Tellamist Pty Ltd v Port Stephens Shire Council - [2003] NSWSC 234

No judgment structure available for this case.

CITATION: Tellamist Pty Ltd v Port Stephens Shire Council & Anor [2003] NSWSC 234

HEARING DATE(S): 17, 18, 19, 20, 21, 26, 27 and 28 February 2003

JUDGMENT DATE:
3 April 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Bergin J

DECISION: See par [120].

CATCHWORDS: DAMAGES - Compensatory damages - Exemplary damages in respect of trespasses to land.

CASES CITED: Bellingham v Dhillon [1973] 1 QB 304
Broome v Cassell & Co [1972] AC 1027
XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448
Evans v Balog; Evans v Progress & Securities Pty Ltd [1976] 1 NSWLR 36
Gray v Motor Accident Commission (1998) 196 CLR 1
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25
Parramatta City Council v Lutz (1988) 12 NSWLR 293

PARTIES :
Tellamist Pty Ltd (Plaintiff)
Port Stephens Shire Council (First Defendant)
Daracon Engineering Pty Ltd (Second Defendant)

FILE NUMBER(S): SC 2067/93

COUNSEL: Mr JS Drummond (Plaintiff)
Mr AA Henskens (Defendants)

SOLICITORS: Hartmann & Associates (Plaintiff)
Cantle Carmichael Lawyers (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J

3 APRIL 2003

2067/93 TELLAMIST PTY LTD v PORT STEPHENS SHIRE COUNCIL & ANOR

JUDGMENT

1 The plaintiff, Tellamist Pty Ltd, sues the defendants, Port Stephens Shire Council (the Council) and Daracon Engineering Pty Ltd (Daracon), in respect of trespasses that occurred in 1991 and seeks damages and exemplary damages. On the fifth day of an eight day trial, the defendants admitted liability and the Council abandoned its Cross Claim against the plaintiff in which it had claimed that the plaintiff was estopped from bringing the proceedings and sought orders that the plaintiff dedicate part of its land as a public reserve. Although liability has been admitted it is necessary to set out the facts in detail because of the nature of the claims for damages and exemplary damages.

2 The plaintiff purchased the property known as 28 George Street, Salamander Bay, being Lot 2 in DP 56140, on 15 December 1988 (the plaintiff’s land). The Council owned the property immediately to the south of the plaintiff’s land at 304 Soldiers Point Road, Salamander Bay, being Lot 596 in DP 27382 (the Council’s land).

3 The northern boundary of the plaintiff’s land was Gilchrist Road. The southern boundary of the plaintiff’s land was common with the northern boundary of the Council’s land. The eastern boundary of the plaintiff’s land was common with a number of properties, owned by others, and the Bush Fire Brigade Station (the fire station) to the south of those properties that all had frontages on Soldiers Point Road. The western boundary of the plaintiff’s land and the Council’s land was along Homestead Drive which later became known as George Road which then ran south and east along the southern boundary of the Council’s land. The eastern boundary of the Council’s land was along a reserve on Soldier’s Point Road to the south of the fire station. The location is helpfully depicted in Exhibit 26.

4 When the plaintiff purchased the land from its predecessor in title, Casmer Associates Pty Ltd (Casmer), it received copies of letters between the Council and Casmer as a consequence of requisitions on title. It is apparent from that correspondence that the Council had sought Casmer’s consent to a road closure to the western side of the property. By letter dated 3 September 1984, Casmer advised the Council that it was concerned at the possible future intrusion of light industrial land use of the Council’s land onto its land that was then zoned residential. Casmer sought assurances from the Council that the road closure to the west of the property and the extension of a road to the south of the property (George Road) would not adversely affect any residential development on Casmer’s land.

5 By letter dated 6 September 1984, the Council advised Casmer that when the Council re-zoned and subdivided its land “for extensions of the light industrial area, provision will be made for an arboreal screen along the boundary of your property” and that a “buffer” would take the form of a public reserve not less than nine metres wide that the developers of the adjoining blocks would be required to landscape. The Council also advised that when Casmer’s land was residentially developed there would be a requirement for an “open space contribution” and the provision of a “complementary buffer strip” which “would serve to further separate the light industrial and residential areas if considered necessary”.

Development Consent 4370/89

6 On 23 May 1989, the plaintiff lodged Development Application 4370/89 to subdivide its land into 27 residential lots. On 3 July 1989, the Council granted its consent with conditions that included a condition that all trees on the plaintiff’s land were subject to a Council Tree Preservation Order and that any removal, lopping or topping was subject to Council approval. A further condition required the plaintiff to pay a contribution of $28,262 pursuant to s 94 of the Environmental Planning and Assessment Act 1979 (NSW).

7 In 1989, the plaintiff and the Council engaged in negotiations in relation to a land-swap involving the plaintiff transferring a portion of the south- western area of its land to the Council and the Council transferring a portion of the north-eastern area of its land to the plaintiff. John Edward Neal, the principal of the plaintiff, gave evidence that those discussions included the following conversation between himself, Mr Rennie, a consultant surveyor retained by the plaintiff, and Mr Davies, the Council’s Assistant Engineer:

Davies: I’ve got some things in mind, I’ll prepare a plan and we could meet again next week.

Rennie: What about this buffer zone?

(Neal’s aff. 29/1/03; par. 9)

8 On 16 October 1989, the plaintiff wrote to the Council referring to the discussions and noting that “settlement” had been achieved and the “full details” of the agreement were:

In consideration of the above 1,

Port Stephens Shire Council to provide Tellamist Pty Limited;

A. The land not owned by Tellamist Pty Limited, but has been included in a previous Development Application to Council (and since approved), for a 27 lot subdivision of Lot 2 Gilchrist Road. This land owned by Council and which forms part of the approved subdivision application are identified on the Application as Lot 1, Part of Lot 9, Lots 10 and 11, Part of Lot 12 and Lot 27.

B. Total concession of all Section 94 contribution fees associated with the approved 27 lot subdivision as assessed by Council. These fees total approximately $30,000.00.

C. Reimbursement of Tellamist Pty Limited “out of pocket” expenses associated with the negotiations to date. This amount has been agreed at $10,000.00.

D. An amount of $240,000.00 to be paid to Tellamist Pty Limited by Port Stephens Shire Council.

As noted in Council’s letter of the 10th, Tellamist Pty Limited was very reluctant to negotiate away from its initial position as indicated very clearly by Mr Holland.

9 On 21 November 1989, the Council wrote to the plaintiff advising that the negotiated agreement had been submitted to Council on 14 November 1989. The letter also advised that Council had resolved that subject to gazettal of the LEP amendment (re-zoning) and the registration of the boundary adjustment, Council would pay to the plaintiff $250,000 in full compensation for the transfer of land and that its solicitor was preparing a formal agreement that would be submitted to the plaintiff as soon as possible (Ex. 12).

10 On 27 November 1989, Mr Rennie wrote to the Council referring to the approval of 3 July 1989 and to subsequent discussions with the Council’s Development Assessment Panel. Mr Rennie noted the understanding that negotiations had been completed and that the exchange of land with Council “can now proceed”. Mr Rennie sought the Council’s approval for the plaintiff to carry out the subdivision in two stages, Stage 1, including Lot 1 and Lots 17 to 27, and Stage 2, Lots 2 to 16 (Ex. 11).

Development Consent 4697/90

11 On 24 January 1990, a Development Application 4697/90 was lodged by the Council for the adjustment of the boundaries between the plaintiff’s and the Council’s land. The plaintiff had consented to the lodgement of this Application by letter to the Council dated 9 January 1990. On 5 February 1990, the Council granted its consent with conditions. One of the conditions was that all trees within the proposed subdivision were subject to the provisions of the Council’s Tree Preservation Order requiring Council approval for any removal, lopping or topping of trees.

Development Consent 4760/90

12 On 21 March 1990, the Council’s surveyors, Atkinson & Tattersall Pty Ltd, lodged the Council’s Development Application 4760/90 for 18 industrial lots on the Council’s land. On 6 April, the Council granted its consent subject to conditions, including the following:

1) The development taking place in accordance with the plans submitted with the application and excepting as modified by these further conditions.

6) Proposed road closure shown as Part Lot 10 is to be dedicated as a Public Reserve. The proposed boundary between Lots 10 & 11 is to be relocated so that Lots 10 & 11 will have approximately equal area.

ADVICES

…

b. If and when the proposal to close George Road is complete, part of the road reserve is to be used as an informal recreation buffer zone which will be incorporated into the buffer area which divides the residential subdivision to the north and this industrial subdivision.

c. The properties to be filled where necessary to a height commensurate with the developed sites on Lots 25 to 18 George Road.

13 The “buffer area” in the proposed public reserve between the Council’s land and the plaintiff’s land ran the length of the common boundary between the plaintiff’s land and the Council’s land. That area consisted of banks of trees including some eucalypts that were approximately 60 years of age. Much time was spent in the trial as to the nature and number of trees situated in the buffer area before the trespasses occurred and I shall return to this matter later.

