relied upon, it is necessary to be mindful of the provisions of the statute in order to determine whether the claim asserted is compatible with the relevant statutory provisions.

(a) The plaintiff failed to conduct appropriate advertising of the land

96 I am satisfied from the evidence of Mr Bell and Mr McAleer that the sale was advertised in the following manner:

(i) there was the Gazettal notice referred to earlier in para 7 above;

(ii) on 18 November 1998 a notice was published in the “Goulburn Post” to the like effect, but with a somewhat different layout (see Exhibit 2, p 55;

(iii) the pending sale was advertised in the “Sydney Morning Herald” on 27 March and on 3 April 1999;

(iv) an advertisement was placed in the “Post Weekly” on 25 March, 1 April, 8 April and 15 April 1999. The auction was advertised in the “The Land” newspaper on 25 March, 1 April, 8 April and 15 April 1999. The language and layout of the advertisements in the “Herald” are not in evidence, but copies of the advertisements in “The Land” and in the “Post Weekly” are in evidence (see Annexures I and J to the affidavit of John Bell);

(v) the auction was advertised in the “Canberra Times” in its real estate section (see Exhibit 2, p 67). Further advertisements were placed in that paper on 3 April, 8 April and 10 April (see Exhibit 2, pp 69, 70 and 73.) There are further copies of advertisements in the Canberra newspaper appearing in Exhibit 2 at pp 74 and 77, but the dates of those advertisements do not appear;

(vi) Mr McAleer gave evidence that there was a signboard placed on the property;

(vii) the advertising campaign provided for four broadcasts on Radio 2GN. Mr McAleer pre-recorded the radio advertisement which, to the best of his recollection, was in these terms: “Come and inspect this 1100 acres of gentle, flat to undulating late grazing country this weekend” (T 164);

(viii) Mr McAleer had printed 500 brochures for the property and he said he distributed those to prospective clients following inquiry (T164).

97 No copy of the brochure found its way into evidence but Mr McAleer estimated that one-quarter to one-fifth of them were published. That would account for 100-125 of the brochures.

98 In cross examination Mr McAleer said that he would not have conducted the advertising campaign in precisely the same way if he had been acting for the plaintiff (T 184), although he was not asked in what respect or respects the campaign would have been different.

99 It seems to me that the adequacy of the advertising that was done has to be assessed against the requirements of Div 5 of the Act. That Division prescribes what is to be done by way of advertising in s 715(1)(b). Council is required to give notice by an advertisement published in the Gazette and in at least one newspaper. The council here did more than s 715(1)(b) prescribed as a minimum, and having regard to the statutory provision as to advertising, I am not satisfied that the defendant owed a duty to the plaintiff to do more than was done by way of advertising or, indeed, to do as much as was done.

(b) The defendant failed to ensure that the attributes of the land and improvements were advertised to potential purchasers

(c) The defendant failed to ensure that the subdivisible nature of the land was advertised

100 It is convenient to deal with these two particulars together.

101 The property had certain improvements upon it. In particular, there were the shed and the dam depicted in the photographs annexed to the plaintiff’s affidavit.

102 It was the plaintiff’s case that a further selling point for the land were the steps that had been taken by him to subdivide it. Approval for the subdivision had been given but there were a number of conditions attached to the approval and I accept the evidence given by Mr Bell that conditions of the approval had not been satisfied. The relevant notification concerning the subdivision approval and the conditions to be satisfied appear at pp 9-13 of Exhibit 2. Mr Bell’s evidence was that conditions 1, 8, 12 and 13 had not been met. Condition 1 required the construction of driveways to each concessional lot. Condition 8 required fencing of all boundaries. Condition 12 required the control of noxious weeds. Condition 13 required the payment of a contribution for each allotment towards the provision of community facilities.

103 Nevertheless, the subdivision potential of the land was something that could properly be considered as a selling feature. Dr Hutcheson considered that the standard practice would be to endeavour to sell the individual lots first, and only if that approach failed should consideration be given to a total sale (T 18).

104 Dr Hutcheson and Mr Munnings were critical of the content of the advertisements. Dr Hutcheson considered that reference should have been made to the improvements (T 17), and Mr Munnings considered that the property should have been described in the advertisement as “a property with potential, a property with a good location, open grazing, well watered” (T 55). He considered the advertisement in the “Canberra Times” as being “a little light on”.

105 The statutory requirement under s 715(1)(b) was to give notice “by means of an advertisement published in the Gazette and in at least one newspaper”. The section was silent as to the content of the notice which the council was required to give but this topic was specifically addressed in reg 13, to which earlier reference has been made. That regulation prescribes what information was to be contained. The regulation does not require the advertiser to highlight the selling points or attractive features of the property, and I consider that reg 13 negates any legislative intention to require any more of the advertiser than is addressed in the regulation itself.

