San Sebastian Pty Ltd v Minister [1986] HCA 68; (1986) 162 CLR 340 (25 November 1986)

HIGH COURT OF AUSTRALIA

SAN SEBASTIAN PTY. LTD. v. THE MINISTER (1986) 162 CLR 341
F.C. 86/068

Negligence

High Court of Australia
Gibbs C.J.(1), Mason(1), Wilson(1), Brennan(2) and Dawson(1) JJ.

CATCHWORDS

Negligence - Negligent misstatement - Preparation and publication of local government planning scheme - Abandonment of scheme - Failure by authority to warn potential developer - Whether duty of care - Proximity - Alleged reliance - Representations in scheme documents alleged but not proved.

HEARING

1986, February 11, 14; November 25. 25:11:1986
APPEAL from the Supreme Court of New South Wales.

DECISION

GIBBS C.J., MASON, WILSON AND DAWSON JJ.: The appellant companies, which carried on business as developers, sued the respondents in the Supreme Court of New South Wales for damages for the loss which they sustained as a result of the alleged negligence of the State Planning Authority ("the Authority") and the second respondent, the Council of the City of Sydney ("the Council"), in the preparation and publication of a plan for the redevelopment of the Woolloomooloo area of the City of Sydney and in failing to warn the appellants that the plan was to be abandoned. The plan was embodied in three documents: a Study entitled "Woolloomooloo Redevelopment Study", Development Control Proposals which reproduced sections of the Study, and a brochure which explained the Study proposals in popular terms, but unless otherwise indicated it will be convenient to refer to them compendiously as "the Study documents". The first respondent, the Minister administering the Environmental Planning and Assessment Act 1979, has since succeeded to the liability of the Authority. At first instance Ash J. gave judgment for the appellants in the sums of $745,248, $34,550, $32,628 and $602,497 respectively. The judgment was based on findings in favour of the appellants on the issues of negligent preparation and negligent publication. The Court of Appeal (Hutley, Glass and Mahoney JJ.A.), whose decision is reported at (1983) 2 N.S.W.L.R. 268, upheld the respondents' appeals, holding that the respondents were not under a relevant duty of care to the appellants. The primary issue in these appeals is whether the Court of Appeal was correct in so holding.

2. At the request of the Minister for Local Government, a meeting was held on 1 February 1968 between the Chief Commissioner of the City of Sydney, the Chairman of the Authority and the Town Clerk at which it was resolved that a detailed plan of development should be prepared for the Woolloomooloo area. A Steering Committee, consisting of representatives of the Council and the Authority, was set up as well as a planning team which commenced work in March 1968. On 29 July the Authority sent its report on the completed plan to the Council. On 11 August 1969 the Council adopted the plan. Initially, as Hutley J.A. noted, it had no statutory force, except as a guide to the public interest which the Council, as the responsible authority, was required to consider (cl.27(f) of the County of Cumberland Planning Scheme Ordinance, made pursuant to the Local Government Act 1919 (N.S.W.)). After the City of Sydney Planning Scheme Ordinance was proclaimed on 16 July 1971, the plan had a more important role because cl.32(e) of that Ordinance required the responsible authority to take it into consideration in respect of any application for consent to erect or use a building or to carry out or use a work or to use land for a purpose referred to in Column IV of the Table to cl.23 of the Ordinance.

3. The Council placed the Study documents on exhibition and adhered to them until 1972 when they were abandoned. The plan, which made provision for the high density development of the area, proceeded, not on the footing that land in the area would be resumed for the purpose of redevelopment, but on the footing that developers would be encouraged to purchase land in the area and develop it in an appropriate fashion. The existing pattern of subdivision and land ownership was not congenial to high density development. Much of the land was subdivided into small allotments and ownership was fragmented. The plan sought to create a regime which would encourage developers to acquire properties and consolidate them. To this end the Study documents held out the prospect of a basic floor space ratio of 5:1 with a bonus ratio of 2:1 or 3:1 for progressively larger site amalgamation, subject to a general maximum permissible floor space ratio of 10:1.

