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[2020] NSWSC 1659
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Lorenzato v Burwood Council [2020] NSWSC 1659 (23 November 2020)
Last Updated: 8 February 2021
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Supreme Court
New South Wales
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Case Name:
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Lorenzato v Burwood Council
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Medium Neutral Citation:
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Hearing Date(s):
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10-21 August 2020
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Date of Orders:
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23 November 2020
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Decision Date:
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23 November 2020
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Jurisdiction:
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Common Law
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Before:
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Fagan J
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Decision:
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(1) Judgment for the plaintiff against the first defendant
in the sum of $1,274,000 together with interest up to judgment in accordance
with s 100 of the Civil Procedure Act 2005 and Practice Note SC Gen 16
in the amount of $726,171.06 comprising (a) interest of
$697,324.62 on $1,219,000 from 12 August 2011 and
(b) interest of $28,846.44 on $55,000 from 1 March
2012. (2) The first defendant is to pay the
plaintiff’s costs of the proceedings against
it. (3) Judgment for the plaintiff against the second
defendant in the sum of $1,219,000 together with interest up to judgment in
accordance
with s 100 of the Civil Procedure Act 2005 and Practice Note SC
Gen 16 in the amount of $697,324.62 from 12 August
2011. (4) The second defendant is to pay the
plaintiff’s costs of the proceedings against
him. (5) The cross-claim by the second defendant against
John Lukas is dismissed. (6) The second defendant is to pay
the cross defendant’s costs of the
cross-claim. (7) The parties have liberty to apply to
resolve any issue concerning the calculation of interest and to obtain
additional orders
quantifying interest if necessary. |
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Catchwords:
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CONVEYANCING – vendor and purchaser – whether council
stormwater pipe under property would have given rise to a right
of rescission
under rule in Flight v Booth – whether the pipe so affected the subject
matter that it might reasonably be supposed
that the purchaser might not have
contracted at all TORTS – negligent misstatement –
breach of duty by local council issuing certificate under s 149 Environmental
Planning and Assessment Act – misstatement as to council policy resolution
for acquisition of easements over
property – purchaser’s reliance on
certificate – defences under s 43A of the Civil Liability Act and s 733 of
the
Local Government Act TORTS – negligent misstatement
– vendor’s breach of duty in answering requisitions about existence
of council stormwater
pipe under property – reliance by purchaser through
conveyancing solicitor – whether plaintiff would have been entitled
to
rescind if correct answers given TORTS – professional
negligence – whether solicitor exercised reasonable care and skill in
obtaining instructions for
answers to requisitions – negligence not
established TORTS – private nuisance by public authority
– interference with use and enjoyment of land – property flooded by
overland flows of stormwater – “good faith” – necessity
to prove negligence of council – defence under
s 733 Local Government Act
1993 – nuisance established – damages VALUATION –
land – value impaired by local council stormwater pipe – necessity
to create an easement and relocate
pipe – necessity to alter pipe
connections external to the land – difficulty and uncertainty of dealing
with council |
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Legislation Cited:
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Cases Cited:
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Category:
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Principal judgment
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Parties:
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Elisa Lorenzato (plaintiff)
Burwood Council (first defendant)
Michael
Della-Franca (second defendant)
John Lukas (cross-defendant)
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Representation:
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Counsel:
R Carey (plaintiff)
M L Wright SC with D Robertson (first
defendant)
J A Trebeck (second defendant)
J Gooley
(cross-defendant)
Solicitors:
Fraser Clancy (plaintiff)
Matthews
Folbigg (first defendant)
Scarfone & Co (second defendant)
Mullane
Lindsay (cross-defendant)
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File Number(s):
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2017/83223
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Publication Restriction:
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No
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JUDGMENT
- The
plaintiff brings an action against Burwood Council for negligent misstatement in
a planning certificate issued under s 149 of
the Environmental Planning and
Assessment Act 1979 (NSW). The certificate was issued on 9 August 2010 in
respect of a property at No 13 Appian Way, Burwood. It did not disclose the
existence of a 400mm diameter pipe owned by Council that had been laid beneath
the property in the early 1900s. A residence had been
built over the pipe in
about 1911 and a pool was built over it in 1969. Those improvements remained on
the land at times relevant
to these proceedings. The pipe carried stormwater
run-off from a 5.2ha catchment of long established residential development. The
certificate did not disclose a resolution that Council had adopted in 2002 for
the acquisition of an easement over the pipe and for
the later establishment of
a drainage easement along the property’s western boundary.
- In
March 2011 the plaintiff purchased No 13 for $3 million under a contract to
which Council’s planning certificate was attached.
The second defendant
was the vendor. The plaintiff brings an action against him for negligent
misstatement in the answers he gave
to requisitions that were raised prior to
completion. Those answers failed to disclose the existence of the pipe or
Council’s
statutory rights and claims over it or Council’s
resolution for the acquisition of easements.
- After
the plaintiff moved into possession of the property it was flooded by overland
flows of stormwater from Appian Way on nine occasions
between 7 November 2011
and 11 October 2012. The flooding occurred when the pipe through the property
became blocked, causing stormwater
to back up on Appian Way and then pour down
the plaintiff’s driveway. The plaintiff claims damages from Council for
the nuisance
constituted by the escape across her land of stormwater from the
street.
- The
subject property is within the local government area administered by the first
defendant (referred to herein as “Council”).
The southern boundary
of the property fronts onto Appian Way and is 18m wide. The block is rectangular
and extends northward to a
depth of approximately 86m. The land slopes downward
from the street frontage to the rear boundary at the north. The fall from the
front to the back of the block is approximately 5m. The stormwater pipe is of
vitrified clay. It runs through the entire length of
the property roughly down
the centre.
- Stormwater
run-off from roofs and paved surfaces in the 5.2ha catchment accumulates in a
junction pit at the kerb of Appian Way directly
in front of No 13. The pit
was constructed in about 2005 and the pre-existing pipe through No 13 was
connected to the bottom of it.
The catchment comprises all of the residential
lots along the southwest side of Appian Way, being about 10 in number, and
approximately
five lots to the east of Appian Way. It also includes the surface
of Appian Way itself; a small reserve midway along the length of
the street and
approximately 12 residential lots on the north side of Liverpool Road.
- The
plaintiff inspected the property before she contracted to buy it. The existence
of the pipe was not ascertainable from a reasonable
inspection. The plaintiff
was unaware of it until Council engineers told her about it in November 2011,
three months after she had
completed the purchase, when the pipe blocked and
caused flooding as earlier described. Council claims the right to enter the
plaintiff’s
land for the purpose of maintaining it.
Action
against Council for negligent misstatement
- When
Council issued the planning certificate in August 2010 the relevant subsections
of s 149 of the Environmental Planning and Assessment Act were in
these terms:
149 Planning certificates
(1) A person may, on payment of the prescribed fee, apply to a council for a
certificate under this section (a planning certificate)
with respect to any land
within the area of the council.
(2) On application made to it under subsection (1), the council shall, as soon
as practicable, issue a planning certificate specifying
such matters relating to
the land to which the certificate relates as may be prescribed (whether arising
under or connected with
this or any other Act or otherwise).
(4) The regulations may provide that information to be furnished in a planning
certificate shall be set out in the prescribed form
and manner.
(5) A council may, in a planning certificate, include advice on such other
relevant matters affecting the land of which it may be
aware.
(6) A council shall not incur any liability in respect of any advice provided in
good faith pursuant to subsection (5). [...].
- Council’s
common law duty to exercise reasonable care to provide correct information in a
planning certificate is established
by L. Shaddock and Associates Pty Ltd v
The Council of the City of Parramatta (No. 1) [1981] HCA 59; (1981) 150 CLR
225. In Mid Density Developments Pty Ltd v Rockdale Municipal Council
[1993] FCA 408; (1993) FCR 290 the Full Court of the Federal Court described as
follows the class of persons to whom a Council owes this
duty:
[39] The relevant class of persons to be considered in the
present situation included potential purchasers of the property the
subject of
the certificate. It is sufficient if the misstatement is made to members of a
limited class of persons, including the
plaintiff, with the intention that those
persons should rely thereon in deciding whether to commit themselves
financially; see San Sebastian Pty Ltd v Minister Administering The
Environmental Planning and Assessment Act 1979 [1986] HCA 68; (1986) 162 CLR
340 at 357, per Gibbs CJ, Mason, Wilson, Dawson JJ.
- The
operative pleading is the plaintiff’s third further amended statement of
claim (“the statement of claim”). This
was amended to its present
form, by leave, on the fifth day of the hearing, 14 August 2020. In her action
against Council for negligent
misstatement the plaintiff alleges that in breach
of its duty of care the planning certificate contained incorrect and misleading
information concerning matters prescribed for the purposes of sub-ss (2)
and (4) of s 149 and that it failed to include advice on
relevant matters
of which it was aware and that should have been disclosed pursuant to
sub-s (5). The certificate was annexed to
the contract of sale in
accordance with s 52A of the Conveyancing Act 1919 (NSW) and the
Conveyancing (Sale of Land) Regulation (2010).
- By
a resolution of 6 December 1994 Council adopted a Code of Stormwater Management
(“the 1994 Stormwater Code”). A resolution
concerning acquisition of
drainage easements over No 13 was passed 11 June 2002 by the Services and
Policy Committee of Council (“the
2002 resolution”). It is common
ground that the Committee acted under delegation and that its resolution has the
same force,
effect and status as a resolution of Council. The plaintiff alleges
that she entered into the contract in reliance upon the s 149
certificate
and upon the absence from it of any reference to the land being affected by any
policy of Council that would restrict
development.
- The
plaintiff says that had the certificate been prepared with reasonable care it
would have informed her of the 1994 Stormwater Code
and the 2002 resolution,
both of which she alleges restrict development. She also alleges that the
planning certificate was negligently
misleading in its failure directly to
disclose the existence of the pipe and the susceptibility of the land to
intermittent flooding.
The plaintiff asserts that had she been made aware of
those matters she would not have proceeded with the purchase.
- It
is common ground between the plaintiff and Council that s 59A of the
Local Government Act 1993 (NSW) applies to the pipe. That section came
into force on 1 August 2002, with the exception of sub-s (3), which was
inserted later
and took effect from 13 May 2009. Sub-sections (1) and (2)
of s 59A have been in the same terms from first enactment.
- The
section is as follows (with emphasis added):
59A Ownership of water supply, sewerage and stormwater drainage works
(1) Subject to this Division, a council is the owner of all works of water
supply, sewerage and stormwater drainage installed in or on land by the
council (whether or not the land is owned by the council).
(2) A council may operate, repair, replace, maintain, remove, extend, expand,
connect, disconnect, improve or do any other things
that are necessary or
appropriate to any of its works to ensure that, in the opinion of the council,
the works are used in an efficient
manner for the purposes for which the works
were installed.
(3) The provisions of this section have effect despite anything contained in
section 42 of the Real Property Act 1900.
- In
Bonaccorso v Strathfield Municipal Council [2003] NSWSC 408 at [44],
Young CJ in Eq held that s 59A applies to drainage works whenever they may
have been installed by a council, whether before or after
commencement of the
section. At [36]-[39] his Honour adopted a broad interpretation of the word
“installed”. It was held
that the pipes in that case had been
installed by Strathfield Council within the meaning of the section. The
manufacturer had supplied
them and provided supervision and lifting gear; the
council had supplied the labour for installation – and the cost of the
work had been born as to two thirds by the council and one third by the
proprietor of the land.
- Section 191A
was inserted in the Local Government Act at the same time as s 59A.
Sections 191 and 191A need to be considered together. They are in the
following terms, so far as presently relevant:
191 Power of entry
(1) For the purpose of enabling a council to exercise its
functions, a council employee (or other person) authorised by a council
may
enter any premises.
(2) Entry may only be made at any reasonable hour in the
daytime or at any hour during which business is in progress or is usually
carried on at the premises.
191A Power of entry—construction and maintenance of water supply,
sewerage and stormwater drainage works
(1) Without limiting section 191, a council employee (or
other person) authorised by a council may enter any premises to carry out water
supply work, sewerage work
or stormwater drainage work on or under the premises
(being work that the council is authorised by this or any other Act to carry
out).
- A
further statutory provision that has a bearing upon Council’s rights over
the pipe is s 94 of the Roads Act 1993 (NSW), of which the relevant
subsections are as follows:
94 Roads authority may carry out drainage work across land adjoining public
road etc
(1) A roads authority may, for the purpose of draining or protecting a public
road, carry out drainage work in or on any land in
the vicinity of the road.
(3) The roads authority must pay compensation to the owner of the land for any
loss or damage arising from the exercise of any power
under this
section.
Council is the roads authority for Appian Way.
- The
plaintiff and Council agree that the pipe was “installed” within the
meaning of s 59A(1) by a predecessor of Council
and that a continuous chain
of succession of local government authority can be traced to the present Council
through a series of
enactments and repeals. Council is therefore to be regarded
as having installed the pipe so that s 59A is engaged. The plaintiff
alleges that by reason of Council’s ownership of the pipe and statutory
rights over it, the property was worth very much less
than the $3 million that
she paid for it. The difference in value at the date of completion, 11 August
2011, is the principal component
of the damages claimed by the plaintiff in her
action for negligent misstatement based on the planning certificate.
- Council
does not dispute that it owed to prospective purchasers of the property, such as
the plaintiff, a duty to exercise reasonable
care with respect to the terms in
which the certificate was issued. It denies that the matters stated in the
certificate were inaccurate
or misleadingly incomplete. It denies negligent
breach of duty. This aspect of Council’s defence turns upon the correct
construction
of questions that Council was required to answer in the
certificate, as prescribed by Sch 4 of the Environmental Planning and
Assessment Regulation 2000 (NSW). Council also disputes that the scope of its
duty of care extended to a positive obligation to disclose, pursuant to
s 149(5), the existence of the pipe or Council’s rights or the risk
of overland stormwater flooding of No 13. Council raises statutory
defences
under s 43A of the Civil Liability Act 2002 (NSW) (exercise of a
“special statutory power”) and under s 733 of the Local
Government Act (act or omission in good faith).
Action
against second defendant for non-disclosure
- The
plaintiff has pleaded at pars 65-94 of the statement of claim alternative
bases upon which she says the second defendant is liable
to her in damages
because the pipe running under the land and Council’s rights over the pipe
constitute a defect in title to
No 13. This part of the plaintiff’s
pleading is difficult to follow. With the benefit of submissions from the
plaintiff’s
counsel my understanding of the alternative basis of claim is
as follows.
Failure to convey good title –
cl 16.3
- In
pars 73-77 the plaintiff relies upon cl 16.3 of the contract, which
required that the vendor “cause the legal title to the
property ... to
pass to the purchaser free of any ... other interest”. She cannot recover
damages upon the basis that a deficiency
of title discovered after completion
constituted a breach of that clause. The doctrine of merger precludes such a
claim, as explained
in Christopoulos v Angelos (1996) 41 NSWLR 700 at
706C-F (Powell JA) in the following terms:
In the case of a contract for the sale of land, all the provisions in the
contract which the parties intend should be performed by
the conveyance, or
memorandum of transfer, are merged in the conveyance, or memorandum of transfer,
and all the rights of the purchaser
in relation thereto are thereby satisfied
although if there are provisions in the contract which are collateral to the
main duties
of proving title, conveyance, or transfer and the like, the
obligations imposed by [these stipulations are] not discharged by the
performance of those main duties.
- This
principle is an insurmountable obstacle to the plaintiff’s formulation of
her claim against the second defendant for damages
based upon cl 16.3 of
the contract and I will not consider it further.
Non-disclosure
of a latent defect in title – the pipe
- In
pars 80-94 of the statement of claim it is pleaded that in failing to
inform the plaintiff of the pipe and Council’s rights
over it the second
defendant breached an alleged general obligation owed by him, independently of
the terms of the contract and independently
of any requisitions being raised, to
disclose defects of title. The second defendant disputes that he was obliged to
make such disclosure,
as matter of law, or that he could be held liable in
damages after completion of the contract for any failure to disclose the alleged
defect. This part of the plaintiff’s pleading also invokes cl 6 of
the contract, concerning errors of misdescription and providing
for compensation
where such errors are complained of prior to completion. I am unable to find any
support in cl 6 for the plaintiff’s
innocent non-disclosure case but
I will consider it in other respects under Issue 7 ([326]).
Action against second defendant for
negligent misstatement
- At
pars 110-141 of the statement of claim the plaintiff alleges that the
second defendant, as vendor, owed her a common law duty to
exercise reasonable
care in answering requisitions raised prior to completion. In the alternative
the plaintiff alleges that a term
of the contract of sale pursuant to which
those answers were required to be given was subject to an implication of law
that they
would be provided with reasonable care. The answers are alleged to
have been incorrect and misleading because, amongst other things,
they denied
the existence of any unregistered easement or of any “outstanding
notification, claim or requirement of a ... local
authority”. The
plaintiff alleges that the second defendant had been aware from late 2002 that
Council claimed s 59A rights
over the pipe, that those rights were in the
nature of an unregistered easement and that Council had given notifications and
made
claims concerning exercise of its rights that were relevantly
“outstanding”. The inaccuracy and incompleteness of the
answers to
requisitions in August 2011 is said to have been negligent having regard to the
second defendant’s knowledge of
Council’s claims.
- The
plaintiff alleges that she relied, through her conveyancing solicitor, upon the
answers. Following receipt of them she proceeded
to settlement. It is alleged
that if the answers had been expressed with reasonable care they would have
revealed Council’s
rights over the pipe and, with that knowledge, the
plaintiff would have rescinded the contract. The damages claimed against the
second
defendant under these alternative causes of action in tort and in
contract are the same as those claimed against Council on the cause
of action
for negligent misstatement.
- Some
particulars of the plaintiff’s case against the second defendant depend
upon it being established that Council’s
actual legal rights over the pipe
– not just its claims – amounted to a defect in the second
defendant’s title
and that this defect would have justified the plaintiff
rescinding the contract if she had been aware of the true position. To succeed
on those particulars, the plaintiff must prove that the pipe and Council’s
rights with respect to it constituted such a fundamental
difference between what
the second defendant had promised to convey and what the plaintiff would in fact
receive that she could not
have been compelled to complete, even upon terms of
substantial compensation for misdescription.
- The
second defendant disputes that his answers to requisitions were inaccurate or
misleading, taking into account the precise extent
of information sought in the
requisitions and having regard to what the second defendant alleges was an
abandonment of Council’s
claims over the pipe as a result of it not having
taken any action on those claims during the preceding eight years. The eight
years
dated from 4 February 2003, when Council gave the second defendant notice
of intention to enter No 13 to repair the pipe, a notice
that Council never
acted upon. The second defendant also disputes that the pipe was installed by
any local government authority that
was a statutory predecessor of Council. He
contends that the plaintiff has not proved that s 59A applies to the
pipe.
Council’s proportionate liability partial defence to
the plaintiff’s claim
- The
plaintiff’s actions for negligent misstatement brought against Council and
against the second defendant fall within the
definition of apportionable claims
in s 34(1) of the Civil Claims Act 2002 (NSW), each of them being
“a claim for economic loss ... in an action for damages (whether in
contract, tort or otherwise)
arising from a failure to take reasonable
care”. It would have been open to Council to plead that, if both of these
claims,
as pleaded and particularised by the plaintiff, should be established,
then its liability as a concurrent wrongdoer is:
limited to an amount reflecting that proportion of the damage or loss claimed
that the court considers just having regard to the
extent of [Council’s]
responsibility for the damage or loss (s 35 of the Civil Claims
Act).
- However,
instead of pleading a proportionate liability defence in reliance upon the
plaintiff’s formulation of her action against
the second defendant,
Council has pleaded an entirely distinct case of negligent misstatement upon
which it says the second defendant
is liable to the plaintiff. Council thus
seeks apportionment under s 35 on the basis that the second defendant is
concurrently liable
on a cause of action that the plaintiff herself does not
allege or adopt. It is not clear why Council has not sought apportionment
in
reliance on the plaintiff’s own formulation of her action against the
second defendant.
Second defendant’s cross-claim against
his conveyancing solicitor
- The
second defendant has joined the solicitor who acted for him on the sale of the
property in 2011 as a cross-defendant. He pleads
that the cross-defendant was
professionally negligent in that he failed to elicit instructions about the
existence of the pipe and
Council’s claims over it. It is alleged that any
deficiencies in the answers to requisitions resulted from that negligence
and
that if the second defendant is found liable to the plaintiff for negligent
misstatement then the amount of any judgment against
him will constitute damages
caused by the cross-defendant’s negligent breach of his retainer.
- The
cross-defendant completed the answers to requisitions and delivered them to the
plaintiff’s conveyancing solicitor on the
afternoon before settlement. He
contends that he exercised reasonable care in taking instructions and that the
answers he supplied
were a faithful reflection of those instructions. The
cross-defendant says that he asked the second defendant questions that, having
regard to the cross defendant’s knowledge of the pipe and of
Council’s claims under s 59A of the Local Government Act,
should have elicited instructions about those matters.
Plaintiff’s claim against Council in nuisance for
stormwater flooding
- Council
disputes its liability to the plaintiff in nuisance for the repeated flooding of
her land by overland flows of stormwater
from Appian Way. It asserts that a
cause of action can only be sustained against a public authority such as itself
if the escape
of accumulated stormwater onto privately owned property has
occurred through negligence. Council not only disputes negligence but
asserts
that during the 11 month period in which intermittent flooding occurred the
plaintiff refused Council access to her land
to rectify the blockage in the pipe
that was the cause of water backing up on Appian Way and escaping overland
through No 13. Council
denies that it was negligent in relation to the
flooding. It also pleads in answer to the nuisance action a statutory defence of
good faith under s 733 of the Local Government
Act.
List of findings and issues
- The
myriad legal issues on which the parties are in dispute can only be resolved by
reference to a protracted history of dealings
and events, in several discrete
periods. The parties disagree about the factual conclusions to be drawn from
this mass of detail
and about the application of the law. My factual findings
will be set out in chronological sequence under the following headings:
- 1904:
construction of the drain by Council’s predecessor – [34]ff
- 1989-2011:
second defendant’s tenure of No 13 – [61]
- 2011: second
defendant’s sale of No 13 to the plaintiff – [132]
- 2011-2014:
flooding of No 13; repair of the pipe; raising of the footpath – [139]
- 2015-2017:
plaintiff’s Development Application – [204]
- October
2017-July 2020: Council’s settlement negotiations – [216]
- Whether
the plaintiff is entitled to relief and determination of the cross-claim will
depend upon resolution of the following issues:
Liability of Council
for the s 149 certificate
(1) With respect to Council’s 2002 resolution and Question 7 in the
planning certificate:
(a) what is the statutory context in which Question 7 formed part of the
planning certificate and was required to be answered ([233]-[235]);
(b) was the 2002 resolution a “policy adopted by the Council”
that affected the land by restricting “the development
of the land because
of the likelihood of ... flooding” ([236]-[265]);
(c) when the certificate issued on 9 August 2010 was the resolution still
operative ([266]-[276]);
(d) in the circumstances as found in answer to pars (a)-(c), was the
resolution a policy that should have been referred to in answer
to
Question 7 of the planning certificate? ([277]).
(2) Is the 1994 Stormwater Code a “flood related control” to
which development on the land was subject, such that it should
have been
referred to by Council in answer to Question 7A of the planning certificate?
([278]).
(3) Was Council required, by s 149(5) in conjunction with the common
law, to exercise reasonable care to disclose in the planning
certificate the
2002 resolution, the 1994 Stormwater Code, the existence of the pipe and/or the
nature of Council’s s 59A rights
with respect to the pipe –
independently of and in addition to the provision of answers to specific
questions in the certificate?
([287]).
(4) Insofar as the planning certificate was misleading by reason of the
answer to either question 7 or question 7A or any failure
to disclose
information pursuant to s 149(5), did Council fail to exercise reasonable
care in the issue of the certificate? ([291]).
(5) Is Council able to rely upon statutory defences in s 43A of the
Civil Liability Act (exercise of a “special statutory power”)
or s 733 of the Local Government Act (act or omission in good faith)
in answer to the plaintiff’s claim for negligent misstatement in the
planning certificate?
([308]).
(6) Has the plaintiff established reliance upon the planning certificate and
consequent damage, to constitute a cause of action for
negligent misstatement?
([320]).
Liability of the second defendant for non-disclosure or negligent
misstatement
(7) Can the plaintiff recover damages from the second defendant for innocent
non-disclosure of the pipe prior to completion? ([326]).
(8) Did the second defendant breach a common law duty of care owed to the
plaintiff, or a contractual obligation of care implied by
law, in answering
requisitions under the contract of sale? ([330]).
(9) Would the plaintiff have been entitled to rescind the contract of sale if
the second defendant’s answers to requisitions
had disclosed the pipe and
Council’s rights with respect to it and/or Council’s 4 February 2003
notification of intent
to enter the land to repair the pipe and/or
Council’s 2002 resolution? ([348]).
(10) Did the plaintiff rely upon the answers to requisitions, in so far as
they did not disclose the pipe or Council’s rights
over it and
notification in respect of it, when she did not purport to assert a right of
rescission and instead proceeded to complete
the purchase? ([359]).
Damages for negligent misstatement by Council and/or second defendant
(11) If Council and the second defendant are liable on the plaintiff’s
causes of action for misstatement in the planning certificate
and in the answers
to requisitions respectively, what loss and damage has the plaintiff sustained?
([361]).
(12) Did the plaintiff fail to mitigate her damages caused by misstatement in
the planning certificate by not accepting offers made
by the Council between
October 2017 and June 2020? ([414]).
Apportionment between first and second defendants
(13) Has Council established that that second defendant is a concurrent
wrongdoer in respect of the plaintiff’s damages upon
the cause of action
that Council has formulated for the plaintiff against the second defendant,
based upon negligent misstatement
by annexure of the planning certificate to the
contract and by nondisclosure – so that any judgment against Council
should
be limited to its proportion of responsibility for the apportionable
claim? ([415]).
(14) If the first defendant is entitled to have liability for the
plaintiff’s damages apportioned, what is the appropriate share
to be borne
by each of Council and the second defendant? ([424]).
Claim against the cross-defendant for professional negligence
(15) Did the cross-defendant exercise reasonable care and skill in obtaining
instructions from the second defendant for the purpose
of answering requisitions
and in giving effect to those instructions by drafting and delivering the
answers that he did? ([430]).
Liability of Council for nuisance; quantum of damages
(16) Is Council liable to the plaintiff in nuisance for any instance or
instances of overland flows of stormwater on to No 13 Appian
Way in the
period 7 November 2011 to 12 October 2012? ([439]).
(17) If Council is liable to the plaintiff in nuisance, what is the quantum
of the damage suffered? ([464]).
1904: construction of the drain by Council’s predecessor
- The
facts summarised in the following paragraphs are primarily relevant to
Issue 8 – whether the second defendant gave incorrect
answers to
requisitions under his contract of sale to the plaintiff. If a statutory
predecessor of Council installed the pipe under
No 13, within the meaning
of s 59A of the Local Government Act 1993, and if the act of
installation is to be imputed to Council so that the section is engaged, then
Council had rights over the land,
or at least a claim of such rights, that the
plaintiff alleges should have been disclosed in answer to the
requisitions.
1867 and 1897 Acts: Borough of Burwood
proclaimed
- Pursuant
to s 11 of the Municipalities Act 1867 (NSW) (rep) the Governor of
what was then the Colony had power by proclamation to declare a new borough (in
the case of a city, town,
suburb of Sydney or any other populous district), or a
new municipal district (in the case of a less populated area of up to 50 square
miles with not less than 500 inhabitants). It is agreed between all parties in
the present proceedings that the Borough of Burwood
was proclaimed under the
1867 Act. Section 25 provided that the electors for the time being of every
borough or municipal district
proclaimed and all succeeding electors entitled to
vote in accordance with the terms of the Act:
shall be a body corporate under such name as the Governor shall in such
proclamation direct [...].
- The
parties also agree that, so far as relevant to these proceedings, the boundaries
of the Borough of Burwood have, from the date
of its proclamation under the 1867
Act, encompassed what is now the local government area of Burwood under the
Local Government Act 1993, including the location of Appian Way and the
lots on that street including No 13.
- The
1867 Act was repealed by the Municipalities Act 1897 (NSW)(rep). In the
1897 Act the term “municipality” was defined to include
“borough” and “municipal
district”. Section 4(III)
of the 1897 Act provided that the present and future electors of any existing
municipality, being
those who were entitled to vote according to the terms of
the 1897 Act, would:
be and remain a body corporate under such name as the Governor has, in the
proclamation constituting such municipality, directed,
and shall by such name
have perpetual succession and a common seal, and be capable in law of suing and
being sued, and of purchasing,
holding, and alienating land, and of exercising
all such corporate functions, and doing and suffering all such acts and things
as
by law and in conformity with this Act they may be entitled to exercise, do,
and suffer.
- Section 6
of the Municipalities Act 1897 prescribed the number of aldermen who
should comprise the council of every municipality, according to the number of
people living
within the municipal boundaries. Other sections made provision for
election of the aldermen. The authority of the council was established
by
s 8, as follows:
8 The council of every municipality shall, in and for all such
acts, matters, and things as by law and in conformity with this
Act may be done
or suffered, be the sole representatives of the body corporate of such
municipality, and all the acts and proceedings
of such council shall be deemed
to be the acts and proceedings of such body
corporate.
Installation of the storm water pipe in about
1904
- By
1903 Burwood Road had been constructed, running approximately north-south and
intersecting with Liverpool Road running approximately
east-west. George John
Hoskins was the registered proprietor of more than 19 acres of land lying
between these two roads in a triangle
east of Burwood Road and north of
Liverpool Road. He submitted to the Council of the Borough of Burwood a plan of
subdivision. The
plan provided for Appian Way to be constructed, commencing at
Burwood Road in the north-west and following a serpentine route to
join
Liverpool Road in the south-east. The street was designed to diverge and then to
rejoin around a small park approximately halfway
along its length. That is how
it was eventually constructed and that is the configuration of the road to the
present day. No 13 is
located opposite the small park, on the north side of
the street. There are lawn tennis courts in the park.
- Mr
Hoskins’ plan of subdivision provided for numerous residential lots to be
created along each side of Appian Way. By 25 August
1903 the Council of the
Borough had approved the plan and on that day it entered into an agreement with
Mr Hoskins containing the
following provisions:
(1) Clause 4
provided that Mr Hoskins “shall dedicate the said Road to be called the
Appian Way to public use as a public road
and thoroughfare within the said
Borough ... and the said Borough shall accept such dedication and shall take and
have the care construction
charge maintenance and management of the said Road
... as a public road street or thoroughfare within the said Borough”.
(2) By cl 2 it was agreed that as soon as practicable Mr Hoskins would
supply to the Council of the Borough “suitable levels
and sections of the
said Road to be called the Appian Way whereupon the said Borough shall forthwith
commence and diligently proceed
with the construction of such Road”.
Clause 2 further provided that Appian Way “shall be completely
constructed and finished
by the said Council prior to the month of December in
the year [1904]”.
(3) Clause 2 also specified that the Council would “with all
reasonable dispatch carry out and completely finish” certain
additional
works, the description of which included “the drainage of the said Road
with all proper provisions for the carrying
off and away therefrom and from the
lands before referred to of all surface waters and surface drainage including
the construction
of all proper culverts gullies gully shafts gratings pipes and
other works necessary and efficient for the purpose”.
(4) Pursuant to cl 3 it was agreed with respect to all works carried out
by the Council of the Borough under the terms of the agreement
that “all
work shall be under the supervision and to the satisfaction and approval of the
Overseer of works of the said Borough
and upon completion of such works or any
of them the said Borough shall thereafter have the care maintenance and
management thereof
respectively and shall at all times keep the same in good
order and repair”.
(5) Clause 5 required the Borough “with all reasonable dispatch
after the execution of this Agreement [to] make construct and
carry out a main
drain from the lands and Works hereinbefore mentioned for the purpose of
carrying all surface waters and surface
drainage therefrom and from all
buildings and improvements to be hereafter erected and made thereon ... and the
said Borough shall
at all times have the care control and management of such
main drain and shall at all times maintain and keep such main drain in
good
order condition and repair as a work of the said Borough”.
(6) By cl 6 Mr Hoskins agreed to contribute to the Borough the funds
necessary for carrying out the works, up to a maximum of £1,100.
- The
Borough, being a body corporate constituted by its electors in accordance with
s 4(III) of the 1897 Act, had the power to undertake
construction and
management of Appian Way and of the “main drain” and other surface
drainage works. It had the power
thereafter to maintain those works. This
appears from the following extracts from ss 175 and 177 of the 1897
Act:
175 The council shall, within the boundaries of the
municipality, have the care, construction, and management of public roads other
than the main roads of the Colony ... and shall adopt such means as may seem to
them desirable for the establishment and management
of ... sewerage or other
drainage .... For the purposes of this Act all roads, streets, lanes, or other
thoroughfares ... dedicated
to public use ... shall be deemed and taken to be
public roads, streets ... and thoroughfares ... .
177 Any council or person authorised by any council may, for
any purpose of this Act at all reasonable times in the day-time enter
upon and
layout ... or make-up on or under any private land within the municipality, any
sewers or other drains, water-courses ...
or any other necessary works
[...].
- In
accordance with the plan of subdivision, separate titles to lots along Appian
Way were created. A report of Burwood Council’s
Group Manager Engineering
Services, Mr Wyatt, dated 11 June 2002 states that “the records available
show that ... the road
[was] completed by 1905 (including planting and road
drainage) and the house [on No 13 was] built in 1911”. The parties
agree
that construction of the house took place in 1911. It is a clear inference
that by that year the pipe that runs through the centre
of No 13 must
already have been installed. I infer that this is the “main drain”
referred to in cl 5 of the agreement
of 25 August 1903.
- It
is established by reports of hydrological engineers tendered in the proceedings
that Nos 13-17 Appian Way are located in a slight
depression forming part
of a drainage path dictated by the natural topography. A contour plan of the
area lying immediately to the
north of Appian Way is annexed to a report to
Council from Brown Smart Consulting dated May 2012. It shows that the natural
drainage
path is oriented from south-west to north-east, across the south-east
corner of No 17, diagonally across the middle of No 15 and
then across
the northern one third of No 13. One would expect the “main
drain” to have been constructed across one or
more of these three parcels
of land. There is no evidence of any pipe or drain in the vicinity that could
answer the description
of the “main drain”, other than the pipe
through No 13 that is the subject of these proceedings.
- The
report of Mr Wyatt referred to above states that in Council’s 2000 budget,
presumably for the financial year ended 30 June
2001, funds were provided for an
investigation of stormwater drainage from Appian Way, with a view to relieving
periodic flooding
of Nos 13-17. A letter from Council to a resident of
16 Appian Way dated 3 January 2001 stated that “a detailed drainage
study”
was being undertaken at that time. Mr Wyatt’s June 2002
report summarises some of the results of the study. It records that
“sidelines were found to run through the front yards of [No 13] and a
number of adjacent properties”. A plan illustrating
the location of the
pipe and the sidelines was submitted by Council to Mr Dundas of Egan National
Valuers in July 2001. I infer that
this plan was prepared from the results of
the investigations carried out with funds from the 2000 budget and that what it
illustrates
is what was referred to in Mr Wyatt’s report.
- The
plan shows six stormwater collection grated pits located in the gutters of
Appian Way within a radius of approximately 80m of
the front boundary of
No 13. It depicts connecting subsurface drainage lines from these pits to
the pipe that runs the length of
No 13. Three of the connecting lines are
shown as joining the pipe, apparently below the ground surface, in the front
garden of No
13 between the house and the front boundary. I infer on the
balance of probabilities that all of these pits and connecting lines
are part of
the original construction of the stormwater drainage works for Appian Way,
executed by about December 1904 pursuant to
the agreement made on 25 August 1903
between the Borough of Burwood and Mr Hoskins. This inference is supported by
the consideration
that the pits and sidelines are clearly adapted to and
necessary for drainage of the road surface. They are integral to the road,
which
was required to be constructed under the terms of the agreement and which
self-evidently was constructed.
- I
also infer on the balance of probabilities that it was the Borough that
installed the drainage works. Completion of those works
by the Borough was part
of its consideration for Mr Hoskins’ dedication of Appian Way as a public
road. He plainly performed
his side of the bargain. The Deposited Plan of
subdivision is in evidence and there is no doubt that Appian Way has been a
dedicated
public road since 1904. It is a natural inference that the Borough
discharged its corresponding obligation. The drains had to be
constructed and
there is no basis for finding, or entertaining the possibility, that the Borough
repudiated this contractual obligation.
- Further,
the minutes of a meeting of the Borough Council held on 20 July 1903 record that
it considered tenders that had been received
from contractors, for execution of
the work, and that it resolved, inter alia:
That the drainage as estimated for by the overseer of works be carried out by
the Council.
The fact that the Council required Mr Hoskins to pay
for the work and that this requirement was formalised in cl 6 of the
agreement
does not alter the position that the Borough was the entity that
carried out the installation. Funding is a separate matter from
execution. There
is no evidence that the resolution of 20 July 1903, that the Council carry out
the works, was ever countermanded.
I find that the subsequent construction of
the drain, which undoubtedly occurred, was the implementation of that
resolution.
1906 Act: from a corporation of electors to a corporation of
aldermen
- With
effect from 1 January 1907 the Municipalities Act 1897 was repealed
by the Local Government Act 1906 (NSW)(rep). Boroughs and municipal
districts constituted under the repealed Act, including the Borough of Burwood,
were referred
to in the 1906 Act as “existing municipalities”.
- Section 29
of the 1906 Act provided that every municipality shall be governed by a council
consisting of elected aldermen. Section
12 effected a significant change in
the identity of the municipal corporate body, relative to the operation of the
1867 and 1897
Acts. It provided as follows:
12 Every existing municipality ... is constituted a
municipality under this Act. Thereupon the body corporate of such existing
municipality shall be dissolved, and shall be replaced by the council of the
municipality which under that name is created a body
corporate. All powers,
rights, and liabilities of such old body corporate shall be the powers, rights,
and liabilities of the council
of the municipality.
- Whereas
under the 1867 and 1897 Acts all of the electors constituted the body corporate,
now it was an incorporation of only the elected
members of the council. The
corporate entity named Borough of Burwood, comprising all of the electors, was
dissolved and in its place
was a corporate entity named Council of the
Municipality of Burwood, comprising the elected aldermen.
- This
change is confirmed by the terms of s 44 of the 1906 Act. The word
“area” in this section is defined to include
“municipality”.
Section 44 of the 1906 Act was in these
terms:
44 The duly constituted council of an area shall be a body
corporate, having perpetual succession and a common seal.
- By
combination of s 73(xi) and s 74 of the 1906 Act, there was conferred
upon the Council of the Municipality of Burwood the “care,
control and
maintenance of any stormwater channel, culvert, drain” – amongst
many other powers and responsibilities.
Section 76 conferred power to enter
upon private lands lying near to public roads to make and keep open, inter alia,
“tunnels,
drains, and watercourses”. Section 208 provided for
enforcement of the Council’s right to enter on private land for such
purposes.
- Subject
to any inconsistent provision of the 1906 Act, of which I can find none that is
presently relevant, s 4(6) provided as follows:
4(6) ... [T]his Act shall apply to all matters and things made,
done, or commenced under the Acts hereby repealed, and at the commencement
of
this Act of any force or effect ... by virtue of the Acts hereby repealed, as if
this Act had been in force at the time they were
made done or commenced, and
they were made, done or commenced hereunder.
- Relevantly
for the purposes of this case, s 4(6) had the effect that the 1906 Act was
applicable to the execution of the works by
the Borough under the 1897 Act as if
the 1906 Act had been in force when those works were performed. Thus, the
drainage works of
Appian Way including the main drain through No 13 were
governed by the 1906 Act as if those works had been installed by the newly
incorporated Council of the Municipality of Burwood in exercise of its powers
conferred by s 76 of that Act.
1919 Act: continuity of the
incorporated council
- The
Local Government Act 1919 (NSW)(rep) commenced on 1 January 1920. It
repealed the 1906 Act but made the following provision for
continuity:
7 The repeal of any Act by this Act shall not operate to break
the continuity of existence of a shire or municipality or of its
council
existing at the commencement of this Act.
8 (1) The repeal by this Act of any enactment shall not, as far
as relates to any previous or pending transaction or matter, affect
property
vested, acts and things validated or authorised, rights powers and protection
acquired, liabilities incurred, or indemnities
given by or under the repealed
enactment.
