- Unreported Judgment
- Appeal Determined (QCA)
SUPREME COURT OF QUEENSLAND
QM Properties Pty Ltd v Belscorp Pty Ltd  QSC 158
QM PROPERTIES PTY LTD ACN 010 716 935
BELSCORP PTY LTD ACN 053 831 806
No 3340 of 2008
Supreme Court of Queensland
25 July 2018
12 February 2018 - 2 March 2018; 10 May 2018
1.Judgment for the defendant against the plaintiff on the plaintiff’s claim.
2.Judgment for the defendant against the plaintiff in the sum of $2,943,250 on the counterclaim.
RA Perry QC, with C Jennings of counsel, for the plaintiff
D Kelly QC, with J Baartz of counsel, for the defendant
HWL Ebsworth for the plaintiff
Burns and Associates for the defendant
On Friday 14 September 2007 the plaintiff, QM, contracted to buy numerous parcels of land from Belscorp. The total purchase price was over $22 million. One parcel of land was at Albany Creek, the purchase price was $3,835,000. The land was sold with the benefit of a development application (made but not approved) for residential subdivision. Before completion QM, through its solicitors, wrote to the solicitors for Belscorp, saying that due to misrepresentations about the effect of powerlines running through the Albany Creek property and the amount of land which the Council would require as a buffer to residential development along the northern boundary of the land (the South Pine River):
“… our client hereby relies upon its rights pursuant to s 52 of the Trade Practices Act and at general law to terminate this contract.”
The date for completion was 13 November 2007. QM did not tender the contract price on that day. QM then commenced this proceeding on 16 November 2007 claiming a declaration that the contract had been validly terminated, and asking for the return of its deposit. The pleading went through an unusual number of iterations. The seventh was filed on 27 August 2015 and by then the relief claimed had expanded to include seeking an order pursuant to the Trade Practices Act setting aside the contract as an alternative to the declaration sought; a claim for damages pursuant to the Trade Practices Act and a claim in tort for negligent misrepresentation. QM’s claim to have validly terminated the contract, and its alternative claim to have the contract set aside under the Trade Practices Act, were based on the same facts: essentially, that representations were made by Belscorp; relied upon by QM in deciding to buy the Albany Creek property, and proved to be false and misleading.
Belscorp denied that the contract was validly terminated, and denied that QM had any basis to have the contract set aside under the Trade Practices Act. It pleaded that the plaintiff had wrongly repudiated the contract and that it was ready, willing and able to settle. Partway through the trial it elected to accept the repudiation, terminate the contract and claim damages.
Both QM and Belscorp were property developers, although at very different levels of the market. QM was one of the largest privately owned property development companies in Queensland; it competed directly with publicly-listed property developers. It had an office at Ann Street in the City, as well as an office at Burpengary. It had around 100 employees. In the financial year ending 2007 it made a profit of around $25 million. At its head was Jon Haseler, who had been a property developer since 1974 and who had operated QM since 1987. A Mr Ian Russell was the general manager of QM and had been since 1997. He retired in 2015. He had been a property developer since 1981. The development manager at QM in 2007 was a Mike Russell (no relation to Ian). He had worked at QM Properties since 1984. Working directly below Mr Mike Russell in the company’s hierarchy were three project managers, one of whom was Greg Mackney. He had been a project manager with QM for over 20 years. Another was Stephen Panitz.
Belscorp was controlled by a Mr Tosh Murphy. He had a staff of five and an office at Kallangur which he said was somewhere between 30 and 50 square metres in size. The staff included a Mr Paul Van der Meer, who was employed as a project manager. Ms Leanne Lord kept the office running and also performed the duties of a project manager when that was necessary. Also on the payroll were a salesman, a bookkeeper and a gardener.
Unfortunately in this matter it is necessary for me to make credit findings. My credit findings are largely based on the substance of the evidence given and for that reason the matters which have led to my conclusions as to credit cannot be conveniently collected in one place but are integrally bound up in my discussions of the evidence in this very fact-rich case. I will however make a short summary of my conclusions at this stage of the judgment.
Mr Greg Mackney impressed as a very competent property developer who was well engaged in the tasks with which this litigation is concerned, and for that reason likely to have a good recollection of those tasks. I thought he did his best to give his honest recollections, and indeed that was conceded by counsel for Belscorp during oral submissions. I accept his evidence where it is referred to in this judgment, unless stated otherwise.
At the other end of the spectrum was Mr Ian Russell. I thought his evidence as to many of the crucial matters in this litigation was dishonest, given to advance QM’s position. While his demeanour in the box did contribute to my conclusions in this regard, they are to a more significant extent based upon the substance of his evidence and I have made several findings in relation to this below. I did not form my judgment as to his credit based on any one of these matters, but as a result of the accumulation of them. As well, Mr Ian Russell gave instructions to the litigation lawyers acting on behalf of QM from before the time of the termination of contract until 2015 when he retired – t 6-28. He swore that he personally confirmed the accuracy of what was pleaded in the statements of claim during this time – t 7-40. The changes, contradictions and late additions of matters to the statements of claim are quite unusual and bear upon my assessment of Mr Ian Russell’s credit. I reject his evidence unless it is corroborated, or is against QM’s interests.
I had very significant reservations as to the reliability of Mr Van der Meer’s evidence. No doubt as a result of the passage of time, but I think more significantly as a result of his minimal active intellectual involvement or interest in his work as project manager, Mr Van der Meer had little real recollection of any of the matters at issue in this case. As well as that, I think he was fairly inarticulate and struggled with the process of giving evidence. Mr Van der Meer agreed with many leading questions in cross-examination when in fact I very much doubt he really knew what he was being asked and positively assented to it. I suspect that he understood less of the questioning process than he made apparent and for this reason I am slow to draw an inference that he was dishonest at times, although the suspicion was squarely raised in my mind.
I had some reservations about Mr Mike Russell’s evidence. I thought he gave evidence in a rather subdued or constrained way. It was his job to review the Albany Creek property before purchase, and his review which failed to detect problems which later emerged. I did feel that he was defensive and struggled to be honest about his interactions with Mr Van der Meer and his work in reviewing the Albany Creek property before contract.
Lastly, I note that all the lay witnesses had some degree of motivation to give evidence that supported the case of the party calling them. The facts about which they gave evidence occurred more than 10 years ago and there were few contemporary documents which bore upon the representations said to have been made. In those circumstances, the defendant’s submissions were to the effect that I ought to be very cautious in my findings about representations made. I accept that. Human memory is not only fallible, but susceptible, even subconsciously, to alteration by self-interest.
The Albany Creek land was bounded on its northern side by the South Pine River and on its eastern side by Albany Creek. It had three significant disadvantages which constrained its potential for development. First, the majority of the land was prone to flooding. It had two, relatively small, areas which were slightly higher; one on the northern boundary adjoining the South Pine River, and one on the south-western side of the land. Secondly, a set of high voltage powerlines ran through the middle of the land. The Council prohibited any residences within “the two milligauss lines” – t 2-39. Milligauss (mG) is a measurement of electro-magnetic activity. The electro-magnetic radiation from powerlines diminishes the further from the powerlines one measures it. Experts would make measurements and plot “the two milligauss lines” to show where residential dwellings were prohibited. Very commonly the two mG lines were outside the Energex easement – t 2-89.
The third constraining factor was the Council’s policy to preserve vegetation along waterways by setting development back from those waterways. This had particular impact on the higher land at the northern side of the site, as that land was bounded by the South Pine River. In fact, because it was bounded by a floodplain on one side and the river on the other, this area of land was referred to by the Council’s senior planner, Mr Rae, as an island – t 3-5.
Belscorp’s Development Application
By an application dated 3 December 2003 Belscorp sought development approval for the Albany Creek land. In January 2004 the Council asked Belscorp to provide a report from an electrical engineer about the effect of the powerlines. No such report was provided and the 2003 development application lapsed.
On 12 April 2005 Belscorp again applied for development approval. This application proposed 16 freehold lots in the south-west of the property and 12 community title lots on the island to the north. On 26 May 2005 Council issued an information request requiring further information, including from engineers addressing the potential for flood; the effect of the powerlines, and vegetation management along the northern boundary, the South Pine River. On 16 November 2005 Belscorp’s town planner responded to this information request, including providing a reconfigured development proposal which can conveniently be referred to as DSC Plan B.
The response to the information request was expressed to be a “full response”, which meant that the applicant required a decision on its application – tt 2-7-8. However, the response to the information request was inadequate. Council had extended the decision‑making stage each month thereafter until the time of contract. It wanted to continue to work with the applicant to gain sufficient information to allow the application to be put forward for decision – tt 2‑8‑10; t 2‑19. This was an extraordinarily long time for Council to continue extending the decision-making time.
The response to the information request was inadequate (inter alia) because: (a) it did not include a report as to the electro-magnetic field created by the high voltage powerlines; (b) the vegetation management plan did not demonstrate that the proposed development on the northern island could occur consistently with Council’s requirements for conservation and buffer zones to the South Pine River, and (c) the flood study report was unsatisfactory; in particular it did not demonstrate access to the northern island during floods.
There was correspondence between Belscorp’s town planner and the Council as to these matters. There were meetings. The exchange of information was very protracted. The delay was due to Belscorp which did not progress its application with diligence, or with much apparent readiness to address Council’s concerns.
Status of Development Application at time of Contract. The development application required approval from the Council in general meeting; it was not an “as of right” development. There was considerable evidence bearing upon whether or not the Council’s engineers and planners would have recommended to Council that the application be approved.
The engineers and planners would have required an electrical engineer’s report that showed all residential dwellings outside the two mG lines before they would have recommended the development – t 2-69 and t 2-89. At the time QM contracted to buy this land there was no such report. There was a drawing (the Humphrey drawing) which showed the two mG lines as coincident with the Energex easement. This was not their correct position and their placement was not based on any proper study.
In November 2007, after contract, QM obtained such a report. It showed that properly plotted two mG lines would have reduced the number of lots available in the development (shown as 28 on DSC Plan B). However, there was an option to pay Energex somewhere between $20,000 and $30,000 to re-phase the powerlines. This would have reduced the area affected by the electro-magnetic field with the result that all of the 28 lots shown on DSC Plan B were available. Council had accepted re‑phasing of powerlines as a solution in only one instance prior to this – t 2-69 and tt 2‑89-90. That is, a need for re-phasing was unusual.
DSC Plan B showed something marked as a driveway connecting the northern island to the road access point to the Albany Creek land, Stewart Road. Although Belscorp had never suggested it – t 3-12 – Council was contemplating that some form of causeway would have to be built across the floodplain between the northern island and Stewart Road. That is, fill would have to be placed on the land to raise the height of the driveway. The difficulty with that was that Council prohibited filling flood‑prone land (below the Q100 line). This prohibition might be relaxed if what the Council called “compensatory fill” was undertaken. This term referred to reducing the level of some higher land to compensate for the damming effect of building a causeway across a floodplain. The difficulty with this idea was that reduction in the areas of higher land might well reduce the land available for development – tt 2-60-61. Further, any causeway would have to have substantial culverts under it, and all of this work would be expensive. This aspect of the proposed development was most unusual. Mr Vanderent, the senior engineer involved on behalf of the Council, had never seen a causeway over a floodplain – t 2-79.
Even if problems as to building the causeway could be overcome, there would still be difficulties, for the causeway, short of being a bridge, was never going to be above water in all floods. If the causeway was designed to withstand floods of, say, a five year frequency and less, Council would have expected the applicant to produce a plan that made provision for warning systems to the residences on the northern island and perhaps evacuation systems. This was another feature which made the application unusual.
So far as this flooding issue is concerned, several more engineering reports would have been necessary, addressing solutions not raised by the applicant’s experts before contract. While major issues like this were normally resolved at the application stage with only minor issues left to conditions, Mr Vanderent was prepared to recommend approval of the development on conditions that these matters be resolved at the operational works stage – t 2-71. However, while the Council engineers were confident there would be engineering solutions available at that stage, the conditions would be onerous; complying with them would be expensive, and might well affect the number of lots available on the land. I reject Mr Ian Buchanan’s evidence that if matters had been left to the operational works stage any conditions would have been minor – t 8-10 and t 8-92. He answered by reference to general practice rather than precisely respond to questions asked of him. Further, he knew that issues going to flooding, at least, were not minor – see the transcript references at footnote 15 above.
The third difficulty Council had with Belscorp’s 2005 development application related to the amount of land between the South Pine River and the boundary of the lots on the northern island. I find that Council required a setback of 40 metres in total – t 2-21 and t 2-24. The Belscorp plans showed only 30 metres in total.
Further, Council required that the 40 metre setback was to be measured from the “top of bank” of the South Pine River – t 1-53; t 1-55, and the Council document at tab 125 of ex 1. The terms “top of bank” and “high bank” were both somewhat imprecise, but generally used to be synonymous. It suffices to understand that (so far as the relevant stretch of the South Pine River is concerned) they are both above the edge of geomorphic stream channel or creek invert. Those latter terms are more precise, indicating the channel through which the waterway generally flows. For any given waterway, the only way of locating both the geomorphic stream channel and the top of bank is to conduct a survey.
I find that the 30 metre setback which was allowed in the Belscorp plans did not start at “top of bank”, but further down the bank at the creek invert – tab 125, ex 1. It was agreed between the surveyors that DSC Plan B showed a line marked “High Bank” which was in fact the edge of the stream channel. A survey commissioned by QM, from Land Partners, showed the high bank-line in a position which the surveyors agreed was correct. The difference between the two was significant and is illustrated in the document at tab 38, Vol 7 of ex 1. At least six of the lots which DSC Plan B showed on the northern island (lots 23 to 28) would not have been available if Council insisted on a 40 metre setback from the high bank.
Findings as to Status of Development Application at time of Contract. I find that at the time of the contract to buy the Albany Creek land Belscorp had responded to the Council’s information request but that response was inadequate and incomplete.
Before the development application would have been recommended to Council an electrical engineering report as to the two mG lines needed to be obtained. It would have shown that there were two lots on DSC Plan B which were not available. With extra work it could have been demonstrated that Energex’s re-phasing of the powerlines would have saved those two lots. Had the engineers and planners in Council been prepared to recommend the application on DSC Plan B, it would have been on the basis that Energex re-phase the powerlines.
Once the two mG issue had been resolved to the satisfaction of Council’s engineers, I find it likely that the planners and engineers would have allowed the application to go forward to Council on the unusual basis that hard engineering questions relating to flooding would have to be addressed at the operational works stage of any development. These conditions would have been onerous. Compliance with them would have been expensive and may well have reduced the number of lots from that shown on DSC Plan B.
As to the setback from the South Pine River, on the evidence before me, only six of the proposed lots on the northern island were likely to have been allowed by Council, had the Council approved the development. That is all that were available if Council approved the development in terms of its planners’ views, ie., that there be a 40m setback between the high bank of the South Pine River and the northern island lots.
I find that because this application had to be approved by Council in a general meeting, and because it contained the unusual features noted above, and left major engineering questions to be determined at the operational works stage, there was real uncertainty as to whether or not Council would approve it. All applications to Council to approve development were attended by some uncertainty. However, I find that significantly more than the usual uncertainty attended this application.