14 The Council’s Property Officer between September 1989 and 30 June 1994 was Peter McMahon who had delegated to him the Council’s power to approve Development Applications. Approximately two weeks after he had granted Consent 4760/90, Mr McMahon telephoned Mr Neal and sought the plaintiff’s consent to the Council’s Development Application. He did not inform Mr Neal that the Consent had purportedly been granted on 6 April 1990. By fax dated 20 April 1990, Mr Neal referred Mr McMahon to the plaintiff’s letter of 9 January 1990 in which it had consented to the Development Application 4697/90 for the transfer of lands pursuant to the land swap agreement. Mr McMahon then drafted a letter to the plaintiff dated 23 April 1990 for the General Manager/Shire Clerk’s signature in the following terms:

Thank you for your fax of 20 April, 1990. The letter of 9 January, 1990 refers to the adjustment of boundaries. We now wish to have the Development Application processed to subdivide the light industrial land as per the attached plan.

For this purpose, will you please provide Council with a letter as follows:

“Re: Subdivision of Lots 1 & 2 DP 561040 Gilchrist Road and Lot 596 DP 27382 George Road, Salamander Bay
As current owner of Lots 1 and 2 referred to above, Tellamist Pty Ltd consents to the lodging of the Development Application incorporating part of our property.

This letter should include the company seal and two signatures.

15 The plaintiff sent a letter to the Council in these terms on 23 April 1990.

Heads of Agreement

16 On 15 June 1990, the plaintiff and the Council executed a document entitled “Head of Agreement” (Heads of Agreement) that provided as follows:

1. That in consideration of each of the parties entering into mutual agreements in the form set out in Appendix 2 and 3, the Council will pay to the Company the sum of TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000.00) FURTHER the Council will transfer to the Company the land referred to in Appendix 1 hatched in black and blue biro.

2. That in consideration of the payment of TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) and the transfer of the parcel of land referred to the Company will transfer to the Council the land hatched in black biro in Appendix 1.

3. The parties agree that following execution of this document they will proceed to execution of formal Contracts for Sale of land as Per Appendix 2 and 3 and exchange simultaneously with the exchange of this document.

4. Each of the parties will join in and assist in any Application for Subdivision.

5. The Council shall be responsible for costs in relation to the Subdivision Application.

6. The Council shall also be responsible and have carriage of the Application for Subdivision and the Company shall join in and consent to such Subdivision Application and assist in the expedition of such Application.

7. The parties note that Development Applications by each party for subdivision have been processed and consents thereto granted and each party agrees to proceed to registration of a Linen Plan and to produce the respective certificates of title to enable registration to proceed PROVIDED HOWEVER should registration of the Linen Plan not take place within a period of THREE MONTHS then either party shall be at liberty to rescind this ontract and the provisions of Clause 19 of the Standard Real Estate Institute Agreement for Sale shall apply save and except that the Council shall bear all costs and charges including legal and survey and all disbursements incurred by the Company relating to the subdivision.

8. Annexed hereto is Appendix 4 being a copy of the proposed subdivision plan showing the several dimensions proposed.

9. That in consideration of the transfers of the lands pursuant to the contracts specified in 1 and 2 above the Council will grant approval for and issue all necessary certificates for the residential subdivisions of the lands that will, in consequence of the said transfers, be owned by the Company in accordance with the plan prepared by the Company’s surveyor and annexed hereto as Appendix 5.

The Council acknowledges that the overall subdivision as detailed in Appendix 5 may, at the Company’s option, be accomplished by stages and in such event the Council agrees that it will approve each stage subject to the conditions of development consent 4370/89 and grant the necessary certificates so as to achieve the Company’s intention to ultimately effect a residential subdivision in accordance with Appendix 5.

10. That in consideration of the transfers of the lands pursuant to the contracts specified in 1 and 2 above the following provisions shall apply in respect of such approval or approvals:

(i) The Council shall waive the requirement for the payment by the Company of a section 94 Contribution.

(ii) The Council shall not impose any restriction or condition consequent upon the present non availability of sewerage main facilities and shall permit the disposal of sewerage and sullage by all of the other means now presently available and in use in other residential subdivisions where sewer is not available within the Shire of Port Stephens.

(iii) The Council shall not impose any conditions additional to those attaching to the granted Development Application 4370/89 save and except as may be necessary to encompass the matters specified in (i) and (ii) hereof.

11. Each party shall bear its own costs of and incidental to preparation of this agreement and consequent transfers including stamp duty and legal costs.

12. Any notice required to be served shall be deemed to be properly served if served in accordance with any method set out in paragraph 21 of the Standard Real Estate Agreement.

13. In the event that Georges Road, Salamander Bay adjoining the land contained in Lot 2 DP 561040 is closed the land delineated as Lot 27 in DA Application 4370/89 will be transferred to the Company for the consideration of $1.00.

17 The Council caused a survey plan to be created on 13 March 1990 with the adjustment in the boundaries. This Plan was registered on 2 July 1990, consequent upon which the plaintiff’s land became known as Lot 21 in DP 803568 and the Council’s land became known as Lot 22 in DP 803568. On 13 July 1990, the Council paid the plaintiff $250,000.

Development Consent 1591/90

18 On 23 August 1990, the plaintiff lodged a new Development Application 1591/90 with the Council to subdivide Lot 21 into fourteen lots. On 8 October 1990, the Council gave its consent and Lot 21 became Lots 1 to 14 in DP 806230.

Development Consent 5163/91

19 On 14 March 1991, the plaintiff lodged a further Development Application, 5163/91, to subdivide Lot 14 in DP 806230 for cluster housing. Lot 14 was situated at the eastern end of the plaintiff’s land and ran between the northern boundary of the plaintiff’s land on Gilchrist Road to the common boundary with the Council’s land. Included within the southern portion of this Lot was part of the buffer area or proposed public reserve.

20 Mr McMahon gave affidavit evidence that in March 1991 he had a telephone conversation with Mr Neal in the following terms:

McMahon: I have recently looked at the linen plan lodged for stage 1 of your development. I notice that the linen plan prepared by your surveyor did not include the dedication of public reserve. What’s going on?

Neal: That wasn’t done intentionally. I will get my surveyor to prepare a plan to re-instate the public reserve.

21 Mr McMahon also gave affidavit evidence that in April 1991 he had a further conversation with Mr Neal in the following terms:

McMahon: The plan to dedicate the public reserve has still not been lodged with Council. Can you please instruct Jack Rennie to prepare it?

Neal: I will have the public reserve dedicated, but I don’t have to do that right now. I will dedicate it at the end of the development.

McMahon: We’ll see about that.

22 In cross-examination, Mr Neal agreed that it was “possible” that these conversations had occurred. Mr Neal gave affidavit evidence of a meeting with the Council’s Development Assessment Panel on 16 May 1991 at which he had a conversation with a Council representative, Keith Blackmore, that included the following:

Blackmore: When do you propose to dedicate the public open space land.

Neal: I am prepared to keep my word. I’m just waiting to see what you do with your word (to waive the s 94 contribution).

Blackmore: Yes, but when do you propose to dedicate it – at what stage? At the moment we are giving you …

Neal: It can be done in about five minutes – as soon as we find out about the DA. I’ll dedicate it – sorry, not the DA – the Section 94 contribution.

Blackmore: I’ll follow it through.

23 On 7 August 1991, the Council granted its consent subject to a number of conditions including the following:

These Contributions are to be paid to Council as a contribution toward the provision of open space and/or community facilities in the area in accordance with the requirements of Development Control Plan No. 27 – Port Stephens Shire. Payment of these contributions shall be made at a rate of $1720 per unit prior to release of relevant building approvals.

The Public Reserve at the rear of the proposed development shown on the approved survey plan (file no 89/025) shall be dedicated to Council prior to release of Building Application.

ADVICES

…

NOTES:

(4) It should be noted that this Development Consent is for a period of two years and unless the development is substantially commenced within that period or Council has granted a further 12 month extension, the approval will lapse. If a Building Application is required and it is not lodged within 12 months of this Development Consent it will be necessary to seek an extension of time for the Development Consent at the time of lodging the Building Application to ensure the Building Application has a concurrent valid Development Consent for the 12 months of the approval.

(Emphasis added)

The Council’s proposed drain

24 When the Council obtained the benefit of the land swap, it had the intention of developing its land into a light industrial area for sale to the public. To that end it cleared the land and placed fill in that part of it that was swampy. The Council documents in evidence demonstrate that prior to the rezoning of the Council’s land from residential to industrial, it was the Council’s intention that a “buffer” be provided between its land and that of the plaintiff (Ex. P; p. 5028). There is ample other evidence that the Council informed the plaintiff that a buffer would be in place between their respective properties.

25 In February 1990, the Council appointed Atkinson & Tattersall Pty Ltd as the Project Managers to provide surveying, planning and engineering services for the development of the Council’s land. In September 1990, Mr Philip John Atkinson, a principal of the firm, prepared subdivision works drawings that included drawings of a drain on the proposed public reserve area. Those drawings were lodged with the Council on 5 October 1990 and purportedly approved by the Council on 28 November 1990.

26 In cross-examination, Mr Atkinson said that he knew that the area of the proposed public reserve was still registered in the plaintiff’s name because he had conducted a property search that recorded the plaintiff as the registered proprietor (tr. 416-417). Mr Atkinson agreed that the plaintiff’s consent to the drainage works should have been obtained and that the consent given by the plaintiff in April 1990 was not a consent to the drainage works (tr. 420). He gave evidence that he informed Mr McMahon, of the Council, that the Council would have to obtain the plaintiff’s consent to the works in the buffer area (tr. 421). Mr McMahon informed Mr Atkinson that there was an “arrangement” between Mr Neal and the Council that the land was to be a public reserve and that the arrangement was in the process of being finalised.