4. Mr Baker, the guiding spirit behind the four appellants, inspected the Study documents when they were on exhibition and obtained copies of them. The appellants then purchased land in the Woolloomooloo area for redevelopment in accordance with the proposals which those documents contained. The essence of the appellants' claim was that they purchased the land for redevelopment, relying on representations made in the Study documents. They claimed that the representations were untrue and that the Authority and the Council knew or ought to have known that they would be relied on. After the plan for redevelopment was abandoned, the properties were eventually sold or compulsorily acquired. The loss claimed by the appellants was the net deficit that resulted from deducting the cost of acquiring, maintaining and developing the land, including interest on moneys borrowed for the purpose of acquisition, from the income derived from the properties and the proceeds of their sale or resumption. That loss is purely financial, being unaccompanied by any damage to their property.

5. The findings of fact made by the primary judge are sufficiently set out in the judgment of Glass J.A. in the Court of Appeal. The account which follows is taken from that judgment. The Authority and the Council intended that private enterprise should play a major role in the proposed redevelopment of Woolloomooloo. Exhibition of the Study documents was designed to stimulate the interest of developers in the purchase of properties in the area, the consolidation of sites and the making of development proposals. It was foreseeable by the Authority and the Council that the proposals contained in the Study documents would, when published, cause developers to invest money in land within the area. It was also foreseeable that loss would or might be suffered by persons who invested money in land in Woolloomooloo in the expectation of being allowed to develop in accordance with the proposals if the plan, due to inherent defects, was incapable of implementation and had to be abandoned. The appellants were persons who had invested money in land with knowledge of the Study documents and with the expectation of being allowed to develop in accordance with the proposals.

6. The primary judge found that the Study documents were not prepared with the degree of professional competence reasonably to be expected of persons in the position of the Authority and the Council. He found that due care in the preparation of the Study documents would have required a detailed analysis of the capacity of the transport system and that this analysis was not undertaken. The method adopted of consulting the two government instrumentalities (Railways and Main Roads) was an insufficient fulfilment of the duty since the information placed before them was inadequate. There was in reality only one act or omission relied on, namely the transportation/workforce deficiency, which the primary judge described as the core allegation. The Authority and the Council were charged upon a negligent failure to conduct a proper investigation of the transport system, which would have informed them that the development of the Woolloomooloo area in accordance with the maximum permissible floor space ratios recommended in the Study documents would necessarily attract a workforce of 50,000 - 90,000 persons, whereas the transport system could barely handle 35,000. As the primary judge had previously accepted the appellants' estimates of workforce in preference to those put forward by the respondents, he found that if the examination of the transport system and the investigation of the kinds and intensity of proposed land use had each attained proper professional standards, the disparity between the workforce that would be generated and transport capacity available would have been discovered.

7. The findings made by the primary judge in connexion with the claim of negligent publication reflected his acceptance of the appellants' case based upon pars.18 and 21 of their amended statements of claim which are in these terms:

"18. By the said statements the Authority and the
(Council) and each of them represented to members
of the public that the said documents embodied the
results of expert research carried out by the
Authority and by the (Council) in collaboration
with each (other) and further represented that the
said documents had been prepared in a proper and
workmanlike manner and were based on sound town
planning principles and principles as to the use
and development of land and in relation to
transportation, were feasible of implementation,
whereas the said plans were not feasible of
implementation.

21. The Authority and the (Council) know or ought
to have known that the said documents would be
relied upon by developers in deciding whether to
buy land in the Woolloomooloo area and if so the
price at which such land should be bought and in
determining prices that ought to be paid for land
to be acquired in the Woolloomooloo area."

8. The appellants pleaded reliance on the representations and supervening damage. The trial was conducted on the footing that an allegation that the representations were negligently made formed an integral part of the appellants' case. The Court of Appeal understood that the appellants were alleging that one material false representation only was made, namely that the plans were feasible of implementation in relation to transportation. The appellants then alleged that the plans were infeasible by reason of the incapacity of the transport system to accommodate the workforce to be attracted by maximum development in accordance with the proposals in the Study documents. The representation conformed to the allegation of negligence in the preparation of the Study documents. The appellants' efforts in this Court were largely directed to making out the existence in the Study documents of a representation that the plan was feasible of implementation. However, having regard to the way in which the matter was pleaded in par.18 of the amended statement of claim, it is necessary for them to demonstrate the existence of the more specific representation that it was feasible for the transport system to handle a workforce of 50,000 - 90,000 persons. The way in which this contention was supported and the way in which it was rejected by Hutley and Glass JJ.A. - matters critical to the outcome of these appeals - may be left conveniently for later consideration.

