Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd ［2007］ NSWSC 1533

 CITATION : Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd [2007] NSWSC 1533
 
 
 HEARING DATE(S) : 19/02/07-002/03/07, 07/05/07, 14/05/07-29/05/07
 
JUDGMENT DATE : 
28 June 2007
 
 
 JUDGMENT OF : James J 
 
 
 DECISION : Verdict in favour of the plaintiff on the claim and a verdict in favour of the cross-defendants on the cross-claim.
 
 

 CATCHWORDS : Architect’s remuneration — architect’s professional negligence — State Environmental Planning Policy 5 — Corporations Act s 131
 
 
 LEGISLATION CITED : Corporations Act
Environmental Planning and Assessment Act
Fair Trading Act
 
 
 CASES CITED : Astley and Ors v Austrust Ltd (1998 –1999) 197 CLR 1
Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319
DEM (Australia) Pty Ltd v Pittwater Council [2004] NSWCA 434
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Oliver v Lakeside Resort Property Trust Pty Ltd [2005] NSWSC 1040 
 
 
 PARTIES : Oaktwig Pty Ltd v Glenhaven Property Holdings Pty Ltd 
 
 
 FILE NUMBER(S) : SC 11684/04
 
 
 COUNSEL :  S. Bell - Plaintiff
C.A. Freeman - Defendant 
 
 
 SOLICITORS :  Webster O'Halloran & Associates - Plaintiff
Leonard Legal - Defendant 
 
 
 
 

 

 

 IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

JAMES J

THURSDAY, 28 JUNE 2007

11684/04 OAKTWIG PTY LTD trading as HOMEPLAN PROJECT DESIGN RESOURCES v GLENHAVEN PROPERTY HOLDINGS PTY LTD & ANOR

JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiff Oaktwig Pty Ltd sued the defendants Glenhaven Property Holdings Pty Ltd and Richard Walsh, claiming monies alleged to be due and unpaid under two agreements for performing architectural and design services for a proposed development on a property at 607 Old Northern Road Glenhaven (which I will sometimes refer to in this judgment simply as “the property”), which is within the Hornsby Shire. Later in this judgment I will consider the question of who were the parties to the two alleged agreements. An alternative claim by the plaintiff on a quantum meruit basis was ultimately not pressed. The defendants defended the plaintiff’s claim and brought a cross-claim claiming damages for alleged breaches of contract, in tort and pursuant to the Fair Trading Act.

2 Mr John Giles Bourke, an architect, conducted his practice through the plaintiff and other companies. The second defendant Richard Walsh was the sole shareholder and sole director of the first defendant.

3 Evidence in the plaintiff’s case in chief was given by Mr Bourke; Mr Christopher Blyth, a town planner; Mr Bruce Tamplin, a quantity surveyor; Mr Graham Murray, an architect; and Mr Mark Bullen, an architect. All of Mr Bourke, Mr Blyth, Mr Murray and Mr Bullen made an affidavit or report and also gave oral evidence. Mr Tamplin made an affidavit but was not required for cross-examination and did not give oral evidence. The evidence of Mr Tamplin, Mr Murray and Mr Bullen was largely concerned with the plaintiff’s original alternative claim based on a quantum meruit.
4 Evidence for the defendants/cross-claimants was given by Mr Walsh; Mr Ian Neal Joseph Glendinning, a town planner; Mr Neil Ingham, a town planner; Mr Martin Pickrell, an architect; Mr Mark Stephen Relf, an accessibility consultant; Mr Anthony Zantiotis, a valuer; Mr William Alexander, who had been a town planner employed by Hornsby Shire Council; and Mr Simon Maxwell, a developer. All of Mr Walsh, Mr Glendinning, Mr Ingham, Mr Pickrell, Mr Relf and Mr Zantiotis made affidavits and gave oral evidence. Mr Alexander and Mr Maxwell did not make affidavits but gave oral evidence.
5 In the plaintiff’s case in reply, evidence was given by Mr Christopher Young, a town planner, and Mr Noel John Bridger, a valuer, each of whom made an affidavit or report and gave oral evidence. Mr Bourke also gave some brief oral evidence in reply.
6 At the hearing there were a number of strongly contested issues of fact. A number of these issues arose because any agreements between the parties were made in conversations between Mr Bourke and Mr Walsh about which conflicting evidence was given. However, many facts were not disputed or were clearly established by the evidence and I will now set out a summary of some of those facts. In the summary it will be convenient, for the most part, to refer simply to Mr Bourke or Mr Walsh, although sometimes it might be more accurate to refer to Oaktwig Pty Ltd or Glenhaven Property Holdings Pty Ltd.

Undisputed or clearly established facts

7 As already indicated, Mr Bourke is an architect and has practiced architecture for many years.
8 Mr Walsh, who was born in Ireland, migrated to Australia in 1985. Since the early 1990s he has been engaged in property development in and around Sydney.
9 Mr Bourke and Mr Walsh first met in about 2000. Mr Walsh, as a result of a recommendation made by another architect, retained Mr Bourke to act as architect on a project by Mr Walsh for a high-rise residential and commercial building at Parramatta. The design prepared by Mr Bourke was granted development consent by the Parramatta City Council. Mr Walsh asked Mr Bourke to let him know, if Mr Bourke came across another potential development site.
10 In early 2001 Mr Bourke noticed a property for sale at 607 Old Northern Road Glenhaven, which was about 2.9 hectares in area. The property was almost entirely vacant land. The property was zoned Rural BA (small holdings—agricultural landscapes) under the Hornsby Local Environmental Plan.
11 In Mr Bourke’s opinion, the property was suitable for a development under “State Environmental Planning Policy No 5 — Housing for Older People or People with a Disability”. At the hearing this State Environmental Planning Policy was generally referred to as “SEPP 5” and I will so refer to it in this judgment.
12 The aims of SEPP 5 as stated in cl 3 were to increase the supply and diversity of housing that would meet the needs of older people or people with a disability, making efficient use of existing infrastructure and services and being of good design. These aims would be achieved by setting aside local planning controls that would prevent the development of housing for older people or people with a disability that met the development standards specified in SEPP 5.
13 Under cl 4 SEPP 5 applied to land zoned primarily for urban purposes or adjoining land zoned primarily for urban purposes. Although the property at 607 Old Northern Road Glenhaven was zoned rural, land on the other side of Old Northern Road was zoned residential and it was not disputed at the hearing that the property adjoined land zoned for urban purposes and was land to which SEPP 5 applied.
14 Later in this judgment I will set out the terms of a number of the provisions of SEPP 5.
15 Immediately to the north of 607 Old Northern Road was an area occupied by a commercial nursery known as “Flower Power”. To the south of 607 Old Northern Road was a property 599-601 Old Northern Road, which was acquired by another developer Mr Nolan.

16 Mr Bourke informed Mr Walsh that, in his opinion, the property was suitable for a SEPP 5 development. Mr Bourke and Mr Walsh inspected the property.
17 It was not disputed at the hearing that in about April 2001 Mr Bourke and Mr Walsh made an oral agreement that Mr Bourke would perform architectural and other services for an application to Hornsby Shire Council for consent to a development within SEPP 5 on the property. Nor was there any dispute that Mr Bourke would charge fees at the rate of $2,600 per unit in the development. However, some other alleged terms of the agreement were the subject of vigorous dispute. I will consider these alleged terms later in this judgment.

18 In 2001 the owners of 607 Old Northern Road were two persons named Moussa.
19 In about February 2001 Mr Walsh paid $5000 to the Moussas as a holding deposit to enable Mr Walsh to make enquiries of Sydney Water about the availability of water and sewerage services to the property. Satisfactory results to these enquiries were obtained in about April 2001.
20 No written agreement was made between Mr Walsh and the Moussas until 27 July 2001, when a put and call option deed was executed with a purchase price for the property of $1,950,000.
21 On 11 October 2001 the first defendant Glenhaven Property Holdings Pty Ltd (“Glenhaven”) was incorporated.
22 On 30 October 2001 the Moussas and Glenhaven entered into a contract for sale, whereby the Moussas sold the property to Glenhaven for a price of $1,950,000. A deposit of 10% of the purchase price was paid. Completion of the contract was not to take place until July 2002. The date for completion was later extended by three months.
23 By about the end of January 2002 the preparation by Mr Bourke of a development application for a SEPP 5 development on the property had been completed. The proposed development was for the erection of a retirement village comprising 140 self-contained dwellings (“units”).
24 On or about 31 January 2002 Mr Bourke forwarded an account dated 31 January 2002 for his architectural services on the proposed development. Mr Bourke charged $364,000 for the preparation of the development application documentation and plans on the basis of charging for 140 units at $2600 per unit, and also charged a further amount for plan printing and plotting, making a total amount, including GST, of $402,855.42.
25 On 8 February 2002 the development application, which was referred to at the hearing as “the first development application”, was lodged with Hornsby Shire Council, together with plans for the development and a statement of environmental effects.
26 On 28 May 2002 an amount of $50,000 was paid by Mr Walsh to Mr Bourke. This payment of $50,000 was the only payment Mr Walsh ever made to Mr Bourke.
27 The first development application was considered by employees of Hornsby Shire Council. An executive manager’s planning report was prepared. One of the officers of the Council responsible for the report was Mr William Alexander.

28 The executive manager’s planning report is undated but refers to a meeting on 17 July 2002. It is clear that the reference to a meeting on 17 July 2002 was a reference to a meeting to be held on that date, and not to a meeting which had already been held, and that the report had been completed and had been made available to Mr Bourke a number of days before 17 July 2002.
29 The report recommended that the first development application be refused on a large number of grounds, including the loss of agricultural land, the potential for land use conflict, inadequate building setbacks, a potential that the site was contaminated, unsatisfactory arrangement for waste collection and unsatisfactory traffic access and pedestrian safety. A further ground (ground 7) was:-
“The proposed development fails to comply with State Environmental Planning Policy No 5 in the following areas:
…
(b) Buildings B and D do not comply with the 2-storey requirement pursuant to clauses 6A and 13(2). The heights, in combination with the building length, result in excessive size and scale of the buildings which will not be in keeping with the rural character of the area, thus not complying with clause 25(a).
…
(d) Units in Buildings B and D are sited too close to each other, resulting in Units in Buildings B and D are too close to each other, resulting in internal overlooking into living areas and courtyards and overshadowing thus not complying with clauses 25(b) and (c).”

It was asserted that the proposed development failed to comply with SEPP 5 in a large number of other respects.

30 On 15 July 2002 Mr Bourke sent a facsimile transmission to Mr Walsh commenting on the Council’s planning report. He said inter alia:-
“7. Bulk and Scale: Council’s criticism of bulk and scale should have regard to requirements of SEPP 5 which prohibit criticism on these grounds where the FSR is less than 0.5:1 as is the case of this proposed development. Building heights also comply with the strict requirements of SEPP 5 Council has not interpreted the height correctly.”

10. CRITICISM: Criticism of the proposed development seems to be politically motivated by the Mayor rather than that based on a fair merit assessment. No due regard has been taken by Council of the State Environmental Planning Policy which encourages housing for aged and disabled persons.”
31 On 17 July 2002 there was a meeting of Hornsby Council. Both Mr Walsh and Mr Bourke addressed the meeting. Mr Walsh asked the Council to have another look at the development application “but, if not, this will be taken all the way”, that is, to the Land and Environment Court. A councillor said that the development application did not comply with SEPP 5 in a number of respects. Further consideration by Council of the development application was adjourned for two weeks.
32 A town planner, Mr Blyth was retained on behalf of Mr Walsh.
33 On 29 July 2002 Mr Bourke made a formal written reply to the issues raised in the Council’s planning report. In this reply Mr Bourke dealt inter alia with the subjects of “Setting, siting and design”, “Solar access and design for climate”, “Solar access”, “Streetscape”, and “Visual impact”. In “A conclusion” commencing near the end of the reply Mr Bourke replied to the grounds on which it had been asserted in the planning report that the proposed development failed to comply with SEPP 5. In reply to ground 7 Mr Bourke said in part:-
“(b) Buildings B and D do comply with the 2 storey requirements pursuant to clauses 6A and 13(2).
Size and scale should not be criticised by Council. [refer” standards which cannot be used as grounds for refusal – clause 14 SEPP 5 – Annexure “A”].
…
(d) Units in buildings B and D are well designed to allow for solar access and screening appropriate to minimise overlooking.”
34 Further consideration by the Council of the development application was again deferred. A further executive manager’s planning report was prepared for the meeting of Council to be held on 4 September 2002. The report again recommended that the development application be refused. On 4 September 2002 the first development application was formally refused.
35 In its formal refusal of the first development application the Council stated that the development application had been refused on the same grounds (apart from ground 7) as the grounds in the executive manager’s report which I summarised earlier (apart from a potential of the site being contaminated) and on the ground that the proposed development failed to comply with SEPP 5 in many areas, including:-
“…

(b) Building D does not comply with the 2-storey requirement pursuant to clauses 6A and 13(2). The height, in combination with the building length, and the building length of Building B, both of which are in excess of 96m, result in excessive size and scale of the buildings which will be out of keeping with the rural character of the area characterised by modest dwelling-houses. The proposal, therefore, does not comply with clause 25(a) of contributing to an attractive residential environment and maintaining reasonable neighbour amenity and reasonable residential character in the locality.”

…

(e) Units in Group B and D buildings are sited too close to each other, with less than 7m to balcony/terrace in some instance resulting in internal overlooking into living areas and private courtyards. The open common walkways between the buildings in Groups B and D will have privacy and noise impacts on the residents especially on the private courtyards. The proposal, therefore, does not comply with the design requirements to clause 25(b).
(f) The shadow diagrams indicate unacceptable internal overshadowing especially of ground units of the middle and southern row of units in Groups B and D. The proposal, therefore, does not comply with the design requirements pursuant to clause 25(c).”

36 An appeal was brought to the Land and Environment Court by an application dated 5 July 2002. The appeal was brought, prior to the development application actually being refused on 4 September 2002, on the basis that by 5 July 2002 there had been a deemed refusal of the development application.
37 On 9 July 2002 Mr J E Hannaford the solicitor acting for the applicant on the appeal made an affidavit in support of an application that the hearing of the appeal be expedited. A copy of the executive manager’s planning report for the meeting to be held on 17 July 2002 was annexed to the affidavit, showing that the report had already been received by Mr Bourke.
38 In his affidavit Mr Hannaford referred to the costs already incurred by Mr Walsh on the development application, including “architect’s fees $400,000”.
39 The application for an expedited hearing of the appeal was refused and the hearing of the appeal was listed for 4-8 November 2002. After the application for an expedited hearing of the appeal was refused, an affidavit by Mr Walsh dated 25 July 2002 was sworn and filed in support of a further application that the hearing of the appeal be expedited, on the grounds that Mr Walsh had incurred or expended large amounts of money on the proposed development, including Mr Bourke’s fees, and the hearing dates which had been fixed were after the last date on which the contract for the purchase of the property could be completed.

40 A draft statement by Council of the issues to be determined on the appeal was prepared on or about 12 September 2002 and a final statement was prepared on or about 19 September 2002. A response to the statement of issues dated 14 October 2002 was prepared by Mr Bourke and forwarded to Mr Hannaford.
41 On or about 17 or 18 October 2002 the contract for the purchase of the property was completed, the balance of the purchase price being paid with borrowed money.
42 Two issues of law arising on the appeal were argued on 31 October 2002 before a judge of the Land and Environment Court and determined, favourably to the applicant, in a judgment delivered on 1 November 2002.
43 Some of the remaining issues on the appeal were heard in the Land and Environment Court by a Senior Commissioner and a Commissioner over five days between 4 November 2002 and 8 November 2002. During the hearing the number of units in the design was reduced from 140 to 132, on the advice of the barrister appearing for the applicant on the appeal. On 8 November 2002 the Court reserved its decision on the appeal.
44 On 10 December 2002 the Land and Environment Court gave its reserved judgment. The appeal was dismissed and the development application was determined by its being refused. Later in this judgment I will quote parts of the judgment of the Land and Environment Court.