(d) The defendant failed to fix a convenient time and place for the sale of the land

106 I addressed this issue earlier when considering the plaintiff’s claim that the defendant failed to comply with s 715(1)(a). For reasons earlier stated, I am not satisfied that there was any such failure as is alleged.

(e) The defendant failed to give proper notice of the sale

107 Consideration of this allegation overlaps with consideration of particular (a) above. I have concluded that the defendant did more than was required by s 715(1)(b) to advertise the sale. So far as the plaintiff is concerned, he was notified by letter of 19 November 1998 of the proposal to sell (see para 9 above). The evidence indicates that he was alert to the pending sale and he sought to come to some arrangement with the council, as evidenced by the communications earlier reviewed. The failure alleged under particular (e) has not been established.

(f) The defendant failed to properly disclose that there was a subdivision of three 40 acre blocks on the land

108 This topic has been addressed when considering particular (b). For reasons earlier expressed, I do not consider that there was a duty imposed on the council to advertise the fact that approval had been given to a proposed subdivision subject to conditions to be fulfilled.

(g) The defendant failed to set an appropriate reserve for the land

109 It is contended that an appropriate reserve required consideration to be given to these features:

(i) the nature and quality of the land;

(ii) the improvements on the land;

(iii) the location of the land;

(iv) the unimproved capital value of the land;

(v) the bank valuations of the land; and

(vi) comparable land sales in the district.

110 The Local Government Act specified no requirement in Chapter 17 for the council to set a reserve price for the purposes of the auction. The agency agreement (Exhibit G) recorded the agent’s opinion as to a probable selling price as being from $150,000-200,000 and in para 7 of that document the agent was authorised to sell the property for $150,000 “or such a price as the principal might agree to accept”. Curiously, there is a contradictory authority recorded lower in the document in which it is recorded that the agent was authorised to sell the property for the reserve price of $100,000 “or such a price as the principal may agree to accept”.

111 No attempt was made in the defendant’s case to justify the lower reserve price. Mr Bell said it was determined by the mayor and the general manager of the council. Mr Kearney was identified as being the general manager and Mr Bates was identified as being the mayor. Neither person was called as a witness but their decision to set a reserve of $100,000 was not indicative of an intention to see that the best possible price was fetched for the property.

112 Whilst no satisfactory explanation has been advanced for that lower reserve, in the events that occurred that reserve assumed no importance. Mr Bell, who liaised with Mr McAleer, was at the sale. His evidence was that his intention during the sale process was to achieve the highest price possible. I accept that Mr Bell’s involvement proceeded with his expressed intention in mind, notwithstanding the lower of the two reserve figures expressed in Exhibit G which had been arrived at by the general manager and the mayor.

113 There is conflicting evidence before the Court concerning the value of the property sold at the time of its sale. The plaintiff relied upon the opinion of Mr Munnings recorded in Exhibit C. His opinion was that the property would have been worth $400,000-$440,000 in April 1999. Mr Munnings had some knowledge of the plaintiff’s property by reason of having visited it when he conducted a rural merchandise store before he became an estate agent. Mr Munnings sold two properties within two kilometres of the subject properties in his capacity of an estate agent. One of these properties was sold in 2001 and the other in 2002 and his valuation of the plaintiff’s property was made in 2004, by which time he had been an estate agent for five years.

114 Neither of the properties which Mr Munnings had sold was of a comparable size to the plaintiff’s property. One was approximately 400 acres and the other was approximately 200 acres.

115 Mr Munnings said that his attendances at the plaintiff’s property had been on three occasions canvassing for sales.

116 Mr McAleer’s evidence as to the value of the property was in marked contrast with that Mr Munnings Mr McAleer only started in an estate agency position in 1994, and he commenced to work with Ray White in Goulburn early in 1998. He had a salesperson’s certificate rather than a real estate agent’s licence. He had, however, spent his childhood in the Goulburn area and worked on properties on a part time basis even before he left school. He was employed full time on properties in the Goulburn area for four years after leaving school before he turned to estate agency work. He drew on sales knowledge and discussions with valuers in stating the probable selling price. He also relied upon his inspection, which he said was in February 1999.

117 I accept both Mr Munnings and Mr McAleer to be truthful and conscientious witnesses. The difference in their evidence as to value highlights what I see to be the difficulty in determining what was the market value of the property at the time it was auctioned in 1999.

118 I am satisfied that at that time the property was heavily infested by serrated tussock. In making that finding, I do not overlook the evidence that Mr Quzag gave to the contrary, but Mr McAleer’s inspection revealed that 80-90 percent of the property “was badly tussock affected” (T 161).

