Was there a duty of care?
150The starting point is the duty of care for which the appellant contends. In Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; 200 CLR 1 at [5] Gleeson CJ observed that difficulties in formulating the practical content of a duty for the purpose of measuring the performance of a statutory authority against that duty may be a reason for denying its existence. See also Graham Barclay Oysters v Ryan at [8] (Gleeson CJ) and Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422 at [59] (Gummow J).
151In its Statement of Claim the appellant pleads the content of the alleged duty of care in two ways. First, it alleges that the Council owed a duty of care "to give proper consideration" when the time came to determine its development application "to whether sufficient sewerage capacity existed at the [West Byron plant]". Secondly, it alleges that when giving consideration to its application the Council had a duty of care "to act upon information which was properly and soundly based [and] accurate and reasonable in its conclusions as to the existing spare capacity" of that plant at that time.
152In its written submissions to this Court, the appellant formulated the duty more narrowly. A distinction is sought to be made between, on the one hand, the exercise of deciding whether there was available capacity and, if so, how that capacity was to be allocated, and on the other, the subsequent task of implementing that decision. The more narrowly formulated duty is said only to apply to the task of implementation, to have arisen once the decision as to capacity was made and to have applied for so long as that decision was adhered to.
153In oral argument the appellant confirmed that this narrower duty did not extend to the making of any decision about capacity and how it might be distributed. It was also accepted that the duty did not require that at any relevant time the Council adhere to any earlier decision as to the availability of capacity or as to how that capacity should be allocated. In pressing this argument the appellant must be taken to have abandoned the broader formulations of the scope of the duty pleaded in its Statement of Claim.
154The appellant describes the activities of the Council to which this narrower duty of care attached as "operational" in the sense referred to by Mason J in Council of the Shire of Sutherland v Heyman [1985] HCA 41; 157 CLR 424 at 469; being activities that involved "action ... that is merely the product of administrative direction". That description was adopted in an attempt to distinguish between the 'policy' decisions of a public body that involved or were dictated by financial, economic, social or political factors or constraints, and the 'operational' decisions that were not. It was said that decisions of the former kind were not ordinarily the subject of any duty of care. In more recent judgments this distinction has been said to be of dubious utility because it will not always be the case that decisions at an operational level do not involve, at least in part, policy or public interest considerations: Pyrenees Shire Council v Day at [181] - [182] (Gummow J); Crimmins v Stevedoring Industry Finance Committee at [292] (Hayne J); and Vairy v Wyong Shire Council [86] (Gummow J).
155In relying on this distinction, the appellant's argument accepts, as it must, that when making decisions about the management and operation of the treatment plant the Council must have regard to considerations that are incompatible with the interests of a particular property owner in seeing that its development is not delayed or refused by a lack of sewerage capacity. The consequences of overloading those facilities include immediate risks to their safety and continued working as well as risks to public health and of pollution of the environment. There is also the possibility of breaches of the plant's operating licence. Where an assessment has to be made as to whether there should be any further loading of the system, these considerations are likely best served by a decision not to do so whereas the interest of the land owner seeking access to the system is not.
156The appellant's argument seeks to avoid this incompatibility by framing the content of the duty narrowly and by reference to the task of allocation which it says the Council staff performed carelessly. That argument proceeds as follows. In September 2000 the Council resolved to acknowledge the existence of spare capacity at the West Byron STP and to allocate that capacity to new developments. Thereafter Council staff were engaged in the administrative task of undertaking that allocation. The Council did not at any relevant time resile from its earlier decision acknowledging the existence of that spare capacity or that it could be allocated. In the period between December 2001 and February 2002 the Council considered whether to approve the appellant's development application. It was not prevented from doing so because there had been a deemed refusal under s 82(1) or an appeal lodged under s 97(1) of the EP&A Act, and indeed s 82(2) authorised the Council to determine the application notwithstanding that appeal. By this time, the public interest and policy matters to which the Council was otherwise required to have regard were no longer relevant because they had been considered by the Council at an earlier point in the process, namely, when the resolution of September 2000 was passed. They were not reconsidered by the Council in February or March 2002, before or during the hearing of the Land and Environment Court proceedings.