It was a curious aspect of this case that each side commissioned reports from engineers and town planners to express opinions as to whether or not Belscorp’s development application complied with various aspects of Council’s planning requirements and as to whether or not Council would have approved the development application. Debate was had between these experts in terms of their reports, responsive reports and joint expert reports as to:
- whether or not Council required a 30 or 40 metre setback and whether it was to be from the geomorphic edge of the stream channel or the high bank;
- whether or not it was necessary that the driveway to the northern lots be raised and if it were raised, whether it would need to be underlain by a series of culverts or not. There was debate about whether or not building the driveway, or a higher causeway, would have increased the chance of flooding for other lands, and therefore required compensatory fill;
- whether in times of flood when the driveway, or causeway, and the northern island lots were threatened, or indeed inundated, an evacuation system was necessary or whether the option of having the residents shelter in place was satisfactory.
For all of that, the experts gave little oral evidence and their opinions were not put to the several witnesses from the Council who gave evidence as to what their requirements were and how they expected them to be fulfilled. Further, the factual substratum of the expert reports was varied, but was not based upon what the Council officers said were their requirements, but upon the professional judgment of the engineers and town planners, having regard to what facts and Council policies they considered were material. It is fair to say this body of expert evidence was almost entirely disregarded by both sides in making their submissions.
My findings about the status of the development application at the time of contract are based on the facts which were proved about the Albany Creek land and the development application, together with the evidence of the Council officers. I think this is all the evidence which is relevant to the state of affairs which existed at the time pre-contractual representations were made. Perhaps theoretically there may have been an applicant with the funds and commitment to employ some of the engineers and planners who gave reports in this matter, to challenge either a refusal by Council to approve the application, or challenge conditions imposed upon the development, had approval been given. However, in reality, probably there would not have been such an applicant, for the evidence before me was that the development shown in DSC Plan B was unlikely to be economically feasible, even if it was approved – see the evidence I deal with at ff below. In any case, it seems to me that these matters are irrelevant to a consideration of whether the representations alleged by the plaintiff were false or misleading at the time they were made.
The Representations Alleged
The pleaded representations were as follows:
that the Albany Creek property was able to be subdivided into 28 residential housing lots in the way shown in DSC Plan B;
that the high bank-line was accurately shown in DSC Plan B;
that the northern lots could be developed as shown in DSC Plan B, notwithstanding the location of the high bank-line and the Council’s requirements for conservation and buffer zones;
that the information request issued by the Council had been fully and adequately responded to;
that the matters identified in the information request had been sufficiently addressed so that the development application would be approved allowing subdivision into 28 individual lots in accordance with DSC Plan B;
that there was nothing which would prevent or substantially impede the approval of the development application;
that Belscorp had, in the week prior to contract, provided its complete project file as to the subdivision of the Albany Creek property to QM.
I now turn to the evidence to see whether these representations were made.
Negotiations towards Contract
Initial Approach. Mr Murphy, the controlling mind of Belscorp, gave evidence that, in about September 2007, he decided to quit the property development business and sell his stock of land. Some of this land was partly developed; some was not.
In January 2007 Mr Murphy had negotiated with QM Properties as to the sale of a valuable piece of land at Delaneys Creek. The land was across the road from land which QM was developing. That negotiation had not resulted in a contract; it had been abruptly terminated by Mr Murphy – t 6-22. After this, and before September 2007, Mr Haseler had visited a shop owned by Mr Murphy, City Cowboy. Mr Murphy and Ms Lord were in attendance at the shop and Ms Lord sold Mr Haseler some boots. Mr Murphy’s evidence was that Mr Haseler asked if Mr Murphy would sell the Delaneys Creek land. He had replied that everything was for sale at a price. Mr Haseler I think stopped short of actually denying that conversation, although he rather fenced with the questions about it – t 6-24. I find that the conversation occurred.
During the time that both QM and Belscorp had developed land at Delaneys Creek, Mr Van der Meer and Mr Mackney had worked together. In fact the two men had known each other for about 10 years through work (Mr Van der Meer was working as a landscaper or gardener). Mr Mackney accepted that he had probably rung Paul Van der Meer over the years before January 2007 to ask if Mr Murphy had property for sale. He accepted he had probably rung him after January 2007 to ask whether Mr Murphy would sell the Delaneys Creek property to QM – t 4-7.
It was against this background that Mr Van der Meer telephoned Mr Mackney on 10 September 2007 and told him that Mr Murphy wanted to sell:
“… a line of developments at different stages of approval … They were in one line, meaning that if we bought one, we had to buy the whole lot, and that we needed to make a decision and secure them by the following Friday or they’d be put on the open market, where every developer could have a crack at buying them.
… by Friday, Paul wanted contracts in place to secure those properties or they’d be put out to the open market.” – t 3-70.
Meeting at the Golf Club. Mr Mackney organised for Mr Van der Meer to attend a golf club on Bribie Island early the next day; ie., Tuesday, 11 September. He met with Mr Haseler, Mr Mike Russell and Mr Mackney. At that meeting Mr Van der Meer handed over a one page summary of the properties which Belscorp wished to sell (the project summary) – tab 197 of ex 1. There were six separate projects, many of which comprised more than one lot of land. Under the heading “Albany Creek” the project summary read:
“• 28 blocks
• sold as going concern
• ready to re-lodge after info request.”
Mr Haseler said Paul Van der Meer communicated that the offer was to take all the six projects or none, and that Mr Murphy required the contracts to be signed by Friday. Mr Haseler said this as to what Mr Van der Meer said at the meeting regarding the Albany Creek land:
“Basically, he said what was in the document, that they were seeking 28 lots, 12 of which were riverfront, 16 non-riverfront. They had got an information request. They were preparing the reply to the information request, that the consultants were dealing with the issues and they would be re-lodging the reply very shortly.” – t 5-39.
Mr Haseler’s evidence was that he understood the representation that Belscorp was ready to re-lodge after the information request as meaning that the issues raised by the information request had been sorted out – t 5-41. In the absence of any qualification, and there was no evidence of any, I accept that is the natural meaning of the words on the project summary and the natural implication of what Mr Van der Meer said.
Mr Mackney had no recollection of what was said by Mr Van der Meer at the golf club. Mr Mike Russell could not recall any details of what Paul Van der Meer said at the golf club meeting other than that the contracts had to be signed by Friday.
I accept the evidence of Mr Haseler and Mr Mike Russell about what was said at the golf club. It is supported by what is in the project summary. I prefer their evidence to that of Mr Van der Meer. I find there was a Friday deadline and that the deal was to take all six projects or none. I discuss these two aspects in more detail at ff and ff below.
Inspection of the Land. At the conclusion of the golf club meeting, Mr Mike Russell and Mr Mackney set off with Mr Van der Meer to inspect the various blocks of land for sale. They attended the Albany Creek property as part of this. Mr Mackney said he saw the powerlines and saw the South Pine River – t 3-81. He also observed that most of the land was “broken”, meaning uneven – t 3-81. He visited the site again on 23 October 2007 and on that occasion walked out to the river bank of the South Pine River which bordered the northern island. He was concerned at how steep it was – t 3-95. Also on that October visit he said that “standing there and looking towards the Pine River, it appeared as if that broken ground was subject to inundation from time to time, flood inundation” – t 3-96. The broken ground he referred to was the floodplain between the two slightly higher areas of land which DSC Plan B showed as able to be developed.
Mr Ian Buchanan said that the potential for flooding issues was obvious from looking at the site – tt 7-82-83. As was the potential restraint due to the high voltage powerlines – t 7-83.
Mr Mackney’s evidence about what was said at the inspection of the land was:
“I’ve got a distinct memory of Paul assuring us that all of council’s concerns … had been sorted, and that the only reason they didn’t have an approval was that he hadn’t actively pursued it.” – t 3-80.
Mr Mike Russell said that on 11 September 2007, when at the Albany Creek land, he asked Mr Van der Meer about flood issues. He said he also asked Mr Van der Meer what issues Council had raised in the information request. He said that Mr Van der Meer replied that there were issues with flooding, particularly to do with the northern lots, “and they were being dealt with through the various consultants” – t 6‑51. Further, that issues relating to vegetation management along the river had been dealt with by a report – t 6‑51.
Further, Mr Mike Russell said that Mr Van der Meer said:
“…after having done the various reports that were required and … adjusted the layout of the proposal and that he was of the view that once the information request response had gone in that council would be in a position to approve the development.” – t 6-51.
Mr Van der Meer denied that he said the things Mr Mackney and Mr Mike Russell gave evidence of. However, Mr Van der Meer agreed that at the time he believed the things they attributed to him. This must support the plaintiff’s case that the things were said. Further, Mr Van de Meer’s approach to the process of property development was to simply brief consultants when it was necessary, and have them report to town planners. He did not even read the consultants’ reports. He considered it was the consultants’ job, not his, to take care of matters that were raised. What he is alleged to have said to Mr Mike Russell and Mr Mackney about consultants having dealt with issues raised by the information request has this general flavour about it.
I think that in fact Mr Van der Meer had very little recollection of what he did or did not say at the Albany Creek land. When pressed in evidence he really could volunteer almost nothing that was said during the inspection of that land. The conversation happened 10 years before he gave evidence. He had not made any note of what was said at the time. He had been to the golf club meeting that morning and then to visit nearly all the blocks of land on the project summary. Later that afternoon he met with QM representatives again at their Ann Street office. On all these occasions he must have provided some information to QM. Unless he was being very careful about what he said, and he did not strike me as somebody who would be, he would be unlikely to remember what he said on the occasion of the visit to the Albany Creek land. Mr Van der Meer was not actually engaged at any intellectual level with his work, see below at . That is another reason he is unlikely to have any recollection of the conversation at the Albany Creek land.
Relevant to my consideration of what was said at the Albany Creek land is the plaintiff’s pleading. The first and second versions of the pleading filed 16 November 2007 and 24 April 2008 pleaded the visit to the land but pleaded no discussion whatsoever at the land. This is in circumstances where, as early as 31 October 2007, Mr Ian Russell, on behalf of QM, had been instructing solicitors so as to get advice on the plaintiff’s position and asking both Mr Mike Russell and Mr Mackney to make statements.
On 13 September 2012, five years after the relevant events, this part of the pleading was changed significantly. It was then pleaded for the first time that Mr Van der Meer said words to the effect:
“I’m in the process of attending to an information request from the Council, the response was ready to be submitted, everything in the information request and the development application had been sorted out, and that once had been lodged it would not be too long before the approval was issued. There were no outstanding issues with development application. The only reason that Council had not issued an approval as per the plan of proposed development to date was because he had not actively pursued them to do so.” – paragraph 4A of the pleading, grammar in the original.
This was in the context where it was for the first time pleaded in this version of the statement of claim that at the golf club meeting Mr Van der Meer had said of the Albany Creek land, when presenting the project summary, “that’s it, there are 28 lots there, and it’s pretty close to approval” – paragraph 3.3.2 of the pleading. I note no one gave evidence of this having been said at the golf club.
There was another statement of claim filed on 21 January 2013. No change was made to these paragraphs. However, on 17 April 2014 a fifth version of the pleading was filed. It pleaded that at the inspection of the Albany Creek land Mr Van der Meer said (I am para‑phrasing):
“(a) the information request pertained to flood-free access to the lots closest to the South Pine River and vegetation management along the river;
the layout and design of the development of the Albany Creek property had been changed to address these issues;
the Council was in favour of the Albany Creek development; and
once the information request had been responded to, approval for the property development would be issued.” (see paragraph 4B of this pleading)
This fifth version of the pleading removes the sentence, “that’s it, there are 28 lots there, and it’s pretty close to approval” which had been inserted in the 13 September 2012 version.
Another amended statement of claim was filed on 25 March 2015. No change was made to these paragraphs. However, in August 2015 the pleading was massively re-cast, and there were substantial changes to these paragraphs. It was now pleaded that the comments added in the September 2012 and April 2014 versions were in response to Mr Mike Russell having said to Mr Van der Meer that he was concerned about the Q100 line; he was concerned about whether there was flood-free access to the lots closest to the South Pine River, and he wanted to know what information the Council had requested – see paragraph 75 of the pleading.
I find that having regard to the experience of Mr Mike Russell and Mr Mackney and having regard to the photographs taken of the land on the day of the inspection (ex 13), it must have occurred to both Mr Mike Russell and Mr Mackney at the inspection that the high voltage powerlines, the low-lying nature of the majority of the land and the land’s proximity to both the South Pine River and Albany Creek would be very significant constraints on any development of the land by way of residential subdivision. I find that observations as to the low lying nature of the land are likely to have prompted Mr Mike Russell’s asking about flood issues. Further, that proximity to two waterways is likely to have prompted questions as to vegetation management plans.
I accept Mr Mackney’s evidence – see  above, and I accept that Mr Mike Russell asked about flood issues and vegetation management issues and that he received a reply to the effect that consultants had sorted these issues out. I have regard to the fact that what is alleged to have been said is not so different from what was implied in the project summary itself at the third dot point under the heading “Albany Creek”.
I have regard to the matters I outline at  and  above. I am not able to conclude that anything further was said by Mr Van der Meer at this inspection. I am not satisfied that it was, even on the balance of probabilities, because of the late changes to the pleadings and an uneasiness that, in Mr Mike Russell’s mind, general assurances made about consultants having sorted out the issues raised by Council have somehow become specific assurances about those matters which later proved problematic, and assurances as to a stronger concept, ie., that Council would likely approve the development.
Van der Meer at QM Offices. By arrangement, at about 4.00 pm on 11 September 2007 Mr Van der Meer attended the Ann Street offices of QM Properties and delivered the project files for each of the six development projects which Belscorp wished to sell. These were his original working files. There is significant divergence in the evidence about what occurred at this point.
Mr Mackney’s evidence was that Mr Van der Meer stayed for a short time – t 3-85. He could not recall any conversation with him regarding the Albany Creek land. He thought that when Mr Van der Meer left, he began looking at the project files – t 3-85. These files were divided up between staff at QM. Mr Mackney was given the files for Delaneys Creek and the Ocean View property – t 3-85. Mike Russell was given the Albany Creek project file – t 3-86. Mr Mackney said that he was not involved in discussions about the prices of the projects which were for sale – t 4-19.
Mr Haseler said that there was a conversation between himself and Mr Van der Meer, Mike Russell, Ian Russell and Greg Mackney at QM’s offices that afternoon. He said all six projects were discussed – t 6-31. He said that Mr Van der Meer pulled out DSC Plan B for the Albany Creek land and highlighted the number of lots, the riverfront, the notation of the high bank-line and the power easement. He said Mr Van der Meer said that Belscorp was close to lodging the reply to the information request – t 5-43. He said that discussion continued and turned to price – t 5-44, and that Mr Van der Meer represented that Belscorp had put a value of $130,000 to $140,000 per lot on the 28 proposed lots for Albany Creek. He said that the price that “had been put to us … [was] three point nine two, I think” – t 5-45. Mr Haseler said he left that meeting before it was complete – he was going on holidays the next day and had other tasks which he needed to attend to – t 6-8 and t 6-31.
Mr Mike Russell said that there was a meeting between himself and Mr Van der Meer, Jon Haseler and Greg Mackney at QM Properties. He says Mr Van der Meer pulled DSC Plan B out of the project files and explained there were proposed to be 28 lots; 16 in the south and 12 in the north – t 6-53. Mr Van der Meer said that the response to the information request “was ready to go back in, and everything had been moving along smoothly with that project” – t 6-53 – “and therefore approval would be expected once the information request response had gone back in” – t 6-54.
