San Sebastian Pty Ltd v. Minister Administering the Environmental Planning and Assessment Act 1979
162 CLR 34068 ALR 161
(Decision by: BRENNAN J)
Between: SAN SEBASTIAN PTY LTD
And: MINISTER ADMINISTERING THE ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979
Judges:
Gibbs C.J.
Mason J.
Wilson J.
Brennan J.Dawson J.
Subject References:
Negligence
Judgment date: 25 November 1986
Canberra
Decision by:
BRENNAN J
I do not need to repeat in this judgment all the circumstances out of which these appeals arose, but it is necessary to identify the material facts and the statutory provisions relevant to the resolution of the problems which the appeals raise. The State Planning Authority ("the Authority") prepared a number of documents ("the Study documents") containing a proposed plan for the redevelopment of Woolloomooloo within the City of Sydney. The Authority was established and its functions declared by the State Planning Authority Act 1963 (NSW). The Authority had no power to control the use of land or the erection or use of buildings in Woolloomooloo. The use of land and the erection and use of buildings in Woolloomooloo were governed at first by the County of Cumberland Planning Scheme Ordinance and, after 16 July 1971, by the City of Sydney Planning Scheme Ordinance. Each of those Ordinances conferred power on the Council of the City of Sydney ("the Council") as the responsible authority to consent to the use of land and to the erection and use of buildings where consent was necessary. In exercising its powers under the latter Ordinance the Council was required to take into account, inter alia, any detailed plan adopted by it, representations by statutory authorities and the public interest: cl.32(d), (e) and (h). The Council was bound in some instances to obtain the consent or concurrence of the Minister, the Authority, a government department or a statutory authority to a proposed exercise of the Council's powers.
In August 1969, the Council accepted the plan contained in the Study documents as its plan for the redevelopment of the Woolloomooloo area and shortly afterwards the Council and the Authority placed the Study documents on public exhibition. At that time, Commissioners appointed pursuant to the Local Government (City of Sydney Boundaries) Act 1967 (NSW) were deemed to be the Council of the City of Sydney. Subsequently, an elected Council took office. Nothing turns on this .
The Study documents included a brochure which stated that the redevelopment plan had been prepared on behalf of the Council by "the professional planning organisation of the State Planning Authority of New South Wales". It proclaimed that:
"The proposals are a carefully planned mixture of commercial, residential, and entertainment (tourism) uses relating to a redeveloped passenger port as a new 'front door' to Sydney ."
It stated that a "work-force of 35,000 and a resident population of 9-10,000 is envisaged when the area is fully redeveloped". The redevelopment was intended to be carried out by private developers and involvement by public authorities was intended to be "minimal". The brochure stated, however, that the Council, the Commonwealth and the State and its instrumentalities held or would hold, once roadways were taken into account, nearly 60 per cent of the land in the Study area.
One of the Study documents contained a section relating to the maximum floor space ratios for the proposed redevelopment. These were "designed to give special encouragement to site consolidation and block redevelopment". The need for consolidation arose "because of the many very small sites and, indeed, small blocks which exist". A bonus floor space ratio of 2:1 or 3:1 was therefore to be added (according to the area of the consolidated site) to a base ratio of 5:1. The document noted that the "incentive is a critical factor in achieving effective redevelopment of the Woolloomooloo area without public intervention on land resumption". However, the Woolloomooloo Bay area (where the plaintiffs bought most of the properties involved in this litigation) was in part zoned for port purposes. The document stated:
"The question of densities will, therefore, need to be considered especially having regard to the particular objectives in this redevelopment area."
The document stated its purpose to be -
"to stimulate ideas on the part of landowners and others and to serve as a guide in the control of development. The scheme does not depend upon large scale public land resumption, the basic approach in the current study has been to design a set of proposals which, whilst forming an integrated whole, are capable of implementation in self-contained stages, with the maximum participation of private enterprise. It offers a challenge to private owners and others concerned with development to demonstrate a willingness to collaborate in the necessary re-organisation of sites and street patterns within the guidelines laid down ..."