27 Mr Rennie claimed in affidavit evidence (aff. 19/12/01; par. 12) that in March or April 1991 he observed the Council placing fill along the southern boundary of the plaintiff’s land and inside the proposed public reserve comprising part of the plaintiff’s land. He also observed that this work created a batter having a gradient of approximately 4:1 extending approximately 4 metres onto the plaintiff’s land. Mr Rennie also gave affidavit evidence (aff. 19/12/2001; par. 13) that in about May 1991 he telephoned Mr Atkinson and had a conversation in the following terms:

Rennie: My client is the owner of the lands immediately adjacent to the light industrial zone being developed by council in George Road. It has come to our attention that the Council is proposing to construct a drain along the common boundary. Can you tell me the details of the drain?

Atkinson: The plans have not yet been finalised.

Rennie: Can you give me some of the dimensions of the drain that you are thinking of constructing?

28 Mr Atkinson responded to Mr Rennie’s evidence by affidavit sworn on 29 August 2002. Mr Atkinson gave the following evidence:

I state that whilst I recall having a conversation with Mr Rennie I cannot now recall the exact details of the conversation. … I doubt very much that I would have made the statements attributed to me in paragraph 13 of Mr Rennie’s Affidavit as at May 1991.

29 Mr Atkinson gave the following evidence in cross-examination:

30 Mr Atkinson said that if Mr Rennie had asked him for plans he would have given them to him and that there was no reason not to give them to him (tr. 422). When Mr Atkinson was asked whether he was more assertive about what was said to Mr Rennie than he had been in his affidavit, he said he was “now” more assertive and that his memory had improved in the time that he had taken to read all the information since the events of 1991 (tr. 423). Mr Atkinson also gave evidence that he was not in a position to deny that there was a conversation in May 1991 with Mr Rennie but said, “I don’t know what it was about, I can’t recall” (tr. 424-425). He said that he was in a position to deny the contents of the conversation because he “would never have acted in that conduct” and also said, “the way that I have practiced all my life in practice and there is no, absolutely no way I would have responded in that manner to Mr Rennie” (tr. 424-425).

31 Mr Drummond, counsel for the plaintiff, tested Mr Atkinson further about his denial of the conversation alleged by Mr Rennie by reference to a letter written by Mr Atkinson after the trespasses occurred. That was a letter to Daracon dated 21 August 1996 and was in the following terms:

(Ex. P; p. 5271)

32 It was suggested to Mr Atkinson that this letter was intended to prevent Mr Neal from having access to the plans or the details of the dimensions of the proposed drain. Mr Atkinson denied this and explained that he was being careful because he understood Mr Neal had threatened legal action. He said that the reference to “confidential contractual matters” related to the financial relationship between the contractor and the Council (tr. 426).

33 Mr Atkinson gave evidence that he became aware that the plaintiff did not have a copy of the drainage drawings at about the time the trespasses occurred. He said that he suggested to Mr McMahon that the Council should give a copy of the plans to the plaintiff. In his affidavit sworn on 3 August 1995, Mr McMahon gave evidence that at the site meeting on 16 August 1991 the plans were handed to Mr Neal (par. 41). His evidence in cross-examination on that topic was as follows:

Q. You knew at that time dedication had still not occurred, correct?
A. Yes.

Q. And the buffer zone remained the property of Tellamist?
A. Yes.

Q. Mr McMahon, taking you back to that time, how long was it your view that council could continue to refuse to notify Tellamist of these proposed works?
A. I don’t think there was any intention to deny them.

Q. They certainly give evidence, may I suggest to you, of having meetings with you on 16 August, you have been asked about that today, on site; I am suggesting to you on that day there were discussions about the destruction. Did you tell Mr Neal on that day about the plans?
A. Not that I can recall.

Q. No?
A. He asked me out there to have a look at what happened, I went out to have a look at what happened.

Q. Was it not a perfect opportunity then at that stage to tell him what the plans were?
A. I didn’t know what the plans were.

Q. Before going out there didn’t you familiarise yourself with what council had done and what authorities had been given to do it?
A. The details of the drainage, no.

Q. What did you think they were doing, pushing down the trees?
A. They were carrying out work in conjunction with the construction of the subdivision but I didn’t know in detail.

Q. You knew what the subject matter was on 16 August when Mr Neal asked you to come to a meeting, he told you, “that’s my land and you people are trespassing and knocking down my trees”, that’s what he told you?

A. Yes.

Q. You must have then thought, if you didn’t know then, I’d better go back to council and check to see what is the position, didn’t you?

A. Yes, I probably did.

The Trespasses

34 Mr Atkinson gave evidence that he attended the area of the proposed public reserve on 6 August 1991 with representatives of the Council, Daracon and the Council’s geo-technical advisers. By this time Daracon had been engaged by the Council to construct a drain on the area of the proposed public reserve and Mr Atkinson’s evidence was that “some trees on it were required to be removed” (aff. 3/11/95; par. 8).

35 Within days of Consent 5163/91 being granted to the plaintiff on 7 August 1991, the defendants trespassed onto the plaintiff’s land. Between 10 and 14 August 1991 Daracon, at the Council’s direction, entered the plaintiff’s land in the area of the proposed public reserve at the southern end of the proposed cluster home subdivision and knocked down all the trees and shrubs and commenced excavation of a trench in that area.

36 On 11 August 1991, Mr Neal instructed the first defendant to remain off the plaintiff’s land. On 12 August 1991, Daracon re-entered the land and continued with the extension of a trench that it had commenced to excavate which was 150 metres long, 7 metres wide and 2.5 metres deep.

37 On 16 August 1991, the plaintiff’s then solicitors wrote to the General Manager/Shire Clerk of the Council confirming their instructions that the Council, through its contractor Daracon, had entered upon the plaintiff’s land on or about 10 August without the consent or knowledge of the plaintiff. The solicitor’s letter advised that heavy machinery was brought onto the plaintiff’s land and substantial trees were knocked down, undergrowth destroyed, the surface disturbed and a trench excavated. The solicitors requested an explanation and reason for the Council’s actions and asked it to specify any alleged authority for such “unauthorised entry and the destruction and damage effected”. There is no letter in evidence explaining the Council’s conduct. However the Council maintained until the fifth day of the trial that it was entitled to enter the plaintiff’s land.

38 Mr McMahon drafted a letter dated 16 August 1991 directed to Daracon and signed by the General Manager/Shire Clerk. He was not sure whether he had drafted the letter on 16 August or some days earlier. The letter was in the following terms:

Re: Subdivision Construction

George Road, Salamander Bay

Reference is made to the drainage work in this development and particularly the drain to be located at the rear of Lots 10 to 18. As the plan indicates this drain is located on land which is intended open space public reserve that will form a buffer zone between the light industrial lots and the adjoining residential subdivision.

This land was to have been dedicated by lodging of deposited plan to that effect. The plan was not lodged but this is to be rectified.

In the mean time you are instructed to proceed with work on the subject drain. Council will hold you indemnified against any action should any be taken because of your presence on that land.

39 Mr McMahon was cross-examined about that letter and gave the following evidence:

(tr. 312-313)

40 On 16 August 1991, a meeting took place on the plaintiff’s land at the site of the trespasses attended by Mr Neal and his then solicitor and Mr Rennie and representatives of the Council. Present for the Council were Mr McMahon and his immediate superior, Jim Neely, Mr Atkinson and the Council’s solicitor. Mr McMahon claimed in his affidavit evidence that the conversation included the following:

McMahon: The drainage works will benefit everybody’s land. Whilst we claim that the land concerned is a public reserve through our previous agreement, at this stage all we are seeking is your approval to continue with the drainage works. When the work is completed, we will replant trees on the reserve to provide a visual screen between the two developments.

Neal: The public reserve is technically ours. However, we are prepared to have a look at the work you intend to do and will get back to you with our decision on whether we will let you on the land. We would prefer that the work is not done at this time.

41 Mr McMahon agreed in cross-examination that when he attended the meeting on 16 August 1991 he observed trees lying on the ground in the buffer area (tr. 311). He agreed that it was always intended that there would be a “buffer zone” between the Council’s land and the plaintiff’s land “in the interests of the residential development” (tr. 314). Mr Henskens, counsel for the defendants, cross-examined Mr Neal about this meeting. Mr Neal gave the following evidence:

42 On 19 August 1991, Mr Neal hand-delivered to Daracon a letter in which he stated:

Re Our Discussion on Site Soldiers Point Rd, Monday 12-8-91 @ 7-00am
I requested that you stop working on my land, and remove all machinery back onto Council’s land, - which you abided by immediately- which I thank you.

43 On 27 and 28 November 1991, Daracon re-entered the plaintiff’s land and removed large quantities of fallen trees. On 28 November 1991, the plaintiff’s solicitors once again wrote to the Council stating that they had been instructed that felled timber and stumps had been removed from the plaintiff’s land and placed on the Council’s adjoining land and that further fill had been placed onto the plaintiff’s property. Once again, the solicitors asked for an explanation of the Council’s reasons for the re-entry and advice as to any authority upon which the Council relied for its actions.