45 After the Land and Environment Court gave its decision there was a conversation between Mr Bourke and Mr Walsh. It was not disputed at the hearing of the present proceedings that it was agreed between them that Mr Bourke would prepare a new design for a retirement village, with fewer units. There was, however, a serious dispute about the terms on which the new design would be prepared, including whether Mr Bourke was to make any further charge for his work.
46 Mr Bourke prepared a further development application for a retirement village comprising 57 units. At the hearing this development application was referred to as “the second development application”.
47 By a contract for sale dated 27 February 2003, which was settled the same day, Glenhaven sold the property to Simon William Maxwell and his wife for a price of $3 million.
48 On the same day Glenhaven and Mr and Mrs Maxwell entered into a deed of agreement. The deed of agreement referred to both “the second development application”, that is the development application being prepared by Mr Bourke, and “the third development application” being a development application to be lodged by Mr and Mrs Maxwell. In this judgment I will refer to the latter development application as “the third development application”. The third development application was being prepared by an architect Mr Pickrell. The deed of agreement provided inter alia that, if development consent was received to either the second development application or the third development application, Mr and Mrs Maxwell would re-sell the property and, on completion of the re-sale, pay to Glenhaven half of the amount by which the sale price on the re-sale exceeded $3 million.
49 The second development application and the third development application were both lodged with Hornsby Shire Council on the same day 21 March 2003. A statement of environmental effects was lodged for each application. The third development application was for a retirement village comprising 39 units.
50 Mr Bourke sent an invoice to Mr Walsh dated 6 May 2003 charging $148,200 calculated at $2600 per unit for 57 units and a further amount for plan printing and plotting, making a total amount, with GST, of $166,472.68. A claim was made for interest, which was later abandoned.
51 On 22 May 2003 an appeal was brought to the Land and Environment Court against the deemed refusal of the third development application. Certain amendments were made to the third development application including a reduction in the number of units to 38. In October 2003 development consent was granted to the third development application and the proceedings in the Land and Environment Court were discontinued.
52 In February 2004 the second development application was refused.
53 In late 2005 the property 607 Old Northern Road, with the third development application consented to, was sold by Mr and Mrs Maxwell for a price of $5,840,000. Glenhaven, in addition to the amount of $3 million it had received in February 2003, received half of the amount by which the sale price exceeded $3 million.

State Environmental Planning Policy 5 (SEPP 5)

54 Earlier in this judgment I referred to clauses 3 and 4 of SEPP 5. I will now set out verbatim some of the clauses of SEPP 5. I have, of course, taken all of the provisions of SEPP 5 into account.
“2 Commencement

This Policy commences on 14 February 1998.

3 Aims

(1) This Policy aims to encourage the provision of housing that will:
(a) increase the supply and diversity of housing that meets the needs of older people or people with a disability, and

(b) make efficient use of existing infrastructure and services, and

(c) be of good design.

(2) These aims will be achieved by:

(a) setting aside local planning controls that would prevent the development of housing for older people or people with a disability that meets the development standards specified in this Policy, and

(b) ensuring that applicants and councils take into consideration the level of additional demand for support services for older people or people with a disability in the council’s area to be generated by the development when preparing and assessing development applications that are affected by this Policy, and

(c) setting out design principles that should be followed to achieve built form that responds to the characteristics of its site and location.

4 Where this Policy applies

(1) This Policy applies to land within New South Wales:
(a) that is zoned primarily for urban purposes, or that adjoins land zoned primarily for urban purposes, and

(b) on which development for the purpose of any of the following is permitted:
(i) dwelling-houses,

(ii) residential flat buildings,

(iii) hospitals,
(iv) development of a kind identified in respect of land zoned for special uses, including (but not limited to) churches, convents, educational establishments, schools and seminaries.
……………
5 Relationships to other environmental planning instruments
…………….
(2) If this Policy is inconsistent with any environmental planning instrument, made before or after this Policy, this Policy prevails to the extent of the inconsistency.

10 What this Part does
This Part allows development for the purpose of any form of housing for older people or people with a disability, despite the provisions of any other environmental planning instrument, if the development is carried out in accordance with this Policy.

14 Standards which cannot be used as grounds for refusal

The consent authority must not refuse consent to a development application under this Part on the grounds of:
(a) building height: if all proposed buildings are 8 metres or less in height, or

(b) density and scale: if the density and scale of the buildings when expressed as a floor space ratio is:
(i) 0.5:1 or less, …

25 Design of residential development

Consent must not be granted for development to which this Part applies unless the consent authority is satisfied that the proposed development demonstrates that adequate regard has been given to the following principles:
(a) Neighbourhood amenity and streetscape
The proposed development should:
(i) contribute to an attractive residential environment with clear character and identity, and

(ii) where possible, retain, complement and sensitively harmonise with any heritage conservation areas in the vicinity and any relevant heritage items that are identified in a local environmental plan, and

(iii) where possible, maintain reasonable neighbour amenity and appropriate residential character by providing building setbacks that progressively increase as wall heights increase to reduce bulk and overshadowing, and
(iv) where possible, maintain reasonable neighbour amenity and appropriate residential character by using building form and siting that relates to the site’s land form, and

(v) where possible, maintain reasonable neighbour amenity and appropriate residential character by adopting building heights at the street frontage that are compatible in scale with adjacent development, and

(vi) where possible, maintain reasonable neighbour amenity and appropriate residential character by considering, where buildings are located on the boundary, the impact of the boundary walls on neighbours, and
(vii) be designed so that the front building of the development is set back in sympathy with, but not necessarily the same as, the existing building line, and

(viii) embody planting that is in sympathy with, but not necessarily the same as, other planting in the streetscape.
(b) Visual and acoustic privacy
The proposed development should, where possible, consider the visual and acoustic privacy of neighbours in the vicinity and residents by:
(i) appropriate site planning, the location and design of windows and balconies, the use of screening devices and landscaping, and

(ii) ensuring acceptable noise levels in internal living and sleeping areas of new dwellings by locating the living and sleeping areas away from driveways, parking areas and paths.

Note. Australian Standards AS 2107-1987 (Acoustics) and AS 3671 (Road Traffic Noise Intrusion) should be referred to in establishing acceptable noise levels.

(c) Solar access and design for climate
The proposed development should, where possible:

(i) ensure adequate daylight to the main living areas of neighbours in the vicinity and residents and adequate sunlight to substantial areas of private open space, and

(ii) involve site planning, dwelling design and landscaping that reduces energy use and makes the best practicable use of natural ventilation solar heating and lighting by locating the windows of living and dining areas in a northerly direction.

Note. AMCORD a National Resource Document for Residential Development, 1995, may be referred to in establishing adequate solar access and dwelling orientation appropriate to the climatic conditions.

………………….”
55 Counsel for the plaintiff referred to a decision of the Court of Appeal in DEM (Australia) Pty Ltd v Pittwater Council [2004] NSWCA 434, a decision on SEPP 5. The actual decision in DEM, that certain land was land to which SEPP 5 applied, is not relevant to present proceedings. However, in her judgment McColl JA, with whom the other members of the Court agreed, made the following comments about SEPP 5:-
“[47] SEPP No 5 is also in the category of remedial or beneficial provisions which should be construed to afford “the fullest relief which the fair meaning of its language will allow”…

[48] Where a beneficial statute is expressed in general terms, so far as possible within the text, decision-makers will construe the legislation to advance and achieve those beneficial purposes — not to frustrate and defeat their attainment …

[51] SEPP No 5 starts from the premise that obstacles to its aims may be found in local environmental planning instruments and that it is to prevail notwithstanding. This is made clear in the aims (cl 3(2)(a)), the fact that it prevails where it is inconsistent with any other environmental planning instrument (cl 5(2)) and the fact that it allows development despite the provision of any other environmental planning instrument in certain circumstances (cl 10).”

Judgment of the Land and Environment Court

The judgment of the Land and Environment Court is generally important but I will quote only some parts of it

“3. Across the road, on the west side of Old Northern Road is a low-density residential area, which is part of Baulkham Hills Shire. The east (Hornsby) side of the road is rural in zoning and character. The Flower Power site is the exception. While rural by definition, it is densely built and visually prominent. Despite its name, it has virtually no landscaping.

………………….

9. The applicant proposes to demolish the existing buildings on the site and to erect a development for older people or people with a disability containing 132 apartments and parking for 272 cars. The housing is laid out in three groups. The first group is close to the road and is in the form of two rows of buildings at right angles to each other, each row containing four dwellings on each of two levels. The second group is in the centre of the site and is in the form of three rows parallel to each other, containing 12, 10 and 8 dwellings respectively on each of two levels. The third group is towards the northeast end of the site and is in the form of three rows parallel to each other, containing 7, 9 and 13 dwellings respectively on each of two levels. Parking is at basement level. Apartments are single level. The access to the first floor apartments is through external lift towers, staircases and walkways, from which entrance bridges lead to front doors. Since the walkways and bridges go directly above and past the ground floor courtyards, there is an opaque glass screen along one side.

………………….

11. The council submitted a Statement of issues containing 32 issues, of which it pressed 27. During the hearing the issues were refined as follows:
§ Is the impact on the rural environment acceptable?
§ Is the internal amenity acceptable?
§ Does the site analysis comply with the requirements of SEPP 5? ·
§ Is the access to public transport and facilities safe and convenient? ·
§ Will residents have reasonable access to home delivered services?
§ Is the loss of agricultural land a reason for refusal?
§ Is there likely significant effect on the Blue Gum High Forest on adjoining land? ·
§ Is there adequate information on water and sewer services?

12. During the five days of hearing, only the first six issues were covered. The parties requested the Court to determine these issues before setting aside further days to deal with the remaining issues.”
Impact on the rural environment
13. According to the council’s Statement of Issues, the proposal will have a detrimental impact upon the streetscape; detract from the rural views from surrounding properties; be out of character with the surrounding rural landscape; and have detrimental impact on the natural and built environments.
14. LEP 94, the Rural DCP and the Rural Lands Study contain objectives and principles relating to the Shire’s rural areas. These may be summed up as the maintenance of rural character. SEPP 5, under which this application is made, permits medium density housing on rural land, provided the occupants are old or disabled people. Thus, while the local controls permit one dwelling on this site, SEPP 5 permits in the order of 130 dwellings. We do not think therefore that it is valid to criticise this proposal on the basis that it is not rural in character. If it had only half as many dwellings as it does, it would still not appear rural in character.
15. The issue is made more complex by the fact that SEPP 5 appears to be drafted mainly for the assessment of housing in residential areas. Clause 25, which deals with the design of residential development, fails to mention the word rural. While it contains numerous guidelines and principles for fitting into residential areas, it says nothing about designing medium density housing in a rural environment.
16. Having said this, we believe that housing, even at medium densities, within a rural area should acknowledge its location and have a different design and appearance from housing in a residential area. While SEPP 5 provides no guidance, s79C(b) of the Environmental Planning and Assessment Act 1979 requires us to have regard to the proposal’s impact on the natural and built environment. The visual impact on the rural environment is therefore a matter that we must consider in the assessment of this application.
17. Dr R Lamb, a visual analyst retained by the council gave evidence on visual impact. The applicant’s expert was Mr C Blyth, a consultant planner. Dr Lamb and Mr Blyth differed in their assessment of the character of the surrounding area. Mr Blyth took his cue from the adjoining Flower Power site and the residential development across the road, while Dr Lamb considered that the majority of the surrounding area was rural in character. We agree with Mr Blyth that the Flower Power site is a hard and dominant development. However, this is the only development of its kind visible from the subject site. Its existence is not a reason to extend the un-rural character further.
18. Dr Lamb recognised that a development under SEPP 5 is unlikely to be rural in character. On page 11 of his statement he said:

While I generally consider that development such as the proposed cannot realistically look like detached housing, nor should it have to, I am of the opinion that such development should be attentive to prevalent character elements within the locality. In particular, the building size and styles have virtually no relevance to the rural landscape or the site conditions and have no local precedent within the rural setting. The siting of residences appears to take no special heed of site conditions and the treatment of the street frontage expunges sight lines through the site. There is minimal variety in building forms and little relationship between them and rural dwelling character. As such, the contrast between the existing character of the locality generally and that which would result from the construction of the proposed development would be extreme. In my opinion, the change in the character of the site would be so great as to adversely affect the existing and desired rural character of the surrounding properties to an unacceptable degree.

19. Dr Lamb agreed that the appearance of the proposal from Old Northern Road was acceptable. He considered the worst feature of the design to be the length of the rows of dwellings. The most northern row had an uninterrupted length of over 120m. He considered this to be unsuitable even in a residential zone, let alone in a rural environment.

20. Mr B Newbold, a consultant planner and urban designer retained by the council, supported Dr Lamb’s evidence. He said that the proposal’s scale was excessive for its context and not compatible with the surrounding landscape.
21. Mr Blyth, on page 19 of his statement, commented on the issue of rural character, amenity and streetscape:

The built form is typically residential in its design appearance and proposes high quality generous floor plans with variety in size and style, in a two-storey built form. The form of the development enhances amenity through having well separated building enabling large landscaped separations between buildings and to the streetscape reducing scale and enhancing the landscaped setting of the development. The development will in my opinion undoubtedly have character and identity and will provide an attractive residential environment for future occupants.
22. We do not accept this evidence. The fact that the built form is residential in appearance, or that the floor plans are high quality and generous, says nothing about the impact on the rural environment. Moreover, it is not correct to say that the buildings in the proposal are well separated. Elevated walkways, bridges, lift towers and staircases fill in whatever separation exists.

23. It appears to us that Mr Blyth bases his defence of the proposal on the argument that SEPP 5 prevents a consent authority from refusing an application on the basis of Floor Space Ratio (FSR), if the FSR does not exceed 0.5:1. Therefore any development with a FSR of 0.5:1 is acceptable in character, no matter in what context it is located. We do not accept this line of reasoning. Whatever the FSR of a development under SEPP 5, it is still required to have an acceptable relationship to its surroundings. A row of dwellings 120m long would probably be out of place in most residential areas. It is grossly out of place in a rural setting.
24. We note that, while in most residential flat buildings the circulation space is internal, in this case the lifts, stairs and corridors are placed outside the buildings. As a result they are not included in the calculation of floor space. The exclusion from floor space calculations does not mean, however, that these built elements do not add to the apparent bulk of the building. The device may be effective in placing more dwellings on the site without exceeding the FSR of 0.5:1, but it is not effective in lessening the bulk and scale of the proposal.

25. For the above reasons, we accept Dr Lamb’s evidence that the change in the character of the site would be so great as to adversely affect the rural character of the surrounding properties to an unacceptable degree.”
Internal amenity

26. According to the council’s Statement of Issues, the design of the dwellings will not promote amenity, sense of identity and community for residents. The statement singles out the effect of the elevated walkways on the outlook from dwellings.

