New South Wales Supreme Court CITATION : Dansar Pty Ltd v Pagotto [2008] NSWSC 112 HEARING DATE(S) : 12 and 13 February 2008 JUDGMENT DATE : 20 February 2008 JUDGMENT OF : Harrison J DECISION : 1. Verdict for the plaintiffs in such sum as is agreed by counsel for the parties having regard to the terms of par [97] of these reasons for judgment. 2. Order the defendants to pay the plaintiffs costs. CATCHWORDS : NEGLIGENCE - solicitor and client - deemed refusal of plaintiffs' application to local authority to develop land - appeal against refusal to Land and Environment Court - clause 45 of Byron Shire LEP - Council required to be satisfied about prior adequate arrangements for provision of sewerage services to the land - condition precedent to approval - appeal flawed from the outset - plaintiffs never advised of that fact by defendants - further appeal pursuant to s 56A of the Environmental Planning and Assessment Act 1979 against Commissioner's decision - appeal limited the questions of law - decision of Commissioner a question of fact - second appeal flawed from the outset - plaintiffs never advised of that fact by defendants - application to Supreme Court for prerogative relief in respect of Commissioner's original decision - no jurisdiction - proceedings flawed from the outset - plaintiffs never advised of that fact by the defendants - reliance by defendants upon defence of advocates immunity - no circumstances found for immunity to apply - damages -plaintiffs entitled to recover wasted legal costs and expenses of futile proceedings LEGISLATION CITED : Environmental Planning and Assessment Act 1979 CATEGORY : Principal judgment Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 Codlea v Byron Shire Council [1999] NSWCA 399; 105 LGERA 370 D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 CASES CITED : Donellan v Watson (1990) 21 NSWLR 335 Giannarelli v Wraith [1088] HCA 52; (1988) 165 CLR 543 Ian McKay v Byron Shire Council [2000] NSWLEC 29 Symonds v Vass [2007] NSWSC 1274 Vaughan v Byron Shire Council [No 2] [2002] NSWLEC 158 Dansar Pty Ltd (First Plaintiff) PARTIES : John Bernard Vaughan (Second Plaintiff) Antonio B Pagotto, John L Walker, Geoffrey R Manion and David R Wolfe, trading as Walters Solicitors (Defendants) FILE NUMBER(S) : SC 20177 of 2005 COUNSEL : D L Davies SC (Plaintiffs) D L Ronzani (Defendants) SOLICITORS : Norman Waterhouse (Plaintiffs) Ebsworth & Ebsworth (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROGRESSIVE LIST HARRISON J 20 February 2008 20177 of 2005 Dansar Pty Ltd and John Bernard Vaughan v Antonio B Pagotto, John L Walker, Geoffrey R Manion and David R Wolfe, trading as Walters Solicitors JUDGMENT Introduction 1 On 19 February 2000 Dansar Pty Ltd ("the first plaintiff") purchased a property at 7 Cavvanbah Street, Byron Bay ("the property"). On 6 February 2001 the first plaintiff lodged a development application in respect of the property with the Byron Shire Council ("the Council"). The property was at all relevant times subject to the Byron Local Environmental Plan 1988 ("the Byron LEP") and in particular cl 45 which was in the following terms: "The Council shall not consent to the carrying out of development on any land to which this plan applies unless it is satisfied that prior adequate arrangements have been made for the provision of sewerage, drainage and water services to the land." 2 The Council did not determine the first plaintiff's development application within 40 days of its lodgement and in accordance with the terms of s 82 of the Environmental Planning and Assessment Act 1979 ("the Act") it was deemed to have been refused. On 12 September 2001 the plaintiffs retained the defendants as their solicitors to provide legal advice in relation to the development application and to appear for them in proceedings concerning it and the appeal against its refusal. Except to the extent referred to below, the terms of the defendants' retainer are not relevantly in dispute. 3 In due course, the defendants acted in three separate sets of proceedings which had been commenced by or on behalf of the plaintiffs or one of them arising out of the deemed refusal by the Council of the plaintiffs' development application in respect of the property. They were as follows: 3.1 Proceedings in the Land and Environment Court between Mr Vaughan as applicant and the Council as respondent that commenced before Commissioner Hoffman on 11 March 2002 ("the first proceedings"). 3.2 An appeal against the decision of Commissioner Hoffman in the first proceedings pursuant to s 56A(1) of the Act that was determined by Lloyd J on 27 September 2002 ("the second proceedings"). 3.3 Proceedings in the Administrative Law Division of this Court seeking declaratory and other relief that would have the effect of setting aside or quashing the decision of Commissioner Hoffman in the first proceedings ("the third proceedings"). 4 John Bernard Vaughan is the second plaintiff. Together with his wife Anne Vaughan, he was one of two directors of the first plaintiff. He had been involved in commercial office property development for 30 years. The first plaintiff was a company incorporated for the purpose of developing the property. Mr Vaughan said he knew that in accordance with cl 45 of the Byron LEP the Council was not to grant development consent to a development unless prior adequate arrangements had been made for the provision of sewerage services to the land the subject of the application. He said he was not aware, if there were a difference of opinion as to whether proposals as to sewerage services amounted to "adequate arrangements" between a developer and the Council, that that difference of opinion could not be resolved in proceedings in the Land and Environment Court. Mr Vaughan said that he did not become aware that cl 45 operated as a condition precedent to the granting of development consent until he received advice from separate lawyers in February and March 2003. 5 The plaintiffs allege that they were negligently advised by the defendants in relation to all of these proceedings as the result of which they incurred legal costs in each case that were unnecessary and valueless. The plaintiffs contended that they would not have incurred any of these costs if they had been properly and adequately advised by the defendants of the correct legal position. Background 6 Before the first plaintiff purchased the property, Mr Vaughan made enquiries to determine the likelihood of obtaining a successful development application from the Council for his proposed development. One of his enquiries concerned the issue of whether there was adequate sewerage capacity for the site given that the property was within the catchment area for the West Byron Shire Treatment Plant ("the WBSTP"). Mr Vaughan said that he was aware from having lived in the Byron Bay area for some years, and having some knowledge of planning issues within the Byron Shire, that sewerage capacity for proposed residential developments in the WBSTP was an issue when obtaining development consents. He said he knew that the Council had issued a moratorium in respect of sewerage capacity for medium density residential developments from 1997 onwards due to limited and insufficient spare capacity at the WBSTP to take any load more than its then current and already committed loads for new developments. 7 Without the benefit of any advice from the defendants Mr Vaughan believed that while sewerage capacity was an issue to be resolved, it was not an insuperable impediment to development of the property. 8 In September 2000 the first plaintiff retained town planners GeoLINK Pty Ltd ("GeoLINK") to prepare its development application. On 6 February 2001 GeoLINK lodged the first plaintiff's development application with the Council for 18 residential units/tourist facilities on the property. GeoLINK continued to correspond with the Council, and to perform certain other tasks, on behalf of the plaintiffs with respect to the development application from time to time thereafter. 9 On 28 February 2001 the Council's General Manager notified the Council in a memorandum of certain matters, which included the following: "In respect to the West Byron STP, the spare capacity is calculated at being 92.75 ETs. Applications for development in the West Byron STP catchment total 95.42 ET's with 32.14 ETs being approved in various development consents. Thus, there is no remaining spare capacity in the West Byron STP assuming the success of a large percentage of lodged DA's." 10 On 6 March 2001 the Mayor issued a press release. Mr Vaughan read that press release, part of which was in the following terms: " SPARE CAPACITY AT WEST BYRON AND BANGALOW STP's NOW EXHAUSTED As a result of limited improvement works at both the West Byron and Bangalow Sewerage Treatment Plants (STP's), there has been a window of opportunity over the last 2 1/2 months for proponents of developments to lodge development applications in the catchment areas of these 2 STP's. [The] Mayor today advised that the number of development applications which Council is now processing would consume all the remaining capacity in each of these 2 plants. Proponents who wish to lodge development applications in either the West Byron or Bangalow STP catchment areas, do so in the knowledge that there may be no spare capacity in these STP's, at the time of determination of their development applications, he said. In West Byron and Bangalow, any spare capacity that emerges because of the failure of current development applications will be allocated on the basis of the date of receipt, said the Mayor." 11 Mr Vaughan spoke to the Mayor on the day of the press release. He asked the Mayor, "Have the existing development applications been allotted capacity?" The Mayor replied, "If you are in, you're in". 12 On 24 April 2001 the Council passed a resolution regarding sewerage capacity. It was as follows: "Resolved that Council, for reasons of equity, allocate any spare capacity that should emerge in either the West Byron or Bangalow STPs after the date of Public Notification, as advised in the Echo and at the front counter on 6 March 2001, to development applications received after that date in chronological order, that is, according to the date of receipt." 