- The
1919 Act did nothing to disturb the status of the Council of the Municipality of
Burwood as a corporate entity. The following
provisions confirmed that
status:
22 (1) For the local government under this Act of each city
municipality and shire there shall be a council.
(2) The council shall he a body corporate, with perpetual succession and a
common seal, and may sue and be sued in its corporate
name; and shall, for the
purposes and subject to the provisions of this Act, be capable of purchasing
holding granting demising disposing
of and alienating real and personal
property, and of doing and suffering all such other acts and things as bodies
corporate may by
law do and suffer.
23 (1) Each city and municipal council shall consist of
aldermen elected by the electors (except where otherwise
provided).
1993 Act: from corporation of aldermen to body
politic
- From
the commencement of the Local Government Act 1993 on 1 July 1993,
s 219 has established a council for each local government area. Local
government areas are as proclaimed by the Governor pursuant to s 204(1). By
cl 21 of the transitional provisions in Sch 7 of the Act, an area
constituted as a municipality at 1 July 1993, such as the area
within the
boundaries of what was Burwood Municipality under the 1919 Act, is taken to be
constituted under s 204(1) of the 1993
Act.
- The
legal status of each council is provided for in the following section of the
1993 Act:
220 Legal status of a council
(1) A council is a body politic of the State with perpetual
succession and the legal capacity and powers of an individual, both
in and
outside the State.
(2) A council is not a body corporate (including a
corporation).
(3) A council does not have the status, privileges and
immunities of the Crown (including the State and the Government of the
State).
(4) A law of the State applies to and in respect of a council
in the same way as it applies to and in respect of a body corporate
(including a
corporation).
- Clause 22
of Sch 7 makes the following transitional provision:
22 Continuation of existing councils
A council constituted immediately before the commencement of Division 1 of Part
2 of Chapter 9 [in which ss 219 and 220 are located]
continues as that
council and is taken to be constituted under this Act.
- The
effect of enactment of the Local Government Act 1993 is that the body of
aldermen of Burwood Municipality that was an incorporated entity under the 1906
Act and that continued in existence
without interruption under ss 7 and 22
of the 1919 Act has maintained its continuity under the new Act. The entity has
changed its
status from that of incorporated body of aldermen to body politic
but there has been no change of identity and no dissolution of
the previous
entity or replacement of it by a new one. The present Council, the first
defendant in these proceedings, is the same
entity as the council of aldermen
that was incorporated under the 1906 Act and that was, in substance and effect,
deemed by that
Act to have carried out the drainage works that were executed by
its predecessor, the Borough of Burwood, in about
1904.
1989-2011: second defendant’s tenure of
No 13
- The
facts summarised under this heading are important to Issues 8-10 –
whether the second defendant’s answers to requisitions
in connection with
his 2011 sale to the plaintiff were erroneous or misleading and whether they
were given negligently. The facts
show that from late 2000 the second defendant
knew that the pipe existed. By 4 February 2003 he knew that Council claimed
ownership
of the pipe; that it was 100 years old and in a dilapidated condition;
that Council had issued a notification asserting its right
and intention to
enter the land to repair and maintain the pipe; that Council had resolved to
acquire an easement over the pipe and
that it had resolved to acquire at some
time in the future an easement on the western boundary of the property.
- The
facts related in the following paragraphs, particularly those concerning events
in the years 1996 to 2004, are also important
to one aspect of Issue 11;
namely, the question of what a hypothetical purchaser would have been willing to
pay for No 13 in 2011
if he or she was fully informed about the pipe and
Council’s rights over it. Council’s dealings with the second
defendant
during these years show that it was determined not to pay compensation
for a drainage easement near the western boundary of No 13,
to which the
pipe could be relocated from under the house. The dealings also show that
Council was markedly indecisive about rectifying
the inefficiency of stormwater
drainage from Appian Way through No 13 and resisted expending funds on
improving this infrastructure,
even in the face of firm, consistent hydraulic
engineering advice and repeated pleas from affected landholders over many years.
Council
failed to take action despite knowing that the drain through No 13
had only 11.5% of the capacity that would be required for 1 in
20 year rain
events – being Council’s own standard for piped stormwater capacity,
prescribed in the 1994 Stormwater Code
for construction on private land.
Awareness of Council’s chronically unsatisfactory record with respect to
the deficient pipe
would be significant to the price that a fully informed
hypothetical purchaser would have paid for the property in
2011.
Complaints of flooding to Council pre- and post- the second
defendant’s purchase
- Given
the continuity of the Council as a single legal entity under the successive Acts
considered above, I will refer to it as “Council”
in relation to all
relevant events irrespective of the date on which they occurred. In December
1969 Council approved construction
of a swimming pool at the rear of No 13,
pursuant to an application by the second defendant’s predecessor in title.
No condition
was imposed with respect to the pipe, such as any limitation on
depth of excavation or on siting of the pool relative to the line
of the pipe.
The pool was in place when the second defendant bought the land in 1989.
- In
September 1986 Council received a letter from the proprietor of No 15
Appian Way reporting that on four occasions during the preceding
15 years the
drainage of the street had proved “incapable of carrying storm water after
heavy rain”, resulting in overland
flows down the driveway of the
property. Other complaints from residents in 1984 and 1988 attributed these
flooding events to blockage
of drains by leaves and refuse.
- When
the second defendant purchased No 13 in 1989 a planning certificate dated 5
June 1989 was attached to the contract. It made no
mention of the existence of
the pipe, or of any rights asserted by Council with respect to it, or any
restrictions upon use or development
of the land by reason of the pipe, or the
incidence of overland stormwater flows through the property as a result of
inadequacy of
the pipe. On inspection of the property prior to purchase the
second defendant did not become aware of the pipe.
- Wyatt
Avenue runs more or less parallel to Appian Way, to the north of it. Six
townhouses are constructed on a single parcel that
is designated 10-12 Wyatt
Avenue. That property and No 13 Appian Way are back to back. The pipe
through No 13 terminates at a pit
in the back garden of the property, just
inside its rear boundary, which is the common boundary with 10-12 Wyatt Avenue.
Stormwater
is carried further to the north from the boundary pit, through 10-12
Wyatt Avenue. From time to time during the 1990s overland stormwater
flowed
through No 13 Appian Way as a result of inadequate capacity of the pipe,
causing flooding and damage at 10-12 Wyatt Avenue.
On 3 January 1996 the six
townhouses suffered heavy flooding as a result of such overflows during a severe
rainstorm.
- This
prompted the strata manager to write to Council’s General Manager on 6
March 1996 requesting that “the Appian Way
street drain [be] enlarged to
enable it to collect all water in a heavy rainstorm”. The General
Manager’s reply of 17
April 1996 included the
following:
It is understood that flooding was caused by overland flows in excess of the
capacity of the drainage system in Appian Way. ... It
is acknowledged that the
drainage system in Appian Way requires upgrading to Council’s current
standards for stormwater drainage.
A proposal for reconstruction has been
submitted to Council for consideration and inclusion in the drainage component
of Council’s
Management plan.
- Two
years went by without Council taking any action to rectify the acknowledged
deficiency. Other evidence in this case has shown
that Council’s
statements to residents who have been affected by Appian Way stormwater
overflows cannot be relied upon. The
Court has no acceptable evidence that in
1996 there actually was a proposal before Council for reconstruction of Appian
Way drainage
or, if there was, that Council considered it. In April 1998 the
proprietor of No 17 Appian Way reported to Council that the basement
level
of his house had been flooded by stormwater flowing down his driveway when the
drainage system for the street proved inadequate.
He reminded Council that this
had last occurred in January 1996, during the same rainstorm that had resulted
in stormwater damage
at 10-12 Wyatt Avenue. The proprietor of No 17 pointed
out that on that earlier occasion he had been told by Council that the rain
storm of January 1996 was a “1 in 100 year event”, an explanation
for the failure of the street drainage system that
he no longer accepted in view
of a recurrence after two years. Council’s response was to have an officer
attend No 17 and propose
ways in which the overland flows down the driveway
could be diverted around the house. Still nothing was done about the
acknowledged
inadequacy of the drain under No 13.
- Neglect
of the problem continued throughout 1998, 1999 and 2000. Although the inadequacy
of this system had been demonstrable from
residents’ reports of flooding
since 1972 and had been acknowledged by Council in early 1996, over the ensuing
period of nearly
five years Council did not identify which drain was causing the
problem. During that time Council’s engineering personnel did
not
ascertain that there was a critical main drain under No 13 and that it was
in a dilapidated condition.
- The
Chairman of the unit holders at 10-12 Wyatt Avenue wrote to Council’s
engineering department on 6 June 2000, in the following
terms:
It is agreed generally that the overland flooding to our property really begins
from an inadequate drain in the area of 13 and 15
Appian Way, which has not been
able to handle large quantities of water during deluges. Consequently, this
water overflows through
the driveway and garage at 13 Appian Way, builds up in
his backyard then overflows onto our properties.
We understand and hope it is true that a substantial sum of money is budgeted to
increase the Appian Way drain system and ask that
this be given highest priority
to be completed as soon as possible.
- Whatever
hope may have been held out to the Chairman in mid-2000 that Council would do
anything in the reasonably near future to enhance
the stormwater drainage of
Appian Way proved to be false.
January 2001: Council found that
the pipe had deteriorated
- In
about late 2000 and in January 2001 Council workmen attended a blocked drainage
pit on the south-western side of the small park
around which Appian Way
diverges. They observed that a storm water pipe ran north under the park towards
No 13. A camera inserted
through the pipe was used to produce a video
recording. This showed that the pipe passed directly under the house and
swimming pool
on No 13. That information was passed on to the second
defendant, as the then occupier of the property, at some time in late 2000.
It
was the first he knew of the pipe.
- The
results of Council’s investigation at this time are in evidence only
through Mr Wyatt’s report to Council of 11 June
2002. The report included
the following:
The detailed investigation revealed that the existing pipeline, which was
thought to have been located along the side boundary was
in fact located beneath
the existing house and swimming pool at number 13 Appian Way. Sidelines were
found to run through the front
yards of this and a number of adjacent
properties. A small section of pipeline appeared to be missing at the junction
of the sideline
with the mainline in the front yard of No 13 Appian Way.
The investigation of the interior of the pipe using closed circuit TV camera
showed that the pipe under the house has extensive longitudinal
cracking, tree
root infestation and a lost section under the front lawn of the property.
Unfortunately, the investigation was not
able to check the pipe joints so no
information is available regarding the amount of leakage through the joints.
Should there be
a lot of leakage it could lead to structural damage of the
house.
- The
“missing” or “lost” section of the pipe was not
associated with collapse of the internal diameter or blockage.
Water still
passed through. This must have depended upon the surrounding soil being
sufficiently compacted to maintain the opening.
- When
this information emerged in January 2001 it became manifest to Council that the
pipe was not only of proven inadequate diameter
and capacity, even for rainfall
events of a 2 year Average Return Incidence (“ARI”), but that it was
also unserviceable.
Council’s senior engineering officers considered the
solution to lie in acquiring a drainage easement, 2m wide, inside and
adjacent
to the western and northern boundaries of No 13 and extending for the full
length of those boundaries. The total area affected
would be 211m². On the
western boundary this easement would be located in the area of an existing
driveway, carport and garage
that lay to the west of the house. The officers
intended that a new storm water pipe of greater capacity would be installed on
this
proposed easement and that the existing pipe would be decommissioned. The
second defendant was first informed of this proposed solution
by a Council
engineer who was investigating the street drainage, at about the time when the
second defendant was told of the existence
of the pipe.
May
2001: commencement of negotiation for an easement
- It
would reasonably have been expected that Council would respond to the 2001
investigation results with a sense of urgency. However,
five months went by
before Council officers formally approached the second defendant for acquisition
of the proposed easement, at
a meeting on 25 May 2001. The second defendant said
he was agreeable to granting an easement if no viable alternative was available.
Mr Wyatt said that there was “no viable alternative”. The second
defendant said he would expect compensation for the
easement. He pointed out
that he had been unaware of any stormwater pipe when he purchased the property
and that there had been no
reference to any such pipe in the planning
certificate that had been issued by Council at that time. The General Manager
was present
at the meeting and said that he would have two valuations prepared
to determine the effect of the proposed easement on the value
of the property
and hence the appropriate level of compensation.
- On
8 June 2001 the General Manager advised the second defendant that a valuer had
been appointed. Council received a valuation from
Mr Dundas of Egan National
Valuers on 10 August 2001. Mr Dundas was of the view that the easement would
create a “blot on the
title” and would give rise to 4-6 weeks of
interference with enjoyment of the land while the new stormwater pipe was laid.
He also took into account that conditions of the easement would likely preclude
future construction of improvements over the area
affected. These detriments
were valued at $95,000.
- However,
Mr Dundas thought there would be considerable betterment to the property through
decommissioning of the old pipe. This involved
an assumption that it would be a
condition of the grant or resumption of the easement that the rights associated
with it would be
exercised by Council and that a new pipe would be laid and the
old one would cease to be used. Mr Dundas wrote:
[It] is considered the location of the existing pipe below the residence would
be of serious concern to any potential purchaser of
this property. It is my
opinion it would devalue the property by between $125,000 and
$150,000.
That range of figures constituted the measure of
betterment that would result from decommissioning of the pipe. It exceeded the
$95,000
assessment of detriments arising from the easement, leading Mr Dundas to
assess compensation at nil.
- Mr
Dundas’ report was not initially sent to the second defendant but a plan
of the proposed easement was forwarded to him under
cover of a letter of
13 September 2001 from Council’s General Manager, with no offer of
compensation. The letter included the
following:
The need to establish the proposed easement results from drainage infrastructure
works being carried out by Council in the vicinity
of [your] property.
The infrastructure works, amongst other things, are intended to improve the
drainage system for all properties in the vicinity of
this property. Clearly,
the carrying out of such works is desirable because they will benefit the
community generally.
[...] Council considers that the construction of a new drainage system within
the site of the proposed easement and the decommissioning
of the existing line
of pipes, which currently run directly under the swimming pool and residence,
will be beneficial to [your] property.
Naturally, Council will pay all costs and expenses associated with the
construction of the drainage system to be located within the
site of the
proposed easement and the decommissioning of the existing line of pipes. You
will not be required to contribute to those
costs and expenses.
Council is prepared to pay all your reasonable legal costs and expenses
associated with the creation of the proposed easement.
Please consider the Council’s proposal and let us know whether it is
commercially acceptable to you.
- On
21 September 2001 the second defendant replied, stating that he did not find
Council’s proposal commercially acceptable.
He complained of the lack of
detail of the works proposed and requested a further meeting. The second
defendant’s letter included
the following:
When I purchased this property I had no idea that there was a storm water pipe
under my house. It was only last year that Burwood
Council were working on the
street stormwater that one of your engineers approached me to discuss the
possibility. Searches were
then carried out to confirm this. It seems that even
your engineers were not certain of the whereabouts of those pipes. That engineer
then raised with me for the first time the possibility of me giving an easement.
Of course I am concerned about the pipe and the
possibility that it might burst
or leak.
[At the meeting on 25 May 2001] I further explained that I expected compensation
to be paid by Burwood Council to me for the granting
of [a new drainage
easement]. After all the presence of such a large storm water pipe on my
property will affect my property in a
very significant way.
- Shortly
after this letter was written the second defendant retained Mr Brady, a
certified practising valuer. In a report issued in
early November 2001 Mr Brady
assessed that Council’s proposed drainage easement would diminish the
value of the property by
$100,000. No offset was allowed for betterment from
de-commissioning the old pipe. The second defendant did not provide a copy of
this valuation to Council until a year later.
- By
February 2002 the lack of progress towards a negotiated agreement for Council to
acquire a drainage easement over No 13 was causing
deferral of other works.
Resurfacing of Appian Way was two years overdue. If an easement were to be
acquired and a new storm water
pipe installed on it, the pits at various
locations in the gutters would have to be relocated and new connecting lines
would have
to be laid. According to a memorandum from Mr Wyatt to one of the
Councillors dated 7 February 2002, resurfacing could not proceed
until the
reconfiguration of pits and drainage lines under Appian Way had been
completed.
March 2002: differences concerning Council’s
rights and “betterment”
- On
21 March 2002 Council’s General Manager together with Mr Wyatt and Mr
Cormican, the Engineering Manager, met with the second
defendant and his
solicitor, Mr Hones. Mr Hones said that he had a barrister’s advice on the
status of the pipe under No 13,
on the basis of which he considered
Council’s claimed rights over the pipe were “in some
jeopardy”. He therefore
disputed that compensation for the proposed
easement should assume betterment to the second defendant from decommissioning
the old
pipe. Council’s officers proposed that they would investigate the
history of the pipe and obtain their own legal advice. They
suggested that the
parties’ valuers should meet.
- Mr
Wyatt said that a new pipe would be laid within the proposed easement by thrust
boring so that the existing driveway, carport and
garage would remain
undisturbed. Mr Hones said that the new pipe should be laid at sufficient depth
to permit lowering of the driveway
and construction of a basement under the
existing residence, in case such development of the site should in future be
desired.
April 2002: Robinson GRC hydraulic study
- In
April 2002 Council received a report from Robinson GRC Consulting Pty Ltd
(Robinson GRC) on a hydraulic study that Council had
commissioned. The report
presented the results of drainage system modelling on almost all of the
stormwater drainage operated by
Council and by Sydney Water within the
municipality. A computer program was used to calculate stormwater flows in pipes
and channels
and to forecast the magnitude of overflows during major storms.
Probable maximum precipitation data from the Bureau of Meteorology
was utilised,
as well as records of storm patterns that enabled calculations to be made of
maximum run-off from the extensive impermeable
surfaces across the local
government area.
- Several
discrete catchments were identified, one of them being “Dobroyd
North”. From part of the Dobroyd of North area,
stormwater drains through
No 13 Appian Way. The report identified likely trouble spots where high
overflow rates and levels of ponded
water were likely to occur. Such locations
were identified by means of hydraulic calculations. The likely flows in excess
of system
capacity were quantified. In addition the consultants examined
Council’s files concerning drainage works and complaints. The
file for
Appian Way yielded the most complaints for the whole municipality, recorded in
the consultants’ report as follows:
October 1972 17 Appian Way – Flooding
November 1974 17 Appian Way – Flooding of garage
July 1988 16 Appian Way – Flooding
January 1996 10-12 Wyatt Avenue – Flooding; 17 Appian Way
– Garage and basement flooding
April 1998 17 Appian Way – Flooding
November 1998 13 and 15 Appian Way – Blocked pit
January 1999 15 Appian Way – Overflowing
drain
- Until
February 2015, when Council raised and levelled the footpath, the lowest point
along the combined frontages of Nos 13-17 Appian
Way was at the driveway of
No 17. When the capacity of the pipe through No 13 was exceeded
overland flows would initially proceed
down that route. If the excess over pipe
capacity was great enough there would be overland flows through Nos 13 and
15 as well.
- Robinson
GRC rated the severity of potential for flooding at the Appian Way trouble spot
as “significant”. The consultants
understood that the diameter of
the pipe was 450mm. Their report included the following:
In heavy storms the capacity of [the pipe under No 13] is inadequate and
the resulting surface flows can pass through Nos 13, 15
and 17 Appian Way
and properties in Wyatt Avenue to the north. [...]
[Works] are proposed by Burwood Council to reduce the drainage problems at
Appian Way. These include the provision of additional
pits and pipe work to more
effectively collect stormwater from the low point adjacent to No 13 Appian
Way. These [works] are limited
because of the difficulty of enlarging the 450mm
pipeline that runs through No 15 [sic] Appian Way. [...]
The current works will improve the flooding situation, but flooding is likely to
occur in future. Effective options would be: the
construction of a new pipeline
to Wyatt Avenue through private property; demolition or alteration of some
buildings and fences between
... Appian Way and Wyatt Avenue to provide a clear
flow path for overflows.
Both of these are difficult because of the existing buildings on the
lots.
- Table
6.2 in the Robinson GRC report set out the magnitude of overflows at
Nos 13-17 Appian Way that would result from the insufficient
capacity of
the pipe through No 13 to handle likely recurrent intensities of
precipitation. The table showed the overflow values
for various Average
Recurrence Intervals, as follows:
1 year
ARI 0.32
m3/sec
10 year
ARI 1.7
m3/sec
100 year
ARI 2.8
m3/sec
Potential Maximum Precipitation 12
m3/sec
April - June 2002: inconclusive negotiations for
acquisition of an easement
- In
response to matters raised by Mr Hones at the meeting with Council officers on
21 March 2002, Mr Wyatt wrote to the second defendant
on 24 April 2002. He
advised that on information available to Council it appeared likely the drain
under No 13 had been constructed
in connection with the roadworks of Appian
Way in “or around” 1905. Mr Wyatt said that Council had obtained its
own legal
advice. He quoted statutory provisions that he said gave Council
sufficient power to undertake work on the existing drain and/or
to improve the
drainage of Appian Way. He asserted that, regardless of the outcome of the
parties’ dispute about whether Council
had rights over the existing pipe,
the installation of a replacement on the proposed new easement would be
desirable for the relief
it would give from flooding of No 13. He
said:
This benefit is enough in itself to extinguish the bulk of the owner’s
claim for compensation payable in respect of the proposed
easement.
- Mr
Wyatt expressed Council’s preference for resolving the question of
compensation by negotiation “rather than seeking
a legal solution”
and he proposed that the parties’ valuers should meet. A meeting took
place between Messrs Dundas and
Brady on 23 May 2002. This achieved nothing
because the second defendant had not given Mr Brady authority to negotiate on
valuation
methodology or to release a copy of his own valuation report. Through
Mr Brady the second defendant maintained his stance, in reliance
upon legal
advice, that there was no benefit to him from decommissioning the old pipe
because Council had no rights over it.
- In
a letter dated 29 May 2002 Mr Hones offered on behalf of the second defendant to
accept compensation of $200,000 for the easement.
Needless to say Mr
Brady’s valuation at $100,000 had still not been provided to Council at
this time. In oral evidence the
second defendant denied that he had authorised
this offer but I do not accept that evidence. Mr Hones’ letter contains
detailed
additional proposed terms of an easement and these must have been the
subject of instruction. I find it improbable in the extreme
that the solicitor
would have made this offer without authority. Having observed the second
defendant in the witness box when he
gave evidence that the offer of $200,000
was unauthorised, I am satisfied that this was said not on the basis of any
genuine recollection
but in order to deflect embarrassment caused by the
cross-examination, in which it was suggested that his seeking $200,000 while
withholding a valuation for half of that sum was disingenuous.
- On
31 May 2002 Mr Wyatt wrote to Mr Hones to point out that, without a copy of Mr
Brady’s valuation, Council had no basis for
assessing the offer to accept
$200,000. He said:
If your client is not prepared to provide information necessary to resolve this
situation quickly, Council will consider commencing
proceedings for the
compulsory acquisition of the easement. If forced to go down this path, Council
will look for the most cost-effective
solution – including the acquisition
of an easement over the existing pipeline or abandoning the whole project. Given
the demands
on Council’s financial resources, it is unclear when or if the
project will again receive funding should Council resolve to
reallocate the
funds for the project.
- The
second defendant was difficult. The advice he said he was receiving was, in my
respectful opinion, wrong. But Mr Wyatt’s
letter disregarded
Council’s responsibilities to the owners of other affected properties. It
should not have been considered
open to Council to pressure the second defendant
by threatening to leave him – and, necessarily, the other owners –
to
suffer ongoing stormwater damage from the inadequate drainage
system.
June 2002: Council’s resolution
- Mr
Wyatt prepared a detailed report for consideration at a meeting of
Council’s Services and Policy Committee scheduled for
11 June 2002. His
report summarised the history of construction of the pipe under No 13, the
frequency of complaints from residents
of Nos 13-17 since 1984 and the
results of the investigation in January 2001 that had revealed deterioration of
the pipe. He referred
to the Robinson GRC study of the hydraulic capacity of the
pipe in “a variety of storm conditions”. Mr Wyatt identified
two
options. The first was to acquire an easement at the western boundary of No 13
and install a larger diameter pipe. The second
“significantly cheaper
solution” was to remediate the existing pipe and install a lining in it.
He said that neither
solution would completely eliminate overland flows during
heavy rainfall events but that such flows would be higher under the second,
cheaper option.
- Mr
Wyatt included in his report a summary of the failed attempts to negotiate with
the second defendant for acquisition of a western
boundary easement on agreed
terms. He said that continued negotiation was “unlikely to resolve the
issue in a reasonable time
frame with acceptable conditions”. Mr Wyatt
drew Council’s attention to the avenue of compulsory acquisition under the
Land Acquisition (Just Terms Compensation) Act 1991 (NSW). He also said
that, given the second defendant’s legal advice, Council would need to
establish its legal entitlement to
enter upon No 13 for the purpose of
refurbishing the existing pipe, if that option were adopted. Mr Wyatt
recommended that Council
move to acquire a western boundary easement
compulsorily if a last attempt at negotiation should prove unsuccessful. He
recommended
as follows:
That, should Council be unable to proceed with the relocation of the pipe in a
new easement, it should initiate action to gain access
to the property and
proceed to reline the pipe in its current location. (Future development of the
property should include the establishment
of an easement adjacent to the side
boundary for drainage purposes).
- On
11 June 2002 the Services and Policy Committee acting under delegated authority
from Council adopted a plan that did not follow
the first part of Mr
Wyatt’s recommendation. The Committee decided not to invoke the compulsory
acquisition process in respect
of a western boundary easement. The creation of
such an easement was postponed until it could be achieved as a condition of
future
development of the property. The only easement Council resolved to
acquire compulsorily was over the existing pipeline. The Committee’s
2002
resolution was as follows:
A That Council proceed to negotiate the creation of an easement
over the existing pipeline and then proceed to reline the existing
pipe in its
current location beneath the house.
B That, should Council be unable to gain consent from the
owner, it proceed with compulsory acquisition of an easement over the
existing
pipeline. (Future development of the property should include the establishment
of an easement adjacent to the side boundary
for drainage purposes).
C That the Acting General Manager and Council’s Solicitor
meet with the owner and his solicitor to advise them of Council’s
adopted
course of action.
- The
second defendant was informed of Council’s 2002 resolution by a letter to
Mr Hones dated 14 June. Mr Hones replied on 3
July 2002 with an invitation to
Council to make an “offer of what sum is thought appropriate to acquire
the easement as proposed”.
July - November 2002:
negotiations and impasse regarding Council’s rights
- On
12 July 2002 a meeting was held between Mr Wyatt and Mr Cormican, representing
Council, and the second defendant. The second defendant
said he wished to reopen
negotiations for compensation for the proposed western boundary easement, that
Mr Wyatt had said was abandoned
by Council due to “inability to obtain
details of your valuations”. The second defendant said he was now willing
to exchange
valuations, preliminary to further negotiations. Mr Wyatt said there
was no basis for further negotiations but the matter could be
taken back to
Council for reconsideration of its 2002 resolution if additional information
from the second defendant provided justification
for this.
- As
earlier mentioned, ss 59A and 191A of the Local Government Act 1993
(see [13]-[15] above) came into force
on 1 August 2002. By 8 August 2002 there had been no material development
between Council and the second
defendant. On that date Mr Wyatt wrote to the
second defendant as follows:
As almost a month has passed and Council has received no information, it would
appear that you have reconsidered this matter and
decided against the proposed
course of action. I therefore wish to inform you that I am proceeding to
implement Council’s resolution,
details of which were covered in
Council’s letter dated 14 June 2002 to [Mr Hones].
- On
about 8 October 2002 Council’s solicitors drew to Mr Hones’
attention the enactment of the new sections and provided
him with an extract of
the agreement of 25 August 1903 between Mr Hoskins and the Borough of Burwood.
Council’s solicitors
clearly considered that the amendments to the
Local Government Act 1993 strengthened Council’s rights over the
existing pipe and reinforced the argument that, if the pipe were decommissioned
in conjunction
with the grant of a new easement, there would be a betterment to
the property and this would offset the second defendant’s
claim to
compensation.
- On
10 October 2002 Mr Hones sent to Council’s solicitors a copy of Mr
Brady’s valuation that had been prepared in November
2001. With reference
to the question whether the pipe had been “installed [on the land] by
Council”, within the meaning
of s 59A, Mr Hones wrote as
follows:
We are unaware of and to date we have seen no evidence that Council in fact
installed stormwater drainage pipes. If in fact the Council
did install the
drainage pipes, then we would have expected Council to have notified our client
of its ownership of those pipes in
the Section 149 Certificate presented to
our client when he purchased the property. Obviously had our client known of the
existence
of the pipes at the time of his purchase then the purchase price would
have been adjusted accordingly. Our client was not granted
that opportunity.
[...] Obviously the existing pipe is totally inadequate to carry the volume of
water which may flow from Appian Way and the suggestion
that this smaller pipe
may be upgraded but of the same diameter is totally
inappropriate.
The letter concluded with a request that Council
make an offer of compensation for a western boundary easement.
- In
a further report to Council dated 10 October 2002 Mr Wyatt stated that the delay
up to this point in implementation of Council’s
resolution of 11 June had
been:
intended as a final attempt to avoid the legal action which is likely to follow
if Council seeks to force entry to undertake the
work. While Council’s
legal position appears to be sound, the owner has indicated that it will be
challenged in court if it
proceeds.
- On
31 October 2002 Mr Hones informed Council’s solicitors that he had an
opinion from senior counsel to the effect that ss 59A and 191A of the
Local Government Act 1993 had not been shown to be applicable because it
had not been proved that the Borough of Burwood “actually paid for and
constructed
the drain”, nor that the pipe through No 13 was the
“main drain” referred to in the 1903 agreement with Mr Hoskins.
The
second defendant therefore maintained his position that Council was presently
without rights over the pipe and that there would
be no betterment from
decommissioning it and installing a new drain adjacent to the western boundary.
He asked whether Council would
agree to pay the $100,000 that Mr Brady had
assessed as compensation for the easement
- On
26 November 2002 Mr Hones wrote to Council’s solicitors a detailed letter
disputing the right of Council to come on to the
second defendant’s land
to refurbish or maintain the pipe and stating that the second defendant would be
entitled to compensation
if this should occur. Mr Hones
said:
Our client’s greatest concern is that at no time was he aware by the
exercise of normal care and enquiry that an easement existed
or that a pipe
existed through his land under his house. If Council were to exercise a right to
enter to reinstate the pipe or to
maintain the pipe our client will suffer a
loss arising out of what is tantamount to rights similar to those which would be
vested
by an easement and there is the attendant loss in value to our
client’s land as a result of an exercise of such a right by
the
Authority.
December 2002 - March 2003: Council’s
notifications of entry to repair the pipe
- Council
responded on 12 December 2002 with two letters. The first was in these
terms:
As previously advised Council has resolved to carry out maintenance of the
drainage pipeline which passes through your property.
Council intends to reline
the pipe and undertake maintenance of the pipeline.
Council will carry out this work pursuant to section 94 of the Roads Act
1993 which enables Council, as roads authority for Appian Way, to carry out
drainage work for the purposes of draining a public road.
There
followed advice that the second defendant would be notified of the date and time
of proposed entry, first for the purpose of
inspection and subsequently to carry
out the requisite work.
- The
second letter of 12 December 2002 was in the nature of formal statutory notice,
headed as follows:
Notice of Entry to Carry out Drainage Work to 13 Appian Way, Burwood (Lot 33 DP
12249)
This letter again stated that the power of entry would be
for the purpose of carrying out Council’s function under s 94 of the
Roads Act 1993. It included a paraphrase of sections of the Local
Government Act 1993 and s 118B of the Environmental Planning and
Assessment Act, to explain the extent of Council’s asserted powers. Mr
Hones responded on 27 December 2002 reiterating the second defendant’s
denial of any right of entry and his claim for compensation if work should be
undertaken on his land.
- At
some time in late December 2002 or early January 2003 Mr Hones offered on behalf
of the second defendant to accept $70,000 for
the acquisition of the proposed
new easement. Council might have taken a conciliatory approach to compensation
in light of the valid
points that had been made by Mr Hones on 10 October and 26
November 2002 (see [102]
and [105] above). But it
did not. By letter of 14 January 2003 Council’s solicitors rejected the
offer to accept $70,000 and a recent
offer from Council of $15,000 was withdrawn
on the grounds of increased legal costs incurred after that offer had been made.
Mr Hones
was informed that Council intended to act on its 2002 resolution but
that fresh notices, in place of those dated 12 December 2002,
would be issued.
- By
14 January 2003 Council had arranged for a contractor to inspect the pipe, so
far as he could, from pits on Appian Way and to provide
a price for relining the
pipe with UV cured fibreglass. On 4 February 2003 fresh notices were issued
to the second defendant under
s 94 of the Roads Act 1993, in
substantially the same terms as the notices of 12 December 2002. It was advised
that Council would enter No 13 for the purpose
of inspection on
17 February 2003 and would again enter for the purpose of carrying out pipe
refurbishment work between 3 and 7 March
2003. The second defendant wrote
to the Mayor on 7 February 2003 protesting Council’s proposal to
maintain the old pipe and
requesting mediation of the issue of compensation for
a new easement. The Mayor replied on 14 February 2003, concluding as
follows:
I therefore confirm that Council will act pursuant to the notices issued to you
on 4 February 2003.
- At
this time the estimated cost of the relining work was $60,000 and further works
at a cost of $125,000 would have to be done on
the inlets and other connections
in the street. The alternative of constructing a new pipe within a western
boundary easement had
not been designed in detail but its cost was estimated at
$210,000. This would also require additional work in the street for altered
connections. Any compensation payable to the second defendant for acquisition of
the easement would be additional.
February 2003: Council deferred
its remediation work on the pipe
- By
20 February 2003 the second defendant had instructed Mr Hones to seek an
injunction to restrain Council if it should attempt to
undertake work on
No 13 in connection with the existing pipe. Mr Wyatt discussed the matter
with the second defendant on that day
and agreed that Council “would not
proceed with its works at this time” and would investigate alternatives to
the current
proposal. The second defendant’s position was confirmed in a
letter sent by Mr Hones to Council the next day, concluding as
follows:
Would you kindly confirm as a matter of urgency that you will not [proceed] with
the works on 3 March [2003] as notified by you to
our client. In the event
that you do not so confirm, we are instructed by our client to seek an
injunction to restrain Council from
undertaking these unauthorised
works.
- At
first impression it would seem contrary to the second defendant’s
interests to have refused access to his land for the repair
and relining of the
failing storm water drain under his house. The only available inference, which I
draw, is that the second defendant’s
opposition was a tactic to force
Council to resume negotiations for the acquisition of a western boundary
easement and for the payment
of substantial compensation. The tactic did not
achieve its objective. It led to the worst possible outcome for the second
defendant
and for the proprietors of all properties that lay in the path of
stormwater flooding from Appian Way. Council did not resume negotiations
to
acquire an easement but did allow itself to be deterred from exercising its
undoubted statutory powers to enter the second defendant’s
property and
remediate the pipe.
- In
a letter to the second defendant dated 5 March 2003 the General Manager
said this:
Council’s position remains that no further rights or easements are
required to undertake maintenance of the existing pipe and
that no net
compensation is payable in respect of any new pipeline on the side of your
property.
The General Manager referred to the second
defendant’s position that Council could not perform work on the existing
pipe in
the absence of an easement over it and that he would be entitled to net
compensation for a western boundary easement. The General
Manager’s letter
continued:
Given this impasse Council has agreed to defer the proposed drainage works
through your property until this matter could be resolved.
This includes the
proposal to replace the missing section of pipeline under the front section of
your property.
- The
General Manager’s letter stated that Council would investigate the
possibility of acquiring an easement down the eastern
side of No 13,
possibly with half of its width located on the adjoining property, No 11.
The letter also stated that Council would
examine minimally intrusive techniques
for constructing a pipe in the proposed easement on the western boundary of
No 13. The letter
concluded in these terms:
Council has agreed not to enter your property in accordance with the notice
issued, and will formally notify you should it wish to
proceed in this manner at
some time in the future. No other formal response is required from you in
relation to the current notice.
- On
21 March 2003 Mr Wyatt reported to the Mayor, General Manager and
Councillors on the meeting with the second defendant of 20 February
2003.
He said:
As a result of the meeting it was agreed that Council would not proceed with the
maintenance work as advised and it would investigate
the possibility of
relocating the pipeline in an adjacent property. The owner was advised that the
funds which had been allocated
for the project would be reallocated to other
projects and that future funding of this project would need to be considered in
conjunction
with other projects in future capital works
programs.
- There
was no further communication between the parties until 16 December 2003,
when the second defendant wrote to the General Manager
to enquire whether the
possibilities referred to in the letter of 5 March 2003 had been examined.
Mr Cormican replied on 21 January
2004 that Council had not yet
investigated those alternatives. On 15 March 2004 Mr Cormican informed the
second defendant that provision
for capital works in Appian Way had been made in
a draft Council budget for the forthcoming financial year. In the event, the
only
further works executed, probably in 2005, were the reconfiguration of
drainage inlets and feeder pipes within the street and the
placement of the
large junction pit below the gutter close to No 13, as referred to at the
commencement of these reasons and described
further below.
- In
summary, from March 2003 Council shelved and ignored the need for improved
stormwater drainage infrastructure at Appian Way. The
impasse with the second
defendant concerning compensation for a western boundary easement could readily
have been submitted to just
resolution according to law, by commencing a
compulsory acquisition process that would have given the second defendant
standing to
seek a determination of the value of a resumed easement in the Land
and Environment Court. The impasse concerning interim access
to No 13 could
readily have been resolved by application to this Court for a declaration of
Council’s s 59A rights. Council
chose to do nothing, leaving the
second defendant and his neighbours to the certainty of future
flooding.
June 2004: second defendant’s development
application
- On
18 June 2004 Council consented to a development application by the second
defendant for a patio 3m wide across the rear of the
residence at No 13 in
place of the existing patio, 1.5m wide. The development included construction of
a skillion roof over the new
patio, by extension of the existing roof line of
the house. The consent was granted upon conditions but these did not include
that
a western boundary easement be established and Council did not raise its
requirement of such an easement at this time.
October 2004: Brown
Consulting (NSW) Pty Ltd updated hydraulic study
- In
October 2004 Brown Consulting (NSW) Pty Ltd reported on a review that Council
had asked the firm to make of the 2002 Robinson GRC
hydraulic study of the
municipality. Revised calculations showed an increase in projected overland
stormwater flows from Appian Way
through private property towards Wyatt Street,
representing excess surface flows beyond the capacity of the pipe through
No 13. The
increase in the projections was attributed to changes to the
computer program used for the forecasts and alterations within the catchment,
such as the percentage of impervious surfaces. The new projections of overflows
were as follows:
1 year
ARI 0.6
m3/sec
10 year
ARI 2.0
m3/sec
100 year
ARI 3.0
m3/sec
Potential Maximum Precipitation 12.3 m3/sec
For
comparison, the results reported by Robinson GRC are summarised at [89] above. For 1 year ARI
rainstorms the forecast excess over the capacity of the pipe had increased
100%.
May 2005: Webb McKeown concepts and costings for Appian Way
drainage
- In
December 2004 Council briefed Webb McKeown and Associates Pty Ltd to undertake
technical investigations and detailed design for
a range of alternatives to
resolve the inadequate stormwater drainage of Appian Way. The design brief
informed Webb McKeown of the
deterioration, partial obstruction and inadequate
diameter/capacity of the pipe running through No 13. Nothing had been done
to remediate
the deterioration of the drain since its condition had been
surveyed by CCTV camera in January 2001.
- Webb
McKeown’s draft report, furnished in May 2005, noted that Council’s
1994 Stormwater Code specified a 20 year ARI
standard for piped systems in
residential areas and suitable treatment of all surface flows to a 100 year ARI
standard. The Robinson
GRC report of 2002 and the Brown Consulting (NSW) Pty Ltd
update of October 2004 had shown that the pipe through No 13 did not
satisfy
even a 1 year ARI standard. Webb McKeown stated that for a 20 year ARI
the pipe through No 13 was under capacity by 2.3m³/sec,
which would be
the magnitude of the resultant overland flow through Nos 13-17.
- The
hydrological calculations by all consultants were made on the assumption of a
450mm diameter pipe in serviceable condition. Webb
McKeown advised Council as
follows:
The results indicate that the existing drainage system has less than a 1 year
ARI capacity. Analysis of the [computer model] results
also indicated that the
drainage system capacity is limited by insufficient pipe capacity through
No 13 Appian Way as well as insufficient
pipe and surface inlet capacities
in Appian Way itself. Hence, to upgrade the drainage system to Council standard
would require improvements
to the system within Appian Way as well as the
pipeline connecting through to Wyatt Avenue.