157In the way the appellant's case is formulated, whether the Council owed it a duty of care and whether it suffered any economic loss depend on the Council's having adhered to its earlier acknowledgement of available capacity and decision, albeit uncommunicated at the time, as to how that capacity might be allocated. If in January 2002 the Council had reassessed the question of capacity by reference to the more recent data relied upon by Mr Warner, it could have concluded that there was no available uncommitted capacity. Alternatively, it may have decided to reserve any capacity which was otherwise available for a particular use or development such as a hospital or nursing home. In either event, the appellant's application for an allocation of capacity would have been refused in circumstances to which the suggested duty of care would not have applied. That this is so exposes a fundamental difficulty for the appellant's case. The primary judge points to that difficulty in her reasons at [45] where it is observed that the earlier adoption by the Council of a methodology for the allocation of capacity "informs the existence and content" of the duty of care.
158In Vairy v Wyong Shire Council at [60] Gummow J warned against the danger of focussing on the alleged breach when addressing the existence and content of any duty of care. That is because that is a question of law to be determined prospectively. One risk of doing so is that the duty will, as in this case, be framed retrospectively by too specific reference to what happened: per Hayne J in CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; 239 CLR 390 at [68]. A related risk is that the question as to the existence of the duty will not be addressed prospectively.
159Where 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. Having done so, as the joint judgment in Sullivan v Moody makes clear at [60], it is then necessary to address whether the existence of that duty would give rise to inconsistent obligations in the performance of that function or conflicting claims upon the exercise of the power. These questions are part of the prospective inquiry as to the existence and content of the duty. They are not answered, as the appellant's argument would have it, by looking to the way in which the public authority acted on the particular occasion in question and asking whether its doing so in fact required it to give consideration to conflicting claims, or engaged statutory obligations inconsistent with that duty.
160The function in relation to which it is said the Council owed a duty of care was that of deciding whether to increase the permanent load on the treatment works by the amount of capacity required for the appellant's development. That question arose in the context of its determining whether to approve that development. The Council undertook that function between December 2001 and February 2002. There were two particular matters to which it had to give attention. The first was whether, as sewerage authority, it should allocate capacity and consent in principle to the development being connected to the public sewer. The second was whether, as consent authority, it was satisfied that there was an arrangement within cl 45(1) of the Byron LEP.
161Those questions had to be addressed consecutively and the answer to the second was dictated by the answer to the first. In addressing the first 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 a private law duty to take reasonable care to avoid economic loss to a developer resulting from refusal of or delay in its development approval.
162Furthermore, that incompatibility is not avoided by restricting the duty to what is described as the "mechanical" task of allocation. When the Council was considering the appellant's application in the period from December 2001, it remained subject to these statutory obligations. In deciding, by its rescission resolution of 29 January 2002, to adhere in relation to the appellant's development to the methodology it had previously adopted, the matters to which the Council was able to have regard included any recent data as to loadings on the treatment plant as well as the assumptions and calculations underlying the earlier report of its officers of 18 December 2001. The decision to adhere to the earlier methodology was not a "mechanical" one. It involved a judgment as to whether the previous methodology and the assumptions and calculations which informed it should be applied to that development.
163For these reasons the primary judge was correct to conclude that there was a disconformity between the alleged duty of care and the Council's statutory functions and obligations and that the existence of such a duty would be "inimical to the unimpeded exercise" of those functions. That incompatibility would ordinarily be a sufficient reason for denying the existence of the duty: Sullivan v Moody at [60].
164There are other features of the relationship between the parties that must be considered. They are the foreseeability of harm, indeterminacy, reliance and assumption of responsibility, and the vulnerability of the appellant. The primary judge concluded that there was "no relevant reliance, no assumption of responsibility and no vulnerability in the relevant sense": [85], [91], [92]. I agree with each of those conclusions.