9. The claim that the Authority and the Council were negligent in failing to give warning of the abandonment or possible abandonment of the plan is in a sense consequential upon the earlier allegations of negligence in preparation. If there was no duty to take care in relation to the preparation and publication of the Study documents, then a fortiori there could be no duty to take care to give warning of the abandonment or possible abandonment of the proposal previously published.

10. Relying on the decision of this Court in Caltex Oil (Australia) Pty. Ltd. v. The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529, esp. at pp 555, 593, in the Court of Appeal, Hutley and Glass JJ.A. concluded that the Authority and the Council owed no duty of care to the appellants in respect of financial loss resulting from the preparation of the Study documents because at the time they were prepared the respondents had no knowledge of the appellants as specific individuals. The Study documents were directed to the general class of developers and not to the appellants otherwise than as undifferentiated members of that general class. The consequence was that the appellants were confined to their case based on negligent publication. Their Honours were confirmed in this conclusion by the fact that in any event it was the publication of the documents, not their preparation, that was causative of damage (see Glass J.A., at p.302).

11. The members of the Court of Appeal gave separate reasons for denying the existence of a duty of care in relation to negligent publication. A common ground in the judgments was that the appellants had failed to establish that the Study documents contained a representation of the kind necessary to establish the existence of a duty of care. An understanding of the way in which the appellants sought to make out the misstatement on which they relied is essential to an appreciation of the Court of Appeal's conclusion that the alleged misstatement was not made out. Glass J.A. summarized this aspect of the appellants' case in this way (at pp.307-308):

"The defendants did not make any actionable
representation specifically directed to the size of
workforce which development in accordance with the
proposals in the study would have engendered.
However they did represent that the development
proposals in the study were feasible of
implementation in all respects including the
capacity of the transport system to accommodate the
workforce which would be necessarily attracted by
the nature and scale of the developments proposed
by the study. A body of evidence was then produced
which upon the basis of certain assumptions showed
that the full development of the area would bring
into the Woolloomooloo basin a workforce of 70,000.
The handling of such numbers, as I have said,
plainly exceeded the capacity of the transport
system."

His Honour then set out six steps by which the appellants sought to establish that the Study documents made the representation on which they relied (at p.308).

"(1) The foreword to the study contains the words
'the basic approach in the current study has been
to design a set of proposals, which while forming
an integrated whole are capable of implementation
in self-contained stages with the maximum
participation of private enterprise'.

(2) The underlined words mean or imply that the
proposals are in all respects - including transport
- capable of implementation.

(3) The density standards in the study recommend
a base ratio of 5:1 and further recommend bonuses
for block development and for making public space
available with a maximum permissible floor space
ratio of 10:1.

(4) These floor space ratios were so expressed to
developers as to represent that approval would be
given to develop land in the area up to the maximum
recommended ratios.

(5) Upon the assumption that such approval would
be given a workforce in excess of 70,000 would
necessarily be attracted upon full development
given certain further assumptions respecting
available developable area, extent of site
amalgamation to generate bonuses and assuming
further a low level of residential use as compared
to commercial use and assuming a low level of non
office commercial use in relation to office
commercial use.

(6) By adding together propositions 2 and 5 it
was represented that it would be feasible for the
transport system to handle the workforce even
though this would necessarily amount to
50,000-90,000 persons."

12. His Honour considered that no information capable of being proved false was imparted unless the Study documents, when recommending floor space ratios, were also giving an assurance that development to something like the maximum density would be permitted. According to his Honour, the critical information said to be imparted by the Study documents depended in a large degree upon the expectations of developers due to factors not mentioned in the Study documents. The conclusion was that as a matter of construction the documents gave no such assurance and that the Authority and the Council were not responsible for the accuracy of information which "they did not clearly and unmistakeably communicate" to the appellants. Hutley and Mahoney JJ.A. based themselves on what was substantially the same ground, stating that inferences (Hutley J.A.) and implications (Mahoney J.A.) are not statements for the purpose of liability in accordance with Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1963] UKHL 4; (1964) AC 465.