Mr Mike Russell said that Paul Van der Meer gave a price per (future) subdivided lot for each of the six projects, including of $130-$140,000 per lot for Albany Creek – t 6-53. He said that after Mr Van der Meer had gone he multiplied the per lot prices given by Mr Van der Meer for all of the different developments to get a price per property – t 6‑50. Later that evening he had a discussion about price and value with Mr Haseler.
Mr Van der Meer said he attended the QM offices with three or four archive boxes of project files and that Greg Mackney helped him carry them from the carpark. He said he met with Greg Mackney and Mike Russell in Greg Mackney’s office – t 9-7. He denied that he met Mr Ian Russell. He denied that he passed on prices per lot, or per parcel of land. In this respect Mr Van der Meer’s evidence is consistent with Mr Murphy’s evidence that he did not fix a price for each parcel of land which was the subject of a separate contract, he left that up to QM – t 9-95 and t 9-97. If Mr Murphy had not considered prices for individual parcels, I think it was most unlikely that Mr Van der Meer would have.
While Mike Russell and Jon Haseler both say that Mr Van der Meer did give them prices, their evidence is inconsistent; Mr Mike Russell had a recollection of doing mathematical calculations to work from price‑per‑potential‑subdivided‑lot, to price per‑parcel‑of‑land, but Mr Haseler said those latter figures were “put to” QM by Mr Van der Meer.
There is a document at tab 308 of ex 1 which bears Mr Mike Russell’s handwriting. There is also at that tab a copy of the document marked up to show when Mr Russell says the notes were made. According to this, per-potential-subdivided-lot prices were noted by him at the meeting with Mr Van der Meer et al and then he calculated a total price from this information for each of the six parcels of land and noted the total on the same sheet. The notations of price per potential subdivided lot are in the same coloured ink as details of the corporate owner of the land in each case, and some other details which are likely to have come from Belscorp and are unlikely to have been known by QM. That provides support for Mr Russell’s version of events. So does the fact that if the prices per potential subdivided lot are multiplied by the number of lots in each of the parcels of land, the figure of $22 million – Mr Murphy’s asking price – is obtained.
I find Mr Van der Meer gave prices per potential subdivided lot in relation to each parcel and that after the meeting with Mr Van der Meer, and before a separate meeting with Mr Haseler, Mr Mike Russell calculated the asking prices for each of the six parcels of land in accordance with that information and noted it on his copy of the project summary. I prefer the evidence of Mr Mike Russell about this because he made a note at the time, as discussed.
An email Mr Mackney sent to Mr Ian Russell early on 12 September 2007 shows that he had spent a large part of the night reviewing the project files he had been allocated. I see this as consistent with him having left the meeting with Mr Van der Meer early to get on with this task. I find that Mr Mackney left the meeting with Mr Van der Meer early and that the meeting continued.
It remains to be determined what, if any, representations Mr Van der Meer made about the land. Once again, the seven statements of claim filed by the plaintiff must be considered. In the first (November 2007) there was no pleading that Ian Russell was at this meeting, only Mr Mike Russell, Mr Greg Mackney and Mr Haseler; there was no pleading that Mr Van der Meer got out DSC Plan B; there was no pleading that Mr Van der Meer gave prices for the lots of subdivided land. Mr Van der Meer is only alleged to have said, “this is the complete file” in relation to the Albany Creek project file, and to have told Mr Mackney that the Energex easement contained the two mG lines.
The second pleading (April 2008) adds two further representations said to have been made by Mr Van der Meer:
“All issues raised by the Council in respect of the property (including flooding, vegetation and the high voltage power transmission line) had been addressed by the various project consultants engaged by Belscorp.” – paragraph 6.5.1 of the pleading, and
“The response to the information request was ready to be submitted to Council, and that the Council’s approval to the proposed development would then be forthcoming.” – paragraph 6.5.2 of the pleading.
The third version of the statement of claim (filed September 2012) made three changes. The first was to amend one of the representations said to have been made by Mr Van der Meer thus: “This is the complete project file”. The allegation that Mr Van der Meer made a representation with respect to the two mG lines was deleted entirely. Further, paragraph 6.5.2 was amended so that it read:
“… consultants engaged by Belscorp. The response to the information request was ready to be submitted to Council, and that the Council’s approval to the proposed development would then be forthcoming.”
There was no change to this part of the pleading in the fourth statement of claim (January 2013). However, in the fifth version (April 2014) it was pleaded for the first time that at the meeting Mr Van der Meer opened the Albany Creek project file and produced DSC Plan B. Further, it was said that in addition to the representations pleaded at paragraph 6.5.1 and the shorter version of 6.5.2, Mr Van der Meer represented:
“The purchase price for the Albany Creek development was calculated on the basis of between $130,000 and $140,000 per lot … so about $3.64m and $3.92m in total.” – paragraph 6.5.3 and
“Everything in relation to the Albany Creek development was travelling along smoothly.” – paragraph 6.5.4 of the pleading.
No change was made to this part of the pleading when the next version of the statement of claim was filed in March 2015. However, the August 2015 version added a further separate allegation that at a smaller meeting held in a small meeting room between Mr Van der Meer, Mr Ian Russell and Mr Greg Mackney, Mr Van der Meer said words to the effect that:
“He was Mr Murphy’s project manager and that he represented Mr Murphy in relation to each of the property developments; and
The property development files were his complete files and included all information in relation to each of the property developments.” – paragraph 79(2) of the pleading.
Pleadings Admission. In its defence, the defendant admitted the statements alleged at paragraph 6.5.1 and 6.5.2 of the April 2008 pleading were made to Mr Mike Russell and Mr Mackney (not to Mr Haseler). The pleading, with the alteration noted at paragraph  above, and the admission, remain as the current state of the pleading and there was no application to withdraw the admission. Nonetheless the plaintiff chose to open the issue in evidence. At t 5-43 the plaintiff’s counsel elicited that Mr Haseler could not recall representations in terms of what was admitted. It was led from Mr Mackney that he could not remember being at the meeting, and my finding is that he was not. Further, the plaintiff’s counsel put the admitted conversation to Mr Mackney as having occurred at the inspection; Mr Mackney said he could not recall that being said – tt 4-18-19. Lastly, Mr Mike Russell was asked about the matter. He said that Mr Van der Meer did make a statement in terms of the agreed fact, although he was led at this part of his evidence:
“It is agreed between the parties, Mr Russell, that Mr Van der Meer said at that meeting that all issues raised by the council in respect of the property, including flooding, vegetation, and the high voltage transmission line had been addressed by the various project consultants engaged by Belscorp. Do you recall that or not?--- Yes, that led to the discussion about things running smoothly and council being in a position to approve once the information request response had been lodged.” – t 6-54.
Mr Van der Meer was asked about the subject of the admission without objection from the plaintiff and said he could not recall saying this – t 9-7.
One of the difficulties about the admission on the pleadings is that it is cast in lawerly language and, of all the witnesses, Mr Van der Meer was most unlikely to have said anything so concise, precise and organised. The other difficulty is that the terms of the representation deal with the very three matters which at a future time became known to QM as issues with obtaining Council approval. I suppose this could be accounted for by those matters having been apparent during the inspection of the land. Then the curiosity is that the representation was not said to be made at the land, but later. The fact that the pleading changed so many times does not inspire confidence.
Findings as to afternoon meeting 11 September 2007. I find that the topic dealt with by the admission was opened up in evidence sufficiently to allow me to consider the entirety of the evidence bearing on this matter. I find that at this meeting Mr Van der Meer said that Belscorp was close to lodging the reply to the information request, in accordance with Mr Haseler’s evidence. And I accept that Mr Van der Meer said something reassuring along the lines that this project was running along smoothly in that context, accepting in part what Mr Mike Russell had to say about this. I prefer the evidence of Mr Haseler and Mr Mike Russell to that of Mr Van der Meer for reasons I have already discussed. Further, I think that these representations are very like those made in the project summary, at the golf club, and at the land inspection.
I am not prepared to find that Mr Van der Meer said that approval was expected once the information request response had gone back in. I have regard to the pleading versions in this respect and also to the matters I have referred to at paragraph  above. I am not prepared to find that Mr Van der Meer said the things which are pleaded at paragraph 6.5.1 of the pleading. No witness could recall them being said. They seem more specific and precise than Mr Van der Meer was likely to be.
I am not prepared to find that Mr Van der Meer showed DSC Plan B to Mr Mike Russell and Mr Haseler, pointing out various aspects of it to them. I am influenced by the fact that there was no mention of this until the statement of claim filed in 2013. Had it happened, and had the very features which later became issues in the litigation such as the high bank-line etc., been pointed out, this was a most material fact to have pleaded.
I am conscious that generally there can be many reasons why pleadings take the form they do other than that witness statements change, so as a general approach I am cautious as to how I use the pleading in this respect. Also, it is true that the 2013 version of the statement of claim also pleaded for the first time that Mr Van der Meer gave per lot prices to Mr Mike Russell and because Mr Mike Russell had a contemporary note which supported this, I have found that that did occur. However, in this case it appears that Mr Mike Russell was asked to make a statement on this topic early on – see the letter of 31 October 2007 – tab 221, ex 1 – where Mr Ian Russell asks Mr Mike Russell to “prepare from your notes and recollections what exactly they represented to you in terms of the property”. Further, on 9 November 2007 Mr Ian Russell sent Mr Haseler an email in which he said that the most serious issues in relation to the purchase were the existence of the high voltage transmission lines and the “high bank survey line is not properly shown on the proposed layout plan”. Mr Ian Russell goes on to say:
“Importantly both of these issues were not indicated on the file which they gave to us prior to entering the contract. In fact it is quite clear that this vital information was perhaps purposely deleted. There are also the statements made by Paul Van der Meer in relation to the current application before Council in that there were no particular issues outstanding only the fact that Paul did not have time to deal with the information request from Council.” – ex 41.
This is certainly inconsistent with Mr Ian Russell having been at a meeting only two months before where DSC Plan B was pulled out and the high bank survey line and the Energex easement were discussed. In fact, my finding is that Mr Ian Russell was not at the meeting on the afternoon of 11 September 2007, see below. I cannot believe that Mr Jon Haseler was at such a meeting, then received this email and did not ensure that these events and representations were pleaded.
In fact, ex 41 and in particular the part extracted above, is consistent with Mr Mackney’s evidence that there were just general assurances given by Paul Van der Meer, rather than any specific representations having been made.
I am also influenced by the fact that if all six project files were discussed in sufficient depth that plans were examined, the meeting must have taken quite some time. An hour would have been needed if 10 minutes had been devoted to examining plans for each of the six projects. Although Mr Haseler gave evidence that all six projects were discussed, cross-examination did not particularly focus upon how long the meeting took or what detail was gone into in relation to each of the properties. In the absence of this type of evidence, I feel uncomfortable making the finding that DSC Plan B was examined. There seems no particular reason why the Albany Creek project would have been the subject of particular focus when, according to Mr Mike Russell’s evidence, there were other projects which were more problematic than Albany Creek – see  below.
I find the evidence that DSC Plan B was examined at this meeting, and in particular that features such as the high bank-line were pointed out, a little too convenient to be convinced that it occurred. Even if Mike Russell and Mr Haseler were alert to the fact that there might be issues with setback from the South Pine River and wanted to discuss this, it seems very unlikely that they would be focussed on the high bank-line. This concept only became an issue when, after the parties fell into dispute, it was alleged that Belscorp’s consultants had incorrectly surveyed the high bank-line. That is, the issue was not apparent from DSC Plan B; it only became apparent when that plan was compared to the geography of the land itself.
Mike Russell gave evidence that Mr Van der Meer brought in his project files and said, “These are my project files. They have all the documents in them.” – t 6-61. Further, “Mr Van der Meer had said that that was the project file and had all of his relevant documents in it” – t 6-80. I am not convinced that this was said. It was discovered later that not all the documents relevant to the development applications were in the Belscorp project files. But at the time the project files were delivered there was no issue as to their completeness or otherwise. There was no reason for Mr Van der Meer to make the statement. In addition, there is the obvious prevarication in the pleading which I have pointed out at paragraph  above.
Ian Russell. It is necessary to discuss the evidence of Ian Russell about this meeting in order to explain why I reject it. Mr Ian Russell said that he was at a meeting between Paul Van der Meer, Jon Haseler, Greg Mackney and Mike Russell at about 4 o’clock on 11 September. He said:
“Mr Van der Meer said that he was the project manager for Mr Murphy’s companies, and that he would be making his project files – and he said they were his complete project files – available to us, to assist us in the due diligence that we needed to undertake.” – t 7-23.
“What [Mr Van der Meer] did was go over, for everyone’s benefit, each of the properties with a brief description about at what stage they were at and what he needed to do” - t 7-23.
“In that meeting Mr Van der Meer expressed that Mr Murphy would not be entertaining a due diligence period, that’s why he was making his files available to us, so that we could put ourselves in a position to sign the contracts on Friday that week.” – t 7-24.
Mr Ian Russell swore that in relation to the Albany Creek property Mr Van der Meer said that the development required approval but, “that had been taken care of” – t 7-23.
Generally Mr Ian Russell’s evidence seemed rehearsed, not just in his style of delivery, but in the substance of it. It seemed very much tailored so that he was able to give evidence of either Mr Van der Meer or Mr Murphy (below) making representations to him about all the things which later became issues in the dispute about the Albany Creek land. This is evident in the passages of his evidence I have extracted above.
It is most unlikely that Mr Van der Meer told the assembled company that afternoon he was the project manager for Mr Murphy’s companies. He might have said that at the beginning of the conversation at the golf club, but it would be an odd thing to say after that golf club meeting, and after having spent several hours discussing the properties he was project managing with Mr Mike Russell and Mr Mackney that day. Further, Mr Van der Meer was a simple, uneducated man, well out of his depth in the company he found himself that afternoon. I very much doubt that he was making announcements as to his job description in Belscorp.
Secondly, I accept Mr Haseler’s evidence that at the golf club that morning he had asked Mr Murphy to make his project files available so that QM could assess the properties quickly in preparation for potential contracts that Friday. That was the reason Mr Van der Meer had come to the QM office and everyone in the room knew it. There was no reason for Mr Van der Meer to make any statement as to why he was bringing the files or, for that matter, to assure anyone that the files were complete.
The small passage of Mr Ian Russell’s evidence-in-chief that the Albany Creek land required approval but “that had been taken care of” expanded in cross-examination:
“My discussions with Mr Van der Meer revealed that he was doing everything necessary to handle all those queries that the Council had. He’d employed the proper consultants to do so. And given that he said that all of that had been attended to – and I think on the sheet we were given it said, ‘ready for re-lodgement’ – he explained that there was just a couple of more things he was waiting for from his consultants, then it would be re-lodged with Council, and the approval would emanate.” – t 7-30.
In the same vein:
“Yes, the information request is a vital part. What I discovered, talking to Paul, was that he was doing all those things necessary to handle the queries that the Council had given them on that information request, and I was suitably impressed.” – t 7-38.
“That’s why Paul had those consultants employed doing it. He knew that it needed to be done properly.
Are you speaking for Mr Van der Meer’s state of mind?--- No, Paul had – Paul had told me that.
All right, so what did he tell you, sorry?--- That he had engaged the specialist consultants to undertake this work to answer the information request, so it gave them the best chance of getting the best approval.” – t 7-39.