The plan contained in the Study documents was not certain of implementation. The Council was not bound to exercise its powers to control development in accordance with the plan. The plan was devoid of legal effect on the property, rights or liabilities of any person. The acceptance by the Council of the plan prepared by the Authority was a declaration that the plan would "serve as a guide in the control of development" and, after the introduction of the City of Sydney Planning Scheme Ordinance, the Council was bound to take the plan into consideration in exercising its powers: cl.32(e ). The publication of the Study documents, emanating from the responsible sources concerned in their preparation and acceptance, would have encouraged interested developers, as the appellants (plaintiffs in the actions) were, to think that the development proposed in the Study documents was "feasible of implementation in the planning sense", as Mr Kacirek, who had been the Authority's Chief Planner, acknowledged in evidence. The plaintiffs assert that the proposed development was not feasible in the planning sense.
The learned trial judge, Ash J., accepted the evidence of experienced and expert planners that, when a plan for a significant urban area is proposed, it is necessary that there be a satisfactory relationship between planning proposals and the transport system that is or will be available. Feasibility in the planning sense therefore encompasses a correspondence between the transport demands to be expected when a plan of development is implemented and the capacity of the transport system which serves or will serve the relevant area. In preparing the Study documents, however, no adequate research into or analysis of the capacity of the transport system was undertaken or commissioned by the Authority. There was evidence, given by a transport engineer, that the rail and road traffic generated by a workforce of even 35,000 would have caused unacceptable congestion at the Town Hall underground station and on the roadways leading to Woolloomooloo. That opinion was a matter of controversy at the trial and there is no finding that the transport system would not have been capable of meeting the demands of a workforce of 35,000. However, his Honour found that there was a significant error in estimating what the size of the workforce would be if the Study were implemented. The calculations on which the estimate of 35,000 was based were not given in evidence. Obviously the size of the workforce depended on a number of factors: on the extent of site amalgamation, for that determined the maximum floor space ratio which might be permitted; on the floor space ratio actually approved for particular sites; on the proportion of space in the new development allocated to particular uses, for office use attracts the highest number of workers per unit of floor space; on the average area that would be occupied by an office worker; and on a decision by the Commonwealth whether it would develop a large site which it owned as an office block. Ash J. found that the Authority's "'envisaged' workforce figure was very wrong and resulted from very inadequate work including the items of research, investigation and calculation in the preparation of the Study". Whether or not the transport capacity was adequate for a workforce of 35,000, it was clearly insufficient to support a redevelopment which would, on his Honour's finding , "involve a workforce well in excess of 35,000". That finding must be taken to mean that if the Council exercised its powers as the Study documents proposed, the resulting redevelopment would have generated the larger workforce. There is a logical difficulty in accepting that finding, because the Study documents did not prescribe the manner in which the Council would exercise its powers in particular cases and, had the Council continued to regard the plan as its guide to the exercise of its powers, it might nevertheless have exercised its powers so as to restrict development in order that the workforce should not exceed 35,000. However, let it be assumed that the plan was not feasible in the planning sense, because redevelopment along the lines proposed would have generated a workforce - whether 35,000 or more - in excess of the capacity of the transport system to cope. For reasons to be stated, that finding does not suffice to establish the plaintiffs' claims.
The Council adhered to the plan for some time. His Honour found that in August 1971 the Council adopted another plan, the City of Sydney Strategic Plan, which recommended that Woolloomooloo should be predominantly residential. Nevertheless, in December 1971 the Council reaffirmed that, in respect of Woolloomooloo, development control would be administered in the light of the 1969 Study. A letter written by the Minister for Transport to the Minister for Local Government and Highways on 28 January 1972 expressed concern about the conflicting development proposals for Woolloomooloo. On 2 December 1974 the Council formally adopted an amended Strategic Plan which superseded the plan in the Study documents. At that time, if not earlier, the plan contained in the Study documents was abandoned. In the meantime, the appellants had bought parcels of land for redevelopment, held them for a time and, after the plan was abandoned, sold them. Ash J. found they had suffered financial loss and awarded damages against the defendants in the actions (the respondents) for negligence in the preparation and publication of the Study documents. The respondent Minister has become the appropriate defendant against whom a remedy in respect of the Authority's alleged negligence in the preparation and publication of the Study documents might be recovered.