165Foreseeability of harm. As Allsop P observed in MM Constructions (Aust) Pty Ltd v Port Stephens Council at [93], delay in or rejection of a development approval can readily be seen to have economic consequences for a developer. To that extent, in the present case it was foreseeable that a developer might incur some financial disadvantage if its development application was delayed or refused.
166However, the risk of harm to which the suggested duty is directed is not all or any delay in the approval of the development application, or all or any such delay due to a refusal to allocate or delay in allocating sewage treatment capacity. It is only the risk of economic harm resulting from delay or refusal of a development application due to negligence in the mechanical or operational task of allocating capacity.
167In that event, the applicant would only suffer financial loss as a result of any delay or refusal if there were spare capacity that would have been allocated earlier, but for the relevant negligence. Whether there was capacity available for allocation was a matter for the judgment of the Council as sewerage authority and not something in respect of which there could be only one "correct" answer. As the primary judge observed at [87] treatment capacity was not a "fixed, measureable resource which the Council had an obligation to quantify correctly and to allocate exhaustively".
168Assuming that but for the relevant negligence the Council would have concluded that there was capacity available, whether the appellant would suffer financial loss as the result of any delay or refusal of its application would then depend on a range of factors, some of which would not in the ordinary course be known to the Council. Those factors include the developer's intentions with respect to the development; any alternative opportunities available to the developer with respect to the use or sale of the undeveloped property; the costs of proceeding with the development, including financing and construction costs; and the revenues received or anticipated before, during and on completion of the development.
169Although in a general sense it was foreseeable that the appellant might suffer detriment if its development was delayed or refused due to carelessness in allocating capacity, it was not foreseeable that the appellant would inevitably do so: cf Caltex Oil at 577, and Perre v Apand at [131], [216].
170Indeterminacy. The present case is not one in which the liability of the Council is indeterminate in any relevant sense: see Caltex Oil at 568 (Stephen J); Perre v Apand at [106] - [108] (McHugh J) and Woolcock v CDG at [21] (Gleeson CJ, Gummow, Hayne and Heydon JJ). The class of potential claimants is those who lodged development applications in the period between August 2000 and February 2001. The general nature of their claims and the measure of the damages that might be claimed can realistically be determined.
171Reliance and assumption of responsibility. Liability claims for negligent misstatement or advice ordinarily depend upon the presence of known reliance and an assumption of responsibility. The speaker must realise, or the circumstances must be such that it ought to have realised, that the recipient intends to rely upon the information or advice in connection with some matter of business or serious consequence and the circumstances must be such that it is reasonable for the recipient to seek or accept, and to rely upon, the information or advice: Tepko Pty Ltd v Water Board at [47] (Gleeson CJ, Gummow and Hayne JJ), citing Mutual Life & Citizens' Assurance Co Ltd v Evatt [1968] HCA 74; 122 CLR 556 at 571 (Barwick CJ).
172The presence of reliance is also an indication of 'vulnerability' as that notion is understood: Perre v Apand at [10] (Gleeson CJ); Woolcock v CDG at [24] (Gleeson CJ, Gummow, Hayne and Heydon JJ). The vulnerability arises because of the recipient's known reliance on the defendant as the source of advice or information.
173In preparing and lodging its development application the appellant had the assistance of expert town planning advice. It also had access to officers and staff of the Council, of whom it could make inquiries, and to the public deliberations and resolutions of the Council and reports presented at its public meetings. The fact that the appellant and its advisors exercised that access is apparent from the terms of its original development application, the evidence of Mr Vaughan as to his dealings with the Council and the correspondence between the Council and the appellant's town planners.
174At the time it lodged its development application the appellant had an expectation that there would be capacity available for its development. However, it did not have any assurance from the Council to that effect or any assurance as to the way in which any available capacity would be allocated. The appellant at the same time must be taken to have appreciated that in determining that there was or was not available capacity, the Council was bound to consider whether increasing the permanent load on the plant, by granting capacity, would compromise its operation.