It should be further noted that given the poor condition of the pipeline
traversing No 13 Appian Way the capacity of the existing
drainage system
may even be less than that indicated from the results of the [computer
modelling].
- It
is common ground between the parties to the present proceedings that the
diameter of the pipe is only 400mm. It therefore has a
cross-sectional area that
is only 79% of the cross-sectional area implicitly assumed in the
engineers’ calculations. It follows
that the under-capacity of the pipe
through No 13 was even more severe than the engineers believed.
- The
Webb McKeown report considered four alternative concepts for upgrading Appian
Way stormwater drainage. Advantages and disadvantages
of each were considered
and cost estimates were given. Concept 1 was as
follows:
A structural liner would be inserted into the existing pipeline and the missing
section of pipe in the front yard of No 13 Appian
Way would be replaced. In
conjunction the street drainage system upstream would be upgraded to divert the
street drainage into pipes
fully contained within the road reserve as compared
to the existing arrangement which runs through private
properties.
- An
attached diagram showed that under Concept 1 the sidelines feeding the pipe
and connecting with it in the front yard of No 13 would
be decommissioned.
Seven new surface grated inlets would be installed in the gutters of Appian Way
within a radius of 70m from the
front boundary of No 13. Pipes from these
would lead to a large new junction pit to be constructed under the gutter in
front of No
13. The pipe running under No 13 would connect at the
bottom of this pit and would thus receive all of the surface water flowing
into
the new system of inlets and feeder pipes. The cost was estimated as
follows:
New pits and feeder lines on Appian Way $105,000
Re-lining the main pipe $95,000
Total $200,000
- The
benefits of Concept 1 were said to include that, if all components were
executed, the flows through the refurbished pipe could
be increased from
0.3m³/sec to 0.5m³/sec. This would still be less than the 0.9
m³/sec capacity that would be required
to handle 1 year ARI storm water
run-off wholly within the pipe. Webb McKeown warned of the following
deficiencies of the Concept:
[The] capacity of the pipeline traversing No 13 Appian Way would not be
increased. Hence there would be only marginal increase in
the performance of the
overall drainage system. The capacity of the drainage system under this option
is still estimated to be less
than 1 year ARI. Overflows through several private
properties would still be quite high in major storms; the estimated overflow
through
the properties would be 2.1 m3/sec and 2.7 m3/sec during the 20 year and
100 year ARI storms respectively. Furthermore, this option
does not provide for
an overland flow path for flows in excess of the piped system capacity.
In the longer term, this option is undesirable as the pipeline would still be
located beneath the house and swimming pool. This could
affect the future
redevelopment potential of the property and access to the pipeline would be
difficult if required for future maintenance
or upgrading.
- Webb
McKeown’s Concept 3 is the only other concept that need be considered
for present purposes. It involved acquisition of
an easement over No 13
adjacent to the western boundary and installation of a new 900mm pipe within
that easement. The consultants
said this would be necessary to achieve
Council’s standard of 20 year ARI pipe capacity. Extensive works would be
required
on Appian Way to redirect stormwater from inlets in the gutters to a
junction pit approximately in line with the western boundary.
An increase in
capacity of the downstream stormwater pipe running through 10-12 Wyatt Avenue
would also be required. The existing
pipe through that property was 750mm in
diameter and an additional pipe would have to be laid alongside it to avoid
surcharging at
the point of connection from the proposed new 900mm pipe through
No 13.
- Webb
McKeown recommended that the existing carport and garage on No 13 be
removed and that the proposed easement should include terms
that would prevent
future construction on this area, so that any overland flows experienced in
rainstorms more severe than 20 year
ARI events could pass over the easement
toward the rear of the property. The consultants’ cost estimate was broken
down as
follows, not including any compensation payable for resumption of the
proposed easement:
900mm pipe through
No 13 $250,000
Upstream drainage work on Appian
Way $330,000
Downstream augmentation of pipe to Wyatt
Avenue $155,000
Total $735,000
May
2005: reconfigured street drainage junction pit in front of No 13
- Council
proceeded with only the drainage work on Appian Way that formed one component of
Webb McKeown’s Concept 1. Several new
inlet pits and feeder lines
were installed in the road reserve, all discharging into a large junction pit
constructed beneath the
gutter directly in front of No 13. The junction pit
had to be built to a depth of about 3m in order to connect with the pipe running
under the surface of No 13. The front yard of the property was about 1.5m
below street level and the pipe through the yard was buried
below that. I infer
that this work was executed shortly after May 2005, having regard to the date of
Webb McKeown’s report.
The second defendant said he thought the work was
done in 2004 but he was uncertain.
- The
second defendant was aware of the junction pit being constructed near the front
boundary of No 13. However there is no evidence
that Council explained to
him, or that he otherwise appreciated, that all street drainage inlets and pipes
were directed to this
pit. The second defendant deposed that over the 22 years
of his occupancy of the property, from 1989 to 2011, he “did not
experience
any major flooding problems” and his land “had never been
seriously affected by flooding”. He said that during
torrential rain,
water would on occasions flow down his driveway and exceed the capacity of a
U-profile surface drain that was laid,
transversely, at the carport entrance.
When that occurred the water would be diverted into the adjoining property,
No 15. The second
defendant said that, of the occasions when storm water
flowed through to his garage behind the carport, the deepest he ever saw it
was
about 15mm. In the second defendant’s experience, stormwater flows through
No 13 were “almost always” as a
result of heavy rain falling
directly on his own land, rather than overflow from the surface of Appian Way.
He was aware that surface
run-off from Appian Way flowed through
No 15.
- So
far as the evidence shows, after March 2004 and for the balance of the second
defendant’s tenure of No 13 up to August 2011,
there was no further
communication between Council and the second defendant on the subject of
stormwater drainage.
2011: second defendant’s sale of
No 13 to the plaintiff
August 2010: obtaining the planning certificate
- In
August 2010 the second defendant contacted a real estate agent to market the
property and submit it to auction. The agent requested
that a contract of sale
be prepared. On 6 August 2010 the second defendant completed and lodged
with Council an application for a
planning certificate pursuant to s 149 of
the Environmental Planning and Assessment Act. He knew that such a
certificate would have to be attached to the contract.
- Council’s
application form offered a choice of certificates, as
follows:
Section 149(2) Certificate ... $40.00
Section 149(2) Certificate + 149(5) Certificate
... $100.00
The second defendant checked the box
for the second of these alternatives and paid the fee of $100. He did not
specify on the application
form any subject matter in respect of which he
required information to be disclosed pursuant to s 149(5). On 9 August 2010
Council
issued a certificate. It made no reference to the pipe, or
Council’s statutory rights over it, or any restriction upon development
of
the land by reason of the presence of the pipe. The certificate did not mention
Council’s 2002 resolution or its notices
to the second defendant of 4
February 2003 regarding its intention to enter and repair the pipe.
- In
mid-August 2010 the second defendant attended upon the cross-defendant, Mr
Lukas, and instructed him to prepare a contract of sale.
The second defendant
provided the planning certificate to Mr Lukas and a contract was prepared with
the certificate incorporated.
Mr Lukas sent the contract to the real estate
sales agent on 10 September 2010. The property went to auction on
23 October 2010 but
was passed in. In early March 2011 the plaintiff and
second defendant agreed upon a price of $3 million. By letter of 15 March
2011
from the plaintiff’s solicitor to Mr Lukas modifications to the
special conditions of the contract were proposed. The plaintiff’s
solicitor also sought eight items of information prior to exchange. The fifth of
these, so far as presently relevant was as follows:
5 Is the vendor aware of the following:
[...] Any outstanding notices affecting the land which
have been issued under the Local Government Act and/or under the
Environmental Planning and Assessment Act 1979.
- On
15 March 2011 Mr Lukas took instructions from the second defendant by phone
as to how this letter should be answered. He recorded
in a file note the
instructions given, which included that the answer to question 5 was,
“No”. Mr Lukas replied to the
plaintiff’s solicitor’s
letter of 15 March 2011 by email late on the same afternoon. All eight of
the plaintiff’s
requests for information before exchange were answered in
accordance with the second defendant’s instructions. For reasons
that will
appear, the answer “No” to question 5 was incorrect. However,
the plaintiff has not pleaded any cause of action
upon that statement.
- Counterparts
of the contract were exchanged on 17 March 2011. Standard condition 5
provided for the purchaser to raise requisitions.
Special condition 10 was in
these terms:
10 The Purchaser acknowledges that the only form of general
requisitions on title that the Purchaser shall be entitled to raise
pursuant to
Clause 5 shall be in the form of Requisitions on Title annexed and are
deemed to be served at the date of this Contract.
- A
set of requisitions was annexed to the contract, as envisaged in special
condition 10. Under cover of a letter of 14 July 2011 the
plaintiff’s solicitor requested answers to those requisitions. In a
telephone conversation on 28 July 2011 Mr Lukas took instructions
from the
second defendant as to the answers to be given. The evidence concerning those
instructions will be considered in detail
below, in connection with the second
defendant’s cross-claim against Mr Lukas. By 11 August 2011 Mr Lukas
had not sent the
answers to the plaintiff’s solicitor and at 9:19am that
day the plaintiff’s solicitor sent a reminder by email. On the
basis of
the instructions given by the second defendant on 28 July, Mr Lukas
completed the answers in handwriting and sent them to
the plaintiff’s
solicitor at 3:53pm on 11 August. The sale was settled the next day and the
plaintiff and her family took possession.
- The
second defendant purchased No 16A Appian Way, on the slightly higher
southern side of the street. He has resided there since
2011.
2011-2015: flooding of No 13, repair of the pipe,
raising the footpath
- The
facts considered in the following paragraphs establish the extent of flooding of
the plaintiff’s property by stormwater
from Appian Way between
7 November 2011 and 11 October 2012. These facts also support findings
that the cause of the flooding was
blockage of Council’s pipe under
No 13; that Council’s long delay, until mid-July 2013, in rectifying
this blockage was
the product of its own indecision and inaction; that the
plaintiff did not deny Council access to her land to repair the pipe and
that
she does not bear any responsibility for the flooding. All of these findings are
relevant to issues 16 and 17 concerning the
plaintiff’s cause of action in
nuisance.
- During
heavy rain on 7 November 2011 stormwater accumulated in the junction pit
outside No 13 and overflowed to form a large pond
at the gutter. The pond
extended across the frontages of Nos 13-17. The water was unable to escape
through the pipe under No 13.
It continued to accumulate and then
overflowed down the plaintiff’s driveway. The driveway led to a carport
with a vertically
retractable panel door. The a U-profile surface drain across
the driveway at the foot of the carport door, previously referred to
at [130], had an outlet pipe
that was designed to allow water to escape to the rear yard. The flow was too
great for the surface drain and
its outlet. Water therefore entered the carport
and the garage behind it, flooding the latter to a depth of approximately 400mm.
A number of the plaintiff’s personal possessions stored in the garage were
damaged beyond repair, including electrical items.
The water escaped through the
rear of the garage to the lawn and pool surrounds behind the house. These areas
were inundated.
- The
plaintiff notified Council of the accumulation of water on Appian Way and of the
flooding of her property. A Council employee
who attended on 8 November
2011 and another whom the plaintiff contacted on 11 November attributed the
problem to leaves in the gutters
and inlet pits of the street, which was, in
fact, not the problem.
- Overnight
on 22-23 November 2011 there was a second flooding of No 13, very
similar to the first. No further damage to personal property
occurred but a
large volume of fast flowing stormwater surged through the plaintiff’s
carport and garage onto the rear lawn
and pool area. During 23 November
2011 Council employees installed a pump at the junction pit in front of
No 13, with a 150mm diameter
flexible discharge hose that they laid down
the driveway, through the carport and across the back lawn to a point near the
rear boundary
pit. This was effective to move water from the large pond at the
kerb of Appian Way to the rear of the property, bypassing the house,
carport and
garage. However the discharge into the back garden thoroughly flooded it and
eroded the rear lawn. The stormwater carried
wastepaper and effluent and had an
offensive smell. Its residue, after pumping stopped, left the back garden
polluted, waterlogged
and unusable for many days.
- Council’s
Civil Construction and Maintenance Coordinator, Mr Jamal Aslan, realised that
the cause of the junction pit overflowing
and flooding the street and adjacent
properties must have been a failure of the pipe under No 13. On
24 November 2011 he sent an
email to Mr Bruce Macdonnell, who had taken
over as General Manager at some time after Council’s earlier dealings with
the
second defendant. The email included the following:
An investigation into the damaged pipe is ongoing and will resume once rain
stops and water in the pipe recedes. Contractors [...]
will be engaged again on
29/11/11 (weather permitting) to carry out CCTV camera recording of pipe damage
[...].
Once pipe damage is located and assessed we can schedule and commence urgent
repairs provided we have access to site and the location
of damage. [...].
Future blockage and flooding is highly likely even after pipe is repaired in
view of the large catchment area discharging into this
under-capacity small
diameter terracotta pipe.
- The
plaintiff’s property was flooded for a third time on 26-27 November
2011 because one of the hoses of the bypass pump became
blocked. That was the
explanation given to the plaintiff by a Council employee who attended the
property at the time. The delivery
hose was repositioned by Council’s
employee in response to a neighbour’s complaint about the noise of the
outlet jet
striking a boundary fence. After it had been moved the hose
discharged water at high velocity more directly onto the plaintiff’s
lawn
and tore up sections of it.
- On
7 December 2011 the General Manager and two other Council representatives
met with the plaintiff and her husband at the property.
The General Manager
informed the plaintiff that there was a storm water pipe under her land and that
it had “collapsed”.
This was the plaintiff’s first knowledge
of the existence of the pipe. The General Manager erroneously told her that it
ran
under the driveway. He said:
Council has an easement over the pipe.
That was also wrong,
although Council’s statutory rights were as much an encumbrance as an
easement would have been. In answer
to the plaintiff’s question whether
she would be able to make an extension at the back of the house the General
Manager said:
You won’t be able to do that on this property. The pipe won’t be far
enough beneath the surface.
The plaintiff’s question
whether the pipe could be lowered was met with this response:
No, and as you know the property is also affected by flooding which is another
reason why you will not be able to [make an extension
at the
rear].
- Council
did not call Mr Macdonnell and the plaintiff was not cross-examined to challenge
her recollection of the above conversation.
One of the Council representatives
present at this meeting said that it was proposed to investigate the pipe with a
CCTV camera.
It was agreed that this would not commence until after
20 January 2012 as the plaintiff and her family would be away from the
property
in the meantime. She was provided with a diagram purporting to show
that the pipe ran under her driveway but a representative of
Council informed
her some time later that the pipe actually passed directly under the house and
swimming pool and that the diagram
shown to her on 7 December was an
illustration of where Council wished to acquire an easement and install a
replacement pipe. The
plaintiff’s affidavit contains the unsurprising and
readily believable statement that, as a result of the confused and contradictory
information provided to her, she “lost all confidence in Council and what
its representatives were telling me”.
- No 13
was flooded for a fourth time on 11-12 December 2011. The mode of flooding
was the same on each occasion, namely, stormwater
backed up in the junction pit,
overflowed and formed a pond at the northern gutter of Appian Way and then
streamed down the plaintiff’s
driveway, through her carport and garage and
across her rear garden and lawn. Council’s bypass pump had to be manually
started.
Despite heavy rain on 11-12 December, no one from Council attended
in a timely fashion to throw the switch. It was necessary for
the plaintiff to
maintain a careful eye on the weather and on the level of water in the pit and
to phone Council to request that
a staff member attend to operate the pump. The
plaintiff’s phone records show numerous calls to the Council that she says
were
for this purpose.
- The
combined effect of flooding up to this time caused a section of a sandstone
retaining wall adjacent to the plaintiff’s swimming
pool to collapse on
12 December 2011. Dirty, polluted water and debris flowed into the pool on
more than one of the first four occasions
of flooding. It became unusable until
the water could be changed.
- On
12 December 2011 the plaintiff sought advice from Mr Pomare, solicitor.
While the plaintiff was present in Mr Pomare’s office,
he phoned the
General Manager. He asserted that Council had no easement over the land and no
right to pump water through it. He demanded
that the pumping cease. The General
Manager recorded his response, in an email of the same date, as
follows:
I further explained that [removing the pump and discharge hose] was not possible
as this would have been the overland flow path for
water even before
development.
- This
was incorrect. The contour plan referred to at [43] above shows that the pre-development overland flow
path would have been across only the rear one third of No 13. The General
Manager
was thoroughly uninformed about Appian Way drainage infrastructure and
its deficiencies. He did not allow his ignorance of the facts
to inhibit him
from asserting Council’s entitlements and endeavouring to make Appian Way
stormwater someone else’s problem;
namely, the plaintiff’s.
- The
General Manager considered Mr Pomare aggressive in the phone conversation on
12 December 2011 and hung up. Mr Pomare sent a letter
the same day by
facsimile. He wrote that the discharge of water by the pump was
“considered a trespass and a nuisance”
and he threatened that the
plaintiff would apply for an injunction if pumping should continue. Mr Pomare
noted that there was no
drainage easement over the land. He made the following
request for further information:
On the general issue of the stormwater pipes, please provide details as to the
nature of any stormwater pipes located on our client’s
property and the
basis upon which you allege that you have any entitlement to retain same on our
client’s property.
- Council’s
solicitors replied on 13 December 2011. Their letter included the
following:
[Our] client has an entitlement to retain stormwater pipes on your
client’s property without easement pursuant to s 59A of the Local
Government Act 1993 (“LGA”). This section was proclaimed to
commence on 1 August 2002. In that regard we refer you to the decision of
[...]
Young CJ [in Eq] in Bonaccorso v Strathfield Municipal Council
[2003] NSWSC 408.
The LGA, being a public statute, overrides the private rights of your client
under the Real Property Act 1900.
Further, our client has the power to undertake necessary works and
investigations pursuant to s 191A of the LGA.
- Notwithstanding
Council’s claim of statutory rights, from 13 December 2011 it ceased
to pump water from the junction pit into
the plaintiff’s rear garden and
instead ran the discharge hose north-west and slightly uphill along Appian Way
to a stormwater
pit in Burwood Road.
- The
property was flooded for a fifth time during the plaintiff’s absence
between 9 and 20 January 2012. This was evident on
her return from the
presence of sand, dirt, leaves and other debris in the garage and backyard. A
sixth flooding took place on 25
January 2012. The pump, now discharging to
Burwood Road, still had to be activated manually and evidently Council staff did
not attend
promptly enough for this purpose.
- On
25 January 2012 Council’s contractor, Mr Allen Pickup trading as All
About Pipes, attempted to clear the pipe under the plaintiff’s
land by
inserting equipment from the downstream end, apparently gaining access to the
pipe from the rear boundary pit. Tree roots
and pieces of concrete were found to
be causing the blockage. Mr Pickup’s work continued on 1 February
2012.
- By
letter of 31 January 2012 Mr Pomare conveyed to Council’s solicitor
the plaintiff’s consent for Council staff to enter
the property on
1 February to undertake “above ground investigation work” to
locate the storm water pipe and other subsurface
drainage structures and to
determine the extent of any existing damage.
- On
10 February 2012 Mr Aslan made this report to the General Manager and
others:
The investigation into the damaged drain(s) under the property is ongoing.
We’ve been delayed due to wet weather and the holiday
and in part by the
resident previously denying Council access to the property to conduct
investigations or repairs.
The underground pipe network is somewhat complicated. Weather permitting we
expect to conclude our investigation into the damaged
drains and other
underground stormwater structures by mid next week.
- The
assertion that investigations had been to any extent delayed by the plaintiff
denying Council access was untrue. She had never
for any period denied such
access. On 7 December 2011 the plaintiff had requested that any work on the
property be deferred until
20 January 2012, when she could be present. This
was a reasonable request and was agreed to by Council. Mr Aslan’s
reference
to multiple drains under the plaintiff’s property and to a
“network” shows that he was unaware of the work done
in 2005
following the Webb McKeown report. That work had decommissioned all pipes that
had previously joined to the main drain under
the front yard of No 13. The
decommissioning had occurred at the same time as the junction pit and
reconfigured inlets and feeder
drains on Appian Way were constructed.
- Council
had substantial documentation of the drainage infrastructure in this known
trouble spot. Many of the relevant records have
been referred to in these
reasons. The evidence has not explained why those records were not reviewed
within Council at this time
in order to have the then current engineering staff
properly briefed with information already known to and recorded by Council.
- On
subsequent days during February 2012 Mr Pickup was able to identify the line of
the pipe through the front and back yards of No
13, using ground
penetrating radar. In conjunction with this an underground CCTV survey was
conducted. A complete blockage was found
9.6m downstream from the junction pit,
being 6.8m inside the front boundary, under the plaintiff’s front garden.
That was where
the images recorded from within the pipe in 2001 had shown that a
section of the pipe was missing under the front garden of No 13.
Naturally,
the line of the pipe had become blocked at that point. Another internal email
from Mr Aslan shows that Mr Pickup had informed
Council of these results by
14 February 2012.
- From
15 February 2012 Council’s pump at the junction pit was automated
with a float switch. Instances of flooding became less
frequent although they
still occurred when the float switch failed to operate. On those occasions a
Council employee had to be called
out by the plaintiff and the response was not
always quick enough. The plaintiff had her pool drained and refilled on
19 February
2012. On 7-8 March 2012, for a seventh time, the property
was flooded when the pump failed to start automatically following heavy
rain.
The recently replaced pool water was again polluted and the pool was rendered
unusable for the time being.
- Council
did not inform the plaintiff of the results of Mr Pickup’s investigations
until a letter was sent on 15 March 2012,
following requests from Mr Pomare
on 22 February, 1 March and 13 March 2012. The letter of
15 March 2012 came from Council’s
solicitors. It did not indicate
what if any action Council was proposing to take to overcome the complete
obstruction of the sole
pipe that was available to carry stormwater from the
junction pit at No 13 Appian Way.
- On
16 April 2012 the mayor, Councillor John Faker, wrote to a resident of
14 Wyatt Avenue who had been affected by the overland flooding.
The letter
included the following:
Heavy rainfall in spring last year (and subsequent rains) has highlighted
flooding issues in the Appian Way area and Council is now
undertaking extensive
investigations into this matter. Council also recently engaged Brown Smart
Consulting to conduct hydraulic
investigation of the area and produce options to
address this matter, following on site investigation work by another
contractor.
When these investigations have been completed, Council will be in a position to
determine a suitable way forward and will notify
affected residents. [...]
It should be noted however, that given the severe (most likely a
one-in-one-hundred-year rainfall event) rain experienced in Sydney
in early
March 2012, some flooding issues (as experienced elsewhere in Sydney) at this
location are likely to have occurred notwithstanding
the current
problems.
- The
proposed “hydraulic investigation of the area” would be the third
such study providing Council with stormwater flow
projections for the Appian Way
catchment. The previous municipality-wide studies by Robinson GRC in April 2002
and by Brown Consulting
(NSW) Pty Ltd in October 2004 had both addressed this
particular location and had contained ample information to inform storm water
pipe design. The engagement of Brown Smart Consulting to “produce options
to address this matter” was also redundant
in view of Webb McKeown’s
full consideration and costing of the options in May 2005. There is no evidence
that Councillors
or engineering staff regarded the earlier reports as
insufficient or unreliable. Rather, Council appears to have lacked capacity
to
disseminate and utilise existing corporate knowledge.
- The
mayor’s assertions that the rainfall in March 2012 may have been a
one-in-one-hundred-year event and that the flooding would
likely have occurred
irrespective of the “current problems” – presumably a
reference to the blocked pipe –
were unfounded. For 10 years it had been
known within Council, from professional reports commissioned by it, that the
pipe through
No 13 could not cope with run-offs calculated to occur every
year. It was a matter of Council record that flooding of properties
in the area
had occurred on at least five occasions in the preceding 24 years (see [86] above).
- In
April 2012, when Council had still taken no action to rectify the blockage of
the pipe, the plaintiff resorted to laying sandbags
across her driveway whenever
rain threatened, in case the pump should fail to activate. Council was
apparently paralysed by indecision
about a more enduring remedy. It directed its
employees to follow the plaintiff’s lead and place sandbags across the
frontages
of Nos 15 and 17. As a result, during heavy rains a substantial
lake formed on the north side of Appian Way. This phenomenon is depicted
in
photographs showing the water extending from the sandbags across to the
centreline of the roadway. The accumulated water reached
a depth of 400mm at
times.
- By
the time the sandbags were laid it had been obvious to Council for five months
– since November 2011 – that the only
piped outlet was blocked.
Council had been in possession of photographic evidence of the blockage for two
months. The possibility
of excavating down to the blocked section of pipe and
unblocking it was surely not far-fetched or radical. It is what municipal
authorities
often do. The excavation would have to have been carried out on the
plaintiff’s land. As will be seen, Council did not even
propose this until
2 October 2012, six months later.
- While
Council contemplated the commissioning of yet another study, as referred to in
the Mayor’s letter of 16 April 2012, the
properties on the north side
of Appian Way and down-slope from them on Wyatt Avenue continued to sustain
periodic inundation. On
19 April 2012 a resident of 14 Wyatt Avenue
sent an email to Council that included the following:
The flooding from the properties on Appian Way is worse than ever. Our backyard
was a lake and our garage was flooded again. The
drains and pits could not cope
with the volume and were rapidly flooded. Water poured through the fences from
the properties to the
south on Appian Way and from the west, 16 Wyatt
Avenue, as a river would. [...] We drove around to Appian Way and the pump
outside
No 13 was working hard but could not cope. Turn a garden hose on a
bush fire. That had the same silly effect. There was a lake of
water to the
front of the houses on the southern [scil northern] side of Appian Way. People
had futilely sandbagged their drives
against the rising
waters.
Also on 19 April 2012 the occupant of No 17
Appian Way reported to Council that he had floodwater in his house to a depth of
400mm.
- In
May 2012 Brown Smart Consulting, apparently the same hydraulic engineering
consultancy as Brown Consulting (NSW) Pty Ltd that had
performed work in 2004,
provided to Council a report entitled “Stormwater Drainage Assessment,
Appian Way, Burwood”.
This stated that the catchment had been computer
modelled, generating estimates of the peak stormwater flows arriving at the
collection
point in front of No 13. The run-off values estimated for
various ARI frequencies were the same as those given in the October 2004
hydraulic survey. The report described several options that the consultants had
been asked to consider “to effectively manage
the stormwater drainage
network and overland flows associated with the Appian Way catchment”.
- Only
two of the options considered by the consultants are presently relevant. Under
Option C2 Council would acquire an easement over
No 13, adjacent to the
western and northern boundaries, and a 900mm pipe would be installed. This was
the same as Concept 3 considered
by Webb McKeown in May 2005: see [127]-[128] above. Brown Smart
Consulting’s estimate of the construction cost was as follows:
900mm pipe through
No 13 $288,000
Upstream drainage work on Appian
Way $285,000
Downstream augmentation of pipe to Wyatt
Avenue $179,000
Total $752,000
- Under
Option D1, Council would simply repair and reline the existing pipe under
No 13. This corresponded with the second component
of Webb McKeown’s
Concept 1: see [125]
above. The estimated cost was $115,000. The consultants made the following
observations upon this Option:
This option is a temporary solution only, what it achieves is to restore some
drainage capacity to the existing Appian Way drainage
network and allows for the
removal of the pump and associated infrastructure. The capacity of this restored
line will be in the order
of 0.5 m3/sec. It must be noted though that the peak
flow rate for the 1 year storm event has been estimated at 0.9 m3/sec. Thus
this
option will be able to alleviate nuisance flooding issues for smaller more
frequent rainfall events, but it is not a long-term
solution to the drainage
issues of this area.
- On
18 May 2012 the Mayor wrote to a number of residents of Appian Way to
report upon drainage of the street. His letter included the
following:
The analysis of overland flows is a complex task in an urban environment as is
found in Appian Way. Council is currently investigating
options to alleviate the
drainage and overflow problems in Appian Way that are also impacting on the
downstream properties in Wyatt
Avenue.
Council officers will be making a determination on this matter (both in terms of
an engineering solution and funding strategies)
in the near future and the
results of this will need to go to Council for final endorsement. When these
investigations have been
completed, Council will be in a position to determine a
suitable way forward and will notify affected residents.
The
evidence has not explained why a decision could not have been made on the basis
of the reports that Council had received in 2005.
In 2012 there does not appear
to have been any new information sought or obtained concerning the drainage
options.
- On
10 June 2012 the plaintiff’s property was flooded for the eighth
time. Due to heavy rainfall overnight on 10-11 June and
continuing during
11-12 June, water accumulated on Appian Way in front of the property to a
depth of 400mm. The pump failed to operate.
Despite several phone calls from the
plaintiff to Council no one attended to activate it in sufficient time to
prevent overland flow
down the driveway of No 13 and into the carport and
garage.
- On
14 June 2012 Mr Pomare on behalf of the plaintiff sought an update on
Council’s plans to rectify the inadequate stormwater
drainage of Appian
Way. He wrote as follows:
[Our] client continues to live under unacceptable conditions and is not in a
position to proceed with the repairs to [her] property
until you have provided a
response to our earlier correspondence including your client’s proposal to
remedy the substantive
issues.
- On
25 July 2012 the plaintiff and her husband and Mr Pomare met with Council
representatives at Council’s solicitors’
office. Up to that date no
material response had been made to Mr Pomare’s letter of 14 June
2012. At the meeting Council’s
representatives produced a plan that
identified the location of the blockage in the pipe through No 13 and an
aerial photograph of
the property, marked up to show the area of a possible
future drainage easement adjacent to the western and northern boundaries.
The
aerial photograph was dated 23 July 2012. No evidence has been given of any
discussion that may have taken place when the plan
and aerial photograph were
presented at this meeting. However, it is self-evident that Council’s
representatives must have
indicated that Council wished to acquire the easement.
No details of the size of the proposed pipe on this easement or the depth
at
which it would be laid were provided. Mr Pomare inquired about those details
later.
- On
26 June 2012 Council considered, in closed session, an “Appian Way
Drainage Report”. That document is not evidence
but from the terms of the
resolution passed I infer that it set out options for improving the inadequate
drainage of the street.
Council resolved as follows:
1 That Council authorise the General Manager to enter into
negotiations with the owners of No 13 Appian Way for an easement as
per
Option B or to acquire the entire property No 13 Appian Way by Burwood
Council as per Option C.
2 That a further report be provided back to Council on the
outcome of the negotiations regarding the easement or acquisition of
the entire
property No 13 Appian Way by Burwood Council.
3 That a report for Council’s consideration be prepared
outlining the implications of a potential future Stormwater Management
Service
Charge (SMSC).
- On
14 August 2012 Mr Pickup prepared a report of his February 2012 internal
examination of the pipe, marked “without prejudice”.
No evidence has
been given of circumstances that could attract without prejudice privilege for
this document. The plaintiff had been
informed on 15 March 2012 of the
substance of Mr Pickup’s findings, which are summarised at [160]. It is not clear
whether Council had an earlier version of the report. Only the “without
prejudice” document was provided
to the plaintiff. From subsequent
documents I infer that it was provided on 22 August 2012.
- On
3 September 2012 Mr Pomare wrote to Council’s solicitors requesting a
copy of the 1903 agreement between Mr Hoskins and the
Borough and any records
relating to construction of the stormwater drainage of Appian Way. Mr Pomare was
clearly endeavouring to
determine whether the pipe under No 13 had been
installed in circumstances that would engage s 59A of the Local
Government Act 1993. Mr Pomare also requested copies of correspondence
between Council and the plaintiff’s predecessors in title concerning the
pipe. He sought copies of investigative reports that may have been prepared in
relation to it in earlier years. There was no indication
in this letter that the
plaintiff would deny the Council entry onto her land to clear and repair the
pipe. The question of access
had not arisen because Council had not made any
decision to carry out repairs.
- On
25 September 2012 the plaintiff sent an email to the elected Councillors in
anticipation of a Council meeting that she understood
would take place that
evening to make a decision about Appian Way drainage. The plaintiff summarised
the history of repeated overland
flooding of her property since November 2011.
She wrote the following:
Council was aware of this problem back in 2002 (and did not act to rectify the
problem back then). They allowed the previous owner
to sell the property and now
we are being victimised into accepting what Council believes is the only
solution – an easement.
Why was this not done before? [...].
[...] If an easement were placed on the property the pipe would need to be
placed very low so we could incorporate a lower floor
at the rear of the
property much like numbers 11 and 17 and the house would need underpinning.
Council’s legal counsel has
advised this would be too expensive and not to
be entertained. It seems that any suggestion we make to Council is negated (we
have
tried to work with Council but it has been difficult).
- The
plaintiff attended Council’s meeting on 25 September 2012. She read
out a list of 19 questions concerning Appian Way drainage.
These included: why
the problem had not been dealt with in 2002; why Council had no records of
dealings between itself and the second
defendant concerning the pipe; what was
the history of construction and subsequent works with respect to the pipe;
whether the plaintiff
could be provided with “the full suite of reports
commissioned by Council”; why Council had taken no steps to put an
incoming purchaser such as herself on notice of the existence of the pipe and
the difficulties that had been encountered in relation
to it. There is no
evidence of any substantive response from Council to these questions. The
meeting moved into closed session and
resolved:
- to inform the
plaintiff that Council is lawfully entitled to enter the property and make the
necessary repairs to the pipeline;
- to authorise the
General Manager to obtain quotes for repair and lining of the pipe and
“take all the necessary steps to progress
this matter forward”
and
- that an offer be
made to meet the plaintiff without prejudice in relation to entering the
property “to fix the pipeline”.
- On
2 October 2012 Council’s solicitors sent a letter to the plaintiff
that included the following:
The Council maintains that it owns the subject pipe for the purposes of
s 59A of the Local Government Act 1993 (“LGA”). We note
that your clients dispute same.
We confirm that investigations undertaken by the Council show that the subject
pipe requires repairs so that it will operate in an
efficient manner (the
works).
We put you on notice that Council is currently readying itself to go out to
tender for the works.
The Council will be undertaking the repair works once the Council is in a
position to attend to same. The works are urgently required,
in the opinion of
the Council, to ensure that the subject pipe is used in an efficient manner for
the purposes for which it was installed.
[...].
We also put you on notice that should your clients in any way impede the Council
(including denying our client access to your clients’
property), and the
Council be unsuccessful in any proceedings issued by a resident of Appian Way
(or any other resident) [to compel
Council to undertake the repairs], then the
Council will have no other option than to commence proceedings against your
client for
damages, including any costs orders against the Council. [...].
We may also seek the Council’s instructions to issue proceedings seeking a
declaration that the Council is the owner of the
subject pipe for the purposes
of s 59A of the LGA [...].
- Rather
than composing this overbearing letter, Council’s solicitors might
usefully have devoted their energies to providing
their opponent with the
information he had requested on 3 September 2012, upon which he would have been
able properly to advise his
client. So far as the evidence shows, up to
2 October 2012 there had been no intimation from the plaintiff that she
would do anything
to impede Council entering upon her land to repair the pipe.
Consent for access had readily been granted, whether or not required,
for the
purpose of Council investigating the pipe. No occasion for impeding access for
repair works had arisen because, almost a
year after the pipe failure had first
caused flooding and eight months after the precise location and nature of the
blockage had
been identified, Council was only now “readying itself”
to seek tenders and have the blockage addressed. This undefined
“readying” proceeded at a glacial pace.
- Mr
Pomare replied on 6 October 2012 with a request for a diagram of the
pipe’s exact location and particulars of its depth and
size. He also
sought “all documentation and information upon which the Council relies to
support ownership of the subject pipe”.
This was a repeat of earlier
requests, such as that of 3 September 2012, which apparently had not been
met. It was reasonable for
the plaintiff to have asked for the historical
records of construction of the pipe. They had a bearing upon the applicability
of
s 59A. The existence of the pipe and the extent of Council’s
statutory rights over it critically affected the plaintiff, both in respect
of
the value of her property and in respect of its habitability, for herself and
her family.
- The
relevant records should have been readily available for production. Council
personnel, including legal advisers, must have had
them to hand and must have
examined them in order to satisfy themselves of Council’s own position
under s 59A. Council and its solicitors failed to provide this material to
the plaintiff promptly when it was asked for. In addition to making
direct
requests through solicitors, the plaintiff endeavoured to obtain release of the
documents pursuant to an application made
by her town planner on
25 September 2012 under the Government Information (Public Access) Act
2009 (NSW). Documents were supplied under that Act on 13 November 2012.
The evidence does not disclose what documents were handed over
at that
time.
- In
his letter of 6 October 2012 Mr Pomare also requested full particulars of
the works proposed by Council. He concluded as follows:
Once our client has the benefit of this information and documentation, they will
be in a position to give proper consideration to
your requests and respond to
same.
That conclusion was inapposite as the letter under reply,
from Council’s solicitors, had not made any “requests”.
It had
merely given notice of intention to carry out works and warned that proceedings
for a declaration may be commenced. Certainly,
Mr Pomare’s reply contained
no suggestion that Council would be obstructed by the plaintiff in carrying out
repairs to the
pipe.
- The
ninth flooding of the plaintiff’s property, by overland flow down her
driveway, occurred on 11 October 2012. The pump had
failed to activate
automatically and it had been necessary for the plaintiff to call Council more
than once between 3:00am and 4:00am
to secure the attendance of a staff member
who could start it up. In the meantime, the usual large pond formed on Appian
Way and
overtopped the plaintiff’s driveway entrance before a Council
employee arrived.
- On
17 October 2012 the plaintiff engaged its own contractor to make an
internal examination of the pipe. This examination was carried
out on
22 October 2012 and shortly afterwards the contractor produced a report
that confirmed the results obtained by Mr Pickup in
February 2012. Access to the
pipe was gained from the junction pit outside No 13 and from the rear
boundary pit. Upon learning of
this, Council’s solicitors entered into
gratuitous collateral correspondence with Mr Pomare concerning alleged breaches
of
workplace safety regulations arising from access to the confined space.
- On
5 December 2012 the plaintiff and her solicitor took part in without
prejudice discussions with Council representatives and legal
advisers. There has
been no waiver of the without prejudice privilege with respect to those
discussions. However their subject matter
is revealed in much later open
correspondence between the parties’ solicitors, dating from October to
December 2017. In a letter
of 31 October 2017 the following is recorded by
the plaintiff’s solicitor:
[We] are instructed that our client met with Council in 2012 for the express
purpose (so our client understood) of negotiating the
grant of an easement to
Council. At that time and after having learned from our client that she intended
to lodge a development application,
Council advised our client that it did not
require an easement [...].
- On
18 December 2012 the Mayor sent to residents of Appian Way a letter
advising of developments with respect to the drainage problem.
The letter
included the following:
Council resolved to undertake a request for quotation or tender process for the
repair and lining of a pipeline situated in No 13
Appian Way. The request
for quotation or tender process is subject to the Council undertaking further
CCTV confirmation in relation
to the pipe.
Unfortunately, a dispute has arisen between the Council and the owner of
No 13 Appian Way, the result of which means to date the
Council has been
denied access to the premises to undertake the necessary investigative works.
The parties met on 5 December 2012.
The Council cannot disclose anything
that occurred at that meeting except that there was no resolution
reached.
- The
second paragraph quoted above significantly misrepresented the position. Between
February 2012 when the location of the obstruction
in the pipe was established
and 18 December 2012 the plaintiff had received no further request for
access for investigation. There
was no dispute between Council and the plaintiff
about entry onto her land for this purpose and there never had been such a
dispute.
Contrary to the impression conveyed by the Mayor’s letter, the
cause of the drain having remained blocked for over a year had
been
Council’s general dithering, inactivity and lack of internal
communication. The extraordinary procrastination was in part
contributed to by
the repetition of engineering analyses that had been comprehensively carried out
by Webb McKeown in 2005.
- On
11 February 2013 Council’s solicitors wrote to Mr Pomare
substantially repeating what had been said in their letter of 2
October
2012. Again it was stated that rights over the pipe were claimed under
s 59A and that Council was “readying itself
to go out to tender for
the works”. The process of “readying itself” had by this date
held Council in a state of
suspended animation for over four months. Enclosed
with the letter were technical documents explaining the work that would be
undertaken,
including lining the pipe. It was stated that these technical
specifications would form part of the tender documents that were to
be issued to
prospective contractors – presumably, when Council had finished
“readying itself”.
- Council’s
solicitors concluded their letter with the following:
Please advise by no later than 5pm on Friday, 22 February 2013 whether your
client will consent to the Council accessing the property
to undertake the
works.
This was followed by a warning that proceedings for an
injunction may be commenced if the plaintiff should fail to reply in the
affirmative.
The request for consent was superfluous in view of Council’s
powers under ss 59A and 191A of the Local Government Act and
s 94 of the Roads Act.