13 Mr Vaughan said that he believed that that resolution meant that the first plaintiff's development application had been, or would be, allocated sewerage capacity, given other development applications lodged after the first plaintiff's development application had received approval. The statutory 40 day period within which the Council was required to deal with the first plaintiff's development application expired at the end of May 2001. The Council had advertised the application earlier that month. There had been public objections to it based on environmental issues but none based on lack of sewerage capacity. 14 On 14 August 2001 Mr Vaughan attended a Council meeting at which the first plaintiff's development application was to be determined. The Council considered an Evaluation Report dated 14 August 2001 in respect of the first plaintiff's development application. The report recommended 13 reasons why the application should be refused, but none of the reasons related to any lack of sewerage capacity. The report stated that the required 11.6 equivalent tenements ("ETs") were available with the payment of contributions. The Council's engineer advised that there was adequate spare capacity at the WBSTP for the first plaintiff's development application. The Council's Environmental Planning and Local Approvals Committee deferred making a decision on the application for a period of two months to allow the first plaintiff the opportunity to submit a revised proposal. The effect of this was to give the first plaintiff until about 13 October 2001 to provide the Council with a revised plan. 15 On 28 August 2001 the Council received a Sewerage Treatment Plant Report that showed that ETs had been reserved for all development applications that were at that time subject to appeals in the Land and Environment Court. The net result from the first plaintiff's perspective was that the total number of ETs that had been applied for in development applications before 6 March 2001, but which had not been approved as at 28 August 2001, was 35.6. 16 Mr Vaughan said that in these circumstances he became concerned that the sewerage capacity for the first plaintiff's development application was then at risk. The demand exceeded capacity, which meant that the Council had a basis, other than the 13 grounds raised in its 14 August 2001 meeting, upon which to reject the first plaintiff's development application. Whilst GeoLINK could address and potentially resolve the 13 outstanding planning issues, the capacity issue was beyond its control. The first proceedings 17 Mr Vaughan instructed GeoLINK to lodge what he referred to as "a deemed refusal appeal". Mr Vaughan said that Mr Pagotto had earlier given informal advice to lodge such an appeal because there was a real concern as to how the Council was to treat sewerage capacity. According to Mr Vaughan, Mr Pagotto said words to the effect of, "my advice when dealing with Byron Shire is to lodge a deemed refusal immediately the 40 day period [has] expired". 18 On 12 September 2001 Mr Vaughan met with Mr Pagotto at his office and retained him to advise the first plaintiff in relation to the first proceedings and to the obtaining and preserving of sewerage entitlements. Mr Pagotto wrote three letters in accordance with Mr Vaughan's instructions seeking confirmation that 11.6 ET's had been reserved for the first plaintiff and would not be reallocated until such time as the Court had dealt with the first proceedings. The first of those letters to the Council, dated 13 September 2001, sought the Council's "written confirmation that ET allocations for [the first plaintiff's] Application [were] in place and [would] not, under any circumstances, be reallocated until such time as [the] Application [had been] determined by the Court or agreement [was] otherwise reached". The second letter, to the Council's solicitors, dated 17 October 2001 reiterated a similar theme. The third letter, also to the Council's solicitors, dated 28 November 2001 did so as well but went further, concluding with the following paragraph: "Unless we receive the written confirmation sought in our letter to your client dated 13 September 2001 by 5.00pm on Friday, 30 November next, we are instructed by our client, in order to preserve his position, to institute Class 4 proceedings out of the Court seeking, inter alia, a declaration as to the validity of available ETs allocated by your client to development applications lodged subsequent to our client's application and an injunction restraining the allocation of any remaining ETs to any development applications lodged subsequent to our client's application." 19 On 8 November 2001 the defendants sent a letter to Mr Vaughan enclosing a draft statement of issues in the first proceedings. Mr Vaughan said, "I read it and saw there was an issue about sewerage arrangements. I was surprised as the Mayor had told me to lodge the application". The relevant portions of the statement of issues that troubled him would appear to have been as follows: "1.1 Whether adequate arrangements can be made for the provision of services to the proposed development in accordance with cl 45 of the Byron Local Environmental Plan 1988. 1.2 Whether the proposal can be approved, having regard to the inability to make prior adequate arrangements to the satisfaction of Council for the disposal of sewerage." 20 Shortly after 20 November 2001 Mr Vaughan received a letter from the defendants advising that the first proceedings had been fixed for hearing in the week commencing 11 March 2002. 21 On 28 November 2001 he met with Mr Pagotto. They went through all of the issues in the draft statement of issues. Mr Vaughan said to Mr Pagotto, "I will be talking to other councillors to see [if the cl 45 issue] can be removed". According to Mr Vaughan, Mr Pagotto responded saying, "If that's the case, it will be best to wait and see the result, rather than lodging a Class 4 action". Mr Vaughan said that he was of the belief that even if the Council relied on cl 45, the issue could be dealt with in the first proceedings and that any assertion that there were no prior adequate arrangements as a matter of fact could be challenged. He said that Mr Pagotto did not advise him then, or subsequently, if the Council asserted that no prior adequate arrangements had been made for the provision of sewerage services to the property, that it would have to be established "as a preliminary matter", prior to consideration of whether or not refusal of the development application was justified. During the course of the proceedings before me, as a matter of convenience, this came to be referred to as "the condition precedent". 22 Mr Vaughan said that if he had been told that the cl 45 issue were a condition precedent, he would have asked the defendants to obtain an opinion from Senior Counsel, and would not have proceeded with the first proceedings unless the effect of the advice received was that the first proceedings had substantial prospects of success and could not be defeated on that preliminary point. 23 On 18 December 2001 the Council considered a Further Evaluation Report dated 14 December 2001. The report recommended that the application be refused for the reasons stated in the report. One of the Development Engineer's conclusions contained in the report was, "[t]he application has not made prior adequate arrangements for the provision of sewerage services to the land as required by Clause 45 of Byron LEP 1988". However, the minutes of the Council meeting record a series of resolutions, including the following: "6. That Council recognises that DA 10.2001.64.1 was included in the pre 6 March 2001 ET allocation." 24 On 19 December 2001, Mr Vaughan received a telephone call from Mr Pagotto. Mr Pagotto said, "I have read the further evaluation report [of the Council]. It seems that ET's for the development have been confirmed. Obviously it was the Council officers who issued [sic] sewerage as an issue you will need to talk to the Councillors and residents by the end of January and try and resolve the remaining issues." Mr Vaughan said, "The Councillors took out clause 45". Mr Pagotto replied: "That's good, we certainly won't need any class 4 appeal now, and if the voting is unchanged, we may not need to proceed with the class 1 appeal". 25 Following the 18 December 2001 meeting, Mr Vaughan spoke with the Council General Manager Ms Read, and discussed the first plaintiff's proposed changes to its development application. She said, "I will convene a meeting in early January 2002 between yourself and the three appointed Councillors charged with resolving the outstanding issues". 26 On 19 December 2001 the defendants wrote to the Council's solicitors. That letter contained the following paragraphs: "We also note that despite our requests dated 13 September, 17 October and 28 November, we have received no written confirmation that ET allocations for our client's application are in place and will not, under any circumstances, be reallocated until such time as our client's application is determined by the Court or agreement is otherwise reached between our respective clients. In those circumstances, we are left with no alternative but to relist the matter for further mention and institute Class 4 proceedings. We have now briefed Counsel to finalise the originating process." 