BLUESKIN BAY FOREST HEIGHTS LTD V PATERSON PITTS PARTNERS LTD HC DUN CIV-2010-412-000460

BLUESKIN BAY FOREST HEIGHTS LTD V PATERSON PITTS PARTNERS LTD HC DUN CIV-2010-412- 000460 [3 September 2012]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYCIV-2010-412-000460[2012] NZHC 2252BETWEEN BLUESKIN BAY FOREST HEIGHTSLIMITEDPlaintiffAND PATERSON PITTS PARTNERS LIMITEDDefendantAND DUNEDIN CITY COUNCILThird PartyHearing: 23-25 July 2012Appearances: P M James and A Riches for the PlaintiffM E Parker and A J Nash for the DefendantNo appearance for the Third PartyJudgment: 3 September 2012RESERVED JUDGMENT OF HON JUSTICE FRENCHIntroduction[1] Blueskin Bay Forest Heights Limited engaged Paterson Pitts, a resource management specialist, to assist it with a rural residential subdivision.[2] Blueskin says that Paterson Pitts negligently failed to obtain all the required resource consents and as a result Blueskin has suffered various losses.[3] The key issues for determination are:(i) did Paterson Pitts breach the duty of care it owed Blueskin?(ii) was any negligence on the part of Paterson Pitts the effective cause of the loss claimed by Blueskin, or did the actions of the Dunedin City Council and/or Blueskin itself constitute intervening causes?(iii) is Blueskin guilty of contributory negligence and/or a failure to mitigate its loss?Factual Background[4] In late 2003, Blueskin purchased an 82.3839 hectare property situated at Blueskin Bay near Dunedin.[5] Apart from a small cottage, there were no buildings on the site. Part of the property had been planted in pine trees and the rest was covered by bush, the remnants of previous logging and wilding trees.[6] Blueskin's intention was to harvest the mature pine trees on the site and develop the property as a rural residential subdivision.[7] In May 2004, one of Blueskin's directors, Mr Rapsey, contacted Paterson Pitts and spoke to a Mr Hosken of that firm. Mr Hosken is a surveyor and a resource management specialist.[8] Mr Rapsey discussed Blueskin's plans for the site with Mr Hosken andinstructed him to obtain the necessary resource consents for the subdivision.[9] It was decided that the subdivision would be done in two stages. This was because there was already an agreement in place to sell six hectares to a Mr Stanger. Stage 1 was to consist of subdividing those six hectares (to be called Lot 1) from the balance so as to enable the Stanger purchase to proceed. Stage 2 was to involve the subdivision of the remaining land into 11 rural living allotments ranging in size from six hectares to nine hectares for the purpose of building a dwelling on each allotment.[10] Mr Hosken undertook the necessary surveying work and prepared two resource consent applications, one for each stage of the development.[11] It was agreed that they would seek a 10 year consent for Stage 2 because the proposed building platform areas contained large pine trees that would need to be logged to provide the building sites. Blueskin did not intend to undertake harvesting straight away but wanted to wait until timber prices improved.[12] At the time, the consent authority, the Dunedin City Council, was administering both a Transitional District Plan and a notified Proposed District Plan.[13] Under the Transitional District Plan, Blueskin's proposed subdivision was anon-complying activity and required land use consent as well as subdivision consent. The reason it required land use consent was because of the size of the proposed lots. The Transitional District Plan had a minimum lot size of 15 hectares.[14] The Proposed District Plan, however, allowed smaller lot sizes. Under a notified Variation to the Proposed Plan, the permissible minimum area was six hectares per lot. The Variation called Variation 9A had been in place since 2002. Under Variation 9A, dwellings could be built on the Blueskin lots as of right. No land use consent was required.[15] The resource consent application form, prepared by Mr Hosken on behalf of Blueskin, described the type of resource consent being applied for as a subdivisionconsent. It also stated that "no additional resource consents are needed for the proposed activity."[16] Mr Hosken duly submitted the application to the Council in June 2004. His covering letter stated as follows:RE PROPOSED SUBDIVISION JONES ROAD EVANSDALEIn Support of the Resource Consent Application we enclose the following:(i) Application Form for Subdivision(ii) Additional Information.(iii) Copies of Certificates of Title.(iv) Copies of Plans and Supporting Data.(v) A cheque for $750.00 being the fee to process the application. (The land Use [sic] is technical in nature and should not attract a fee).[17] In evidence, Mr Hosken explained that what he meant by the concluding words in brackets was that if a land use consent was required, then it should be a mere technicality and no additional fee payable.