CASE STUDY:

Andrew, Brian, and Elizabeth were the directors of First Fleet Village Pty. Ltd.

First Fleet is a residential property development, which has reclaimed an area of swampland and disused industrial land. It has had the land rezoned and subdivided, and built prestigious waterfront houses.

The directors were aware of certain remaining toxicity levels in the soil of the development, but were of the view that this shouldn't be a big problem, as after dumping a metre of soil everywhere, plants grew. Andrew is a scientist who has worked on some big water management projects overseas and performed the necessary checks, although he hasn't had much to do with soils, land reclamation, industrial sites, or swamps.

Due to the large amount of capital that the company has spent on the development, the directors were keen to sell the houses quickly. They developed standard form contracts which were available on the day at bargain prices, on a first come, first served, no negotiation basis.

The homes were a big success, and all were sold within 2 weeks. The company is now developing a neighbouring site in the same way.

Dave and Angie run a coffee shop and bought one of the new homes as their first home. It cost them $500,000 plus stamp duty. They looked at the contract only briefly and did not seek legal advice - First Fleet weren't negotiating and the homes were selling like hotcakes, so as Elizabeth told them, "take it or leave it - if you don't buy then the next person through the door will - the property market is running hot!"

After six months Dave and Angie decided to do bit of landscaping, but the soil seemed bad and the plants started to die. They consulted a gardener who said the soil was the problem. He advised them that there is a big problem with acid sulphate soils in a lot of these swampy areas.Apparently, this is a naturally occurring phenomenon, but when the soils are drained, excavated or exposed to air, the sulphides react with oxygen to form sulphuric acid. This can then release heavy metals such as arsenic. As well as killing vegetation, this can also degrade concrete and steel structures.

Dave and Angie were horrified. They consult an expert in the field and discover that only one metre of soil was used to cover the site, whereas at least 3 metres is normally required. Also, time is needed for soil to recover, and it is unheard of to build on land within 3 years of reclamation, and normally takes 5 years before the land can be built upon. First Fleet gave the land just 6 months between dumping soil and commencing to build.

There already cracks appearing in their house, and Dave and Angie are afraid to let their little girl go outside to play. She hasn't been well and they are worried whether this may be due to exposure to arsenic in the soil.

Dave and Angie, together with some of their neighbours who are experiencing similar problems, are seeking legal advice. Their solicitor has contacted First Fleet as a first step toward legal action.

QUESTION SCENARIO:

You are a management consultant and you have been engaged by First Fleet Pty. Ltd. to provide expert advice with regard to a business situation with this company.

You have been contacted by Brian, on behalf of the directors of First Fleet Pty Ltd. They would like you to advise them as to any potential liability or actions under the current statute, common law, and equitable principles in relation to property law relevant to the information in the First Fleet case study.

Provide advice to your client in the form of a report addressing the client's requirements.

HINT:

" You need to provide specific advice to Brian on behalf of all the directors of First Fleet Pty Ltd of potential liability or action under current statute, common law and property law.

It is suggested that you start with identifying/determining all of the key issues and parties affected by the case, then research specific law issues and cases applicable.You can then provide appropriate to the directors regarding all of these issues."