These statements are over-egged. The idea that Ian Russell had such searching or intense discussions with Mr Van der Meer that matters would be “revealed” or that he would “discover” matters is not believable. Further, I reject any notion that Mr Van der Meer was capable of saying anything about the consultants or the issues they were addressing which would impress any experienced property developer, see  below. Mr Van der Meer took no interest in the substance of the issues raised by Council or by experts. He did not read reports: he could not understand them.
I reject what Mr Ian Russell said about the meeting at QM Properties on 11 September 2007. I do not think his evidence was honest. In fact I find he was not at the meeting. Mr Mackney, Mr Mike Russell and Mr Van der Meer do not put him at that meeting. The pleading did not put him at the meeting in the six versions delivered before August 2015. Then in August 2015 the pleading was amended to say that Mr Ian Russell was at a separate meeting that day with Mr Mackney and Mr Van der Meer. No one gave evidence of this.
Mr Haseler Departs on Holidays. Mr Haseler left Brisbane very early in the morning of 12 September 2007. He was effectively out of telephone contact until Thursday evening. I find that he had two meetings regarding the proposed purchase from Belscorp after Mr Van der Meer left. The first of them was with Mr Mike Russell (which I have already partly discussed) and the second of them was with Mr Ian Russell. I find that at these two meetings Mr Haseler made arrangements for what work was to be done in relation to the Belscorp offer while he was away. First, he delegated to Mike Russell the task of looking at Belscorp’s project files and making an assessment of what he called “the technical side” of things. Mr Haseler said he told Mike Russell to “check the files and make sure that what we’d been represented was the case.” – t 6-34. Secondly, Mr Haseler delegated to Ian Russell the task of instructing solicitors to prepare contracts for QM to purchase the land that Friday should he (Mr Haseler) decide to buy the Belscorp land.
Mr Mike Russell understood his task was to review the files in conjunction with the project managers and to proceed with the preparation of contracts with the solicitors – t 6-55. Mr Ian Russell did not accept that he had been delegated the task of instructing the solicitors. I accept Mr Haseler’s evidence about these matters. I prefer it to Mr Ian Russell’s. Further, Mr Duncan Murdoch, QM’s solicitor, said he dealt with Mr Ian Russell only, and from the beginning of his involvement with these contracts – t 3-36. I accept his evidence.
Mr Ian Russell Takes Charge. Mr Ian Russell sent the following email to Mr Mike Russell and Mr Mackney at 7.23 am on 12 September 2007:
“I have had discussions with Jon this morning and he is keen to go to contract at the earliest opportunity (hopefully today) in relation to the various parcels which we discussed yesterday. I am aware that there is much to do during the course of the day to achieve this however I believe it would be a good idea if we touched base first thing this morning so that we can possibly streamline those processes to enable this to occur. Jon mentioned to me that in his discussions last night with you Mike that he believed that the assessment in relation to ‘Ocean Views’ could have been incorrect … perhaps we can discuss this aspect also this morning.” – ex 47. (my underlining)
Greg Mackney replied, “Standing by Ian and a bit better prepared now after snuggling up to the Tosh Murphy job files last night”. Mr Ian Russell replied to that, “Perhaps at about 8.30 am or perhaps when Mike arrives. Give me a call if he comes in earlier.”
Mr Haseler’s evidence was that he had not given any instruction to Mr Ian Russell that he wanted to go to contract on 12 September – t 6-36. His evidence was that there was too much work to be done (legal and “technical”) for this to occur – t 6-37. He also said that he would always take full advantage of any terms that were offered to him – t 6-37. That is, Mr Murphy was offering a deal which gave him until Friday to sign contracts, and he would take advantage of it. I accept Mr Haseler’s evidence that he did not tell Ian Russell that he wanted to go to contract on 12 September. I find that he did not give him any instruction that he wanted to go to contract before Mr Murphy’s deadline – Friday, 14 September. I accept Mr Haseler’s evidence that he would take advantage of any terms offered. Further, I accept Mr Haseler’s evidence that it was unrealistic to think the contracts could be prepared in one day. This was the overwhelming evidence.
Mr Ian Russell’s evidence about this 7.23 am email demonstrated that he was dishonest in writing it and, more importantly, that he was prepared to be dishonest in his evidence. When he was first asked about the matter he said that he could not “properly recall” if Mr Haseler told him to go to contract that day – t 7-43. He later admitted that that part of his evidence was dishonest. He could recall, and he could recall that Mr Haseler had not given him the instructions he recorded in his 7.23 am email. Instead he had decided to send an email which dishonestly relayed the instructions from Mr Haseler as a way, apparently, of encouraging Mr Mackney and Mr Mike Russell to work harder:
“No. I – I – I – I did that to give everyone a hurry up. They weren’t working on it fast enough for my liking, so, I gave them a touch-up with that email … they weren’t doing things quick enough.” – t 7-62.
That explanation, on oath, also was not completely honest in my opinion for, at 7.23 am on 12 September, Mr Ian Russell could have had no idea how quickly Mr Mackney or Mr Mike Russell were working.
Review of the Albany Creek File. I find that rather than motivate Mr Mike Russell, the email of 7.23 am had the opposite effect. By anyone’s estimation the assessment of the projects offered for sale by Belscorp was a big task, even split between the managers at QM. Mr Mike Russell arrived at work on 12 September 2007 expecting to begin this task. He found that, although he and Mr Haseler had had discussions the evening before, Mr Haseler had not informed him that he was leaving on holidays and would not be contactable for the next two days. Further, he discovered (apparently) that Mr Ian Russell was the repository of an instruction from Mr Haseler that QM was to purchase the properties, and as soon as possible.
It was put to Mr Mike Russell in cross-examination that he did not read the project file for Albany Creek because it was clear to him from early on the morning of 12 September 2007 that Mr Haseler had already decided to buy the properties – in effect the task of reviewing the project files was irrelevant. He was asked several times and each time prevaricated in that he answered by reference to his understanding of Mr Haseler’s instruction to him on the evening of 11 September – t 7-8. After I warned him that I might make an adverse finding because of this prevarication, he capitulated, agreeing that he was aware that Mr Haseler wanted to purchase the properties because there was an email from Ian Russell to that effect – t 7-9. There followed more cross-examination at tt 7-9-10 as to whether or not in these circumstances he had properly reviewed the files. He stopped short of saying that he had analysed the Albany Creek file; he said simply that he had read through the Albany Creek file as he was asked to do – t 7-10. His demeanour was subdued at this part of his evidence and he appeared to struggle as he gave answers which revealed he had paid little attention to the Albany Creek file.
Mr Mike Russell said that some of the properties required more work by way of consideration of their merits than others, “so the focus was more on those properties, than this one, which we were told was – every – where everything had been dealt with and it was ready to go back to Council, and Council were supportive of it, and – and there was no reason that it wouldn’t be approved in – in the form it was shown.” – t 6-69. Another comment in the same vein was this: “No, I – I believed, particularly on Albany Creek, the – the focus at that time was more on getting the contracts prepared” – t 6-68. In this context he said that, despite not being able to satisfy himself from his own reading of the file that an electro-magnetic field report had been provided, he was prepared to proceed on the basis that he had been assured by Mr Van der Meer that everything had been provided. The question was put: “Why were you reading the project file at all?” Mr Russell replied:
“It was to see what was, obviously, in it and to try to pick up whether the status of the, you know, the project was. We, at the time, were – saw this property as a good opportunity and we were keen to get on and get moving with it.” – tt 6-84-85.
Mr Mike Russell conceded that at the time he looked at the Albany Creek project file prior to contract he knew it was not complete – t 7-8. The development application, together with all the supporting documents for Belscorp’s proposal for the land, were not on the file – t 7-4. The information request from Council was on the file but no response, draft or otherwise, was on the file – t 7-5. Mr Mike Russell conceded that there were other documents on the file which he read which did refer to such a response – t 7-6. Further, there was a reference in the file to a report by engineers Gilbert & Sullivan (whose job it was to deal with the flooding issue) dated November 2005 but there was no such report on the file. Mr Mike Russell swore that he saw correspondence from the Council on the file requiring an electro-magnetic field report – t 6-84. However, there was no such report on the file. There was not even a plan which showed the two mG lines on the file.
There were various steps which could have been taken by Mr Mike Russell when reviewing the Albany Creek project file in order to increase the information available to him. He conceded he could have contacted any of Belscorp’s consultants during this time – t 6‑79. He could have logged onto the Council website, “PD Online”, which showed all the major documents in relation to current development applications – t 6-60. The development application for the Albany Creek project was on the PD Online site. So was a drawing (the Humphrey Drawing) showing the implausible alignment between the Energex easement and the two mG lines. He also accepted that he could have contacted Council by telephone, although he thought that he did not have time before Friday, 14 September to set up a meeting with Council to discuss the land – t 6‑60. He did none of these things.
Mr Mike Russell made no attempt to prepare a feasibility analysis for the Albany Creek land between 11 September and 14 September – t 7-11. He could have, because when he did a feasibility analysis for the valuer in October it took less than a day to prepare it – t 4-23 and t 7-13. Further, or as part of a feasibility study, he could have conducted an internet search to reveal historical prices for vacant land in the vicinity of Albany Creek – t 4-23.
When Mr Mackney received the Albany Creek file after the contract had been signed, he was concerned because he could not see that Belscorp had complied with Council’s requirement for an EMF study – t 3-88. He went to the online service and found the Humphrey plan which showed the two mG lines as coincident with the Energex easement boundary. He thought that this would be “very unlikely” – t 3-91. Mr Mike Russell could easily have come to that position before contract. It was a matter which bore directly on whether the Albany Creek land would yield 28 lots. Mr Mike Russell had been to the land and noticed the floodplain. He had been told that there were issues with flooding in relation to the northern lots but there was nothing on the file which showed how these issues were resolved by Belscorp’s consultants. Telephone enquiries to Belscorp or their consultants would have revealed in a short time that the issues had not been resolved.
I find that Mr Mike Russell did read the Albany Creek file but in a half-hearted way, with little application and making almost no analysis. I find that he did not review the Albany Creek file in accordance with the instructions he received from Mr Haseler on 11 September 2007, ie., to see whether the development was in accordance with what Mr Van der Meer had said about it. The file did not show that the project was in accordance with the representations made. Mr Mike Russell either did not analyse it sufficiently to come to that conclusion or, if he did, made no efforts to supplement the information in the file. He did have time to make enquiries.
Meeting on 12 September 2007? Mr Ian Russell said in cross-examination, but not in evidence-in-chief, that on 12 September Mr Van der Meer came back into QM’s offices where Mr Ian Russell found him talking to Mr Greg Mackney. They had a file open on Greg Mackney’s desk. The file was the Albany Creek project file. Mr Ian Russell joined the discussion. He said the subject of the electro-magnetic field came up and Mr Van der Meer said that the two mG lines were contained within the Energex easement. Mr Mackney asked him if he had a report to confirm that. He replied that he did, and he would get a copy for Mr Mackney – t 7-55. Mr Ian Russell said that he had told his lawyers about this conversation in his initial statement to them – t 7-56.
No evidence was sought to be led from Mr Mackney of such a conversation, or such a visit by Paul Van der Meer. Nor were these things put to Mr Van der Meer in cross‑examination. Despite the wide variety of things which the plaintiff has pleaded over time, this meeting and this conversation have never been pleaded.
The review of the Albany Creek project file before contract was Mr Mike Russell’s responsibility not Mr Mackney’s; it is unlikely that the Albany Creek file would be in Greg Mackney’s office. It would be most unusual for the two mG lines to fall within an Energex easement. When Mr Mackney obtained the Humphrey drawing (after contract), he noted that it showed the two mG lines as coterminous with the Energex easement and his response to that is recorded in writing – “not very bloody likely” – tab 222 in ex 1. I therefore doubt Mr Mackney would have let matters rest on the basis that Mr Ian Russell describes.
I find that the meeting and conversation Mr Ian Russell described as having taken place on 12 September 2007 simply did not take place. I find Mr Ian Russell manufactured this evidence to try to assist QM.
Meeting 13 September 2007. On 13 September 2007 Mr Murphy and Mr Van der Meer attended a meeting at QM Properties’ offices. Mr Ian Russell, Mr Mike Russell and Mr Mackney were also present.
Mr Mackney had a recollection of Mr Murphy saying things about the Albany Creek land, either at that meeting or the next day at the meeting where contracts were signed; he could not say which day – t 3-88. What he recalled Mr Murphy saying was:
“The Albany Creek property was the jewel in the crown, and in saying that, there was the most potential upside in terms of increasing the available yield if we turned it into, say, a retirement proposition.” – t 3-87.
Mr Mackney recalled that on 13 September most of the conversation was between Ian Russell and Mr Murphy and he remembered in particular Ian Russell attempting to re‑negotiate the price on the deal and Mr Murphy becoming impatient and saying words to the effect of, “Take it, or leave it, or I’m out of here” – t 4-27.
Mr Mike Russell said that he recalled Mr Murphy saying at the meeting on 13 September:
“He didn’t think there was any reason that Council would have an issue with the proposal [for Albany Creek] and that it would be approved, in his view. He also did say that it was his view that the site had higher – better potential for medium density development and particularly the area along the Pine River, then ventured that because of that potential, he thought that that particular property was the jewel in the crown of the properties that he was offering to us.” – t 6-57.
Mr Ian Russell said this about what occurred on 13 September:
“I asked Tosh … would there be any issues in obtaining approval, and, if so, would there be any onerous conditions. He replied by saying, firstly, that he didn't believe that was the case, it was an as-of-right application, and that the Council would even entertain a medium density development on the site, which I was quite surprised. And his opinion was that that was the highest and best use for that land. And then he finished by saying that of all the properties we’d be buying, he believed that was the jewel in the crown. And I thanked Tosh for that, because I think that adequately provided to us, if you could do medium density on the land, you could certainly do 28 ordinary residential lots.” – t 7-27. (my underlining)
“… He presented himself in such a way where it was difficult to get much information out of him. I kept prompting him and, eventually, he spoke about the Albany Creek matter, which I appreciated, because that was what I wanted to hear him say. It gave me the feeling of comfort that we could proceed with that, particularly, after the – what Van der Meer had told me.” – t 7-61.
Again I reject Mr Ian Russell’s evidence. As to the part which is underlined, there was no reason as at 13 September for anyone to be expecting that development conditions would be onerous. To the contrary, everything QM had been told about this property was to the effect that issues raised by the information request had been sorted out, meaning that these matters would be resolved at the application stage rather than going through as onerous conditions at the operational works stage, which latter option was unusual according to the Council witnesses. I consider that Mr Ian Russell included that detail in this part of his evidence because he appreciated a prospect that Belscorp might succeed in this litigation by proving that the application was likely to have been approved, although subject to onerous conditions. Accordingly, he gave some evidence to stymie that possibility.
Further, there was no reason for Mr Murphy to say that the proposal contained in DSC Plan B was an as-of-right application. That was untrue, and QM Properties would be in a position to contradict it, having had the project file for two days. I find he did not say it.
I also disbelieve the part of Mr Ian Russell’s evidence to the effect that he thanked Mr Murphy for the information and felt assured by it. Everybody else who gave a description of that meeting said that Mr Ian Russell constantly irritated Mr Murphy by trying to re-negotiate price, to the point where Mr Murphy threatened to walk away. Further, there was no reason at the time of that meeting for Mr Ian Russell to be concerned that 28 lots would not be approved on the Albany Creek land. No one else at Belscorp gave any evidence of holding such a concern at that time. And of everyone at the meeting Mr Ian Russell knew least about the projects. Albany Creek was one of the less complicated projects according to Mr Mike Russell.