[18] The Council planner responsible for processing the application was Mr Tiffen. He testified that he must have overlooked that concluding sentence in Mr Hosken's covering letter. Had it registered with him, he would have either referred it back to Mr Hosken or more likely would have himself filled out an application form for a land use consent.[19] As it was, Mr Tiffen assumed that a deliberate decision must have been made not to apply for a land use consent. He simply processed the two applications for subdivision consents which were duly granted on a non-notified basis in September 2004.[20] It is common ground that what Paterson Pitts had expressly applied for, the Council granted.[21] The decisions granting the subdivision consents were sent to Blueskin C/- Paterson Pitts. The decisions set out various conditions of the consent. The decision regarding Stage 2 noted that to some extent the timing was dependent on market prices for timber. It also noted that because of the lot size, the proposed subdivision was a non-complying activity under the Transitional Plan. It went on to say:As a result of the Titterton v Dunedin C.C. case, there is no provision for a dwelling in the rural zone. Therefore, the erection of a dwelling on each of Lots 2-12 would require resource consent at this present time. However, in view of the likely timing to act on Stage 2 of this proposed subdivision (up to 10 years), the advanced stage of the Proposed District Plan in respect of the Rural zone where ultimately the Transitional Plan will become inoperative and the uncertainty at this stage of the precise building development for each lot, it is not intended to pursue land use consents at this time.[22] Mr Tiffen accepted that this statement about Blueskin's intentions must havebeen pure assumption on his part.1[23] As for Mr Rapsey, he says that when he received a copy of the decisions, he understood that Blueskin had received everything it needed in order to be able to proceed with its subdivision.[24] The next thing that happened was that in November 2004, the Environment Court allowed an appeal against Variation 9A and reinstated a minimum area rule of 15 hectares per lot into the Proposed Plan.[25] Mr Hosken first became aware of this unexpected development when, on 19 November 2004, he along with a number of other Dunedin surveyors and resource management consultants received the following email from a Council planner, Mr Darrell Thomson:Sorry to be the bearer of bad news.Judge Smith has just delivered his decision on variation 9A.The decision reverts back to the 15 ha rule effective immediately. This has implications for all current subdivisions before Council not yet granted.A dwelling on an undersized Lot reverts back to an activity status of non- complying. Hence approved subdivisions down to 6ha which did not require land use resource consent will now require land use consent to establish the residential activity if the site remains vacant. These will have non complying status and will need to demonstrate true exception criteria.1 Mr Tiffen may arguably have been too ready to make that concession. In his evidence at aCouncil hearing, Mr Rapsey stated, "land use consent was not pursued because precise buildingdevelopment was unknown and residential activity was permitted under the Proposed DistrictPlan. An application for what is permitted makes no sense."Although the NZIS reference has been settled which allows Lots down to 75% [of 15 ha], any such reduced area allotment will also require land use resource consent to establish the residential activity and will need to demonstrate true exception criteria.RegardsDarrell ThomsonPlannerCity Planning[26] Within 40 minutes of receiving this email, Mr Hosken electronically forwarded a copy of it to Mr Rapsey of Blueskin. Mr Hosken's covering email toMr Rapsey stated:Brian,Just came inNot sure of the impact on Lot 1 where a new building is not replacing an existing one.RegardsTony[27] The reference to Lot 1 was a reference to the lot being sold to Mr Stanger which had the cottage situated on it.[28] In evidence, Mr Rapsey claimed that his reaction on reading the Council email was to thank his lucky stars. His was a subdivision that had already been granted and the Council email said:This has implications for all current subdivisions before Council not yetgranted. (Emphasis added)[29] Mr Rapsey heard nothing further from Mr Hosken about the Environment Court decision.[30] In February 2005, Mr Rapsey was in Dunedin with another Blueskin director and decided to call in on Mr Tiffen, the Council planner. Mr Tiffen and Mr Rapsey knew each other from previous dealings in Timaru. According to Mr Rapsey, it wasjust a casual social call. The Blueskin subdivision was discussed but nothing that was said disabused him of his belief he had everything he needed. He left feeling reassured.