- Mr
Pomare replied on 4 March 2013 to the following
effect:
In the circumstances our client is prepared to consent to the repairs being
undertaken and will allow access for that purpose.
However, before such works can commence, and given the nature of the work that
is required [...] our client requires reasonable notice
of the
following:
(i) The proposed commencement date of
the works?
(ii) The hours during which the works are to be undertaken.
(iii) Advice as to what extent, if any, access to the property
will be impeded.
(iv) The appointment of a liaison person through whom our
clients can communicate any matters of concern for a prompt response,
particularly in circumstances where our clients have young
children.
- Even
if not stipulated by the plaintiff, these were matters to which Council would
have had to attend in order to ensure efficiency
and cooperation in the
performance of the work. Mr Pomare also requested in this letter a statement of
the purpose for which the
pipe had been installed and copies of documents upon
which Council relied to form the opinion that the proposed works were necessary.
These enquiries appear to have been unnecessary having regard to the information
that was already in Mr Pomare’s hands by that
date. The letter did not
state that the plaintiff’s consent was conditional upon Council’s
response to the enquiries.
- On
19 March 2013 Council’s solicitors responded to all of Mr
Pomare’s requests for information. It is difficult to see
how there could
have been any misunderstanding that Mr Pomare’s letter of 4 March
2013 had conveyed the plaintiff’s consent
for the pipe repair works to be
undertaken on her land. However, Council’s solicitors managed to
misunderstand, as reflected
in the following passage of their
reply:
Due to your client’s refusal to allow our client to undertake the works,
the Council cannot call for tenders until either your
client accepts that the
Council is entitled to enter the property to undertake the works, or
alternatively a Court makes an order
that the Council is the owner of the pipe
pursuant to s 59A of the LGA.
- Mr
Pomare replied as follows on 3 April 2013:
Despite our client’s consent being provided [in our letter dated
4 March 2013], we note that you have sought further confirmation
on same.
[...]
Accordingly, and for the avoidance of doubt, our client will allow Council
access to the property to undertake the works set out
in the documents attached
your letter of 11 February 2013, and to that intent, accepts that Council
may enter the property to undertake
the works pursuant to section 59A of
the LGA.
- Council
finalised its tender process during May 2013. The repair work was commenced on
15 July 2013 and was completed within two weeks.
A collapsed section of
pipe under the plaintiff’s front yard was replaced and the remainder of
the pipe was lined, from the
junction pit to the rear boundary pit. Council
undertook remedial landscaping of the plaintiff’s backyard in late August
2013,
at no cost to her.
- The
minutes of a meeting of Burwood Council held on 26 August 2013 incorporated
an “Information Item” concerning the repair
of the pipe at Appian
Way. This contained a paraphrase of Mr Pomare’s letter to Council dated
12 December 2011 in which he
had objected to Council pumping storm water
into the plaintiff’s backyard and requested information about the pipe
under her
property. The Information Item also recorded that by his letter of
3 April 2013 Mr Pomare had confirmed the plaintiff’s consent
for
Council to enter her land to repair the pipe and had acknowledged
Council’s rights pursuant to s 59A of the Local Government
Act. None of the events of the 16 intervening months were described or
explained in the “Information Item”.
- By
omitting any description of what occurred between 12 December 2011 and
3 April 2013 the Information Item conveyed the false impression
that
Council’s inordinate delay in doing anything about the blocked pipe at
No 13 was attributable to the plaintiff withholding
consent for entry upon
her land. That was untrue. It was a significant misrepresentation in this public
document. In fact, responsibility
for the delay rested entirely with
Council’s employed engineering staff or with the elected Councillors, or
with both. Throughout
these proceedings Council has maintained that the
plaintiff brought upon herself the 11 months of intermittent inundation of her
property, by denying Council access for the purpose of repairs. That contention
has not been sustained. Responsibility for the continuing
state of affairs rests
entirely with Council.
- Since
the repair and lining of the pipe there has been no further flooding down the
driveway of the plaintiff’s property. However,
after heavy rain, when the
capacity of the pipe is exceeded, stormwater backs up in the junction pit and a
pond forms on the north
side of Appian Way. In about February 2015 Council
raised the footpath in front of Nos 13-17 by about 300mm and brought it to
the
same level across all three properties. For many rain events in which the
capacity of the pipe is exceeded, the raised footpath now
acts as a stormwater
detention weir, retaining sufficient water on the surface of Appian Way to
prevent overland flows through the
plaintiff’s property and/or Nos 15
and 17.
- The
evidence does not disclose what level of intensity of rainfall, or at what ARI
value, the holding capacity of this street-surface
detention weir is exceeded so
that overland flows through the three properties occur. The engineers who
considered overland stormwater
paths in connection with the plaintiff’s
Development Application (“DA”) in 2015-2017 accepted that such flows
would
be experienced from time to time. Although the levelling of the footpath
would distribute the excess flows between the three properties
and thus reduce
the volume through any one of them to one third of the total, the three streams
would converge at the rear of No
13 and would likely contribute to flooding
of 10-12 and 14 Wyatt Avenue, as occurred frequently in the past due to
overland flows
from Appian Way.
- Mr
Limnos, Council’s current Senior Manager Civil Constructions, deposed on
9 October 2018 that after the footpath had been
raised and levelled in
February 2015 he had not become aware of any flooding in or around
Nos 13-17 Appian Way apart from one incident
involving a blocked drain on
15 November 2015. Mr Limnos says that during the period to which he refers
there were some high-intensity
rainfall events. If this evidence was intended by
Council to show that the stormwater drainage problem on Appian Way has been
solved
then it has failed to achieve its objective. In the Land and Environment
Court proceedings described below, in which Council sought
to impose upon the
plaintiff an obligation to grant a western boundary easement and install a new
pipe at her cost, Council adduced
evidence from a hydrological engineer –
which Mr Limnos is not – to the effect that Nos 13-17 remain subject
to overland
flows.
- Further,
after failing in its bid to make the plaintiff bear the cost of relocating the
drain, Council has negotiated with her about
acquiring an easement and carrying
out this construction work. Ultimately, Council has initiated the compulsory
acquisition process.
Despite Mr Limnos’ anecdotal evidence the Court is
left in no doubt that provision of satisfactory stormwater drainage at this
location, to meet Council’s own standards and to implement the
professional advice it has received, still requires that a new,
larger pipe be
installed on a western boundary easement. That requirement has been a constant
since January 2001.
2015-2017: plaintiff’s Development
Application
- In
September 2015 the plaintiff proposed to develop No. 13 by removing the existing
carport and garage; building a basement garage
at the rear of the property with
access via an extension of the driveway; extending the ground floor slab to the
west of the house,
over the driveway, to form the roof of a drive-through
carport; constructing a retaining wall on the western boundary; building a
rumpus room and other rooms within the proposed basement and replacing the
existing pool. Prior to lodging a DA the plaintiff and
her architect met with
Council planning officers on 17 September 2015 to discuss the proposal.
- This
prompted a response from Mr Pokharel, a Council engineer, to the following
effect:
(1) The basement/garage would lie across the pipe and would
not be permitted under cl 8.16 of the 1994 Stormwater Code, which states
that new buildings and structures cannot be constructed over drainage lines.
(2) This objection could be overcome if the plaintiff provided a 2.5m wide
drainage easement along the western and northern boundaries
of the property and
installed an equivalent pipe within that easement, with appropriate connections
at each end.
(3) The plaintiff would have to submit with the DA “a detailed
hydrological and hydraulic assessment” of this repositioning
of the pipe,
taking into account “the full stormwater network upstream of the property
including the overland flow”.
The plaintiff would have to demonstrate that
Council’s downstream system would not be “compromised in a 1 in 20
year
ARI storm event at minimum”.
- The
plaintiff lodged her DA on 23 June 2016. Her proposed alterations would not
materially alter the extent to which the house was
constructed over the pipe. In
order to address Mr Pokharel’s points (1) and (2), so far as they may have
been directed to the
risk of damage to the pipe, the plaintiff’s
engineering drawings provided for piers on each side of the pipe to provide
support
for the basement/garage floor, thus protecting the pipe.
- For
the purpose of addressing Mr Pokharel’s point (3), the plaintiff obtained
a report dated 12 June 2016 from a hydraulic engineer,
Mr Weber. He sought to
demonstrate that the pipe could remain in its existing position and that the
proposed development would not
compromise stormwater flow through the property.
On the assumption of a complete blockage of the pipe and a 100 year ARI rain
event,
Mr Weber calculated that the surface level of overland flows would be
lower than the proposed basement floor level.
- In
September 2016 Council obtained a report from another hydraulic engineer, Mr
Gray. He considered that the proposed basement should
be considered at risk of
flooding unless its floor level was at least 500mm above the surface of maximum
overland flows. He said
that “amendments to the overland flow path to
facilitate the proposed development, for example a box culvert, are likely to
lead to off-site impact issues”. Mr Gray represented that the catchment
for stormwater that accumulates on Appian Way in the
vicinity of No 13 is
an area of 8.4ha. That appears to have been an exaggeration by a factor of over
60%. No other hydraulic engineer
has ever suggested that the catchment is more
than 5.2ha. Both Mr Gray and Mr Weber assumed the diameter of the pipe to be
400mm.
- On
12 October 2016 Council’s planning officer notified the plaintiff
that he would recommend that her application in its then
form be refused.
Numerous reasons were given, relating to many aspects of the application. With
respect to engineering considerations,
the planning officer cited Mr
Gray’s conclusions. The plaintiff made no revision to her application.
Council had not determined
it by 25 January 2017 and it was then deemed to
have been refused. The plaintiff thereupon lodged with the Land and Environment
Court
an appeal against the deemed refusal.
- In
connection with the plaintiff’s appeal she engaged another engineer, Mr
Kozarovski. He conferred with Mr Gray and they produced
a joint report dated
13 April 2017. They agreed that any risk of flooding to the basement from
overland flows down the driveway could
be addressed by installation of a
mechanical flood barrier. This would be installed on the right-hand side of the
driveway outside
the entrance to the basement garage. The barrier would direct
stormwater to continue flowing down the driveway towards the rear of
the
property and would divert it from entering the garage.
- The
engineers agreed that the development would not result in any change to the
magnitude of overland flows through No 13 or the adjoining
property,
No 15. In particular, the installation of the flood barrier would not cause
any such change. The only remaining difference
between the engineers was that Mr
Gray considered approval should be subject to conditions that before any work
commenced, first,
the plaintiff should grant a 2.5m wide easement on the western
and northern boundaries and, secondly, she should install a replacement
400mm
diameter pipe within that easement – as had been proposed by Mr Pokharel.
These two requirements were referred to in
the Land and Environment Court
proceedings as “deferred commencement conditions”. Mr Gray’s
support for them was
based upon cl 8.8 of the 1994 Stormwater Code, which
states that Council will require an easement in its favour over the location
of
any existing pipeline, and cl 8.16 (referred to at [205(1)] above). Mr Gray
also supported the conditions out of concern as to whether the existing pipe
might be damaged in the course of excavations
adjacent to it.
- The
requirement that the plaintiff install a 400mm pipe in the proposed easement was
contrary to engineering advice that had been
consistently tendered to Council
since 2001; namely, that a 400mm pipe was of insufficient capacity for 1 year
ARI rainfall and that
a 900mm pipe would be required to satisfy Council’s
standard of piped capacity for 20 year ARI storm water volumes. No explanation
was given in evidence for Council imposing the apparently irrational requirement
that the existing under-capacity pipe should be
replicated. I infer that Council
was seeking to portray its requirement that an easement be granted without
compensation as merely
an incident of the plaintiff having to replace like with
like.
- The
appeal was heard by Commissioner Brown on 24 May 2017. It proceeded on the
basis that Council pressed the two deferred commencement
conditions and also
“Operational Condition 99”, that the plaintiff cause a
“detailed drainage study” to be
prepared by a hydraulic engineer to
“demonstrate that the development has no adverse effects on adjoining
properties as a result
of flooding and storm water run-off and that there is
adequate protection for buildings against the ingress of surface run-off”.
It is not apparent why Council should have pressed for another hydraulic
engineering study having regard to the agreement of its
own expert, Mr Gray, in
the joint report of 13 April 2017, that the development would not change
the magnitude of overland flows.
- On
31 May 2017 Commissioner Brown upheld the plaintiff’s appeal and approved
the DA without the deferred commencement conditions
and without Operational
Condition 99. He held as follows
[14] The relevant parts of the Stormwater Code
are:
8.8 Easements
For sites that have existing Council pipelines through them that are not covered
by an easement, or where an existing pipeline is
not within the easement,
Council will require the creation of an easement in favour of itself over the
pipeline. The easement width
is to be the pipe, box, or channel section width
plus 1.5m, with an overall minimum width of 2.5m.
[...]
8.16 Structures Over or Near Drainage Lines and Easements
New buildings, structures and tennis courts will not permitted over drainage
lines or within easements. Paving over any drainage
line or easement is
acceptable, but will require appropriate jointing at the easement boundary, and
to be in a material approved
by Council's Engineer.
Clearances to easement boundaries are required to prevent structural loads on
drainage structures or encroachment within the angle
of repose of the soil.
Piering is an acceptable technique to achieve this.
If there is an existing structure over the drainage line or easement within the
site that is part of the application, then an access
pit is required to be
provided upstream and downstream of the structure.
[...]
[15] With the benefit of submissions from [counsel], I have
little trouble in accepting that the conditions in dispute should not
be
included on any approval, for a number of reasons. First, I do not accept that
the conditions satisfy the "Newbury tests" or principles
to test the validity of
planning conditions. In Newbury District Council v Secretary of State for the
Environment [1981] AC 578 at 607 Lord Fraser held that the power to impose
conditions was subject to certain limitations, being:
it must have a planning purpose,
it must relate to the permitted development to which it is annexed, and
it is [not] so clearly unreasonable that no reasonable planning authority could
have imposed it.
[16] Under any assessment, it could not be said that the
conditions “relate to the permitted development to which it is
annexed”.
While the 400mm stormwater pipe runs through the site, the pipe
collects stormwater from the 8.4ha catchment above the site; the
site being at
the low point in the catchment. Also of some importance is that the site does
not make use of the stormwater pipe as
the stormwater for the proposed dwelling,
after the alterations and additions, will drain to the pit at the rear of the
property.
This pit is a junction point in the stormwater system before it enters
an easement over 10-12 Wyatt Street and then further downstream.
Similarly,
I cannot accept that the need for a detailed drainage study that is to cover the
8.4ha catchment relates to the proposed
development.
[17] Given the lack of any real association of the
council’s proposed conditions with the proposed development on the site,
I
can also comfortably conclude that the conditions are “so clearly
unreasonable that no reasonable planning authority could
have imposed
it”.
[18] Second, the council seeks, in the disputed conditions,
that the applicant is to provide a detailed drainage study for the
catchment,
relocate and presumably upgrade the pipe, prepare the documentation for the
easement, create the easement and transfer
the easement to the council; all at
no cost to the council. I accept the submission of [the plaintiff’’s
counsel] that
the only power available for the council to acquire these works
without cost is through s 94 of the Environmental Planning and
Assessment Act 1979. It was accepted that the only mechanism that the
council has for collecting s 94 contributions is through their
Section 94 Contributions Plan (July 2012) and that this plan contains no
such contribution for the work required by the disputed conditions.
[19] Third, the matter of proportionality is relevant. In my
view, the work sought by the conditions is disproportionate to the
extent of the
alterations and the need to relocate the existing stormwater pipe and the other
matters associated with the creation
of an easement. The proposed alterations
and additions only marginally extend the existing footprint over the existing
stormwater
pipe. To expect the applicant to prepare a drainage strategy for the
8.4ha area above the site and undertake an extensive and likely
very expensive
works given the minimal additional impact on the stormwater pipe is
unreasonable, in the extreme.
[20] Fourth, I am not convinced that the Stormwater Code
provides the necessary warrant, as suggested by Mr Gray to undertake the
work
required by the proposed conditions. Part 8.16 is relevant and states, in
part:
If there is an existing structure over the drainage line
or easement within the site that is part of the application, then an access
pit
is required to be provided upstream and downstream of the structure.
[...].
[21] If read literally, these comments do not suggest that the
drainage line should be relocated but only that access pits be provided.
There
is nothing in the Stormwater Code to support the proposed conditions. The
requirement for an easement only becomes relevant,
in this case, if there is a
sufficient reason to relocate the pipe, which has not been provided. The
requirements in the Stormwater
Code, in my view, should not be read literally
but seen as general design principles that should be considered broadly and with
a
proper consideration of the particular issues involved.
[22] The reference in cl 8.16 (first paragraph) to
“New buildings, structures and tennis courts will not [be] permitted over
drainage lines or within easements” is not relevant and clearly is a
reference to new development rather than a situation where
a building is already
constructed over drainage lines or within easements. The words “will not
be permitted” suggests
an absence of any structure over drainage lines or
within easements and that in the event that approval was sought, any approval
“will not be permitted”.
[23] Put simply, the imposition of the conditions sought by the
council is unmeritorious and should not be entertained.
- In
accordance with the Land and Environment Court’s procedural rules and its
practice in planning appeals, no order was made
with respect to costs. The
plaintiff incurred over $80,000 in legal costs to defeat Council’s
unreasonable attempt to make
her bear the cost of relocating the pipe from under
her house to the western boundary – a cost of infrastructure for the
benefit
of the local community that should have been born by Council on behalf
of all ratepayers and that should have been outlaid, including
upgrade of the
pipe to 900mm, 16 years earlier, in 2001, when the necessity for these changes
was made known to Council through unquestioned
professional engineering
advice.
October 2017-July 2020: Council’s settlement
negotiations
- The
findings of fact recorded in this section of the reasons are relevant to
Council’s contention that the plaintiff failed
to mitigate her damages
flowing from negligent misstatement in the planning certificate: Issue 12 (at
[414]). Council tendered
in the trial of these actions evidence of its communications with the plaintiff,
as summarised in the following
paragraphs, in support of its claim that the
plaintiff failed to mitigate the loss that her purchase of No 13 in
reliance upon the
planning certificate had caused her. The plaintiff submits
that in these communications Council never made an offer that was sufficiently
certain to be capable of acceptance. She submits that such offers as were made
by Council involved settlement of the entire proceedings,
including her nuisance
claim and that the offers are not relevant to mitigation of damages but could
only have a bearing upon the
Court’s discretion as to costs. The plaintiff
says she acted reasonably in not accepting Council’s offers, so far as
any
of them may have been capable of acceptance.
- The
proceedings were commenced on 17 March 2017. The plaintiff’s
solicitor sought to initiate mediation of her claims by letters
sent to the
legal representatives of both defendants on 19 September 2017. On
3 October 2017 the plaintiff’s solicitor notified
the defendants that
the plaintiff had obtained a construction certificate for her proposed
alterations and additions; she had arranged
for demolition to commence in
December 2017 and for piling on the western boundary, to permit lowering and
extension of the driveway,
to commence on 7 January 2017. It was urged that
mediation should proceed expeditiously as the progress of these works would
limit
the possibility of Council acquiring an easement and installing a new
drain as part of any settlement.
- During
the first three weeks of October 2017 the solicitors for the Council and for the
plaintiff exchanged letters concerning the
diameter of the pipe that Council
would install in the proposed easement. Council proposed a pipe of 750mm whereas
the plaintiff
wanted a 1200mm pipe that her engineer had indicated would
eliminate overland flows even during infrequent and extreme rain events.
On
27 October 2017 Council’s solicitors sent to the plaintiff’s
solicitors a formal notification that Council considered
acquisition of a 2.5m
wide easement and installation of a 750mm diameter pipe necessary “to
reduce the likelihood of any flooding
to the property and other properties in
the Appian Way in the future”. This letter stated that if the plaintiff
failed to agree
within seven days to negotiate for the acquisition of this
easement, it was expected that Council would commence the compulsory acquisition
process, in exercise of its power under s 186 of the Local Government
Act. The threat of enforcement action was unnecessary. It disregarded the
plaintiff’s prior communications endeavouring to initiate
negotiations
concerning an easement.
- The
plaintiff’s solicitor responded on 31 October 2017 with the
observation that not only was his client willing to negotiate
but that he had
been trying to convene a mediation for over a month. He advised that unless a
mediation should take place in early
November 2017, the plaintiff would proceed
with her proposed works. No mediation took place and on 28 November 2017
Council by resolution
approved commencement of the formal process to acquire an
easement 2.5m wide, either compulsorily or by agreement, for the installation
of
a new pipe of either 750mm or such diameter as may be agreed with the plaintiff.
- The
plaintiff was notified of the passing of this resolution by letter from
Council’s solicitors dated 18 December 2017. The
letter stated that
as there was no agreement for the grant of an easement, Council intended to
acquire it compulsorily and would
issue a Proposed Acquisition Notice in
accordance with s 11 of the Land Acquisition (Just Terms Compensation)
Act. By the same letter Council demanded an undertaking that the plaintiff
not proceed with any construction works that would encroach
on the proposed
easement. Council threatened that it would apply to this Court to seek urgent
injunctive relief if such an undertaking
was not forthcoming.
- On
discretionary grounds alone an application for an injunction would have had poor
prospects. Council’s senior engineer in
early 2001, Mr Wyatt, had
appreciated that the acquisition of an easement was “the only viable
option”. Council had at
that time refrained from pursuing compulsory
acquisition because the second defendant, as registered proprietor, sought
compensation.
Council had taken no steps towards acquiring the easement up to
2015 and had then failed in its endeavour to obtain it without compensation
through the DA process. Having held up the plaintiff’s development for
2½ years in pursuit of unreasonable conditions,
Council wished to exercise
its compulsory acquisition power more than 16½ years after being
professionally advised that it needed
to do so, just as the plaintiff was
commencing her works and at a time when an injunction would cause maximum
disruption and loss.
There was no legal basis for Council’s threat of
injunction proceedings. The threat was not carried out.
- Notwithstanding
Council’s aggressive posturing, negotiations with respect to the terms of
an easement resumed in February 2018.
By 6 March 2018 Council had agreed
that it would install a new pipe of 1200mm diameter and that structures could be
erected in the
airspace above the easement to the extent approved in the
plaintiff’s existing development consent. This included the westward
extension of the ground floor of the residence, to form a carport roof over part
of the driveway. At this date Council had a valuation
of the easement and the
plaintiff was waiting on her own valuer. Compensation for the easement was
therefore not yet agreed.
- On
19 April 2018 the plaintiff’s solicitor informed Council’s
solicitor that revised engineering calculations showed that
a 1050mm diameter
pipe would be sufficient to handle 100 year ARI storm water volumes and that the
easement need not be any wider
than this diameter plus 1.5m, in accordance with
the 1994 Stormwater Code. At the end of April and during May 2018 the
plaintiff’s
solicitor repeatedly informed his opponent that construction
work was progressing and that there was limited time left for the parties
to
reach agreement on an easement and for Council to install the proposed new pipe
before the works in the area of the proposed easement
would be completed. In
particular, he pointed out that once the extended ground floor slab had been
installed over the driveway it
would “no longer be possible for the pipe
to be craned into position in that area ... nor for piling works to be
undertaken
in that area (which are needed to facilitate the installation of the
pipe without damaging adjacent structures)”. He said that
it appeared
unlikely that the valuers would reach agreement and that it would be best to aim
for an agreement to grant an easement
on terms that could be settled in most
respects, but with “a mechanism for determining the easement compensation
amount”.
- This
reasonable and sensible letter was met with an extraordinary response from
Council’s solicitor, blaming the plaintiff’s
solicitor for
protraction of the negotiations, disputing his recollection of prior discussions
between them concerning mechanical
and procedural matters and threatening that
Council would claim damages if the plaintiff’s building work
“encroaches
upon the site of the proposed easement”. There would be
no legal basis for such a claim.
- The
parties exchanged valuations in late June 2018 but agreement was not reached and
negotiations lapsed. Even at this point, seven
months after Council had resolved
to acquire an easement compulsorily and with negotiations apparently exhausted,
Council did not
proceed with an application to the Minister for Local Government
for approval to issue a proposed acquisition notice pursuant to
s 11 of the
Land Acquisition (Just Terms Compensation) Act. Ministerial approval was
a necessary preliminary step: see s 187(2) of the Local Government
Act.
- On
22 March 2019 the plaintiff’s solicitor advised his opponent that the
plaintiff was still willing to grant an easement, “assuming
it is still
possible to install a pipe along the western boundary despite recent building
works”. By this date the plaintiff’s
works were complete. The
plaintiff’s solicitor proposed a meeting to negotiate the amount of
compensation. This took place
on 21 May 2019. No concluded agreement was
reached but after the meeting Council’s solicitor commenced to prepare a
deed of
grant of an easement. No draft of such an agreement had been submitted
to the plaintiff’s solicitors by 11 November 2019, on
which date
Council applied to the Minister for Local Government for approval to issue a
proposed acquisition notice. On 19 February
2020 Council’s solicitor
informed the plaintiff’s solicitor that the application to the Minister
had been made.
- On
2 June 2020 Council’s solicitors submitted to the plaintiff’s
solicitors a proposed Deed to Grant Easement. Notable
features of the offer
constituted by this draft Deed are as follows:
(1) Clause 2
provided that the plaintiff agreed to execute a Transfer Granting Easement in a
form said to be annexed to the Deed.
No such transfer was annexed. This was
important because it was evident from the negotiations that the plaintiff did
not contemplate
a general drainage easement under which Council would be at
liberty to determine what drainage works would be undertaken thereon.
It is
apparent that the plaintiff contemplated granting an easement under which
Council would construct, and only construct, a 1050mm
diameter drainage pipe.
Even if the works to be executed by Council were stipulated and limited in the
Deed, in the plaintiff’s
interest the easement that was to be registered
would have to stipulate that no greater or lesser work could be undertaken. This
would be important to the value of the land on resale. The plaintiff’s
purchaser, not being a party to the Deed, would be unable
to hold Council to its
terms and would be reliant upon the registered dealing.
(2) Clause 3 provided that Council would carry out, inter alia,
installation works in the easement, in accordance with a Schedule
C to the
Deed. The draft had no Schedule C attached. Precise specification of the
work to be undertaken was obviously critical to
any agreement under which the
plaintiff would transfer an easement to Council, not least because the size of
the pipe to be installed
would determine the degree to which it would protect
the property against overland flooding.
(3) Clause 4 prescribed a mechanism for determining the amount of
compensation. Pursuant to this clause, the owner would serve a valuation
and
make an offer to Council to accept the amount thereof. If Council did not accept
the offer, it could serve its own valuer’s
assessment. If that was not
accepted by the plaintiff, the issue of compensation would be submitted to an
independent valuer appointed
by the President of the Australian Valuers
Institute.
(4) In a covering letter Council’s solicitors offered a compensation
amount of $200,000. The letter stated that Council’s
valuer assessed the
appropriate compensation at nil, on the basis that the betterment resulting from
decommissioning of the old pipe
would add $500,000 to the value of the property
and that this exceeded the amount of compensation that might otherwise be
payable
for the easement, which Council’s valuer put at $275,000.
(5) Clause 5.1 provided as follows:
5.1 Upon carrying out the Decommissioning Works [with respect
to the existing pipe under the house] the [plaintiff] agrees to release
Council
from any claims, actions, demands, suits or proceedings of any nature arising
from or in any way related to the [existing
pipe].
- Clause 5.1
was significant. The Deed did not prescribe parameters for assessment of the
appropriate compensation by the independent
valuer under cl 4. The covering
letter made it clear that Council would contend that the plaintiff’s
compensation should be
reduced or offset by a betterment component for removal
of the old pipe. This implicitly assumed that the plaintiff’s title
to and
enjoyment of the property was impaired by Council’s rights over the pipe.
The plaintiff claims in the proceedings that
she is entitled to damages for this
impairment as a component of her loss caused by Council’s negligent
misstatement in the
planning certificate. Clause 5.1 would have the effect
that the plaintiff would be entirely giving up her claim to damages on that
cause of action. She would be releasing the Council from any claim for loss
arising from having purchased the impaired property on
the faith of the planning
certificate while at the same time receiving nothing for the transfer of the
easement upon the basis that
decommissioning the pipe would improve the
property. Further, by cl 5.1 the plaintiff would abandon claim to damages
for nuisance.
- Council
eventually obtained the Minister’s approval and on 8 July 2020 it
issued to the plaintiff a proposed notice of acquisition
of the easement.
Perhaps unsurprisingly, given the 20 year history of Council’s disregard
of professional engineering advice
concerning stormwater drainage in Appian Way,
this notice states that the purpose of the easement is to install and maintain a
stormwater
pipe of only 750mm diameter. I infer that this size must have been
selected to avoid having to increase the capacity of the downstream
pipe that
runs through 10-12 Wyatt Avenue: see [127] above.
- The
Webb McKeown report of May 2005 calculated the capacity of the 750mm pipe
through 10-12 Wyatt Avenue at 0.9m3/sec. This has not
been refuted or questioned
in any other hydraulic engineering opinion. Assuming that other factors
affecting pipe capacity would
be comparable for a new pipe laid through a
western boundary easement over No 13, the 750mm pipe that Council proposes
for that location
would also be capable of conveying only 0.9m3/sec. In all of
the run-off calculations that have been tendered in the proceedings,
0.9m3/sec
is given as the expected stormwater flow at 1 year ARI. The proposed new pipe
would therefore be inadequate, leading to
ponding on Appian Way and overland
flows in all heavier rainfall events. Rain intensity that can be expected every
two years would
result in an overland flow of 1.4m3/sec. Every five years there
would be an overland flow of 1.9m3/sec, every 10 years 2.3m3/sec
and every 20
years 2.6m3/sec.
- That
is why Webb McKeown calculated that a 900mm pipe should be installed under its
Concept 3. Those consultants recommended the same
diameter pipe in each of
two other concepts that they considered, which it has not been necessary to set
out in these reasons. Webb
McKeown said that a 900mm pipe would have a capacity
of 2.6m3/sec – sufficient to handle 20 year ARI events, in accordance
with
Council’s standard. They also advised that downstream augmentation would
be necessary through 10-12 Wyatt Avenue.
- Residents
of the affected properties may expect continued overland flows and flooding if
the 750mm pipe is installed. Installation
will involve difficulties of access
now that the plaintiff’s alterations have been completed. As a result of
Council having
deferred compulsory acquisition for 20 years, from early 2001
when it first knew that a drainage easement would be required, the
cost of the
work will be greater by much more than the factor of inflation. Council’s
proposed installation of an undersized
pipe in order to avoid the cost of the
downstream work that would be required in order for the job to be done properly
follows the
established pattern of Council’s procrastination, half
measures, false savings and departures from advice. An increase in the
piped
capacity through the easement over No 13 at a later date will add more
expense, most likely significantly greater than the
marginal difference between
the cost of a 750mm pipe and that of a 900mm pipe if the work were to be done in
accordance with the
engineers’ advice in the first
place.
Liability of Council for the s 149
certificate
Issue 1: Council’s 2002 resolution and Q7 of the planning
certificate
- The
evidence that Council issued the planning certificate on 9 August 2010 is
referred to at [132]-[133] above. Until
15 February 2007 reg 279 and Sch 4 of the Environmental Planning
and Assessment Regulation 2000 required that a certificate under s 149
include the following information:
7 Council and other public authority policies on hazard risk
restrictions
Whether or not the land is affected by a policy:
(a) adopted by the council, or
(b) adopted by any other public authority and notified to the council for the
express purpose of its adoption by that authority being
referred to in planning
certificates issued by the council,
that restricts the development of the land because of the likelihood of land
slip, bushfire, flooding, tidal inundation, subsidence,
acid sulphate soils or
any other risk.
- With
effect from 16 February 2007 Sch 4 of the Regulation was amended by
deleting the word “flooding” from the final paragraph
of the above
clause and inserting the words “(other than flooding)” at the end of
the clause. At the same time a new
cl 7A was added to Sch 4, as
follows:
7A Flood related development controls information
(1) Whether or not development on that land or part of the land for the purposes
of dwelling houses, dual occupancies, multi dwelling
housing or residential flat
buildings (not including development for the purposes of group homes or seniors
housing) is subject to
flood related development controls.
(2) Whether or not development on that land or part of the land for any other
purpose is subject to flood related development controls.
(3) Words and expressions in this clause have the same meanings as in the
instrument set out in the Schedule to the Standard Instrument (Local
Environmental Plans) Order 2006.
- Clauses 7
and 7A of Sch 4 remained in the form described at [234] up to and including
the issue of Council’s planning certificate to the second defendant on 9
August 2010. Council, however,
worded its certificate in accordance with the
pre-16 February 2007 version of cl 7, coupled with the
post-16 February 2007 wording
of cl 7A. The result was a certificate
containing the following questions and answers (with irrelevant wording removed
and emphasis
added):
7 Council [...] policies on hazard risk restrictions
Is the land is affected by a policy adopted by the Council [...] that
restricts the development of the land because of the likelihood of land
slip, bushfire, flooding, tidal inundation, subsidence, acid sulphate
soils or any other risk?
No
7A Flood related development controls information
Whether or not development on that land or part of the land for the
purposes of dwelling houses, dual occupancies, multi dwelling housing or
residential flat buildings (not including development for the purposes of group
homes
or seniors housing) is subject to flood related development
controls.
No
Construction of the disputed words in their
statutory context
- The
plaintiff contends that the answer given to question 7 was incorrect and
misleading because Council’s 2002 resolution (reproduced
at [97] above) affected
No 13 and was “a policy adopted by the Council ... that restricts the
development of the land because of the
likelihood of ... flooding”.
Council submits that this contention “essentially raises a question of
statutory construction”,
namely, the proper interpretation of cl 7 of
Sch 4 of the Environmental Planning and Assessment Regulation and, in
particular, whether the 2002 resolution falls within that clause.
- For
the purposes of the plaintiff’s misrepresentation case, the question is
whether the answer “No” to question
7 was misleading having regard
to the existence of the 2002 resolution. This cause of action cannot succeed if
it is based upon the
plaintiff attributing an unreasonably wide meaning to
question 7 and its answer. As Council was required by s 149 of the
Environmental Planning and Assessment Act (reproduced at [7] above) to provide the
information prescribed by Sch 4 of the Regulation, the plaintiff could not
reasonably have understood question
7 in any sense different from that
which it bears in its statutory setting. Acting reasonably, the plaintiff must
be taken to have
understood that what was annexed to the contract was a
statutory certificate and that the words in it must bear the same meaning
as
they bear in the subordinate legislation by which the content of the certificate
is prescribed.
- Accordingly
Council’s submission that the plaintiff’s negligent misstatement
case raises a question of statutory interpretation
may be accepted. However, for
reasons that follow, the Act and the Regulation do not provide contextual
influence that would dictate
an interpretation of cl 7 in Sch 4 or
question 7 in the planning certificate any different from the ordinary
English meaning of the
words used. As a result, no difficulty of interpreting
question 7 arises from the fact that the wording adopted by Council had
been
superseded by amendment of the Regulation prior to issue of the
certificate.
Interpretation of the word
“policy”
- The
Environmental Planning and Assessment Act as in force in August 2010
contained no definition of the word “policy”. I refer to the Act in
the past tense in order
to identify its provisions at the date when Council
issued the relevant planning certificate. Most of the provisions referred to
in
this judgment remain in force to this day, although they have been
comprehensively renumbered in the current form of the Act.
As at August 2010,
the objects of the Act were set out in s 4 and were, broadly, to encourage
proper management of development of
land and conservation of resources; to
encourage provision of land for public purposes; to encourage ecologically
sustainable development
and protection of the environment; to promote sharing of
responsibility for environmental planning between different levels of government
and to increase opportunities for public involvement in environmental planning.
All of these are objects that would be promoted by
the adoption of what might be
termed, in plain English, “policies”. The Act provided for the
adoption of general plans
for achieving the stated objects but it did not refer
to them as policies.
- Part 3
of the Act was entitled “Environmental planning instruments” and
provided for two types of such instruments: “State
environmental planning
policies” (also referred to as SEPP) and “local environmental
plans” (referred to as LEP):
s 24. Section 33A empowered the
Governor, by order, to “prescribe the standard form and content of local
environmental plans
or other environmental planning instruments”. Pursuant
to this power the Standard Instrument (Local Environmental Plans) Order 2006 was
gazetted, being a pro forma LEP with standard provisions. Section 53
provided that there should be an LEP for each local government
area.
Division 4 of Pt 3 stipulated the manner in which LEPs may be adopted,
including preliminary submission of a proposed plan to the Minister and
subsequent
community consultation. Division 6 of Pt 3 provided that an
environmental planning instrument (that is, either an SEPP or a LEP) may require
Development Control Plans (DCPs)
to be prepared before any particular
development or kind of development may be carried out.
- In
both the Act and the Regulation as at August 2010 there was no use of the word
“policy” or “policies” to
describe, generically,
documents containing plans for development or conservation of land, or otherwise
to achieve the objects of
the Act. Such plans were referred to throughout the
Act as “instruments” and the word “policy” appeared only
as part of the title of one type of instrument, namely, a “State
environmental planning policy”. As a result, the meaning
of
“policy” in cl 7 of Sch 4 of the Environmental Planning
and Assessment Regulation, either before or after amendment of the clause, is
not elucidated by its statutory context. The meaning of “policy”
in
question 7 of Council’s planning certificate is, likewise, not
elucidated by that context. The word must be given its ordinary
English
meaning.
- Council
submitted that “in a planning context the word ‘policy’ is
usually not applied to a resolution adopted by
Council in respect of one site
and one development application” and that “a ‘policy’ is
ordinarily in the
nature of an instrument which has the character of
establishing a course of action for environmental planning for a locality or for
the State”. The reference in these submissions to “a planning
context” is indeterminate and does not meaningfully
identify any relevant
context beyond the Regulation in which the word is used and the Act under which
the Regulation is made. As
found above, that context imparts no particular
meaning to “policy”.
- In
support of its submission Council cited Cobden-Jones v Woollahra Municipal
Council [2002] NSWLEC 2; (2002) 118 LEGRA 41. In that case a Development
Application in respect of a commercial site was affected by SEPP 1, by
Woollahra
LEP 1995 and by a Development Control Plan (DCP) that Woollahra
Council had developed for the precinct in which the site was located.
Council
resolved to adopt certain urban design guidelines as an acceptable method of
interpreting Council's planning controls for
the subject site, whereby the
constraints of the otherwise applicable planning instruments were alleviated. In
an application to
the Land and Environment Court objectors alleged that the
urban design guidelines were beyond the power of Woollahra Council to adopt.
Sheahan J found in favour of the council. There was an unsuccessful appeal to
the Court of Appeal but that Court’s reasoning
is not presently relevant:
Alison Cobden-Jones v Woollahra Municipal Council [2002] NSWCA 382.
- Sheahan
J held as follows:
[162] Central to the applicants' challenges is the allegation
that the [urban design guidelines] resolution is ultra vires the
Council,
because it purports to exercise plan-making powers without satisfying the
requirements of Pt 3 of the [Environmental Planning and Assessment
Act], notably those involving the participation of the public and, in the
case of an LEP, the Minister. [...]
[163] The technical requirements of Pt 3 apply equally to
LEPs and DCPs, but there is no doubt the Pt 3 processes, as such, played no
part in the evolution and making of the Council's [resolution to adopt the urban
design guidelines].
[...]
[165] The applicants concede that the [urban design guidelines]
are neither an environmental planning instrument nor a DCP, but
contend that
they purport to do the job of an LEP or DCP, and supplant the statutory controls
presumed to have been duly made in
the LEP and the relevant DCP. [...]
[Provisions] of a LEP cannot be amended in this way and may be amended only by
the making of
a new LEP. [The applicants] contend that there is no statutory
basis for the Council to formulate such guidelines as a "method for
the
interpretation of its planning controls". [...]
[169] I accept the Council's submission that, as admitted by
the applicants, the [urban design guidelines] are neither an environmental
planning instrument nor a development control plan. Accordingly, they do not
depend in any way on the operation of Pt 3 of the [Environmental
Planning and Assessment Act], and, accordingly, cannot be controlled by
it.
[170] I also accept the "backup" submission [on behalf of the
Council] that they are also not a "policy", such as would attract
the
administrative law principles of "inconsistency", or "fettering of discretion".
Corkhill v Hope (1991) 74 LGRA 33.
[171] The term "policy" is usually not applied to a resolution
in regard to only one site or one DA. Policies can deal with a wide
range of
subject matters, but they also do not purport to be LEPs or DCPs, and cannot
include consideration of the particular circumstances
of a case. See Re Drake
and the Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
at 640-1.