27 On 22 January 2002 Mr Vaughan met with Mr Pagotto at his office to discuss the remaining issues relating to the grounds for the refusal of the first plaintiff's development application. Mr Vaughan said that at that time there was no issue raised by the Council that cl 45 had not been complied with. 28 On 29 January 2002 the Council held an extraordinary meeting. The Council resolved to rescind the resolution of 18 December 2001 recognising that the first plaintiff's development application was included in the pre-6 March 2001 ET allocation: see par [23] above. It was the plaintiffs' case before me that this had the effect of reviving the position as it was when the Council resolved to adopt the recommendations in the Further Evaluation Report dated 14 December 2001, including, relevantly, the recommendation that the application had not made prior adequate arrangements for the provision of sewerage services to the land as required by cl 45 of the Byron LEP. 29 On 30 January 2002 Mr Pagotto rang Mr Vaughan to find out what had happened at the Council meeting. Mr Vaughan said that when he told Mr Pagotto what happened, Mr Pagotto indicated his disappointment "in colourful language". He went on to say, "Now that they have done this, the appeal will almost certainly have to run. You will need a sewerage expert. I recommend Ray Sargent, who is a consulting engineer". Mr Vaughan said, "Can we wait until the mediation takes place?" Mr Pagotto replied, "Yes, but if the mediation fails we will have to work quickly". Mr Vaughan said that Mr Pagotto did not tell him that there might be difficulties because cl 45 was once again an issue. 30 Shortly thereafter Mr Vaughan told Mr Pagotto about the case of Ian McKay v Byron Shire Council [2000] NSWLEC 29. He said he got the impression that Mr Pagotto already knew about the case. He said he assumed that the defendants would comment on it if it were relevant to his appeal. 31 On 6 February 2002 Mr Vaughan sent an email to Mr Pagotto setting out his views "as to what Council's real concerns were". That email commenced with an opening paragraph in the following terms: "I think it is imperative that we keep the pressure on Council and, at this stage, not give up the 11th March Hearing. Our objective at this stage is to force them to narrow the issues." 32 Mr Vaughan continued saying, "I confirm my instructions re the sewer issue". He then set out over three pages a series of detailed statements preceded by the words, "The sewerage issue as I see it". It is a fair summary of the email, and the plaintiffs contend, that the significant area of concern for Mr Vaughan with which it dealt was the issue of ET capacity at the WBSTP. On some occasions Mr Vaughan referred to cl 45. For example, on one occasion he referred to "developments which have no planning consent and no prior adequate arrangements with Council for connection to the West Byron Sewer system under BLEP Clause 45 - where is Codlea principle on this decision?" A little later he asks, "where was the Aquarius prior adequate arrangements under Clause 45 to change and expand its operations without approval?" It will be necessary in due course to return to the significance of this document in the proceedings. 33 Mr Vaughan said that although the Council passed a rescission motion, a recommendation remained on foot that mediation take place. He said in those circumstances he thought the opportunity remained to resolve the outstanding matters without the need for protracted or expensive litigation. He remained in contact with the Councillors nominated to mediate with him to try to resolve the issues. 34 Mr Vaughan said that at no time did he recall any of the Councillors or the Council officers asserting that there were no prior arrangements during any of the meetings or discussions he had with them or the Council. At all times the discussions were about adequate capacity at the WBSTP. He said that if the issue of prior adequate arrangements had been raised directly by the Council, the Councillors or the Council officers, he would have asked for that to be explained to him. He said that he would have contacted Mr Pagotto about it and asked him to obtain counsel's opinion. 35 On 15 February 2002 Mr Pagotto telephoned Mr Vaughan and informed him that he had received a letter from the Council's solicitors furnishing the final Statement of Issues for the first proceedings. Mr Pagotto said, "I confirm that clause 45 is listed as an issue, obviously on the instruction of the Council officers. I will send you a copy". A copy of that document was sent to Mr Vaughan by facsimile. 36 On 21 February 2002 Mr Vaughan met with Mr Pagotto to discuss tactics for the mediation with the three Councillors that was scheduled to take place the following day. All of the issues concerned with the refusal of the first plaintiff's development application were discussed at that time, apart from the question of whether or not cl 45 had been complied with. 37 The mediation took place as arranged. Mr Pagotto attended the mediation with Mr Vaughan. Nothing was resolved. The discussions dealt with available capacity. The Council's General Manager remained adamant that only 2.7 ET units were available. Because the first plaintiff's development application requirement was 11.6 ETs there was therefore insufficient capacity. Mr Pagotto advised Mr Vaughan to terminate the mediation, as it was pointless dealing with the other issues of refusal. That is what occurred. Mr Vaughan said that there was no mention at the mediation that the Council was of the view that the application could not succeed because of cl 45 or that its offer should be considered because the first proceedings had serious difficulties. 38 Following the mediation the defendants retained Mr McEwen SC and Mr Atkin of counsel to appear for the plaintiffs in the first proceedings. Included in the Observations on Brief dated 7 March 2002 were the following comments from Mr Pagotto: "The Applicant will need to "satisfy" the Court that a prior adequate "arrangement" existed from: * the content of the media release. * the Mayor's statement to the Applicant in April 2001. * the fact that sewerage was not an issue in the initial report to Council (14 August 2001). * the holding out that ETs would be allocated in order of lodgements and the General Manager's memo of 28 February 2001. * the content of the facsimile from the Respondent to the Applicant's Consultant on 25 May 2001. * the resolution of the Respondent as late as December 2001 that it recognised the DA was included in the pre 6 March 2001 ET allocation (notwithstanding that the relevant part of the resolution was subsequently rescinded in January 2002)." 39 On 6 March 2002 Mr Pagotto and Mr Vaughan had a telephone conference with Mr McEwen and Mr Atkin to discuss the first proceedings. Final preparations for the hearing, the evidence and matters generally were discussed. There was no discussion about cl 45, nor was there any advice given to Mr Vaughan that it was a problem. Following the telephone conference, Mr McEwen sent a letter dated 6 March 2002 by facsimile to the defendants and Mr Vaughan. That letter made no reference to cl 45. Mr McEwen's letter commenced with the following paragraphs: "Having now received the reports of the experts on both sides, digested them, conferred with John Aitkin [sic] and you, it is appropriate that I commit to writing, briefly, my view as to the prospects of the Application, as presently constituted, succeeding. Leaving to one side the scattergun/broadside of matters raised in the Statement of Issues, the matter at hearing will be resolved by the determination of two issues, viz, adequate arrangements for sewerage, and the role the littoral rainforest will play." 40 Apparently with respect to the former issue, Mr McEwen continued on the second page of this letter as follows: "Here the argument will be put against us that absent the additional capacity which will be provided in the augmented plant, Council is simply not in a position to make the necessary assessment. Whilst in answer to such a submission it will be relevant to point to a whole raft of civil engineering works which Council's condition projects upon [sic], being able to make an assessment of the environmental impacts of those works in a prospective fashion - witness drainage works, or roadworks." 41 Mr McEwen's letter effectively concluded with the following paragraph: "These two main issues are, and will be in my view, determinative of the application. There may still be an avenue for compromise with the Council, and I would urge your client to consider pursuing it." 42 Mr McEwen's letter did not refer to cl 45 or to the fact that the requirement concerning satisfaction that prior adequate arrangements had been made for sewerage amounted to a condition precedent to the success of the first proceedings. There is no reference in Mr McEwen's letter to the first plaintiff being unable to meet the requirement of establishing that the Council was satisfied that prior adequate arrangements had been made for the purposes of cl 45. 43 On 7 March 2002 Mr Vaughan spoke to Mr Pagotto. There was some discussion about whether or not to adjourn the hearing of the first proceedings. Mr Pagotto was concerned that if the matter were adjourned there was a danger of a Development Control Plan or Local Environment Plan being introduced that might affect the first plaintiff's development and the result in the first proceedings. Mr Vaughan said that in the circumstances he decided to proceed on the listed hearing dates. 44 The first proceedings commenced before Commissioner Hoffman on 11 March 2002. Mr Cole, on behalf of the Council, opened the Council's case and referred to the absence of any prior adequate arrangements having been made. Mr Vaughan said that he was not present when this occurred, and presumably read the transcripts later, but said that nothing was said to him by Mr Pagotto at the time that there was or may have been a problem. 45 Mr Vaughan later complained to his barristers that the Council's development engineer had not been cross-examined. He said he was advised by one of them, although he could not recall which one, that "the sewage [sic] issue has been won, we have Council's engineer Mr Warner agreeing that the ETs reserved for the Aquarius DA have been double counted". Mr Vaughan said he replied, "I accept your decision". Mr McEwen submitted to Commissioner Hoffman that the sewerage treatment plant had capacity and that the spare capacity had not been allocated. 