[31] Mr Rapsey further testified it was not until August 2007 that he realised for the first time that Blueskin did not in fact have everything it needed and that it needed to apply for a land use consent. What was described at the hearing as his Eureka moment came about because another person had expressed an interest in purchasing the entire subdivision from Blueskin. During the course of due diligence, the prospective purchaser had caused inquiries to be made at the Council offices about the consent arrangements. His consultant Mr Orchiston had received the following email on 12 July 2007 from a Council planner, Mr Thomson:Hi Jeff,I have now had a closer read through the resource consent.At the time of the consent, even though the residential land use activity was permitted under the Proposed Plan it was a non-complying activity under the transitional District Plan. This therefore meant that land use consent was required for the residential activity, as detailed on page 2 of the decision,with references to the Court decision of 'Titterton v DCC'.Unfortunately, the decision clearly states that there is no intention to [pursue] land use consents at the time of the consent, as it was envisaged that by the time the subdn would be given effect to, the transitional rules would be obsolete. Unfortunately this did not foresee the demise of the 6 ha rule. Hence – a land use consent is required, and under the current regime I can give no certainty as to success of such an application.[32] The prospective purchaser subsequently forwarded the email, which I shallcall the Orchiston email, to Mr Rapsey. Mr Rapsey's evidence is that on receiving acopy of the Orchiston email, he was very confused and concerned. On 8 or 9 August 2007, he met with the writer of the email, Mr Darrell Thomson. According to Mr Rapsey, Mr Thomson gave him a clear assurance that land use consent would be approved once a formal application was made.[33] Mr Rapsey then filed what was described in evidence as "a pretty sparse"application for a land use consent on 12 September 2007.[34] The Council decided to notify the application.[35] In March 2008, the Council requested further information from Blueskin. The further information was supplied in August 2008 and a hearing of the consent application was held in October 2008. There were 19 submitters who opposed the application.2[36] The hearing was adjourned because the Council Hearing Committee sought more information from Blueskin. The hearing was reconvened in February 2009.[37] In April 2009, the Council issued its decision which was to decline the application.[38] Blueskin then appealed to the Environment Court. In May 2010, theEnvironment Court allowed Blueskin's appeal and granted a land use consent butsubject to a number of conditions. The conditions included landscaping conditions, pest control and exotic plant control.[39] As at the time of the hearing before me, Blueskin had only sold two lots, namely Lot 1 to Mr Stanger and Lot 2 also to Mr Stanger. It had a contract to sell Lots 10, 11 and 12 but this was cancelled in June 2010 by the purchaser ostensibly on the grounds of delay in obtaining the land use consent and also on grounds relating to the effect of the Environment Court conditions.[40] The evidence established that had an application for a land use consent been made in June 2004, it would have been granted on a non-notified basis and without the imposition of any conditions. Although Mr Hosken said it was possible conditions might have been imposed, the weight of the evidence satisfies me that it is much more probable there would have been none.[41] Blueskin's case is that as a result of Paterson Pitts failing to obtain a land useconsent in 2004 it has suffered the following losses:Additional costs incurred in obtaining the land use consent.The cost of management time.2 There were actually 27 opposing submitters but some opposed the subdivision consent whichhad already been granted.The costs of compliance to meet the conditions imposed by the Environment Court, conditions which have also affected the saleability of the lots.Loss of the sale contract for Lots 10, 11, and 12 which was cancelled.Loss suffered as a result of having to sell Lot 2 at a discounted price.Loss of prospective sales revenue due to changing market conditions.Holding cost of local body rates for two years.Professional fees.Interest calculated at the rate of 6.5 percent per annum being the rate of interest Blueskin pays on money it borrows.[42] In total, the losses claimed together with interest amount to $862,648.3[43] For its part, Paterson Pitts disputes some of the losses and says further that any losses suffered by Blueskin have been caused by the negligence of the City Council and/or Blueskin itself, not Paterson Pitts.