15Mark

Lindsay has inherited a 20-acre parcel of semi-rural land in south-western Sydney, on the fringe of the metropolitan area, from his recently deceased uncle. He wishes to sub-divide the property and sell it off as residential allotments, and so sets up his own development company for the project.

He is advised that he will need to have the land rezoned as residential by his local council prior to any sub-division, and that he will need to have the allotments connected to water and sewerage services. Lindsay realises that this will be a costly process, and so he approaches the State Bank for a development loan to cover the up-front expenses. The bank is willing to finance the project, but is concerned that the costs of connecting water and sewerage services to such a limited area will be prohibitive, and so requires detailed cost estimates for this part of the development before the financing will be approved.

Lindsay approaches the Water Board to explain his plans for the land, and to request an estimate of the costs involved to provide to the bank. After a number of site inspections by Water Board officers, Lindsay is provided a written estimate, on Water Board letterhead, of what the work would be expected to cost, and he submits that to the State Bank as a part of his loan application.

The bank decides that, based on the estimated expenses that would be incurred in connecting these services to the allotments, the redevelopment project would be untenable, and so declines Lindsay's loan application. Despite his best efforts, Lindsay is unable to fund the project himself or through other sources, and so he opts to sell the property under its present zoning, for a far lower amount than it would otherwise have fetched.

Twelve months later, it comes to light that the estimate provided by the Water Board had been grossly over-stated as a result of a calculation error. The actual costs of connection on Lindsay's allotments would have been less than half of the figure stated, meaning that the redevelopment would not only have been viable, it would have been very profitable for him!

Advise Lindsay on the likelihood of success in bringing an action against the Water Board for negligent misstatement. Your answer MUST be presented in the IRAC format and be supported by appropriate legal authority in the form of statute or case law.