27. Clause 25(b) of SEPP 5 deals with visual and acoustic privacy. It states that a development should provide neighbours and residents with visual and acoustic privacy. Clause 25(c) deals with solar access and design for climate. It states that developments should, where possible, ensure adequate daylight to the main living areas of neighbours and residents and adequate sunlight to substantial areas of prive open space. In addition it provides that site planning, dwelling design and landscaping should reduce energy use. To measure the performance of an individual proposal, the subclause suggests that reference may be had to the Australian Model Code for Residential Development (AMCORD).
28. The council’s expert on internal amenity was Mr Newbold. In effect, Mr Newbold criticised the proposal on three counts. First, the living areas and courtyards did not receive adequate sunlight. Second, the courtyards did not enjoy adequate privacy. Third, the long parallel rows of buildings with near-identical architectural expression created an unattractive residential environment. The reason for the lack of sunlight and privacy was the tight spacing of adjacent buildings and the proximity of overhead walkways to living rooms and courtyards.

29. The proposal was defended by Mr Blyth and by the proposal’s designer, Mr J Bourke, an architect. They pointed out that all the dwellings have northern orientation. According to Mr Bourke, four of the dwellings fail to meet AMCORD standards for solar access, while another 16 may or may not meet it. He responded to the criticism of overlooking from the elevated walkways by placing an obscure glass screen along one side.

30. Mr Newbold did not accept Mr Bourke’s estimate of the proposal’s performance on solar access. He pointed out that the shadow diagrams did not include the impact of several built elements, such as the entrance bridges, balconies, lift structures, courtyard walls and the obscure glass balustrades and screens. According to Mr Newbold, 25-30% of the apartments do not meet AMCORD.
31. In relation to solar access, we find Mr Newbold’s evidence more persuasive than Mr Bourke’s. The reason is that Mr Bourke appears to have left out numerous elements that would produce shadows. While it is true that the vast majority of apartments face north, the benefit of north orientation is cancelled by the placing of the elevated walkways and entrance bridges to the north of about two-thirds of the apartments. We agree with Mr Newbold that in the context of this site, the non-compliance of 25% of apartments with AMCORD guidelines indicates a very poor performance on solar access.
32. We hasten to add that it is only in respect of this site that we consider the solar performance of the proposal poor. This is because the site is a rural allotment large enough to allow all living areas to be oriented to the north. (Indeed the designer has oriented most living areas to the north, but then cut off sunlight by placing structures in front.) There are no buildings around casting a shadow. It would not be difficult to achieve compliance with AMCORD guidelines (which are designed for an urban context and are not onerous) for all, or almost all, apartments.
33. We also accept Mr Newbold’s evidence that the proposal performs poorly on the privacy and amenity of courtyards. It is true that the applicant intends to provide obscure glass screens on one side of the elevated walkways. This may prevent people looking down from the walkway to the courtyards, but it will present a bulky element to the courtyard. It will eliminate all the pleasure a resident might otherwise experience in a north-facing courtyard in a rural area. In fact, in most of the apartments there will be no sense of living in a rural area. The outlook will be confined to walkways, bridges, stairs, lift towers and the rear of the row in front.
34. In our opinion, the internal amenity of the proposal is unacceptable. The application does not meet cl 25(b) and (c) of SEPP 5.”

56 The Court proceeded to decide the remaining three issues which had been argued in favour of the applicant, that is, site analysis, access to public transport and facilities and access to home delivered services. The Court decided that loss of agricultural land was not a genuine issue.
57 The Court concluded:-
“We have concluded that the proposal’s impact on the rural environment and its internal amenity are unacceptable. Our finding on the other four issues is that they would not be reasons for refusal if the proposal were otherwise acceptable.”

Issues

58 In his written submissions counsel for the defendants conveniently identified a number of issues to be determined, as follows (rearranging and paraphrasing slightly):-

(1) As to the first development application agreement:-

(i) who were the parties
(ii) when was it entered into
(iii) its scope
(iv) its terms as to remuneration
(v) its other terms
(vi) was it an entire contract
(2) As to whether the first development agreement was breached:-

(i) was there a breach of a term to use reasonable care and skill
(ii) was there a breach of a term to perform the agreed services within 10 weeks or, alternatively, within a reasonable time
(iii) was there a breach of any other term

(3) As to the first development application:-

(i) was there a duty in tort, independently of the contract, to use reasonable care and skill and, if so, whether the duty was breached

(4) As to the second development application agreement:

(i) who were the parties
(ii) when was it entered into
(iii) its scope
(iv) its terms as to remuneration
(v) its other terms
(vi) was it an entire contract

(5) As to whether the second development agreement was breached:-

(i) was there a breach of a term to use reasonable care and skill
(ii) was there a breach of a term to perform the agreed services within a reasonable time
(iii) was there a breach of any other term

(6) As to the second development application:-

was there a duty in tort, independently of the contract, to use reasonable care and skill and, if so, whether the duty was breached

(7) As to the claim under the Fair Trading Act:-

(i) what representations were made by the cross-defendants to the cross-claimants

(ii) were such representations as were made relied on by the cross-claimants

(iii) were such representations as were made misleading or deceptive or likely to mislead or deceive

(8) What damages would the cross-claimants be entitled to for breach of contract, in tort or under the Fair Trading Act.

Credibility of Mr Bourke and Mr Walsh

59 It was not in dispute at the hearing that some agreement had been made for the preparation of the first development application and some agreement had been made for the preparation of the second development application. However, as I previously noted, both agreements were made in conversations between Mr Bourke and Mr Walsh, about which conflicting evidence was given by Mr Bourke and Mr Walsh, and neither agreement was reduced to writing. Some assistance in determining what were the terms of each agreement can be derived from evidence of objective circumstances and from a consideration of which version of a conversation is the more inherently probable. However, some recourse must be had to an assessment of the general credibility of Mr Bourke and Mr Walsh. Mr Walsh’s credibility was the subject of a separate section of the plaintiff’s written submissions and I will deal first with Mr Walsh’s credibility.
60 Mr Walsh lied to the estate agent acting for the Moussas about his purposes in seeking to acquire the property. He told the estate agent that he wished to build a house and run some horses on the property. I am prepared to regard this lie as venial. Disclosure by Mr Walsh of his true purpose would have forced the price up. I would not infer from the telling of this lie that Mr Walsh would lie on other occasions.
61 However, much more serious in my opinion were parts of the affidavit sworn on 25 July 2002 in the Land and Environment Court proceedings, in support of the further application for an expedited hearing of the appeal.
62 In para 10 of the affidavit Mr Walsh said that in the preparation of the first development application Glenhaven had incurred considerable expenses. A summary was then given of those expenses. After the listing of a number of items, it was asserted in para 10:-
“Glenhaven properties has also expended considerable financial sums in respect of the following matters in support of the development application”.
63 Under this heading a number of items were listed, including “architects fees $406,700”. This item clearly referred to the invoices the plaintiff had rendered, including the principal invoice for $402,855.42.
64 Copies of the two invoices rendered by the plaintiff formed annexure D to the affidavit. On each invoice there is a stamp “PAID” followed by the stamped words or abbreviations “Date”, “Ref” and “Amt”, with handwritten entries alongside these words or abbreviations.
65 In oral evidence at the hearing Mr Walsh said that he had read the affidavit before swearing it. He denied that he had put the stamps on the plaintiff’s invoices or that the handwriting on the plaintiff’s invoices was his. He did not know whose handwriting it was.
66 Mr Walsh said in evidence that the handwriting alongside similar “PAID” stamps on some other invoices, copies of which were annexed to the affidavit, was the handwriting of a bookkeeper he had once employed, who had returned to Ireland. He accepted that the bookkeeper would not have placed “PAID” stamps on the invoices, without his instructions.
67 As to the stamps and handwriting on the invoices from the plaintiff, Mr Walsh agreed with questions put to him in cross-examination that “it couldn’t have been (the bookkeeper), it wasn’t yourself” and “it doesn’t leave anybody (else)”.
68 I am satisfied that the stamps and the handwriting indicating that the invoices from the plaintiff had been paid were placed on the invoices by Mr Walsh himself or by someone else on Mr Walsh’s instructions, Mr Walsh well knowing that the invoices had not been paid (apart from $50,000). Mr Walsh saw an advantage to himself in untruthfully representing to the Land and Environment Court that he had paid the amounts charged in the invoices.
69 Mr Walsh’s affidavit of 25 July 2002 has the further significance that there is no suggestion in the affidavit that the plaintiff had not earned the amounts it had charged or that its right to be paid was in any way conditional.
70 As noted earlier in this judgment, Mr Hannaford in his affidavit in support of the application for an expedited hearing of the appeal referred to the costs already incurred on the development application, including “architect’s fees $400,000”. I am satisfied that Mr Hannaford would not have included this matter in his affidavit, without receiving instructions from Mr Walsh.
71 Mr Hannaford had difficulty in collecting his costs of acting for Mr Walsh on the application to the Land and Environment Court. In a facsimile transmission of 21 April 2003 demanding payment, Mr Hannaford said in part:-
“In our telephone discussion you said “you can sue Glenhaven Properties if you like---it’s a $2 company and I can fuck you around for 3 years”. We are fully aware as to how the land at Glenhaven is legally held. We are also aware that other consultants retained by you in relation to this project remain unpaid. In fact it has been the cause of much embarrassment to us that consultants that we recommended to you have repeatedly contacted us since January requesting payment.”
72 I have concluded that I should have serious reservations about Mr Walsh’s credibility.
73 As regards the credibility of Mr Bourke, I do not accept every part of Mr Bourke’s evidence.

74 An attack was made on Mr Bourke’s credibility on the following basis:-
1. Mr Bourke said in his first affidavit that the town planner Mr Glendinning had said of the second development application that it was a reasonable proposal which was likely to be approved.
2. Mr Walsh in his affidavit had disputed this evidence, saying that at a meeting on 3 February 2003 between Mr Bourke, Mr Walsh and Mr Glendinning, Mr Glendinning had said that the second development application would not be approved and at a meeting on 25 February 2003 also between Mr Bourke, Mr Walsh and Mr Glendinning, Mr Glendinning had said to Mr Bourke that the second development application was basically the same as the first development application, “you just pulled little sections out here and there” and had said to Mr Walsh “get yourself another architect, who understands SEPP 5 and who will listen to what I have to say…”
3. Mr Glendinning in his affidavit had corroborated Mr Walsh’s evidence by saying that he had told Mr Bourke that the second development application would not be approved, and that at a meeting on 25 February 2003 he had told Mr Bourke that the second development application was basically the same as the first development application, that the modifications proposed were minor and that the second development application would not be approved and had told Mr Walsh “get yourself another architect who understands SEPP 5 and who will listen to what I have to say”.
75 If I accepted Mr Glendinning’s evidence, his evidence would corroborate Mr Walsh’s evidence and weaken Mr Bourke’s credibility. I have, however, concluded that there are serious doubts about the accuracy of Mr Glendinning’s recollection of events in early 2003.
76 Mr Glendinning’s affidavit, which was sworn on 8 December 2005, was based on a statement he had made a short time before. He had prepared the statement “just going from memory—I didn’t go back and review history when I wrote this”.
77 In para 37 of his affidavit Mr Glendinning said that, apart from the conversations with Mr Bourke and Mr Walsh of which he had given evidence, he had had nothing more to do with the second development application. This assertion was incorrect. As was shown by two facsimile transmissions from Mr Glendinning to Mr Bourke dated 20 March 2003 and 26 March 2003, Mr Glendinning had reviewed a draft statement of environmental effects for the second development application prepared by Mr Bourke and had given Mr Bourke his comments and Mr Glendinning had then reviewed a further draft by Mr Bourke of the statement of environmental effects.
78 Furthermore, it is difficult to reconcile the terms of these facsimile transmissions, fairly brief as they are, with the comments Mr Walsh and Mr Glendinning claim Mr Glendinning made about the second development application and Mr Bourke. In the second facsimile transmission Mr Glendinning made one comment and then commended Mr Bourke for his work, saying “otherwise well done”.
79 Mr Walsh and Mr Glendinning both said in identical words in their evidence that at the meeting on 25 February 2003 Mr Glendinning said to Mr Walsh “get yourself another architect who understands SEPP 5 and who will listen to what I have to say….”. In my opinion, it is improbable that these words were said. Mr Walsh himself gave evidence, which is confirmed by other evidence, that by 25 February 2003 Mr Walsh had reached an agreement with Mr Maxwell which was formalised in the contract for sale and the deed of agreement of 27 February 2003, that in January 2003 Mr Maxwell had engaged another architect Mr Pickrell to prepare a development application for the property and that Mr Pickrell had retained Mr Glendinning as a town planner on the application and by 25 February 2003, when the words were allegedly said, Mr Glendinning would have known that Mr Walsh had, in effect, got another architect and that he, Mr Glendinning was advising that other architect.
80 I do not accept that there were only minor changes between the first development application and the second development application. The number of dwellings had been greatly reduced from 140 (or 132) to 57. The defendants’ principal town planning witness, Mr Ingham, considered the second development application “a significant improvement” on the first development application.
81 If Mr Glendinning had made such trenchant criticisms of the second development application, it is difficult to understand why Glenhaven proceeded to enter into the deed of agreement of 27 February 2003, whereby it covenanted to lodge the second development application and, in the event of it not being approved by the Council within 42 days of the date of lodgement, to appeal to the Land and Environment Court, paying all the costs of the appeal. Mr Walsh lodged the second development application, paying a substantial lodgement fee.
82 Mr Walsh, in his oral evidence about what Mr Glendinning had said in February 2003, retreated from saying that Mr Glendinning had said words to the effect that the second development application would not be approved, to saying that “he (Mr Glendinning) would have said that we would have some issues with it”.
83 Mr Glendinning in his oral evidence said that the second development application was “substantially different” and “substantially better” than the first development application.
84 The conclusion I have reached, after assessing the credibility of Mr Walsh and Mr Bourke is that, while I would not accept every part of Mr Bourke’s evidence, his general credibility is substantially higher than Mr Walsh’s.

Issues as to the first development application agreement

(i) Who were the parties

85 In the amended statement of claim filed on 10 September 2004, which was the most recent statement of claim throughout most of the hearing, it was alleged that Mr Walsh had retained the plaintiff Oaktwig Pty Ltd on behalf of himself and (after its incorporation in October 2001) Glenhaven.
86 It was accepted by counsel for the defendants that Oaktwig Pty Ltd was the proper plaintiff.
87 However, in final written submissions on behalf of the defendants it was submitted, for the first time, that, within the terms of s 131 of the Corporations Act, Mr Walsh had entered into the agreement for the first development application on behalf of Glenhaven before it was registered and that Glenhaven had subsequently been registered and had ratified the agreement, with the consequences that Glenhaven became bound by the agreement and entitled to its benefit and Mr Walsh, subject to the possible operation of s 131(4) of the Corporations Act, ceased to be subject to any liability.
88 Section 131(1) of the Corporations Act provides:-
“If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a company before it is registered, the company becomes bound by the contract and entitled to its benefit if the company, or a company that is reasonably identifiable with it, is registered and ratifies that contract:
(a) within the time agreed to by the parties to the contract; or
(b) if there is no agreed time — within a reasonable time after the contract is entered into”
89 Counsel for the plaintiff was taken by surprise by this submission and I expressed a view that, if it had been intended by the defendants to allege that the first development application agreement was a pre-registration contract within s 131 of the Corporations Act, the matters relied on to support this allegation should have been pleaded by the defendants.
90 Counsel for the defendants pointed to para 2 of the defence which had been filed on 17 December 2004, in which it was alleged that the first development application agreement had been made in about April 2001 between the plaintiff and the first defendant, that is Glenhaven. However, in my opinion, this allegation did not sufficiently plead the matters sought to be relied on (See Supreme Court Rules Pt 15 r 13, which was in force at the time the defence was filed).
91 Before I reserved my decision, I did not make any grant of leave to the defendants to amend the defence so as to rely on s 131 of the Corporations Act. A relevant matter in deciding whether to grant leave to amend would be whether further evidence might have been led or elicited by the plaintiff, if any amendment had appeared in the defence of 17 December 2004, for example further evidence relevant to any application of s 131(4) of the Corporations Act.
92 Notwithstanding that I had not granted leave to amend, I received, after I had reserved my decision, an amended defence in which it was alleged that Mr Walsh entered into the first development application agreement on behalf of Glenhaven and in which the various matters required for s 131 of the Corporations Act to be operative were expressly pleaded.
93 I do not consider that I should grant leave to amend. Nevertheless, I will consider on their merits counsel for the defendants’ submissions based on s 131 of the Corporations Act.
94 Section 131 applies only if a person enters into or purports to enter into a contract on behalf of or for the benefit of a company before it is registered.
95 In support of his contention that s 131 was applicable, counsel for the defendants referred to a paragraph in Mr Bourke’s first affidavit (para 21), in which Mr Bourke said that in one of the conversations in early 2001, Mr Walsh had said “I’m forming a new shelf company for this project so that I can sell the company if necessary”.
96 My attention was not directed to anything else in Mr Bourke’s affidavit or Mr Walsh’s affidavit which might support a submission that Mr Walsh had entered into the first development application agreement on behalf of a company to be registered.
97 In my opinion, the statement set out in para 21 of Mr Bourke’s affidavit that Mr Walsh said he would be forming a new shelf company, so that he could sell the company, if necessary, falls far short of establishing that Mr Walsh was entering into an agreement on behalf of a company before it was registered.
98 Counsel for the defendants referred to the decision of the Court of Appeal in Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319. However, the facts in that case were very substantially different from the present case. In Aztech the contract was in writing, in the written contract an individual Mr Azzi was identified as “the promoter”, a recital in the contract referred by name to the company to be incorporated, which was identified as “the principal” and the first operative clause in the agreement provided that the promoter intended to enter into the agreement on behalf of the principal before it was registered.
99 In my opinion, the first development application agreement was made between Oaktwig Pty Ltd and Mr Walsh, and remained an agreement between Oaktwig Pty Ltd and Mr Walsh, notwithstanding the incorporation of Glenhaven approximately six months afterwards.