[44] Paterson Pitts issued third party proceedings against the Council. However, I was advised that these proceedings have been settled. The Council did not take any part in the hearing.Did Paterson Pitts breach the contractual and tortious duties it owed Blueskin?[45] There was no formal written contract between Blueskin and Paterson Pitts.[46] The statement of claim describes the retainer between Blueskin and PatersonPitts as including engagement "to obtain the necessary resource consents tosubdivide the land into 11 rural living allotments for the purpose of building a dwelling on each lot."3 This figure is less than that claimed in the statement of claim due to an adjustment made duringthe hearing.[47] Obviously, an obligation to obtain the consents could not be an absolute obligation. As both contracting parties knew, the granting of the consents was within the purview of a third party, the Council. The obligation could only be toapply for all necessary consents and to use all reasonable care and skill in undertaking that work and other tasks associated with the subdivision.[48] The duty to take care can be expressed as either an implied contractual term or a duty in tortious negligence. Blueskin relies on both.[49] Mr Rapsey's evidence about his instructions to Mr Hosken was somewhat unsatisfactory. At one point of his testimony, he claimed to have specifically instructed Mr Hosken to obtain both a subdivision and a land use consent4 but in other parts of his evidence he gave the general impression that at the time he did not really know such a thing as a land use consent existed5 or appreciated that it was distinct from a subdivision consent. On the face of it, this appears to be inconsistent with earlier evidence given at the Council hearing which suggests he made a deliberate decision not to apply for a land use consent. Mr Rapsey told the Council hearing, "The fact is you do not ask for or try to obtain what you do not need... land use consent was not pursued because precise building development was unknown and residential activity was permitted under the Proposed District Plan."[50] On the other hand, Mr Hosken never suggested he received a specific instruction not to apply for a land use consent. Accordingly, and having regard to the realities of the situation, I am prepared to accept that Mr Rapsey's instructionsand therefore the term of the contract was to apply for all necessary consents (ie, whatever they might be).[51] Mr Hosken's explanation for not formally applying for a land use consent inJune 2004 was that because of the situation with the two Plans, the Council'spractices regarding land use consents had been inconsistent and very often he did not know whether the Council would require one or not. He knew a land use consent might be needed but decided to wait for the Council response.4 Brief of evidence at [10].5 There was however also evidence that Mr Rapsey had applied for a land use consent before inconnection with another project.[52] Mr Hosken did not recall picking up on the statement in the consent decision,that the applicant "did not intend to apply for a land use consent." However, he saidthat his overall impression from the planners' report was that a land use consent wasnot necessary.[53] As for the November 2004 email advising of the demise of the six hectarerule, Mr Hosken stated that the Court's decision had only just come out that day. Hehad not had a chance to read it and no one had any idea what the implications might be. Mr Hosken further stated that although there was a certain amount of concern after reading the judgment, the sense coming out of the Council was that any application caught by the change would be dealt with favourably.[54] Mr Hosken was an honest witness and I accept that these were his thought processes at the time.[55] I also accept that in 2004 the Council and planning practitioners were operating on the basis that the key planning document was the Proposed Plan and that the Transitional Plan was outdated and irrelevant. Any consent required under the Transitional Plan was largely considered a technicality if the activity was permitted under the Proposed Plan. And as already mentioned, for two years prior to Mr Hosken filing the Blueskin application, the Proposed Plan had permitted the construction of dwelling houses on six hectare sites as of right.