His Honour's judgment was reversed by the Court of Appeal (Hutley, Glass and Mahoney JJ.A.) who held that the Authority and the Council owed no duty of care to the plaintiffs in respect of the preparation and publication of the Study documents. On appeal to this Court, the argument has been restricted in the first instance to a consideration of the existence of a duty of care and of the defence raised under the Limitation Act 1969 (NSW). This course, though a convenient means of restricting the argument to two issues at the centre of the litigation, requires some assumptions to be made as to the nature and cause of the loss allegedly sustained by the plaintiffs, for the only relevant duty of care is one which relates to the making of a representation which actually causes the damage which the plaintiff suffers: Sutherland Shire Council v. Heyman (1985) 59 ALJR 564, at pp 590-591; 60 ALR 1 , at p 48; Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering Co Ltd. (The Wagon Mound) (No 1) (1961) AC 388, at p 425. For the purpose of determining the existence of a duty of care, one must assume that the plaintiffs suffered economic loss in purchasing, holding and disposing of properties in the Study area. Making that assumption, the next question is whether there is some causal relationship between the preparation and publication of the Study documents on the one hand and the loss suffered on the other.
A causal relationship between a representation (a term which I shall use to embrace any verbal statement made by one person to another) and economic loss does not exist because of the operation of the laws of nature. It exists because the representation induces the representee to do something which causes the loss or to refrain from doing something which would have avoided the loss. It is the operation of the representation on the representee's mind - the inducement - which links the representation with the conduct which more immediately causes the loss. A representation induces a representee to act or to refrain from acting in a particular manner when he acts or refrains from acting in that manner because he believes that the representation is probably true; in other words, he acts or refrains from acting in that manner in reliance on the truth of the representation. Therefore it is not enough to prove merely that a representee's conduct which causes loss occurred after the representation was made or that the representation was one among many factors of which the representee was aware when he engaged in that conduct. The representation must be a real inducement or one of the real inducements to engage in the conduct which occasions the loss. That is the test in deceit (see Gould v. Vaggelas (1984) 157 CLR 215 , at pp 250-251) and there is no reason in principle why a different test should be applied in negligence to ascertain the causal relationship between the representation and the loss for which compensation is sought. If a representation which is untrue induces a representee to act in a manner which causes him loss, the loss is caused by the making of the representation.
If it is foreseeable that a representee might, in reliance on a representation, act or refrain from acting in a manner which might cause or avoid loss, the essential foundation for postulating a duty of care in the making of the representation exists. Foreseeability of the risk of loss to another is the source of a duty to use reasonable care in doing something which might cause the loss. But foreseeability of the risk of loss is not always sufficient in itself to give rise to a duty of care. When economic loss caused by a representation is in question, the foreseeable contingencies of action or inaction in reliance on the representation and the foreseeable consequences of whatever action or inaction is induced are so many and various that mere foreseeability of loss is too broad a basis for imposing a legal duty of care: a duty of care imposed on that criterion alone would expose the maker of the representation "to a liability in an indeterminate amount for an indeterminate time to an indeterminate class", to adopt the well-known words of Cardozo C.J. in Ultramares Corporation v. Touche (1931) 174 NE 441, at p 444; 74 ALR 1139 , at p 1145. Some more stringent criterion is required.
There are two general approaches which have been espoused in modern times as appropriate to confine the occasions when a legal duty of care is imposed on a defendant whose carelessness in word, deed or omission might cause loss to the plaintiff. The first approach, advanced by Lord Wilberforce in Anns v. Merton London Borough Council (1978) AC 728, at pp 751-752, is to deny the existence of a duty of care which general principle would otherwise establish when there are "considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed". I have stated elsewhere (Sutherland Shire Council, at p 588; pp.43- 44) my reasons for rejecting this approach. The second approach is to require "a relationship of proximity" as explained by Deane J. in Sutherland Shire Council, at p 595; pp 55-56. Both the Anns approach and the proximity approach have been espoused because it was perceived that foreseeability of loss is not the only criterion for imposing a duty of care in some classes of case. Neither the Anns approach nor the proximity approach defines the legal rules which apply in those classes of case where foreseeability of loss alone does not suffice to give rise to a duty of care. Yet legal rules are required to determine whether a duty of care exists in a particular case. By a legal rule I mean a rule that prescribes an issue of fact on which a legal consequence depends. It is necessary to appreciate that neither approach expresses a legal rule; each approach postulates a framework within which the courts can develop legal rules which limit the occasions when the law would otherwise impose a duty of care. Deane J. in Sutherland Shire Council (at p 595; pp 55-56) saw the importance of the general notion of proximity as "the unifying rationale of particular propositions of law which might otherwise appear to be disparate" and listed factors which might be determinative in different categories of case. His Honour described this notion of proximity as "a touchstone and control of the categories of case in which the common law will adjudge that a duty of care is owed". So long as the general notion of proximity is understood in that way, it will not be treated as a particular proposition of law apt to be applied in the resolution of a particular case. The variable content proposed for the notion denies its applicability as a particular proposition of law. True it is that some legal rules import broad community standards, for instance, a rule expressed in terms of what is reasonable. Such a rule nevertheless requires determination of an issue of fact: McHale v. Watson (1964) 111 CLR 384 , at p 397. But proximity is not a community standard by reference to which issues of fact can be determined, nor is it a particular proposition of law excluding a right to relief otherwise open on the facts of a case. If proximity were misunderstood as being a particular proposition of law expressing a touchstone for resolving a particular case, the judge would be required to define its legal content according to some notion of whether it was appropriate to impose a duty of care in that case. A rule without specific content confers a discretion. The discretion might be described as a judicial discretion and the discretion might be reviewed on appeal but such a rule nonetheless confers a discretion. Damages in tort are not granted or refused in the exercise of a judicial discretion.