Mr Murphy swore that at this meeting he said that there might be a potential upside to the Albany Creek property because “you could put townhouses on it” – t 9-74.
I find in accordance with Mr Murphy’s evidence, and that of Mr Mackney and Mr Mike Russell, that Mr Murphy said something to the effect of the Albany Creek property having potential value because some type of medium density development, perhaps townhouses, might be built on it. Because the phrase “jewel in the crown” is used in some almost contemporaneous correspondence and because both Mr Mackney and Mr Mike Russell could recall it, I am prepared to find that was said. I do not accept Mr Mike Russell’s evidence that Mr Murphy said anything to the effect that there was no reason for Council to have an issue with the proposal and it would be approved. It is very like his evidence at  and  above. In accordance with the type of reasoning I explained at ,  and , I fear that Mr Mike Russell has persuaded himself to this point of view over time. He had more reason to have done so than any other relevant witness given his lack of diligence in reviewing the file.
Findings as to Representations Made
Having regard to the amount of evidence just traversed, I will summarise my findings as to the representations made. I find that at the golf club, on 11 September 2007, Belscorp represented that the Albany Creek project was a proposed development in which it sought 28 blocks, 12 of which were situated on the South Pine River frontage. Further, that Council had issued an information request in relation to the application and that Belscorp was almost ready to respond to that request, having engaged consultants and sorted out the issues raised in the request. I think these were representations of presently existing fact. Further, I do not think that these representations were simply the passing on of an expert view or views. This was a general assurance made by Mr Van der Meer as project manager for Belscorp (and thus the person in charge of the development application) that all the issues had been sorted out. He was presenting this as his statement of fact. He was not acting solely as a conduit passing on an opinion from an expert for what it was worth, without any belief in its truth or falsity.
At the inspection of the land on 11 September 2007, I find that Mr Van der Meer assured Mr Mackney and Mr Mike Russell that Council’s requirements raised in the information request had been sorted out and the only reason that Belscorp had not obtained an approval was that it had not actively pursued that approval. Further, although slightly contradictory to this, that Mr Van der Meer told Mr Mike Russell that there were issues with flooding, in particular with the lots on the South Pine River, and that these were being dealt with through various consultants. I accept that Mr Mike Russell asked about vegetation management issues and was told that these issues had been dealt with by a report. Again these were representations of presently existing facts, and not merely the passing on of expert views.
At the meeting on 11 September 2007 at the QM offices, I find that Mr Van der Meer said that Belscorp was ready to lodge the reply to the information request and that Mr Van der Meer gave an assurance in this context that the project was running along smoothly. Again, representations of existing fact.
At the meeting of 13 September 2007, I find that Mr Murphy said that the Albany Creek property might be the jewel in the crown of his stock of properties and was possibly suitable for development with medium density residences or townhouses. These representations were not pleaded as having been relied upon. The first is plainly puffery and an experienced property developer like QM would regard it as such. There was no evidence that the second representation was relied upon by anybody except Ian Russell. I disbelieve his evidence.
Having regard to the representations alleged – see paragraph  above – it seems to me that the plaintiffs have made out almost the entirety of the representations at (a) and (e). I say almost entirely for it was common ground between the parties that nobody could guarantee that the Council would approve any development application – this was a matter within the discretion of the Council. Mr Haseler understood that. The absolute terms of the pleading at subparagraphs (a) and (e) must be read in that way. I think it was common ground that that was the way the case was conducted.
I think that the plaintiff also partly proved the representation at (d). I think that what was in fact proved was a representation that there had been an adequate response to the information request gathered together by Belscorp and that had reached the point that it was ready to be submitted to Council.
Findings as to Falsity
I find these representations were false. Belscorp had not adequately addressed all the issues raised in the information request. Issues as to flooding, the two Mg lines, and the setback to the South Pine River were unresolved at this date. Belscorp was not in a position to satisfy the Council in relation to these outstanding issues in the near future. At the very least, an electromagnetic field report would have to be obtained and further work done to show that Energex was prepared to re-phase the high transmission lines. If the engineers could be satisfied about that, they might have recommended that Council assess the application, but it would have been on an unusual basis where major engineering issues as to flooding and setback from the South Pine River remained to be addressed at the operational works stage. When those issues were resolved there was a real risk that 28 lots would not be obtained from the land. There was also more than the usual risk that Council would not approve the application because these matters had not been sorted out at the application stage and because to sort them out would require re‑phasing of high transmission lines, which was unusual; building a causeway across a floodplain, which was unusual, and implementing an alert and evacuation system for the residents on the northern island. I turn to consider whether or not QM relied upon the representations made.
Contracts signed. On Friday, 14 September 2007, contracts for the sale and purchase of all the land on the project summary were signed.
Mr Mike Russell said that on Friday morning, 14 September 2007, he and Mr Ian Russell met and agreed that on the basis of the review they had done on the properties they should sign the contracts. Mr Ian Russell’s evidence was that he rang Mr Haseler on 14 September 2007 and communicated that, “So far we’d not seen anything that would alert us to the fact that we needed, perhaps, to pull out of the contract” – t 7-28. Mr Haseler said that he rang Ian Russell on Friday morning and gave him authority to sign the contracts – t 6-9. Mr Haseler swore that he gave that authority to contract because he had not heard anything from Mr Russell to indicate that his review of the “technical aspects of the proposal” would cause him to think the contracts should not go ahead – t 6‑46. I accept this evidence.
The contracts were only signed on the express authority of Mr Haseler. This is consistent with the arrangements he made before he left on 12 September 2007. The arrangements are consistent with his general practice – it was he who decided in every case whether or not land was acquired or not – t 3-71, t 4-23 and t 6-22. The consequence of this is that it is his decision processes which are the relevant ones in terms of considering whether or not QM relied upon representations made by Belscorp in entering into the contracts.
Friday Deadline. The plaintiff’s case was that Belscorp imposed a Friday, 14 September 2007 deadline for contracting. For the following reasons, I find that was so.
The defendant pursued the line that there was no such deadline imposed by Belscorp either at the golf club meeting or subsequently. Probably the strongest support for that comes from the fact that no such deadline was pleaded by the plaintiff until the fifth version of its statement of claim filed in April 2014. It was then pleaded that it had been communicated by Mr Van der Meer at the golf club that if the plaintiff wished to purchase the projects, it had to enter into contracts by 14 September 2007 because Mr Murphy was leaving for a fishing trip on 15 September 2007.
Mr Murphy’ evidence was that in fact he was leaving on 15 September 2007 for a fishing trip. Further, his evidence was that when Mr Ian Russell annoyed him with constant requests to change the price on 14 September 2007 he said that if QM was not prepared to enter into the contracts that day he would talk about it when he got back from fishing – t 4-28 and t 9-75.
Mr Mackney swore that in the initial telephone conversation he had with Mr Van der Meer, Mr Van der Meer told him that the contracts had to be signed by Friday or the properties would be put onto the open market – t 3-70 and t 3-71. The defendant submitted that Mr Mackney may have unconsciously reconstructed this part of the conversation after the statement made by Mr Murphy on 14 September, just referred to. I do not think so. Mr Mackney’s email to Ian Russell early on the morning of 12 September 2007 shows that he had put in a night’s work assessing the Belscorp project files. This fits with his evidence that after Mr Van der Meer attended the QM offices Mr Mackney was in a hurry to get on and read the project files because the land had to be secured by “that same Friday” – t 3-85. Both Mr Mike Russell’s and Mr Haseler’s evidence was to the effect that there was an offer made on terms that it must be accepted by the signing of contracts by Friday. I accept their evidence; it is consistent with Mr Mike Russell’s actions between 12 September and 14 September and with the arrangements made to contact Mr Haseler on 13 and 14 September 2007.
It is clear from the evidence that there was urgency on the part of both QM and Belscorp to inspect the land on offer, review the project files and enter into the contracts. All the evidence is consistent with both parties working towards Friday, 14 September 2007 as the date when contracts would be signed if QM decided to purchase. Further, it is consistent with both parties having that understanding from Monday, 10 September 2007. This was Mr Murdoch’s understanding – t 3-65, and I accept him as an honest and careful witness.
Due diligence. Mr Murdoch had long been retained to act for QM in property transactions. He said, and I accept, that normally QM did have a due diligence clause in contracts to purchase land – t 3-28. Mr Murdoch’s evidence was that Mr Ian Russell told him that Belscorp would not accept a due diligence clause – t 3-28 and t 3-64. I accept that Mr Murdoch was telling the truth about this. However, his instructions came from Mr Ian Russell who was in the habit of telling people what he considered convenient, rather than telling the truth, so I do not regard this as evidence of the fact that Belscorp in fact would not accept a due diligence clause. Mr Murphy’s evidence was that no one ever raised a due diligence clause with him. I am not convinced that Mr Murphy imposed the requirement that there be no due diligence clause.
In any case, however it came about, QM contracted on the basis that there would be no due diligence period allowed after contract. It was an experienced property developer and familiar with the land offered for sale. No one thought that a due diligence process on all the properties could occur between 11 and 14 September 2007 – the typical timeframe for that was 30 days – tt 3-86-87. Mr Haseler knew that a full due diligence process could not be undertaken in the time between 11 and 14 September – t 5-40 – but he was happy to contract if his experienced staff could confirm that the representations made to QM were true – t 5-40.
QM’s attitude to Belscorp’s offer. QM Properties was very interested in the offer made to it by Belscorp. At that time the supply of land available for property development was limited and demand was high. It was difficult to buy land at that time and Mr Haseler said that QM needed land – tt 5-41-42 and 6-20. Mr Haseler also said that his company had a substantial land-bank, whether or not it bought Mr Murphy’s properties, so it was not desperate for stock. I accept that. However, in the circumstances I find that the offer of several properties suitable for development, not on the open market, where QM might have to compete on price, was an attractive one for QM.
Mr Haseler said that he was particularly keen on the Albany Creek block. He said he knew that area well. He said that the Albany Creek property was particularly attractive to him because it was “infill development”. He described the riverfront blocks on the Albany Creek property as appealing to him because they were “absolutely unique” – t 6‑9. Further, he thought it was an advantage that the Albany Creek property was close to Brisbane and land, according to Mr Haseler, was hard to buy in Albany Creek – t 5-42.
Mr Haseler denied that Delaneys Creek was particularly attractive to him. He said he would rather have bought land somewhere else, than somewhere where he had already had a development – t 6-23. I find however, that the Delaneys Creek land was attractive to him because it was across the road from a large development QM had already undertaken and that development had been profitable – tt 4-5-6. Mr Haseler had tried to buy the Delaneys Creek land in January 2007, and he had enquired whether it was for sale at some time after that, and before September 2007.
The Ningi property was one with which QM was familiar. It shared a common boundary with land QM had already developed. That development had been profitable – t 4-6.
Mr Ian Russell said, “… we were keen to buy the properties” – t 7-29. His evidence was that on the evening of 11 September Jon Haseler and he had reached the point where they agreed that what was on offer, “looked like a good opportunity for us” – t 7-36.
On 12 September 2007 Mr Mackney rang Mr Van der Meer and said that it looked like “the deal was on” and that QM had engaged solicitors to draw contracts – t 4-23. On 13 September 2007 Mr Mackney sent an email to Belscorp explaining that draft contracts which QM had sent Belscorp showed some errors in pricing, “… but it is important for [Mr Murphy] to know that we will be paying his asking price”. Mr Mackney agreed he sent this email to reassure Mr Murphy that “we still had a deal in place”. Having regard to Mr Murphy’s abrupt termination of negotiations for Delaneys Creek in January 2007, he was worried that Mr Murphy might take offence at the pricing errors in the contracts and walk away from the deal – t 4-20. Mr Mackney said that at that stage he was “keen to see the deal proceed” – t 4-20.
QM’s knowledge of the properties offered. The Belscorp properties were in locations with which QM was familiar, because it operated in those areas. This was part of the attraction of Mr Murphy’s stock. But it also meant that QM had, quite apart from its general depth of property development experience, specific knowledge on which to base opinions as to the value of the land which Belscorp was offering for sale.
Mr Haseler said this:
“Well I, knew that three days was quite unreasonable to assess, you know, half a dozen properties. We had a good feel for what the properties were and where they were, from the point of view of location, you know, sales prices that might be able to be achieved in those areas. But we just needed to make sure that everything was as – as it was put to us.” – t 5-40.
He clarified at t 6-16 that he personally thought he had a good feel for those matters. Further:
“… I was very interested in all the blocks … I believed that if we could, in those three days, ensure that the properties were as they were represented to us, then we would proceed, unless something unforeseen came up.” – t 6-6.
Mr Haseler accepted that his familiarity with the Delaneys Creek property and the Ningi property had some influence on his decision to buy – t 6-25.
Mr Mackney’s evidence (which I prefer) was that he and Mr Mike Russell did not inspect Delaneys Creek with Paul Van der Meer on 11 September 2007 as they were very familiar with it – t 4-9.
Discussions between Mr Mike Russell and Mr Haseler as to Value. The extent of QM’s familiarity with the market generally, and with the land on offer in particular, is shown in the discussion between Mr Mike Russell and Mr Haseler on the evening of 11 September 2007. Mr Mike Russell said he and Mr Haseler discussed the “rough values we thought that we could apply to the properties” – t 6-50. During this discussion he noted the conclusions he and Mr Haseler reached as to value on his copy of the project summary, against the right-hand margin of the page. I accept his evidence. It is consistent with Mr Haseler’s and Mr Mike Russell made a contemporaneous note.
The values Mr Mike Russell and Mr Haseler attributed to the properties were different from those which were produced by the multiplication exercise Mr Mike Russell had undertaken using the subdivisional lot prices given by Mr Van der Meer. The differences are as follows:
Name of Property
Price calculated using Belscorp’s per lot figures
QM’s rough idea of value
Ocean View (Sth)
It can be seen that Mr Haseler and Mr Mike Russell had their own ideas about the value of the land and were not relying on Belscorp’s assessment in this regard.
Mr Van der Meer
Mr Haseler, Mr Mike Russell and Mr Ian Russell all swore that they relied upon what Mr Van der Meer said to them. Having regard to the matters I have already discussed concerning Mr Ian Russell’s evidence, I place no reliance upon what he said.
Mr Haseler said that he accepted Mr Van der Meer at his word, “There was no reason not to. He was quite affable, easy to get on with you know, quite likeable.” – t 6-9. I think it is significant that he did not say he thought Mr Van der Meer competent, reliable or in any way impressive. Mr Haseler had not met Mr Van der Meer prior to the meeting at the Bribie Island Golf Club and did not know of him – t 6-17.
Mr Mike Russell had never met Mr Van der Meer before 9 September 2007. He said he understood he was an experienced property developer – t 6-67 – but on cross-examination it became clear he had no basis for saying that – tt 6-67-68. He also said that when Mr Van der Meer took him and Mr Mackney around the properties on 11 September 2007 he “appeared to know the properties well”.
Having heard evidence in the plaintiff’s case from very experienced property developers who were obviously men of some considerable sophistication, it was something of a shock when Mr Van der Meer appeared to give evidence in the defendant’s case. He was, it must be said, at the other end of the spectrum. I record that his appearance in the witness box, as well as the substance of his evidence, was significant in forming my view of him.