(ii) When was it entered into

100 In the amended statement of claim of 10 September 2004 it was alleged that the agreement was made in about June 2001.
101 In the defendants’ written submissions it was submitted that, having regard to a number of pieces of evidence, I should find that the agreement had been entered into in about April 2001.
102 I granted leave to the plaintiff to amend the statement of claim so as to allege that the agreement had been entered into in about April 2001.
103 I find that the agreement was entered into in about April 2001.

(iii) Its scope

104 In the statement of claim the plaintiff alleged that the agreement was to perform certain architectural and design services in respect of the property.
105 In his evidence Mr Bourke agreed that the services to be performed extended to planning and landscape design services.
106 Counsel for the defendants submitted, and counsel for the plaintiff disputed, that the services to be performed included advising Mr Walsh about the requirements of SEPP 5. Counsel for the defendants pointed to various pieces of evidence, including evidence that Mr Walsh had never previously done a SEPP 5 development, whereas Mr Bourke was an architect with previous experience in SEPP 5 developments.
107 In my opinion, it was implicit in the relationship between the parties and the services the plaintiff expressly agreed would be provided, that the plaintiff (Mr Bourke) would advise Mr Walsh about the requirements of SEPP 5.

(iv) Its terms as to remuneration

108 There was no dispute that Mr Walsh agreed to pay at the rate of $2600 per unit. However, it was pleaded in the defence (para 2(b)(iv)) that the $2600 per unit would be paid “upon approval of the development application by Council and the sale of the Glenhaven property”. In his affidavit Mr Walsh gave evidence to that effect. Mr Bourke in his affidavit in reply disputed that payment was conditional upon the development application being approved by Council and the property being sold.
109 An argument can be made for each of the parties that it or he would be unlikely to have agreed to what the opponent alleges was the term of the agreement.
110 On behalf of Mr Bourke, it can be argued that it is unlikely that Mr Bourke would have agreed to undertake the substantial amount of work required to prepare the development application, if any remuneration for the work was to be conditional upon the Council approving the development application and the property being sold.
111 On the other hand, it can be argued on behalf of Mr Walsh that it is unlikely that Mr Walsh would have agreed to pay Mr Bourke at the rate of $2600 per unit, irrespective of whether any development approval was granted and, if some development approval was granted, irrespective of the number of units which were approved.
112 Arguments each way can also be made based on the remuneration of $2600 per unit. For Mr Bourke, it can be argued that in the absence of any remuneration in addition to his professional fees, for example a share of profits, it is unlikely that he would have agreed that payment of his professional fees would be conditional. For Mr Walsh, it can be argued that the agreed remuneration of $2600 per unit was a high figure, rendering it more likely that Mr Bourke would have agreed to his remuneration being subject to conditions.
113 I have concluded that the promise to pay remuneration at the rate of $2600 per unit was not conditional on approval of the development application by Hornsby Shire Council and sale of the Glenhaven property.
114 Mr Bourke was a professional person agreeing to render professional services and professional persons do not usually enter into speculative agreements under which their right to remuneration for their services is conditional upon a particular result being achieved. I am satisfied that another case sought to be relied on by counsel for the defendants as an instance of Mr Bourke entering into a speculative costs agreement was very different from the present case.
115 It would have been highly speculative for Mr Bourke to have agreed to a term of the kind alleged by Mr Walsh. Mr Bourke knew that Hornsby Shire Council was opposed to SEPP 5 developments within the Shire and there was a real possibility that a SEPP 5 development application would be refused by the Council. Even if the development application was approved by the Council, there could be a long delay in finding a purchaser for the property.
116 I am satisfied that Mr Walsh was aware that the Council was opposed to SEPP 5 developments, that a SEPP 5 development application might be refused by the Council and that it might be necessary to appeal to the Land and Environment Court.
117 Mr Walsh was a property developer who demonstrated at a number of stages that he was willing to take risks. For example, he entered into the agreement with the plaintiff before he had any written agreement with the Moussas and he entered into the put and call option with the Moussas under which he could have been obliged to acquire the property, before obtaining any finance.
118 I accept evidence by Mr Bourke that Mr Walsh told Mr Bourke that he, Mr Walsh, had made his own calculations and believed he could fit 140 dwellings into the design for the site. Accordingly, Mr Walsh believed that he could make a large profit out of the venture.
119 In accordance with his contention that payment of his fees was not subject to any condition, Mr Bourke caused the plaintiff to render an invoice on 31 January 2002, upon preparation of the development application being completed. There is no evidence of any complaint by Mr Walsh that the rendering of the invoice was premature.
120 In May 2002 Mr Walsh made a part payment to the plaintiff of $50,000. I do not accept Mr Walsh’s explanation that he made this payment gratuitously.
121 As previously noted, Mr Walsh represented in his affidavit of 25 July 2002 that the plaintiff’s fees had been incurred and paid. There is no suggestion in Mr Walsh’s affidavit that payment of the plaintiff’s fees was subject to any condition.
122 I also rely on my finding that Mr Bourke’s general credibility is greater than Mr Walsh’s.

(v) Its other terms

123 It was accepted by counsel for the defendants that the plaintiff did not agree to guarantee a result, that is to say, the plaintiff did not promise that development approval would be obtained.
124 This concession was properly made. In general, a professional person does not guarantee to a client that the aimed for result will be achieved. See Jackson & Powell on Professional Liability 6th ed at 2-001 to 2-012.
125 In the present case the result aimed for was a decision to be made by a third party the Council, (or the Land and Environment Court), applying criteria some of which were imprecise and subjective. I am satisfied that it was appreciated by both Mr Bourke and Mr Walsh that the Council, at least, might not grant development consent.
126 Any alleged terms of the agreement which would be tantamount to a term that development approval would be granted were likewise not terms of the agreement, for example an alleged term that the plaintiff promised “to ensure that the development application would be approved”.
127 As regards an alleged term that the development application would “comply with SEPP 5”, I consider that the agreement did include a term that the development application would comply with the “development standards” in SEPP 5, that is the standards in SEPP 5 which were precisely stated and in respect of which it could be objectively determined whether they had been complied with, but did not include a term that the development application would comply with the “performance standards” in SEPP 5, that is the standards in SEPP 5 in respect of which it was a matter of subjective judgment whether they had been complied with.
128 It was common ground that the agreement, as being an agreement for the performing of services, included an implied term that the plaintiff exercise reasonable care and skill in performing the services it had agreed to provide. Astley and Ors v Austrust Ltd (1998 –1999) 197 CLR 1 at 22.
129 It was alleged in the defence and in the cross-claim that the agreement included a term that the services would be provided within 10 weeks. Mr Walsh gave evidence that Mr Bourke had said to him in April 2001 “I can do the plans in about 10 weeks”. In his affidavit in reply Mr Bourke denied that he had said this, giving, as one reason why he would not have said this, that time would have been required to obtain a survey of the property and to obtain necessary reports from external consultants.
130 I do not consider that I should find that it was a term of the agreement that the services would be provided within 10 weeks.
131 It was common ground that, if there was no express term as to the time within which the services were to be performed, it was an implied term of the agreement that the services would be performed within whatever in all the circumstances was a reasonable time.
132 I have already noted that it was common ground that there was an implied term in the first development application agreement that the plaintiff in performing the services it had agreed to provide, including the giving of advice, would exercise reasonable care and skill. Although the plaintiff is Oaktwig Pty Ltd, it will be convenient to refer to the person obliged to exercise reasonable care and skill as being Mr Bourke.

(vi) Was it an entire contract

133 The contract was an entire contract. However, the case of Oliver v Lakeside Resort Property Trust Pty Ltd [2005] NSWSC 1040 (Barrett J) referred to by counsel for Mr Walsh is readily distinguishable from the present case. In Oliver the plaintiffs withdrew their services before the project had been completed, with the consequence that the plaintiffs’ performance was neither complete nor sufficiently substantial to qualify for remuneration under the contract. In the present case Oaktwig Pty Ltd completed the agreed project.

2(i) Was there a breach of a term to exercise reasonable care and skill

134 In para 20 of the cross-claim very extensive particulars were provided of alleged breaches of this implied term of the first development application agreement. Many of these particulars were not really particulars of breaches of an implied term to exercise reasonable care and skill but particulars of alleged breaches of other terms, for example a term that the plaintiff would prepare and lodge a development application which would be approved by the Council. As the cross-claimants’ claim was ultimately put, the respects in which it was submitted that Mr Bourke had failed to exercise reasonable care and skill were:-
(1) he had prepared and lodged a development application which had no reasonable prospect of being approved by the Council or by the Land and Environment Court (see the defendants/cross-claimants’ written submissions para 70—“never going to be approved”) and which a reasonably competent architect would have realised had no reasonable prospect of being approved by the Council or by the Court.

(2) he had failed to advise Mr Walsh that the development application had no reasonable prospect of being approved by the Council or by the Court.
135 As part of (1) it was submitted that Mr Bourke had failed to respond or had failed to respond reasonably to issues which had been raised by Council and which were the issues on which development approval had subsequently been refused by the Council and by the Land and Environment Court.
136 It is apparent that particular (2) is dependent on particular (1), that is, that Mr Bourke had prepared and lodged a development application which had no reasonable prospect of being approved and which a reasonably competent architect would have realised had no reasonable prospect of being approved.
137 It is important to note that the particulars extend to alleging that there was no reasonable prospect of the development application being approved by the Court. As I have already stated, both Mr Bourke and Mr Walsh appreciated that approval might be refused by the Council.
138 Both the Council and the Land and Environment Court refused to approve the first development application. However, it could not be inferred simply from the fact that the development application was refused by both the Council and the Land and Environment Court that Mr Bourke was negligent in preparing and lodging the first development application.
139 As far as the Council is concerned, there was much evidence that in 2002 Hornsby Shire Council, or at least a majority of councillors including the Mayor, were strongly opposed to SEPP 5 developments in the Shire.
140 As far as both the Council and the Court are concerned, a distinction was drawn by a number of witnesses between those requirements in SEPP 5 which were “development standards”, that is standards in respect of which it could be objectively ascertained whether they had been complied with, and those requirements which were “performance standards”, that is standards in respect of which it would be a matter of subjective judgment whether they had been complied with.
141 In his report Mr Ingham said at p 15:-
“I’m constantly being asked to provide advice as to the probability of success of development applications which proceed to appeal. I’m always very careful to ensure that I do not give specific advice in relation to this matter. The people who hear appeals are people with particular opinions and biases, as we all are, and the possibility of success at appeal depends very often on the individual who hears the appeal”.
142 It was sometimes suggested by counsel for the plaintiff in his submissions that the decisions of the Council and the Land and Environment Court refusing to approve the first development application were wrong, in that the Council and the Court had not faithfully applied the provisions of SEPP 5. However, the principal submission made by counsel for the plaintiff on this subject was that it was not necessary that I should find that the Council and the Court were wrong in refusing to approve the first development application; it would be sufficient for me to find that an opinion that the first development application had at least a reasonable prospect of being approved by the Court, if not the Council, could reasonably have been held by a competent architect. Counsel for Mr Walsh submitted that I should be very cautious in making any finding that the Land and Environment Court was wrong and, even if I were to conclude that the Council was wrong, a reasonably competent architect would nevertheless have accepted that he had to respond to the issues which the Council had raised. I do not consider that I should enter upon any consideration of whether the decisions of the Council and of the Court should be regarded as wrong.