[56] However, while I accept these matters, it was nevertheless a term of the contract that Mr Hosken apply for all necessary resource consents. If "necessary" isdefined by reference to the Transitional Plan, then he breached that term in June 2004. A somewhat cryptic reference in brackets to land use in a covering letter which is contradicted by the actual application document does not in my view constitute an application. Nor can it be a defence that it was clear on the face of the application for subdivision consent that it was intended to enable residential use of the land.6 Under s 88 of the Resource Management Act 1991, an application for a consent must be in the prescribed form.6 The application made reference to carefully delineated building platforms, conditions about suchmatters as roading upgrades, advice notes about water supply, wastewater, sewage disposal and[57] Further, at the time Mr Hosken filed the application for the subdivision consent, he knew or ought to have known that the six hectare rule was the subject of an appeal to the Environment Court. It was therefore not certain that the six hectare minimum allotment and associated right to build would be guaranteed into the future. In those circumstances, I consider that a reasonably competent and prudent resource management consultant would have filed a specific application for a land use consent.7[58] A reasonably competent and prudent resource management consultant would have read the consent decision thoroughly and, having realised that the Council was under the erroneous impression that Blueskin had deliberately chosen not to apply for a land use consent, would have followed up with the Council.[59] Mr Hosken was, in my view, also negligent in failing to advise Mr Rapsey of the implications of the Court decision, and in failing to advise him that Blueskin did not have a land use consent and needed to apply for one.[60] The fact that Mr Hosken breached the contract and was negligent does not of itself mean that Paterson Pitts is liable in damages for the losses claimed by Blueskin. Blueskin must also establish that the breaches caused those losses.What was the effective or real cause of Blueskin's loss?[61] The evidence established that had Paterson Pitts applied for the land use consent in June 2004, then it would have been granted as a mere formality without being notified and without conditions. Paterson Pitts would not have charged Blueskin any extra fees. There would have been no Council hearing, no need for an Environment Court appeal and no need to comply with onerous conditions.[62] The 'but for' causation test is therefore clearly satisfied, at least in relation to some of the more straightforward losses claimed by Blueskin.utilities.7 There is no evidence that Mr Rapsey knew the six hectare rule was under threat at the time theapplication was made.[63] However, Paterson Pitts says that is too simplistic an analysis.[64] Paterson Pitts submits that, even if Mr Hosken was negligent, any negligenceon his part was not the effective cause of Blueskin's loss. Paterson Pitts argues thatthe chain of causation was broken by the wrongdoing of the Council and/orBlueskin's own negligence.[65] Some of the criticism levied against Blueskin relates to Mr Rapsey's perusalof the 2004 consents and the November 2004 email.[66] Counsel argued that Mr Rapsey must have appreciated the importance of obtaining a land use consent and was careless in that he failed to read the consent decisions and the November 2004 email properly. Had he read them properly, he would have realised there was a problem.[67] I do not accept those submissions.[68] While Mr Rapsey did have previous subdivision and resource management experience, he had engaged an expert. He and Blueskin were entitled to rely on the expertise of that expert and, as Mr Hosken himself acknowledged, it was not reasonable to expect that Blueskin would double check his work.[69] Further, criticism of Mr Rapsey over his perusal of the November 2004 email has a rather hollow ring to it when one considers that it came to him with a coveringemail from Mr Hosken. Mr Hosken's covering email was potentially misleading, inthat it conveyed the impression that if there were any implications from the Court decision, they would be restricted to Lot 1. Mr Hosken never followed up with any other communication to Mr Rapsey about the Court decision.[70] In my view, nothing done or not done by Mr Rapsey in 2004 up to and including 19 November 2004 would constitute an intervening cause.[71] In my view, the critical issue as regards causation is the date at which Mr Rapsey first realised that Blueskin did not have all the necessary consents and needed to apply for a land use consent.[72] As already mentioned, Mr Rapsey testified that he did not discover that Blueskin needed to apply for a land use consent until July/August 2007.[73] Regrettably, after very careful consideration of all the evidence, I am unable to accept that testimony.[74] It is completely at odds with previous statements made by Mr Rapsey including evidence he gave at the Council Committee hearing in October 2008.