[172] The [urban design guidelines] are not of general
application – they were developed from a specific planning analysis,
with
one particular site and one particular project in mind.
- The
last three paragraphs of this extract, upon which Council relies, are concerned
with administrative law concepts. A valid policy
adopted by a government
authority in order to structure the application of a broad discretionary power
may be a consideration that
must be taken into account by a decision maker. On
the other hand, a policy that purports to exclude considerations that are
required
by statute to be taken into account may be ultra vires and irrelevant,
so that the decision maker will commit a reviewable error
if he or she takes it
into account. These concepts are elaborated at length in the judgment of Brennan
J in Re Drake and the Minister for Immigration and Ethnic Affairs (No 2)
(1979) 2 ALD 634. In the context of those administrative law principles the
concept of a policy is that of a plan or approach that may be applied across
a
broad range of separate cases; for example, in the varied circumstances of
individual non-citizens who may be under consideration
for deportation.
- Nothing
in Sheahan J’s judgment supports Council’s proposition that this
concept of a “policy” is imported
by the use of the word in
legislation that applies to planning and development in New South Wales. The
subject resolution was a policy
in the sense of a broad plan of action with
multiple components, some of them contingent upon others or upon the course of
events,
drawn up to address a significant and persistent stormwater management
problem that affected a number of landowners and users of
a public road in one
part of a local government area. Sheahan J’s judgment provides no basis
for treating a “policy”
of that nature as not falling within the
meaning of the word where it is used in the Regulation and in the
certificate.
The 2002 resolution was a
“policy”
- For
ease of reference pars A and B of Council’s 2002 resolution are repeated
(from [97]
above):
A That Council proceed to negotiate the creation of an easement
over the existing pipeline and then proceed to reline the existing
pipe in its
current location beneath the house.
B That, should Council be unable to gain consent from the
owner, it proceed with compulsory acquisition of an easement over the
existing
pipeline. (Future development of the property should include the establishment
of an easement adjacent to the side boundary
for drainage
purposes).
- The
object of these paragraphs was to achieve adequate drainage of stormwater from
Appian Way and to avert the risk of flooding the
road and/or Nos 13-17
and/or properties in Wyatt Avenue. Paragraph A called for an immediate first
step of negotiating acquisition
of an easement over the line of the existing
pipe. The step described next is the relining of the pipe. However the
resolution allowed
for the contingency that negotiations for the easement would
be unsuccessful. In that event, the second step chronologically would
have to
have been compulsory acquisition of an easement over the existing drain. The
resolution provided for that in par B. Given
the regime of the Land
Acquisition (Just Terms Compensation) Act, the compulsory process could take
12 months or more. The resolution prescribed, as an aspect of the whole plan,
that Council would
not undertake relining of the existing pipe until it had
acquired an easement over it, compulsorily if necessary.
- The
final step called for by the resolution, in par B, was the acquisition of a
western boundary easement and relocation of the pipe:
“(Future development
of the property should include the establishment of an easement adjacent to the
side boundary for drainage
purposes)”. Because this would be contingent
upon the proprietor of No 13 seeking to develop the property, it might be
deferred
for a considerable period. The resolution does not state in terms that
development consent would be made conditional upon the grant
of a western
boundary easement but that is what was meant – and what is conveyed
– by the words in parentheses in par
B. That is how the second defendant
himself understood the resolution. He gave these answers in
cross-examination:
A Well, they had said in their 2002 resolution - if I've got
that term correct - that they would want an easement if there was
to be a DA;
there was to be a condition of the DA that you would have to grant them the
easement.
A What I knew is that in 2002 they had said that a DA would be
conditional upon the granting of an easement. It didn't say that
they needed
time to investigate.
[...]
Q You were told on 14 June 2002 about this resolution and that
one of the terms of any future development application for the property
would be
the establishment of an easement down the western boundary?
A Yes.
- Such
a long term plan of action, with a defined objective and multiple intermediate
and contingent steps, was a “policy”
according to the ordinary
meaning and usage of that word in the English language. The policy was adopted
“because of the likelihood
of ... flooding” of road infrastructure
and vulnerable properties. The fact that the means chosen would require drainage
access
through only one parcel of private property and would therefore restrict
the development of only that property does not make it any
the less a
“policy”. Council submitted that its 2002 resolution only had to be
disclosed in answer to question 7 if it
applied generally throughout the
local government area or at least to multiple properties. But question 7 in
the certificate is not
so limited.
- Certainly
it was inherent in the 2002 resolution that the stormwater flooding problems at
Appian Way should be addressed by exercising
compulsory powers only in respect
of one of the affected properties. An alternative might have been to spread the
burden, for example,
by acquiring an easement on a boundary so that half of its
width would be on each of two of the properties, or by acquiring additional
narrow easements on each of Nos 15 and 17 and increasing stormwater
capacity by installing two extra 400mm pipes. The 2002 resolution
represented a
policy choice.
- Paragraph
B of the resolution is silent as to whether, at the point of future development,
Council would require an easement to be
created without compensation to the
proprietor. In my view that is implicit. If Council intended to pay fair
compensation –
or to acquire the easement compulsorily under the Land
Acquisition (Just Terms Compensation) Act and submit to assessment of
compensation by the Land and Environment Court – there would have been no
reason to defer acquisition
of the western boundary easement until “future
development of the property”.
- I
do not accept Council’s submission that the words in parentheses in par B
are ambiguous or vague. Council submits that the
resolution “does not even
identify the part of the property over which the easement is sought”.
However the western boundary
is necessarily intended. That appears from the
physical condition of No 13, from Mr Wyatt’s report which was before
Council
when the resolution was passed and from antecedent correspondence. All
aspects of the resolution were sufficiently defined for it
to constitute a
policy, capable of being implemented over time.
- I
reject Council’s submission that the 2002 resolution was “an
‘operational’ decision, not a ‘policy’
decision”.
The only immediate, operational action that was approved by the resolution was
the first step of negotiating to
acquire an easement over the existing drain.
The further action of commencing the compulsory acquisition process for an
easement
on the line of the pipe was approved, contingent upon negotiations
being unsuccessful. Acquisition of a western boundary easement
and relocation of
the pipe could not be operational matters because both steps were expressly made
contingent upon the proprietor
initiating further development of the
property.
- Inconsistently
with the submission that the resolution was an “operational”
decision, Council also asserted that it “expresses
a desired course of
future action, not a decided course of future action”. This is apparently
directed to the words in parentheses
in par B. In fact, those words contain no
reservation about Council’s intention to give effect to them. However,
because future
development of the property would depend upon action by the owner
and would occur in a timeframe not under the control of Council,
necessarily
this aspect of the resolution could not be precise as to date of implementation.
That is consistent with it being an
element in a policy.
The
resolution “restricts the development of land”
- From
the date of passing the resolution, the policy to which it gave effect
restricted development of the land. In the early stages
of implementation, the
policy’s requirement that an easement over the existing pipe be acquired
would restrict development.
According to the usual terms of such an encumbrance,
a drainage easement would preclude building any structure over the area affected
by it. This would be subject to the existing house but the easement would
sterilise, from the point of view of building development,
areas through the
centre of the front and rear gardens. An easement would impose restrictions
additional to those that already applied
under s 59A of the Local
Government Act. Even if new construction over the easement should be
permitted to some degree, the minimum burdens of a drainage easement would
create a degree of restriction upon physical development of the site.
- The
policy’s provision for acquisition of a western boundary easement in the
event of future development of the property involved
still further restriction.
Irrespective of whether compensation would be paid, either pursuant to an offer
from the Council or following
assessment in the Land and Environment Court,
Council’s policy of acquiring such an easement would restrict development.
At
a minimum the requirements of a western boundary drainage easement would
preclude or limit construction on a substantial proportion
of the property.
- Council
has argued the case as if it only had to disclose the 2002 resolution if it was
a policy adopted with the primary intention,
design or purpose of creating a
restriction on development of land. I do not accept that argument.
Question 7 requires disclosure
of policies according to whether they have
the effect of creating a restriction. The effect is what is material to anyone
who may
rely upon a planning certificate, such as a purchaser of land.
Question 7 required disclosure of any “policy adopted by the
Council
[...] that restricts the development of the land because of the
likelihood of ... flooding”. The words to which emphasis has been added
are addressed to effect, not intent.
Restriction on development would be an
inherent effect of the creation of easements pursuant to the policy in the 2002
resolution.
- Council
further submitted that it “could not pass a resolution affecting the
second defendant’s property rights ... without
giving [him] the right to
be heard”. According to Council’s argument the words in parentheses
in par B could not mean
that any future development would be on condition of the
establishment of a western boundary easement. Such a resolution would affect
the
second defendant’s rights and as he was not given any hearing about this,
Council submitted that it would be void. This
argument does not follow. It is
irrelevant whether the validity of the resolution would have been open to
challenge on the basis
suggested. If it constituted a policy that restricted
development of No 13 because of the likelihood of flooding, as I have
concluded,
then not disclosing the resolution in answer to question 7 was
misleading. The possibility that a Court might declare the resolution
invalid
would no doubt be a consideration material to a purchaser. But the answer
“No” to question 7 would still be incorrect.
The
restriction is imposed “because of the likelihood of
flooding”
- From
all surrounding circumstances it is clear that Council’s intention with
respect to the proposed new boundary easement was
to install on it a more
adequate pipe. Equally clearly, the intention in acquiring an easement over the
existing drain was to secure
Council’s right of access for keeping that
drain open and in good repair. In both cases the easements were to be acquired,
with their concomitant restrictive effects on development of the land, because
of the likelihood of recurring uncontained surface
flows of stormwater. That
justification for the 2002 resolution falls within the meaning of the expression
“because of the
likelihood of ... flooding” in question 7 of
Council’s planning certificate.
- Council
has endeavoured to portray inundation by stormwater run-off as something other
than “flooding” in the sense in
which the word is used in
question 7. Council went so far as to put this
argument:
[The 2002 resolution] had nothing whatsoever to do with “flooding”.
... [The resolution] set out the intended course
of action for Council to repair
and upgrade its stormwater infrastructure. ... However, that has nothing to do
with “flooding”.
The resolution does not deal with the issue of flooding at all.
- I
find that submission surprising and unrealistic. I reject it. Mr Wyatt’s
report to Council for the very meeting at which the
resolution was adopted
commenced as follows (emphasis added):
Since 1984, Council has received complaints about local flooding from
residents at Numbers 13, 15 and 17 Appian Way, Burwood. The flooding
follows heavy storms where the capacity of the existing drainage system has been
exceeded or compromised by heavy leaf litter. [...]
Damage has been recorded at
No 17 Appian Way: stormwater flooded the downstairs living area
damaging carpets and furnishing.
- Mr
Wyatt was not alone in regarding inadequate piped capacity at Appian Way as
giving rise to a problem of “flooding”.
Everyone who has spoken of
uncontrolled stormwater surface flows through this part of Appian Way, for
nearly 50 years, has referred
to the problem in those terms. In
“everyone” I include the numerous residents who have made complaints
to Council since
1972 and Council’s own personnel and consultants who have
written reports and letters referring to the incapacity of the drainage
system.
See the evidence referred to at [64], [66]-[70], [86], [88] and [96] above concerning communications up to the date of the
resolution. In accordance with common usage and common sense, those
communications
almost invariably referred to the risk associated with the
under-capacity pipe as a risk of “flooding”.
- In
Council’s Statement of Facts and Contentions in the Land and Environment
Court, dated 21 February 2017, the following propositions
were advanced
(emphasis added):
2.1 The Development Application should be refused because the
proposed basement area will be used as a habitable room contrary
to Provision P4
of [Burwood Development Control Plan (BDCP)].
Particulars
b The proposal is incompatible with the known
overland flow path and the property is flood affected. See Contention
No 5 below for further details of this particular.
5 INCOMPATIBILITY WITH OVERLAND FLOW PATH AND FLOODING
ISSUES
5.1 The Development Application should be refused because in
accordance with Council’s planning controls under Clause 6.2
Flood
Planning of [Burwood Local Environment Plan] 2012 and Section 6.4 Flood
Planning in BDCP, development consent must not be granted to the proposed
development as the development fails to satisfactorily
demonstrate
that:
- it is compatible with the
site’s flood risk;
- it will not adversely affect existing flood behaviour
or the environment; and
- it incorporates appropriate measures to manage risk to life
from flooding.
Particulars
a The development proposal is incompatible with the known
overland flow path and the following matters are raised:
1 In a flood event, flow is likely to enter the premises
and cause widespread damage including potential risk to life.
- Council
saw no difficulty in characterising stormwater surface flows over No 13 as
“flooding” when its purpose in the
Land and Environment Court was to
invoke planning policies to obstruct the plaintiff’s DA (unless she would
grant an easement
without compensation and install a Council drain at her
personal expense). In this Court, for the different purpose of denying that
Council’s planning certificate contained negligent misstatements, it
contends that the 2002 resolution for drainage easements
to manage the same
stormwater surface flows has “nothing whatsoever to do with
‘flooding’”. The meaning of
the word, so far as Council is
concerned, appears to depend upon which Court it is addressing and for which of
its purposes. The
Court could reasonably expect from a public body such as
Council a more forthright approach to argument. Contrary to Council’s
submission, its 2002 resolution had everything to do with
“flooding”.
The 2002 resolution was not revoked or
abandoned
- Council’s
actions and failures to act in the period between the passing of the resolution
and the issue of the planning certificate
have been set out at [98]-[129] above. The order of
events is summarised as follows for ease of reference, with notation of earlier
paragraphs of this judgment
in which the detail is set out. Contrary to
Council’s submissions, these events do not suggest that the plan in the
resolution
was abandoned:
14 June 2002: Council notified the second
defendant of the terms of the resolution – [98].
3 July to 31 October 2002: Council had a meeting with the second defendant
and exchanged correspondence with him concerning negotiation
of an easement on
the western boundary. Negotiation to that end at that time was not part of the
sequence prescribed in the resolution.
Council notified the second defendant on
8 October 2002 that s 59A of the Local Government Act had been
enacted – [99]-[104].
12 December 2002 and 4 February 2003: Council notified the second
defendant of its intention to enter No 13, in exercise of its statutory
rights, to repair the existing drain. Entering the property on this basis,
rather than pursuant to an acquired easement over the
drain, was not part of the
sequence in the resolution – [106]-[109].
5 March 2003: Council advised the second defendant that it would
“defer” undertaking repairs to the drain until the impasse
between
the parties concerning Council’s asserted statutory right of access was
resolved. Council said it would formally notify
the second defendant
“should it wish to proceed in this manner at some time in the
future” – [113]-[114].
21 January 2004: Council notified the second defendant that it had not
yet investigated alternatives for drainage through No 13, namely,
an
eastern boundary easement or minimally intrusive pipe construction on the
western boundary – [116].
18 June 2004: Council approved the second defendant’s development
application for a wider rear patio. No condition was imposed
with respect to the
grant of an easement on the western boundary – [118].
After May 2005: Council constructed the junction pit directly in front of
No 13, with new inlet pits and feeder lines on Appian Way
– [129].
- No
resolution amending or repealing that of 11 June 2002 was passed by Council
up to August 2010. Council submits that its express
notification to the second
defendant on 5 March 2003 that it was deferring repair of the existing
drain constituted abandonment of
any intention to implement the resolution. I do
not accept that submission. Deferment of remediation of the drain was not
abandonment.
In any event, what was deferred was the entry under statutory
powers. Entry on that basis had not been dealt with in the resolution
and
deferment of it said nothing about whether Council would proceed in the future
with acquisition of either an easement over the
drain or a western boundary
easement.
- Council’s
deferment of entry was expressly only for the purpose of investigation of other
possibilities, not for the decided
purpose of actually doing anything
inconsistent with the proposed repairs or proposed future actions. In the event,
Council did not
even investigate alternatives. The deferment became indefinite
by default and inaction rather than as a result of anything so decisive
as
cancellation of the policy.
- Council
submits that abandonment of the 2002 resolution was “confirmed” in
Mr Wyatt’s memorandum to the Mayor, General
Manager and Councillors of
21 March 2003 ([115]). That memorandum did no more than advise senior
personnel that the second defendant had been advised of the deferment. Mr Wyatt,
as Group Manager Engineering Services, had no authority to abandon a plan of
action resolved upon by Council.
- For
a year before the passage of the resolution Council had known that it would have
to acquire a western boundary easement over No
13 in order to discharge its
responsibility of providing adequate stormwater drainage of Appian Way. The
necessity for such an easement
was recognised in the resolution and it was
reaffirmed repeatedly in subsequent engineering reports. This imperative
remained a constant
up to and beyond August 2010. From the chronological
findings set out earlier in these reasons, the following events are significant
to this conclusion:
25 May 2001: Mr Wyatt had concluded by this
time, as he informed the second defendant, that there was “no viable
alternative”
to the acquisition of a western boundary easement and
installation of a larger pipe – [76].
April 2002: Robinson GRC’s report advised of the inadequate capacity of
the existing drain and the difficulty of enlarging it
along its current line
under the house – [88].
June 2002: Mr Wyatt’s report to Council recommended compulsory
acquisition of a western boundary easement and installation of
a new larger pipe
– [95]-[96].
October 2004: Brown Consulting (Australia) Pty Ltd reviewed the Robinson GRC
report and confirmed the inadequacy of the existing drain
– [119].
May 2005: Webb McKeown recommended their Concept 3, requiring acquisition of
a western boundary easement and installation of 900mm
diameter pipe – [122], [127]-[128].
- From
these frequent and consistent reiterations of engineering advice, Council was
aware that establishment of a western boundary
easement was a core,
indispensable element of the 2002 resolution. Notwithstanding that the
resolution itself postponed acquisition
of such an easement until “future
development of the property”, Council knew that this acquisition was not
just an option
but that it would have to be done. Implicit abandonment of the
plan in the resolution cannot be attributed to Council in these
circumstances.
- No
evidence was called by Council to explain why it did not try to secure a western
boundary easement at the time of the second defendant’s
development
application in June 2004. Counsel for the second defendant adduced from Mr
Olsen, a Council planning officer, that he
did not see the 2004 development
application. He did not claim to have had any involvement in the grant of
consent. He agreed with
the following proposition put to
him:
The determination was dealt with by Council, by the various departments in
council and considered by the various departments in Council
from the time that
– if normal course of events were followed from the time of the original
application [...] until the notice
of determination of 18 June
2004.
Mr Olsen also said that:
[It] would have been referred to our heritage advisor and to our engineering
section.
- Having
regard to Mr Olsen’s lack of involvement or first-hand knowledge, this
evidence was no more than a description of what
ought to have happened and
perhaps what would happened “if normal course of events were
followed”. The Court is left
without any basis for finding what reviews
the second defendant’s development application actually went through.
Accordingly,
I rejected the second defendant’s attempt to ask Mr Olsen
“how it was that development consent was provided [...] without
it being a
condition [...] that the easement adjacent to the side boundary [be] established
for drainage purposes”. Any answer
given by Mr Olsen to that question
would have been no more than a speculative opinion.
- The
failure of Council to act upon par B of the 2002 resolution in connection with
the second defendant’s development application
in 2004 may reflect no more
than Council’s lack of internal communication and dysfunction with respect
to implementation of
policy. It is possible that the application was dealt with
by someone within Council who was not aware of the resolution or that,
despite
full awareness, the relevant decision maker simply did not give effect to it.
The history of Council’s dealings with
No 13 and with the drainage
problem on this part of Appian Way includes many examples of decisions not
carried through, to some of
which I have referred. Lack of implementation does
not signify a change of heart in such an organisation. I do not regard
Council’s
treatment of the 2004 development application as a constructive
or implicit revocation of the 11 June 2002 policy. In the absence
of
explanation from Council no inference of abandonment can be drawn.
- Council
relies upon the fact that it did not attempt to invoke the 2002 resolution in
seeking access to No 13, in the period March
2011 to July 2012, for the
purpose of carrying out repairs to the drain after the plaintiff had acquired
the property. Instead it
passed a fresh resolution for the execution of those
works on 25 September 2012. It is also said that Council did not rely upon
the
2002 resolution as authorisation for negotiating with the plaintiff to
acquire a western boundary easement in 2012 or as the basis
for requiring that
the plaintiff grant such an easement as a condition of approval of her DA in
2016 and 2017. These events took
place between three and seven years after the
s 149 certificate had issued. They are incapable of constituting any
evidence of the
status of the 2002 resolution at the date of the
certificate.
- Failure
on the part of this Council to implement the resolution, in any respect, is not
evidence of revocation. The policy adopted
in the resolution was still operative
when the planning certificate was issued on 9 August 2010.
Conclusion on Issue 1
- The
2002 resolution was a “policy adopted by the Council ... that restricts
the development of the land because of the likelihood
of ... flooding”
within the meaning of those words in question 7 of the s 149 planning
certificate. It was incorrect for Council
to have answered this question
“No”. A correct answer to the question would have been
“Yes”, followed by
statement of the substance of the 2002
resolution.
Issue 2: 1994 Stormwater Code and Q7A of the
planning certificate
Meaning of “flood related development controls”
- In
relation to Council’s answer to question 7A on the planning
certificate (see [235]
above), the plaintiff’s negligent misstatement case again raises an issue
of statutory interpretation. The expression “flood
related control”
in question 7A could only have been understood by the plaintiff,
reasonably, in the sense in which that expression
is used in cl 7A of
Sch 4 of the Environmental Planning and Assessment Regulation. There is no
definition of “flood related control” in the Regulation or in the
Act and it is not an expression used in
common, everyday speech or writing. Each
of the individual words has an ordinary English meaning but the composite
expression has
no particular ordinary meaning. However its correct
interpretation may be gathered from a number of documents published by the
Department
of Infrastructure, Planning and Natural Resources (“the
Department”) in January 2007. I take those documents into consideration
pursuant to s 34(1)(b)(i) of the Interpretation Act 1987 (NSW).
- In
April 2005 the Department published an updated Flood Plain Development Manual.
This contained a statement of the New South Wales
Government’s policy for
managing the development of flood prone land, with the object of facilitating
its use while reducing
the impact of flooding on individual owners and
minimising private and public losses caused by flood events. The Manual provided
guidance to local councils on how to assess the degree of risk of flooding in
their respective areas and how to adopt appropriate
Flood Planning Levels and
freeboards, below which certain classes of development should not be permitted.
- As
at early 2007 s 117(2) of the Environmental Planning and Assessment
Act empowered the Minister to issue directions to councils requiring them to
prepare local environmental plans in accordance with “such
principles, not
inconsistent with this Act, as are specified in the direction”. In
exercise of that power the Minister directed
councils to prepare local
environmental plans consistently with the Flood Plain Development Manual 2005.
On 31 January 2007 the Minister
issued pursuant to s 117(2) Direction
No 15, requiring that draft local environmental plans should be consistent,
also, with the
Guideline on Developmental Controls on Low Flood Risk Areas
(“the Guideline”). The Guideline was published by the Department
on
the same day and both it and Direction No 15 were distributed to councils
under cover of a Departmental planning circular on 31
January 2007.
- Direction
No 15 required that:
a draft LEP must not impose flood related development controls above the
residential flood planning level for residential development
on land unless the
Council provides adequate justification for those controls to the satisfaction
of the Director-General.
- The
Guideline stated the same restriction. It commenced with a description of its
own contents, namely, that it:
provides advice to councils on appropriate flood related controls for
residential and non-residential development in areas of flood
prone land above
the [Flood Planning Level] for residential development (sometimes known as low
risk areas) and associated advice
on section 149 certificate
notifications.
The Guideline further stipulated that:
unless there are exceptional circumstances, councils should adopt the 100-year
[Flood Planning Level] for residential development.
- The
Guideline used the expression “flood related development controls”
repeatedly and consistently in the sense of restrictions
imposed by local
environmental plans upon residential development by reference to the location of
the subject land either above or
below an adopted Flood Planning Level. The
Departmental circular under cover of which the Guideline and Direction
No 15 were distributed
also used the expression “flood related
development controls” repeatedly and consistently in the above sense. The
circular
stated that cl 7A of Sch 4 of the Regulation, the Guideline
and Direction No 15 constituted, together:
a package of changes concerning flood related development controls on
residential development on land above the 1-in-100 year flood
and up to the
Probable Maximum Flood.
- The
circular said that the changes followed “community concern over notations
about low flooding risk being included on section
149 certificates and the
appropriate development controls that should apply to residential development in
low flood risk areas”.
From the usage of the expression “flood
related development controls” throughout these documents, issued by the
Department
at the time of cl 7A being inserted in the Regulation, I
interpret the quoted expression where it appears in the clause as having
the
meaning discussed at [283] above. It has the same meaning in question 7A in
the planning certificate.
The 1994 Stormwater Code
- The
plaintiff submits that the 1994 Stormwater Code is a “flood related
development control” and that the answer “No”
to
question 7A on the planning certificate was therefore incorrect. The
plaintiff relies upon cll 8.8 and 8.16 of the Code, which
are set out in
the extract from Commissioner Brown’s judgment at [214] above. In August 2010
when Council’s s 149 certificate issued, those clauses were capable
of having a restrictive effect upon
development of No 13 because of the
drain running through the property. Clause 8.8 would be engaged by the
existence of the drain
and would require that the proprietor, upon seeking
development approval, should create an easement in favour of Council, with
concomitant
limitations on full utilisation of the site. Clause 8.16 would,
similarly, restrict freedom of development over the drain line.
- It
is no doubt true that preservation of the integrity of an existing drain and
creation of an easement over it, as provided for in
these clauses, are
provisions related to ensuring that storm water is piped and contained and does
not become an overland flood.
But that does not constitute those clauses, or any
other part of the Code, a “flood related development control” within
the meaning that I have concluded at [283]-[284] must be attributed to that expression in
question 7A. The quoted expression encompasses development controls that
are stipulated
according to the location of a property relative to a Flood
Planning Level. A partial restriction upon full development of land,
dictated by
the presence of a drain on it and/or an easement over it, has only an indirect
connection with flooding and is outside
the concepts with which question 7A
is concerned.
Issue 3: non-disclosure under s 149(5)
- The
plaintiff submits that by force of s 149(5) of the Environmental
Planning and Assessment Act Council’s duty of care extended to
providing information beyond the matters prescribed by the Regulation. She
submits that
irrespective of whether the answers Council gave to
questions 7 and/or 7A were literally correct, discharge of its duty
required
that there be disclosed in the certificate the facts that the pipe ran
through the middle of the property, that it was owned by the
Council and subject
to Council’s statutory rights and that No 13 was affected by overland
flooding as a result of inadequate
stormwater drainage of Appian Way.
- The
plaintiff was unable to cite authority for the proposition that the scope of
Council’s duty of care extended to volunteering
information beyond that
specified in the Regulation. There is no principle upon which the content of the
duty could be so enlarged.
By responding to the second defendant’s
application, lodged pursuant to s 149(1), Council could only be taken to be
providing
such information as subs (2) obliged it to provide.
- Subsection (5)
is expressed in permissive or facultative terms:
(5) A Council may, in a planning certificate, include advice on
such other relevant matters affecting the land of which it may
be
aware.
Upon checking the appropriate box on the application form
to seek further disclosure under subs (5) (see [133] above), the second
defendant did not specify any particular subject upon which he sought
information. It was left to Council to
make such additional disclosure under
s 149(5) as it thought fit. In this respect the case is quite different
from Mid Density Developments Pty Ltd v Rockdale Municipal Council, where
the applicant for a planning certificate expressly requested information beyond
that specified in Sch 4 of the Regulation.
- In
the absence of an explicit request for information about Council infrastructure
installed on the property, or any statutory rights
Council may have that could
interfere with use and enjoyment of the land, or any affectation of the land by
inadequate street drainage,
there was no obligation upon Council to address such
matters. No person who received the certificate could reasonably rely upon it
as
containing full disclosure on those topics. Council’s duty did not extend
to the exercise of reasonable care with respect
to such
information.
Issue 4: Council’s breach of duty in issuing
the planning certificate
- A
correct answer to question 7 would have referred to the 2002 policy that
Council had adopted by the resolution of its Services and
Policy Committee. The
existence of that policy was information about an act or decision of Council
itself, not about some event or
circumstance external to Council of which it
might have learned by due enquiry. The passing of the resolution was inherently
within
Council’s corporate knowledge. The duty to exercise reasonable care
in issuing the certificate could only have been discharged
by providing an
answer to question 7 that reasonably accurately conveyed the existence of
the policy. In a case where the information
supplied concerns Council’s
own acts and/or decisions, it is not relevant to enquire whether Council took
reasonable steps
to maintain accurate records of policies that it had adopted or
whether it followed a reasonable procedure for interrogating those
records prior
to issuing a certificate. The duty of care could not be discharged by the
adoption of any system of keeping or searching
records if, notwithstanding such
system, Council failed to answer question 7 in a s 149 certificate
with reasonable accuracy as to
the existence of its own policy resolution that
lay within its own repository of corporate knowledge.
- This
follows from consideration of the basis upon which a public body owes a duty of
care in the provision of information within its
possession. The basis was stated
in L Shaddock and Associates Pty Ltd v The Council of the City of Parramatta
(No. 1) in the following passages:
A public body, by following the practice of supplying information upon which the
recipients are likely to rely for serious purposes,
lets it be known that it is
willing to exercise reasonable skill and diligence in ensuring that the
information supplied is accurate.
In the circumstances, diligence might be more
important than skill, although competence in searching for and transmitting the
information
must play a part. However, even if diligence only and not skill were
required, a public body might be specially competent to supply
material which it
had in its possession for the purposes of its public functions. (Gibbs CJ at
235).
Where, as in the present case, the supplier is the exclusive possessor of
essential information concerning a matter of importance,
such as the buying and
selling of property, and, being a local government body, sets itself up as a
centre from which, in a quite
formalized fashion, this information is
distributed to those who require it, it requires no holding out of special skill
or competence
in order to lead to the inference that care will be taken in
furnishing that information. (Stephen J at 243).
In the discharge of their public functions local authorities have in a practical
sense an obligation to provide information of the
kind now in question in
response to a request. It is information of vital importance to an owner or
intending purchaser. It materially
affects the use to which the land may be put
in the future and its value. Because it relates to intended acts of the
authority, it
is information which it alone possesses. [...] The specialized
nature of the information, the importance which it has to an owner
or intending
purchaser and the fact that it concerns what the authority proposes to do in the
exercise of its public functions and
powers, form a solid base for saying that
when information (or advice) is sought on a serious matter, in such
circumstances that
the authority realizes, or ought to realize, that the
inquirer intends to act upon it, a duty of care arises in relation to the
provision
of the information and advice. (Mason J at 252-253).
- The
facts of L Shaddock and Associates Pty Ltd v The Council of the City of
Parramatta (No. 1) were similar to those in the present proceedings in that
the road widening proposal that was not disclosed to a prospective purchaser
in
that case was the council’s own proposal. The enquiry made of Parramatta
Council, like question 7 in the planning certificate
here, sought
information about the council’s own acts and/or decisions. Taking
reasonable steps to collect and collate information
and to search for it may be
sufficient to discharge a council’s duty of care in providing information
concerning some matter
extraneous to Council’s own acts and decisions. An
example is Mid Density Developments Pty Ltd v Rockdale Municipal Council
in which the appellant had enquired of Rockdale Council whether it had
“information which would indicate that the land is subject
to the risk of
flooding or tidal inundation?". Reasonable care in answering this question
required that the levels of the subject
land be ascertained and compared to
flood prone levels as identified in two studies that were held by the council.
Breach of duty
was established on the basis that the council engineer who
responded incorrectly had not made any examination of the levels or of
the
studies. Had he made a reasonably careful examination of the material,
council’s duty may have been discharged, even if
he made an error.
- Council
argued the question of breach of duty in the present case and adduced evidence
directed to the issue on the assumption that
the plaintiff could only succeed by
proving lack of reasonable care in Council’s system of storing and
searching for the information
that was required to be disclosed in the
certificate. I will address that argument and evidence in the following
paragraphs although
I do not consider that the plaintiff was required to prove
breach of duty in this way where Council has made a statement in the certificate
that is falsified by its own act of resolving upon a policy.
- From
1998 to November 2017 Mr Brian Olsen was Council’s officer responsible for
issuing planning certificates. The usual procedure
of Council in 2010 was that
upon receipt of an application under s 149(1) from a member of the public,
one of the personnel in Council’s
Customer Service Department would
prepare a draft certificate. This was done by entering the Lot and Deposited
Plan numbers for the
property into a computer program named
“Authority”. This software had the capacity to interrogate a
database on Council’s
mainframe computer identified as the “Property
Module”. Authority would generate a draft certificate.
- It
is apparent from Mr Olsen’s affidavits that he does not have expertise in
information technology and that he does not purport
to understand or to be able
to explain the capabilities of the Authority software or the details of what
data is entered into and
retained within the Property Module. He states that
information in the Module is stored in the form of codes so that a draft
planning
certificate can be automatically generated. The Module does not
contain, in electronic form, the documents from which data is drawn
and does not
enable access to such documents.
- A
report of Mr Lindsay Dyce, an expert in local government data systems, was
tendered by Council. Taking Mr Olsen’s affidavits
together with the Mr
Dyce’s report I infer that the Property Module at least included the
Digital Cadastral Data Base of all
land in the local government area, sourced
from the New South Wales government. I infer that it also included some
information with
respect to each parcel of land that would be relevant to
answering prescribed questions in a s 149 certificate. The evidence does
not disclose which information was entered into and stored within the Property
Module or which questions purported to be answered
by Authority in any draft
certificates that it produced.
- Mr
Olsen deposed, in the present tense as at the date of his affidavit sworn 24
September 2018, to his practice upon receipt of a
draft certificate generated by
Authority. He said this:
First, I consult the Council’s Geographic Information System
(“GIS”). The GIS is a system used to capture, store,
manipulate,
analyse, manage and present spatial geographic data. The information contained
in the GIS reflects information contained
within a variety of sources, including
the Burwood Local Environmental Plan 2012 and Burwood Development Control Plan
2013.
- Reading
this affidavit beneficially to Council, I infer that in 2010 the GIS recorded
information from the then current local environmental
plan and any development
control plan that may have been in force. Mr Olsen has not deposed to any other
sources from which information
may have been drawn and stored in the GIS. He
deposed that by entering the Lot and Deposited Plan number into the GIS, it
would provide:
information relating to the particular property including but not limited to the
zoning, heritage constraints (if any), and road
widening proposals affecting the
property (if any).
- Mr
Olsen deposed as follows regarding his practice in 2018 and I infer that this
corresponds with his practice in August 2010:
I then conduct a manual comparison of the information contained in the draft
Section 149 Certificate with the information contained
in the GIS. Examples
of the information that is manually checked include the title reference, the
zoning and the records of road
widening.
Mr Olsen said that he
also uses his own knowledge of the area to check the accuracy of the information
contained in the s 149 certificate.
If he identifies anything that needs to
be changed or amended, he corrects the certificate. If in the process he finds
anything recorded
in Council’s records or computer systems that needs to
be changed, he notifies the Manager Strategic Planning who then updates
the
Property Module.
- Mr
Olsen said that he was the officer responsible for issuing the planning
certificate to the second defendant in August 2010. He
identified his signature
on the certificate. He did not know of the existence of the pipe under the land.
He said that in his experience
he had never seen disclosure on such a
certificate of above-ground or in-ground services within a property. He did not
give evidence
that he knew of any other property in the Burwood Local Government
Area that was affected by the presence of such a service and in
respect of which
a decision had ever been made whether or not to disclose its existence under
s 149.
- Mr
Dyce’s report includes his opinions about how various of the prescribed
questions on a s 149 certificate should be answered,
including whether
one-word “Yes” or “No” answers should be given. These
opinions are not admissible and I
disregard them. The issue of what answers
should be given to discharge Council’s duty of care, taking into account
particular
information that may or may not be relevant to one of the prescribed
matters, is a question for the Court’s application of
a legal standard to
facts found. It is not a matter for opinion evidence. Mr Dyce’s report
also sets out his experience of
matters that he has seen disclosed in planning
certificates and other matters that he has not seen disclosed. That evidence is
of
marginal relevance. It does not assist me to determine whether Council failed
to exercise reasonable care in not disclosing the 2002
resolution as part of its
answer to question 7.
- From
Mr Olsen’s evidence regarding Council’s usual practice and from the
content of the certificate issued on 9 August
2010 relating to the subject
property, I infer that there was not entered in the Property Module or in the
GIS any reference to the
resolution of 11 June 2002 or, more broadly, to
Council’s proposal to acquire an easement over the pipe and later to
acquire
an easement adjacent to the western boundary. I infer that there was no
other repository of data that (a) recorded such a resolution
or its effect and
(b) was routinely examined when preparing planning certificates .
- There
is no evidence to suggest that there would have been any difficulty, either
financial or logistic, in recording the content
of the June 2002 resolution, or
at least a reference to it, against the Lot and Deposited Plan numbers of the
property, in a readily
searchable form, and establishing a system whereby that
record would be interrogated for the purposes of s 149. The ability of
Council
to record other restraints upon individual lots, such as heritage
classification and proposals for road widening, affirmatively shows
that Council
had the capacity to record in searchable form specific information such as the
resolution. It is in any event common
knowledge that there exist such systems of
electronic record keeping and of indexing and searching that are widely used in
business
and in government.
- The
resolution embodied a policy decision of Council that was of great significance
to any purchaser of No 13. The undisputed evidence
of the second defendant
and of the plaintiff is that Council did not at any time physically mark the
drain at the point where it
entered the property or where it exited at the rear
boundary. No sign was placed on the road reserve or at the rear of the property
to indicate the presence of the drain below the ground surface. Its existence
was always known to Council in the sense that it was
the subject of municipal
records. After engineering staff had rediscovered the pipe in January 2001,
Councillors and staff were made
fully aware of its existence and of the fact
that it was undetectable to the proprietor for the time being of No 13 and
would be
undetectable through reasonable physical examination by an intending
purchaser.
- In
these circumstances Council ought reasonably to have known, from when the
resolution was passed in June 2002, that any intending
purchaser would see
nothing upon inspection of the property that would put her or him upon such
enquiry as might reveal the existence
Council’s policy for resolving the
longstanding stormwater flooding problem on Appian Way. It ought to have been
apparent to
all responsible persons in Council that there would be no realistic
possibility of an incoming purchaser learning of the policy in
the 2002
resolution unless Council were to record that resolution in a manner that would
facilitate it being identified and disclosed
in the event of a planning
certificate being applied for.
- The
proposed western boundary easement would seriously diminish the value,
attraction and potential of No 13. The imperative for Council
to implement
this aspect of the resolution (see [270]-[271] above) and the impact a western boundary easement
would have on an incoming purchaser meant that the consequences of failing to
exercise reasonable care to disclose the resolution in answer to question 7
could cause considerable loss. A prospective purchaser
misled by non-disclosure
could be induced to enter into or to complete a contract that, with knowledge of
the 2002 resolution, would
have been rejected or rescinded. If it is necessary
at all to consider the reasonableness of Council’s method of storing and
interrogating information about its own policy-making and resolution-passing
activities, then Council negligently breached its duty
of care owed to the
plaintiff by issuing the erroneous answer to question 7 in the absence of
any system of (a) recording resolutions
such as that of June 2002 in a manner
that would be readily searchable against the affected title reference and (b)
routinely searching
that record when preparing a planning
certificate.
Issue 5: Council’s claimed statutory
defences
- Council
submits that s 43A of the Civil Liability Act is applicable to the
plaintiff’s cause of action against it for negligent misstatement. That
section is in the following terms:
43A Proceedings against public or other authorities for the
exercise of special statutory powers
(1) This section applies to proceedings for civil liability to
which this Part applies to the extent that the liability is based
on a public or
other authority’s exercise of, or failure to exercise, a special statutory
power conferred on the authority.
(2) A special statutory power is a power—
(a) that is conferred by or under a
statute, and
(b) that is of a kind that persons generally are not authorised
to exercise without specific statutory authority.
(3) For the purposes of any such proceedings, any act or
omission involving an exercise of, or failure to exercise, a special statutory
power does not give rise to civil liability unless the act or omission was in
the circumstances so unreasonable that no authority
having the special statutory
power in question could properly consider the act or omission to be a reasonable
exercise of, or failure
to exercise, its power.
(4) In the case of a special statutory power of a public or
other authority to prohibit or regulate an activity, this section applies
in
addition to section 44.
- Section 43A
does not apply to this case because the planning certificate was not issued in
exercise of a statutory power. By providing the certificate
Council performed a
statutorily imposed obligation. Section 149(2) is expressed in mandatory
terms. It requires that upon application
by a person under sub-s (1)
Council “shall, as soon as possible, issue a planning certificate”.