The number of units

143 It is clear that an important factor in both the Council and the Court refusing to approve the first development application was the number of units in the development application (140, reduced to 132 during the hearing of the appeal). The number of units was directly related to the size of the development and had ramifications for such matters as solar access and privacy.
144 It was in the interests of both Mr Bourke and Mr Walsh that the number of units in the development should be maximised, provided, of course, that development approval could be obtained. The amount of Mr Bourke’s remuneration was directly linked to the number of units. Mr Walsh’s profit would be likely to be greater, the greater the number of units.
145 Conflicting evidence was given by Mr Bourke and Mr Walsh about which of them was responsible or primarily responsible for the development application containing as many as 140 units.
146 In his evidence Mr Bourke accepted that Mr Walsh had asked him, at a time which was not fixed in Mr Bourke’s affidavit but which would have been in about April 2001, “how many units can we get on the site”, to which Mr Bourke had replied: “I can do some preliminary plans and calculations” (Mr Bourke’s first affidavit para 22). Mr Bourke prepared some preliminary concept plans, which indicated to Mr Bourke that about 100 units would be possible, although no survey report had yet been obtained (Mr Bourke’s first affidavit para 26).
147 Mr Bourke gave a copy of the preliminary concept plans to Mr Walsh, who said: “We need to get as many units as possible on the site” (Mr Bourke’s first affidavit para 27).
148 After a survey report was obtained, Mr Bourke had a conversation with Mr Walsh. Paragraph 36 of Mr Bourke’s affidavit was in the following terms:-
“Richard Walsh visited my office and inspected the plans as they were being prepared.
He said How many units have we got.
I said We have about 108, 3-bedroom units
He said We should be able to get more than that on 7 acres.
I said Some of this land is steep and we have a large water feature, we do not want to crowd the site too much or council won’t like it.
He said We need to start with as many units as possible. We can always take units out, if they don’t like them.
I said Well the density is OK, below 0.5FSR, but some of our site is steep and we have a large water feature and several trees in the middle of the site. We need to have substantial setbacks from our boundaries because it is a rural zoned area on this side of the road. Council have requirements for setbacks in rural areas to be increased.
He said The Council may not like it but we need to get about 140 units on the site to get the best return we can. I have been looking at the site and we can easily get 140 units and stay under the 0.5FSR. If the Council don’t like it, we will take them to Court. We are entitled to build a retirement village on the land. That’s the law.
I said You will not find much support at Hornsby Council for SEPP5 developments, the Mayor does not like them. He has even sent a letter out to ratepayers about his objection to SEPP 5. I have a property at Normanhurst and I received a letter. I wrote back to him to say he should realize that older people need somewhere decent to retire and should support housing for aged persons.
He said The whole thing is political but I have checked on SEPP5 and we are allowed to develop the land to 0.5FSR that is what I want to do, so proceed with the design on the basis of 140 units with double car garages, because that is what the market requires. All the experts say that units in this area should be 3 bedrooms with double garages.
I said I will proceed with the design, as you say we can take out some units if we need to. We should have a prelodgement meeting with Council as soon as we have a full design layout which should be next week.
He said I have looked at the building setbacks along Old Northern Road, they seem to vary considerably, the buildings and car park at Flower Power are right near the front boundary.
I said Council expect a large set back in rural areas but they have not stuck to this idea over the years. The other side of the street is in Baulkham Hills Shire, they have different setback requirements.
He said Let us just do similar to Flower Power next door we can justify that our design is much better than the next door car park.
I said I will complete the layout design and typical unit plans and contact you to go to the Council next week for a prelodgement meeting.”
149 In his affidavit (para 25) Mr Walsh said that on 26 February 2001 he had a conversation with Mr Bourke as follows:-
“Walsh: How many houses do you think I can get on the site?
Bourke: You can build on 50% of the site with two-storey houses. You will get about 140 units [meaning dwellings]
Walsh: Will SEPP 5 let you do that? What are the rules?
Bouke: Yes, don’t worry. I am very experienced in SEPP 5 and I have designed numerous developments.”
150 Mr Walsh denied that Mr Bourke had said “I can do some preliminary plans and calculations” (Mr Walsh’s affidavit para 174). Mr Walsh said that he knew nothing about any preliminary proposal for 100 units and Mr Bourke had never mentioned 100 to him (Mr Walsh’s affidavit paras 176-177). Mr Walsh denied that a conversation in the terms alleged in para 36 of Mr Bourke’s affidavit had taken place.
151 Exhibit P at the hearing consisted of the plans for the first development application. Included in exhibit P were two preliminary plans for, respectively, 101 units and 101 units with 19 bedsit units attached to a nursing home. Although these plans are undated, they cast doubt on Mr Walsh’s version that Mr Bourke told him at the beginning, that is in February 2001, that Mr Walsh would get 140 units and that Mr Bourke never mentioned 100 dwellings to Mr Walsh.
152 On the basis of inter alia exhibit P, my general assessment of the comparative credibility of Mr Bourke and Mr Walsh and what appears to me to be the unlikelihood of Mr Bourke committing himself to 140 units in February 2001, I have concluded that I should accept Mr Bourke’s evidence in preference to Mr Walsh’s evidence and find that the idea of having as many as 140 units originated with Mr Walsh and was strongly pressed by Mr Walsh. It remains true, of course, that Mr Bourke, whose retainer I have found included advising Mr Walsh, would have been subject to an obligation, if he was of the opinion that a development application for 140 units had no reasonable prospect of succeeding, of informing Mr Walsh of that opinion.

Mr Ingham’s report

153 The principal expert witness relied on by Mr Walsh in seeking to prove that Mr Bourke was negligent was Mr Neil Ingham, an experienced town planner. In December 2005 Mr Ingham, on instructions from Mr Walsh’s solicitors, prepared a report.
154 On pp 9 to 12 of his report Mr Ingham considered the question “Did the first development application have any reasonable prospect of being approved, giving that it sought permission to erect 140 double storey dwellings or in relation to the design generally?”.
155 Mr Ingham said in his report:-
“Firstly let me say there were no double storey dwellings proposed. They were 2 storey buildings with the dwellings being on separate level of each of the two storeys within the development. Access was possible via a lift to the upper level and to basement car parking via a lift. This provided for disabled access to be available from the car parking area to any of the dwellings on the site. A parking provision was not convenient for residents and there was an issue of security relating to the movement of people from the car parking area to their dwelling. Notwithstanding this matter it is a matter for consideration of the responsible authority as to whether that form of car parking was satisfactory for aged or disabled persons.
In my opinion it is certainly not a desirable form of access as people with shopping need to carry that shopping considerable distances from their parking space up lifts or stairs to their dwelling unit.
It is my opinion that the development as proposed in the first development application did not have any reasonable prospect of being approved mainly due to the following factors.
· The proposed development had attached 2 storey apartment buildings with one of the buildings having a length of 127 metres and containing 26 dwelling units. Another building had a length of 95 metres containing 24 units. For some people the distance which they would be required to walk from their car parking space to their dwelling unit was up to 100 metres. In my opinion this is an unacceptable length of travel from a car parking space to a dwelling unit for aged or disabled persons. Furthermore the security in that movement requires people to leave the lift and move to their dwelling unit along a walkway between units of up to 60 metres.
· Secondly the proposed development, being wholly two storeys in height, does not fit within the general character of buildings in the Rural BA Zone which tend to be lower scale and much lower in density. While the development application could not be refused on the grounds of it having a floor space ratio of less than 0.5:1, the configuration of the units and their bulk and scale were grounds upon which the application could be refused. In my opinion the scale and bulk of the buildings would have ensured a refusal of the application. The length of some buildings without a break is unacceptable in the Rural BA Zone.
· Thirdly the solar access for a large number of units within the site is extremely poor. The walkway providing access to the upper level units ensured that not only was there shadow created by units adjoining other units to the north but also that the walkway created very significant overshadowing of the courtyards and living rooms of buildings to the south. This is a matter which must be taken into consideration and must be satisfied in accordance with the provisions of SEPP 5. SEPP 5 refers to AMCORD which has a section dealing with daylight and sunlight (page 162 and 165). In a section in 4.3 dealing with the following criterion is cited. (see Appendix “C”).

“P8 Buildings are sited and designed to provide daylight to habitable rooms, and in temperate and cooler climates, winter sunlight to ground level private open space of new and neighbouring dwellings.”
In a section following dealing with the method of achieving acceptable solutions the document has this to say.
“A8.4 In temperate and cool-temperate climate zones, sunlight to at least 50% (or 35m2 with minimum dimension 2.5m, whichever is the lesser area) of the principal area of ground level private open space of adjacent properties is not reduced to less than two hours between 9a.m. and 3 p.m. on June 21. Where existing overshadowing by buildings and fences is greater than this, sunlight is not further reduced by more than 20%.”
Along with this issue is the provision of daylight to the kitchen area of the development. In each of the different unit types proposed within the first development application the kitchen was central to the building and a considerable distance from any daylight area. In many cases that distance was about 12 to 13 metres from the place at which daylight was able to penetrate into the unit. Many of the ground floor units had a terrace above the ground floor preventing direct sunlight onto the windows of the ground floor units and preventing daylight access into the area of the kitchen. This, in my opinion, did not satisfy the requirements of SEPP 5 relating to solar access.
AMCORD on page 190 (see Appendix D) has a diagram indicating that the desirable depth of a dwelling for daylight and cross ventilation is 10 to 14 metres. This is the distance shown between the external windows of the dwelling, not from one window to the rear of a kitchen.
· Finally the proposed development in the first development application did not provide outdoor recreation space attached to each of the units which was significantly without overshadowing in mid winter. The units to the north of other units cast considerable shadow onto the open space and the walkways on the upper level cast additional shadowing onto that open space. This overshadowing, in my opinion, was simply unacceptable and did not accord with the requirements of SEPP 5.
· A fifth matter of concern with the application related to the extent of privacy loss for people living within the development. The upper level walkways between rows of apartment buildings provided the opportunity for people moving along those walkways to not only look down into the private courtyards of each adjacent building but also produced a lack of privacy within the living rooms of many of the units. AMCORD elements 5.5 (page 166) makes the following comments. (see Appendix E).
“Planning for privacy begins at the site planning stage when the privacy needs of both residents and neighbours influences the location of dwellings and the placement of windows and private open space.”
In the same section dealing with privacy AMCORD states that the objective for privacy may be achieved by application of the performance criteria listed below which are as follows.
“P2 Direct overlooking of main internal living areas and private open spaces of other dwellings is minimised by building layout, location and design of windows and balconies, screen devices and landscape, or remoteness. Effective location of windows and balconies to avoid overlooking is preferred to the use of screen devices, high sills or obscured glass. Where these are used, they should be integrated with the building design and have minimal negative effect on residents’ or neighbours’ amenity.”
In terms of visual privacy AMCORD suggests that acceptable solutions for privacy are:-
“A2.1 Habitable room windows with a direct outlook to the habitable room windows in an adjacent dwelling within 9m:
· are offset from the edge of one window to the edge of the other by a distance sufficient to limit views into the adjacent windows;
· have sill heights of 1.7m above floor level; or
· have fixed obscure glazing in any part of the window below 1.7 m above floor level.
AND
A2.2 Outlook from windows, balconies, stairs, landings, terraces and decks or other private, communal or public areas within a development is obscured or screened where a direct view is available into the private open space of an existing dwelling.
If screening is used, the view of the area overlooked must be restricted within 9 m and beyond a 45o angle from the plane of the wall containing the opening, measured from a height of 1.7 m above floor level (see Figure 4).
No screening is required where:
· windows are in bathrooms, toilets, laundries, storage rooms or other non-habitable rooms and they have translucent glazing or sill heights of at least 1.7 m;
· windows are in habitable rooms and they have sill heights of 1.7 m or more above floor level or translucent glazing to any part of a window less than 1.7 m above floor level.”
There is one further matter that I need to comment upon relating to the first development application. The willow trees are located adjacent to the dam which is on the north western side of the site and extends into the ‘Flower Power’ site are not shown at their actual scale on the development application plans. The application provided information relating to the location, height and foliage spread of all trees on the site with the willow trees being included within that schedule of information. The trees on the application plans are only shown at about half of the spread of the foliage, with the foliage actually extending into the roadway adjacent to the trees. The foliage actually extends about halfway across the main access road into the site.
With these being willow trees the roadway would require the removal of a significant proportion of the hanging branches of the willow trees, thus changing the character of the area adjacent to the dam and changing the visual significance of those trees. In my opinion this was an inappropriate design outcome which apparently occurred because the extent of those trees was not considered in the application.
Therefore, having regard to the proposed development and the matters discussed above, it is my opinion that the development application of 140 dwelling units for aged or disabled persons as proposed in the first development application did not, at any time, have any possibility of receiving development consent.”
156 The acronym AMCORD referred to in Mr Ingham’s report stands for Australian Model Code for Residential Development.
157 Before considering in detail Mr Ingham’s report I will refer to the evidence of the other expert witnesses.

Mr Glendinning

158 Mr Glendinning is an experienced town planner. As noted earlier, he gave Mr Bourke some assistance in preparing the statement of environmental effects for the second development application. He played no part in the preparation of the first development application.
159 Mr Glendinning was critical of the first development application. In his affidavit he expressed the opinion that “there was no prospect of having more than 40 single storey dwellings ever approved by Council under SEPP 5 on the Glenhaven property”. In his oral evidence he described the units in the first development application as being designed “like 1960 motel units” and “(looking) like an army barracks”.
160 I consider that there are some factors reducing the weight which should be given to Mr Glendinning’s criticism of the first development application.
161 Mr Glendinning did not make any detailed assessment of the plans for the first development application. At one stage in his oral evidence he said “I didn’t even see the plans” but he later altered this to “I had a quick look at the plans”. He had read the Council’s report on the first development application and the judgment of the Land and Environment Court. His opinions were largely based on the Council’s report and the Land and Environment Court’s judgment.
162 Earlier in this judgment in assessing the relative credibility of Mr Bourke and Mr Walsh I stated my conclusion, giving reasons, for considering that there are serious doubts about the accuracy of Mr Glendinning’s recollection of events in 2003.
163 Mr Glendinning’s opinion that there was no prospect of having more than 40 single storey dwellings ever approved by Council under SEPP 5 on 607 Old Northern Road is difficult to reconcile with the assistance he gave Mr Bourke in preparing the statement of environmental effects for the second development application, which had 57 units. His comments in exhibit 8 demonstrate that he had looked at the plans for the second development application.

Mr Pickrell

164 Mr Pickrell was the architect who prepared the third development application.
165 In his affidavit Mr Pickrell said that he had formed a view that a SEPP 5 development for 41 dwellings was possible on the property. He had reduced the number of dwellings in his design to 39. In his affidavit Mr Pickrell said that he would never have prepared a development application under SEPP 5 for the property, which contained more than 41 dwellings, and if he had been instructed to prepare a design for 140 or 132 dwellings, he would have had no hesitation in informing the client that there would be no reasonable possibility of the Council approving such a design. The extra dwellings would have impacted on every aspect of the design, including internal amenity issues and external design issues.
166 It was submitted by counsel for the plaintiff that Mr Pickrell’s oral evidence was “not as strong” as his affidavit. In his oral evidence Mr Pickrell said that he had “a sense” of what Council was trying to achieve, keeping buildings low and “a sort of rural feel”.
167 Mr Pickrell said in his oral evidence:-
“I find that Council’s policy is not easy to read in that regard. I think that you tend to head in a direction hoping that you are getting the kind of feelings that they were wanting”.
168 A matter which Mr Pickrell believed weighed with Council was that “the site is quite visible from the street” and “they wanted buildings that were not sitting high in the view from the road”. However, I note that the Land and Environment Court appears to have accepted that the appearance of the proposed development from Old Northern Road was acceptable.
169 In his oral evidence Mr Pickrell gave evidence consistent with the evidence in his affidavit about the prospect of a design for 132 or 140 units being approved by the Council. He said that he had not in fact looked at the design in the first development application and his opinions were based on general considerations which he felt would have applied.
170 When Mr Pickrell was asked whether he had a view as to whether a design for 132 or 140 units would be consented to by the Land and Environment Court, as distinct from the Council, he said “I don’t have a view”.

Mr Blyth

171 Mr Blyth was retained by Mr Bourke on behalf of Mr Walsh. In a report dated 29 July 2002, which became exhibit A in the proceedings, Mr Blyth responded point by point to the matters referred to in the Council’s planning report. On page 10 of his report Mr Blyth concluded:-
“In conclusion we state that we have reviewed the DA submission and drawings and read the officers report in this matter and the recommendation for refusal. In looking at those matters listed for refusal and then by reference to the actual situation we cannot understand and certainly do not agree with the conclusions reached.
We believe in the circumstances of the case and with the benefit of the additional consultants’ reports accompanying this submission, that the proposal requires an urgent comprehensive review by Council.”
172 Mr Blyth made a further report for the present proceedings. On page 13 of his report Mr Blyth said in part:-
“The proposal was in full compliance with the development standards of SEPP No.5 and site analysis was undertaken by the architect. That site analysis revealed that there was a proposal for 130 dwellings immediately abutting, that the subject site was highly disturbed by deep filling from a dam excavation and had been subject to excavation at the rear associated with a former use of the land by Flower Power.
The existence of the very large commercial operation carried on by Flower Power and residential development opposite in Baulkham Hills further gives weight to the conclusion that the nature and character of what was once a rural area is changing.
The architect laid the site out in a logical manner given the site characteristics and sought to give all units a northern orientation apart from those few that necessarily addressed Old Northern Rd.
Whilst there would be some impact caused by the elevated walkways the majority of units were not affected by these features and the design and construction sought to address the impact of such on the ground floor dwellings.
In my opinion the development is one that could and should have received development consent. The proposal complied with the technical requirements of SEPP No.5.”
173 Mr Blyth’s credit was attacked by counsel for Mr Walsh on a number of grounds including:-

(1) He had had a dispute with Mr Walsh over payment of his fees for the Land and Environment Court proceedings. As to this ground, Mr Blyth gave evidence that he had been upset about the time Mr Walsh had taken to pay any of his fees but that he had come to an agreement with Mr Walsh for payment of part of his fees and Mr Blyth had not sought to recover the balance. When giving evidence Mr Blyth did not appear to me to manifest any resentment towards Mr Walsh.