46 The Council's town planner Ms Croft gave evidence about whether or not there were prior adequate arrangements. Part of the transcript of proceedings before Commissioner Hoffman on 13 March 2002, at pages 85 to 86 whilst Ms Croft was giving evidence, contains the following material: "COMMISSIONER: Q. Ms Croft, I'm looking at page 619 here and item 6 of the original motion was that Council recognises DA 10.2001.64.1 was included in the pre-6 March 2001 ET allocation. That's the one that was deleted, wasn't it? A. That was rescinded. Q. So from your memory of all the other preceding decisions, did it leave it up in the air or was there a -- A. Well there was nothing in - within the Council resolutions themselves there was actually nothing there. Once that was taken out there was nothing there about clause 45 in terms of the actual resolution. What Mr Cole's referring to is that it reverts back [sic] to the officer's recommendation which [was] that there wasn't prior adequate prior arrangements- - Q. Which just remains a recommendation? A. That was the council officer recommendation that the resolution of Council was. COLE: Q. There was no resolution in Council then to make a prior adequate arrangement? A. No, no. McEWEN: It didn't resolve it [sic] not to either. COLE: No, they resolved to come and let us defend the case on the basis of the clause 45 issue and there was no prior adequate arrangement." 47 On 15 March 2002 Commissioner Hoffman delivered his judgment and dismissed the first proceedings. He found that all but three ETs of the spare capacity had been allocated leaving insufficient capacity for the first plaintiff's development application, which required 12 ETs. Mr Vaughan said that it was his understanding that Commissioner Hoffman had accepted the Council's evidence that the spare ETs had been allocated. The second proceedings 48 On 22 March 2002 Mr McEwen wrote to the defendants concerning Commissioner Hoffman's decision in the first proceedings. Among other things he wrote the following paragraph: "Whilst I expect the reasons for judgment will be susceptible to challenge as demonstrating an error of law, it may well be that to succeed in such an argument, given the expected time frame, prove to be a pyrrhic victory - disposal of an appeal in our favour and the remittance of the matter to the Commissioner to deal with "in accordance with law" would take some five to ten months, by which time the augmented sewerage treatment plant ought be close to completion." 49 On 3 April 2002 Mr Vaughan had a meeting with Mr Pagotto to discuss the first plaintiff's legal options in the light of that letter. Mr Pagotto said, "McEwen said that you were badly treated and that he was surprised at the decision. My advice is that you only have a short time to appeal; if you are considering appealing you need to get it in". Mr Vaughan replied by saying, among other things, "If your advice is that there is a good chance of a successful appeal, it should be pursued". Mr Pagotto responded, "It is very important to keep the development application alive because Council will be obliged to reserve whatever spare capacity might be available for this application. A new application would go to the back of the queue for sewage capacity. I will talk to McEwen". 50 One week later Mr Pagotto told Mr Vaughan that he had spoken to Mr McEwen and Mr Atkin and that Mr McEwen had told him that he should appeal. Mr Vaughan said, "Okay, go ahead and prepare it". 51 Mr Vaughan gave detailed evidence about what happened thereafter and about his involvement with the defendants with respect to the second proceedings. They were ultimately listed for hearing before Lloyd J in the Land and Environment Court on 20 and 21 August 2002 and decided by his Honour on 27 September 2002. The proceedings were dismissed. 52 It was common ground before me, and is otherwise uncontroversial, that the second proceedings were by way of appeal pursuant to s 56A of the Act and that they were limited to questions of law. The terms of the section are as follows: "(1) A party to proceedings in Class 1, 2 or 3 of the Court's jurisdiction may appeal to the Court against an order or a decision of the Court on a question of law, being an order or a decision made by a Commissioner or Commissioners. (2) On the hearing of an appeal under subsection (1), the Court shall: (a) remit the matter to the Commissioner or Commissioners for determination by the Commissioner or Commissioners in accordance with the decision of the Court, or (b) make such other order in relation to the appeal as seems fit. (3) Notwithstanding subsection (1), an appeal shall not lie to the Court under that subsection in respect of a question of law that has been referred to, and determined by, a Judge pursuant to section 36." 53 Significantly in this respect, Mr McEwen wrote to the defendants on 10 April 2002 in which he advised the defendants on this issue in the following terms: "As to challenging the decision by Commissioner Hoffman, you will recollect that the only basis upon which an appeal can be mounted, successfully, is by demonstrating that the Commissioner has committed an error of law. Errors of fact are insufficient - that is, unless they are so fundamental that one can argue that the Commissioner simply did not understand the facts, or came to a conclusion which no reasonable mind could have come to . . ." 54 The Notice of Motion dated 11 April 2002, that commenced the second proceedings, however, appears either to have overlooked or to have misunderstood these limitations. Although the document contains effectively ten grounds of appeal suggesting that Commissioner Hoffman erred in law in varying respects, Ground 5 would appear on one view to have been bad on its face. It was as follows: "5. The Commissioner erred in law in failing to consider and determine whether adequate arrangements for sewerage existed as required by clause 45 of the Byron Bay LEP." 55 It was also common ground before me, and appears to be equally uncontroversial, that the question of whether or not prior adequate arrangements for the provision of sewerage to the property had been made was a question of fact. Accordingly, whatever other legal, strategic or tactical advantage the plaintiffs could have achieved in the second proceedings, it was not open to Lloyd J to grant any form of relief to them that would have had the effect of overcoming Commissioner Hoffman's adverse decision on that point. If the plaintiffs had any other expectation on that issue, it was clearly ill founded. It was the plaintiffs' case before me that their expectation was indeed different and that at no time prior to disposition of the second proceedings on 27 September 2002 had the defendants ever advised them of the correct legal position. 56 A significant corroborating indicator of this can be seen in the energy directed to the question of whether or not fresh evidence could successfully be relied upon in the second proceedings. It is unnecessary for present purposes to explore the detail of what Mr Vaughan considered amounted to fresh evidence. There seems little doubt that conferences were held with the defendants in which the question of fresh evidence was discussed. For example, on 13 August 2002, Mr Vaughan took part in a conference that, according to him, dealt almost exclusively with "new evidence for the appeal" but did not address whether or not that evidence could be adduced at the hearing. That would appear to be so notwithstanding the terms of the Council's reply suggesting that it could not. 57 On the morning of 20 August 2002 Mr Vaughan met with Mr Webster of counsel who said to him, "I do not know of a single s 56A appeal where new evidence [has] been allowed". Mr Vaughan said that he was shocked. He said to Mr Webster, "Months of work have gone into the preparation of the new evidence, but no one has raised this before. Somebody should have told me". He said that he was told by Mr Manion at court that "proceeding with the appeal seems a complete waste of time without the new evidence". 58 It was the plaintiffs' case before me that the second proceedings were futile if the significant question of fact decided against the first plaintiff by Commissioner Hoffman in the first proceedings was not itself susceptible to some form of relief. Mr Manion's words quoted in the previous paragraph appear clearly, although probably in the circumstances inadvertently, to support that proposition. Mr Vaughan's evidence that he was never told about this was not the subject of any evidence to the contrary. The plaintiffs' expenditure of time, effort and money on the issue of fresh evidence was therefore doubly futile, for the reason that the second proceedings would not, according to the plaintiffs' case, have been commenced or continued at all if the plaintiffs had been correctly advised that the appeal was limited to questions of law. The third proceedings 59 On 25 June 2002 the defendants filed a statement of claim on behalf of the plaintiffs against the Council in which the plaintiffs sought various forms of relief including the following: "5. A declaration that the judgment of Commissioner Hoffman of 15 March 2002 in the proceedings was obtained by fraud, in that the Defendant had available to it and withheld from both the Plaintiffs and the Court the pertinent information in relation to Childe Street and the Discussion Paper. 6. An order that the judgment of Commissioner Hoffman in the proceedings be set aside." 60 Although the defendants acted for the plaintiffs at the time the third proceedings were commenced, Mr Vaughan decided to run the proceedings himself. He notified the defendants of that decision on 26 November 2002. Prior to that time, on 27 August 2002, the Council had put on a notice of motion to strike out the third proceedings. The motion was ultimately listed for hearing on 5 December 2002 but was adjourned until March 2003. Upon the receipt of advice from Maddocks Lawyers and senior counsel retained by them, the third proceedings were discontinued on 19 March 2003. The Council would not agree, however, to the third proceedings being discontinued without its costs being paid by the plaintiffs. 