119 Mr Bell gave evidence of seeing the property prior to the sale in company with the noxious weeds inspector. He did not go on to the plaintiff’s property but travelled along the road which bisects that property. His evidence was that “the majority of the property, at least fifty-five percent, was fairly heavily infested with serrated tussock or had been ploughed and had small serrated tussock plant regrowth coming straight back through” (T 153).

120 Mr Munnings’ earlier observations of the plaintiff’s property when the plaintiff was his customer were to the effect that the property was “overrun with serrated tussock”.

121 Because the plaintiff was in dispute with the Commonwealth Bank, he did not have access to the property after the beginning of 1999 but his evidence was that eighty percent of the property was “completely clean” (T 91). The plaintiff’s diagram, Exhibit E, shows where the affected area was, according to his evidence.

122 Mr Quzag’s evidence is inconsistent with the evidence of infestation reviewed above, and I prefer the contrary evidence. I was particularly impressed by the evidence Mr McAleer gave, drawing upon his inspection in about February 1999.

123 I am satisfied that the serrated tussock infestation would have had a significant impact upon the market value of the property in April 1999. Mr Munnings allowed for this in his valuation. But for the infestation, he considered the land would have been worth $700 per acre and not $400 per acre. Those figures add emphasis to the depressing effect of the presence of the weed in significant quantities.

124 In 1995 a notice of valuation from the Valuer General’s office stated a land value for Portions 40, 185, 161, 130, 182 and part of 242 of $326,000. As at the same date a further valuation for the remaining part of Portion 242 held by the plaintiff stated a land value of $13,200. In all then, the valuation as at July 1995 was for approximately $340,000.

125 The evidence was that the valuations from the Valuer General are normally conservative but Mr Bell described the valuations as “desk top” valuations. That may be so, but one would have expected some increase in land value between the date of the Valuer General’s valuation and the date of the auction. On the other hand, it is not to be assumed that the Valuer General would have taken into account the serrated tussock infestation and the impact that would have upon the land value.

126 There was a more recent valuation by the Valuer General supplied pursuant to the Crown Lands (Continued Tenures) Act 1989. That valuation is dated 7 July 1997 and concerned 360.6 hectares, being for Lot 242 and the valuation was in the sum of only $110,000. Dr Ward submitted it would be dangerous to extrapolate that valuation, and I accept that submission, but, at the same time, it seems to me to be difficult to reconcile this later valuation with the earlier ones upon which the plaintiff here has placed reliance in the course of submissions.

127 Dr Ward drew attention to a letter from Hooker’s dated 31 May 1999 (Exhibit Q to Mr Quzag’s affidavit) which specified various price ranges for 700 acres only and which, taken at face value, would make Mr Munnings’ evidence of value conservative.

128 The only evidence as to value which was tested was the evidence of Mr Munnings and Mr McAleer.

129 The evidence of the outcome at the auction also affords some evidence of value. The evidence of Mr McAleer was that there was a lot of interest in the sale (para 12 of his affidavit) and he remembered receiving as many as fifteen to twenty calls per day from people locally and further afield. He said “it was a much higher level of interest than I would usually expect on a standard sale” (para 13). That evidence was not challenged, and I accept it.

130 Mr Bell attended the auction and he recalled there were at least three or four bidders and fifteen to twenty people in attendance.

131 Mr O’Riley, who swore an affidavit on 30 January 2002, was one of those in attendance. He considered the auction was carried out “in a proper manner by an energetic auctioneer” (para 5 of his affidavit).

132 It seems to me in the circumstances reviewed that the result of the auction was itself evidence that pointed to Mr McAleer’s assessment as to value being not unreasonable.

133 Such evidence as there was of other sales I do not find to be of assistance in determining the market value of the land.

134 Returning to the alleged failure to set an appropriate reserve, the actual sale price exceeded the reserve and I am not persuaded that to have set a higher reserve than was set would have affected the outcome. The evidence does not persuade me that a reserve price in excess of $200,000 ought to have been set. It was not unreasonable for the council to have acted on the advice of the agent it consulted.

135 Hence, for the reasons I have stated, I am not satisfied that the defendant was negligent in any of the respects particularised under para 23 of the second further amended statement of claim.

136 I do not conclude that the provisions of Chapter 17 Pt 2 Div 5 convey a legislative intention to extinguish any duty towards the plaintiff, but the Division puts in place procedures which define what was required of the council by way of advertising, fixing a time and place for auction and the manner of sale. Whilst Mr Munnings considered that the way to sell this property was by way of private treaty, s 716 compelled the council to sell by way of public auction, unless the land failed to sell in that way. Any duty owed by the defendant to the plaintiff was governed and limited by the provisions of Div 5.

