San Sebastian Pty Ltd v The Minister

Citation: (1986) 162 CLR 340

A Summary.

The appellants were developers who acquired land in Woolloomooloo relying on a redevelopment plan, which was published in 1968 by the State Planning Authority and the Council of the City of Sydney. The plan allowed high density development and encouraged developers to acquire and consolidate properties. It was adopted and followed by the Council until 1972, when it was abandoned. The appellants sued for their resulting financial loss, and claimed that the plan had not been prepared with due care, because there had been a failure properly to investigate and to discover that the transport system lacked the capacity to accommodate the projected workforce, resulting in the plan not being feasible of implementation. They succeeded at first instance in the Supreme Court of New South Wales, but the Court of Appeal held that the respondents were not under a relevant duty of care to the appellants. In this appeal to the High Court of Australia, the appellants conceded that, if a claim for negligent publication of a misrepresentation that the plan was feasible of implementation failed on non-technical grounds, this would entail the failure of claims for negligent preparation of the plan and for failure to warn of its possible abandonment.

Held, per curiam, dismissing the appeal.

Per Gibbs CJ, Mason, Wilson and Dawson JJ: If the appellants’ case was to succeed they must establish at least:
(1) that the alleged representation was made;
(2) that the Authority and the Council made the representation with the intention of inducing members of the class of developers to act in reliance on the misrepresentation.

They had failed to establish matter (1), since the documents offered no assurance about the ultimate level of development or the continuing application by the Council of the proposed maximum space ratios.

Per Brennan J: Where a representor gives information or advice on a serious or business matter, intending thereby to induce the representee to act on it, the representor is under a duty of care in giving that advice or information if three conditions are satisfied:
(1) if the representor realises or ought to realise that the representee will trust in his especial competence to give that information or advice;
(2) if it would be reasonable for the representee to accept and rely on that information or advice;
(3) if it is reasonably foreseeable that the representee is likely to suffer loss should the information turn out to be incorrect or the advice turn out to be unsound.

In the present case, even if the documents carried by implication a representation that the plan was feasible in a planning sense, the circumstances did not give rise to a duty of care, since it was unreasonable for a person contemplating a course of action which involved a risk of loss if a public authority did not exercise its discretion in a particular way to rely on the feasibility of a policy affecting the discretion when the discretion was one which must be exercised in the public interest.

First Point Summary

Torts > Negligence > Essentials of action for negligence > Where economic or financial loss > Careless advice, statements and non-disclosure > Particular persons and situations > Public authorities

Local authority - Alleged negligent preparation of development plan - Reliance by developer - Relationship of proximity

In August 1969 Sydney City Council adopted a scheme to redevelop Woolloomooloo in accordance with a plan and documents prepared by the State Planning Authority. The scheme was exhibited publicly and operated until abandoned in 1972. Its only binding force derived from a requirement that it be considered concerning development applications made after proclamation of a City of Sydney Planning Scheme Ordinance in 1971. In reliance on alleged representations in the scheme documents, developers bought land at Woolloomooloo in the expectation of its profitable redevelopment. When the scheme was abandoned the land lost value and was either acquired compulsorily or sold at a loss. The developers claimed damages from the Council and the Authority for the loss suffered as a result of their reliance upon representations in the scheme documents, which they alleged had been negligently prepared and published, and for their failure to warn of the likely abandonment of the scheme. Held:

* (1) Developers had at least to establish
o (a) that the alleged representations were made and
o (b) that the Authority and the Council so represented with the intention of inducing members of the class of developers to act in reliance thereon. As they had failed to establish (a), (b) did not arise.
* (2) Failure of the principal claim for negligent publication was necessarily fatal to the claims for negligent preparation and for failure to warn.

Per curiam —

* (1) In the absence of contrary indications, it will not be inferred that a plan intended as a guide to future development contains an assurance that it will be applied continuously and inflexibly.
* (2) The general interest of an Australian local authority in encouraging the development of its area is not enought to support the existence of a duty of care on the part of the authority in relation to statements made in development plans so as to make the authority liable for negligent misstatement.

Torts > Negligence > Essentials of action for negligence > Duty of care > Relationship of proximity

Economic loss - Negligent representation

Per curiam — The notion of proximity is of vital importance in a claim for pure economic loss. When that loss results from negligent misstatement, the element of reliance plays a prominent part in ascertaining a relationship of proximity between plaintiff and defendant, and the related duty of care. But when economic loss results from a negligent act or omission aside from negligent misstatement, the element of reliance may not be present. Absence of reliance as a factor creates a further difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss. Observations by Brennan J on the relationship of proximity in establishing a duty of care.