61 The plaintiffs contended that the third proceedings were a futility from the outset and that any costs incurred by them in prosecuting the third proceedings were always expended for no good purpose. They argued that the third proceedings did not ever have any reasonable prospects of success and that the defendants should have advised them of that fact at the outset but failed to do so. A letter dated 31 July 2002 from Mr McEwen to the defendants dealt obliquely with the prospects of success of the third proceedings, although it is fair to say the letter did not express a clear or concluded view about them. It seems reasonably clear from the terms of the letter, however, that the Council had raised an issue challenging the jurisdiction of the Supreme Court in the third proceedings, suggesting that the Land and Environment Court was exclusively entitled to deal with the matters that they ventilated. There is no evidence that the defendants gave the plaintiffs advice about this. Mr Pagotto 62 Antonio Pagotto is one of the named defendants. He died after the commencement of these proceedings. Mr Davies of Senior Counsel, who appears for the plaintiffs, adverted quite properly to the caution with which one must approach evidence given by or behalf of a party to proceedings in circumstances where a relevant contradictor is unavailable to give evidence by reason of death or incapacity. Mr Davies conceded that Mr Vaughan's evidence had to be considered and assessed having regard to the fact that many of the conversations to which Mr Vaughan referred in his evidence, and upon which the plaintiffs relied, were conversations with Mr Pagotto. 63 I have had regard to these principles in assessing the evidence given by Mr Vaughan. However, sight should not be lost of the fact that the conversations between him and Mr Pagotto that are relied upon all occurred in the context of the relationship of solicitor and client and that it was Mr Pagotto's custom, in accordance with normal practice, to make and to retain file or diary notes of them. Mr Ronzani of counsel, who appeared for the defendants, was not able to draw my attention to the existence of a file or diary note in which Mr Vaughan's recollection of a particular conversation contrasted starkly with, or was contradicted by, a written record of the same conversation made by Mr Pagotto. 64 Furthermore, the plaintiffs' case was to some considerable extent based upon written material passing between them and the defendants. As will already be apparent, that written material is significant both from the point of view of what it demonstrates to have been the advice that was given to the plaintiffs by the defendants, as well as from the point of view of what it demonstrates to have been the advice that was not given to the plaintiffs by the defendants. Consideration 65 In relation to the first proceedings the defendants did not argue that they had given the plaintiffs the specific advice about the condition precedent that the plaintiffs argued they should have been given. This was unsurprising in the circumstances. The evidence reveals, and I find as a fact, that the defendants did not inform the plaintiffs, or either of them, at any time prior to Commissioner Hoffman's decision on 15 March 2002, that the making of the arrangements to which cl 45 refers was exclusively the province of the Council or that the nature of the clause is as a condition precedent to the granting of consent: see, for example, Codlea v Byron Shire Council [1999] NSWCA 399 at [36]-[43]; 105 LGERA 370. No such advice was given to the plaintiffs in writing and the evidence does not suggest that it was given to them in any other way. 66 Instead, the defendants defended the plaintiffs' claim that they had been negligent in respect of the first proceedings upon two bases. First, that Mr Vaughan knew the true legal position without being told of it by the defendants and accordingly the plaintiffs either suffered no loss as a result of the defendants' failure properly to advise them of the true legal position or alternatively in those circumstances contributed to the loss and damage that they suffered by reason of their own negligence. Secondly, and alternatively, that even if Mr Vaughan did not know the true legal position as the plaintiffs alleged, he was so determined to prosecute the first proceedings to their conclusion for tactical or strategic reasons, that the plaintiffs would not have acted differently in the circumstances even if the defendants had given them the advice with which the plaintiffs complained they had not been provided. 67 With respect to the first proposition there is no evidence that satisfies me that Mr Vaughan knew or appreciated that the making of prior adequate arrangements for the provision of sewerage services to the property was a condition precedent to the Council's granting of consent to the carrying out of development on the property. Mr Vaughan gave evidence in chief that he did not know it. 68 He was also cross-examined about it in the context of his email, referred to earlier, that he sent to the defendants on 6 February 2002. Some of that cross-examination is as follows: "Q. I suggest that the whole purpose of this email to the solicitor was to make it very clear to him, one, you appreciated you could lose on 11 March 2002, correct? A. I felt very confident about the case. Q. You appreciated that you could lose? A. Of course. Q. And that you could lose because the council would use the clause 45 point against you? A. I concede that, yes. Q. What you say, is this fair to you, that in spite of what you have written on 6 February 2002 to the solicitor, what you did not have squarely in your mind was that element of the clause 45 point, namely the condition precedent that your senior counsel has referred to? A. That's right. Q. May I, sir, say this to you? For you to make that assertion in these proceedings is just not correct? A. Yeah well - Q. Do you understand? I'm challenging you on this self-serving assertion that you make in these proceedings that throughout the litigation and leading up to Commissioner Hoffman's hearing that you did not appreciate the gravity of the risk of the litigation because of the clause 45 point, that's what I am suggesting to you, what do you say? A. Oh well, I agree, I didn't understand the gravity of it, yes. Q. No. What I am suggesting to you is that for you to assert it now is not correct because you in fact understood it in 2002? A. If what you're saying is that clause 45 was fatal to the application, no, I did not understand that at the time. Q. But you did, Mr Vaughan, which is why you wrote this facsimile, that is what I am suggesting to you? A. This facsimile was all about the capacity of the plant and the fact that there was adequate arrangements in the plant for my development." 69 It was inevitable that the terms of the 6 February 2002 email would become controversial. As I have already indicated, cl 45 is mentioned in it on a number of occasions. Moreover, Codlea and McKay are both referred to in terms. There is in these circumstances material within the text of the email upon the basis of which the defendants could fairly and reasonably contend that Mr Vaughan had as good an understanding of the true legal position with respect to cl 45 as if the defendants had given advice about it themselves as the plaintiffs alleged they should have. 70 However, in my opinion, this argument should be rejected for at least two reasons. First, if the 6 February 2002 email is the highest and best example of Mr Vaughan's knowledge of the meaning of cl 45, it fails expressly or by implication to evince, or to evidence, an understanding on his part of the way cl 45 operated or of its significance in the first proceedings. Mr Vaughan was not legally trained and even though the email refers to the clause and cites cases, it does not do so in a way that reveals or suggests the existence of a level of legal understanding that the plaintiffs say the defendants should have given them. Mr Vaughan's reference to the objective of forcing the Council "to narrow the issues" is eloquently but naively inconsistent with an adequate understanding of the real issues. The condition precedent could not be narrowed out of existence by negotiation or force if prior adequate arrangements had not been made. Secondly, as I have discussed earlier in these reasons, the significant subject matter of the email was an analysis of the WBSTP's capacity to provide sufficient ETs for the plaintiffs' development. References to case names and to cl 45 in particular must in my opinion be considered having regard to that subject matter. Viewed in that context, they do not have the significance that the defendants seek to attribute to them. 71 With respect to the second proposition, it is not in my opinion open to the defendants to establish what the plaintiffs would have done if they had been properly advised by reference to what we know the plaintiffs did in fact but at a time when they were not properly advised. There is no doubt upon the evidence that Mr Vaughan was an enthusiastic proponent of the tactical use of litigation and that he saw the first proceedings as a weapon in aid of such an approach. So much is clear from the fact that he obviously ignored the cautious - not to say entirely pessimistic - advice contained in Mr McEwen's letter of 6 March 2002 when he referred to the two main issues that were likely to be "determinative of the application". Mr McEwen's reference to compromise in that context was an entirely but appropriately unsubtle expression of opinion that the first proceedings were probably doomed. However, Mr Vaughan's resolve to continue with the proceedings is entirely explicable on the basis that the two matters to which Mr McEwen referred were arguable before Commissioner Hoffman. The same could not be said about the question of whether or not the Council could be satisfied that prior adequate arrangements for the provision of sewerage services to the property