Mr Van der Meer gave evidence both in chief and in cross-examination that he did almost nothing of substance in his role as project manager – tt 8-114-115; t 9-7, t 9-8 and t 9-19. In summary, he did what the town planner retained by Belscorp told him to do. He regarded the town planner as having primary carriage of the development, in fact, he regarded the town planner as the applicant. If the town planner instructed him to engage a particular engineer or other consultant, he did so. When he received reports, his evidence was that he “would not know” what he was looking at; he just passed them on to the town planner. He explained that he did not read consultant’s reports – “If I don’t understand them there is no point me going through them” – t 9-20 and t 9-33, ll 25-35. He said he did not even read letters sent to him as project manager except “to see who they’re from and then pass them on” – t 9-20. Mr Murphy said that he considered Paul Van der Meer as being experienced in the engineering requirements of councils. However that may be, he did not appear competent to me. When it came to his comprehension of the contents of reports commissioned by Belscorp for the Albany Creek site as at September 2007, he said that he would have “no idea – I had an idea there was contents, but ---” – t 9-20. As extreme as this sounds, I do accept that Mr Van der Meer was being truthful in giving this evidence. As noted above, apart from working as Mr Murphy’s project manager, he had been a bricklayer, earthmover and gardener.
The point of these observations is that they bear on whether or not Mr Haseler or Mr Mike Russell did rely upon statements Mr Van der Meer made. No doubt they listened to what he said, but he would not have been able to provide them with any substantive information as to any aspect of any of the projects. Indeed, the terms of representations which I have found were made are very much in accordance with Mr Van der Meer’s description of his property development approach. All he could say was that consultants had been engaged to deal with issues raised by the Council. He would not have been able to give any detail which would elucidate the types of problems raised, or the types of solutions proposed.
Mr Haseler struck me as a highly intelligent man. He had very considerable experience in property development. He must have understood Mr Van der Meer was not a competent property developer. Likewise, I just cannot accept the implication in Mr Mike Russell’s evidence that his dealings with Mr Van der Meer gave him any comfort that he was a competent property developer who had a reliable, substantive understanding of the issues affecting the development of any of the six projects. Apart from the fact that Mr Van der Meer must have appeared unable to give details of the substance of any issues affecting the projects, Mr Mike Russell also had his project file, which was lacking in several very fundamental respects.
Associated with this point is the fact that the representations I have found Mr Van der Meer made were of the most general nature. There was nothing in the substance of the representations themselves which would have made an experienced property developer think that they were soundly based.
Reliance on Mr Van der Meer not proved. In any case, Mr Haseler’s evidence was that he did not rely upon Mr Van der Meer. He made it perfectly clear that he required his staff to ascertain from the project files whether or not the state of the projects was as Mr Van der Meer had represented them – t 5-40, t 6-6, and t 6-55, see  and  above.
Mr Haseler said this:
“So when you say you delegated the technical investigation to Mr Mike Russell, what were your instructions to him? As best you can recall, what did you say to him?--- Mike has worked for me, this year, 40 years bar seven or eight, as I’ve mentioned before. He was very capable. He was a surveyor by profession, and had worked as a project manager for many, many years. He’s very, very capable, very conservative, and I felt fully confident that Mike would assess the properties properly. He basically – some of the properties were being developed at the time, so I know that that was one area we’d touched on, that he needed to make sure he got the full information on the properties that were being developed. And with the other properties, he just needed to check the files, and make sure what we’d been represented was the case.
So when you said to him – I take it Albany Creek was in the latter group?--- Yes.
So when you said to him, ‘check the files,’ what you – what did you mean read the files?--- Whatever was involved with that. Between him and Greg Mackney, I would imagine that they would go over those files and assess them according to, you know, what had been represented to us.
From a – from a technical aspect?--- Yeah, remember we only had three days.
Yeah?--- So, you know, it was a – you had to focus on the critical – critical issues on each one of those projects.
So it’s the case, isn’t it, from what you’ve said, that you weren’t prepared to proceed on the basis of what had been said to you by Mr Van der Meer. What you wanted was for Mr Mike Russell to study the files to investigate the technical aspects of the developments to see whether what had been said to you was correct?--- Yes, we – the – the deal that had been put to us by Mr Van der Meer was, in general terms, agreeable to us, subject to us checking what was said was in actual – the fact.
Yes?--- And so that’s what Mike’s, you know, responsibility was.
Yes, and my point to you is that you, as the owner, you weren’t – when you left on holidays, you weren’t prepared to enter into a signed contract simply on the basis of what Mr Van der Meer had said to you?--- No.” – tt 6-34-35.
Mr Haseler’s evidence was that he relied upon Mike Russell to check that the representations made to QM were correct. In fact, as the discussion commencing at paragraph  above shows, Mr Mike Russell did not do the job which was asked of him. To the contrary, when Mr Mike Russell found respects in which the project file for Albany Creek did not support the representations, he made no further enquiries as to them, he swore, because he relied on what Mr Van der Meer said. What he said about the two mG issue shows this neatly:
“So is this your evidence, that on your review of the project file, you couldn’t, just by looking at the file in your own reading, satisfy yourself that an EMF report had been provide?--- Correct.
And despite not being able to satisfy yourself from your own reading of the file, you were prepared to proceed on the basis that you’d been assured by Van der Meer that everything had been dealt with?--- Yes.” – t 6-84.
The obvious was then asked and I think the answer is revealing:
“But if that was the basis on which you were proceeding, why were you reading the project file at all?--- It was to see what was, obviously, in it and to try and pick up where the status of the, you know, the project was. We, at that time, were – saw this property as a good opportunity and we were keen to get on and get moving with it. So, obviously, that was the first part of the process as well as, you know, going through it prior to the contract signing.” – tt 6-84-85.
Conclusions as to Reliance
Belscorp offered to sell QM a suite of properties which were attractive to QM. QM was familiar with the properties and a very experienced property developer. It was prepared to contract quickly, without a due diligence clause, on the basis that it have the chance to see whether or not what Belscorp had told it about the properties was true. This may have been an unusual approach, but the overwhelming inference from all the evidence is that it was one which Mr Haseler, on behalf of QM, was prepared to take because the deal was attractive to him and he had experienced staff who could make quick assessments of the land offered.
The plaintiff argued that by imposing the Friday deadline Belscorp in some way put it under undue pressure. I do not accept this. QM had sufficient time to undertake the enquiries necessary to reveal that what it had been told about the Albany Creek land was not true. The Friday deadline did not force QM to rely on what it had been told. Apart from those factual matters canvassed above, I note that the contracts were subject to a five day cooling off period.
From the day the offer was made it was clear that both Mr Haseler and Mr Mike Russell had their own ideas about the value of the land offered. I reject the notion that either Mr Haseler or Mr Mike Russell relied upon the representations Mr Van der Meer made to them about the Albany Creek land. I find he could not have impressed them as being a competent property developer. He made only the most general representations in relation to the land and its state of development. Mr Haseler did not rely upon what Mr Van der Meer said. He relied upon Mr Mike Russell performing an assessment of Mr Van der Meer’s file. It was Mr Haseler’s mind which is relevant in considering whether or not QM relied upon Mr Van der Meer’s representations.
By way of obiter I express my conclusion that nor did Mr Mike Russell rely upon Mr Van der Meer. Mr Mike Russell was a property developer of 40 years experience with all the resources of QM at his disposal. Mr Van der Meer could not have impressed Mr Mike Russell as competent either in person, or when Mr Mike Russell looked at his file. The Albany Creek land had issues as to flooding and as to high voltage power transmission lines. These were obvious to Mr Mike Russell when he inspected it. The Belscorp file lacked basic information about the flooding and the powerline issues. Mr Mike Russell did not investigate these issues or any other issues. He did not do the job which Mr Haseler asked him to do before leaving on holidays. One of the reasons for that is discussed above at . There may have been other reasons. Despite his evidence, I do not accept that one of the reasons was reliance upon Mr Van der Meer. In rejecting his evidence I have regard to the matters I raise at  and  above and the matters discussed in Juniper Property Holdings No 15 Pty Ltd v Caltabiano (No 2). By way of further obiter, I am of the view that in all the circumstances any reliance by Mr Mike Russell on Mr Van der Meer was unreasonable.
The plaintiff’s case, based on the Trade Practices Act and in tort, must fail because it has not proved that it relied on what Mr Van der Meer told it in deciding to contract.
All or Nothing Deal. Belscorp put the offer it made to QM on 11 September 2007 on an all or nothing basis and Mr Haseler’s evidence was that he assessed the deal on that basis. That is, he looked at the total pool of properties that was being offered in deciding whether he wanted to contract on Mr Murphy’s all or nothing terms: “the real intent was to make sure that the combined total of the blocks justified the purchase price of $22 million” – t 6-45. That this is so, is clear from the notes made on the document at tab 308 of ex 1, reflecting the opinions of Mr Haseler and Mr Mike Russell as to the values of each individual property.
I find that had QM refused to sign a contract to purchase the Albany Creek land on 14 September 2007 Belscorp would have refused to contract to sell any of the land on the project summary. Further, from what Mr Van der Meer said on 11 September and Mr Murphy said to Mr Ian Russell on 13 and 14 September 2007, I find that QM understood that was the likely result. Therefore, to succeed either on its Trade Practices case, or its tort case, it was necessary for QM to prove that, had it known the true state of affairs about the Albany Creek land, it would have been prepared to lose the benefit of purchasing all the land on the project summary at 14 September 2007. There was no evidence to this effect.
Mr Ian Russell was asked about this issue and swore that if he had known the truth about the two mG lines issue and the setback issue concerning the northern lots and their proximity to the South Pine River, he would have walked away from the whole deal – tt 7‑31 and 7-36. Because of my general view of Mr Ian Russell’s credit, I would not act on this evidence. But in any case, it did not matter what his view was; he had no authority to make this decision. The view that counted was Jon Haseler’s view. He was never asked what he would have done had he known the truth about the Albany Creek land.
Further to my conclusion at  above, the plaintiff’s case, based both on the Trade Practices Act and in tort, therefore fails for want of proof that the plaintiff would have acted any differently had the misrepresentations not been made.
The defendant counterclaimed for damages representing its loss of profit on the contract with QM, less the deposit. I turn to the evidence as to the true worth of the Albany Creek land at the time of breach of contract, 13 November 2007. In circumstances where it suited QM to have a higher value of this land, its valuer, Mr Michael Slater, produced a valuation substantially lower than that given by Belscorp’s valuer, Mr Scott Iveson. Having almost not cross-examined Mr Iveson, counsel for QM submitted that his valuation ought to be preferred. Apparently counsel for the defence could not bring themselves to be so bold, but did not advocate strongly for Mr Iveson’s view, only submitting that it was more conventional.
I prefer the evidence of Mr Slater, although I think partly due to an error (by the solicitors who briefed him – see  below) his opinion is likely to be too conservative. I find that the true value of the land at the time of the breach of contract by QM was $700,000. I discuss the reasons for my view below. Before coming to that it is necessary to discuss some further factual evidence which concerns the economic, as opposed to town planning or geographic, feasibility of the development of the Albany Creek land.
Economic Feasibility of Developing Albany Creek land
Stephen Panitz, employed by QM, prepared a feasibility study for the Albany Creek land on 11 October 2007 – exhibits 23, 24 and 26. The study showed an internal rate of return of 17.9 per cent. Generally QM did not develop land unless its feasibility studies showed a 20 per cent internal rate of return. The descriptor “internal rate of return” was not just a measure of potential profit, but a measure of profit and risks. If a proposed development did not show an internal rate of return of 20 per cent or greater, QM regarded it as too much of a risk to develop.
On 12 October 2007 Mr Panitz made a computer search to show the sales results for vacant land in Albany Creek – ex 25. This search showed that the average price for a block of vacant land at Albany Creek was $243,684. The median price was $235,000; the lowest $225,000, and the highest $298,000.
The preliminary feasibility study which Mr Panitz had produced the day before showed three different scenarios. They assumed sale prices of $357,000, $342,000 and $328,000 for the subdivided lots at Albany Creek. That is, the sale search cast grave doubts on the economic feasibility of the development, even assuming 28 lots could be developed as shown on DSC Plan B.
Mr Panitz was a very unimpressive witness, for reasons that are not necessary to go into here. He prevaricated about the significance of the work he did – tt 4-74-82.
After Stephen Panitz passed on this information to Ian Russell, Mr Rix (another QM employee) was asked to make an analysis to see if the Albany Creek land could be developed profitably as a unit development. The answer was that it could not be.
Mr Haseler gave evidence that he recalled that in November he had found out that there were questions as to the economic feasibility of the Albany Creek land and asked Mr Rix to consider whether it could be developed for units. He persisted, I thought quite unconvincingly, with the idea that the subdivided lots at Albany Creek could be sold for “400 plus” on the northern island and “300” on the south-western lots – t 6-42. But nevertheless, he conceded that there were economic difficulties with the project because of the high cost of the development – tt 6-39-40.
It will be recalled that Mr Murphy had made a previous application to develop the Albany Creek land in 2003. He did not persist with it. He made a further application to develop the land in 2009. This did not involve developing the higher area of land which I have referred to as the northern island, but only 14 lots on the area of land in the south-west. This application was unsuccessful, although I recognise that QM interfered with its chances of success based on the EMF issue. It must be noted, however, that Belscorp did not robustly advance the application on the basis that the south-west lots could be developed if the high voltage transmission lines were rephased.
On the evidence before me, on the balance of probabilities, even if the Council had allowed the 28 block subdivision shown in DSC Plan B, it would not have been economically feasible, having regard to the purchase price which QM paid for the Albany Creek land. Mr Murphy had paid $1,045,000 for the land in 2003. While not conclusive, the evidence tends to suggest that even at that price, the land could not be economically developed, either by way of a 28 lot subdivision, or a 14 lot subdivision.
The Albany Creek land consisted of two lots. Lot 1 was just over 1,000 square metres in size and lot 2 was 7.8 hectares in size. There was no independent access to lot 2; access to that lot depended upon an easement which was registered over lot 1. There were old wooden houses on each of lots 1 and 2. The valuers were agreed that the houses were of no material value.
The sale price on the contract between Belscorp and QM Properties was $3.835 million. However, I do not think this can be used as evidence of value. To begin with, the sale was not independent, but part of a larger transaction where several properties were purchased for the price of $22 million. Secondly, the transaction did not complete and by the time of trial there was no claim for specific performance.
Mr Slater’s Opinion. Mr Slater said that a single rural residence was the highest and best use of the two lots of land. His first reason for that conclusion was that whether or not a 14 lot development or a 28 lot development was considered, it could not be profitable unless the land was acquired for less than $500,000. This conclusion is given some support by the evidence I have just discussed as to economic feasibility.
Mr Slater set out his views on the economic feasibility of these development scenarios at Annexures E1 and E3 to his report of 29 May 2015. These annexures show as the last figure on each page the amount of money which a developer would pay for the land in order to take the risk of making a profit on the development. That is, they are not values of the land per se.
Unfortunately, Mr Slater assumed that the powerlines would prevent development of two lots on the south‑western side of the block in his calculations at Annexure E1. I think that the probability is that they would not, having regard to the evidence as to rephasing. Mr Slater was not able to recalculate to allow for the effect of that in the witness box. He could say that the two extra lots would produce another $470,000 income to the project and increase development costs by around $100,000. That is, he seemed to accept that the developer would be better off by an amount of $370,000 by reason of the land yielding 16 rather than 14 lots, but because of the complicated structure of his financial analysis in Annexure E1, was not able to say what difference that would make to the price a fully informed developer would be prepared to pay in order to acquire the land for such a development.