Council cited no authority
that would justify interpreting the word
“power” in s 43A so broadly as to bring s 149(2) within
it. The cases in which s 43A has been applied by the Courts have concerned
statutory provisions that confer powers in permissive and enabling terms.
- One
example is s 87(1) of the Roads Act. It provides that Roads and
Maritime Services “may carry out traffic control work on all public
roads”. In Rickard v Allianz Australia Insurance Ltd [2009] NSWSC
1115 Hoeben J (as his Honour then was) held that the authority’s placement
of a sign on a highway, warning of a hazard constituted
by the accumulation of
water, was undertaken solely in exercise of the power conferred by s 87 of
the Roads Act. It was alleged that the sign had been placed, negligently,
too far from the hazard to provide an adequate warning to approaching
vehicles.
His Honour held that s 43A was engaged. Having first determined that less
than reasonable care was taken in the positioning
of the sign, his Honour
proceeded to apply the more stringent test of liability in sub-s (3) of
s 43A.
- Another
example is s 51 of the Road Transport (Safety and Traffic Management)
Act 1999 (NSW), as in force in August 2004. Section 51 was considered
in Curtis v Harden Shire Council [2014] NSWCA 314. It provided that
persons and bodies that had been directed or authorised by the Roads and Traffic
Authority had “appropriate
authority to install, display (or to interfere
with, alter or remove) a prescribed traffic control device”.
“Prescribed
traffic control device” was defined as a signal or sign
for warning traffic. Section 50 prohibited any other person from installing
or displaying such a device on, above or near a road. Basten JA (Bathurst CJ and
Beazley
P agreeing) held that s 43A applied. The defendant council had been
carrying out roadworks at a location where a car driven by the appellant’s
partner
ran off the road and hit a tree, fatally injuring her. The appellant
claimed that the accident was caused by loose gravel on the
road surface and
that the respondent was negligent in failing to provide adequate signage to
indicate that resurfacing work had been
done and that motorists should reduce
their speed. Applying the high threshold for liability in s 43A(3) the
Court held that the failure to include signage indicating that the road was
slippery and that motorists should reduce their speed
was a decision no body
with the special statutory powers in question could reasonably have made in the
circumstances.
- Council
relies upon Bankstown City Council v Zraika [2016] NSWCA 51 where the
Court of Appeal applied s 43A to the exercise by a local government
authority of its power under s 91 of the Environmental Planning and
Assessment Act, as that section was in force in 1997. It was alleged that a
local government authority had acted negligently in consenting to a
development
application without imposing a condition that a “left turn only”
sign should be erected at the exit of a
driveway onto a busy intersection. A
vehicle leaving the premises and proceeding straight through the intersection
had caused an
accident that injured the plaintiff. Section 91 made it
obligatory for the local government authority to determine the development
application. That was not what attracted the operation
of s 43A. The
section was engaged by the council’s exercise of its facultative power to
attach conditions of consent: see [108]-[128]
(Leeming JA, Gleeson and Simpson
JJA agreeing).
- The
basis of the decision is clear from the following statement by Leeming JA
(emphasis added):
[108] There was no dispute that the power exercised by the
Council to grant consent conditionally was a “special statutory
power” conferred on it within the meaning of s 43A(2) of the Civil
Liability Act, or that the liability upon which the Council was sued was
“based on” the exercise of that power.
After
examining the evidence his Honour concluded:
[128] [It] has not been shown that no local council acting
reasonably could properly consider the consent granted without a mandated
left turn from the southern access point to be a reasonable exercise of the
power. Even if the Council owed a duty of care to the plaintiff,
there was no
breach of that duty, in light of the s 43A standard of care.
- The
decided cases provide further examples but the above are sufficient to
illustrate the type of provision that may be regarded as
conferring a
“special statutory power” within the meaning of s 43A(2) of the
Civil Liability Act. Section 149(2) is not such a provision. The
plaintiff’s cause of action for negligent misstatement in the certificate
is not
“based on” Council’s “exercise of, or failure to
exercise, a special statutory power conferred” on
Council.
- Further,
s 43A is only capable of being applied to a claim against a public
authority that is based upon a deliberate act in exercise of a power
or a
deliberate refraining from action under the relevant power. It is only in
relation to deliberate acts or failures to act that
the Court can sensibly apply
the test in sub-s (3); that is, whether the exercise or non-exercise of the
power was:
so unreasonable that no authority having the special statutory power in question
could properly consider the act or omission to be
a reasonable exercise of, or
failure to exercise, its power.
- If,
contrary to my conclusion, s 149(2) should be regarded as conferring a
“special statutory power”, s 43A and in particular
sub-s (3) could only apply if the plaintiff’s case was based upon
Council having exercised the power by issuing
a certificate when it should not
have done, or upon Council having failed to issue a certificate when it should
have done. The plaintiff’s
case is not of that kind. Council clearly
exercised the power – if s 149(2) confers a power – by issuing
a planning certificate.
The plaintiff’s case is not based upon the fact
that the power was exercised nor upon a contention, which could not succeed,
that Council failed to exercise it. The plaintiff’s claim in negligence is
that Council erroneously answered “No”
to the question in the
certificate about the existence of a policy. The test in sub-s (3) could
not meaningfully be applied to that
negligent misstatement.
- If
s 149(2) creates a “special statutory power”, it is one power
with respect to the issue of a planning certificate,
not multiple powers with
respect to the provision or withholding of individual particles of information:
see Bankstown City Council v Zraika at [96]. The plaintiff’s case
on negligent misstatement in the certificate is incapable of engaging
s 43A.
- Council
also relies upon s 733 of the Local Government Act, relevant extracts from
which are as follows:
733 Exemption from liability—flood liable land, land
subject to risk of bush fire and land in coastal zone
(1) A council does not incur any liability in respect
of—
(a) any advice furnished in good faith
by the council relating to the likelihood of any land being flooded or the
nature or extent
of any such flooding, or
(b) anything done or omitted to be done in good faith by the
council in so far as it relates to the likelihood of land being flooded
or the
nature or extent of any such flooding.
(3) Without limiting subsections (1), (2) and (2A), those
subsections apply to -
(d) advice furnished in a certificate
under section 149 of the Environmental Planning and Assessment Act 1979
[...]
(4) Without limiting any other circumstances in which a council
may have acted in good faith, a council is, unless the contrary
is proved, taken
to have acted in good faith for the purposes of this section if the advice was
furnished, or the thing was done
or omitted to be done -
(a) substantially in accordance with
the principles contained in the relevant manual most recently notified under
subsection (5)
at that time [...]
(5) For the purposes of this section, the Minister for Planning
may, from time to time, give notification in the Gazette of the
publication
of -
(a) a manual relating to the management
of flood liable land [...]
The notification must specify where and when copies of the manual may be
inspected.
- Council
submits that s 733(1)(a) is applicable if there should be a finding that,
prima facie, Council is liable for failing to disclose in the planning
certificate
anything that “constitutes advice related to flooding”.
That is not an accurate paraphrase of par (a) of s 733(1). The actual words
of the paragraph are “advice ... relating to the likelihood of any land
being flooded or the nature or extent
of any such flooding”. Those words
are not engaged by Council’s incorrect answer to question 7, to the
effect that there
was no “policy adopted by the Council ... that restricts
the development of the land because of the likelihood of ... flooding”.
The answer is advice concerning the non-existence of any policy of a particular
description. It is not advice “relating to
the likelihood of [the land]
being flooded”.
Issue 6: plaintiff’s reliance,
consequent damage and cause of action
- Prior
to the plaintiff exchanging counterparts of the contract of sale on 17 March
2011 she retained a conveyancing solicitor to advise
on the contract and
thereafter to complete it. Before exchange the solicitor made enquiries of the
vendor’s solicitor as described
at [134]-[136] above. I infer that if Council had issued the
s 149 certificate that was attached to the contract with question 7
answered “Yes”,
then the purchaser’s solicitor would have
asked further questions to find out what policy was referred to in that answer.
I
infer that the solicitor would have advised the plaintiff against exchange of
counterparts until those further enquiries were answered.
I am satisfied that
the plaintiff would have acted in accordance with her solicitor’s advice.
Of course, if question 7 had
been answered on the certificate by providing
the substance of the 2002 resolution, as in my view it should have been
answered, then
the plaintiff’s solicitor would have had that information
directly from the certificate.
- Upon
the plaintiff’s solicitor becoming aware of the 2002 resolution in either
of these ways I infer that the plaintiff’s
attention would have been drawn
to it, from which she would have learned of the existence of the drain through
the property, as well
as Council’s intention to acquire an easement over
the drain (by negotiation or compulsory acquisition) and its intention to
establish an easement on the western boundary in the event of any future
development of the land. In drawing all of these inferences
as to enquiries that
would have been made and information that would have been obtained I take into
account the diligence of the
plaintiff’s solicitor as demonstrated by the
pre-exchange correspondence with the purchaser’s solicitor. I also take
into account that the plaintiff’s correspondence and her evidence
demonstrates that she is an educated, professional, competent
person with a
grasp of commercial and contractual concepts. In 2011 and subsequent years the
plaintiff worked with her husband in
a finance broking business.
- As
considered below in relation to the case against the second defendant for his
negligent answers to requisitions, the plaintiff
gave oral evidence that if she
had known at any time prior to completing the contract “that there was a
stormwater pipe running
under the house and the swimming pool” she would
have rescinded. I have no hesitation in accepting that evidence. No rational
purchaser who, without knowledge of the pipe, was willing to enter into a
contract to purchase this property at a price of $3 million
would still be
willing to proceed upon learning of this feature.
- One
can envisage a purchaser who might be willing to proceed with the purchase at a
substantially reduced price, in the expectation
of being able to have the pipe
decommissioned and relocated. Completion of the purchase on that basis would
involve capital risk
and would require careful research into the possibilities
for removal of the pipe, the cost of that exercise and the degree of physical
vulnerability of the residence in the meantime. The plaintiff was not an
investor of that type. She was seeking a home for herself
and her family.
Understandably, she would have regarded a 100-year-old, deteriorating vitrified
clay stormwater pipe under the house
and swimming pool as a completely
unacceptable impairment.
- If
Council had issued the planning certificate with question 7 answered either
“Yes” or by provision of the substance
of the 2002 resolution, the
plaintiff would thereby have learned of the pipe before entering into the
contract and she would not
have exchanged, just as she would not have completed
the sale if this information had come to her through the answers to
requisitions.
But for Council’s erroneous and negligent answer to
question 7 the plaintiff would not have suffered the loss she sustained
by
acquiring No 13 at a price of $3 million when its value was very
considerably lower than that because of the impairment constituted
by the pipe.
- All
of the elements of a cause of action against Council for negligent misstatement
in the planning certificate are established and
I will consider the measure of
damages later in these reasons.
Liability of second defendant for
non-disclosure, negligent misstatement
Issue 7: second defendant’s non-disclosure of the pipe
- The
plaintiff’s contention that the second defendant was under an obligation
to disclose latent defects of title is really no
more than an unconventional way
of stating the rule in Flight v Booth [1834] EngR 1087; (1834) 1 Bing (NC) 370; (1834) 131
ER 1160 (Tindal CJ). The rule, discussed more fully below, is that if the
property that the vendor is able to convey differs from what was promised
in the
contract in a respect so material that “it may reasonably be supposed that
but for the misdescription the purchaser
might never have entered into the
contract at all, in such case the contract is avoided altogether”.
Specific performance will
not be ordered against the purchaser and he or she may
rescind, notwithstanding any provision of the contract limiting the
purchaser’s
rights to monetary compensation. The rule applies to a
sufficiently serious “misdescription, although not proceeding from
fraud”.
- The
plaintiff’s pleading at pars 80-95 and the submissions in support of it
endeavour to construct upon, or infer from, the
rule in Flight v Booth a
duty of the second defendant to disclose the pipe and Council’s rights
over it, those being faults with the property that
the plaintiff says are of
such gravity as to constitute a defect of title according to the rule. Accepting
for the purposes of the
argument that it is permissible to speak of such a duty
of disclosure, as a corollary or counterpart of the rule, the question is:
what
are the consequences of and remedies for a breach of the obligation? First, if
the latent defect is discovered prior to completion
then specific performance
will not be ordered and the purchaser may rescind and recover any deposit; that
is the rule. Secondly,
if the purchaser proceeds to completion without having
discovered the defect then he or she has no remedy upon discovering it
afterwards
– assuming that the non-disclosure was innocent, which is a
premise of this discussion, having regard to the way the plaintiff
has pleaded
her case. Upon completion, the vendor’s contractual obligation to convey
good title is merged in the transfer:
Christopoulos v Angelos, cited at
[20] above. No claim for
damages for the undisclosed defect of the property could survive completion for
the additional reason that that
is what the parties agreed by their contract:
see cl 6.1 quoted at [349] below.
- The
plaintiff has cited no authority for her proposition that innocent
non-disclosure of a defect in the property, of sufficient importance
to
constitute a latent defect of title according to the standard applied in
Flight v Booth, will, without more, found an action at common law that
may be pursued after completion for the legal remedy of damages. To sustain
such
an action the non-disclosure would either have to have been fraudulent in the
sense explained in Derry v Peek (1889) 14 App Cas 337 or negligent in
breach of a duty of care recognised by the common law.
- Counsel
opened the plaintiff’s case in a manner that appeared to allege fraud on
the part of the second defendant. When his
departure from the statement of claim
was pointed out, counsel applied to amend to bring the pleading into conformity
with the opening
in this respect. The application was met by substantial
arguments of prejudice that would be occasioned to the second defendant if
the
plaintiff were permitted to introduce an allegation of such gravity after the
trial had commenced. I was constrained to refuse
leave. As for negligence, the
answering of the plaintiff’s requisitions was the only circumstance giving
rise to a duty of
care on the part of the second defendant in discharge of which
he was required to disclose the pipe. That is considered under the
next heading.
There is no alternative, free-standing cause of action for damages based solely
upon the obligation of disclosure that
the plaintiff’s counsel has sought
to construct.
Issue 8: second defendant’s breach of duty in
answering requisitions
- At
[137] above reference
has been made to the correspondence by which the plaintiff’s conveyancing
solicitor sought answers to requisitions
and Mr Lukas supplied answers, in
accordance with the second defendant’s instructions, at 3:53pm on 11
August 2011, the day
before settlement. The requisitions that the plaintiff
asserts were incorrectly answered were as
follows:
|
REQUISITIONS
|
RESPONSE
|
|
6 Is the Vendor aware of:-
(a) any unregistered easements such as a right-of-way
which affect the property? If so, please give full details.
(b) the breach of any covenant noted on the title? If so,
such breach must be remedied before completion.
|
NO
The purchasers should make their own enquiries.
|
|
7 Has the Vendor received any notification from the Roads
and Traffic Authority or local Council that the land or part of it is
to be
realigned, widened, altered or resumed? If so please give full details
|
NO, but purchaser should make own enquiries
|
|
8 Is there any outstanding notification, claim or
requirement of:-
(a) a statutory or local authority, or
(b) an adjoining owner which affects the property or part
of it?
Any such notice, claim or requirement issued before contracts were
exchanged must be complied with by the Vendor will before completion
|
Not to vendors knowledge but purchaser should make own enquiries
Not to vendors knowledge
|
|
19 Is the Vendor aware of any restrictions on the use or
development of the land?
|
Purchaser should make own enquiries
|
- A
vendor owes a common law duty to a purchaser to exercise reasonable care to
answer accurately requisitions on title: Bebonis v Angelos; Christopoulos v
Angelos (2002) 56 NSWLR 127; [2003] NSWCA 13; Votraint No 1088 Pty Ltd v
The Commonwealth [2005] NSWCA 249 at [13]- [19] (Mason P, Giles JA and
Campbell AJA agreeing). The duty of care is not disputed by the second
defendant. I am satisfied that there
is also implied by law a contractual
obligation to exercise reasonable care to answer requisitions accurately.
Whether the above
answers were incorrect or misleading is to be measured against
the circumstances that prevailed in August 2011 concerning the pipe
and
Council’s plan for resolution of the Appian Way drainage
problem.
Council’s rights over the pipe; engagement of s
59A
- The
extent of Council’s statutory rights over the pipe in August 2011 when the
above answers to requisitions were supplied has
been established by examination
of historical facts and legislation at [34]-[60] above. The operation of successive Acts, transitional
provisions and deeming provisions upon the circumstances of the original
installation
leads to the conclusion that the pipe was “installed in or on
[No 13] by the council”, within the meaning of s 59A of the
Local Government Act. Therefore, as at August 2011 Council owned the pipe and
had rights in respect of it and over the land on which it was constructed
as
provided for in sub-s (2) of s 59A. Council’s ownership and
statutory rights over the pipe have continued to the present day.
- The
second defendant said in oral evidence that, at least from Mr Cormican’s
letter of 15 March 2004 (see [116]) he did not understand that Council claimed ownership
of the pipe but that it did claim a statutory right to come onto No 13 and
maintain the pipe. He agreed that in June 2005 he understood that Council
claimed both ownership of the pipe and the right to enter
the property to
maintain and repair it. He gave this answer with respect to his understanding at
the time when the property was sold
to the plaintiff:
Q In 2011 when you sold the property to the plaintiff you were
aware that the council had not abandoned its claim in respect of
the pipe?
A I don't really know what the council's position was but I
would expect that they hadn't abandoned their position. Yes, I didn't
know
anything to the contrary. They hadn't written to me. We hadn't had any
correspondence about it. In the absence of some other
thing the situation that
existed in 2005 I guess existed in 2011.
- The
second defendant gave these further answers concerning his state of knowledge
when providing instructions to Mr Lukas:
A I knew when I sat with Mr [Lukas] in the absence of any other
knowledge that the Council would probably still be maintaining
its position
about the ownership of the pipe.
[...]
Q You knew when you spoke to [Mr Lukas] in July 2011 that the
Council still maintained that it had a right to come onto the property
to fix
the pipe?
A Okay.
Q You’re agreeing that you knew that?
A I would have thought that their position hadn’t
changed.
Status of Council’s 2002 resolution in August
2011
- For
the reasons given at [266]-[276] above, Council’s 2002 resolution had not been
revoked or abandoned as at August 2010 when the s 149 certificate was
issued.
Nothing that occurred during the next 12 months, up to the date when the
requisitions were answered, constituted revocation, abandonment
or qualification
of that resolution. In order to be correct, the answers provided had to take
into account that the policy contained
in the resolution remained operative.
The second defendant gave evidence that because Council had not made provision
of a western
boundary easement a condition of his Development Application in
2004, he “would have thought they’d abandoned”
the intention
to impose such a condition. Nothing that had occurred, as found in these
reasons, made it reasonable for him to answer
the requisitions upon that
assumption without full disclosure of what had taken place between himself and
Council after he was notified
of the resolution on 14 June
2002.
Status of Council’s February 2003 notices in August
2011
- As
recorded at [109] above,
Council issued to the second defendant on 4 February 2003 notice of its
intention to enter upon No 13 for the purpose of
carrying out maintenance
and relining “of the drainage pipe line which passes through your
property”, pursuant to s 94 of the Roads Act. The substance of
the notices is set out at [106]-[107]. On the evidence referred to at [108]-[116] I find that Council
never withdrew its notices of 4 February 2003. By the General Manager’s
letter of 5 March 2003 and through
Mr Wyatt’s discussion with the second
defendant on 21 March 2003, the second defendant was informed as follows:
(1) the repair and relining work proposed in the notices was
deferred “until this matter could be resolved” – referring
to
the impasse regarding Council’s assertion of statutory rights to enter
No 13 and regarding payment of compensation for resumption
of an easement
on the western boundary;
(2) Council would investigate the feasibility of alternatives for resolving
the Appian Way stormwater problem;
(3) Council would “not enter your property in accordance with the
notice issued, and will formally notify you should it wish
to proceed in this
manner sometime in the future”.
- The
second defendant was never informed by Council that the feasibility of
alternative solutions had been investigated, let alone
that any alternative had
been adopted. Council never stated that it no longer asserted the statutory
rights under which its notices
of 4 February 2003 had been issued. Those notices
were simply not acted upon by Council for the remainder of the second
defendant’s
tenure of the property.
Requisition 6(a)
concerning “any unregistered easements”
- The
answer “No” to requisition 6(a) was misleading. It was
literally true because no easement had been granted and there
was no instrument
that was capable of being registered but was presently unregistered. However
Council’s ownership of the substantial
storm water drain that ran through
the centre of the property, together with Council’s rights under
s 59A(2) to “operate,
repair, replace, maintain etc”, were so
closely similar to the qualification of title that would arise from a drainage
easement
that in substance the simple answer “No” was misleading.
- This
had been recognised by the second defendant’s own solicitor, Mr Hones, on
26 November 2002 when he wrote to Council on
the second defendant’s behalf
to deny Council’s claimed statutory rights to enter upon the land. His
letter included
the following:
If Council were to exercise a right to enter to reinstate the pipe or to
maintain the pipe our client will suffer a loss arising
out of what is
tantamount to rights similar to those which would be vested by an easement ...
.
Requisition 7 concerning “any notification from
the ... local Council that the land or part of it is to be ...
resumed”
- So
far as relevant to the issues in this case, requisition 7 required the
second defendant to disclose whether he had “received
any notification
from the ... local Council that the land or part of it is to be ...
resumed”. The answer “No”
was incorrect because the second
defendant had been informed by letter of 14 June 2002 of Council’s
resolution passed three
days earlier: see [98] above. That letter provided the second defendant with
the text of the resolution. In terms it notified that an easement over the
existing drain would be resumed. By clear implication it notified that a western
boundary easement would be resumed in the future.
- As
noted at [335] above the
2002 resolution remained operative and the fact that the second defendant had
been notified of it should have been disclosed
in answer to requisition 7.
Even if the second defendant thought that the resolution had been abandoned or
had in some other way
lapsed on a date after he was notified of it on 14 June
2002, the correct answer to requisition 7 would have been in the
affirmative.
The addition of the words “but purchaser should make own
enquiries” did not negate or neutralise the falsehood of the
answer
“No”.
Requisition 8(a) concerning “any
outstanding notification, claim or requirement of a local
authority”
- For
present purposes the relevant part of requisition 8(a) was an enquiry
whether there was “any outstanding notification, claim
or requirement of a
... local authority ... which affects the property or part of it”. The
answer, “Not to vendors knowledge
but purchaser should make own
enquiries” was erroneous, firstly, because the notifications of 4 February
2003 were outstanding
as explained above at [336]-[337]. Secondly, the notification on 14 June 2002 of
Council’s requirement of an easement over the existing drain was
outstanding,
for reasons given above in relation to requisition 7. Thirdly,
irrespective of the status and ongoing efficacy of any of the past
notifications, Council had “claims” that it owned the pipe and that
it was entitled to enter upon No 13 from time to
time as necessary to
exercise rights under s 94 of the Roads Act and s 59A of the
Local Government Act to perform work on the pipe. Those claims had never
been relinquished and were outstanding regardless of the lack of action by
Council
to enforce or invoke them for several years.
- The
erroneous answer to requisition 8(a), that there was no relevant
notification, claim or requirement to the second defendant’s
knowledge,
was not corrected or neutralised by the addition of the words “but
purchaser should make own enquiries”.
Requisition 19
concerning “any restrictions on the use or development of the
land”
- The
second defendant’s response to requisition 19 that “purchaser
should make own enquiries” was misleading because
the correct answer would
have been that he was aware of restrictions both on the use of the land, arising
from the existing drain
running through the middle of it, and on development of
the land, arising from the 2002 resolution under which Council would require
establishment of a western boundary easement at the time of further development.
Reasonable care required that the response to this
requisition should have
included particulars of the existing pipe, reference to Council’s claimed
statutory rights over it
and disclosure of the 2002 resolution.
- The
second defendant gave the following evidence in
cross-examination:
Q You knew at the time, didn’t you, that you spoke to Mr
[Lukas] in July 2011 that the existence and location of the pipe
was likely to
result in restrictions being placed upon the purchaser by the Council in
relation to the use or the development of
the land?
A Yes.
Q You knew at that time that the Council still maintained that
it had a right to enter the property to fix the pipe and that it
owned the pipe
and that those two things were likely to result in restrictions on the use and
development of the land?
A When I owned the property and up until the time that I sold
it, I think the Council always maintained that it had a right to
enter the
property under those 59A.
[...]
Q You knew at the time you spoke to Mr [Lukas] that the fact
that the Council maintained that it owned the pipe was likely to result
in
restrictions on the use and development of the land?
A Yes.
Failure to exercise reasonable care in
answering the requisitions
- All
of the misleading and erroneous answers to the requisitions referred to above
constituted negligent breaches of the second defendant’s
common law duty
and implied contractual obligation to exercise reasonable care that his answers
should be accurate. The evidence
considered below in connection with Issue 15
shows that the second defendant did not tell Mr Lukas of the existence of the
pipe;
of the claims Council had made in respect of it in 2001-2003; of the
notices he had received, in December 2002 and February 2003,
that Council
intended to enter No 13 to repair and reline the pipe; or of the 2002
resolution under which Council proposed to acquire
an easement over the existing
drain and, at a later date, along the western boundary. The second defendant did
not inform his solicitor
of any advice he had received from Mr Hones or from
counsel retained on his behalf in 2002-2003.
- Even
if Mr Lukas had received proper instructions before issuing the impugned
answers, the second defendant would still have been
liable in negligence and in
breach of contract for their incorrect and misleading content. Obviously the
second defendant should
have disclosed all of these matters to his solicitor and
followed advice as to what answers should be made. The second defendant
would
have been just as much liable to the plaintiff for the incorrect and misleading
answers if he had given Mr Lukas full instructions
and if the latter had made an
error of professional judgment in the answers he provided.
Issue
9: plaintiff’s entitlement to rescind by reason of the pipe
- The
contract described the subject matter of the sale as “13 Appian Way
Burwood 2134 and being the whole of the land in Certificate
of Title Folio
Identifier 33/12249 and being Lot 33 in DP 12249”. The following standard
clause required the second defendant
to transfer title to the land so described
on completion:
16.3 Normally, on completion the vendor must cause the legal
title to the property (being an estate in fee simple) to pass to the
purchaser
free of any mortgage or other interest, subject to any necessary
registration.
- Given
the existence of the pipe and Council’s ownership of it and rights under
s 59A of the Local Government Act, the subject matter promised by
the second defendant under the contract was affected by a misdescription. The
following clause applied
to the situation:
6.1 The purchaser can (but only before completion) claim
compensation for an error or misdescription in this contract (as to the
property, the title or anything else and whether substantial or
not).
- Had
the second defendant answered the requisitions correctly, the plaintiff would
have become aware of the misdescription. The question
whether in those
circumstances the plaintiff would have been entitled to rescind or would have
been limited to compensation under
cl 6.1 depends upon whether the Court
should now find, as a matter of fact, that what the second defendant was able to
convey in
purported performance of the contract fell foul of the rule in
Flight v Booth, referred to above at [326].
- In
Batey v Gifford (1997) 42 NSWLR 710 Handley JA encapsulated the
principle in the following statement at 717D:
As a general rule therefore, compensation clauses cover errors or
misdescriptions, even a trivial kind, which would have entitled
the purchaser to
rescind at common law, but do not cover cases where the error or misdescription
is so substantial that it “annuls”
the sale in accordance with the
rule in Flight v Booth.
- In
Kannane v Demian Developments Pty Ltd [2005] NSWSC 1193 at [39]- [41]
Brereton J considered a number of modern applications of the rule in Flight v
Booth, providing illustrations of misdescriptions that have been found
sufficiently significant to justify rescission and other examples
where the
misdescription has not been of that order. Further examples are given by Sackar
J in Raphael Shin Enterprises Pty Limited v Waterpoint Shepherds Bay Pty
Limited [2014] NSWSC 743 at [113]- [160].
- The
facts in two of the decided cases bear a close similarity to the circumstances
in which the present plaintiff would have sought
to rescind had she known of
Council’s pipe under No 13. In Torr v Harpur [1940] NSWStRp 44; (1940) 40 SR
(NSW) 585 there was a contract for the sale of land on which two semi-detached
cottages were partly erected. Prior to completion the purchaser
discovered that
a box culvert had been constructed beneath the surface of the land, three years
before the contract was entered into.
It was 1.98m wide and 1.2m deep. The top
of it was between 1.2m and 1.8m below the surface and it had been laid
diagonally across
the property. The culvert was undiscoverable upon reasonable
inspection prior to the contract being entered into and it was not referred
to
in the contract. The contract provided that “no error or misdescription of
the property shall annul the sale” but
compensation would be paid if
demanded in writing before completion.
- Williams
J was satisfied that the culvert was soundly built, that it was capable of
bearing a load at least three times that of the
cottages under construction,
that no movement of the foundations had occurred during the four years since
construction had commenced
and that there appeared to be “only a remote
possibility of any such trouble developing”. However, his Honour concluded
that the purchaser was entitled to rescind under the rule in Flight v
Booth, upon the following considerations (at 592-593):
The evidence of Mr Stanton and Mr Fuller [apparently, valuers], which is
uncontradicted, establishes that the presence of the drain
would be an extremely
great defect if the purchaser desired to resell or to mortgage the property. In
effect they say that, speaking
generally, a prospective purchaser or mortgagee,
when he discovered the drain, would not proceed any further. Now that the
purchaser
knows of the drain it would be his duty to inform any prospective
purchaser or mortgagee of its presence: Carlish v Salt [1905] UKLawRpCh 151; [1906] Ch
335..
[The valuers’] evidence appears to me to be in accordance with common
sense and with what one would conclude to be the position
from one’s own
experience and knowledge of the world. A house in the best order and condition
would be an unattractive proposition
to any person who was informed that instead
of being erected on land in its natural state, it was erected partly above a
large tunnel
in the land, comprising a drain which would become filled with
water every time it rained. It is obvious that in such a case any
purchaser or
mortgagee would at least have to seek expert advice. It would entail enquiries
from the Public Works Department to ascertain
whether the drain had been
properly designed and constructed, and an inspection of the foundations [of the
cottages] in order to
be sure that they were adequate. Even if such an
inspection showed the precautions suggested by [an architectural expert in the
case]
had been taken, I think that the presence of the drain would be such a
defect that it may reasonably be supposed, “that, but
for such
misdescription, the purchaser or mortgagee might never have entered into the
contract at all”. As soon as he heard
of its presence he would probably
not proceed any further with the deal. He would look elsewhere for an in
investment for his money.
[...] The facts of the present case show that the misdescription is in a
material and substantial point seriously affecting the subject
matter of the
contract. If I refused the [purchaser] relief I would be forcing upon him
something which “by reason of a departure
from the terms of the contract,
is so materially altered in character as to be in substance a different thing
from that contracted
for”.
- The
purchaser in Torr v Harpur was an investor who proposed to let the two
cottages when they were built. Nevertheless, the considerations referred to by
Williams
J are applicable to the plaintiff in the present case, who purchased
No 13 with the intention of occupying it herself. Had she learned
of the
existence of the pipe, through the second defendant exercising reasonable care
in answering the requisitions, her case for
rescission would have been at least
as strong as that of the purchaser in Torr v Harpur. If the plaintiff
were forced to complete in that hypothetical situation, there would be imposed
upon her a house property beneath
which lay a large diameter pipe, that would
carry stormwater upon every fall of rain, would fill to capacity during
significant rain
probably once per year, was over 100 years old, was constructed
of vitrified clay and was in a seriously deteriorated state. Specific
performance would not be ordered against the plaintiff to require her to accept
from the second defendant a residential property
so different from that which
was promised under the contract, impaired by the pipe to an extent that would
make it saleable only
at a great discount if at all.
- In
Liberty Grove (Concord) Pty Ltd v Yeo [2006] NSWSC 1373 purchasers of
land discovered after entering into a contract and before completion that a
750mm diameter drain lay beneath the surface
through the centre of the property.
No easement for drainage was registered. The ownership of the drain was not
established. Sydney
Water did not own it. It had been installed at some time
prior to 1994. The Council of the local government area, Canada Bay, asserted
that it had constructed the drain pursuant to s 241 of the Local
Government Act 1919, by which councils were empowered to construct drains on
private land for the purpose of draining or protecting public roads. Upon
the
purchaser’s application, the Council refused permission for the drain to
be removed. Palmer J’s findings included
the following:
[24] [...] It is clear that the drainage line carries a
substantial volume of water and that its continued existence is
necessary.
- His
Honour upheld the purchasers’ right to rescind on the following basis
(some citations omitted):
[21] The Defendants rely on the line of authority founded on
Flight v Booth and summarised in Torr v Harpur. They say that the
nondisclosure of the drainage pipe in the contract so far affects its subject
matter in a material and substantial
way that it may reasonably be supposed
that, but for the failure to disclose, the Defendants might never have entered
into the contract.
If the omission to disclose has that character, the law
provides that a purchaser is not compelled to resort to compensation clauses
in
the contract but may rescind: see Torr v Harpur; Beard v Drummoyne
Municipal Council (1969) 71 SR(NSW) 250; Micos v Diamond [1970] 72
SR(NSW) 392.
[26] In my opinion, the continued existence of the pipeline, at
the very latest since 1994, and the purpose for which the Council
insists on its
continued use and presence on the Land, place the pipeline in that category of
rights which may be called quasi-easements.
[27] In my view the facts to which the Defendants point, and to
which I have referred above, amply support the conclusion that
the drainage
pipeline constitutes a substantial latent defect in title which would justify
the Defendants in rescinding the contract.
- The
decision in Liberty Grove (Concord) Pty Ltd v Yeo further supports my
conclusion that if the requisitions under consideration in the present case had
been answered accurately the
plaintiff would have been entitled to rescind and
she would thereby have averted the heavy loss that she has sustained by
completing
the contract at a price of $3 million, for a property that was worth
very much less than that by reason of the pipe and Councils’
rights and
claims with respect to it. It follows that if the plaintiff has shown that she
relied upon the answers to requisitions
in completing the contract, because
those answers did not reveal the facts upon which she would have been entitled
to rescind, then
the second defendant’s negligent provision of those
answers has been causative of her loss.
Issue 10:
plaintiff’s reliance on the answers to requisitions
- The
second defendant submitted that the plaintiff has not proved reliance upon the
answers to requisitions or causation of damage
by their inaccuracy, because she
did not give evidence that she read the answers herself or that she formed any
view about them or
consciously accepted them in proceeding to settlement. In
Bebonis v Angelos; Christopoulos v Angelos the Court of Appeal dealt with
a similar argument, raised in relevantly equivalent circumstances. Handley JA
held as follows at [92]
(Beazely and Heydon JJA agreeing):
[92] The submission that there was no evidence of reliance by
the purchasers was without substance. Reliance through an agent is
an everyday
event, not the least in the case of corporate principals. The whole purpose of
requisitions is to obtain answers on which
the purchasers’ solicitor may
rely when proceeding to completion. A truthful answer would have provoked a very
different response
from the purchasers. Reliance on a misrepresentation need not
be established by direct evidence but may be proved by inference from
the
circumstances: KR Handley, ed, Spencer Bower, Turner & Handley Law of
Actionable Misrepresentation (4th ed, 2000 Butterworths) at
76-7.
- Reference
has been made at [322]-[323] to the plaintiff’s evidence that she would have
rescinded the contract had she learned of the existence of the pipe before
completion. As earlier stated, I accept that evidence. It is an inescapable
inference that the plaintiff’s conveyancing solicitor,
who pressed for a
response to the requisitions close to the appointed settlement date, read the
answers and proceeded to completion
on the basis that they were apparently
benign. Had the answers been accurate and not misleading, the solicitor would
undoubtedly
have informed the plaintiff of the existence of the pipe, upon
learning of which she would have given notice of rescission. The above
consideration of Flight v Booth satisfies me that the plaintiff would
have been legally entitled to rescind and that she would have recovered her
deposit and suffered
no loss. Reliance and causation have been proved. The
plaintiff’s causes of action in tort and in contract for negligent
misstatement
are complete. Clause 6.1 of the contract does not purport to
exclude liability in tort or for breach of the implied obligation to
exercise
care in answering the requisitions.
Damages for negligent
misstatement by Council and/or second defendant
Issue 11: damages for Council’s/second defendant’s
misstatements
- The
plaintiff’s damages for the negligent misrepresentations of both Council
and the second defendant are to be assessed on
the basis that but for the
negligence there would have been no transaction; that is, the plaintiff would
not have entered into the
contract, or would have rescinded it and recovered her
deposit. The measure of damages is therefore the difference between what the
plaintiff paid and the market value of the property in 2011, impaired as it was
by the pipe and by Council’s rights. There
is no evidence that there would
have been any difference in the market value between March 2011 when the
contract was entered into
and August 2011 when it could have been rescinded if
the plaintiff had received an accurate response to her
requisitions.
Legal principles of valuation
- The
general principle upon which a court is to determine the value of land was
stated by Griffith CJ in Spencer v The Commonwealth [1907] HCA 82; (1907)
5 CLR 418 at 432 in the following terms:
In my judgment the test of value of land is to be determined, not by inquiring
what price a man desiring to sell could actually have
obtained for it on a given
day, ie whether there was in fact on that day a willing buyer, but by inquiring
"What would a man desiring
to buy the land have had to pay for it on that day to
a vendor willing to sell it for a fair price but not desirous to sell?" It
is,
no doubt, very difficult to answer such a question, and any answer must be to
some extent conjectural. The necessary mental process
is to put yourself as far
as possible in the position of persons conversant with the subject at the
relevant time, and from that
point of view to ascertain what, according to the
then current opinion of land values, a purchaser would have had to offer for the
land to induce such a willing vendor to sell it, or, in other words, to inquire
at what point a desirous purchaser and a not unwilling
vendor would come
together.
- At
441 Isaacs J said:
To arrive at the value of the land at that date, we have, as I conceive, to
suppose it sold then, not by means of a forced sale,
but by voluntary bargaining
between the plaintiff and a purchaser, willing to trade, but neither of them so
anxious to do so that
he would overlook any ordinary business consideration. We
must further suppose both to be perfectly acquainted with the land, and
cognizant of all circumstances which might affect its value, either
advantageously or prejudicially, including its situation, character,
quality,
proximity to conveniences or inconveniences, its surrounding features, the then
present demand for land, and the likelihood,
as then appearing to persons best
capable of forming an opinion, of a rise or fall for what reason soever in the
amount which one
would otherwise be willing to fix as the value of the
property.
- In
the valuation exercise presently at hand it is particularly important that full
effect be given to the requirement that the hypothetical
willing but not over
anxious seller and buyer must be presumed to be “conversant with the
subject matter at the relevant time”
and “cognisant of all
circumstances which might affect its value, either advantageously or
prejudicially, including its situation,
character, quality, proximity to
conveniences or inconveniences, its surrounding features”. On that
subject, in Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413
McHugh J cited at [49] the above passages from Spencer v The Commonwealth
and added the following:
[50] The market for the property is, therefore, assumed to be
an efficient market in which buyers and sellers have access to all
currently
available information that affects the property.
- The
plaintiff and both defendants tendered reports of expert valuers. All of them
agreed that in order to arrive at a 2011 market
value for No 13 Appian Way
in its impaired state they should commence by assessing its value assuming that
it was not so impaired.
This was agreed at $3 million, having regard to
comparable sales and the rigour of the negotiation process that led to that
price
having been agreed between the plaintiff and the second defendant. The
valuers further agreed that they should then determine what
discount a
hypothetical, fully informed, willing but not over anxious vendor and purchaser
would agree upon to allow for the presence
of the drain and Council’s
rights with respect to it. The three experts adopted markedly different
approaches to assessing
the appropriate discount and the results of their
respective methods diverged widely.
- In
reaching my own conclusion upon the appropriate level of discount I am not
restricted to choosing between the experts’ competing
approaches and
results. I have regard to the inherent imprecision of the valuation exercise in
this case, as in any case. In Secretary of State for Foreign Affairs v
Charlesworth, Pilling & Co [1901] UKLawRpAC 4; [1901] AC 373, the Privy Council said this at
391:
It is quite true that in all valuations, judicial or other, there must be room
for inferences and inclinations of opinion which,
being more or less
conjectural, are difficult to reduce to exact reasoning or to explain to others.
Everyone who has gone through
the process is aware of this lack of demonstrative
proof in his own mind, and knows that every expert witness called before him has
had his own set of conjectures, of more or less weight according to his
experience and personal sagacity. In such an inquiry as the
present, relating to
subjects abounding with uncertainties and on which there is little experience,
there is more than ordinary room
for such guesswork; and it would be very unfair
to require an exact exposition of reasons for the conclusions arrived
at.