44 On 5 December 1991, the Council’s solicitors wrote to the plaintiff’s solicitors advising that the Council was currently in the process of faxing an undertaking to the plaintiff’s solicitors not to trespass on the plaintiff’s land. That facsimile was signed by Mr JW Walsh, the General Manager/Shire Clerk of the Council and was in the following terms:

Port Stephens Shire Council herein undertakes that subject to the resolution of pending court action neither it nor it’s agents will enter upon the land identified as Lot 14 in DP 811289 being part of subdivision of Lot 21 in DP 803568 currently registered in the name of your client, Tellamist Pty Limited.

45 Over a two-day period in December 1991, the plaintiff caused approximately 300 seedling trees to be planted in the proposed public reserve area in which the trees had been felled. The trees were planted in the area commencing near the fire station extending along to the west. On 23 December 1991, Daracon again re-entered the land and damaged a number of the small eucalypts. On 13 January 1992, the plaintiff’s solicitors once again wrote to the Council referring to this re-entry and requested once again the Council’s explanation for these events and alleged that it had breached its undertaking.

46 On 15 January 1992, the Council wrote to the plaintiff’s solicitors advising that it had requested Daracon to provide a written explanation regarding the alleged trespass. It also advised that an employee not familiar with the site boundaries may have driven the excavator outside the existing boundary of Council’s land. The solicitors advised that the Council re-affirmed its undertaking not to enter upon the plaintiff’s land.

47 On 17 February 1992, the Council wrote to the plaintiff advising that it was aware that the “open space buffer zone” had not been dedicated as required by agreement between the parties. The Council advised that there had been a number of requests by local residents for establishment of the buffer zone and sought the plaintiff’s co-operation for the Council to have access to the land so that it could commence to plant some trees. The Council noted that some of the local residents who had asked for the buffer zone to be planted and landscaped were purchasers of land within the plaintiff’s subdivision.

48 The plaintiff responded by letter dated 3 March 1992 advising that in the light of the Council’s “actions to date” it requested the Council to provide a Schedule of Works including advice as to the number, types and height and proposed location of the trees. The plaintiff also sought details of the number of workers to be involved, the number and type of machinery to be used, the length of time such work would take and the parts of the land over which the Council sought access. The Council did not respond to this letter and when Mr McMahon was asked why there was no response he gave evidence that he took the view that the plaintiff’s letter was “antagonistic and asking detailed questions”. He also said that he thought that the land, the subject of the trespasses, would be dedicated as a public reserve and it would be easier to go in and do the work at that stage so he “let the matter lie” (tr. 353). Mr McMahon gave evidence that the Council re-designed its drain into an internal road.

Abandonment of cluster development

49 After the felling of the trees, Mr Neal gave consideration to how the cluster development could proceed. He gave evidence that it was always his intention to proceed with the development in stages and to build four to six dwellings at a time so that the market would not be flooded. Mr Neal was of the view that once the development commenced the plaintiff was committed to complete the whole development even if it became apparent in the first stage that the development had lost its appeal to potential purchasers. After the trees were felled, Mr Neal was also concerned that if the Stage 1 dwellings were built on the northern part of the block adjacent to the dwellings facing onto Gilchrist Road, the potential purchasers of homes built in each of the stages would be exposed to views of the industrial development at the time each of the respective stages were on the market.

50 In 1993, the plaintiff engaged Valley Homes to build two duplexes on the land and construction was completed between October and December 1993. The rear duplex was sold on 23 February 1994 for $135,000 and the front duplex was sold on 13 May 1994 for $138,500. The front duplex had been listed for sale at $150,000 but the plaintiff could not obtain a purchaser at that price. These houses were larger than the proposed units within the proposed cluster development.

Further Development Applications

51 In October 1999, Mr Rennie received instructions from the plaintiff to carry out a twelve lot subdivision of Lot 14. Following an initial inquiry, the Council advised Mr Rennie by letter dated 17 January 2000 that the Consent 4370/89 for subdivision remained valid and that s 94 contributions would be applicable. On 1 February 2000 and 28 March 2000, Mr Rennie sought modification of the Consent and suggested that the requirement to pay s 94 contributions should be deleted “in accordance with the agreement dated 16/10/89” between the plaintiff and the Council.

52 Mr Rennie then prepared road and drainage construction drawings for the site, in the latter of which he included a concrete invert on the proposed public reserve behind Lot 9 of the proposed subdivision draining to the west for approximately 135 metres. On 15 May 2000, the Council issued a Design Check Report in respect of the drawings requiring, amongst other things, the construction details for the drain in the public reserve. On 15 June 2000 Mr Rennie met with Mr Neal and Ray Hanson, the Council’s engineer, at the site. Mr Hanson advised that he wanted the logs and rocks removed and the public reserve area grass seeded where the surface was to be disturbed during construction. Mr Hanson also advised that the land behind Lot 9 in the “buffer” area should be filled and reshaped to allow proper drainage. On 23 June 2000, Mr Rennie prepared further plans incorporating the agreed works to be carried out on the proposed public reserve area. On 6 July 2000, the Council approved the plans. Mr Rennie’s evidence was that these plans approved by Council contained a drain of 5.6 metres in width and 460 millimetres in depth as opposed to the Council’s proposed drain in Atkinson & Tattersall’s drawings of 12 metres in width and a depth of up to 1 metre.

53 Mr Rennie expressed the view that the Council’s plans for the drain identified a catchment area of 4.2 hectares as the basis of the calculation of the dimensions for the drain and that the catchment area of the plaintiff’s land for the cluster home development was approximately 2.5 hectares. Mr Rennie’s view was that the calculation of the flow of surface water did not require the construction of a drain eight metres in width.

54 On 31 July 2000, the Council notified Mr Rennie that the Consent had been modified to require the public reserve to be cleared and graded to provide a “drainage swale” with a requirement that engineering plans be submitted to the Council for approval. On 21 August 2000, Mr Rennie attended a further site meeting with Mr Hanson at which Mr Hanson advised Mr Rennie that the plaintiff did not need to proceed with the concrete invert in view of the low longitudinal grade and that it would be “adequate” if turf was laid in lieu of the invert.

55 On 20 October 2000, Mr Hanson telephoned Mr Rennie and advised that he had observed that the grass in the swale was dead and that there were holes and rocks at the west end that needed attention. These works were attended to by the plaintiff’s contractor Rumbel & Co and shortly after rainfall the grass commenced to grow.

The Trees

56 Both the plaintiff’s land and the Council’s land had trees and other vegetation upon them. In 1990, the plaintiff cleared its land to the border of the proposed public reserve. In early 1991, probably no later than April, the Council cleared its land north of George Road to the common boundary, the southern border of the proposed public reserve.

57 Mr Neal gave evidence that the trees remaining on the public reserve were approximately twenty metres in height and provided an effective shield benefiting the proposed subdivision of the plaintiff’s land from the light industrial zone to be constructed by the Council. Mr Neal annexed a number of photographs to his affidavit of 31 August 1995. The photographs in Annexures “A” to “D” were taken prior to the trespasses and prior to the Council clearing its land. The photographs in Annexures “B” and “C” are looking south from the northern side of Gilchrist Road. The trees in the foreground area of the proposed public reserve range in height from approximately 2 metres to more than 10 metres with varying degrees of leaf cover. The taller trees have a canopy of leaves at above roof height and it is not difficult to see between and beyond the trunks at eye level. In areas where smaller trees are growing between the trunks of the taller trees it is difficult to see through or beyond the leaf cover of the smaller trees combined with the trunks of the taller trees. However, the light industrial estate to the south of George Road can be seen through the vegetation.

58 Mr Neal also exhibited a number of photographs to his various affidavits. Exhibits JN-AF and JN-AG are photographs taken in late March or early April 1991 from the backyard of. 17 Gilchrist Road, the property of Mr Neal’s son and daughter-in-law. That house is to the north west of the proposed cluster housing development site. The evidence does not disclose whether the Council had cleared its land completely at the time this photograph was taken however the Council had not developed its land on the northern side of George Road at that time. The bank of trees depicted in Exhibits JN-AF and JN-AG appear to range in height from approximately 2 metres to more than 10 metres with varying degrees of leaf cover. Once again, the taller trees have a canopy of leaves at above roof height and it is not difficult to see between and beyond the trunks at eye level. In areas where smaller trees are growing between the trunks of the taller trees, it is difficult to see through or beyond the leaf cover of the smaller trees combined with the trunks of the taller trees. The light industrial estate is not depicted in these photographs by reason of the construction of a fence and the angle from which the photograph was taken.

59 The photographs in Annexures “C” and “R” were taken from a property on the northern side of Gilchrist Road to the west of the proposed cluster development site. The photograph in Annexure “C” was taken from ground level before the trespasses occurred and the photograph in Annexure “R” was taken from the upstairs balcony of the property after the trespasses occurred. Even allowing for the fact that the Council had not cleared its land at the time the photograph in Annexure “C” was taken, the comparison of the outlook between Annexure “C” and Annexure “R” is dramatic and stark. The outlook changed from that of a pleasant bushland setting to a harsh and arid-like landscape.