175At no time did the appellant seek any assurance from the Council that it would act carefully or competently in implementing, or making, a decision about available capacity. Instead, assurances were sought that capacity was or would be available to its development. The terms of those requests show that the appellant was not proceeding on the basis that it had any entitlement to receive capacity or to have capacity allocated in a particular way. In that context, the more specific subject of whether the Council staff might make calculation errors in implementing any decision about how capacity was to be allocated was not a matter to which the appellant expressly addressed attention.
176The appellant may have had an expectation that the Council would undertake the exercise of allocation equitably and competently but, as Allsop P also observed in MM Constructions v Port Stephens Council at [94], that was "no more than a reasonable expectation of members of the public". That expectation would include an appreciation that from time to time errors are made in the conduct of the activities of a public or private service provider which affect the supply of its services. As Gillard J noted in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27; Aust Torts Reports 81-692 at [1017], whilst it may be taken for granted that service providers will be efficient and timely, experience shows that nothing is guaranteed. At no time was the appellant 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.
177Vulnerability. The notion of vulnerability includes circumstances in which a plaintiff is unable to protect itself from the consequences of a defendant's want of reasonable care. That may be because it has exercised that ability by placing reliance on the defendant for information or advice. As the above analysis shows, that is not so in this case. It may also be because the plaintiff's enjoyment of a right, interest or expectation is controlled in some relevant sense by the defendant: Pyrenees Shire Council v Day at [168] (Gummow J); Perre v Apand at [38] (Gaudron J), [129] (McHugh J).
178The economic loss claimed by the appellant is the amount necessary to put it in the position it would have been in had it received a timely allocation of capacity and development approval. That loss includes expenses that it says would not have been incurred if development approval had not been delayed and benefits in the form of profits that it says would have been realised. In Hill v Van Erp [1997] HCA 9; 188 CLR 159 the economic loss suffered by the intended beneficiary was the value of an expected testamentary benefit the receipt of which depended totally on the exercise of care in relation to work (specifically the preparation of a will and the securing of its proper execution) which the solicitor had agreed to perform.
179The appellant had no right or entitlement to have any further load committed to the sewerage system. Nor did it have an expectation to that effect, the enjoyment of which necessarily depended on the exercise of care by the Council in relation to a task that it was obliged to perform. The Council was able at any time in the discharge of its responsibility as sewerage authority to determine that there should be no further increase in the permanent load to the treatment works or decide that any such increase should be allocated to specific developments or in a particular way. In these respects the appellant's position is to be contrasted with that of the plaintiffs in Hill v Van Erp, Caltex Oil and Perre v Apand. In Caltex Oil the detriment suffered was the loss of the enjoyment of Caltex's right to use property (the pipeline) which was vital to the ongoing conduct of its business: at 576-577 (Stephen J). In Hill v Van Erp the intended beneficiaries' interests were "totally and unavoidably dependent upon the proper performance of a function within the sole province of the solicitor": at 186 (Dawson J). In Perre v Apand, the plaintiffs were denied access to the "principal and lucrative market" in which they were selling and entitled to sell their potatoes: at [195] (Gummow J). Here, by way of contrast, the appellant's continued enjoyment of any right or interest or expectation was not controlled by the Council. There was no such 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.
180The appellant appreciated at the outset that there was a risk that its development may be delayed or not proceed or proceed in a different form. There were several reasons why that might have occurred. An aspect only of one of those reasons is sought to be made the subject of a duty of care. The appellant was well positioned with the assistance of its expert advisors, and after making inquiries of the Council, to assess before it lodged its application the risk that there would be insufficient sewerage capacity available. It was also in a position to defer the incurring of significant expenses in relation to the development until such time as it had made an arrangement with the Council for the allocation of capacity. In the absence of any such arrangement the appellant may have proceeded in part on an expectation that the Council and its officers would act competently and responsibly in relation to the care and management of the sewerage facilities. At the same time it was foreseeable as a possibility that its development might be refused or delayed in circumstances where reasonable care was not taken. However, that fact and the fact that it might suffer detriment as a result were not sufficient to make it vulnerable in the relevant sense: Woolcock at [23].