- That
passage was quoted with approval by Isaacs J in Spencer v The Commonwealth at
442-443. Similarly in Boland v Yates Property Corp Pty Ltd [1999] HCA 64
Callinan J said:
[277] It should also be firmly kept in mind that valuation
practice, like legal practice, cannot be an exact science. Both require
the
exercise of judgments and the forming of opinions, often on matters in respect
of which certitude is impossible and uncertainty
highly likely.
- In
the same case Kirby J referred at [120] to the:
"principles" developed by the courts (including this Court) to flesh out the
meaning of the simple phrase "the value of the land"
which provided the
statutory foundation for Yates' entitlement to compensation.
His
Honour made these observations (citations omitted):
[120] Many of those so-called "principles" are "ambiguous and
contentious". They may be necessary in cases of this kind, in the
same way as
the "principles" of sentencing are necessary. They may help to guide the
decision-maker to a rational, just and consistent
process of decision-making.
However, like the "rules" governing sentencing, the "principles" governing the
valuation of land in cases
of its compulsory acquisition involve
inconsistencies, overlaps, internal conflicts and occasional illogicalities that
make their
exploration a rather unrewarding one.
- In
Vale v Sutherland [2009] HCA 26 at [21] the High Court cited its decision
in Boland v Yates Property Corp Pty Ltd for the stark proposition
that:
Valuation is a notoriously inexact science.
In Strike
Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205 at [9]- [17]
Bell P cited a number of other decisions of the High Court and intermediate
appellate courts to similar effect.
The facts of impairment that would be known to a purchaser in 2011
- In
order to assess what discount would be arrived at between a seller and a buyer
in 2011 for the impairment constituted by the pipe,
I commence by identifying
the facts concerning the property that the hypothetical parties should be
presumed to have known, as persons
“cognizant of all circumstances which
might affect its value”. Those facts are of wider scope than merely the
existence
of the pipe and Council’s statutory rights over it. Knowledge of
those matters, alone, would have been sufficient to cause
many prospective
purchasers, like the plaintiff, not to proceed at all. However to arrive at a
discounted market value it is necessary
to conceive of a purchaser who would be
willing to take the impaired property and who would make all reasonable
enquiries to ascertain
how the pipe may affect enjoyment of the residence and
what future expenses may be associated with it.
- Council
made this submission:
There is no factual basis for finding that a person in the position of the
plaintiff, in contemplating an ordinary residential real
estate transaction,
would have obtained expert opinions from a hydraulic engineer and a structural
engineer to determine whether
it was possible to relocate the pipe running
through the property, and the cost of doing so, prior to making an offer to
purchase
the property.
- I
am fortified in rejecting this submission by noting that it is directly contrary
to Williams J’s conclusion in Torr v Harpur: see the passage quoted
at [354] above. I am
satisfied that no rational person “contemplating an ordinary residential
real estate transaction” would
purchase the property at all without
assurance that the pipe was of sound construction and adequate hydraulic
capacity. A rational
purchaser expecting to buy a parcel of “ordinary
residential real estate” would also want to know the depth at which
the
pipe was placed and any potential impact it may have upon future alterations or
improvements to the property. None of these assurances
could be acquired without
obtaining the advice of a competent engineer.
- It
must be assumed that the hypothetical purchaser would ascertain, either by his
or her own enquiries or by those of an engineer
engaged for the purpose, that
the pipe was over 100 years old and made of a material – vitrified clay
– that as a matter
of common knowledge has long since been superseded by
concrete for applications such as this. It would be ascertained that the pipe
had been found, 10 years earlier, to have deteriorated seriously, with
longitudinal cracking, root infestation and a missing section
under the front
garden. The purchaser would discover that no repairs had been carried out in the
10 years since that survey. A rational
hypothetical purchaser, even without
specialist knowledge, would regard such a pipe as a threat to the foundations of
the house because
of the potential for leaking and for further deterioration of
the integrity of the pipe walls. The second defendant perceived such
a risk in
September 2001: see [80]
above.
- With
the above knowledge and recognition of risk, a willing but not over anxious
purchaser would certainly obtain engineering advice.
None of the engineering
reports furnished to Council over the past 20 years have suggested that the pipe
could be replaced, economically
and safely for the foundations of the house,
along the line of the existing pipe. I impute to the hypothetical purchaser that
he
or she would receive advice consistent with that position. In those
circumstances the hypothetical purchaser would understand that
in order to bring
this property to a satisfactory condition for long-term habitability the
existing pipe would have to be replaced
by a new one laid adjacent to the
western boundary.
- Upon
recognising these difficulties and uncertainties, any prospective purchaser
answering Council’s description of “a
person in the position of the
plaintiff, ... contemplating an ordinary residential real estate
transaction” would, like the
plaintiff, walk away. A rational and fully
informed purchaser still interested in the property would be a different type of
buyer
altogether and would necessarily approach the transaction with
calculations such as those that would be applied to a development
project. That
is not to say that the class of interested purchasers would be limited to those
who would wish to replace or substantially
alter the existing residence. But the
class would not comprise people simply looking for a residence that was
immediately fit for
enjoyable occupation. A purchaser taking on the property
with full information would know that it could not be left in its existing
state
and that to bring it to the condition of a normal Federation residence,
comparable to others in the street, there would lie
ahead a substantial and
risky project in which the proprietor would not be in control of the timing and
execution of remedial work
and in which it would be necessary to deal with a
council that had proved itself thoroughly unbusinesslike in relation to the
problem
over four decades.
- The
prospective purchaser making rational enquiries would ascertain that the
existing pipe was in 2011, as it still is, the sole stormwater
main for a
catchment of 5.2ha and that the run-off from this area was concentrated to a
large pit directly in front of No 13, from
which the pipe was fed. Further,
he or she would learn that hydraulic surveys over the preceding nine years,
since April 2002, had
repeatedly confirmed that the pipe was of inadequate
capacity for even 1 year ARI rain events and hence that it would be fully
charged,
on heavy rain, at least annually. The purchaser would appreciate that
replacing the pipe with one laid along the western boundary
would require a
larger diameter installation. It would be perceived that this work would be
required urgently and that re-lining
of the existing pipe as an interim
protective measure for the house would be required immediately. On the evidence
in this case I
have no doubt that a reasonably competent hydraulic or civil
engineer would advise a prospective purchaser that both the relocation
and the
interim re-lining were urgent.
- There
should be imputed to the hypothetical purchaser an awareness of Council’s
statutory rights in respect of the pipe and
its record of past dealings with the
proprietor of No 13. This would include knowledge that in order to have the
pipe replaced by
one laid on the western boundary Council would insist upon a
drainage easement in its favour. Further, the purchaser would know that
no
compensation would be paid in respect of such an easement. Council’s
dealings with the second defendant had shown its intransigence
about this. The
hypothetical purchaser would appreciate that he or she could not have the issue
of compensation adjudicated by the
Land and Environment Court unless Council
initiated compulsory acquisition and that Council had demonstrated in 2002 that
it would
not take that course. It would be seen that upon purchasing the
property the only way the purchaser could force the issue of Council
obtaining
an easement, being an essential prerequisite to decommissioning the existing
pipe before it caused serious damage to the
house, would be to make a gift of
the easement.
- The
hypothetical purchaser would also recognise that making a gift of a western
boundary easement would not, alone, achieve decommissioning
of the pipe under
the house. Installation of a larger drain within the new easement would also be
required. The cost of that work
in May 2005, on Council’s information from
Webb McKeown, would have been $735,000, the breakdown of which has been set out
at [128] above. In May
2012 Brown Smart Consulting updated that costing to $752,000: see [170]. Two expert reports
tendered in the proceedings estimated the cost at $738,000 and $810,000
respectively, although the latter appears
to have assumed some additional work
that only become necessary as a result of alterations to the property carried
out since 2011.
It is reasonable to infer that a purchaser in 2011 would have
ascertained that the cost would be in the order of Brown Smart
Consulting’s
estimate, which I repeat for ease of reference as
follows:
900mm pipe through No 13 $288,000
Upstream drainage work on Appian Way $285,000
Downstream augmentation of pipe to Wyatt Avenue $179,000
Total $752,000
- A
fully informed purchaser would see that for Council to undertake such a large
outlay it would first have to budget for it in a future
year or years.
Council’s budget allocation for stormwater drainage capital works in the
financial year to 30 June 2003 was
only $370,000. The evidence does not disclose
how much was allocated for this type of work in subsequent years but is unlikely
that
$752,000 could readily have been found for this single project after
decades of Council apparently having failed to set aside money
to create the
necessary fund.
- Council’s
record up to 2011 was of indecision inefficiency and procrastination in relation
to Appian Way drainage. It commissioned
further studies in preference to acting
upon those it already held. It declined to follow engineering advice in June
2002 and again
in response to the Webb McKeown report in May 2005. The
hypothetical purchaser would foresee great uncertainty as to whether Council
would ever decide to install a 900mm pipe on the western boundary at a cost of
$752,000. He or she would foresee that even if the
decision was made there was a
prospect of some years’ delay before the work would be budgeted for and
then actually executed.
These uncertainties would remain notwithstanding the
grant of an easement without claim for compensation.
- Doubts
that Council would ever pay for an amplified drain along the western boundary
would be compounded by the fact that Council
had spent about $95,000 in May 2005
installing new pits and feeder lines in Appian Way, including the large junction
pit in front
of No 13: see [125] and [129] above. That work was dedicated to the continued use
of the existing pipe through the property. There is no evidence that the 2005
street infrastructure could be modified to redirect stormwater to a western
boundary easement at a cost any less than the $285,000
referred to at [378] above. The likely
redundancy of the street works that had been carried out in 2005 at significant
cost to Council would be a factor
in it being reluctant to relocate the drain
with the urgency that the project would require from the point of view of a
purchaser
of No 13.
- The
hypothetical purchaser would recognise that the cost of relining the existing
pipe in 2011 would likely exceed Webb McKeown’s
2005 estimate of $95,000.
That work had not been done and, as mentioned above, would reasonably be
regarded by a rational purchaser
in 2011 as an urgent interim measure. It could
be expected that Council would not outlay a sum of that order on work that would
become
redundant if a new pipe were to be installed on the western boundary.
- The
hypothetical purchaser would take into account that if he or she could persuade
Council to accept a western boundary easement
for the installation of a larger
drain, it would utilise about 262m2 of the land, calculated as explained at [388] below. No construction
on or over that area would be permitted: see cl 8.16 of the1994 Stormwater
Code quoted at [214]
above. The purchaser would allow for disruption of enjoyment of the land during
installation of a new drain over about eight weeks.
In the price to be paid for
the property the fully informed purchaser would take account of the anxiety that
would be associated
with living in the residence from the date of settlement
until the pipe under the house could be decommissioned. There would be a
constant sense of threat arising from knowledge that a torrent of stormwater
would surge under the house, through an antiquated and
failing drain, during
every heavy rainfall.
- When
taken together, all of these circumstances presumed to be known to an informed
purchaser would make this property an extremely
unattractive proposition unless
the price could be very substantially discounted. The only sensible way to
measure the detriments
in a dollar value is to assume that the purchaser would
intend to rectify them and would calculate the likely cost of doing so. The
purchaser would consider whether the projected cost, as a discount, should be
adjusted down or up to allow for a possibly better
or worse outcome in dealings
with Council, a possibly shorter or longer delay until the pipe could be
relocated and a possibly greater
or lesser degree of discomfort associated with
living in the property in the meantime.
- If
a purchaser could be found who would not intend to rectify the physical
detriments of the property proactively and who would therefore
not approach the
question of an acceptable discount to price on the basis of the likely cost of
rectification, that would be a person
willing to run the risk of the residence
being damaged as a result of failure of the pipe and patient enough to wait in
hope that
Council would at some time resume a western boundary easement, submit
to the jurisdiction of the Land and Environment Court with
respect to
compensation and relocate the pipe at ratepayers’ expense. A hypothetical
purchaser who would approach the matter
in that way would suffer significant
loss of enjoyment of the property in the meantime, both in terms of the anxiety
earlier referred
to and by reason of constraints upon development imposed by the
existing pipe and by the expectation of a western boundary easement
being
compulsorily acquired in the future.
- While
it is not possible to attribute, directly, a dollar value that such a purchaser
would place upon these detractions from enjoyment
of the land, the Court may
safely conclude that in an efficient market he or she would not be driven by
competition to pay any more
for the property than would be offered by a
hypothetical purchaser who would calculate an acceptable discount based upon the
cost
and delay of rectification.
- Council
submitted that the presumed discounting calculations of a prospective purchaser
cannot be used as a guide to value because
they look at only one side of the
hypothetical transaction. It was Council’s submission that, whatever view
the Court might
take of how much a fully informed purchaser would deduct from
the otherwise market value in formulating his offer, that would not
determine
value because a willing but not over anxious vendor would not necessarily accept
the discounted offer. I reject that submission.
The process of judicial
valuation, in accordance with Spencer v The Commonwealth, necessarily assumes
that minds meet and that a transaction results. In identifying all the features
and
circumstances of this property that would bear upon the hypothetical
purchaser’s decision about what he or she would be willing
to pay, the
Court must assume that the vendor would be equally cognisant of all of those
matters. The vendor would have to accept
that the pipe and the uncertain future
of resolving the pressing issue of drainage through No 13 would cause many
otherwise prospective
purchasers not to touch it. On the basis that any
valuation exercise must assume a transaction at a price point, the hypothetical
willing but not over anxious vendor would simply have to accept the heavy
discounting that a rational purchaser would apply.
Discount
for a western boundary easement in favour of Council
- The
expert valuers who gave evidence in the case were Mr Gedeon for the plaintiff,
Mr McGuirk for the first defendant and Mr Bregozzo
for the second defendant.
With respect to the diminution in value that should be attributed to the need to
grant Council a western
boundary drainage easement, the area affected would be
in the order of 262m2. That figure was calculated by Mr Bregozzo on the basis
that the length of the western boundary is 86.49m, that some extension of the
easement along the northern boundary would be necessary
to enable a new drain to
be connected to the pipes that run through to Wyatt Avenue and that the easement
would have to be 2.5m wide,
being the minimum acceptable under cl 8.8 of
the 1994 Stormwater Code.
- The
total area of No 13 is approximately 1,688 m2. Accordingly, as accepted by
all of the valuers, the proportion of the site that
would be affected by the
easement would be approximately 15.5%. Mr McGuirk was of the view that the
market value of the land alone
in 2011 was $2.2 million. In his view an
appropriate valuation of the easement, taking into account that the area
affected by it
would not be completely alienated, would be in the order of 50%
of the proportionate land value; that is 50% of 15.5% of $2.2 million.
That
calculation produces a sum of $170,500 but Mr McGuirk said he would
“probably come to that figure of 175, maybe 200,000”.
- Mr
Gedeon said that he thought $621,000 was a reasonable valuation of a western
boundary easement. That figure was derived by Brown
Smart Consulting in April
2012, as a fraction of the total improved value of the property proportionate to
the area that the engineers
calculated would be taken up by the easement. I
accept Mr McGuirk’s view that the appropriate percentage of land area
should
be applied only to the land value, not to the total improved value.
- Commencing
with the valuation experts’ consensus that the improved value of the
property in 2011 was $3 million, the land only
component is a function of what
value it is assumed the market would attach to the improvements, being a
100-year-old Federation
home. In Mr Gedeon’s view the house did not
contribute any more than $400,000 to the total improved value. He gave these
answers:
[Even] though they’re [...] nice improvements – they don’t add
a lot of value to the property. They were an under
capitalisation of the land so
you’re looking at a 100-year-old improvement. When you’re buying a
$3 million property
you want to have a substantial house that goes with the
purchase. The house was not substantial ... .
[Appian Way is] pretty much the most prestigious street, not just in Burwood but
insofar as heritage properties and heritage areas
it’s - it’s the
most prestigious street in the whole of the inner west, and people who live in
that street and want to
live in that street live there because of the grandiose
nature. It’s got a big tennis court right in the middle of the street,
and
it’s a lovely environment, and they all want to have lovely
homes.
- Mr
McGuirk adopted $800,000 as the value of the improvements. He said that the
house as it stood in 2011 was reasonably commensurate
with the value of the
location and he did not accept that it represented under capitalisation. I do
not entirely accept the position
of either Mr Gedeon or Mr McGuirk on this and
consider that a realistic assessment of the value of the improvements lies
somewhere
between. It is reasonable to adopt a figure of $600,000 and to treat
the value of the land alone, unimpaired, as $2.4 million.
- When
the 15.5% land proportion for the easement is applied, the result is a figure of
$372,000. Mr Gedeon did not consider it justified
to apply a further reduction
factor of 50% and I agree with him. This drainage easement would not be used for
the laying of modest
pipes to serve a single dominant tenement. It would be an
easement to accommodate a 900mm, industrial scale piece of infrastructure
to
serve the entire community living within a 5.2ha area. The proprietor of
No 13 would have no control over the depth of placement.
Nothing could be
built over it. The valuers at times referred to such an easement as “a
blot on the title”. That conveys
the idea of an abstract and almost
theoretical encumbrance. But this easement would involve a very real intrusion
upon a residential
allotment in a sought after location. The above-mentioned
figure of $372,000 is a reasonable assessment of this component of the
discount
that a hypothetical purchaser would require.
- I
disregard altogether the valuations that Council’s valuers in earlier
years have from time to time attributed to the easement:
see [78] and [227(4)] above. I have no
idea what assumptions underlay those figures and the experts who provided them
were not called to provide any explanation.
Discount for the cost
of relocating the pipe
- Together
with the value of the easement, the hypothetical purchaser would factor in the
cost of interim relining at $95,000 and the
full cost of installing a 900mm
replacement pipe along the western boundary, including street work in Appian Way
and downstream amplification
– the $752,000 referred to at [378].
- The
hypothetical purchaser would ascertain the history of Council’s past
conduct concerning this drainage problem, at least
in outline. That knowledge
would be important in predicting whether Council might bear expenses and take
action with the necessary
urgency to rectify the impairments to No 13. In
my view an incoming purchaser would have no expectation, based on the history of
the matter, that Council would commit to relocation of the pipe, let alone
implement such a decision, within a time frame that would
be reasonable having
regard to the physical risk to the property and the diminution of enjoyment that
would be engendered by that
risk until it could be removed.
- The
purchaser would take into account the possibility of an outcome more favourable
than having to pay the full cost of interim relining,
installing a new drain and
constructing the off-site connections. He or she would consider the possibility
that Council might undertake
the relining itself; and/or that it might only
require a contribution to the cost of a new drain, perhaps as a condition of
consent
to a future development application; or that any such requirement for
contribution would be disallowed in the Land and Environment
Court; or that
Council might simply bear the whole cost of the new drain. Consideration would
be given to whether any of these more
favourable outcomes might be offset by
long delay in decision-making and/or implementation; and/or by delay and
irrecoverable costs
associated with Land and Environment Court proceedings.
- On
the other hand the hypothetical purchaser would take into account the
possibility of worse outcomes; for example that once interim
relining had been
carried out Council would be relieved of pressure to relocate the drain and
would impose long delays in relation
to that work; or that Council might not
permit the proprietor of No 13 to relocate the drain, even at its own
expense, because of
the requirement for connecting works in Appian Way and
amplification of downstream drainage, which Council might not be willing to
have
carried out.
- Taking
into account all possibilities in my view the hypothetical purchaser with
knowledge of the circumstances would consider it
necessary to include the full
cost of interim relining and of relocation of the drain as an allowance in the
discount to price. The
whole of those costs might not actually be incurred but
the amount of any expenditure averted would be an appropriate proxy measure
of
the economic costs of delay, compromised enjoyment of the land in the meantime,
legal expenses and risk.
- In
the calculations of a purchaser undertaking what would be in effect a
development exercise, Council’s entrenched tendency
to procrastinate would
translate into prolongation of the project, the cost of extended negotiations,
holding costs and a longer
period of living in a house threatened by the ancient
pipe running under it and unable to be developed. The valuation of the impaired
value of the property in 2011 is made upon the basis that the purchaser would
apply a discount commensurate with a project of bringing
the property up to its
unimpaired value of $3 million. For the reasons given above a purchaser would
see the project as difficult
and risky. He or she would require a discount
sufficient to leave some margin as a reward for the risk involved.
Total discount that would be applied by a hypothetical
purchaser
- In
summary, the components of the discount that in my view a hypothetical purchaser
would apply to the otherwise market value of the
property – and that a
hypothetical purchaser would be driven to accept – are as
follows:
Value of easement gifted to Council $372,000
Cost of interim relining of the pipe $95,000
Cost of capital works to install an amplified drain
on the
easement $752,000
Total $1,219,000
Mr Gedeon’s method and
opinion
- Mr
Gedeon’s primary method of assessing the market value of the impaired
property in 2011 was described by him as a “before
and after”
approach, in which he adopted a full market value of $3 million, by reference to
comparable sales and other indicia,
then applied a percentage discount that he
concluded a hypothetical purchaser would apply – and that a willing but
not over
anxious vendor would have to accept – on the basis of a list of
deficiencies. His list was as follows:
- Council’s
ownership of and rights with respect to the pipe, treated by Mr Gedeon as
equivalent to an unregistered easement.
Mr Gedeon observed that the location of
this “has the effect of severing the land into two parcels notwithstanding
that a dwelling
currently straddles both sides of the easement”.
- The risk of
stormwater flooding.
- Structural risk
to the existing improvements. Mr Gedeon thought a hypothetical purchaser would
discount the value of improvements
to nil because he or she would be
“highly reluctant” to spend money on a house that could collapse or
require significant
underpinning work.
- The risk that
the purchaser would not be permitted or able to make alterations or additions to
the dwelling because of the presence
of the drain and the risk of damage to it
from anything erected over it.
- The risk of
disturbance and nuisance as a result of Council exercising its rights of entry
to maintain and repair the drain.
- General overall
risk.
- Upon
these considerations Mr Gedeon considered that a hypothetical purchaser would
discount the price he or she would be willing to
pay by 50%. As a check on this
Mr Gedeon applied the process that I have adopted above, of calculating what a
hypothetical purchaser
would likely allow for the cost of removing the
impairment constituted by the pipe and thereby eliminating the risks referred to
in the preceding paragraph. For that purpose he utilised his valuation of the
easement at $621,000 and adopted a cost of capital
works figure of $749,000, for
a total of $1,370,000. He concluded that a further discount of $130,000 would be
applied by a purchaser
for disturbance, temporary relocation and accommodation
during construction, legal costs, architectural and engineering fees and
mortgage and refinancing costs.
- I
consider Mr Gedeon’s “before and after” method too broad brush
to be relied upon. He does not claim to be able
to support the percentage
discount that he has adopted by sales evidence of purchasers in comparable
situations having applied discounts
of that order. The method lacks
transparency. I consider Mr Gedeon’s secondary or check method to be more
reliable although
I have adopted different figures for use in my approach of
treating the hypothetical transaction as an improvement
project.
Mr McGuirk’s method and opinion
- Mr
McGuirk had regard to the discount to full market value that appeared to have
been applied by purchasers of properties at 1 The
Causeway, Strathfield South in
March 2011 and at 68 Churchill Avenue, Strathfield in April 2017. The first of
these properties was
affected by a subsurface sewer main within an easement
running diagonally across the land and under an existing dwelling. The second
was subject to a stormwater easement lying diagonally across the centre of the
land, under an existing house, with a pipe laid through
it. Mr McGuirk derived
the full market value of each property by reference to sales of other houses in
the near locality that were
comparable but unaffected by any easement in favour
of a public authority or by the presence of a subsurface pipe. He calculated
that the first of the properties had changed hands at a price that was
discounted by 13.75% to full market value and the second had
sold at a discount
of 22%. From this Mr McGuirk concluded that it would be appropriate to apply a
discount of 20% in the case of
No 13 Appian Way as at 2011. He valued the
property in its impaired state at $2.4 million.
- From
Mr McGuirk’s descriptions of the affectation of the properties that he
used as comparators I am not satisfied they were
affected anything like as
seriously as the property that is under consideration in this case. There is no
suggestion that the subsurface
pipes across the properties at The Causeway and
Churchill Avenue were of 100-year-old construction or that they had been found,
upon
survey more than 10 years before the respective sales, to be in a
deteriorated condition that had never been addressed by the authority
responsible for them. There is no suggestion that those pipes were known to be
of inadequate capacity for the flows that they were
required to carry. Although
in each case the pipes would have been difficult to relocate, there is no
evidence that the prospective
purchasers perceived relocation to be necessary.
- Here,
in contrast, any rational purchaser of No 13 Appian Way would perceive
relocation of the drain under the house to be both necessary
and urgent and
would be aware that it was improbable Council would bear or contribute to the
cost of this work, or undertake the
work within a reasonable time frame, or
compensate for the grant of the necessary easement. Given those circumstances
and the risk
that a purchaser of No 13 might not even be able to secure
consents to undertake the necessary work at his or her own expense, I
cannot
regard the examples presented by Mr McGuirk as usefully comparable.
- Mr
McGuirk took into account the following consideration in reaching his
conclusion:
The buyer [of No 13] would balance Council’s right to decline to
relocate the pipe against the written correspondence and previous
negotiation
process which outlined Council’s willingness to relocate the pipe subject
to negotiations around the granting of
an easement over the relocated
pipe.
I do not accept that a rational hypothetical purchaser
would take this sanguine view of the prospects of getting Council actually
to
undertake the work of relocation and to incur the cost. Mr McGuirk’s
caveat, “subject to negotiations around the granting
of an
easement”, brushes over a serious impediment. Council’s
“negotiations” with the second defendant on
the subject were not
deserving of the name. Council’s determination not to pay anything for an
easement is manifest in the
record of these “negotiations”.
- Mr
McGuirk also attributed to the hypothetical purchaser the following
understanding:
A fully informed purchaser would understand the drainage pipes deal with water
collection and dispersal from alternate parts of the
Appian Way estate and do
not deal with water flow within the subject property. Hence costs associated
with dealing with the augmentation
of the drainage system should be borne by
Burwood Council.
No doubt the last sentence of this accurately
describes what “should” occur. A fully informed purchaser would
examine
the record of Council’s neglect of this problem and find
considerable divergence between, on one hand, what Council “should”
do in performance of its statutory responsibilities and, on the other hand, what
it actually had done in the past and what could
reasonably be expected of it in
the future.
- Mr
McGuirk dismissed the making of any allowance for the hypothetical
purchaser’s perception that the failing drain might put
the house at risk.
He said:
I believe Burwood Council, as the owner of the pipe, would have a responsibility
for any damage caused to the existing improvements,
being either the dwelling,
the land or the pool, which resulted from deterioration or damage to the pipe.
As such these rights provide
a level of protection to the owner’s
improvements.
In so saying Mr McGuirk must have been completely
unaware that Council has fought tooth and nail in these proceedings to deny the
plaintiff any compensation for the repeated flooding of her property that has
occurred as a result of the dilapidated pipe under
her house having become
completely occluded, entirely predictably, in November 2011. Confining my
consideration to what would be
known to or expected by a hypothetical purchaser
earlier in 2011, I do not accept that such a person would place any reliance
upon
the prospect of Council compensating for damage to the house as a basis for
moderating the discount to market value that he or she
would insist upon.
- Mr
McGuirk’s suggested 20% discount does not come anywhere near reflecting
the reduction in price that a hypothetical purchaser
would hold out for if he or
she had full knowledge of the physical impairment and threat to this property
that was constituted by
the pipe and a reasonable appreciation of the difficult
and expensive path that lay ahead in trying to have that impairment resolved,
dealing with a council that had over many years proved itself obdurate towards
the proprietor of No 13 and other affected landholders
and oblivious to
advice with respect to the problem.
Mr Bregozzo’s method
and opinion
- Mr
Bregozzo was asked by the second defendant’s solicitors to prepare several
alternative valuations of the property in 2011,
each valuation to be carried out
on the basis of one of a range of assumptions. One of the assumptions was that
there was a stormwater
pipe under the house “with no known defects”.
Another was that there was such a pipe “with defects needing repair
at no
cost to the property owner”. These assumptions and the others that Mr
Bregozzo was asked to make do not relate to the
facts as I find them. On each of
the given assumptions Mr Bregozzo arrived at a valuation of either $2.95 million
or $2.9 million,
assuming full market value of $3 million. These conclusions
confirm that the assumptions the valuer was asked to make are out of
touch with
reality. This is not a reflection upon Mr Bregozzo’s skills as a valuer or
the weight of his opinions as an expert
witness. He was asked irrelevant
questions. A discount of only $50,000 or $100,000 for the complex problems
created by the pipe under
the house and the unattractive prospect of having to
deal with this Council to resolve those problems is manifestly
inadequate.
Conclusion on measure of damages
- I
assess the amount of the plaintiff’s damages at $1,219,000, being the
difference between the price of $3 million that the
plaintiff paid for the land
in 2011 and its market value at that time discounted by reason of its impaired
state.
Issue 12: alleged failure of plaintiff to mitigate
damages
- The
course of the negotiations considered at [216]-[228] above satisfies me that the plaintiff adopted a
reasonable position at all times during the negotiations with Council between
October
2017 and July 2020. Having regard to the uncertainties of the draft Deed
that was ultimately submitted on 2 June 2020, Council never
reached the point of
making an offer in sufficiently certain terms to be capable of acceptance. The
draft Deed did not specify the
scope of works definitively and no Transfer of
Grant of Easement was submitted in a form suitable for execution and
registration.
Further, even if those outstanding elements of the draft Deed had
been finalised, it would not have been unreasonable for the plaintiff
to refuse
what was in effect a capitulation on both of her causes of action against
Council in exchange for no more than the construction
of a new and larger storm
water pipe without cost to herself. No failure to mitigate has been
demonstrated.
Apportionment between first and second
defendants
Issue 13: Council’s entitlement to apportionment
- In
pars 79-88 of its second further amended defence filed 18 August 2020 Council
pleads that its liability to the plaintiff for negligent
misstatement should be
limited under s 35 of the Civil Liability Act. Council’s
allegation of concurrent wrongdoing is advanced solely on the ground that a
cause of action is said to be available
to the plaintiff against the second
defendant arising from s 52A of the Conveyancing Act and from a
warranty implied in the contract of sale by the Conveyancing (Sale of Land)
Regulation (2010) as in force when the contract
was made.
- In
March 2011 s 52A was in the following terms so far as
relevant:
52A Contracts for sale of land
(1) Except in so far as the regulations may otherwise provide,
this section applies to contracts for the sale of any land, including
land
subject to the provisions of the Real Property Act 1900, [...] and irrespective
of whether or not any such Act makes provision for or with respect to the
conveyance or transfer of land.
(2) A vendor under a contract for the sale of
land:
(a) shall, before the contract is
signed by or on behalf of the purchaser, attach to the contract such documents,
or copies of such
documents, as may be prescribed, and
(b) shall be deemed to have included in the contract such
terms, conditions and warranties as may be prescribed.
(6) The regulations may make provision for or with respect to
the remedies and relief available to a purchaser under a contract
for the sale
of land and the penalties which may be incurred by a vendor under such a
contract:
(a) for any failure or refusal to
comply with any of the provisions of this section or the regulations made for
the purposes of
this section, and
(b) for any breach of a term, condition or warranty deemed to
be included in the contract under this section.
(7) Without limiting the generality of subsection (6), the
remedies and relief may include remedies and relief by way of rescission
of the
contract by the purchaser and the payment of compensation by the vendor.
(8) The regulations may provide that a term, condition or
warranty prescribed as referred to in subsection (2) (b) shall not merge
in the
transfer or conveyance on completion of the contract.
(9) The regulations:
(a) may require the inclusion in
contracts for the sale of land of terms, conditions and warranties prescribed as
referred to in
subsection (2) (b), and
(b) may require the attachment to contracts for the sale of
land of notices or other documents.
- Pursuant
to reg 4 and Sch 1 of the Conveyancing (Sale of Land) Regulation
(2010) Council’s s 149 certificate was a prescribed
document for the
purposes of s 52A(2)(a) of the Act. For the purposes of s 52A(2)(b) of
the Act, reg 8 and Pt 1of Sch 3 of the Regulation
had the effect
that the contract was deemed to include the following warranty (extracted so far
as relevant):
Part 1 Warranty in contract
1 The vendor warrants that, as at the date of the contract and
except as disclosed in the contract:
(c) the section 149 certificate
attached to the contract specifies the true status of the land the subject of
the contract in relation
to the matters set out in Schedule 4 to the
Environmental Planning and Assessment Regulation 2000
- In
par 83 of its second further amended defence Council alleges that the second
defendant knew about the pipe and the tendency of
the property to flood and that
he knew that those matters were relevant to how the property could be used and
developed. Council
alleges that the contract, including the annexed planning
certificate, did not disclose any of those matters and that the certificate
“did not disclose the true status of the land ... in relation to the
matters set out in Sch 4 of the Environmental Planning and Assessment
Regulation”. In par 84 it is alleged that the second defendant did not
inform the plaintiff, prior to completion of the contract, of any
of those
matters.
- The
pleading then continues as follows:
85 In the premises, by reason of the second defendant’s
acts and omissions pleaded above (including by his silence), the
second
defendant negligently misrepresented to the plaintiff that the planning
certificate attached to the contract disclosed the
true status of the land
subject to the contract ... in relation to the matters set out in Sch 4 of the
Environmental Planning and Assessment Regulation, when as a matter of fact it
did not because it did not disclose or contain any information about [the pipe
and/or the tendency of
the property to flood].
86 In the premises, by reason of the second defendant’s
acts and omissions (including by his silence) pleaded above, the
plaintiff
suffered loss and damage. [By way of particulars, the second defendant repeated
those parts of the plaintiff’s statement
of claim in which she alleged
that, had she known of the pipe and of Council’s statutory interest in it
she would have rescinded
the contract].
87 In the premises:
a The claim against [Council for
damages for negligent misstatement] and the claim against the second defendant
pleaded in paragraphs
79-86 above [that is, of the second further amended
defence] are each claims in respect of the same loss and damage to the
plaintiff,
and therefore constitute a single apportionable claim and
b [Council] and the second defendant are concurrent wrongdoers
in relation to the claim, being persons whose acts and/or omissions
caused loss
and damage the subject of the claim.
88 Therefore, in the premises, by reason of the second
defendant being a concurrent wrongdoer, pursuant to s 35 of the Civil
Liability Act [Council] is entitled to have its liability to the plaintiff for
any loss or damage caused by reason of the matters pleaded [in the
plaintiff’s claim against Council for negligent misstatement] reduced by
an amount that the Court considers just having regard
to the responsibility of
each of [Council] and the second defendant for that loss or
damage.
- I
do not consider that either s 52A of the Conveyancing Act or the
warranty implied by the Regulation, or a combination of those provisions,
supports the pleading in par 85 that the second
defendant represented, by
silence or otherwise, “that the planning certificate ... disclosed the
true status of the land ...
in relation to the matters set out in Sch 4 of the
Environmental Planning and Assessment Regulation”. There was a statutory
implied warranty that the planning certificate disclosed the true status, not a
representation. Notwithstanding
s 52A(6)(b), the Regulation made no
provision for the remedies and relief available to a purchaser for breach of the
warranty. Notwithstanding
s 52A(8), the Regulation did not provide that the
statutory warranty “shall not merge in the transfer or conveyance on
completion
of the contract”.
- There
is no evidence that the plaintiff understood the second defendant’s
silence, or any other circumstance of the contract,
as a representation by the
second defendant that the planning certificate was accurate. The plaintiff has
not pleaded any such case.
With respect to misstatements in the planning
certificate she has alleged only that they were made by Council, by issuing the
document.
Her negligent misstatement case against the second defendant is based
upon his answers to requisitions. There is no evidence that
the plaintiff or her
solicitor relied upon an implicit representation by the second defendant, by
silence or otherwise, that the
s 149 certificate was accurate. Council has
not cited any authority that would support, let alone require, that the second
defendant be
held liable to the plaintiff on a cause of action arising from the
statutory implied warranty as formulated by Council in pars 79-88
of its
pleading.
- For
the purposes of s 35 of the Civil Liability Act it would have been
open to Council to rely upon the second defendant’s liability to the
plaintiff for negligent answers to
requisitions as the basis upon which judgment
against Council should be limited to its apportionable share of responsibility.
However
Council has deliberately chosen not to plead its proportionate liability
defence in that way, even as an alternative to the ground
of concurrent
liability that it has formulated in pars 79-88, which I find unsupportable. The
Court inquired of Council’s representatives
on two occasions during
closing arguments why it did not invoke s 35 on the basis of the case that
the plaintiff has run against the second defendant, instead of attempting to
construct its own independent
contention of concurrent liability on his part.
Council’s only substantive response was to file several pages of
supplementary
submissions directed to advancing its pleaded case on this
subject. I am unpersuaded by those submissions.
- I
cannot uphold Council’s proportionate liability defence on the only basis
that appears to me to be available, being that the
second defendant’s
concurrent liability arises from negligent answers to requisitions, where
Council has not pleaded or even
attempted to adopt that ground for
apportionment. Accordingly I will give judgment against each of the defendants
for the full amount
of the plaintiff’s damages that have been occasioned,
concurrently, by the negligent misstatements of both of them.
Issue 14: proportions of liability between Council and second
defendant
- I
am not able to determine a suitable apportionment between Council and the second
defendant upon the contingent basis that, contrary
to my own conclusion, the
second defendant is liable to the plaintiff on the cause of action pleaded by
Council in pars 79-88 of
the second further amended defence. Determination of
proportionate liability requires the Court to assess the causative effect of
the
respective wrongs of the concurrent tortfeasors and to evaluate their relative
degrees of culpability. I cannot do either of
those things on the basis of
Council’s pleaded case concerning the second defendant’s liability
to the plaintiff because
I do not regard it as legally sustainable.
- In
case I should be wrong in declining to apportion the damages by reference to the
second defendant’s liability for negligent
answers to requisitions, I will
indicate the proportion for which I consider it would be just to hold Council
responsible if it had
invoked s 35 of the Civil Liability Act on
that basis. First, the causative potency and effect of each of the
defendants’ negligent misstatements was equal. Accurate
information in the
planning certificate concerning Council’s June 2002 resolution or correct
answers to the requisitions would,
equally, have saved the plaintiff from
purchasing this compromised property.
- Secondly,
with respect to degree of culpability, it is relevant that over a period of
about three years from 2001 to 2003 both Council
and the second defendant had
engaged in protracted consideration of the detriments to No 13 caused by
the pipe and by Council’s
need and policy to acquire an easement for an
upgraded drain. Relative to the dates of their misstatements in August 2010 and
August
2011, respectively, that period of close consideration was quite recent
and memorable.
- The
whole issue would certainly have been present to the second defendant’s
mind when he sold the property and was asked for
instructions to answer the
purchaser’s requisitions. Corporate memory is a different phenomenon but
it was part of Council’s
business and responsibility to manage corporate
knowledge through its records and information retrieval systems. Pursuant to
s 149
of the Environmental Planning and Assessment Act it was
Council’s duty to record information such as the existence of the June
2002 policy in a manner that would keep it ready
to hand for inclusion in a
planning certificate. Council should have organised itself to be in just as good
a position to disclose
this information, on a certificate, as the second
defendant was to provide accurate instructions to his conveyancing solicitor for
the requisitions.
- The
second defendant’s answers to requisitions constituted a direct provision
of important information to the purchaser’s
solicitor in the context of a
contractual relationship that was concerned solely with this property. In
contrast, Council issued
its certificate to the second defendant and was not in
any direct relationship with the plaintiff. I do not consider that that reduces
the degree of culpability of the Council. Like any local government authority,
it was well aware that by statute the certificate
would be required to be
incorporated in the contract of sale and knew of the potential for a purchaser
to rely upon it. All things
taken into account, I consider that Council fell
just as far short of the requirements of reasonable care in relation to its
function
as the second defendant fell short of the care that he should have
taken.
- If
I were called upon to apply s 35 as between the two defendants, I would
consider it just that each should bear 50% of the judgment in the
plaintiff’s favour
for damages for negligent misstatement, having regard
to the extent of their responsibility, respectively, for the
damage.
Claim against the cross-defendant for professional
negligence
Issue 15: alleged negligence of second defendant’s solicitor
Second defendant’s instructions to his solicitor for the answers to
requisitions
- Mr
Lukas acknowledged that he could not recall the phone conversation with the
second defendant in which he sought and obtained instructions
for the purpose of
answering requisitions. However he had a brief file note of the conversation. He
gave evidence of his usual practice
in this aspect of conveyancing. He said that
there was no reason to think that he departed from his practice on this
occasion.