60 Mr Rennie prepared a plan on 6 March 1991 (Ex. 4) setting out the contours of the plaintiff’s proposed cluster development site and indicating the general gradient of the land as it passed from the proposed development site into the Council’s land. Mr Rennie gave evidence that the plan located the substantial trees including blackbutt, smooth bark apple, bloodwood and mahogany. He also gave evidence that the plan did not identify the paperbark and smaller trees as it was not his intention to show the full extent of the tree coverage on the area. He claimed the plan did not identify the location or number of trees and vegetation then existing on the proposed public reserve. However, in cross-examination he conceded that he had included the substantial trees, those over more than 350 millimetres in diameter, in the public reserve area in the plan (tr. 171).

61 Mr Rennie visited the plaintiff’s land on numerous occasions between 1988 when the plaintiff purchased the property and August 1991. During the visits to the land, Mr Rennie became familiar with the trees and vegetation located on the proposed public reserve as well as the trees and vegetation located on the proposed cluster development site. Mr Rennie’s evidence was that he observed mature trees, some of which were approximately twenty-five metres high. He claimed that the vegetation and trees were of such density that when standing upon the proposed development site one was not able to see the area forming the Council’s land and the proposed light industrial zone north of George Road. Mr Rennie claimed that this remained the position after the Council cleared its land in March and April 1991.

62 In March and April 1991, Mr Rennie observed that the tress and vegetation in the proposed public reserve constituted a band of approximately ten metres in width for the entire length of the public reserve. At various stages along the proposed public reserve, the band of trees was considerably wider than ten metres and at places up to twenty-five to thirty metres in width. After August 1991, Mr Rennie observed that all of the trees and shrubs and all of the vegetation that had been located on the proposed public reserve had been removed. This observation is consistent with what can be seen of the proposed public reserve area in the photograph in Annexure “R” to Mr Neal’s affidavit of 31 August 1995 referred to above.

63 In cross-examination, Mr Rennie was shown a number of photographs (Exs. 7 to 10) and did not agree that they were a fair reflection of the state of the tree coverage in the public reserve before the Council trespasses (tr. 177). Mr Rennie said that when he attended the public reserve area prior to the trespasses there was plenty of tree growth on it (tr. 178).

64 Henry Drury Skelton lives at 21 Gilchrist Road, Salamander Bay to the west of 17 Gilchrist Road. Mr Skelton gave evidence of his observations of the proposed public reserve prior to the purchase of his home. At an inspection in 1989 he walked onto the plaintiff’s land at the point where 25 Gilchrist Road is located and observed very thick bush. After Mr Skelton purchased his land, he observed the Council clearing its land to the edge of the proposed public reserve. Sometime after August 1991 he inspected the block and observed that the trees in the proposed public reserve had been knocked down. He said that the whole area had been cleared, the survey pegs had been knocked out and the big trees had been bulldozed onto his land. In cross-examination, Mr Skelton said that the bushland behind his home was a satisfactory buffer zone and that the actual spread of the bush behind his home influenced him into buying it. He said that he became very angry when he found out that the buffer zone had been cleared and he wrote to the Council on 8 September 1991 in the following terms:

The bush land reserve which was supposed to be a Nature Reserve and Buffer Zone has been completely destroyed.

We would like to know if the Council has any idea who is responsible and what action is to be taken against them.

65 Leo Joseph Mooney and his wife, together with Gordon and Beverley Baldock, purchased Lot 6 of Deposited Plan 806230 for $50,000 in late 1990. In 1990, Mr Mooney was informed by his sister, Mrs Neal, that all the trees at the back of the blocks at Gilchrist Road had been knocked down. When Mr Mooney inspected the site he observed that there was a clear view across his block and the proposed buffer zone to the Council’s industrial estate. Mr Mooney said that the block had lost its bushland setting and in consequence of the destruction of the trees he decided to sell the land. Mr and Mrs Neal repurchased the land from the Mooneys and Baldocks for the price they had paid for it.

66 In 1991 Ross Alexander Sinclair was employed as a Leading Hand with Daracon. He swore an affidavit on 23 March 1993 for the plaintiff and his evidence appears to be the earliest available evidence in this case. Although Mr Neal, Mr Atkinson and Mr McMahon swore affidavits in 1995, the majority of their evidence is evidence sworn either in 2002 or 2003. Mr Sinclair was supervising the excavation of the drain on the Council’s land and also onto the plaintiff’s land. Mr Sinclair observed that it was necessary to remove a small number of trees and “the excavation then came up against a substantial belt of trees”. On 8 or 9 August 1991, a representative from Atkinson & Tattersall, whose identity Mr Sinclair was unable to recall, instructed Mr Sinclair that, “the trees have to be knocked down”. Mr Sinclair organised for two bulldozers and one excavator to be used the following day commencing at 7am. Mr Sinclair gave the following evidence:

The belt of trees that had been indicated to me ran along the northern boundary of the land that the Council was subdividing. The belt of trees was outside of the Council land being subdivided. The two bulldozers and the excavator worked under my direction from 7.00am to 1.30pm and all trees were pushed over. I estimate that the length of the belt of trees was between 150 to 200 metres and the thickness of this varied but I estimate that it was 30 metres at its widest point. I observed that there were some very old trees removed and I recognised some of the trees as being gum trees, others swampy oaks and others tea trees.

67 There was some confusion about when Mr Sinclair was to be called for cross-examination. Ultimately, Mr Henskens agreed to cross-examine by telephone because Mr Sinclair had been released and was working on a railway line at the time of the proposed cross-examination. Unfortunately Mr Sinclair was giving evidence via a mobile telephone and it was apparent that the battery was very low and reception poor. The line was disconnected during his evidence and Mr Henskens chose not to press the matter further after reception was lost.

68 Although photographic evidence has been tendered and various witnesses have given their recollections of what they observed of the buffer as at August 1991, none of those witnesses put their recollections in an affidavit until four years later. Mr Sinclair was the person supervising the felling of the trees in the area south of the proposed cluster development site and put his recollection of what occurred in an affidavit 18 months after the events. I find his evidence helpful in ascertaining the nature of the buffer as at August 1991, when the trespasses occurred.

69 Mr Atkinson described the tree coverage in the area of the trespasses as “scattered with some five to twenty year old trees and the odd larger tree, together with low underbrush” (aff. 3/11/95; par. 9). The defendants relied upon a number of photographs for the purpose of demonstrating that prior to the trespasses the trees and vegetation did not provide any adequate screening between the plaintiff’s land and the Council’s land. Included in that photographic evidence were two aerial photographs, the first (Ex. 5) taken sometime before 1988 when the plaintiff purchased the land and the second (Ex. 6) taken in approximately 1992 after the trespasses had occurred. Notwithstanding the disadvantages of making assessments from aerial photographs, it is clear that the difference in vegetation on the plaintiff’s land after the felling of the trees is marked. Prior to the trespasses, there were trees and shrubbery providing at least some protection between the two properties. After the trespasses, it is clear that there was little, if any, vegetation that would provide any screening at all.

70 The defendants also relied upon photographs taken from the Council’s land looking east towards the fire station (Exs. 7 to 10C) and a series of photographs (Exs. 15 and 16) taken from Gilchrist Road looking south. Exhibits 7 to 10C depict felled trees on the Council’s land with a swampy area looking towards the east. Some of these photographs were not discovered during the ten years this case has been running and were apparently provided to counsel for the defendants on the morning of 18 February 2003, the second day of the trial. Mr Henskens indicated that Mr Palmer would be called to give evidence that he took the photographs at the end of July 1991 (tr. 85). A copy of the photographs was provided to the plaintiff on 18 February 2003. When Mr Neal was shown some of these photographs in cross-examination, he accepted that there were sections in the photographs that indicated that there was not an effective “screen” between the Council’s land and the plaintiff’s land.

71 Rex William Palmer, who was employed by Daracon as a foreman at the time of the trespasses, gave evidence that the photographs in Exhibits 7 to 10C were taken before the trespasses. He based this evidence solely on his diary notes that referred to the commencement of the works on the Council’s land. The diary makes no reference to photographs having been taken on any day and it is apparent that the first time Mr Palmer was asked to recollect when the photographs were taken was on about 18 February 2003, some twelve years after the trespasses had occurred. Having regard to Mr Sinclair’s evidence and the photographic evidence, I am not satisfied that these photographs were taken prior to the trespass, notwithstanding Mr Neal’s concession in cross-examination in this regard.

72 The photographs in Exhibit 16 were taken before the Council cleared its land (tr. 129-130). They are all taken from the Gilchrist Road area either on the road or from properties on the southern side of Gilchrist Road. They are taken from various angles, some looking almost directly south, others looking in a south easterly direction and others in a south westerly direction. The industrial buildings in the Council’s land to the south of George Road are visible in these photographs and it must be inferred that they would have been more easily observed after the Council cleared its land and before the trespasses occurred.

73 Quite a deal of time at the trial was spent on trying to establish when the photographs in Exhibit 36 were taken. There is a computer date upon the photographs of “23 4 ‘91”, however no witness was able to state when the photographs were actually taken. Comparison was made between the photographs in Exhibit 36 and the photograph in Exhibit JN-AD which was taken from the same position and depicts the same bank of trees at the southern point of the plaintiff’s land. The latter exhibit can be dated by reason of the time frame of the construction of the house on the right-hand side of the photograph. It was taken no earlier than October 1991.