I must do the best I can with this rather unsatisfactory evidence. Given that a 14 lot development would be feasible assuming a purchase price of $500,000 for the land, I find that the assumed purchase price would increase if a 16 lot development were under consideration. It seems that it would not increase by $375,000. Doing the best I can, I find that a 16 lot development would be profitable if a purchase price of $700,000 is assumed. I have regard to the evidence at  below as some assistance in fixing this figure.
The calculation at Annexure E3 showed that an informed purchaser who paid around $775,000 for the land would likely make a profit on a 28 lot development. In his evidence, Mr Slater said that was an erroneous figure and that the true figure was under $500,000. The error had occurred because he had assumed the same risk factor in that calculation (25 per cent) as he had for the 14 lot development. In fact, he ought to have assumed a 30 per cent risk factor for the 28 lot development.
The second reason for Mr Slater’s conclusion that the Albany Creek land was best valued as a single rural residence, is that a purchaser of lot 2 for residential purposes would have little option but to build close to a house situated on lot 1, and the purchaser of lot 2 would have to share a driveway of considerable length with the owner of lot 1. Therefore he concluded that the highest and best use of both lots was that they be in single ownership. These difficulties with amenity and access are well illustrated by the picture at page 7 of Mr Iveson’s report of 28 March 2017, and are discussed in some detail at page 6 of Mr Slater’s second report. Mr Slater thought that a purchaser might pay around $150,000 for lot 1. However, he thought that if lot 2 were then sold separately it would not sell for $500,000 because of these factors – tt 10-40-41.
As to the Albany Creek land as a single residential block, Mr Slater did allow that there were comparative sales and said that the sale of land at 4 Stewart Road, Albany Creek, on 7 November 2007 for the price of $620,000 was the best comparator. That land was very much smaller than the combined area of lots 1 and 2; it was 2,534 square metres in size. It had a brick house on it. The sale in November 2007 was apparently with the intent of subdividing that area into five lots. However, that subdivision did not proceed. The block has always been used as a single residence. Despite the difference in size between the Albany Creek land and the land at 4 Stewart Road, Mr Slater maintained that because of the flood channel through the middle of the Albany Creek land and the powerlines, the value of the land at 4 Stewart Road was a reliable comparator – t 10-43.
Mr Iveson’s approach, preliminary matters. The defendant called Mr Iveson. He provided three alternative values, as he was instructed to do. These were of the land: (1) as a single rural residential home site; (2) assuming it was able to be developed as specified in DSC Plan B, and (3) as a site sold for development with the constraints indicated in DSC Plan B, but no particular proposed development.
As to the second and third bases for valuation, Mr Iveson did not attempt any analysis of the geographic or economic feasibility of the development as per DSC Plan B. In his report, the reason he gave for that was that he was instructed there was no information as to the conditions of development approval or construction cost of the development as at the end of 2007. Mr Iveson acknowledged in the joint expert report (paragraph 5.2) that he was not expressing an opinion as to whether or not the Albany Creek land had the capacity to be developed either in terms of DSC Plan B, or at all. In the absence of any attempt to address the feasibility of the developments he assumed, he based values he gave on what he said were comparable sales. I think there are fundamental difficulties with this approach.
First, as Mr Slater points out in the joint expert report, there is no objection to a valuer using information from a past time and reconstructing a retrospective costing analysis in respect of potential development, so there was no warrant for Mr Iveson proceeding in the way he has. Second, as Mr Slater points out in the joint expert report, to simply accept the instructions he has been given, means that Mr Iveson has not made any independent assessment of, or conclusion as to, the highest and best use of the land.
Third, the assumption that the Albany Creek land could be profitably developed in accordance with DSC Plan B is incompatible with the evidence before me, at least if it sold for the value arrived at by Mr Iveson. Council was unlikely to grant approval which allowed development of the subdivision shown in this plan. Further, the economic feasibility of the development shown in DSC Plan B was so poor that it is unlikely that a developer would have spent the time and money briefing experts such as Messrs Johnson, Ovenden and Powell, either to attempt to convince Council that its approach to flooding and setbacks from waterways was wrong before an approval decision was made, or to support a challenge to an unfavourable Council decision. Only a developer who had bought the land very cheaply might have the motivation to do so. Unfortunately, because of the artificial approach to valuation which Mr Iveson has chosen, he has not considered how cheaply the land would need to be purchased for that to occur. His whole approach begs this question.
Fourthly, as the discussion of comparable sales (below) shows, for a sale to be truly comparable, the land in question would have to suffer similar disadvantages to the Albany Creek land. Mr Iveson has selected some comparators with flooding and EMF constraints, but none of the comparators present the very difficult development problems which the Albany Creek land presents: two small isolated areas of high land, the second separated by a considerable area of floodplain from any road access and bounded by a major waterway. Mr Iveson’s search for comparators really just emphasises how inappropriate his approach is. His approach does not come to grips with the geographical and financial constraints on developing the Albany Creek land.
There was a further problem, in my view, with the third of the alternative valuations given by Mr Iveson. The nature of the exercise was altogether too vague to produce any convincing valuation opinion in circumstances where (i) the development constraints he identifies from DSC Plan B are nowhere defined with any precision, and (ii) the development hypothesised is by definition different to that in DSC Plan B, but in some unspecified way. The fact that neither Belscorp nor QM Properties has ever put forward any better alternative to the development proposed in DSC Plan B makes it unlikely, in my view, that Mr Iveson had anything specific in mind. In fact, his evidence was simply that “en globo land without development approval often sells, and is valued, with no defined development outcome contemplated”. If what Mr Iveson was saying was that purchasers buy land for development in ignorance of geographical or financial constraints, that is not a proper basis for valuation. The basis upon which valuation is to proceed is that in Spencer v The Commonwealth:
“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.” (my underlining).
Mr Iveson’s Opinion. Having dealt with those preliminary concerns, I turn to a more detailed analysis of Mr Iveson’s report and evidence.
As to his second alternative basis of valuation, ie., that the 28 lot development shown in DSC Plan B was able to go ahead, Mr Iveson makes comparison with seven sales which he lists as sales 18-24 of his report. He says that the analysis of this sale’s evidence is on a “rate per lot basis”. He takes the sale price of the comparator en globo land at or around the end of 2007, and the number of lots obtained ultimately produced on development. He divides the latter into the former and produces what he calls a “rate per lot yield”. This produces seven figures which are (in the order of his sales, ie., 18-24): $124,000; $77,500; $93,333; $136,363; $58,252; $93,750 and $68,270.
Mr Iveson then makes remarks about sale number 18 which must I think be taken to mean that he does not think it is comparable, and does not consider it further. He states at the top of page 27 of his report that the remaining six sales range between $58,252 and $136,363 per lot yield. He then says:
“On a rate per lot yield basis the en globo value is supported at greater than $58,252 per lot yield and less than $93,333 per lot yield, with the community title lots likely to be slightly less than those at [sale 19] at $77,500 per lot yield. In my view the land to the east of powerlines, when considering the elevation, position and access under the power lines together with the riverside location and outlook is supported to the lower end of the range for which I have adopted $65,000 per lot; and the land to the west of the power lines when considering the elevation access and outline is supported at slightly better than middle range, for which I have adopted $80,000 per lot.”
This is the reasoning feeding into the conclusion then expressed at page 28 of his report that:
“On this basis I assess the market value as follows:
16 lots on an en globo direct comparison basis @ $80,000/lot $1,280,000.00
12 CTS lots on en globo direct comparison basis @ $65,000/lot $780,000.00
Total market value on an en globo 28 lot development basis say $2,060,000.00.”
I am not prepared to act upon this evidence.
First, I think Mr Iveson was right to regard his sale 18 as irrelevant to this exercise. It is the sale of 4 Stewart Road discussed above. Mr Iveson says that the purchaser intended to develop the land into five sites but never did. Its small size; the small size of the proposed development, and the fact the development never went ahead mean that it is not comparable in performing this exercise. Then it appears from the paragraph quoted at  above that Mr Iveson has also taken his sale 21 out of consideration – it was the sale which yielded a rate per lot of $136,363. Next, Mr Iveson remarks that his sale 20 was “an apparently uncomplicated development site with few constraints”. To my mind that means it is not comparable for the purpose of the exercise he is undertaking, yet he does include it. I find it ought to be disregarded, for the evidence in this case is that the development proposed in DSC Plan B was extremely complicated, to the point that it was unlikely to proceed.
Disregarding sales 18, 21 and 20 leaves Mr Iveson with four sales which he puts up as comparable. Of those one is at Bray Park, a development of 103 lots, and two are at Kedron, next door to each other, developments of 32 and 52 lots respectively. The lots at Kedron are post-valuation date.
Of the Bray Park land Mr Slater says in his responsive report:
“This sale has nothing in common with the subject. I will comment that the construction of the drainage system could be spread over 103 lots which distinguishes the subject extraordinary development costs.”
As to the Kedron sales Mr Slater says:
“Sales 23 and 24 are in Brisbane city, 15 kilometres from the subject land and a completely different environment. They have no relevance to the present case.”
Of the fourth remaining sale – sale 19 – Mr Slater says:
“It is in a superior environment, mostly well elevated, and does not bear the extraordinary costs that went with the development of the subject land in access road/creek crossing, the filling requirements and the CTS lots to be developed to one side only of the internal road. The power lines, 350 metres to the north-west, have no influence on the land. Consequently, when properly considered this sale would indicate a much lower value for the subject than $70 to $85 per square metre.”
Mr Slater was not cross-examined about his views of these four comparators. His criticisms seem valid at a factual level.
It seems to me that the exercise which Mr Iveson has done is not in reality based on any comparable data.
There are more philosophical difficulties with Mr Iveson’s method. It assumes that the purchaser of the land in each comparator sale intended to obtain the approximate number of lots ultimately obtained on subdivision. I do not think such an assumption is safe. Furthermore, when the reasoning extracted at paragraph  is considered, it can be seen that Mr Iveson is basing his opinion on a comparison between the prices received for subdivided lots which were sold well after November 2007 and extrapolating a value per hypothetical subdivided lot at the Albany Creek land.
I turn to the third alternative basis for valuation in Mr Iveson’s report: an en globo development on the site with the development constraints generally identified in DSC Plan B, but not necessarily in accordance with the 28 plan development shown on that plan. As to this basis for valuation Mr Iveson says, “I have assumed that DSC Plans B and C show the likely development constraints and developable footprints that would have been considered by a purchaser on an en globo basis without adopting the 28 lot layout.”
The difficulty with that is that DSC Plan B does not show accurately the constraint imposed by the Council’s requirements as at November 2007 for buffer zones along the South Pine River. Thus Mr Iveson has assumed a much larger area of land on the northern island available for development than was available. Further, there is nothing in Mr Iveson’s report to indicate that he understands that a major constraint on development of the northern island lots is the requirement to have roadway access to them. That is, he simply takes account of the flood channel in the middle of the land as rendering that land unsuitable for development.
In undertaking this third alternative basis of valuation, Mr Iveson again uses the seven sales, 18-24. However, he uses them in a different way. He calculates what he says are the developable portions of the comparative sites. Then, using their sale prices, calculates a price per square metre of developable land for each of the seven blocks. He then applies that rate to what he understands to be the developable portions of the Albany Creek land. His lack of appreciation of the need for an expensive access way to render the northern island developable, and his reliance upon the erroneous buffer zones shown in DSC Plan B, mean that he overestimates the amount of developable land at Albany Creek.
Further, his reasoning is based on an assumption that the purchasers of comparator blocks of land paid a price referable to a developable area of land which is the same as or similar to the parts of the land which were in fact developed. There is no warrant for that assumption.
In addition, there are the same difficulties with the lack of true comparability between the Albany Creek land and sales 18 to 24.
Again, I am not prepared to act on this valuation evidence.
Lastly, I come to Mr Iveson’s first basis for valuation; that is, as a rural residence. He does not consider the impact on the value of lot 2 of the access issues and the need to build a house very close to the house on lot 1. He assesses a value of $270,000 for lot 1 and $900,000 for lot 2. That is, he gives a total value of $1,170,000.
Mr Iveson lists four sales as being relevant to the value of lot 2. I accept Mr Slater’s view that sale 1 is not truly comparable. It is the sale of a large, prestigious rural residential home-site in Bridgeman Downs. Bridgeman Downs is on the other side of Albany Creek. The difference between the two suburbs is very marked. While the Bridgeman Downs property does contain the high voltage transmission lines, and is affected by flooding issues, a large amount of it – 12,600 m2 adjacent to a roadway, is above the floodplain. That is, it is clear that it yields a large home-site unaffected by either the powerlines or flooding. A large home is constructed on it which Mr Iveson values at a million dollars. He gives no reasoning for this and I think Mr Slater is justified in criticising his report in this respect. I suppose the home and its value, and the pictures of it in Mr Iveson’s report, only stand to emphasise how different this suburb is when compared to the pictures of the two old wooden houses on the Albany Creek land.
Mr Iveson’s sale number 2 is another property at Bridgeman Downs and the remarks I have already made apply. Mr Slater regards it as “a vastly superior home-site” and not comparable. He says it is a “considerably superior environment” and is located within Brisbane City Council rather than the Pine Rivers Shire. There are no issues with overhead powerlines affecting this property, although it does appear to be subject to an easement and to have one relatively small corner affected by a waterway.
Mr Iveson’s sale 3 is an unusual sale. Three lots were purchased by the Moreton Council in lieu of a compulsory acquisition. Mr Iveson notes that it has superior improvements to the Albany Creek land, but makes no allowance for those in his valuation. He considers that it is more adversely affected by both flooding issues and powerlines than the Albany Creek property.
Mr Iveson’s fourth sale was another Bridgeman Downs property. Mr Slater points out that it had a highset four bedroom, two bathroom brick home on it, with “extensive nursery improvements including a line marked carpark”.
I find it odd that although Mr Iveson first uses, and then apparently discards, the sale at 4 Stewart Road, Albany Creek (his sale 18) for comparison as a development site, he does not use the sale as a comparator for a rural residence. Whatever he may have been told about the purchaser’s plans to subdivide this lot, it was sold as (and continues to be used as) a rural residence. It is true that 4 Stewart Road is a much smaller block than the Albany Creek land, but so are his sales 2 and 4. It does rather undermine my confidence in his comparative exercise that he chooses three blocks of land in Brisbane City, in the prestigious suburb of Bridgeman Downs as comparators, when there was an obvious comparator, of which he was aware, in Albany Creek, very close to the subject site.
Mr Iveson gives a dozen small lot sales which he says are comparable to lot 1 of the Albany Creek land. At page 17 of his report he makes fairly cursory comments about them.
Conclusions as to Valuation and Assessment of Damages
As noted, I am not prepared to act on the basis of Mr Iveson’s second and third alternative bases for valuation. I accept that the difficulties with shared access and lack of privacy and amenity identified by Mr Slater in relation to the idea of using the Albany Creek land as two separate residential lots are valid. I prefer his valuation of the Albany Creek land as a single rural residence to the first of Mr Iveson’s alternative valuations because Mr Slater takes account of these difficulties with access and amenities and Mr Iveson does not. Further, I think Mr Slater’s comparison sale is more comparable than those used by Mr Iveson.