For my part, I understand Lord Atkin's general conception of proximity in a different way: see Jaensch v. Coffey (1984) 155 CLR 549 , at pp 574-575. It is the neighbour test which, being applied to cases of acts causing damage to person or property, is satisfied by reasonable foreseeability of loss. When that simple test is too wide for application in other categories of case, there must be further and particular propositions of law by which to determine whether, in the instant case, a duty of care exists. I beg leave to doubt whether proximity, if it is understood as having a wider connotation than reasonable foreseeability of loss , will prove to be a unifying rationale of particular limiting propositions of law. The particular propositions have not hitherto revealed a common element. If it should appear that the particular propositions can be subsumed within the generic description of proximity, then the stage will be set for a further simplification and development of the law of negligence. Until that stage is reached, I would find in foreseeability of loss the unifying rationale of the occasions when the law recognizes the existence of duties of care and I would find the appropriate limitations in particular propositions of law, applicable to differing classes of case. The propositions of law which express the appropriate limitations for each class will be devised having regard, no doubt, to factors of the kind to which Deane J. referred in Sutherland Shire Council (at p 595; p 55).
Given that foreseeability of loss is too broad a criterion for imposing a duty of care in cases where a statement is said to cause economic loss, one cannot find in Lord Atkin's general conception in Donoghue v. Stevenson (1932) AC 562 any more than an element which is essential, but not sufficient by itself, to establish the existence of a duty of care. Lord Hodson noted in Hedley Byrne & Co Ltd. v. Heller & Partners Ltd. (1964) AC 465, at p 506, that Donoghue v. Stevenson had not been applied to cases where damages for economic loss had been caused by negligent statements. As Lord Pearce said (at p 536):
"The House in Donoghue v. Stevenson was, in fact, dealing with negligent acts causing physical damage, and the opinions cannot be read as if they were dealing with negligence in word causing economic damage. Had it been otherwise some consideration would have been given to problems peculiar to negligence in words. That case, therefore, can give no more help in this sphere than by affording some analogy from the broad outlook which it imposed on the law relating to physical negligence."
The problems peculiar to liability for negligence in words occasioning economic loss cannot be solved by applying the criteria of liability for physical acts causing damage to person or property (Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 , per Gibbs C.J. at pp 230-231; Mutual Life & Citizens' Assurance Co Ltd. v Evatt (1968) 122 CLR 556 , per Barwick C.J. at pp 566-569. Those criteria are too broad. Nor is it possible to derive precise guidance from Caltex Oil (Australia) Pty. Ltd. v The Dredge "Willemstad" (1976) 136 CLR 529 , where the question was whether economic loss suffered in consequence of physical damage negligently inflicted on the property of a third party could be recovered. In cases of misrepresentations occasioning economic loss, the conditions which govern the existence of a duty of care are stated chiefly by reference to the effect of the representation upon the mind and conduct of the person to whom the words are addressed. Hedley Byrne established or re-established tortious liability for negligent misrepresentations causing economic loss and it is to that case, to the judgments which it approved and to the cases which follow it that one must look to ascertain the principles for determining whether there exists a duty of care in the present class of case.