74 The plaintiff submitted that Exhibit 36 must have been taken after the trespasses because the bank of trees still exists, as seen in Exhibit JN-AD. The defendants submitted that the photograph was taken before the trespasses and demonstrates that there was very little tree coverage looking south from the particular angle in the photograph. That angle is from a position at the entry to the road of the proposed cluster development looking south-east towards the fire station. The evidence is not at all precise as to the position of the common boundary or the position of the boundaries of the public reserve. There is more precision in the aerial photographs (Exs. 5, 6 and 26) but they lack the precision of detail at ground level. If one compares the vegetation in Exhibit 5 with Exhibit 6 and takes into account Mr Sinclair’s evidence, it is not possible to be decisive as to whether the photograph was taken before or after the trespasses. From Exhibit 5, there appears to have been less vegetation in the proposed public reserve at the western end of the proposed cluster development and it may be that the photograph is on an angle that catches the eastern edge of this less vegetated area. If that is so, then the photograph could have been taken before the trespasses occurred.

75 The defendant relied upon the expert evidence of Peter Castor who has qualifications including a Bachelor of Science (Forestry) from the ANU, a Tree Care Certificate from the United Pest Control Association and a Certificate of Horticulture from the Ryde School of Horticulture. Mr Castor has been a director of Tree Wise Men Australia Pty Ltd providing tree care and consultancy services since 1983. His report (Ex. 32) outlines his broad experience.

76 Mr Castor visited the plaintiff’s land in May 2002. His report refers to the “former vegetation within subject land” as follows:

The former vegetation community occupying the subject land is referred to in the Lower Hunter and Central Coast Regional Environment Management Strategy as Coastal Sand Apple-Blackbutt Forest . This is a Woodland vegetation community, which characteristically has the tallest trees 10-30 metres and 10-30% canopy cover (canopy projection onto the ground). The Wanda Wetlands Reserve to the east of the subject land and the forest to the west of the subject land, are both significantly more moist environments and contain a different vegetation community, more characteristic of a Forest structure with 50-70% canopy cover.

…

The tree canopies reached a maximum height of 20-25 metres. The mature canopy trees were spaced at approximately 10-20 metres centres (100-25 stems per hectare). There was a mix of ages of tree species (to be expected within a remnant, climax vegetation community) but as the supplied photos illustrate, the bulk of the canopy was at the upper canopy level with a relatively open mid canopy.

The mid-canopy (3-6 metres in height) was sparse and comprised predominantly of suppressed semi-mature canopy tree species. There were scattered Old Man Banksia, Banksia serrata, Pidgeon Berry, Monotoca elliptica and Wattle, A cacia spp within the mid-canopy.

The ground cover vegetation (to 1 metre) was dense with a mix of grasses, vines and shrubs. …

77 Mr Castor’s report also dealt with the “visual screening potential of former vegetation” as follows:

Woodland

Another indication of the screening potential of the former vegetation was provided by Annexure D of John Edward Neal’s Affidavit of 31st August, 1995. This is a south-easterly view from the rear of No. 17 Gilchrist Road, through to a dwelling three Lots north of the Bushfire Brigade Station on Soldiers Point Road. This dwelling is clearly visible over a distance the 100 metres through the vegetation within the Tellamist land. Although this view is not through vegetation within the subject land, we believe it is typical of this vegetation.

78 Mr Castor estimated that it would cost approximately $44,000 to prepare the land and plant tube stock of local canopy and mid canopy trees and under storey seed and provide a watering system. That estimate relates only to plantings that would take some years to grow to a reasonable height to create a visual screen. Mr Castor also gave evidence that it is possible to buy more mature trees at a greater cost. The smaller of these at a height of about 3 to 4 metres can be purchased for approximately $100 per tree, however to replace the mature aged trees that were destroyed could cost up to $10,000 per tree. Mr Castor also noted the 90% mortality rate of these trees when replanted.

79 Christopher John Fagan, the expert valuer relied upon by the plaintiff, gave evidence that he was “very, very familiar with the property” and that he “valued” in that area on a daily basis in 1991 (tr. 258). He said that he passed the property twice a day (tr. 256) and that he knew it from a “previous dealing” (tr. 257). The “previous dealing” to which Mr Fagan referred was the valuation he provided to the plaintiff at the time of the negotiations in 1989 for the land swap with the Council (Ex. 3). In his report dated 10 July 1991, Mr Fagan referred to Consent 5163/91 and then stated that there was to be a “proposal for the creation of a public reserve”. In fact, the condition of the Consent was that the public reserve at the rear of the proposed development “shall be dedicated to Council prior to release of the Building Application”. Mr Fagan observed in his report at page 4:

The proposed Public Reserve consisted of natural bush land and possessed a stand of mature trees together with general undergrowth. The trees were generally of at least 15 metres in heights and together with the undergrowth provided an effective arboreal screen thereby camouflaging the industrial development being undertaken by the Council from the proposed “cluster home” development to be undertaken by Tellamist Pty Limited.

80 Mr Fagan agreed in cross-examination that he did not count the number of trees on the proposed public reserve area between the proposed cluster development area and the Council’s land but gave evidence that he took photographs of the area two years prior to the trespasses (tr. 257). I presume the photographs to which Mr Fagan referred are those annexed to his report of 3 February 1992 labelled “Before” between pages 51 and 55 although it appears from the evidence that some of those may have been taken by others.

81 The photographs on page 51 in the “before” and “after” categories are in my view not a fair comparison. The “before” photo looks east to the houses on Soldiers Point Road with the fire station at the right hand side, thus not looking south to the Council land. The “after” photo has the fire station on the far left hand side of the photo looking south-east to the Council land. It is not possible to know from these photographs what was on the proposed public reserve in the area depicted in the “after” photo prior to the trespasses. The photos on page 52 suffer from the same problem but to a lesser extent and in this instance it is possible to see some of the trees that were removed to the right hand side of the photo. The photos on page 54 compare the position from the property on the northern side of Gilchrist Road to which reference is made earlier when dealing with the photos annexed to Mr Neal’s affidavit. The comparison is dramatic and although it is to the west of the proposed cluster development, some of the houses would have had a view to the southwest and thus been affected. The photos on page 55 also show part of the affected areas.

82 On the state of the evidence, it is difficult to know just how many trees were felled by the Council during its trespasses. However, I am satisfied that prior to the trespasses there were sufficient trees, plants and undergrowth to provide at least a pleasant bushland setting and a limited screen against the Council’s light industrial estate in the area between the proposed cluster development on the plaintiff’s land and the Council’s land.

Expert valuation evidence

83 The plaintiff relied upon the expert opinion of Mr Fagan who made enquiries in relation to a number of villa unit developments in the area and also reviewed the proposed layout and construction of the plaintiff’s proposed cluster development. Mr Fagan’s view was that the average price of the three-bedroom units would have been $150,000 with a range of $145,000 to $155,000 prior to the removal of the stand of advanced trees from the proposed public reserve.

84 Mr Fagan expressed the opinion that the removal of the trees reduced the overall general aesthetic appeal of the proposed development and reduced the range of the values of the proposed units to $115,000 with a range of $110,000 to $120,000 depending upon the actual location of the unit within the proposed development. Mr Fagan’s view was that the overall appeal, value and saleability of the development was dependent upon the continuation of the stand of trees on the proposed public reserve providing a protective screen from the associated noise and direct outlook into the Council’s light industrial development.

85 Mr Fagan had originally valued the units at $130,000 but later increased that value to $150,000. He conceded in cross-examination that he did not increase the lower value of $115,000 when he changed the upper value to $150,000 and agreed that he did not give any reasons for not increasing the lower value (tr. 254). If one were to adjust the percentage difference so that it remained the same when he valued the units at $130,000, the lower value would be $132,750 equating to an average loss per unit of $17,250.

86 The Council relied upon the expert opinion of John Stephen Howes, also a registered valuer. Mr Howes adopted the unaffected value of $150,000 but took the view that a 9% reduction was more appropriate having regard to the comparative sales in the area, concluding that the diminution in value was from $150,000 to $136,500. Mr Howes also analysed the conditions of Consent 5163/91 and concluded that the tree removal by the Council in August 1991 “would have been substantially required” by the condition in the development consent to establish a children’s play area including facilities, a barbeque and landscaping. Mr Howes also referred to the condition of the consent that the public reserve was to be dedicated to the Council prior to the release of the Building Application for the cluster development. He also expressed the view that a developer exercising good development practice would have planted trees on the affected area. In those circumstances, Mr Howes formed the view that the diminution in value was $nil.

87 His alternative valuations adopted Mr Fagan’s value of each of the units at $150,000 and used a 9% diminution applying an amount for a developer’s profit and interest on the land. In assessing the difference in value on a subdivision into 12 lots, Mr Howes concluded that the loss due to perceived disadvantages was $39,733. In assessing the difference in value for the proposed cluster development, he concluded that the loss due to perceived disadvantages was $308,370. If one adds back in the amount deducted for interest on the land because the plaintiff owned the land, the differences are $44,770 in respect of the 12 lot subdivision and $362,789 in respect of the cluster development.