[75] In a written brief of evidence for that hearing, Mr Rapsey had this to say:16. My discussion with Darrell Thomson indicated that projects like ours that have been caught in the middle of the rule change would be lookedat in a way that was fair. Because Darrell's comments were reassuringand because where the dwellings were to be located was still covered in 50 year old pine trees and because the price of export logs had not yet reached the trigger point that we had decided upon we let things lie and carried on processing and selling firewood, clearing trees for Transit and pregnancy scanning ewes.17. A window of opportunity occurred and 5000m3 of pinus radiata was exported through Port Chalmers with logging being completed in March 2007.[76] The 50 year old pine trees were not removed until March 2007, so that means this conversation with Mr Thomson must have taken place well before March 2007.[77] That in turn would mean Mr Rapsey knew well before March 2007 that Blueskin had been caught in a rule change. The statement I have quoted was part ofa section in the brief, headed "Chronology of Events Since Purchase." Theparagraph immediately follows a paragraph about the contents of the November2004 email. The juxtaposition of the two paragraphs, under a heading "Chronology of Events," clearly implies that the conversation with Mr Thomson occurredfollowing receipt of the email.[78] The statement is contained in a prepared written brief of evidence. It was therefore a considered statement. It was moreover a statement that had beenprepared by Blueskin's then legal representatives.[79] Further, it was made in 2008 (ie, only a year after what is now being claimed as the Eureka moment). It is unlikely that Mr Rapsey would have made a mistake and forgotten that it had only been the previous year that he first discovered he had been caught in a rule change, as opposed to four years ago.[80] It is also a very specific statement with details of what was done in relianceon Mr Thomson's assurances. The possibility of a mistake is therefore very unlikely.[81] It also provides the explanation as to why, if Mr Rapsey knew a land use consent was needed, he did not make an application.[82] That Mr Thomson would have told Mr Rapsey this in 2004/2005 is consistent with evidence from other witnesses about the approach being taken by the Council in that period. The reinstatement of the 15 hectare rule had come as an unwelcome surprise to the Council which favoured a six hectare rule. There was even talk in the Council office of introducing a new variation. For at least a year after the November 2004 decision, the Council continued to look favourably on subdivisions which had subdivided down to six hectares. Applications for land use consents continued to be rubber stamped. However, by July 2007, the Council approach had changed asreflected in the Orchiston email when Mr Thomson wrote "under the current regimeI can give no certainty as to success of such an application."[83] It makes more sense for Mr Thomson to have given any rubber stamp type assurances in 2004 and 2005 than it does for him to have supposedly given themonly a month after writing "under the current regime I can give no certainty as tosuccess of such an application."[84] Mr Rapsey's testimony in this proceeding about when he first learnt heneeded to apply for a land use consent is not only inconsistent with his earlier evidence to the Council hearing in 2008, it is also inconsistent with a letter he wrote to Council in September 2009.[85] The purpose of the letter was to request information for the pending appeal hearing in the Environment Court.[86] The letter included the following statement:On Thursday 24 February 2005 a meeting was held at the Dunedin City Council offices attended by Kevin Tiffen of Dunedin City Council, Brian Bell a Director of Blueskin Bay Forest Heights Limited and me. At that meeting assurance was given that the subdivision consent granted, encapsulated the intention and gave permission for the building of a dwelling on each allotment. A clear assurance was given that Land Use Consent would be approved, when formal application was made.Would you kindly provide me with a copy of the Council's minutes orrecords of that meeting?[87] The last sentence of the first paragraph means that in February 2005, Mr Rapsey knew a formal application for a land use consent was needed.[88] Then, to further complicate matters, in his brief for the Environment Court hearing in April 2010 Mr Rapsey had this to say about his earlier evidence at the Council hearing:15. On Thursday 24 February 2005 Brian Bell (a Director and 30% shareholder in Blueskin Bay Forest Heights Limited) and I traveled to Dunedin and had a meeting with Kevin Tiffen a Planning Officer with the Dunedin City Council. Kevin Tiffen had processed RMA-2004- 0524.16. I note at this point that in my evidence at the Council hearing I said this meeting was with Darryl Thomsen [sic]. I was incorrect.Attached and marked "C" is a copy of my diary showing the meeting was with Kevin Tiffen.17. That meeting reassured me that RMA-2004-0524 was for residential activity and contained the permissions required.18. I did nothing further in relation to land use at the site until 3 September 2007, because we believed we had what we needed. It makes no sense to wait for so long to apply for land use consents if we had not been reassured that we had what was required.