had been made. It is not in my opinion open to the defendants to argue that Mr Vaughan's avowed enthusiasm for the litigated outcome would have withstood a proper and reasoned explanation of the true legal and litigious significance of cl 45. The defendants did not advise the plaintiffs in a way that permitted them to make fully informed decisions. Accordingly, evidence such as the following given by Mr Vaughan in cross-examination has to be considered and understood in that context: "Q. So the answer is yes, isn't it, I suggest, that notwithstanding the recision motion in January, the 29th, 2002, resolving, as the council did, to rescind the resolution of 18 December 2001, you saw utility, worthwhile for you to continue with the litigation, didn't you? A. At that stage the - there's still a council resolution which empowered three councillors to negotiate a settlement and those negotiations at that stage hadn't taken place so I was still optimistic it could be resolved by negotiation. Q. Is the answer yes, that in addition to that optimism, you saw that it was still worthwhile as at the end of January 2002 for the case to continue? A. Yes, I did think so." (Emphasis added) 72 The defendants were unable to advise the plaintiffs properly or adequately because they did not themselves understand the true legal position. The transcript of the proceedings before Commissioner Hoffman reveals that the defendants conducted the case on behalf of the present plaintiffs upon the basis that the cl 45 point was a live issue. For example, senior counsel made the following submission to the Commissioner, which appears on page 7 of the transcript of the proceedings of 14 March 2002: "Can I turn please to clause 45 and the analysis which we will contend for, and it's simply this, on the evidence before the Court there is in fact in place a prior adequate arrangement. 73 Further submissions were made at pages 8 and 9 of the transcript as follows: "Here, Commissioner we submit there is no need for the Court to reverse a council resolution because there is in effect none on foot. Rather, as I've indicated, the report of 28 August at p 6 of that report coupled with the fact that the rescission motion on 29 January in the face of the notation that this proposal was within the 1 March cut-off leaves open the plain deduction and conclusion that this proposal was within the capacity that Council had available as at 1 March to deal with further consents up to the then calculated 92 ETs." ***** "Now, the fact that that is rescinded in the manner in which it is still leaves it available to us because the rescission motion doesn't say it is not available to us, it just says 'We [sic] not going to now adopt that resolution, we're just going to replace it with something else'." 74 Finally in this respect, at page 12 of the transcript, the following submissions appear: ". . . so in relation to the [Codlea] treatment of cl 45, we submit what the council can't resile from now is that there are ETs available on its own approach." ***** "To return to the submission about cl 45, it's our submission and our strong submission to the Court that factually it can be concluded that prior adequate arrangements are in place on the Council's own material." 75 Unfortunately, this submission failed properly to accommodate the consensual nature of the arrangement to which cl 45 referred, as explained in the authorities. For example, in Ian McKay Pty Ltd v Byron Shire Council (supra), Pearlman J was dealing with an appeal brought by the Council pursuant to s 56A of the Act against the decision of a Senior Commissioner. The principal question before her Honour was whether or not an error of law had been committed. The subject matter of the proceedings was in fact cl 45 of the Byron LEP. It is instructive for present purposes to note the following paragraphs from her Honour's judgment: " Did the Senior Commissioner commit an error of law? [24] It is an error of law for a Commissioner to misdirect himself, that is, to define otherwise than in accordance with law the question of fact which he has to answer (Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156). The council asserts that the Senior Commissioner misconstrued cl 45 and took irrelevant matters into consideration in reaching his decision. The applicant asserts that the Senior Commissioner made no such error - that he correctly defined the question he had to answer and found the facts relevant to that question. [25] The issue, of course, is what particular factual question was posed for the Senior Commissioner to decide as a consequence of the application of cl 45. Clearly enough, cl 45 posed two questions - first, had prior arrangements been made for the provision of sewerage services to the land; and, secondly, was the Court satisfied that those arrangements were adequate. [26] The meaning of the word "arrangements" in cl 45 was the subject of a decision of Talbot J in this Court, and from that decision an appeal had been taken to the Court of Appeal in the case to which I have earlier referred. The decision of Talbot J (Codlea Pty Ltd v Byron Shire Council (Talbot J, NSWLEC, 4 December 1998, unreported)) had been delivered before the date of the hearing before the Senior Commissioner. [27] At para 23, Talbot J said: 'It is clear from the use of the language in cl 45 and the general context that what must be shown is, at least, a willingness on the part of any relevant authorities to cooperate in a consensual way that may bring the scheme to fulfilment.' [28] The Court of Appeal delivered its decision after the date of the Senior Commissioner's judgment. At para 40, Stein JA set out the passage from the judgment of Talbot J which I have quoted above, and continued by saying "I think that this is a reasonable way of putting it. Its essence is of course consensual ...". [29] Therefore, at the time of the hearing before him and at the time he delivered his judgment, the Senior Commissioner was faced with the task of deciding, on the facts, whether prior arrangements, in the sense of a "willingness ... to cooperate in a consensual way ..." had been made, and whether the Court was satisfied that they were "adequate". [30] Mr Walker submitted that the Senior Commissioner correctly identified the question of fact in this way and that this is demonstrated in the passages I have earlier quoted from p 24 – p 25 of his judgment. The Senior Commissioner noted that there was a "requirement" for "prior arrangements", and proceeded to make the factual findings that established that "prior arrangements" had been made. By reference to each numbered paragraph of the passages I have quoted, Mr Walker submitted that the facts which the Senior Commissioner found were: first, that the sewer line was available for connection to the land (para 1); secondly, that the land was within a zone in which residential development was permissible with consent and that the land should not have been so zoned unless the council had been satisfied that adequate facilities were available (para 2); that the council itself was the sewerage authority obliged as such to provide sewerage facilities (para 3); and that funds were available, or could be made available, to provide for enhancement of the STP (para 4). [31] In Mr Walker's submission, the Senior Commissioner, having made those factual findings to conclude that "prior arrangements" had been made, turned to consider whether or not he was satisfied that they were "adequate". He determined that he was so satisfied, in para 5, by reference to the fact that there was capacity enough in the STP to receive the effluent load from the proposed development. [32] In my opinion, however, the Senior Commissioner did not define the question he had to answer in accordance with the law as it had by the time of the hearing and his decision been explained by Talbot J. He did not pose for himself the question of fact as to whether it had been shown that there existed a "willingness ... to cooperate in a consensual way ..." between the council and the developer. Had he done so, his approach to the findings of fact which he was required to make would have been different. He would have had to decide whether a willingness to cooperate in a consensual way was shown by the availability of the sewer line, the residential zoning, the council's obligations as sewerage authority and the availability of funds. In that context, the council's "development moratorium" resolution would be a highly relevant fact, because that resolution clearly has a bearing upon a factual determination as to whether or not "prior arrangements" (in the sense I have outlined) had been made. But the Senior Commissioner did not approach the question in this way and, in para 3, he made only a passing reference to the "development moratorium" resolution. [33] The matters which the Senior Commissioner took into account no doubt raised the question - why would the council not be willing to enter into an arrangement about the provision of sewerage, when the pipes were there, the land was zoned for residential purposes, and funds were available to pay for an enhancement of the STP? But that was not the question of fact which the Senior Commissioner had to decide. It was instead whether the council was willing to cooperate in a consensual way, not whether it should cooperate in a consensual way. [34] Evidence about the capacity of the STP was relevant, I think, to a decision as to whether the Court could be satisfied that, if "prior arrangements" had been made, they were "adequate". But the Commissioner had first to decide whether "prior arrangements" had been made, before turning to the threatened or actual under capacity of the STP. [35] For these reasons, I have concluded that the Senior Commissioner erred in law, and that the ground of appeal has been made out." 76 When the proceedings were opened before Commissioner Hoffman by counsel for the Council on 11 March 2002, no one within earshot could have been under any misapprehension about whether or not "prior arrangements" had been made or whether or not it had been shown that there existed a "willingness . . . to cooperate in a consensual way" on the issue. Part of that opening on page 11 of the transcript on 11 March 2002, included the following material: "COLE: . . . That is the position Commissioner - that the Council is not, cannot, will not, I should say has not, and will not make an adequate arrangement - or an arrangement for the purposes of this 16 units. . . . the Council is not making and has not made an adequate arrangement prior to the determination of the application. The case – if I could just hand you up [Codlea's] case Commissioner." 