- Mr
Lukas deposed as follows:
When I receive requisitions on title, I typically telephoned my client to take
instructions about them. It is not my usual practice
to ask the client for
instructions in relation to each individual requisition. I do, however,
universally ask the client about whether
there are any disputes with neighbours;
and whether the client has received any notices from the local council or any
notices from
a public authority, that may be detrimental to the property. The
question is broadly framed so that the client will consider everything
that
detrimentally affects the property, including easements.
Depending upon the particular transaction and whether the client has disclosed a
potential detriment to the property, I may seek
specific instructions in
relation to other requisitions, but that varies from time to time depending on
the particular matter.
- In
oral evidence Mr Lukas provided further explanation of his practice. He
said:
What I tend to do as I ask sort of general questions which [answer] a lot of the
requisitions.
Mr Lukas gave examples of his general questions,
including the following:
Have you received any notification from some public authority?
Somebody wants to resume your land?”
Is there anybody – anybody got access of your land? Anybody claiming some
right of your land?
- Mr
Lukas said that he would not have used the wording of the requisitions in
seeking these instructions and, for example, he would
not have asked directly
whether there was any unregistered easement. He considered that most clients
would not know what an unregistered
easement was and that to ask a question
using that terminology would only tend to confuse the client. Mr Lukas said that
he made
the following note of the date and content of a telephone conversation
with the second defendant in which he followed the above-described
usual
practice:
28.07.2011 No notifications/breaches/notices
- With
respect to this file note Mr Lukas deposed as follows:
The entry for the date 28 July 2011 indicates (and this is my recollection) that
[the second defendant] instructed me he had received
no notifications from any
council or public authority; and that he was not in breach of the Local
Government Act or any law or regulation relating to the property.
I have no recollection of specifically asking [the second defendant] whether
there were any unregistered easements affecting the
property. My question to
[him] would have been broadly framed about anything that adversely affects the
property.
- The
second defendant deposed that he recalled speaking to Mr Lukas on a date that he
believed was 28 July 2011 but he did not recall
Mr Lukas asking
him:
... about any notification from any council or public authority, or whether I
was in breach of the Local Government Act or any law or regulation relating to
the property.
In cross-examination the second defendant
maintained that he had no recall of Mr Lukas asking about those matters or about
“any
notices that [he] may have received in respect of the
property”.
- Despite
the second defendant’s lack of recollection, I am satisfied that Mr Lukas
followed what he described as his usual practice.
The brief file note quoted
above is a contemporaneous confirmation that this practice was followed and that
the second defendant’s
instructions did not include information of which
he was aware and that clearly should have been included in frank answers to Mr
Lukas’ enquiries. At [333]-[334] and [345] above reference has been made to some aspects of the
second defendant’s knowledge, in July and August 2011, of Council’s
claims in relation to the pipe. In addition, he acknowledged the following under
cross examination by Mr Lukas’ counsel:
Q That was a real concern that you had in September 2001, that
there was a possibility that the pipe under the house and pool would
burst or
leak?
A It's a possibility. Yes, definitely.
Q At no stage did you ever disclose that to Mr [Lukas] did
you?
A No, I did not.
[...]
Q You were aware that there was a possibility of an easement
being created?
A Yes.
[...]
- Later,
Mr Lukas’ counsel adduced this evidence from the second defendant
regarding his approach to provision of information
to the
solicitor:
Q Mr Dellafranca, is this the position. [...] - you've already
said that you didn't disclose to Mr [Lukas] issues concerning your
negotiations
with council in relation to an easement?
A Yes, that's correct.
Q Is it the case that you also didn't disclose to the agent
matters in relation to the easement and the pipe on the property?
A That's correct.
Q So is that because to disclose those matters you thought it
might have jeopardised the $3 million sale?
A No, it’s because of the fact that I wondered what my
obligations were to disclose. When I go to sell a property, I wonder
what things
I have to volunteer. I need to have a solicitor tell me what my obligations to
disclose are.
Q Is it the case that you were waiting for him to ask you the
right question to tease out what you knew about the pipe and the
easement?
A I’m not going to say the right questions. I’m
going to say that I expected the solicitor would inform me of what
obligations
to disclose, what would my obligations, because there were many things that I
wasn’t going to volunteer. I mean--
HIS HONOUR
Q Give me an example, an example of something you weren’t
going to volunteer?
A Well, in 96 it had been recorded to me that water had jumped
the gutter and flowed down the driveway, you know. Did I have to
volunteer
that?
[...]
Q [Did] you turn your mind to that when you, as it were, had Mr
[Lukas] engaged, did you turn your mind to the question, should
I or
shouldn’t I ask Mr [Lukas], you know, am I right to disclose this
circumstance, someone - there was a bit of a flood there
in 96, did you turn
your mind to that?
A Well, I think that when I sat with Mr [Lukas], I was - my
intention was that he would ask me questions, that he would protect
my interests
and I - as long as I answered truthfully and accurately, that would be all that
I needed to do, not that I had to know
what it was that I was supposed to tell
my solicitor.
[Further questions from Mr Lukas’ counsel]:
Q You didn’t think for a minute that you ought to
disclose the - in rough [terms], the dealings that you had with council
concerning a pipe that was under the house, running through the middle of the
property, and that you thought this a financial detriment
- it’s presence
had a financial detriment to the value of that property?
A Look, I’m not going to make a moral judgment about what
I should and shouldn’t have done, but I was only going to
do what I was
required to do. I wasn’t going to volunteer things that I knew. I
wasn’t going to volunteer about the 96
matter. I wasn’t going to
volunteer about a noisy neighbour. I wasn’t going to volunteer other
things--
[...]
HIS HONOUR: Just a moment.
Q When you say you weren’t going to volunteer and - do
you mean to the purchaser, either directly or through the agent?
A Through - to Mr [Lukas].
Q To your solicitor?
A To my solicitor. I wasn’t going to volunteer
things—
- Mr
Lukas’ general questions were quite sufficient to discharge his
professional duty of care to obtain adequate instructions
from which to provide
the purchaser’s solicitor with accurate responses to the requisitions. The
erroneous and misleading responses
that were in fact provided and have given
rise to the second defendant’s liability to the plaintiff came not from
any want
of care on the part of Mr Lukas but from the second defendant having
withheld information that was within his knowledge and that
was clearly called
for by way of frank answers to Mr Lukas’ enquiries. For that reason the
second defendant’s cross-claim
against Mr Lukas will be
dismissed.
Liability of Council for nuisance; quantum of
damages
Issue 16: Council’s liability in nuisance for flooding of
No 13
Legal principles of nuisance committed by public authority
- In
Gartner v Kidman [1962] HCA 27; (1962) 108 CLR 12 at 48-49 Windeyer J
(with whom Dixon CJ agreed) laid down the following principles with respect to
“water which comes naturally
upon the land from which it flows, as
distinct from water artificially brought or concentrated there and allowed to
escape”
(paragraph numbers added for ease of
reference):
1 The higher proprietor: He is not liable merely because
surface water flows naturally from his land on to lower land.
2 He may be liable if such water is caused to flow in a more
concentrated form than it naturally would.
3 It flows in a more concentrated form than it naturally would
if, by the discernible work of man, the levels or conformations
of land have
been altered, and as a result the flow of surface water is increased at any
particular point.
4 If a more concentrated flow occurs simply as the result of
the "natural" use of his land by the higher proprietor, he is, generally
speaking, not liable. What is a natural use is a question to be determined
reasonably having regard to all the circumstances, including
the purposes for
which the land is being used and the manner in which the flow of water was
increased: as for example whether it
is agricultural land drained in the
ordinary course of agriculture, whether it is timbered land cleared for grazing,
whether it is
a mining tenement, or is used for buildings and so forth.
5 The proprietor of higher land is not liable for a more
concentrated flow from his land if it is the result of work done outside
his
land by someone else, and for the doing of which he is not responsible, as for
example by the paving and guttering of public
roads by municipal authorities.
6 The above statements concerning the concentration of surface
waters relate to cases when the increased flow results from work
done when the
higher land and the lower land were held by separate proprietors. Different
considerations apply when the lower land
receives a concentrated flow as the
result of work which was done when it and the higher land were in the same
ownership and possession.
7 The lower proprietor: He may recover damages from, or
in appropriate cases obtain an injunction against, the proprietor of the higher
land who is, for
any of the reasons given above, liable to an action because he
has concentrated or altered the natural flow.
8 Although he has no action against the higher proprietor
because of the natural unconcentrated flow of water from his land, he
is not
bound to receive it. He may put up barriers and pen it back, notwithstanding
that doing so damages the upper proprietor's
land, at all events if he uses
reasonable care and skill and does no more than is reasonably necessary to
protect his enjoyment of
his own land. But he must not act for the purpose of
injuring his neighbour. It is not possible to define what is reasonable or
unreasonable
in the abstract. Each case depends upon its own circumstances.
9 It may be added that the proprietor's right to defend his
land against water coming upon it by erecting barriers, is generally
speaking
restricted to penning it back on to the higher land whence it would otherwise
have naturally come. It does not entitle him
to divert it on to the land of a
third proprietor to which it would not have naturally gone to the damage of that
proprietor.
- These
principles have been applied in many subsequent cases and they remain good law.
See for example Gales Holdings Pty Limited v Tweed Shire Council [2013]
NSWCA 382 at [135]- [137]; Owners Corporation SP 46510 v Tan [2020] NSWSC
1564 at [55]- [58] (Robb J). In Gales Holdings Pty Limited v Tweed Shire
Council Emmett JA (with the agreement of Leeming JA and Sackville AJA)
stated the following additional principles:
[131] A nuisance is either a continuous or recurrent state of
affairs. An occupier of land will be liable for continuing a nuisance
if, with
knowledge or presumed knowledge of the state of affairs, the occupier fails to
take reasonable steps to bring it to an end
despite having had ample time to do
so (Hargrave v Goldman [1963] HCA 56; 110 CLR 40 at 59-61). There will be
nuisance if a state of affairs created, adopted or continued by an owner or
occupier of land harms another
person's enjoyment of land occupied or owned by
that other person, unless the first person's conduct involves no more than the
reasonable
and convenient use of its own land (Hargrave v Goldman at
62).
[132] That is to say, nuisance is a wrongful interference with
another's enjoyment of land by the use of other land occupied or
owned by the
alleged wrongdoer. However, an owner or occupier of land is not an insurer.
There must be more than mere harm being
done to another's enjoyment of land. The
harm must be caused by the alleged wrongdoer's use of its own land. The word use
connotes
that a degree of personal responsibility is usually required, even
though a deliberate or negligent act is not. A deliberate or negligent
act will
however be sufficient. A balance must be maintained between an owner or
occupier's right to do what it likes with its land
and a neighbour's right not
to be interfered with. The proper test to apply in most cases is what is
reasonable, according to the
ordinary usages of a particular society. While
negligence is not essential, fault of some kind is almost always necessary
(Elston v Dore [1982] HCA 71; 149 CLR 480 at 487-488).
- Where
the “higher proprietor”, in Windeyer J’s terminology, is a
public authority that has caused a nuisance by
acts undertaken in exercise of a
statutory power, it is necessary to consider whether the statute by which the
power is conferred
excludes liability for nuisances so caused. As found at [448]-[451] below, by constructing
drainage works on Appian Way in 2005 Council caused stormwater to discharge onto
No 13 in a manner that unreasonably
interfered with the enjoyment of the
property. The works were carried out pursuant to s 71 of the Roads
Act and s 59A of the Local Government Act. Those sections do not
exclude liability for nuisances. It was so held in Melaleuca Estate Pty Ltd v
Port Stephens Council [2006] NSWCA 31. In that case a council similarly
carried out drainage works that resulted in the discharge of stormwater on to
and adjacent to the
plaintiff’s land, changing its previous affectation by
water. The drainage works were kerbing and guttering and the installation
of a
pipe system in a subdivision. Giles JA (with whom McColl JA and Hunt AJA agreed)
held at [42]:
Section 733 of the Local Government Act 1993 [...] clearly
contemplates that there can be liability in nuisance – it provides
protection against liability but conditioned
on good faith. I do not think there
is excluded liability in nuisance for the respondent’s conduct resulting
in nuisances.
- In
Allen v Gulf Oil Refining Ltd [1980] UKHL 9; (1981) AC 1001 a statute empowered the
defendant to construct an oil refinery. A resident of a village adjacent to the
site brought an action in
nuisance alleging that noxious odours, vibrations and
offensive noise levels emanated from the refinery. At 1011 Lord Wilberforce
said
this:
It is now well settled that where Parliament by express direction or by
necessary implication has authorised the construction and
use of an undertaking
or works, that carries with it an authority to do what is authorised with
immunity from any action based on
nuisance. The right of action is taken away:
Hammersmith and City Railway Co v Brand [1869] UKLawRpHL 10; (1869) LR 4 HL 171, 215 per Lord
Cairns. To this there is made the qualification, or condition, that the
statutory powers are exercised without “negligence”
– that
word here being used in a special sense so as to require the undertaker, as a
condition of obtaining immunity from action,
to carry out the work and conduct
the operation with all reasonable regard and care for the interests of other
persons: Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430, 455
per Lord Blackburn. It is within the same principle that immunity from action is
withheld where the terms of the statute are
permissive only, in which case the
powers conferred must be exercised in strict conformity with private rights:
Metropolitan Asylum District v Hill (1881) 6 App Cas
193.
- Lord
Wilberforce’s statement of the law was quoted by the English Court of
Appeal in Marcic v Thames Water Utilities Ltd [2002] EWCA Civ 64; [2002] QB 929 at 988 as
part of the wide survey that the Court undertook of the cases in this area.
- In
Bankstown City Council v Alamdo Holdings Pty Ltd [2005] HCA 46; (2005)
223 CLR 660 the plaintiff’s land was situated at the low point of a local
catchment. It was subject to increasingly frequent inundation,
for which the
plaintiff brought an action against the local council in nuisance. The trial
judge referred in his reasons to urbanisation
of the catchment, that would have
increased the extent of impermeable surfaces, as a cause of increased stormwater
run-off. However
his Honour had “not referred expressly to the
significance for that urbanisation of development approvals [granted] by the
[council]”. In the New South Wales Court of Appeal the primary judge was
taken to have treated the actionable conduct of the
council as encompassing both
the construction and operation the drainage system for the catchment and the
council’s “role
in the urbanisation process which had rendered the
system less and less adequate”.
- At
[16] Gleeson CJ, Gummow, Hayne and Callinan JJ said this (some citations
omitted):
[16] However, neither at trial nor in the Court of Appeal does
attention appear to have been drawn to a line of authority marshalled
by the
English Court of Appeal in Marcic v Thames Water Utilities Ltd [2002] EWCA Civ 64; [2002] QB
929 at 988; revd on other grounds [2003] UKHL 66; [2004] 2 AC 42. This indicates that a body
such as the Council is not, without negligence on its part, liable for a
nuisance attributable to the
exercise of, or failure to exercise, its statutory
powers. In this Court, it had been remarked by Gavan Duffy and Starke JJ in
Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR
186 at 197:
"And though it was said in argument that the Company's
claim was founded upon either trespass or nuisance or negligence, still the
liability of the Corporation must depend upon whether, in the exercise of its
statutory powers, it has acted negligently, so as to
do unnecessary damage to
the Company."
- At
[51], their Honours noted that:
... the nature of the nuisance complained of was clarified only in the Court of
Appeal, and then recognised as encompassing the involvement
of the Council over
many years in the construction and operation of the drainage system and its role
in the process of urbanisation
and further that:
... without negligence on its part in the exercise or failure to exercise its
statutory powers, the Council was not liable in nuisance.
- Tracing
the line of authority from Allen v Gulf Oil Refining Ltd through
Marcic v Thames Water Utilities Ltd to Bankstown City Council v Alamdo
Holdings Pty Ltd, it is apparent that the High Court was speaking of
negligence in the special sense explained by Lord Wilberforce. The following
extracts from the judgment of Giles JA in Melaleuca Estate Pty Ltd v Port
Stephens Council make the position clear:
[49] Absence of negligence in this sense is a reflection of
inevitability. If exercise of the statutory power means that the interests
of
other persons are harmed despite all reasonable regard and care for those
interests, there is no right of action.
[50] There may be a close relationship on the facts between
negligence in the [familiar sense of] failure to exercise reasonable
care and
skill and negligence in the sense explained by Lord Wilberforce, but the two
should not be equated.
[57] I do not understand the High Court to have departed from
Lord Wilberforce’s explanation of negligence. [...] It is not
correct to
equate absence of breach of a duty of care with the absence of negligence
material to the immunity from action of a body
exercising a statutory
power.
Conduct of Council that caused the nuisance
- In
the present case the plaintiff’s action in nuisance does not depend upon
proof that the natural flow of surface water from
land up-slope from No 13
has been altered by urbanisation over a long time frame or that Council has been
negligent in granting development
approvals, leading to an increase of
impermeable surface area in the catchment. The plaintiff’s action is
sufficiently based
upon Council’s reconfiguration of the Appian Way street
drainage in 2005. That work redirected all run-off from the road surface,
some
of which in turn flowed from higher parts of the catchment lying to the south,
into the large new junction pit directly in front
of No 13.
- Webb
McKeown’s Concept 1 for enhancement of Appian Way drainage has been
described at [124]-[126] above. It had two
components: installation of a structural liner to repair the pipe under
No 13 and reconfiguration of the street
inlets and feeder lines. As quoted
at [126], Webb McKeown
warned that if this Concept should be chosen, in preference to other higher
performing alternatives proposed by the
consultants, the system would still have
insufficient capacity and “overflows through several properties would
still be quite
high in major storms”. Council nevertheless proceeded with
Concept 1 – but only with the street drainage aspect: see
[129]. Council made no
further attempt, in conjunction with this work, to gain access to No 13,
either with the second defendant’s
consent or by enforcement of statutory
powers. Council did not undertake structural re-lining or any other
refurbishment of the pipe,
which was known to be in failure.
- Implementation
of only the street works aspect of Concept 1 may fairly be described as
half of a bad idea. Even if the pipe were to
function at what the engineers
believed was its theoretical hydraulic capacity of 0.3m³/sec – based
on an incorrectly
over-stated diameter of 450 mm – it would not have been
able to cope with annual rain events, let alone meet Council’s
standard of
piped capacity for 20 year ARI events. Having regard to this enormous shortfall
in performance, relative to Council’s
own standards, execution of the
whole of the Concept would have been impossible to justify on engineering
grounds. Implementation
of only one of the two interdependent parts of
Concept 1 showed reckless disregard for the interests of the proprietor of
No 13.
- In
2005 Council had known for 5 years that the pipe under No 13 was in poor
condition, that its hydraulic capacity was reduced by
root infestation and other
blockages and that a section of the pipe was missing. It was clearly at risk of
collapse or complete obstruction.
The effect of the new street works was that
when stormwater flows exceeded the pipe’s capacity, as would inevitably
occur,
the junction pit would fill and overflow. Upon the pipe’s capacity
being exceeded, instead of the stormwater backing up in
multiple feeder lines to
various inlet grates distributed along the gutters of Appian Way, the excess
would all back up and overflow
at the pit in front of No 13. Similarly,
when the pipe became entirely blocked anywhere along its length through
No 13, as it did,
predictably, in November 2011, there was no path of
escape or back-up for any of the stormwater that Council had channelled into
the
pit, other than for it to pour out at street level and flood the nearest
property, being the plaintiff’s. That is what
occurred upon every
significant rain from 7 November 2011 to 13 July 2013 (see [139]-[197] above). The result was
nine instances of inundation up to October 2012 (see [140]-[186] above).
- Council’s
negligence, in the relevant sense of disregard for the interests of the
proprietor of the land adjacent to the junction
pit, is of a kind comparable to
that of the defendant in Hawthorn Corporation v Kannuluik [1905] UKLawRpAC 55; [1906] AC 105,
although the gravity of the resulting nuisance in the present case is less
because the scale of the works was less and the water
that discharged onto
No 13 was not grossly polluted. The following is an extract from the advice
of the Privy Council at 108-109
of the report:
In 1889 the municipal authorities of Hawthorn under their statutory powers took
over the care and management of this watercourse
and made it into a public
drain. [...] A number of subsidiary channels have since been made [...] for the
purpose of running off
the storm water and sewage into the main drain. The
result is that the water and sewage from the upper parts of [the catchment] are
concentrated and poured into the main drain with great violence. There is an
overflow, and when the flood subsides, the low lying
lands, and [the
plaintiff’s premises in particular] are covered with an offensive mixture
of sewage and slime.
The case seems to be a very simple one. The only question is, have the municipal
authorities acted negligently so as to do unnecessary
damage to [the
plaintiff].
As for negligence, it is difficult to imagine a more conspicuous example of
negligence than is shewn by repeatedly pouring offensive
stuff into a receptacle
or channel proved over and over again to be insufficient to hold it and pass it
on. The municipal authorities
might just as well pour this stuff directly on the
plaintiff's land. The damage to the plaintiff cannot be denied.
- Melaleuca
Estate Pty Ltd v Port Stephens Council, the facts of which have been
referred to at [441]
above, is another case comparable to the present in which a council was found
negligent in the relevant sense and liable in nuisance.
It had disregarded the
interests of a “lower proprietor” by draining stormwater onto her
land. Giles JA there held as
follows:
[60] The respondent may have brought about a well designed and
constructed roadway and piping system which effectively drained
the development
in the catchment area, viewed as a system which brought the stormwater to the
discharge points on and at the boundary
of the land. There may have been no
negligence of the kind in question in Metropolitan Gas Co v Melbourne
Corporation (1924) 35 CLR 186 and like cases of escape of water. But the
piping system ended with discharge of the collected water, and its pollutants,
directly
onto Mrs Coventry’s land or at the boundary of her land, with the
consequences earlier described. There was unreasonable regard
and care for her
interests, and she was left to suffer the increased water
affectation.
Council’s reliance upon s 733 of the
Local Government Act
- Extracts
from s 733 of the Local Government Act are set out at [318]. The parts relied upon
by Council in defence of the plaintiff’s claim in nuisance are repeated as
follows, for ease of reference:
733 Exemption from liability—flood liable land, land
subject to risk of bush fire and land in coastal zone
(1) A council does not incur any liability in respect
of -
[...]
(b) anything done or omitted to be done in good faith by the
council in so far as it relates to the likelihood of land being flooded
or the
nature or extent of any such flooding.
(3) Without limiting subsections (1), (2) and (2A), those
subsections apply to -
(e) the carrying out of flood
mitigation works, and
(g) any other thing done or omitted to be done in the exercise
of a council’s functions under this or any other
Act.
- The
Full Court of the Federal Court considered a defence pleaded under this section
in Mid Density Developments Pty Ltd v Rockdale Municipal Council. It was
held that honesty and absence of malice did not establish good faith in the
provision of information under s 149(5) of the
Environmental Planning
and Assessment Act where no enquiry had been made within available records
before supplying the information.
- The
High Court considered s 733 in Bankstown City Council v Alamdo Holdings
Pty Ltd, where, as referred to above, a landowner sought to hold a local
council liable in nuisance for stormwater run-off onto its land.
At [47] Gleeson
CJ, Gummow, Hayne and Callinan JJ said that in a case such as this the Council
bears the burden “of making
out its case for the operation of that section
in its favour”. Their Honours discussed and did not disapprove Mid
Density Developments Pty Ltd v Rockdale Municipal Council. At [50] they
said (citations omitted):
[50] Reference was made in Mid Density to various
examples in the law where "good faith" is used as a criterion requiring some
state of mind or knowledge other than the
personal honesty and absence of malice
of the relevant actor. Moreover, given the range of advice, acts and omissions
to which s 733(1) may apply, what is required for something to be done or
omitted in good faith may vary from one case to the next. This makes it unwise,
if not impossible, to place a definitive gloss upon the words of the
statute.
- At
[51] their Honours contrasted the facts of the case before them with those of
Mid Density Developments Pty Ltd v Rockdale Municipal Council. The whole
of [51], from which some extracts have been reproduced at [446] above, is as
follows:
[51] In Mid Density, the standard of conduct against
which the Council's conduct in issuing the s 149 certificates was to be
assessed was apparent from
the importance of the information sought for the
routine processes of conveyancing. The present case stands quite differently in
several respects. First, the nature of the nuisance complained of was clarified
only in the Court of Appeal, and then recognised
as encompassing the involvement
of the Council over many years in the construction and operation of the drainage
system and its role
in the process of urbanisation. Given the vagueness of the
complaints against the Council, the weight of its evidentiary burden to
establish good faith was correspondingly lightened. Secondly, that was all the
more so given that, without negligence on its part
in the exercise or failure to
exercise its statutory powers, the Council was not liable in nuisance. True
enough that point was not
taken as an answer to liability, but it cannot
properly be shut out of consideration of the content of the requirement of good
faith
in this case. Here, something more than negligence is necessary because,
unless negligence were present, there would be no liability
for protection
against which s 733(1) was required by the Council.
- In
the present case there is nothing vague about the plaintiff’s allegation
of conduct by Council that gave rise to the flooding
nuisance. The
plaintiff’s complaints are wider than as summarised above at [448]-[451] but the particulars
concerning reconfiguration of the street drains in 2005 are very specific and
sufficient to found the cause
of action. Council adduced no evidence capable of
demonstrating good faith in its absurd decision to construct the junction pit in
front of No 13 and to feed all stormwater run-off into it, when it knew
that the outlet pipe was inadequate in both capacity and
condition. The
necessity to address the drainage problem at Appian Way could not support a
conclusion of good faith because Council
had been told that even the
implementation of the whole of Concept 1 would leave the system well below
adequate capacity and not
even sufficient for 1 year ARI rain events. Good faith
cannot be shown in relation to the partial undertaking of a scheme that would
achieve no useful object.
- It
cannot be said that good faith in the reconfiguration of the street drains and
construction of the pit was frustrated only by the
second defendant’s
refusal of access to complete the second half of Concept 1. As mentioned at
[130], there is no
evidence that the second defendant was ever told the purpose of the pit and
other works on Appian Way. He was not warned
of the danger those works posed to
his property in the absence of refurbishment of the pipe. There was no renewed
request to him
for access, nor did Council endeavour to invoke its clear
statutory powers for the purpose of repairing the pipe. I find no trace
of good
faith in Council’s implementation of the first half of this unsatisfactory
Concept, that created such significant and
obvious risk to the property in front
of which the large junction pit was placed.
- Council
submitted that it had shown good faith by commissioning hydraulic studies,
engineering studies and investigations of the condition
of the pipe. I have
referred to all of those in the chronological narrative of events earlier in
this judgment. The commissioning
of studies and investigations can hardly
support a case of good faith when Council has acted contrary to the professional
and technical
advice contained therein. The flooding of No 13 from the
junction pit installed near its front boundary was so predictable, from
the 2001
internal inspection of the pipe’s condition and from Webb McKeown’s
warnings about Concept 1, that there appear
to be only two possible
explanations for Council having reconfigured the street drainage in 2005. The
first is that the relevant
decision makers in Council failed to understand the
professional advice and did not have sufficient common sense to see what was
likely to occur if all stormwater from the catchment was concentrated in the
junction pit, dependent as it was upon a failing pipe.
- The
other possible inference is that Council determined to pressure the second
defendant to grant access to his land for repair of
the pipe, by exposing his
property to the primary risk of flooding if it should fail. If the inundation
that the plaintiff experienced
had occurred while the second defendant was in
occupation he might have been more compliant with Council. I would not be
willing
to draw this inference in the absence of evidence from any of the
decision-makers. It was Council’s choice not to call them
and if the issue
had been more clearly in focus at interlocutory stages of the proceedings and in
the trial then failure of the decision-makers
to give evidence might have
permitted the inference of such an improper and malicious purpose to be more
easily drawn. The morass
of issues litigated in the case did not identify the
question whether Council may have deliberately misused its powers in this
respect
with sufficient clarity to justify drawing such a grave conclusion
without hearing evidence from those who would be implicated. The
other possible
inference from the circumstances, to which I have adverted in the preceding
paragraph, is sufficient to deny Council
the defence of good faith under
s 733.
- Council
argued that “whenever specific drainage issues or instances of flooding
were reported to Council, those issues were
promptly addressed”. This
contention appears to be addressed to the period after the flooding of
No 13 commenced. I have found,
contrary to the submission, that Council was
extremely dilatory in alleviating the problem. Its first stage of alleviation,
by pumping,
only provided effective protection to the plaintiff’s property
after a delay of 11 months from 7 November 2011; that is, after
12 October
2012. More enduring alleviation was only achieved after a delay of another nine
months up to July 2013 when relining of
the pipe was carried out and then a
further seven months until the footpath was raised and levelled in February
2015. At [199] above I
have already dismissed Council’s submission that its continuance of the
nuisance was caused only by the plaintiff
refusing access to her property. There
was no such refusal.
- Council
has not discharged its onus of proving the defence provided for in s 733
and it is liable to the plaintiff for the flooding damage to her
property.
Issue 17: plaintiff’s damages for
nuisance
- The
extent of damage to the plaintiff’s chattels and the interference with her
enjoyment of the land caused by Council’s
continuing nuisance over the 11
months from 7 November 2011 has been summarised at [140]-[142], [144], [147]-[148], [154], [161], [173] and [186] above. Council made
the surprising submission that, so far as damage was done to the
plaintiff’s back garden by the pumping
of water through it up to 11
December 2011, she consented to this and can claim no compensation. The
alternative would have been
for the plaintiff to allow the water to flood down
her driveway, through her carport and garage and/or into her front garden or
through
the house. I will assess against Council all damage that was sustained
to the plaintiff’s back garden by reason of the pumping
on the basis that
it is likely to have been less than the damage that otherwise would have been
done. The plaintiff’s acceptance
of pumping through her property for the
first month after the pipe became blocked was reasonable mitigation.
- I
accept the plaintiff’s evidence about damage to chattels and incidental
cleaning and repair costs. $4,568 is assessed in respect
of those items. I make
no allowance for the cost of an internal inspection of the pipe carried out by
the plaintiff’s contractor
in October 2012, being $6,204. That expense
cannot be said to have been caused by the nuisance. It would reasonably be taken
into
account as part of the plaintiff’s damages for misrepresentation, in
that it is an expense that would not have been incurred
if the plaintiff had
received accurate information in the s 149 certificate and had never
entered into the contract. However I will
not make separate allowance for it as
part of the damages in that cause of action because the estimate that must be
made of the shortfall
in value of the property is necessarily so imprecise that
I regard it as encompassing all incidental costs.
- The
principal component of the plaintiff’s damages for nuisance is the loss of
enjoyment of her property. Over the 11 months
of intermittent inundation there
were extended periods when the rear garden and lawn were unusable due to
waterlogging. For substantially
the whole of the 2011-2012 summer the pool could
not be used because it was polluted and it was not worth emptying and refilling
it, or otherwise thoroughly cleaning it, until the plaintiff could be sure that
Council’s system of pumping storm water from
Appian Way to Burwood Road
could be relied upon.
- I
take into account that each instance of flooding was of brief duration and that
after March 2012 the events were of lessening severity.
Material loss of
enjoyment of the property was contributed to by the repetition and frequency of
stormwater ingress and the continuous
apprehension to which this gave rise. The
nuisance to the plaintiff’s property warrants damages of $55,000,
inclusive of the
damage to chattels and incidental outgoings referred to
above.
Interest up to judgment
- Council
submits that the plaintiff should be denied interest up to judgment upon such
damages as may be awarded for the causes of
action on which she has been
successful. It is submitted that the plaintiff’s claim for negligent
misstatement accrued “at
least by 7 December 2011, when she became aware
of the pipe running through the property”. The cause of action in nuisance
accrued on 7 November 2011. Council made this submission:
Rather than commencing proceedings in respect of the pipe running through her
property, the plaintiff instead commenced proceedings
to obtain development
consent for substantial alterations and additions to the property, even though
the plaintiff says that she
would not have purchased the property had she known
about the existence of the pipe.
- The
plaintiff only commenced proceedings in the Land and Environment Court because
she was driven to do so after Council had failed
to determine her development
application within the statutory time limit and in circumstances where Council
required her to grant
an easement free of charge, to commission and pay for
another hydraulic survey of the catchment and to build, entirely at her own
expense, a piece of infrastructure that was Council’s long overdue
responsibility. It was this stance by Council that Commissioner
Brown found so
unreasonable that no reasonable Council could possibly have adopted it. That was
an understatement. Council’s
attempt to impose upon the plaintiff
unreasonable economic burdens, forcing her to expensive litigation in the Land
and Environment
Court for relief, may properly be described as oppressive and an
abuse of power. For Council then to assert that the plaintiff should
be denied
interest on her damages, upon the ground that she postponed the present
litigation until she could vindicate some of her
rights in another court, is
very bold. I do not accept the argument.
- Council
also contended that the property had appreciated in value between December 2011
and the date when the proceedings were commenced.
It is said that the plaintiff
would “receive a windfall” if she should be compensated by interest
for the loss of her
money. I regard any appreciation in value of the subject
property as irrelevant to whether interest should be awarded. If the plaintiff
had been given correct information in the planning certificate and had not
bought this residence, the money would have been available
to be invested in
some other appreciating asset.
- I
will award interest up to judgment on the damages for negligent misstatement
from the date upon which the plaintiff completed her
purchase of the property.
Interest on the damages for nuisance will be awarded from 1 March 2012. That
date is somewhat earlier than
the midpoint of the period over which stormwater
flooding incidents occurred. The worst of the flooding was in the early period
and
I attribute more than half of the damage to the first four months, November
to February inclusive.
Orders
- Orders
to the following effect will be entered:
(1) Judgment for the
plaintiff against the first defendant in the sum of $1,274,000 together with
interest up to judgment in accordance
with s 100 of the Civil Procedure Act
2005 and Practice Note SC Gen 16 in the amount of $726,171.06
comprising
(a) interest of $697,324.62 on $1,219,000 from 12 August 2011 and
(b) interest of $28,846.44 on $55,000 from 1 March 2012.
(2) The first defendant is to pay the plaintiff’s costs of the
proceedings against it.
(3) Judgment for the plaintiff against the second defendant in the sum of
$1,219,000 together with interest up to judgment in accordance
with s 100
of the Civil Procedure Act 2005 and Practice Note SC Gen 16 in the amount
of $697,324.62 from 12 August 2011.
(4) The second defendant is to pay the plaintiff’s costs of the
proceedings against him.
(5) The cross-claim by the second defendant against John Lukas is
dismissed.
(6) The second defendant is to pay the cross defendant’s costs of the
cross-claim.
(7) The parties have liberty to apply to resolve any issue concerning the
calculation of interest and to obtain additional orders
quantifying interest if
necessary.
Council’s mismanagement of Appian Way drainage
- The
negligent misstatements of Council and of the second defendant have resulted a
substantial award of damages to the plaintiff.
Those aspects of the litigation
arose from brief instances of tortious conduct in August 2010 and August 2011.
Although the flooding
of the plaintiff’s property has given rise to a much
smaller award for nuisance, the decades of Council’s neglect that
culminated in that flooding and Council’s poor treatment of the plaintiff
in connection with it cannot go unremarked.
- Between
2001 and September 2016 s 7 of the Local Government Act provided
that the general purposes of the Act included the
following:
(d) to give councils:
the ability to provide goods, services and facilities,
and to carry out activities, appropriate to the current and future needs of
local communities and of the wider public.
In the same period s 8 provided that the charter of councils included
these elements:
to provide directly [...] adequate, equitable and appropriate services and
facilities for the community and to ensure that those
services and facilities
are managed efficiently and effectively
to bear in mind that it is the custodian and trustee of public assets and to
effectively plan for, account for and manage the assets
for which it is
responsible.
- In
relation to Appian Way stormwater drainage Burwood Council has over a long
period repudiated the purposes of the Act and the statutory
charter. For 50
years Council has known, from the complaints of residents, that the stormwater
system in this location has insufficient
capacity. To this day that deficiency
has not been addressed. The frequency of flooding events in the 1980s and 1990s
demonstrated
to Council that it is not just exceptional rain events with which
the system cannot cope. From the beginning of 2001 Council knew
that the main
drain lying under the residence at No 13 was not only too small for its
task but that it had deteriorated and was failing.
- Upon
the pipe becoming completely blocked in November 2011, the plaintiff called upon
Council to resolve the inadequacy of the system
and to prevent stormwater from
inundating her land. She asked Council to perform its duty. Stormwater
management is, after all, a
basic service of local government. As a ratepayer
the plaintiff could reasonably have expected that there would be prompt
rectification
of a serious problem that Council had turned into an emergency
through years of conscious neglect. Instead, from the outset, the
General
Manager gave no acknowledgement of Council’s responsibility and
demonstrated complete ignorance of the facts. There
followed egregious delay in
clearing the pipe and in carrying out interim repairs. False assertions were
made by Council that the
plaintiff was refusing access for its workmen. Council
unconscionably used the development application process to try to make the
plaintiff pay for new infrastructure. Council made unreasonable settlement
proposals after its failure in the Land and Environment
Court and then doggedly
and without merit resisted the plaintiff’s action for nuisance in the
present litigation.
- Over
decades Council’s neglect has resulted in significant property damage and
worry for owners and occupiers in this neighbourhood.
In more recent years it
has caused great stress for the plaintiff. Her home has been threatened by
stormwater that Council has channelled
to her front boundary. Hostility has been
stirred up against the plaintiff by Mayor Faker’s letter to her neighbours
on 18
December 2012 falsely alleging that she had delayed resolution of the
problem by refusing access to her property. Contrary to that
claim,
Council’s inactivity during the 13 months from when the pipe became
blocked in November 2011 was caused by a particularly
bad bout of decision
making paralysis in Council’s long and lamentable record of non-feasance.
- Mr
Della Franca’s assertive approach to negotiations in 2002 provided no
excuse for Council’s failure to act at that time.
His stance should have
led to Council compulsorily acquiring a western boundary easement in the
interests of the wider community,
with compensation for Mr Della Franca to be
assessed judicially if need be. In the face of Mr Della Franca’s
resistance Council
abdicated its responsibility to surrounding residents,
leaving them and the unsuspecting successor in title of No 13 to suffer the
effects of a drainage system known to be grossly inadequate.
- The
plaintiff, particularly, has been let down by Council but so have the ratepayers
of Burwood generally. Upon the pipe under No
13 failing in November 2011,
urgent re-lining would have been useful as a temporary protective measure. It
made no sense for Council
to delay action for 20 months and then to re-line the
pipe in July 2013. When the re-lined pipe could not cope, as Council had been
told by its engineering consultants would be the case, it again made no sense to
raise and level the footpath in February 2015. That
merely created a dam by
which the roadway would be flooded when stormwater could not escape quickly
enough through the undersized
pipe. The footpath became a spillway, poised above
a row of valuable homes, over which excess stormwater was spread out to cause
equal annoyance at Nos 13, 15 and 17.
- Council
appears to have squandered ratepayers’ funds on these belated and
half-baked postponements of the inevitable, instead
of applying the money to
compensation for acquisition of an easement over No 13 and the cost of a
proper drain. Of course, Council
had known from 2001 that a larger drain on a
new easement was, in Mr Wyatt’s words, “the only viable
option”. So
Council moved quickly enough when it thought the
plaintiff’s application to develop her land presented an opportunity to
make
her bear the entire cost of these necessary public works.
- Amendments
to the Local Government Act that took effect from 23 September 2016,
prior to the hearing of the plaintiff’s planning appeal, included the
following guiding
principles for the exercise of councils’ functions (in
s 8A):
(g) Councils should work with others to secure appropriate
services for local community needs.
(h) Councils should act fairly, ethically and without bias in
the interests of the local community.
- Burwood
Council’s attempt to extract from the plaintiff a free easement and the
installation of a new public drain at her personal
expense was irreconcilable
with those principles. Words such as these in an Act of Parliament are not to be
disregarded by a council
as mere rhetoric. When Council’s abuse of its
power to impose development conditions was rejected by the Land and Environment
Court, one would have thought that compulsory acquisition of an easement with
fair compensation and installation of a larger pipe
at public expense should
have followed. Instead, after Commissioner Brown had given his decision Council
frittered away three years
on stop-start negotiations with the plaintiff, while
her home improvement works proceeded to the stage where an adequate drain on
the
western boundary could now only be laid at considerably increased cost.
- The
ratepayers of Burwood have been burdened with substantial legal and other costs
by a Council that has preferred disputation through
solicitors’
correspondence, litigation in the Land and Environment Court and now a trial in
this Court, rather than decision-making
and the construction of drainage works.
Many aspects of Council’s conduct towards the plaintiff have displayed a
lack of understanding
that it is an elected public body, constituted to serve
its community, of which the plaintiff and her neighbours in the Appian Way
flood
path are members.
**********
Amendments
08 February 2021 - Cross referencing corrected
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