[89] This evidence is puzzling. First, because Mr Rapsey had never said in his earlier evidence at the Council hearing that the discussion with Mr Thomson took place in February 2005. Secondly, because Mr Rapsey fails to acknowledge that not only had he apparently named the wrong Council officer last time, the content of thediscussion in his earlier version was also wrong. His earlier version involved him being aware he was caught in a rule change.[90] At the hearing before me, Mr Rapsey attempted to explain away these apparent contradictions.[91] He claimed that the description of the meeting with Darrell Thomson in paragraph 16 of his written brief of evidence for the Council hearing was his August 2007 meeting with Mr Thomson. However, that simply cannot be right because paragraph 16 clearly states that the meeting took place at a time when the 50 year old pine trees were still on site.[92] The other difficulty with claiming the meeting described in paragraph 16 is his August 2007 meeting with Mr Thomson is that Mr Rapsey had told the Environment Court that his diary note showed he had mistakenly identified Mr Thomson as the Council officer he had met when it was Mr Tiffen. The diary note however is about a meeting in February 2005, not a meeting in 2007.[93] In an attempt to overcome that difficulty, Mr Rapsey claimed that the misidentification of Mr Thomson for Mr Tiffen was in connection with another meeting, not the meeting described in paragraph 16. However, paragraph 16 is the only paragraph in his entire brief of evidence that mentions a meeting with Mr Thomson. He could only have been referring to that paragraph when he told the Environment Court his earlier evidence had contained a mistake.[94] As for the letter to the Council, Mr Rapsey claimed that it was poorly worded and he had mistakenly conflated two separate meetings into one. The correct position, he said, was that the letter was really dealing with two meetings. The first was with Mr Tiffen in February 2005 and the second meeting was with Mr Thomson in August 2007. At the Tiffen meeting, he was given the impression that he had everything he needed. At the time of the August 2007 Thomson meeting, he had only just learnt he needed to apply for a land use consent and was given an assurance it would be just a formality.[95] Yet the letter quite unambiguously talks about "that meeting."[96] Mr Rapsey's attempts to explain away his previous statements were not convincing, and on this issue I did not find him either credible or reliable.[97] Having regard to all the evidence, I consider the more likely scenario is that there were in fact three meetings or discussions. The first was with Mr Thomson, after the email in 2004 when Mr Rapsey was given assurances that an application for a land use consent would be rubber stamped, the second with Mr Tiffen in February 2005 when similar assurances were given and the third again with Mr Thomson in August 2007, following the Orchiston email.[98] I have come to that conclusion for the following reasons:(i) As discussed above, the circumstances surrounding the brief of evidence at the Council hearing and its content suggest it is reliable.(ii) The contradictions between Mr Rapsey's various statements and hisattempts to explain away those contradictions which are not credible.(iii) The fact that there is a reason as to why Mr Rapsey did not act earlier, even though he knew he needed to apply for a land use consent. It wasa key plank of Blueskin's case that Mr Rapsey's inaction must havebeen due to the fact he was unaware he needed a land use consent. Otherwise, why would he have left it so long? However his brief of evidence for the Council hearing not only says he did knowingly let things lie but also provides an explanation why.(iv) It is unlikely that Mr Thomson, who wrote an email in July 2007 aboutthe Blueskin subdivision with the concluding words " under the currentregime I can give no certainty as to success of such an application,"would only, a month later, make a statement about the same sub- division to the effect it was guaranteed. He may have been encouraging – which could explain why Mr Rapsey filed such a skimpyapplication - but not categorical in the way suggested in some parts ofMr Rapsey's evidence.8(v) While Mr Tiffen agreed he would not have suggested in February 2005 that Mr Rapsey go away and do anything further, he also said the tenor of any discussion would not have resulted in the Blueskin directors being able to go away reassured they did not need to do anything at all. He said he would have told them it was early days. There could onlyhave been discussion about "early days" if the rule change was beingdiscussed, and why would the rule change be discussed at all unless it affected Blueskin.9 Mr Rapsey's diary entry says, "Saw Kevin Tiffen re resource consent, Brian Bell came."