(2) The Land and Environment Court had not accepted part of Mr Blyth’s evidence.

(3) Mr Blyth had been associated in a professional capacity with Mr Bourke. Mr Blyth gave evidence that he had provided town planning services for other SEPP 5 developments in which Mr Bourke was the architect and since January 2003 he could recall “perhaps two jobs” when he had worked with Mr Bourke.

(4) Mr Blyth had not responded to Mr Ingham’s affidavit. I do not consider that there is any substance at all in this criticism. Mr Blyth had stated his views in exhibit A and in his affidavit in these proceedings.

I would not reject Mr Blyth’s evidence on credit grounds.

Mr Young

174 Mr Young, an experienced town planner made a report in January 2007, on instructions from the plaintiff’s solicitors. In his report Mr Young responded to Mr Ingham’s report.
175 On pages 8 and 9 of his report Mr Young considered the question of whether the first development application had any reasonable prospect of being approved.
176 In his report Mr Young said in part:-
“Based on the Councils reasons for refusal I would agree with Mr Ingham that with the building length, bulk and scale as well as the amenity issues that the application was unlikely, to be approved by Council, particularly with the Councils concerns for SEPP5 in rural zones.
Council appeared also to be defending the nature of the Rural zone from SEPP5 developments.
In my experience both as a Council officer and consultant I would not say that an application is certain of approval or rejection at Council or the Land and Environment Court even if it complied with the objective aspects of the relevant controls.
In my view this application complied with the technical aspects of SEPP5.
The Court found it did not comply with the subjective conditions of rural character and internal amenity. These are matters for the subjective consideration of either the Council or the Court.
This first application had in my opinion a chance of success in the Court. Any SEPP 5 must affect rural character to some extent.”

Consideration of Mr Ingham’s report

177 I will now deal in turn with the reasons in Mr Ingham’s report, also having regard to his oral evidence. A number of reasons given in Mr Ingham’s report for his concluding that the proposed development had no reasonable prospect of being approved were not given by either the Council or the Land and Environment Court as grounds for refusing approval. However, I accept a submission by counsel for Mr Walsh that I should take these reasons into account in deciding whether the first development application had any reasonable prospect of being approved. It does remain of some relevance that they were not grounds given by either the Council or the Court.
1. The distance some residents would have to walk from their car parking spaces to their dwelling units.
178 I do not consider that this is a reason for holding that the first development application had no reasonable prospect of being approved.
179 Mr Relf, an expert in accessibility for aged and disabled persons, was retained by Mr Bourke and prepared a report dated 2 August 2002. Mr Relf is himself confined to a wheelchair.
180 There is no criticism in Mr Relf’s report of the distance between car parking spaces and dwelling units. It might be objected that Mr Relf in his report was considering other matters (see the table of contents to his report). However, Mr Relf’s report is a comprehensive document and one of the matters which he discusses in his report was whether the proposed development met the objective set out in clause 9 of SEPP 5 of creating an opportunity for the development of housing designed in a manner particularly suited to both older people who are independent, mobile and active, as well as those who are frailer and other persons with a disability regardless of their age. If there had been a problem in the distance between car parking spaces and dwelling units, one might have expected Mr Relf to have noticed it and reported on it.
181 In oral evidence Mr Relf said that it had been one aspect of his assessment to assess “the trip from the car park to the units”, including for elderly people and people with a disability, and he was satisfied that the proposed development complied with all requirements.
182 This reason given by Mr Ingham was not a ground given by either the Council or the Land and Environment Court.
2. The scale and bulk of the buildings in a rural zone
183 This was a ground relied on by the Council and by the Land and Environment Court and was one of the principal matters relied on by counsel for Mr Walsh.
184 Counsel for the plaintiff submitted that I should conclude that Mr Bourke could reasonably have formed the opinion, which he clearly did, that a development application for 140 units had at least a reasonable prospect of being approved, if not by the Council, then by the Court.
185 It was not in dispute at the hearing that 607 Old Northern Road was land to which SEPP 5 applied.
186 By virtue of cl 10 SEPP 5 operated to allow development for housing for older people or people with a disability “despite the provisions of any other environmental planning instrument”, if the development was carried out in accordance with SEPP 5. See also clauses 3(2)(a) and 5(2).
187 Clause 14 of SEPP 5 provided that the consent authority could not refuse consent on the grounds of (a) building height, if all proposed dwellings were 8 metres or less in height or (b) density and scale, if the density and scale of the buildings when expressed as a floor space ratio was 0.5:1 or less. The proposed development did not exceed either the height limit or the floor space ratio limit. The height limit of 8 metres clearly permitted the construction of two-storey buildings.
188 The Land and Environment Court did not decide this aspect of the case by holding that the proposed development infringed cl 25 or any other part of SEPP 5. The Land and Environment Court held that, notwithstanding the provisions of SEPP 5, it could apply s 79C(1)(b) of the Environmental Planning and Assessment Act and then held that the environment was a rural environment and that the proposed development would “adversely affect the rural character of the surrounding properties to an unacceptable degree” (judgment para 25).
189 As the Land and Environment Court said in its judgment, SEPP 5 would appear to have been mainly drafted for the assessment of housing in residential areas (judgment para 15) and failed even to mention the word “rural”. The Court said that SEPP 5 did not provide any guidance for designing medium density housing in a rural environment.
190 These features of SEPP 5 are unsurprising. SEPP 5 applied only to land zoned for urban purposes or adjoining land zoned for urban purposes.
191 In the present case, I consider that Mr Bourke could reasonably have considered, as he did, that any rural character of the surrounding properties had been substantially affected by the Flower Power development which the Land and Environment Court found to be “densely built and visually prominent”, “hard and dominant” and with “virtually no landscaping” and by the residential development along the other side of Old Northern Road.
192 SEPP 5 commenced on 14 February 1998. There is no reference in the judgment of the Land and Environment Court to any previous decision on a SEPP 5 development application. I infer that there was no previous decision on SEPP 5 to guide Mr Bourke.
193 In February 2003 the Land and Environment Court, subject to certain conditions, allowed an appeal against the refusal of a development application for a SEPP 5 development on the adjoining land 599-601 Old Northern Road. Allowances must be made for differences in the areas and topography of 607 Old Northern Road and 599-601 Old Northern Road. However, it is noteworthy that the design which the Land and Environment Court approved for a SEPP 5 development on 599-601 Old Northern Road included about 130 units and included a row of buildings about 240 metres in length.
3. Solar access for units
194 Mr Ingham considered that solar access for “a large number of units” was poor, because units to the north created shadow for units to the south and walkways providing access to upper level units overshadowed the courtyards and living areas of units to the south.
195 Lack of solar access was a matter relied on by the Council and by the Land and Environment Court.
196 Clause 25(c) of SEPP 5 provided that a proposed development “should, where possible, ensure adequate daylight to the main living areas…of residents and adequate sunlight to substantial areas of private open space”.
197 As noted by Mr Ingham in his report, SEPP 5 said that “AMCORD a National Resource document for Residential Development” could be referred to in establishing adequate solar access. The relevant part of AMCORD formed appendix C to Mr Ingham’s report.
198 At p 164 of AMCORD it is stated:-
“In temperate and cool-temperate climates a substantial proportion of dwellings should be designed to have good access to sunlight to private open space in the cooler months. It is acknowledged that there would be design difficulties if all housing were required to meet this criterion”.
199 At p 165 it is stated that an acceptable solution would be:-
“In temperate and cool-temperate climate zones sunlight to at least 50% (or 35 m2 with minimum dimension 2.5 m whichever is the lesser area) of the principal area of ground level private open space of adjacent properties is not reduced to less than 2 hours between 9am and 3pm on June 21.”
200 At p 165 it is stated that a performance criterion is:-
“Buildings are sited and designed to provide adequate daylight to habitable rooms and in temperate and cooler climates winter sunlight to ground level private open space of new and neighbouring dwellings.”
201 In oral evidence Mr Ingham said that the lower level of “a substantial proportion of dwellings”, as referred to on p 164 of AMCORD would be about 70%. Mr Ingham had not made measurement to determine what proportion of the dwellings in the first development application would have met the AMCORD standard but he doubted whether it was as high as 70%.
202 In a report annexed to his affidavit Mr Blyth said that “there were 98 of the 132 dwellings (74%) with access to northern light and sun unaffected by any of the proposed walkways”.
203 The Land and Environment Court in para 31 of its judgment accepted the evidence of the Council’s expert to the effect that 25% of the dwellings did not comply with the AMCORD guidelines, which would appear to indicate that 75% of the dwellings did comply with the AMCORD guidelines.
204 In its judgment the Land and Environment Court was at pains to say that “it is only in respect of this site that we consider the solar performance of the proposal poor”. The Court said that the site was a large rural area (a “green fields” site) and it would not have been difficult to achieve compliance with the AMCORD guidelines for all, or almost all, of the dwellings in the development.
205 As counsel for the plaintiff pointed out, there is no distinction drawn in SEPP 5 or in the AMCORD guidelines themselves between “green fields” sites and other sites.
206 A further criticism was made by Mr Ingham about a lack of adequate sunlight to the kitchens in the dwellings.
207 This was not a matter relied on by the Council or the Land and Environment Court.
208 The AMCORD guidelines in Appendix D to Mr Ingham’s report indicate a desirable depth of 10-14 metres between external windows of a dwelling and is not directly applicable.
209 Mr Ingham did not make any measurements and did not say in his report how many kitchens were, in his opinion, affected.
210 Mr Ingham estimated that it was about 10-12 metres from the window admitting light to the rear wall of the kitchen, but, in the case of ground floor dwellings, if the balcony of the dwelling above was taken into account, there was a distance of about 14 metres from the source of light to the rear wall of the kitchen.
4. Overshadowing
211 On p 11 of his report in a separate bullet point Mr Ingham made a criticism which appears to be a repetition of the criticism that there was unacceptable overshadowing of outdoor space attached to dwellings.
5. Loss of privacy through persons using upper level walk ways being able to see into the private courtyards and living rooms of other dwellings
212 The relevant AMCORD guidelines were contained in Appendix E to Mr Ingham’s report.
213 In the body of his report Mr Ingham quoted performance criterion P2 in AMCORD and acceptable solutions A2-1.
214 In para 33 of its judgment the Land and Environment Court noted that the applicant intended to provide obscure glass screens on one side of the elevated walkways. The Land and Environment Court appears to have accepted that this step, which, although not the preferred solution, was a solution expressly recognised in AMCORD, might be successful in preventing people looking down from the walkways into courtyards. However, the Court considered that the placing of the glass screens would prevent residents from enjoying the view in a rural area.
215 Accordingly, the ground actually relied on by the Court was not the lack of privacy from persons looking down from the walkways but the blocking of residents’ views.
6. The willow trees
216 I understand Mr Ingham’s criticism to be that construction of the proposed roadway as part of the proposed development would involve the removal of a significant proportion of the overhanging branches of the willow trees.
217 This is not a matter referred to by either the Council or the Land and Environment Court.
218 Mr Ingham did not refer to the report dated January 2002 obtained from a specialist arborist, which states at p 3:
“This group of trees flanks the eastern side of the dam in the central north-western section of the property. Most of the trees appear to be suffering drought stress, exhibiting sparse/thinning canopies. The branching structure on most individuals is also poor and most have a short Safe Useful Life Expectancy. Many of the northern section of the row have been impacted by recent earthmoving activities beneath the canopies. There are two or three trees of this group on the northern side of the dam which are in good health and condition and are worthy of retention and protection.”

Conclusion

219 In my opinion, I should not hold that there was no reasonable prospect of the first development application being approved by the Land and Environment Court. I have found that Mr Walsh appreciated that the first development application might be refused approval by the Council.
220 The first development application complied with all the formal requirements and the development standards of SEPP 5. Whether it complied with applicable performance standards was a matter of largely subjective opinion.
221 In my opinion, there is no substance in the first and sixth criticisms made by Mr Ingham.
222 For reasons which I have already given, I consider that a competent architect could have formed the opinion that a development having the bulk and scale of the proposed development had at least a reasonable prospect of being approved by the Land and Environment Court, if not the Council.
223 The solar access of the dwellings in the development met the AMCORD guidelines referred to in SEPP 5, that a substantial proportion of dwellings should have access to sunlight to their private open space. Neither the Council nor the Court referred to any lack of adequate daylight.
224 The Land and Environment Court did not find any lack of privacy but that the solution adopted by Mr Bourke to overcome a lack of privacy, being a solution referred to in SEPP 5 combined with AMCORD, would interfere with residents’ views.
225 It was submitted by counsel for Mr Walsh that Mr Bourke had failed to respond or to respond adequately to criticisms made in the Council’s planning report for the meeting on 17 July 2002. Counsel referred to the conclusion of the report and some intemperate language used by Mr Bourke.
226 However, the conclusion to the report was merely a conclusion to a submission of more than 50 pages. Mr Bourke did not confine the response to the Council’s report to a submission made by himself. He engaged Mr Blyth, an experienced town planner, who prepared a point by point response to the Council’s report. Mr Bourke also engaged other consultants, including Mr Relf.
227 That Mr Bourke re-evaluated the situation after the Land and Environment Court judgment was handed down does not necessarily show that he ought reasonably to have re-evaluated the situation earlier. After the Land and Environment Court had given its judgment, it was appropriate to undertake a review and re-evaluation, in the light of the Land and Environment Court judgment.
228 I do not consider that it has been shown that the first development application had no reasonable chance of being approved by the Court and, consequently, I do not consider that Mr Bourke should have realised that the first development application had no reasonable prospect of being approved.
229 As regards the second particular of negligence which I identified, that Mr Bourke failed to advise Mr Walsh that the first development application had no reasonable prospect of being approved, Mr Bourke believed that the first development application had at least a reasonable prospect of being approved and I have held that the first development application did have at least a reasonable prospect of being approved. I have found that Mr Walsh said that he wanted as many as 140 units; that Mr Bourke told Mr Walsh about problems with the site and about the antipathy of the Council to SEPP 5 developments; and that Mr Walsh then instructed Mr Bourke to proceed with the preparation of a design with 140 units.
230 In these circumstances I do not consider that Mr Bourke was under any obligation to advise Mr Walsh that a development application with 140 units had no reasonable prospect of succeeding.
231 Mr Walsh gave evidence in his affidavit that, if Mr Bourke had said to him in 2001 that it would not be feasible to have more than 40 single storey dwellings on the property approved under SEPP 5, he would have accepted the advice. I do not consider that I should accept this evidence. If Mr Bourke had given such advice before the Land and Environment Court gave its judgment, I consider it probable that Mr Walsh would have insisted on an application being made for a larger number of dwellings.
232 I conclude there was no breach of the term to use reasonable care and skill.

(2) (ii) Was there a breach of a term to perform the agreed services within a reasonable time.