Hedley Byrne, M.L.C. v. Evatt and Shaddock were concerned to ascertain the conditions which would attract a duty of care in responding to an inquiry made by a person who sought information or advice for himself or on behalf of another. In this case, the plaintiffs submit that the duty arises because the Study documents were published with the intention or for the purpose of inducing land developers, including the plaintiffs, to assemble blocks of land into single ownership and to develop the consolidated blocks in accordance with the plan. Does the making of a representation with the intention or for the purpose of inducing another to act on it suffice to impose a duty of care in the making of a representation?
Hedley Byrne approved the judgment of Chitty J. in Cann v. Willson (1888) 39 ChD 39 where the defendants, who were valuers, provided a valuation of property at the request of a property owner to the plaintiff who advanced money on the security of a mortgage of the property. When the mortgagor defaulted, the property was sold but the proceeds failed to satisfy the mortgage debt. The plaintiff was held entitled to recover damages for his loss on the ground that the defendant was in breach of a duty owed to the plaintiff to use reasonable care in preparing the valuation. The duty was incurred because the valuation was sent to the plaintiff's agents for the purpose of inducing the plaintiff to lay out money on mortgage. The speeches in Hedley Byrne also approved the noted dissent of Denning L.J. in Candler v. Crane, Christmas & Co. [1951] 2 KB 164 , in which his Lordship had held (at p 181) that accountants, in preparing accounts required by their employer for the purpose of showing them to a third person "so as to induce him to act on them", owed to the third person a duty of care. In neither of these cases was the defendant shown to have a commercial or other pecuniary interest in the plaintiff's action. In each case the defendant was a person having special skill and experience in the field in which the advice or information was given, but it is now established that it is not essential that a defendant who is under a duty of care should possess or hold himself out as possessing special skill or experience: see M.L.C. v. Evatt, at pp 572-573; Shaddock, esp. at pp 248,256.
In Hedley Byrne, Lord Reid cited with approval the judgment of Cardozo J. in Glanzer v. Shepard (1922) 135 NE 275; 23 ALR 1425 . There, a public weigher of goods who weighed goods at the request of the seller and who furnished a false certificate knowing that it was to be used to satisfy the buyer was held liable in negligence at the suit of the buyer. Cardozo J. said (at p 277; p 1428):
"The defendants, acting, not casually nor as mere servants, but in the pursuit of an independent calling weighed and certified at the order of one with the very end and aim of shaping the conduct of another. Diligence was owing, not only to him who ordered, but to him also who relied."
Although, in those cases, the intention or purpose of inducing another to act on a representation was critical to the existence of a duty of care in making a representation, a duty of care is not imposed whenever a representation is made with the intention or purpose of inducing another to act upon it. It would be a mistake to impose a duty of care whenever the circumstances would give rise to a duty to be honest. The doctrine of Hedley Byrne has not made the tort of deceit otiose. In M.L.C. v. Evatt (at p 571) Barwick C.J. described three conditions as essential to the relationship out of which a duty of care arises. The first condition is that -
"... the circumstances must be such as to have caused the speaker or be calculated to cause a reasonable person in the position of the speaker to realize that he is being trusted by the recipient of the information or advice to give information which the recipient believes the speaker to possess or to which the recipient believes the speaker to have access or to give advice, about a matter upon or in respect of which the recipient believes the speaker to possess a capacity or opportunity for judgment, in either case the subject matter of the information or advice being of a serious or business nature. It seems to me that it is this element of trust which the one has of the other which is at the heart of the relevant relationship."
The second is that -
"... the speaker must realize or the circumstances be such that he ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence."
And the third is that -
"... the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker."
This statement of conditions was adopted by Mason J. with the concurrence of Aickin J. in Shaddock (at p 251). These conditions, suitably modified, apply to representations made in order to induce the representee to act thereon. The second condition is subsumed in the representor's intention to induce the representee to act upon the information or advice contained in the representation. But the first and third conditions apply. A person who gives information or advice to another to induce the other to a course of action does not necessarily undertake to be careful in the information he gives or the advice he offers. Helpful information and friendly advice, even on matters of the gravest import, will often be proffered without any thought of the informant or adviser being responsible for its truth or soundness. To impose a legal duty of care on the unsolicited and voluntary giving of any information and advice on serious or business matters would chill communications which are a valuable source of wisdom and experience for a person contemplating a course of conduct.
