Public authorities – duty of care & pure economic loss

Dansar Pty Ltd v Byron Shire Council [2014] NSWCA 364


[This headnote is not to be read as part of the judgment]

The respondent, Byron Shire Council (“the Council”), was both the development consent authority and the water and sewerage authority for the Byron Shire. In mid-2000, it assessed that there was spare capacity within the West Byron Sewage Treatment Plant and resolved to allocate that capacity to new developments.

On 6 February 2001 the appellant, Dansar Pty Ltd, lodged an application for approval of the residential development of a property owned by it. In May 2001 there was a deemed refusal of that application and in August 2001 Dansar appealed from that deemed refusal. That appeal was dismissed by the Land and Environment Court in March 2002. In October 2002 Dansar lodged new development applications for the same development. Those applications were approved in June 2005.

In 2007, Dansar commenced proceedings against the Council alleging that the latter had breached a duty of care owed to Dansar, and claiming damages for economic loss suffered as a result of delay in approving its development application. Dansar claimed that but for that breach of duty it would have been allocated the required sewerage capacity and received development approval at some time between December 2001 and February 2002. By judgment of 30 January 2013, McCallum J in the Common Law Division held that the Council did not owe the posited duty of care and entered judgment for the Council.

Held (Meagher and Leeming JJA, dismissing the appeal; Macfarlan JA dissenting):

(1) The existence and content of any duty of care must be determined prospectively and by reference to the statutory context and the positions occupied by the parties in that context ([108]-[110], [158]-[159]).

Sullivan v Moody [2001] HCA 59; 207 CLR 562, CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; 239 CLR 390, Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180, Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; 211 CLR 540, Stuart v Kirkland-Veenstra [2009] HCA 15; 237 CLR 215, Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; 75 NSWLR 649, considered.

(2) Where it is said that a public authority owes a duty of care, it is necessary to identify the function or power, the performance or exercise of which is the subject matter of the alleged duty, and to address whether the existence of that duty would give rise to inconsistent obligations or conflicting claims upon the exercise of the power ([159]).

(3) The asserted duty of care is incompatible with the Council’s unconstrained exercise of its statutory functions and obligations. In determining whether to increase the permanent load on the treatment works by the amount of capacity required for the appellant’s development, the Council was required to give paramount consideration to the safety and continued operation of the treatment facilities, maintaining public health and protecting the environment. That obligation and the interests to which the Council was to have regard are incompatible with the existence of the asserted private law duty of care ([161]).

(4) That incompatibility is not avoided by seeking to restrict the content of the duty by reference to “mechanical” tasks of allocation ([162]). The Council’s decision in January 2002 to adhere to the methodology which it had adopted in mid-2000 was not “mechanical” and required a judgment as to whether that methodology and the assumptions and calculations which informed it should be applied when considering Dansar’s development ([162]).

Sullivan v Moody [2001] HCA 59; 207 CLR 562, applied.

(5) There was no reliance or assumption of responsibility, and to that extent no relevant vulnerability ([171]-[177]). At no time was Dansar relying on any express or implied assurance from the Council that it would allocate available capacity in a particular way and exercise reasonable care in doing so ([176]). The appellant had the assistance of expert town planning advice. It also had access to officers and staff of the Council, to the public deliberations and resolutions of the Council and to reports presented at those meetings ([173]).

Tepko Pty Ltd v Water Board [2001] HCA 19; 206 CLR 1, Mutual Life & Citizens’ Assurance Co Ltd v Evatt [1968] HCA 74; 122 CLR 556, Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180, Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; 216 CLR 515, considered.

(6) The appellant had no right or entitlement to have any further load committed to the sewerage system. Nor did it have any right or interest, the enjoyment of which depended on the exercise of care by the Council or the existence of which depended on the exercise of care by the Council in the performance of a function that it was obliged to undertake ([179]-[180]). In that respect, the position is to be contrasted with Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” [1976] HCA 65; 136 CLR 529, Hill v Van Erp [1997] HCA 9; 188 CLR 159 and Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180.

(7) (Per Macfarlan JA, dissenting) The Council was subject to a common law duty of care in the operational task of allocating to developments for which approval was sought the sewerage capacity that it had determined was available and should be allocated to development applicants in order of receipt of application ([73], [83], [85]-[87]). There is no reason why a statutory authority such as the Council may not be subject to specific duties of care related to aspects of its functions that do not involve matters of judgment, opinion or public policy ([69]).

Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1, Armidale City Council v Alec Finlayson Pty Ltd [1999] FCA 330; 104 LGERA 9 and Western District Developments Pty Ltd v Baulkham Hills Shire Council [2009] NSWCA 283; 75 NSWLR 706, followed.

Dictum of Mason J in Sutherland Shire Council v Heyman [1985] HCA 41; 157 CLR 424 at 469, applied.

David Cormack – Brisbane Barrister & Mediator




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