Compensatory Damages

88 Both parties referred to the common law rule that in an action for damages for tort the court awards “that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”: Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 per Lord Blackburn at 39. In Parramatta City Council v Lutz (1988) 12 NSWLR 293 McHugh JA, referred to this as the “fundamental rule” and said at 335:

Evans v Balog; Evans v Progress & Securities Pty Ltd

89 In Evans v Progress &Securities Pty Ltd, Samuels JA said at 39:

Admiralty Commissioners v S.S. Susquehanna

90 The plaintiff claims that by reason of the defendants’ trespasses it was no longer viable to proceed with the cluster development and that it should have by way of damages an amount equivalent to the loss of profits it would have made from that proposed development. The plaintiff claims $1,898,208 as its loss calculated as a net profit from the sale of the cluster homes at $1,942,101 plus $77,454 for consequential loss for costs in preparing for the cluster development, less an estimated profit from the twelve residential lot development of $121,347.

91 The defendants submitted that the true reason the plaintiff did not proceed with the cluster development was that it elected to pursue a damages claim rather than replant the buffer zone and continue with the development. As this is a pivotal submission in the defendants’ cases, it is appropriate to set out the evidence relied upon in support in some detail. Mr Neal’s evidence in cross-examination was:

…

Q. I suggest to you that by the time you came to swear your affidavit on 29 January 2003 you were aware that an argument would be mounted in the proceedings to say that the real reason the cluster development did not go ahead was that your development application expired in 1996, weren’t you?

92 Mr Henskens also cross-examined Mr Neal in relation to the report provided to him by Mr Fagan in which he indicated that the units in the cluster development would be worth $115,000. Mr Henskens suggested to Mr Neal that he could have proceeded with the development and he still would have made $700,000 profit. The following evidence was given:

93 The defendants also relied upon the offer made by Mr Neal in August 1991 after the trespasses had occurred. It was submitted that the plaintiff’s attitude at that time after taking expert advice was that its loss was $50,000. It was further submitted that the large damages claim has only been recently thought of as a result of becoming aware that the defendants intended to rely upon the expiration of the cluster development consent in 1996.

94 The “offer” of $50,000 was made on 16 August 1991 at the site meeting between Mr Neal, Mr McMahon and others. The detail of that evidence is set out earlier at [41]. Although Mr Neal agreed that as “a matter of logic” any compensation he was seeking from the Council would have included at least the cost of the screening and probably a bit more, he was not able to recall whether $50,000 represented his assessment of the cost of restoring the visual screening (tr. 144; l. 41-44). The trespasses for which the plaintiff is being compensated are those that occurred in August 1991, November 1991 and December 1991. It was submitted that the measure of damages the plaintiff claimed as appropriate in August 1991 was $50,000 and that the plaintiff should be restricted to such an amount because it was an assessment made at that time of the amount needed to restore the screen.

95 Litigants and potential litigants make offers of settlement for numerous reasons. Some wish to compromise their differences and to save the amount of costs that will be incurred and the amount of time that will be taken up in pursuing litigation. I am satisfied that as at 16 August 1991 the plaintiff was willing to walk away from the dispute with the defendants in consideration of a payment of $50,000. However I am not satisfied that such willingness is a proper basis on which to assess the damages to be awarded to the plaintiff in the light of all the evidence in this case.

96 If the plaintiff had proceeded with the cluster development, a condition of the consent was that it was required to dedicate the public reserve area to the Council prior to the release of the building application. The defendant submitted that had such a dedication occurred, the Council would probably have continued with the construction of the drain and that would have required the removal of the trees in any event. There are some real questions about the Council’s entitlement to proceed with the construction of the drain when: (1) no notice to or consent from the plaintiff had been sought; (2) the land was subject to a tree preservation order; (3) the Council had represented to the plaintiff that there would be a buffer between its land and the plaintiff’s land with reference to the public reserve as both open space and also a “koala corridor”; and (4) that it had actual knowledge that the plaintiff had relied upon the maintenance of the buffer in deciding to proceed with the cluster development and had even made it a condition of the consent that the plaintiff enhance the buffer area with the establishment of the playground and landscaped barbeque area.

97 I am of the view that during the period 1992 to 1996 the plaintiff did not proceed with the cluster development because it took the view that the defendant should replant the buffer and it was testing the market with the duplex. If the Council had informed the plaintiff that it wished to construct a drain on the proposed public reserve, negotiations could have taken place in relation to its dimensions and/or alternative means by which to drain the lands. The problem was that the plaintiff was ambushed. Firstly, it did not know that the trees were to be felled and secondly, it did not know that there was to be a drain of such significant proportions on the proposed public reserve where it understood, reasonably in my view, that a buffer of trees and vegetation was to be maintained in which it was to construct a landscaped playground and barbeque area.

98 The defendants claimed that the plaintiff failed to mitigate its loss by refusing to replant the buffer area. The plaintiff did replant the buffer area but was subjected to a further trespass in December 1991 when saplings were destroyed. The ambush together with the damage done to the saplings that were planted in December 1991 and Mr McMahon’s refusal to respond to Mr Neal’s letter in March 1992 requesting details of the proposed plantings are matters that seems to me to explain the plaintiff’s attitude in relation to replanting the buffer area, however they are not matters that support the claim made by the plaintiff for the total loss of profits. I am satisfied that the plaintiff took a reasonable course in testing the market with the duplex before it proceeded with further development of the site. On Mr Neal’s evidence, it appears that the plaintiff sought an extension of the consent for the cluster development and that the Council refused that extension. It ultimately sought a return to the original consent and the development of the 12 lots remaining in that subdivision.

99 Paul William Douglass, a Town Planner retained by the Council at the time of the trespasses, claimed in his evidence that the plaintiff had consented to the construction of the drain by reason of its consent to the Council’s subdivision application in April 1990. That was a consent given after the Council had approved its own subdivision and without the plaintiff having been informed of that fact, not that it would have made much difference, it seems, if it had informed it of that matter. Not surprisingly, the plan attached to the letter seeking the plaintiff’s consent to the Council’s subdivision application did not refer to the proposed construction of the drain, its position or dimensions because the engineering drawings for the drain were not completed until late 1990. I do not regard Mr Douglass’ evidence as persuasive. The plaintiff had been led to believe that the buffer was to remain and to be enhanced by its works in the area with the construction of the playground and landscaped barbeque area, without any notice of or consent to the drainage works.

100 These trespasses converted the outlook from the site of the cluster development, proposed to be marketed to retirees, from a pleasant bushland environment into a harsh and barren industrial environment. The aim in assessing the damages is to place the plaintiff into the position it would have been in 1991 if the trespasses had not occurred. In my view that could not have been done by planting the small trees and plants referred to by Mr Castor. They would have taken years to reach a state that the felled trees and vegetation were in at the time of the trespasses. Mr Castor agreed that some of the trees were 20 years old and some were 60 years old. It was a natural bushland setting or, as the Council had called it, a “koala corridor” (tr. 156 and 191). I think it is too simplistic to claim that all that was needed was some replanting. Certainly, when the plaintiff attempted to replant the area its efforts were thwarted by a further trespass and destruction of saplings.

101 Mr Neal’s unchallenged evidence was that he replanted 300 saplings prior to the further trespasses in December 1991. Having regard to the photographic evidence, it is not unreasonable to conclude that there were at least 20 to 25 trees of between 20 to 60 years of age on the proposed public reserve to the south of the cluster development site. If one applies Mr Castor’s figure of $10,000 per tree, a total of between $200,000 and $250,000 is reached. That figure would need to be increased by reason of the very high mortality rate to say $300,000 to $350,000. There is then the extra cost of plants and shrubs for undergrowth and the watering system and labour. This would bring the cost to approximately $315,000 to $365,000. The uncertainty of survival of the mature trees that are replanted is also an unsatisfactory aspect of assessing the damages on this basis.

102 In all the circumstances, I regard the most reasonable process of assessment as the diminution in value of the plaintiff’s land at the time of the trespasses. I am of the view that I should proceed with the assessment on the basis that the buffer would be replanted, but not at a cost to the plaintiff, and that the development would have had a more limited screen than was there at the time of the trespasses. In reliance upon Bellingham v Dhillon [1973] 1 QB 304, the defendants submitted that the diminution in value should be discounted because the plaintiff retained the land the subject of the 12 lot subdivision. That case involved a claim for loss of profits in a driving school as a result of personal injuries suffered by the plaintiff. I am not assessing the damages in this case as an actual loss of profits. I am assessing the diminution in value of the plaintiff’s land at the time of the trespasses by reference to the impact of the removal of the buffer upon the land as it was then which included the consent to the cluster development.

103 Assisted by the evidence of both experts and with reference to my finding that the visual screen was “limited” at the time of the trespasses, I am satisfied that an appropriate measure of damages for the diminution in value of the plaintiff’s land at the time of the trespasses is one approximating the 9% adopted by Mr Howes rounded to $365,000. The approach that I have adopted to the assessment of the diminution in value precludes the plaintiff’s claim for “consequential” losses.