233 I have already found that the first development application agreement did not contain an express term that the services would be performed within the specific period of 10 weeks but did contain an implied term that the services would be performed within what in all the circumstances was a reasonable time.
234 In his oral submissions counsel for Mr Walsh said that, if I did not find any express term as to a specific time within which the services would be performed, I found an implied term that the services were to be performed within a reasonable time but I did not find any breach of the implied term that the plaintiff would exercise reasonable care and skill in performing the agreed services, then a claim for breach of the implied term as to time would not be pressed.
235 The conditions on which counsel’s concession was based have been fulfilled, nevertheless, I will consider the question of whether there was any breach of the term to perform the agreed services within a reasonable time.
236 A number of witnesses expressed opinions about the amount of time a reasonably competent architect would have required to prepare a development application for a SEPP 5 development.
237 In his affidavit Mr Pickrell said that 10-12 weeks was a reasonable time for a reasonably competent architect to prepare architectural plans for lodgement with a SEPP 5 development application. If obtaining reports from consultants were taken into account, 12-14 weeks would be a reasonable time to finalise the architectural plans and obtain all consultants’ reports. Mr Pickrell said that it had taken him approximately 7 weeks to prepare the final design for the third development application, from first receiving instructions to the lodging of the application.
238 In his affidavit Mr Glendinning said that in his experience a maximum of 12-15 weeks was required to complete the preparation of architectural plans and to obtain consultants’ reports.
239 Mr Ingham was much more guarded in his opinions. At p 17 of his report Mr Ingham said:-
“It is not possible to be definitive about the time which would be necessary to supervise other consultants and prepare the development application plans and the statement of environmental effects to accompany the development application, because some consultants are tardy in the preparation of their components of the work. Notwithstanding this matter I would suggest that a time period of about six months would be appropriate for the preparation of a SEPP 5 development application on the subject lands from the date of commissioning by the client. If the time period were to be significantly longer the reasons for this delay should be very clear to the architect and to the client.”
240 I do not consider that the time taken by Mr Pickrell to prepare the third development application should be taken as a guide to what would have been a reasonable time to prepare the first development application. The third development application was a comparatively simple design with initially 41, and then fewer, units. Mr Pickrell stated in his affidavit that the extra 92 to 100 dwellings in the first development application would have impacted on almost every aspect of the design, including car parking, access, amenities, the visual aspects of the development and the work required to be undertaken by external consultants and would have raised internal amenity issues and external design issues.
241 I note that neither Mr Pickrell nor Mr Glendinning made any detailed examination of the plans for the first development application.
242 In my opinion, I should adopt the cautious opinion expressed by Mr Ingham and hold that a period of about six months would not exceed a reasonable time for the preparation and lodgement of the first development application.
243 There remains the question of when a reasonable time for the performing of the services should be regarded as having commenced.
244 It was submitted by counsel for Mr Walsh that whatever was a reasonable period of time for performing the services would have commenced to run in April 2001, when Mr Bourke and Mr Walsh made their agreement.
245 It is true that in April 2001 Mr Bourke commenced making some preliminary concept plans. However, in my opinion, a reasonable time for performing the services should not be regarded as having commenced, until after Mr Walsh had entered into the option agreement with the Moussas on 31 July 2001 and a report of a survey of the property had been obtained in August 2001.
246 If August 2001 is taken as the commencement date, then the preparation of the architectural plans and the obtaining of consultant’s reports and the lodging of the development application occurred within approximately six months. I conclude that there was no breach of the implied term that the services should be performed within a reasonable time.

(2) (iii) Was there a breach of any other term

247 Counsel for Mr Walsh did not press any submission that there was a breach of any other term of the first development application agreement.

(3) Was there a duty in tort, independently of the contract, to use reasonable care and skill and, if so, was the duty breached

248 There was such a duty but for reasons I have already given in answering issue 2(i) it was not breached.

Issues as to the second development application agreement

249 Evidence about the formation of the second development application agreement was given by Mr Bourke, particularly in para 51 of his first affidavit, and by Mr Walsh, particularly in para 113 of his affidavit.
250 In para 51 of his first affidavit Mr Bourke, after referring in para 50 to the appeal to the Land and Environment Court being dismissed, said that Mr Walsh told him to prepare a new scheme with fewer units and to introduce elements of a rural character into the design. Mr Walsh provided a copy of a SEPP 5 proposal on Mr Nolan’s land and suggested that some similar features be incorporated in a new design for a SEPP 5 development on 607 Old Northern Road. Mr Bourke said that it would be necessary to reduce the scale of the buildings, to create open spaces and to avoid overshadowing and privacy issues.
251 Mr Bourke said that a part of the conversation was as follows:-
“He (Mr Walsh) said how many units do you think we can get?
I said: I think we can get about 70 units.
He said: I thought we could get more than that but we don’t want any problems justifying the design. So work it out and do some plans so we can discuss the matter further”.
252 Mr Bourke further said that Mr Walsh had said that Mr Nolan had got his design approved with 134 houses on the 10 acres of 599-601 Old Northern Road Glenhaven. Mr Walsh said that, on that basis, he should be able to get at least 70 houses on 607 Old Northern Road.
253 Mr Walsh said:-
“The Council is always going to object to any design we propose — even with two houses they would object, because of the Mayor”.
254 Another part of the conversation was as follows:-
“He (Mr Walsh) said What will you charge to do this new design.
I said I will work on the same basis that we previously agreed, $2,600 per unit including the planning report and co-coordinating consultants.
He said Ray’s architect is cheaper. Why will it cost so much, a lot of work has been done
I said We have to start again and do a new site analysis and work right through as if a new project and write another report-there is a lot of work. Ray’s architect did not do the planning report and had a landscape architect do the landscape design. We are doing the whole lot plus co-coordinating the consultants. We are also going to be pressed for time and will need to have at least four staff working intensely on the project. We can get on to it straight away and we know what has to be done.
He said Ok, I want you to proceed as quickly as possible. The option has run out, it is going to cost BIG money to hold the site. We need to get a DA as quickly as possible.”
255 Part of para 113 of Mr Walsh’s affidavit was as follows:-
“On 10 December 2002, after the judgment in the proceedings was handed down, John Bourke and I had a cup of coffee outside the Land and Environment Court in Macquarie Street, Sydney. We had a terse conversation in words to the effect:
Walsh: “John, this is a disaster. We’ve gone down on everything to do with architecture. My suggestion to you was that we get a Town Planner to oversee your work months ago. You told me that you were 60 years of age and an expert and basically to mind my own business and sort out the agricultural and other issues and you would look after the architectural issues”.
Bourke: “It’s disappointing. I think we only lost because of the solar access”.
Walsh: “John, that’s not true. I’m not going to waste my time talking to you. I’ve put a call in to Ray Nolan and he strongly suggested to me that I go straight to his architect, Scott Carver and get him to design a proper SEPP 5 design that will be approved by the Council”.
Bourke: “Look I don’t want you going to another architect. This is my problem. I will fix it and make it so that, if the Council won’t approve it, a Court will. There will be no charge whatsoever to you”.
Walsh: “That sounds fine but there is one big issue. It has to be single storey design and it cannot be your standard design that you use for everybody. It must comply. I want Ian Glendinning overseeing the amendments”.
256 In further paragraphs of his affidavit Mr Walsh said in para 115 that Mr Bourke promised to have the new plans ready by 15 January 2003, in para 116 that in a telephone conversation in early January 2003 Mr Bourke had said “your single storey design that you’re suggesting will not work. I’ve left the same design, I just pulled out every fourth unit and created gaps in the building.” Mr Walsh told Mr Bourke to go back to a single storey design.
257 In para 117 of his affidavit Mr Walsh said that, when Mr Walsh returned to Australia on 25 January 2003, he viewed the new drawings prepared by Mr Bourke “to my observation, they were almost identical to the original architectural drawings submitted with the first DA, save that a number of units had been pulled out”.
258 In his affidavit in reply Mr Bourke disputed Mr Walsh’s evidence in paras 113, 115, 116 and 117 of his affidavit.
259 Earlier in this judgment, in assessing the relative credibility of Mr Bourke and Mr Walsh, I referred to their evidence and Mr Glendinning’s evidence about the subsequent meetings of Mr Bourke and Mr Walsh with Mr Glendinning.
260 There is one clear error in Mr Bourke’s recollection of his conversation with Mr Walsh after the appeal to the Land and Environment Court was dismissed. The appeal by Mr Nolan (or more properly by his company M&R Civil Pty Ltd) against the refusal by Hornsby Shire Council of a SEPP 5 development application on 599-601 Old Northern Road Glenhaven was not heard in the Land and Environment Court until late January 2003 and the Land and Environment Court did not deliver its judgment until 11 February 2003. Accordingly, Mr Walsh could not have said in a conversation taking place on or soon after 10 December 2002 that Mr Nolan’s application had been approved.
261 For his part, Mr Walsh in his recollection of the conversation with Mr Bourke himself seems to imply that by the time of the conversation there had already been a successful outcome to Mr Nolan’s application, thereby making a similar error to Mr Bourke’s.
262 I consider it likely that in a conversation in December 2002 some reference was made by Mr Walsh to the application by Mr Nolan, with whom Mr Walsh was friendly.
263 It was submitted by counsel for Mr Walsh that I should prefer Mr Walsh’s account of the conversation with Mr Bourke. It was submitted that Mr Walsh would have been upset and disappointed, if not outright angry, as a result of the decision of the Land and Environment Court and it was improbable that Mr Walsh in such an emotional state would have agreed to retain Mr Bourke again on the basis of Mr Bourke’s being remunerated at the rate of $2600 per unit. It was far more probable, it was contended, that Mr Bourke, conscious of the criticisms made by the Land and Environment Court of his design for the first development application and concerned that Mr Walsh might retain another architect, would have agreed to attempt to rectify the situation by preparing a new design, without any further charge to Mr Walsh.
264 In my opinion, there are a number of improbabilities in Mr Walsh’s evidence about the conversation with Mr Bourke. It is highly improbable that Mr Bourke could have said that the appeal had been lost “only because of the solar access”.
265 It is improbable that Mr Bourke said he would have new plans ready by the latest on 15 January 2003. Mr Walsh was away in Ireland from before Christmas 2002 to 25 January 2003 and I would infer that his travel arrangements were known to Mr Bourke.
266 It is improbable that it was Mr Walsh who stipulated that the buildings in the new design would be of one storey only and that Mr Bourke later told Mr Walsh that “your single storey design that you’re suggesting will not work”. I am satisfied that, after the Land and Environment Court had given its decision, Mr Bourke accepted, in the light of the decision, that buildings in a new design would have to be of one storey only.
267 It is improbable that Mr Bourke would have said of his new design, “I’ve just pulled out every fourth unit and created gaps in the building”. There is much evidence, some of which I have already referred to, that the design for the second development application was quite different from the design for the first development application.
268 I have decided that I should generally accept Mr Bourke’s evidence of the conversation. I base this decision on what I consider to be improbabilities in Mr Walsh’s evidence, on my assessment of evidence about the meetings with Mr Glendinning which I discussed earlier in this judgment, my general assessment of the comparative credibility of Mr Bourke and Mr Walsh and evidence by Mr Bullen about the quantity of work involved in the preparation of the second development application.
269 I will now answer issues (4).

(4) (i) Who were the parties

270 There was no dispute that the party on one side was Oaktwig Pty Ltd.
271 By the time the second development application agreement was made the first defendant Glenhaven Property Holdings Pty Ltd had been incorporated, so that no issue of whether there was a pre-incorporation or pre-registration contract arises in relation to the second development application agreement.
272 It was submitted by counsel for the defendants that I should find that the second development application agreement was made by Oaktwig Pty Ltd with Glenhaven Property Holdings Pty Ltd.
273 In my opinion, there being no evidence of its being expressly agreed that Glenhaven Property Holdings Pty Ltd and not Mr Walsh should be the client, I should hold that Mr Walsh remained the client or at least one of the clients.

(4) (ii) When was it entered into

274 On or shortly after 10 December 2003.

(4) (iii) Its scope

275 The scope was the same as the scope of the first development application agreement. Mr Bourke agreed to perform architectural services, planning and landscape design services, coordinate consultants and prepare a statement of environmental effects and advise Mr Walsh about the requirements of SEPP 5.

(4) (iv) Its terms as to remuneration

276 Its terms as to remuneration was the same as the terms in the first development application agreement. It was not a term of the second development application agreement that remuneration was to be conditional upon the Council approving the development application and the property being sold.

(4) (v) Its other terms

277 The second development application agreement contained implied terms that the services would be performed with reasonable care and skill and that the services would be performed within whatever was a reasonable time in all the circumstances. There was no express term that the services would be performed within a specified period.

(4) (vi) Was it an entire contract

278 The agreement was an entire contract. The plaintiff completed performing the services it had agreed to perform.

(5) (i) Was there a breach of the term to use reasonable care and skill

279 It was submitted by counsel for the defendants that there was a breach of the term to use reasonable care and skill, because the second development application had no reasonable prospect of being approved and Mr Bourke did not advise Mr Walsh that it had no reasonable prospect of being approved.
280 As in the case of the first development application, I consider that it was appreciated by both Mr Bourke and Mr Walsh that the second development application might still be refused by the Council and that it might be necessary to go to the Land and Environment Court to obtain an approval. Therefore, in order to establish negligence, it would be necessary to show that the second development application had no reasonable prospect of being approved by the Land and Environment Court.
281 A number of expert witnesses gave evidence relevant to this issue.
282 In his affidavit Mr Glendinning said that the second development application had no reasonable prospect of obtaining a development consent, because the layout remained too dense and bulky, the design still did not fit into the rural character of the area and there remained problems with privacy and solar access. In Mr Glendinning’s opinion, as stated in his affidavit, all Mr Bourke had done was to delete a few dwellings and increase the boundary setbacks.
283 As previously stated by me, I do not accept that there were only minor changes between the first development application and the second development application. Exhibits 8 and 11 tend to militate against a finding that in February and March 2003 Mr Glendinning had such pessimistic views about the prospects of the second development application succeeding. As I have already noted, Mr Glendinning in his oral evidence himself substantially retreated from what he had said in his affidavit, saying that the second development application was “substantially different” and “substantially better” than the first development application.
284 In his report Mr Ingham at pp 17-18 said:-
“(a) Did the second development application have any reasonable prospect of being approved given that it sought permission to erect 57 dwellings or in relation to the design generally?
The number of 57 dwellings in the second development application was not, in my opinion, a matter which would have caused a refusal of the application simply because of the density of the development. The issue of whether the second development application would have been approved or not related more to design issues which were problematic. It is my opinion that the second development application as lodged with the Council had little prospect of being approved. It is my opinion that the number of 57 units could have been approved subject to appropriate design and subject to them being able to be located on the site in appropriate manner.
As previously advised in this report the problem with the second development application was not the number of units but rather the distance of travel for a resident from the car space up through a lift and to the front door of the unit. In my opinion this would have been a sufficient cause for refusal of the second development application. However this issue could probably have been overcome by a revision of the development application prior to any hearing before the Court or subsequent to any advice relating to issues from the Council. The provision of more accessible lifts would have overcome this problem and under those circumstances, with the distance of travel being reduced for residents, the application could have been reasonably approved. The only other issue which applied in relation to the second development application was the foliage of the willow trees. As previously stated, these trees are not shown to their full size in the application plans and a considerable amount of foliage would have been required to be removed. This could have brought about the relocation of the access road and the removal of one unit (Villa 24) from the development.
In any event, I am not able to state with any degree of certainty that the second development application would not have been approved by the Court at appeal. The density of the development was not unreasonable and the single storey form of the development together with a much reduced scale of building brought about a significant improvement on the first development application. I would not have supported the second development application. However, with some changes to the access arrangements and to the driveway I could have supported the second development application.”
285 I note that Mr Ingham considered the second development application a significant improvement on the first development application and that, although he would not have supported the second development application, he could have supported it, if there had been some changes to it, and he could not say with any degree of certainty that the second development application would not have been approved by the Land and Environment Court on an appeal.
286 The two reasons given by Mr Ingham for his opinion that the second development application had little prospect of being approved by the Council were the distance some residents would have to travel from their car parking spaces to their units and the foliage of the willow trees which could have affected the location of the access road or driveway.
287 These reasons were the same as the first and sixth reasons given by Mr Ingham for his opinion that the first development application had no reasonable prospect of being approved. In dealing with the first development application I have concluded that, when Mr Relf’s evidence and the report by the arborist are taken into account, little weight should be given to these reasons. Consequently, the basis for Mr Ingham’s opinion that the second development application had little prospect of being approved by the Council, is removed.
288 In his report Mr Young said that he had not had the opportunity to study the second development application in detail and had seen only the plans attached to Mr Ingham’s report. On the basis of Mr Ingham’s report Mr Young concluded:-
“It is my view that the second application had a strong chance of success at Court with access issues amended as outlined by Mr Ingham and appears to have addressed the issues raised in the Commissioners’ LEC decision”.
289 Mr Young gave oral evidence that, after making his report he had looked at the plans for the second development application. After looking at the plans he was of the opinion that the second development application had little chance of being approved by the Council (as distinct from the Land and Environment Court) but this opinion was not based on the merits of the second application but “my reading of the Council resolutions at that particular time was that Council was trying to test the waters over SEPP 5 developments in rural areas from a political point of view”.
290 In his report for these proceedings Mr Blyth expressed the opinion that the second development application was a proposal that should have received consent.
291 I do not consider that any inference can be drawn from the fact that the second development application was ultimately refused by the Council. It was the third development application, and not the second development application, which was actively pursued, after both applications had been lodged on the same day. An appeal was brought against the deemed refusal of the third development application and it was approved by the Council in October 2003. The second development application was refused by the Council in February 2004. It was never adjudicated on by the Land and Environment Court.
292 I conclude that the defendants have not established that the second development application had no reasonable prospect of being approved by the Land and Environment Court and, accordingly, there was no obligation to advise Mr Walsh that the second development application had no reasonable prospect of being approved by the Court. I find that there was no breach of the term to use reasonable care and skill.