77 It can reasonably be assumed that at least the following paragraphs from Codlea Pty Ltd v Byron Shire Council (supra) would have been relied upon in support of the position adopted by the Council: "[36] In my opinion, the nature of the clause as a condition precedent to the granting of consent and its emphasis on 'prior' arrangements having 'been made' are persuasive of the function not being one picked up by s 39(2). While cl 45 is tautological because it refers both to the Council being 'satisfied' and 'prior adequate arrangements' nonetheless, it is clear that the requisite satisfaction by Council can be determined at any time prior to the grant of consent. Notwithstanding, the stress placed in cl 45 on arrangements already having been made with the Council emphasises an exercise of a function and power being a condition precedent to approval." ***** "[39] The 'arrangements' referred to in cl 45 are arrangements in the sense explained in Federal Commissioner of Taxation v Newton (1957) 96 CLR 577, in particular Williams J at 630 - 631 and Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 at 7 wherein the Privy Council said: 'Their Lordships are of opinion that the word "arrangement" is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons a plan arranged between them which may not be enforceable at law.' [40] The parties seem agreed, and I think that it is the case, that the 'arrangements' referred to in cl 45 are Newton type arrangements. Talbot J described them as 'at least, a willingness on the part of the relevant authorities to co-operate in a consensual way that may bring the scheme to fulfilment'. I think that this is a reasonable way of putting it. Its essence is of course consensual and that is where the appellant faces a difficulty. It is true that the arrangements under cl 45 need not have been implemented. But they still have to exist and must pre-exist the 'satisfaction' of Council with them. They are prior arrangements which have been made. And they must exist to Council's satisfaction prior to consent. [41] Returning to the central question. Are these prior arrangements exclusively for the Council and not the Court on appeal or can the Court acquire the function of the Council to make the arrangements with the developer? [42] Applying the tests suggested in Drew, indeed in the other authorities cited therein, it is my opinion that the making of the arrangements is exclusively the province of the Council. The wording of the clause, utilising the past tense, and the nature of the arrangement itself is persuasive of this conclusion. The arrangements must pre-date and pre-exist the 'satisfaction'. It is not for the Court to make the arrangements on behalf of the Council although, as I have already indicated, the Court on appeal acquires the function of the Council as to 'satisfaction' with the 'prior adequate arrangements' made under the clause. [43] To summarise, there are two elements to cl 45. One is the making of the 'prior adequate arrangements' by the Council and the second is the 'satisfaction' with them prior to granting approval. The former is not 'in respect of the matter the subject of the appeal' and the latter is. Under s 39(2) the Court can substitute its satisfaction with cl 45 for that of the Council. However, the nature and wording of the 'prior adequate arrangements' and their creation is indicative that the Court does not acquire that function under s 39(2). The making of the arrangements is not a function 'in respect of the matter the subject of the appeal', nor is it sufficiently analogous to the function to be performed regarding the development application to be in respect of the subject matter of the appeal. In this case there simply was no arrangement made by the Council with the developer." 78 In my opinion, the defendants were confronted with the fatal consequences of this decision on and from the date upon which they received notice that the Council had passed its rescission motion on 29 January 2002. However, even if there were a failure by the defendants to appreciate the full significance of the rescission motion at that time, the defendants could, or should, have been in no doubt about the significance of the position adopted by the Council, or the consequences of that position so far as the case before Commissioner Hoffman was concerned, by the time of their receipt of the Council's final Statement of Issues on or about 15 February 2002. 79 I consider that the defendants failed properly or adequately to advise Mr Vaughan of the true legal position. As a result he was not fully informed to be able to make a proper choice about whether or not to continue with the first proceedings. He pressed on with the case, not being fully informed of the risks, believing the issue was the actual capacity of the system. That was the whole thrust of the defendants' preparation of the first proceedings, including the engagement of the expert. There was a qualitative difference between the chances of success of the first proceedings if there was no evidence of prior adequate arrangements being in place on the one hand, and the chances of success if the only issue was whether or not there was adequate capacity in the system arising from a difference in expert opinion on the other hand. In the former case the decision could go only one way. In the latter case it could go either way. 80 In my view, by 15 February 2002 at the latest, the defendants should have recognised the true position. Certainly between 18 December 2001 and 29 January 2002, the defendants could be forgiven for having thought that the Council had been relevantly satisfied. The same could not be said following the passing of the rescission motion or receipt of the Council's formulation of the final Statement of Issues in the first proceedings. I consider that the plaintiffs, if properly advised of the true legal position at that time, would have given instructions to the defendants to discontinue the first proceedings on the best possible terms, or instructions to like effect. 81 Ground 5 of the Notice of Motion commencing the second proceedings was at the heart of the relief which the plaintiffs sought in the Land and Environment Court. The relief which it claimed was unobtainable, and the second proceedings were doomed to failure, from the outset: see Vaughan v Byron Shire Council [No 2] [2002] NSWLEC 158 at pars [12], [14], [16] and [18]. The defendants did not inform Mr Vaughan of this fact. Nowhere in the defendants' files is there evidence that Mr Vaughan was advised that Commissioner Hoffman's determination on prior adequate arrangements was an issue of fact that was not susceptible to appeal. It was in those circumstances that Mr Vaughan gave instructions to commence and to continue the second proceedings upon the erroneous assumption, which the defendants failed to correct, that Commissioner Hoffman's alleged failure to consider and determine whether adequate arrangements for sewerage existed as required by cl 45 of the Byron Bay LEP could be overturned or otherwise remedied by Lloyd J. 82 The application to lead fresh evidence was also doomed to failure. The fresh evidence did not go to the issue of what adequate arrangements had been made - so much was agreed by Mr Manion. The fresh evidence went to issues relating to the capacity of the sewerage system. Even if there had been power in the Land and Environment Court to admit fresh evidence, that evidence could not have been admitted in the second proceedings because that issue could never have been reached. In any event, the reasoning of Lloyd J in rejecting the fresh evidence at par [6] ought to have been self-evident to the defendants. That evidence could not have gone to an error of law, which was all that a s 56A appeal was concerned with. 83 I accept and I find as a fact that Mr Vaughan would not have given instructions to commence or to continue the second proceedings if he had been properly or adequately informed of the true legal position. 84 The same can be said of the third proceedings. They were without merit from the start. They offered the plaintiffs no prospect of any relief of the sort to which they aspired. They could never have been used to set aside Commissioner Hoffman's finding of fact that there were no prior arrangements. The defendants should immediately have advised the plaintiffs of that fact. The defendants failed properly or adequately to do so and were negligent, and in breach of the terms of their retainer from the plaintiffs, as a result. Other defences 85 For reasons already discussed (see pars [66] –[71] above), I find that the plaintiffs were not guilty of contributory negligence. Such a defence could only arise in the present case by reference to what the plaintiffs did, or omitted to do, with the benefit of the advice that the defendants should have given them – that is, when fully informed - and not by reference to what they did or failed to do without having been given that advice. 86 Paragraph 19 of the amended defence filed on 3 September 2007 was in the following terms: "19. The defendants deny paragraph 33 of statement of claim and state that the plaintiff was advised that fresh evidence would not be able to be relied upon. In further answer to the said paragraph the defendants state the plaintiff continued to be in receipt of advice direct from senior and junior counsel, and was aware at all times that such advice was not the advice of the defendants but the advice of counsel." 