Having said that, it seems to me that having regard to my conclusion at paragraph  above, that on Mr Slater’s evidence, valuation as a single rural residence is no longer the highest and best use of the land. It is marginally more valuable to a developer considering a 16 lot subdivision on the south-west part of the land. Such a purchaser would be likely to pay around $700,000 for the land on this basis. I conclude that this is the value of the land at the time of breach of contract.
The difference between the value of the land at the time of breach of contract and the sale price of $3.835 million is the measure of the defendant’s loss of profit on the contract. The deposit QM Properties paid on the Albany Creek property was $191,750. Belscorp remains in possession of that money. Therefore, I award an amount of $2,943,250 to the defendant on its counterclaim.
On 2 March 2018 I granted leave to the defendant to amend its counterclaim. Prior to 2 March 2018 the defendant pleaded that the plaintiff’s purported termination was a breach of contract and a repudiation of contract not accepted by the defendant as terminating the contract – paragraph 124 of the pleading. The primary claim of specific performance was for an order that QM pay the purchase price together with interest at the contractual rate for monies payable under the contract – paragraphs 125, 126, and 129 of the pleading. Paragraph 130 of the pleading, however, claimed that “further and alternatively”, because of QM’s breach of contract, Belscorp had suffered loss and damage “being the difference between the contract price and the value of the property at the date of the plaintiff’s breach of contract, less the deposit, plus holding costs and interest”. Paragraph 131 of the pleading said: “In the alternative to the claim in paragraph 129 above for specific performance and consequential relief, the defendant claims damages in lieu of the claim for specific performance as a result of the plaintiff’s breach and repudiation of the contract”. The particulars were given as the holding costs and the difference between the contract price and the value of the property as at the date of breach less the deposit.
Holding costs were never properly claimable as common law damages and to that extent the pleading at paragraphs 130 and 131 can be regarded as an overreach on the part of the defendant. That having been said, apart from the words “in lieu of the claim for specific performance” in paragraph 131, I regard paragraphs 130 and 131 as making a conventional claim for damages for breach of contract (ie., common law damages) in the alternative to a claim for specific performance. The phrase “in lieu of the claim for specific performance” is untidy, but in context can simply be regarded as surplusage. That is, in my opinion the pleading as it stood before 2 March 2018 made a primary claim for specific performance and an alternative claim at paragraphs 130 and 131 for damages for breach of contract. My view on that is not changed by the unfortunate wording of paragraph 131(d) of the prayer for relief in the counterclaim before 2 March 2018.
On 26 February 2018 defence counsel made a written opening as to its case on damages. As part of this, he announced that his client made an election to seek damages rather than specific performance. On 2 March 2018 I gave leave to file an amended counterclaim which made it clear that the plaintiff sought common law damages for breach of contract. Counsel for the plaintiff did not oppose that.
In reply to the 2 March 2018 amendments, the plaintiff pleaded that, by the 2 March 2018 amendments to the counterclaim, the defendant, for the first time, pleaded a claim for damages for breach of contract. The consequence was said to be that any interest awarded on damages should date only from 2 March 2018. It was said that the common law claim did not accrue until 2 March 2018. The point-taking nature of this plea is illustrated by the fact that it was conceded in the plaintiff’s written submissions on trial that it had always understood the defendant as making a claim for damages for breach of contract at common law, see footnote 72 above. It is further emphasised by the fact that although the initial written submission on this point by the plaintiff was to the effect that the common law claim did not accrue until 2 March 2018, it withdrew that submission in its reply submissions on this point.
In my view, this claim by the plaintiff must be rejected. The claim for common law damages accrued when QM breached the contract. I regard the date of breach as 13 November 2007 when QM Properties did not settle on the Albany Creek land. Furthermore, as explained above, in my view the defendant’s counterclaim pleaded common law damages as an alternative before the amendments of 2 March 2018. It is incorrect to submit, as the plaintiff did, that following the plaintiff’s failure to settle, the defendant “elected to affirm the contract”. The defendant elected not to terminate the contract. Its right to elect to terminate and seek damages for breach of contract remained intact. There was no new breach.
There is nothing in this point raised by the plaintiff. The defendant should have interest from 13 November 2007. That is the time it has been kept out of its money.
I will hear the parties on the amount of interest and on costs.
 Lots 1 and 2 on RP115421, County of Stanley, Parish of Bunya.
 Tab 236 of ex 1, 8 November 2007.
 In its Reply and Answer the plaintiff raised mistake. No submissions were made by the plaintiff in support of this claim. Neither the pleading nor the evidence disclose any mistake known to the law: Menegazzo v Pricewaterhousecoopers  QSC 94, -.
 Both operated through more than one company, although it was common ground at the trial that the different corporate entities could be disregarded.
 For examples of all three of these things see tt 9-13-14; t 9-17 l 37 to t 9-18 l 10; t 9-21 ll 1-10; t 9-28 l 44 to t 9-29 l 10; t 9-30 ll 1-20; t 9-42 l 31 to t 9-43 l 7; t 9-55 l 22 to t 9-56 l 35.
 For example, tt 9-39-40; tt 9-44-45; t 9-55 ll 25-35; t 9-56 l 20; t 9-58; tt 9-62-63.
 t 9-17 ll 15-30; t 9-21 ll 1-10; t 9-23 compared to t 9-17 ll 30-40; t 9-19 ll 40-50; t 9-20 ll 1-5; t 9-34 l 24 to t 9‑35 l 24.
 t 2-79; t 3-4; t 3-5.
 There was a DSC Plan C, but it differed very little from DSC Plan B.
 It included a drawing (the Humphrey drawing) showing two mG lines. But it was clear that Council was calling for the report which explained how the lines shown on the Humphrey drawing had been determined, and was not satisfied just with the drawing – t 1-45. Council was right to be concerned. There was no underlying report and the two mG lines had simply been drawn to coincide with the Energex easement. This was not their true position.
 Ian Buchanan, Belscorp’s town planner knew all this; made no attempt to obtain a proper report, and tried to fob off requests from the Council for a report – t 8-72, tt 8-75-77 and tt 8-78-79.
 The first report of Robin Russell, 8 November 2007 at tab 239 of ex 1. Note: the second and third reports are incomplete and cannot be relied upon.
 Robin Russell first report (above) and Robin Russell fourth report, November 2008.
 tt 2-48-49 and tab 123 of ex 1.
 Ian Buchanan – tt 8-45-48, 8-51 and 8-58-59.
 The line which marks land which can be expected to be under water during a one in 100 year flood.
 tt 2-72-73, and the references to Mr Buchanan’s evidence at footnote 15 above.
 Mr Vanderent, tt 2-80-81.
 t 8-10.
 t 2-51 and the email dated 11 May 2007 at tab 177 of ex 1; t 8-14 and tab 182 of ex 1.
 Mr Ian Buchanan gave evidence as if he were advocating a case on behalf of his client, and was not constrained by any requirement to be honest in doing so. This is most obvious in relation to his evidence regarding the two mG lines, see the references at footnote 11 above. However, I think this approach pervaded all his evidence. Particularly as to the idea that any conditions left to the operational works stage would be minor, I find he very well knew they were not. In 2009 he lodged a third development application over the Albany Creek land on behalf of Belscorp which proposed no units on the northern island. His evidence about this was that the constraints affecting this area of land “didn’t completely preclude development on that part of the site” – t 8‑20.
 To the extent that Mr Moffatt and Mr Vanderent said any differently to that in their evidence, I prefer the evidence of the planners rather than the engineers. This was a planning issue, not an engineering issue.
 See the joint expert report of John Davidson and Alistair Byrom, dated 15 November 2017.
 See for example Dr Johnson, t 11-53.
 The plaintiff’s written submissions implied that this body of evidence was obtained as being relevant to whether or not specific performance should be granted – see p 7, paragraph LL.
 Paragraphs 81(1), 81(2), 81(10), 81(11), 81(12), 81(13) and 81(14) of the fourth further amended statement of claim.
 Paragraph 81(3) of the fourth further amended statement of claim.
 An augmented reading of paragraph 81(4) of the fourth further amended statement of claim.
 Paragraphs 81(5), 81(6) and 81(8) of the fourth further amended statement of claim.
 Paragraph 81(16) of the fourth further amended statement of claim.
 Paragraph 81(7) of the fourth further amended statement of claim.
 Paragraph 81(15) of the fourth further amended statement of claim.
 This property was by far the most valuable sold by Belscorp to QM in the transactions which are the subject of this litigation, worth somewhere between $9 and $12 million.
 The word “re-lodge” in the project summary is unfortunate because it sounds as though the application was to be re-lodged. It was not. Unfortunately several of the witnesses adopted this terminology of “re-lodging”. I am satisfied that every one of the references to re-lodging was meant as responding to the information request – t 7-16.
 Mr Mackney’s copy of the project summary had some notes on it but he could not recall when he made them and it might well have been after contract – tt 3-75-76 – so I do not have any regard to them as bearing on what was said at the golf club meeting.
 Tab 221 of ex 1. Mr Ian Russell asks Mr Mike Russell and Mr Mackney to “prepare from your notes and recollections what exactly they represented to you in terms of the property”.
 Holdway v Arcuri Lawyers  2 Qd R 18, ; Kennedy v Queensland Alumina Ltd  QCA 159, .
 I think the plaintiff somewhat distracted itself with this representation. The only representation pleaded is that Mr Van der Meer represented that he was providing his complete project file. The project file he provided did not give a complete history of the development application. But there is no evidence at all that it was not Mr Van der Meer’s complete file. That is, there is no evidence at all that Mr Van der Meer kept documents back from QM; only that he did not keep a very good file. Furthermore, the idea that the plaintiff’s case could be advanced by proving that Mr Van der Meer represented that the file was complete is illogical. The file plainly was not complete. If the representation had been made, as soon as Mr Mike Russell looked at the file he would have realised it was false and this would have been an indication to Mr Mike Russell not to rely upon what Mr Van der Meer said.
 Mr Van der Meer thought that Mr Mike Russell asked for the project files during the trip to inspect the properties. Either way, the purpose was understood by everyone, except perhaps Mr Ian Russell, well before the afternoon meeting. Mr Ian Russell said that Mr Haseler had told him of it earlier that day – t 7-22.
 t 3-85, t 4-24 per Mr Mackney and also see the evidence of Mr Murdoch – t 3-38.
 It must be said that the email of 7.23 am did not sit alone. On Thursday, 13 September Mr Ian Russell sent an email (ex 49) to the chief financial officer of QM saying that he hoped to settle that day. He swore that this was not in fact his hope; he was just trying to make sure the chief financial officer had a bank cheque ready for the deposit the next day. His explanations as to why he would not just have sent a straightforward email to the CFO asking for what he wanted were unsatisfactory – t 7-45. However, for much the same reasons I give at  above, I accept that he in fact did not hope to settle the contracts on Thursday.
  and  below.
 The evidence from Council was that they tried very hard to meet intending purchaser’s deadlines in organising pre-purchase advice meetings – t 2-85 and t 2-86. When Mr Mackney asked for a meeting on 23 October 2007 he was told that the earliest available was on 29 October 2007. I cannot find that had Mr Mike Russell asked for a meeting in the week starting 11 September 2007 he would have been granted one before Friday, 14 September 2007.
 It was both Mr Mackney’s and Mr Mike Russell’s evidence that Mr Mike Russell was to review the Albany Creek file – t 3‑85, t 3‑86 and t 6-55. Mr Ian Russell swore that it was Mr Mackney’s task to do so. I find he was wrong about that.
 t 2‑89.
 Evidence as to this occupied the first two or three days at trial.
 See the letter of termination, 8 November 2007, tab 240, ex 1.
 Haseler, t 5-39.
 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, .
 t 6-9; t 6-14; t 6-46; t 4-4, and t 5-39, “sought”.
 He explained he meant that the land was in an area where development had taken place all around it, and it was a remaining block that was not surrounded by development – t 6-6. That is simply not true – see the aerial photograph on the cover of Mr Iveson’s report. That of course does not mean that it was not Mr Haseler’s genuine view at the time
 Mr Van der Meer gave evidence of this telephone call and Mr Mackney accepted that he “could well have” made it – t 4-23. I find he likely did.
 Belscorp’s town planner, Ian Buchanan corroborated this – t 8-50.
 Mr Murphy’s evidence about this was somewhat unsatisfactory, although on balance, I accept that what I have recorded was his honest view.
 Mr Mackney said he was a gardener, Mr Murphy said a bricklayer, and it was hard to tell from Mr Murphy’s evidence whether Mr Van der Meer worked full-time for Mr Murphy, for he ran an earthmoving business as well – t 9-89.
 See also the extracts at  above.
 See Vickers v Taccone  NSWSC 514, ; Juniper Property Holdings No 15 Pty Ltd v Caltabiano (No 2)  QSC 5, -; Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1988) 78 ALR 193, ; Avora v Maxwell  NSWCA 346,  and Vouzas v Bleake House Pty Ltd  VSC 534, ‑.
 Above, -.
 Mr Mackney said that Mr Van der Meer said this at the golf club – t 4-13 – and I accept that. Further, it was clear from QM’s dealings with Mr Murphy on 13 and 14 September 2007.
 Both valuers were of the view that it made no difference whether the land was valued at the time of the contract to purchase, or the breach of that contract.
 See paragraph 156 of the plaintiff’s written submissions. I disregard the bizarre submission at page 7, paragraphs FF-II, that the value represented by Mr Van der Meer pre-contractually should be accepted as the true value.
 If there is any doubt on his evidence that he produced this search, I find that he did. He was the person within QM tasked to work on the development of the Albany Creek land, and was actively engaged in assessing its economic feasibility at the time the search was made. He prepared a preliminary feasibility study on 11 October 2007.
 See Mr Iveson on this point at t 10-55.
 See paragraphs 126.96.36.199 and 5.17 of the joint expert report of valuers.
 See tt 10-9-10 and t 10-34.
 In the joint report he gave the different reason that the feasibility of development was a matter for others, and he was simply making the assumption that it could be developed in accordance with his instructions.
 While this point did not feature in oral evidence, it was debated between the experts in the joint report, see eg., 5.15.3. See also Mr Slater’s responsive report, eg., paragraph 3.2.2.
 Joint expert report, paragraph 4.2.2.
 (1907) 5 CLR 418, 441 per Isaacs J.
 Bottom of p 26 – top of p 27 of his report.
 He says that this was an older sale and that the rate per lot analysis was complicated by the inclusion of a large rear lot retained by the developer.
 So much is acknowledged by the plaintiff at paragraph C (page 2) of its written address at the end of the trial.
 Marked H for identification.
 The Millstream Pty Ltd v Schultz  1 NSWLR 547, p 553, paragraph 15; Galafassi v Kelly  NSWCA 190, . And I record that I prefer the reasoning in Millstream to the obiter in Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444, 462.
 Even if it had not, it is clear from Millstream (above) and Ailakis v Olivero [No 2]  WASCA 127, ‑ that Belscorp retained the right to amend to add such a claim.
- Published Case Name:
QM Properties Pty Ltd v Belscorp Pty Ltd
- Shortened Case Name:
QM Properties Pty Ltd v Belscorp Pty Ltd
 QSC 158
25 Jul 2018
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QSC 158||25 Jul 2018||Judgment for the defendant on the plaintiff's claim; judgment for the defendant against the plaintiff on the defendant's counterclaim in the sum of $2,943.250: Dalton J.|
|Appeal Determined (QCA)|| QCA 138||16 Jul 2019||Appeal dismissed: Sofronoff P and Morrison JA and Brown J.|