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. First (corresponding with the first condition expressed by Barwick C.J.), if the representor realizes or ought to realize that the representee will trust in his especial competence to give that information or advice; second (corresponding with the third condition), if it would be reasonable for the representee to accept and rely on that information or advice; and third (applying the underlying principle of the law of negligence), 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, the plaintiffs submit that the defendants intended to induce developers, including the plaintiffs, to acquire and consolidate blocks of land in Woolloomooloo and to develop the consolidated blocks in accordance with the plan contained in the Study documents. The representation on which the plaintiffs found their case is that the plan was feasible in the planning sense. It is submitted that it was foreseeable that if the representation turned out to be untrue the plaintiffs would suffer loss. What can be said of the other conditions on the existence of a duty of care? It is necessary to identify precisely the relevant representation, that is, the representation which caused the loss complained of. The plaintiffs in this case do not suggest that the representation which caused their loss was merely that the plan was feasible considered as a representation made in isolation. That representation was made, if at all, by implication from the statement that the Study documents had been expertly prepared by the Authority, from the fact that the Council had accepted the plan therein contained and from the publishing of the Study documents. It was the official origins and official acceptance of the plan which at once gave it an appearance of feasibility and engendered such an expectation that the plan would be implemented as to encourage developers to purchase land. It would have been quite unreasonable for a developer to purchase property in Woolloomooloo in reliance on a mere representation that a set of documents - devoid of statutory effect - contained a plan which was feasible irrespective of its origins and its acceptance by the Council. No duty of care could be held to exist with respect to the making of so limited a representation. For the Council and the Authority to say simply "this plan is feasible" is not to offer any inducement to a developer to buy property. On the other hand, a representation that the Council had accepted the plan and intended the Study documents "to serve as a guide in the control of development" is a representation of a very different character, for the Council, as the responsible authority, was vested with the requisite powers to control development in Woolloomooloo. However, that representation cannot avail the plaintiffs for it was true. The plaintiffs are constrained to say that that representation carried by implication a representation that the plan was feasible in the planning sense and was, in that sense, false. But even if that implication should be made (and the want of detail in the Study documents leaves me unsatisfied that it should), the circumstances would not give rise to a duty of care in making the representation.
The implication could not be severed from the means by which it was conveyed. By publishing the Study documents, the Council and the Authority informed the public of the policy which was intended thereafter to guide the Council in the exercise of its powers to control development in Woolloomooloo. Apart from the express provisions of cl.32(h) of the City of Sydney Planning Scheme Ordinance, such a power to control development clearly requires the responsible authority to exercise it in the public interest according to what is expedient at the time of its exercise. When persons chart their conduct in the expectation that a public authority will exercise in accordance with a policy a discretionary power which it is bound to exercise in the public interest, they have no justification for complaint if the public authority, without fraud or breach of contract, alters its policy and disappoints the expectations which the policy engendered, even if the reason for alteration is that the policy was carelessly prepared. Nor have they justification for complaint if a public authority which has adopted a policy to guide its exercise of such a discretionary power informs the public of the policy without first taking care that it is feasible. The public interest in knowing what policy has been adopted prevails over a private right to insist that reasonable care be taken in its preparation or adoption.
In practice - as Mr Baker, the guiding hand of the plaintiff companies, acknowledged in evidence - it is understood that a public authority is free to alter a policy unless the policy is given binding effect by statute or by contract (where that is possible). Therefore it is unreasonable for a person contemplating a course of action which involves a risk of loss if a public authority does not exercise its discretion in a particular way to rely on the feasibility of a policy affecting the discretion when the discretion is one which must be exercised in the public interest. If that person were able to rely on a representation of feasibility of a policy, the public authority would be constrained to adhere to the policy to keep faith with him. The duty which the public authority would owe to the individual would conflict with the duty it owes to the public. The latter duty must prevail. Accordingly, a person who would act on such a statement of policy must form his own view as to its feasibility, and the remedy for carelessness in the preparation or adoption of such a policy must be found in the public arena not in private litigation.
As the condition of reasonable reliance is unsatisfied, the Authority and the Council were under no duty of care as to the making of a representation that the plan was feasible. Even if the plaintiffs and the defendants erroneously believed that the plan was feasible, in the absence of fraud the defendants are under no liability to compensate the plaintiffs for the losses which they incurred by relying on the feasibility of the plan.
The claim that the defendants were negligent in failing to announce the abandonment or possible abandonment of the plan also fails. A public authority's announcement of or omission to announce policy affecting the exercise of a power which it is bound to exercise in the public interest according to what is expedient at the time of its exercise is not, in the absence of fraud, a source of liability.
The appeals must be dismissed.