87 The plaintiffs submitted that this was no defence at all. I agree. Mr Manion accepted that he was aware of the advice that was being given and did not assert that he disagreed with it. The defendants passed on the advice to the plaintiffs. There is no defence pleaded that the defendants briefed competent counsel, provided counsel with all that was necessary, and relied on their advice in advising the plaintiffs. 88 In any event, such a defence would be no answer to the plaintiffs' claim for the reasons given by Kirby J in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at par [142]. In particular, both Mr Pagotto and Mr Manion were experienced practitioners in the Land and Environment Court. 89 The defendants also relied upon the defence of advocates' immunity. In my opinion, this defence fails for the following reasons. First, even though some doubt may have been cast on the significance of the following as a general proposition since D'Orta (infra), the defendants were not acting as advocates. As was said by Kirby J in Boland v Yates Property Corporation Pty Ltd (supra) at [141]: ". . . whilst in contemporary Australian circumstances it seems appropriate to assimilate the solicitor-advocate with the position of a barrister so far as the protection of any immunity from suit is concerned, the solicitors in these proceedings could not invoke such protection. At no stage did they act as advocates." 90 Secondly, the advice that it is alleged ought to have been given by the defendants was not connected with the conduct of the first proceedings but rather related to the question of whether or not they should have been brought to an end. That did not involve a forensic decision about how the case was to be conducted. In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 the High Court confirmed that the immunity (if it operates) extends to the instructing solicitor as well as to counsel: see [90] and [168]. However, the work must still be "work done out of Court which leads to a decision affecting the conduct of the case in Court" or "work intimately connected with" work in Court: D'Orta at [86]. 91 With respect to the first proceedings it cannot be said that the advice that the plaintiffs complain the defendants failed to give them was work done out of court leading to a decision affecting the conduct of the case in court or intimately connected with it. Even though the defendants did not advise the plaintiffs to commence the proceedings in the first place, it was an implied term of their retainer to advise the plaintiffs if the first proceedings were hopeless. Such advice is wholly anterior to, and separate from, work done leading to a decision affecting the conduct of the first proceedings. "Conduct" in that sense is clearly a reference to how, or the manner in which, litigation should be conducted, not a reference to whether or not it should be commenced at all or continued. See, for example, McHugh J in D'Orta at par [151] as follows: "In Giannarelli , the majority adopted the extent of the immunity described by McCarthy P in the New Zealand Court of Appeal [171]. In Rees v Sinclair his Honour said [172]: '... the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing'." (Emphasis added). 92 I do not understand the statement by Patten AJ in Symonds v Vass [2007] NSWSC 1274 at par [153] that "advocate [sic] immunity clearly applied to everything which occurred after the commencement of the proceedings" to be any more than a comment referable to the particular circumstances of that case. 93 The same applies in my opinion to the second proceedings and the third proceedings. Indeed, even if the statement of Patten AJ were taken to be a statement of general application, which I doubt, it would not apply adversely to the plaintiffs in the present case for obvious reasons. The time when the defendants' duty to advise the plaintiffs of whether or not to commence the proceedings arose by definition antedated their commencement. 94 Thirdly, the High Court in D'Orta made it clear that the two principal reasons derived from Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543 for maintaining the immunity were the place of the judicial system as part of the governmental structure and the achieving of finality in litigation: see par [25]. The present case does not interfere with the principal of finality at all. The decisions in the first proceedings and the second proceedings are not said to have been reached wrongly by any failures on the part of the defendants. It has not become necessary to reconsider those decisions. On the contrary, they are the basis upon which the present proceedings are founded. The plaintiffs contend that if the advice had been appropriately given, the matter would never have reached the stage where there would have been judgments from Commissioner Hoffman or Lloyd J. Similarly, if the appropriate advice had been given, the third proceedings would never have been commenced. Where the principle of finality and the judicial system as part of the governmental structure do not arise, there is no occasion for the application of the doctrine of advocates' immunity: Donellan v Watson (1990) 21 NSWLR 335 at 337, 343-344 and 347. 95 Finally, although the defendants pleaded a failure by the plaintiffs to mitigate their loss, no evidence was tendered, and no submissions were made, in support of that defence. Damages 96 The plaintiffs particularised their loss and damage as follows: (a) On or about 5 April 2002, the defendants rendered a bill of costs to the plaintiffs in the sum of $97,128.61 in respect of the first proceedings which the plaintiffs paid in May 2002 ("the first account"). (b) On or about 4 November 2003, the defendants rendered a bill of costs to the plaintiffs in the sum of $77,212.04 in respect of the second proceedings which the plaintiffs have not paid ("the second account"). (c) On 4 June 2004, the plaintiffs were required to pay $962.50 to the Supreme Court in respect of an Appeal Panel Review relating to the second account, which the plaintiffs have not paid. (d) On or about 4 November 2003, the defendants rendered a bill of costs to the plaintiffs in the sum of $17,792.95 in respect of the third proceedings which the plaintiffs have not paid ("the third account"). (e) On 4 June 2004, the plaintiffs were required to pay $2197.70 to the Supreme Court in respect of an Appeal Panel Review relating to the third account, which the plaintiffs have not paid. (f) Monies paid to Jim Glazebrook & Associates Pty Ltd on account of expert fees for town planning advice in the sum of $15,799.82. (g) Monies paid to James Warren & Associates on account of expert fees for an environmental report in the sum of $10,000. (h) Monies paid to Aspect North Pty Ltd on account of expert fees relating to sewerage and stormwater in the sum of $7,386.50. (i) Monies paid to Greg Alderson & Associates on account of expert fees relating to sewerage in the sum of $6,535.10. (j) Costs ordered to be paid by the plaintiffs to the Council in respect of the first proceedings and the second proceedings in the sum of $44,398.96. (k) Costs ordered to be paid by the plaintiffs to the Council in respect of the third proceedings, which costs have not as yet been assessed, but which are claimed in the sum of $30,987.79. (l) Costs of obtaining legal advice from Maddocks Solicitors in respect of the third proceedings in the sum of $19,600. (m) Out-of-pocket expenses incurred by the plaintiffs in preparation of submissions, airfares and expenses to attend court and to obtain accounting advice in the sum of $28,600. 97 It follows from the conclusions I have reached that the plaintiffs are entitled to recover losses referable to the first proceedings on and from 15 February 2002, and the whole of their losses referable to the second proceedings and the third proceedings. It was suggested to me by counsel that in the event that I found in favour of the plaintiffs on and from a particular date, that it would be appropriate for me to indicate that date but to permit counsel to perform the arithmetic. I am happy to accept that offer from counsel in the circumstances. Orders 98 Accordingly, I make the following orders: 1. Verdict for the plaintiffs in such sum as is agreed by counsel for the parties having regard to the terms of par [97] of these reasons for judgment. 2. Order the defendants to pay the plaintiffs costs. 99 The plaintiffs have claimed interest. Some of the damages claimed by the plaintiffs relate to monies that have been paid and some relate to monies that have not yet been paid. I am presently unaware of the way in which the parties propose to treat the claim for interest having regard, particularly, to the fees owing to the defendants in accordance with the second account and the third account. In the event that agreement on this cannot be reached, I will list the matter before me for further submissions on a date convenient to the parties by arrangement with my Associate. 100 I should also like to add the following remarks. This matter was listed before me to commence last Tuesday with an estimate of between four and five days. In the events that occurred, the hearing of this case occupied approximately three hours on Tuesday morning and three hours on Wednesday morning. I reserved judgment at one o'clock. Having regard to the subject matter of the litigation I consider that the original estimate was not unreasonable in the circumstances. 101 Much is said publicly about the length and expense of litigation, the reasons for delays when they occur and the roles and motivations of solicitors and barristers who are involved in these cases. To my observation, this case was run with conspicuous efficiency and occupied no more, and probably considerably less, time than might have been expected in the circumstances. I direct my remarks about this, and my appreciation for it, both to experienced counsel for the parties and to the experienced solicitors who retained them. ************* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.