Exemplary damages

104 In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 Brennan J said, at 471, that an award of exemplary damages “is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff’s rights and to deter him from committing like conduct again”. His Honour referred to Lord Diplock’s statement in Broome v Cassell & Co. [1972] AC 1027 at 1130 that the purpose of such an award is “to teach a wrong-doer that tort does not pay”. In Gray v Motor Accident Commission (1998) 196 CLR 1, Kirby J said at 29 that “such damages may be recovered whatever the subjective intention of the tortfeasor if, objectively, the conduct involved was high-handed, calling for curial disapprobation addressed not only to the tortfeasor but to the world”.

105 Prior to the defendants admitting liability, much of the evidence was directed to establishing that the Council was entitled to an order that the plaintiff take the necessary steps to have the land in the proposed public reserve area dedicated to the Council. There was no express statement in the Heads of Agreement requiring dedication of the proposed public reserve area. There was a plan in existence to which the parties had reference from time to time in which the public reserve area was included. However, no express statement in relation to the dedication found its way into any of the documents until the Council granted its Consent 5163/91 on 7 August 1991 with the condition that the public reserve “shall be” dedicated to Council prior to the release of the building application.

106 Mr Neal conceded that it was possible that he had the conversations Mr McMahon alleged he had with him in March and April 1991. In those conversations, Mr Neal is said to have accepted that the linen plan should have included a dedication of the public reserve. Mr McMahon gave evidence that Mr Neal said that he would dedicate the proposed public reserve at the “end of the development”.

107 These were conversations at a time when Mr Neal was ignorant of the Council’s plans to construct the wide drain on the proposed public reserve. By March and April 1991, the Council had already purportedly approved the engineering drawings for the drain on the proposed public reserve and I am satisfied that it did not inform Mr Neal or the plaintiff of the intention to construct that drain in the area and certainly did not obtain its consent.

108 A very unsatisfactory feature to this case is that it was heard twelve years after the trespasses. It is apparent that a number of interlocutory steps were taken and Mr Drummond has indicated that there was a dispute between the plaintiff and its former solicitors. It is very difficult for witnesses to recall the details of events twelve years later and there is a danger to reconstruct rather than to remember with precision when there is such a long delay before affidavits are sworn.

109 Whatever was said between Mr Atkinson and Mr Rennie in May 1991, it is clear that the Council did not provide copies of the drawings of the drain to the plaintiff until October 1991, well after the trespasses had occurred. The note made by Mr Atkinson at the time of his meeting on 16 August 1991 with Mr Hale of Daracon is in the following terms:

I also advised David H that Rex (ie Mr Palmer) was not to discuss any details of the project with anyone who asked – particularly Neal and to refer him to us if he had any questions.

110 The confirmatory letter to Mr Hale is set out earlier in this judgment. Mr Atkinson claimed in his evidence that the matters that he did not wish Daracon to discuss with Mr Neal were the financial arrangements between Daracon and the Council (tr. 426). Mr Atkinson also said that the reason that he instructed Daracon in this fashion was because Mr Neal had threatened legal action (tr. 423). It seems to me that Mr Atkinson must have meant that Daracon was not to have discussions with Mr Neal about the subdivision generally, rather than simply about the financial arrangements between the Council and Daracon in respect of the subdivision.

111 Mr Atkinson gave evidence that it was at the time of the trespasses that he became aware that the plaintiff did not have copies of the engineering plans (tr. 427-428). He said that he suggested to Mr McMahon that the Council provide the plaintiff with the plans but that Mr McMahon informed him that he would have to speak to his superiors about it (tr. 427). Mr Atkinson said that he had a further conversation with Mr McMahon in which he suggested that the Council “should provide” a copy of the plans to the plaintiff.

112 Mr McMahon’s evidence of his conversations with Mr Neal in March and April 1991 when he found that the public reserve had not been included in the linen plan demonstrates the approach that he took thereafter. What Mr McMahon said in response to Mr Neal’s suggestion that he would dedicate the public reserve at the end of the development was: “we’ll see about that”.

113 What was required was an open and fair approach, with the Council informing the plaintiff of its intentions in relation to the construction of the drain at that time. On 7 August 1991, the Council approved the plaintiff’s cluster development application with the condition in relation to the enhancement of the public reserve when it knew it was about to fell all the trees and remove the vegetation on the reserve and construct this very wide drain. The evidence is overwhelming that the plaintiff was not aware of the dimensions of the proposed drain at the time of the trespasses and did not have a copy of the drawings until after the trespasses had been committed.

114 Mr McMahon’s evidence, at tr. 312-313 extracted earlier, in which he admitted instructing Daracon to recommence the works with indemnity after the trespasses had been committed, is quite extraordinary. If on the other hand the letter to Daracon was drafted before the trespasses and the request to desist, it is clear from its terms that Mr McMahon expected complaint and thus advised Daracon that it was indemnified. It is clear from Mr McMahon’s affidavit evidence, also extracted earlier, that he did not seek Mr Neal’s consent until 16 August 1991. His own evidence was that he informed Mr Neal on that day that the “drainage works will benefit everybody’s land” and that “all” the Council was seeking was the plaintiff’s “approval to continue with the drainage works” with a promise that the Council “will replant trees on the reserve to provide a visual screen between the two developments”. This was of course after the trespasses and after the tress had been felled and at a time when the plaintiff had not been informed of the dimensions of the drain.

115 At the very least, it is evident that the Council understood that there was to be a buffer consisting of trees to provide a visual screen. Just how that was going to be achieved in the jaws of the batters of the proposed drain is not made out in the evidence. It was high-handed to knock down the trees on the reserve and then suggest to the plaintiff that the drain would be to its benefit without giving it the opportunity to make that decision for itself. I am satisfied that Mr McMahon, who had the delegated authority to grant the plaintiff’s cluster development consent, was frustrated with the lack of progress of the dedication of the proposed public reserve. However, he had achieved a process for that dedication by the insertion of the condition in the consent. He knew that it had not yet happened and I am satisfied that the Council’s conduct in August 1991 was in contumelious disregard of the plaintiff’s rights.

116 The Council gave an undertaking not to trespass further onto the plaintiff’s land and then failed to honour the undertaking. Daracon committed a further trespass in December 1991 and damaged the replanted trees. This was claimed to be “inadvertent”. That may have been so on the part of Daracon’s employee but the Council had given the plaintiff a formal undertaking that it would not trespass again and, in my view, had an obligation to ensure that such an undertaking was honoured. However, its failure to do so seems to have been due to a lack of care rather than contumelious disregard for the plaintiff’s rights.

117 Mr Henskens submitted that I would not award exemplary damages because it would rebound on the ratepayers of the Port Stephens Shire. If that were the guiding principle to the award of exemplary damages, it would be a signal to public authorities that they would be cocooned against such awards no matter how contumelious their conduct may be. I do not agree with Mr Henskens’ submission. Mr Henskens made a further submission that such an award should not be made because it would be a windfall to the plaintiff. That is a by-product of such an award but it is not a basis for refusing to make it if the conduct justifies it. I am satisfied that the Council’s conduct does justify such an award.

118 In ensuring that there is no overlap with the compensatory damages I have awarded, I am satisfied in the circumstances that an appropriate award against the Council is $25,000.

Orders

119 The defendants have not put separate arguments and have been represented jointly in the assessment of damages. It has not been submitted that there should be separate verdicts or judgments, however it is appropriate to enter separate judgments because the Council is the only defendant against which an award of exemplary damages has been made

120 The plaintiff is entitled to judgment against the defendants in the amount of $365,000 and, judgment as against the first defendant for the additional amount of $25,000. The matter is listed at 9.30am on 8 April 2003 for the filing of Short Minutes of Order for the entry of judgment together with agreed amounts for interest and costs orders, however if the parties are unable to agree on interest and costs I will give directions in relation to any argument to be heard on those matters.

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Last Modified: 04/04/2003

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Citations

Tellamist Pty Ltd v Port Stephens Shire Council [2003] NSWSC 234

Cases Citing This Decision

0

Cases Cited

4

Statutory Material Cited

0

Sutherland Shire Council v Heyman [1985] HCA 41

XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd [1985] HCA 12

CITATION:	Tellamist Pty Ltd v Port Stephens Shire Council & Anor [2003] NSWSC 234
HEARING DATE(S):	17, 18, 19, 20, 21, 26, 27 and 28 February 2003
JUDGMENT DATE:	3 April 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Bergin J
DECISION:	See par [120].
CATCHWORDS:	DAMAGES - Compensatory damages - Exemplary damages in respect of trespasses to land.
CASES CITED:	Bellingham v Dhillon [1973] 1 QB 304 Broome v Cassell & Co [1972] AC 1027 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 Evans v Balog; Evans v Progress & Securities Pty Ltd [1976] 1 NSWLR 36 Gray v Motor Accident Commission (1998) 196 CLR 1 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 Parramatta City Council v Lutz (1988) 12 NSWLR 293
PARTIES :	Tellamist Pty Ltd (Plaintiff) Port Stephens Shire Council (First Defendant) Daracon Engineering Pty Ltd (Second Defendant)
FILE NUMBER(S):	SC 2067/93
COUNSEL:	Mr JS Drummond (Plaintiff) Mr AA Henskens (Defendants)
SOLICITORS:	Hartmann & Associates (Plaintiff) Cantle Carmichael Lawyers (Defendants)