(vi) The failure to call evidence from the other Blueskin director who also attended the meeting with Mr Tiffen in February 2005.[99] In coming to this conclusion, I have not overlooked an argument that Mr Rapsey's 2009 letter to the Council contained a contradiction, therebydemonstrating that it was poorly worded and/or that he must have been labouring under a genuine mistake about the meetings.[100] The contradiction is said to lie in the following two sentences:At that meeting assurance was given that the subdivision consent granted, encapsulated the intention and gave permission for the building of a dwelling on each allotment. A clear assurance was given that Land Use Consent would be approved, when formal application was made.[101] I do not however agree that there is necessarily any inconsistency or contradiction. The first sentence is the reason why a land use consent would be approved once formal application was made. In granting the subdivision consent, the Council had already assessed the suitability of the site for the erection of8 Mr Rapsey's evidence about his discussions with Mr Thomson in 2007 varied from attributingactual statements to Mr Thomson (see for example pg 41, line 24 notes of evidence) to saying itwas only inferred that any formal application would be treated fairly and favourably (see pg 42,line 25 notes of evidence).9 In assessing the weight to be placed on Mr Tiffen's evidence, I have taken into account that hisrecall of the meeting was limited.dwellings and thus implied permission had already been given. There is no reason why those two statements could not have been said at the one meeting, as the letter itself unambiguously states.[102] My finding is that Mr Rapsey knew Blueskin needed a land use consent by at least the end of February 2005.[103] Had Blueskin filed its application then, it is almost certain on the evidence it would have been granted without any difficulties or conditions and Blueskin would not have suffered any loss.[104] What then are the implications of this finding on the claim against Paterson Pitts?[105] In my view, once Mr Rapsey came to know for himself that he needed to apply for a land use consent but chose for reasons related to assurance(s) given by the Council and logging prices not to apply immediately, the legal position changes dramatically. The operative effect of Paterson Pitt's negligence and breach ofcontract was spent and the causal link was broken.[106] Like the plaintiff in McKew v Holland & Hannen & Cubitts (Scotland) Ltd,10Mr Rapsey is entirely the author of his own misfortune or, if anyone else is to blame, it is the Council officers for giving assurances they should not have given and/or the Council for failing to honour those assurances.[107] Whether the analysis is in terms of intervening cause or failure to mitigate loss, the outcome is the same. Paterson Pitts cannot be liable for losses claimed to be caused by being without a land use consent when Blueskin itself made a deliberate choice not to apply for a land use consent at a time when the situation could have been rectified, a decision that was not influenced by anything Paterson Pitts had done or not done but entirely by external factors.10 McKew v Holland & Hannen & Cubitts (Scotland) Ltd [1969] 3 All ER 1621[108] My findings on causation mean that none of the damages claimed are recoverable. Accordingly it is not necessary for me to consider the other issues raised by counsel. It may however be of some consolation for Blueskin to know that even if I had found in its favour on causation, I would not have allowed the claim in respect of Lot 2 and the Wolsink contract. I would also have found that not all seven lots would have been sold during the time of the buoyant market.Outcome[109] Blueskin's claim for damages is dismissed.[110] As regards costs, my expectation is that counsel will be able to reach agreement. If however that does not prove possible and I am required to make an award then I direct Mr Parker to file and serve submissions first, with submissions inreply to be filed by Mr James within 10 working days of receipt of Mr Parker'ssubmissions. Submissions should be no more than five pages in length.Solicitors:Saunders & Co, Christchurch – pmj@saunders.co.nzMichael E Parker, Queenstown – m@michaelparker.co.nzDuncan Cotterill, Christchurch – garth.gallaway@chapmantripp.com