137 It does not follow from this that s 713 empowers a local council to sell land at any price, in total disregard of the interests of an owner, any more than a mortgagee is permitted to do so, in disregard of the interests of a mortgagor when a power of sale is exercised.

138 There is no common law duty in negligence which makes a mortgagee liable in common law damages if he fails to recover a good price for a property sold under his power of sale: see Ultimate Property Group Pty Limited v Lord (2004) 60 NSWLR 646. However, there is an equitable duty on mortgagees and this was considered in Lord where Young CJ in Eq reviewed the nature and extent of that equitable duty.

139 In Hawkesbury Valley Developments Pty Limited v Custom Credit Corporation Limited (1994) 8 BPR 15,581 at 15,583 McClelland CJ in Eq said in a passage cited in Lord:

“… in exercising its power of sale, a mortgagee must act in good faith, which involves an obligation to deal fairly with the interests of the mortgagor, which in turn involves an obligation to refrain from acting in wilful or reckless disregard of those interests.
This is an area of the law where particular phrases used in judgments should not be construed and applied as if embodied in an Act of parliament. What matters is the underlying equitable principle, which in the modern idiom usually finds expression in terms of unconscionability. Any departure from reasonable standards must be so serious as to be properly characterised as unconscionable, in order to render the mortgagee accountable. If a failure by a mortgagee to take reasonable steps to obtain a proper price is sufficiently serious to be characterised as unconscionable as that expression is understood in equity, then in the taking of accounts between the mortgagee and the mortgagor, the mortgagee will be accountable on the basis of wilful default for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct.”

140 As Young CJ in Eq observed, the above statement of principle has been followed on many occasions since.

141 Then, in Gomez v State Bank of New South Wales (2001) FCA 1059, Branson J referred to the above passage, stating that the borrower was:

“required to satisfy the court that…the bank so failed to take reasonable steps to obtain a proper price for the properties that it was guilty of unconscionable conduct. It will be insufficient for [the borrower] to satisfy the court merely that the properties, or one or more of them, was sold at an undervalue.”

142 Whilst counsel have been unable to refer me to any authority directly in point, it seems to me that at the very least a council exercising a statutory power of sale owes no less a duty than the equitable duty of a mortgagee exercising a power of sale under a mortgage. Chapter 17 Div 5 sets a framework within which the council is to act, but Div 5 does not authorise sale at a throw-away price. It would not, for instance, authorise sale at the price contemplated by the defendant’s Mayor and its General Manager, a price which the defendant made no attempt to justify and which the evidence does not establish would have been a fair price (see paras 111-112 above).

143 In this case the evidence establishes that Mr Bell approached Ray White of Goulburn, which he understood to be competent and professional and a local firm in Goulburn (T 107). Mr McAleer, who was responsible for marketing, was a person he had known as a real estate agent for two years prior to the sale. The estate agent’s advice on a selling price was sought, obtained and in due course acted upon. It was Mr Bell’s belief that a sale price of $200,000 was not an abnormal price for this property “with substantial serrated tussock all over it and, you know, probably facing over $100,000 worth of control work to bring it into use as arable land” (T 134). There was adequate compliance with the procedural requirements of Chapter 17 Div 5, as earlier reviewed.

144 If the council’s duty is to be regarded as analogous to the mortgagee’s duty considered above, then I am not satisfied, having regard to all the evidence, that the council was guilty of unconscionable conduct in the circumstances of the sale.

145 Was the duty of care owed by the defendant limited to an equitable duty in the sense considered above? Although I have found no authority directly in point, I do not see in the legislative framework here an intention to exclude a right to sue at common law in negligence in an appropriate case. However, in considering the nature and the extent of any common law duty, close regard must be had to the provisions of Chapter 17. Here the sales procedures to be followed are defined, and they limit the extent of the defendant’s obligations relevant to the discharge of any duty of care owed. I will not repeat what I have already written such as illustrates this.

146 I do not consider that the defendant owed to the plaintiff a duty to sell this land for the highest possible price. There would be obvious tension between a council’s interest and a landowner’s interest if this was how the duty was to be defined. Chapter 17 does not indicate a legislative intention that the duty be so defined. On the contrary, it seems to me to be consistent with the provisions of Chapter 17 that the council’s duty when selling land for unpaid rates be expressed as a duty to act reasonably in relation to the sale, in compliance with the provisions of Div 5, in seeking to obtain a fair price.

147 I am not satisfied that the evidence in this case discloses any breach by the council of the duty of care as so expressed for the reasons earlier stated in para 143 above.

148 For the reasons stated, this action fails. There must be judgment for the defendant.

149 I will reserve the question of costs.

Formal orders

150 1. Verdict and judgment for the defendant.

2. Costs reserved.

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