(5) (ii) Was there a breach of the term to perform the agreed services within a reasonable time

293 There was no breach of this term.

(5) (iii) Was there a breach of any other term

294 No breach of any other term has been shown.

(6) As to the second development application:—
Was there a duty in tort independently of contract to use reasonable care and skill and, if so, whether the duty was breached

295 There was such a duty in tort but it was not breached.

(7) As to the claim under the Fair Trading Act:-

296 The claim under the Fair Trading Act was brought by Glenhaven and Mr Walsh against Oaktwig Pty Ltd and also Mr Bourke personally.
297 The claim under the Fair Trading Act, as ultimately put, was limited to the first development application and can be summarised as follows:-

Mr Bourke on behalf of himself and the plaintiff made a number of representations. These representations were relied on by Glenhaven and Mr Walsh, or at any rate Mr Walsh. The representations were with respect to future matters (Fair Trading Act s 41(1)). The cross-defendants did not have reasonable grounds for making the representations, the onus of establishing reasonable grounds being on the cross-defendants (Fair Trading Act s 41(2)). Consequently, the representations were misleading (Fair Trading Act s 41(1)) and the cross-defendants breached the prohibition in s 42 of the Act against engaging in conduct that is misleading and the cross-claimants were entitled to damages under Pt 6 of the Act, especially s 68.

298 I will now consider the parts of issue 7.

(i) What representations were made by the cross-defendants to the cross-claimants

299 The alleged representations which were ultimately pressed by the cross-claimants were the representations pleaded in parts of para 5 of the cross-claim, that:-

(e) the development application would be prepared and lodged within 10 weeks

(f) the development application would be prepared within a reasonable time

(g) SEPP 5 requirements would permit up to 140 double storey dwellings on the Glenhaven property

300 As to alleged representation (e), I have already concluded that I should not find that it was a term of the first development application agreement that the services would be provided within 10 weeks. For similar reasons, I do not accept that Mr Bourke made a representation to Mr Walsh that he could do the plans in about 10 weeks.
301 As to alleged representation (f), Mr Bourke did not make any express representation to Mr Walsh that the services would be performed within a reasonable time. However, I find that such a representation was made impliedly by Mr Bourke to Mr Walsh. Mr Bourke held himself out as being a competent architect, with previous experience in preparing SEPP 5 developments.
302 As to alleged representation (g):-
303 I note that none of the dwellings were to be double storey dwellings. The first development application was for 140 single storey dwellings in double storey buildings.
304 For similar reasons to those I gave for holding that it was not a term of the first development application agreement that the first development application comprising 140 units would be approved, I hold that no representation was made that a development application for up to 140 units would be approved by either the Council or the Court. Both Mr Bourke and Mr Walsh appreciated that a development application for up to 140 units would not necessarily be approved.
305 The issue with regard to alleged representation (g) is whether a representation, that a development application with as many as 140 units had a reasonable prospect of being approved by the Court, if not the Council, was made.
306 Mr Bourke disputed having made such a representation. However, Mr Bourke accepted when giving oral evidence that, if he had been of the opinion that a development with 140 units was not “feasible”, he would have been obliged to so advise his client Mr Walsh and he should not have proceeded to prepare a development application with 140 units. I consider that by not advising Mr Walsh that a development with 140 units was not “feasible” and by proceeding to prepare a development application with 140 units, Mr Bourke did impliedly represent to his client that a development application with 140 units, or at least a development application with only a few units taken away from 140 units, had at least a reasonable prospect of being approved by the Court, if not the Council.

(ii) Were such representations as were made relied on by the cross-claimants

307 I consider that Mr Walsh, and therefore Glenhaven as well, relied on the representations which I have found were made.
308 It is true that I have found that the idea of having as many as 140 units originated with Mr Walsh and was strongly pressed by Mr Walsh. Nevertheless, I consider that Mr Walsh, as someone who had never previously done a SEPP 5 development, should be regarded as having relied, at least to some extent, on what he had been told (and not told) by Mr Bourke, after he communicated to Mr Bourke that he wanted 140 units, as indicating that a development application with as many as 140 units, or with only a few units taken out from 140 units, had a reasonable prospect of being approved.

(iii) Were such representations as were made misleading or deceptive or likely to mislead or deceive

309 As to representation (f), I find that Mr Bourke, as an experienced architect with previous experience in SEPP 5 developments, had reasonable grounds for representing, impliedly, that he would be able to perform the agreed services within a reasonable time.
310 As to representation (g), for reasons similar to those I gave for holding that there was no breach of the term to use reasonable care and skill, I hold that Mr Bourke had reasonable grounds for making representation (g). These grounds included the terms of some of the provisions of SEPP 5 including clauses 3, 4, 5, 10 and 14; the effect on any rural character of the property and surrounding properties of the existing Flower Power development and the residential development on the other side of Old Northern Road; and the AMCORD guidelines referred to in SEPP 5.
311 I conclude that such representations as were made were not misleading and accordingly the claim under the Fair Trading Act fails.

(8) What damages would the cross-claimants be entitled to for breach of contract, in tort or under the Fair Trading Act

312 I have held that the cross-claimants Mr Walsh and Glenhaven are not entitled to succeed on any of their causes of action for breach of contract, in tort and under the Fair Trading Act. Accordingly, it is not necessary for me to consider what amount of damages the cross-claimants would have been entitled to, if they had succeeded on one or more of their causes of action. I will, however, deal, fairly succinctly, with the question of damages.
313 Relevant to the question of what damages the cross-claimants would have been entitled to is what actually happened. As stated earlier in this judgment, Glenhaven sold the property on 27 February 2003 to Mr Maxwell and his wife for a price of $3 million. On the same day Glenhaven entered into the deed of agreement with Mr and Mrs Maxwell, which provided inter alia that if either the second development application or the third development application was approved Mr and Mrs Maxwell would re-sell the property and on completion of the re-sale pay to Glenhaven half of the amount by which the sale price on the re-sale exceeded $3 million. The third development application was approved in October 2003. In about October 2005 the property with the development approval was sold by Mr and Mrs Maxwell for a price of $5,840,000. Glenhaven, in addition to the amount of $3 million it had received in February 2003, received half of the amount by which the sale price exceeded $3 million (this amount was variously stated as $1,376,500 and $1,376,200. I will adopt $1,376,200).
314 Accordingly, Glenhaven made a profit out of the total transaction of nearly $2 million, consisting of a difference between the amounts it received ($3 million plus $1,376,200) and its total costs (the cost of purchasing the property and other expenses) of approximately $2,440,000. A major reason for the profit was the appreciation in property values which occurred before the property was re-sold in 2005.
315 The cross-claimants claimed damages for breach of contract, in tort and under the Fair Trading Act. Counsel for the cross-claimants informed the Court in oral submissions that he relied principally on the claim for damages for breach of contract. The amount of any damages which could be awarded in tort or under the Fair Trading Act would be no higher, and arguably lower, than the amount of damages which could be awarded for breach of contract.
316 As damages for breach of contract the cross-claimants claimed damages for reliance losses and expectation losses. Counsel referred to Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 11-12.
317 A summary of the amounts claimed as reliance losses was set out in a document which is under tab 67 in exhibit 1 at the hearing. The amounts in the summary totalled $376,980.01. Copies of the invoices for the amounts claimed were collected under tab 68 in exhibit 1.
318 In the document under tab 67 a total amount of $114,737 was claimed as being costs charged by Hannafords Lawyers. However, counsel for the cross-claimants acknowledged that the invoices under tab 68 came to a lesser total. Counsel for the cross-defendants said that an even lesser amount was actually paid. I would have allowed as damages only the actual amounts paid.
319 I also disallow an amount claimed for the preparation of a model being $5,940.
320 It seems to me that, even if there had been a breach or breaches of contract, some benefit would have been gained by the cross-claimants from some of the expenditure, for example fees paid to a firm of surveyors for a survey of the property.
321 The claim for damages for expectation losses was put in three alternative ways, with descending amounts of money claimed, as follows:-

(1) damages were claimed in an amount of $1,376,200, being equal to the difference between the net sale price of the property in October 2005 and the total amounts received by Glenhaven consisting of $3 million and $1,376,200, the difference being the amount received by Mr and Mrs Maxwell, on the basis that, but for the breach or breaches of contract, Glenhaven would have sold the property in October 2005 as the sole owner and would have received the whole of the net sale price.

322 In my opinion, this method of assessing damages would be clearly inappropriate. Mr Walsh had borrowed the full amount of the purchase price and his holding costs were heavy. It is highly improbable that, if Glenhaven had remained the sole owner of the property, it would have continued to hold the property until October 2005, when property values had appreciated. Glenhaven would have sold the property much earlier than 2005, at a lower price.

(2) damages were claimed by a method of assessing damages, which involve assuming that Glenhaven would have remained the sole owner of the property, making a finding as to when a first development application ought to have been approved, assuming that the property would have been sold forthwith on the development application being approved, assessing the market value of the property at that date with an approval for a SEPP 5 development for 38 dwellings and deducting the purchase price for the property $1,950,000, other costs of purchasing the property, the reasonable costs of obtaining the development approval, the costs of selling the property and the amounts actually received by Glenhaven of $3 million and $1,376,200.

323 In the cross-claimants’ written submissions a range of dates at three monthly intervals between 30 June 2002 and 30 June 2003 were selected as being possible dates for the development aproval and sale, with a calculation of the damages for each date.
324 The cross-claimants’ preferred date was 30 June 2002. This date was sought to be justified, by reference to when Mr Bourke and Mr Walsh had made their agreement and to the period of nine months which had elapsed between Mr Pickrell first receiving instructions to prepare the third development application and the granting of approval to the third development application and allowing a couple of extra months for contingencies.
325 It is apparent that critical to this method of assessing damages would be the value attributed to the property with the development approval, at the selected date.
326 The valuer retained by the cross-claimants, Mr Zantiotis, valued the property with a development approval, as at 30 June 2002, at $7,200,000. If the value of $7,200,000 is adopted, then the amount of damages calculated in accordance with the method I have outlined would be approximately $587,252.
327 The valuer retained by the cross-defendants, Mr Bridger, valued the property with a development approval at June 2002 at $3,800,000. If this value was adopted, then no damages would be payable.
328 Damages would be payable under this method of calculating damages, only if the value of the property with a development approval was not less then a figure exceeding 6.6 million, that is a figure fairly close to Mr Zantiotis’s valuation and much higher than Mr Bridger’s valuation.
329 At the hearing there was a considerable amount of cross-examination of both valuers and some criticisms can validly be made of both valuers. I have, however, concluded that Mr Zantiotis’s valuation was too high and too high by an amount which would prevent any damages being awarded under this method of assessing damages.
330 The sales used by Mr Zantiotis as comparable sales or at least sales providing some assistance were all sales of properties in the Kuring-gai Municipality, in which, it was common ground, property values are generally much higher than in the Hornsby Shire. Mr Zantiotis did apply discounts to the figures for sales of properties in the Kuring-gai Municipality but the amounts of the discounts appeared to me to be fairly arbitrary.
331 Mr Zantiotis attempted to check his valuation by doing a hypothetical development valuation of the property. However, there were a number of dubious features in his use of this alternative method, including the amount of the allowance made for profit and risk, the amount allowed for building costs, the omission of certain items and the sales figures assumed.
332 I do not consider that I should give any weight to some evidence given by Mr Maxwell of a telephone offer to buy the property at a certain price which Mr Maxwell said had been made in 2003.

(3) damages were claimed in the amount of $90,748.66. This method of assessing damages depended on comparing the profit made by Glenhaven on the actual sale to Mr and Mrs Maxwell in February 2003, said to be $826,452.28, with the profit which would have been made in February 2003 on a notional sale of the property at what Mr Bridger considered was the value of the property in February 2003 ($4,200,000), said to be $2,008,452.28, being a difference of $1,182,000. Interest was then calculated on the principal sum of $1,182,000 at the rate of 9% per annum from 27 February 2003 to 31 October 2005, producing an amount of $284,748.66.

333 Credit was given for the amount of $1,376,000 or thereabouts received by Glenhaven in October 2005, by applying it first to extinguish the loss of profit of $1,182,000 and then applying the balance so as to reduce the interest debt from $284,748.66 to $90,748.66.
334 I do not consider that damages should be assessed in this manner. Mr Walsh made a decision in February 2003, not to simply sell the property for whatever Glenhaven could get for it, but to enter into the complex arrangement with Mr and Mrs Maxwell, which, apart from relieving the financial pressure on him, offered the prospect of considerable, if uncertain, profits.

The amount of the plaintiff’s claim

335 Copies of invoices rendered by the plaintiff appear at tab 12 in exhibit 1. Disregarding the invoices and parts of invoices which I was informed during the hearing were not pressed by the plaintiff, I understand the plaintiff’s claim to be made up as follows:-
Invoices at p 34 of tab 12 402,855.42
Invoice at p 35 of tab 12 2,076.00
Invoice at p 38 of tab 12 1,768.58
Part of invoice at p 39 of tab 12, being a charge for 7,006.80 plus GST thereon 777.48
Part of invoice at p 40 of tab 12, being a charge for 5,077.60 plus GST thereon 635.36
Invoice at p 41 of tab 12 166,472.68

336 Credit would have to be given for the amount of $50,000 paid in May 2002. I have not attempted to calculate interest on the amounts claimed.
337 I have decided that there should be a verdict in favour of the plaintiff on the claim and a verdict in favour of the cross-defendants on the cross-claim. I will not at this stage enter any verdicts or make any orders.

338 I would ask the parties to seek to agree on the amount of the verdict which should be entered, consistently with my judgment, in favour of the plaintiff. If the parties are unable to agree on what verdicts and orders should be made to give effect to my judgment, the matter will have to come back before me. 

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