13. Separate reasons were also given for rejecting the claim that there had been a negligent failure to warn the appellants of the abandonment or possible abandonment of the redevelopment proposals. Hutley J.A., who regarded the Study documents as formulating policy rules for the guidance of the Council, thought that this circumstance entailed the conclusion that the policy exception to the liability of a public authority in negligence, as suggested in Anns v. Merton London Borough Council [1977] UKHL 4; (1978) AC 728, was an answer to the existence of a duty of care in relation to warning of abandonment or possible abandonment. Glass J.A. held that, under the principles enunciated in Caltex, there was no duty of care to prevent financial loss to the appellants by warning them of the possible abandonment of the proposals in the Study documents. The Council, although aware that complaints had been made about the feasibility of the plan, expressly decided to adhere to it. Because there could be no loss unless the plan was abandoned, the Council did not have knowledge or the means of knowledge that the appellants would probably suffer financial loss, until the decision to review the plan was actually made in November 1972. Alternatively, even on the assumption that the Council did know that the plan would eventually have to be abandoned, the existence of a duty of care was negated by policy considerations. Mahoney J.A. held that whatever be the position in relation to a duty to warn, the circumstances of the present case did not bring into existence such a duty.

14. The appellants' case, as presented in this Court, focussed on the claim for negligent publication. It was conceded by Mr Bennett Q.C. for the appellants that the failure of that claim, unless it was on technical grounds, would necessarily entail the failure of the claim for negligent preparation. It was also conceded that the claim in respect of failure to warn had as its foundation the making of the misstatements which are central to the alleged negligent publication and that if those misstatements cannot be established, the claim for failure to warn must fail.

15. Since Hedley Byrne there has been a tendency, discernible in the judgments of the Court of Appeal in this case, to regard liability for negligent misstatement as standing apart from the general principles expressed in Donoghue v. Stevenson (1932) AC 562 with respect to the duty of care. There is a special problem in defining the circumstances in which a duty of care arises in the context of statements. One facet of this problem is that it is more difficult to apply the standard of reasonable foreseeability to the consequences which flow from the making of a statement, than it is to apply that standard to the consequences which flow from acts. This is because damage flows, not immediately from the defendant's act in making the statement, but from the plaintiff's reliance on the statement and his action or inaction which produces consequential loss. A second facet of the problem arises from the propensity of negligent statements to generate loss which is purely economic. The recovery of economic loss has traditionally excited an apprehension that it will give rise to indeterminate liability. And there is also an apprehension that the application of the standard of reasonable foreseeability may allow recovery of economic loss of such magnitude and in such circumstances as to provoke doubts about the justice of imposing liability for it on the defendant.

16. It was with a view to diminishing the risk of indeterminate liability for negligent acts, as distinct from negligent statements, that the members of this Court in Caltex sought to limit the persons, or class of persons, to whom a duty of care may be owed in respect of economic loss. It will be recalled that in that case Gibbs J. considered (at p.555) that economic loss is recoverable in negligence where the defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence. Mason J. expressed a similar view (p.593), while Stephen J. said that recovery depended upon sufficient proximity between the tortious act and the injury (p.575). And Jacobs J. (at p.599) concluded that if economic loss arises out of the physical effect on the person or property of the plaintiff, it is not irrecoverable simply because it is economic loss. Although these approaches have been criticized (Junior Books Ltd. v. Veitchi Co. Ltd. [1982] UKHL 4; (1983) 1 AC 520, at pp 532-533; Candlewood Navigation Corporation Ltd. v. Mitsui O.S.K. Lines Ltd. (1985) 3 WLR 381, at pp 391-394; Leigh and Sillivan Ltd. v. Aliakmon Shipping Co. Ltd. (1986) 2 WLR 902) the critics have themselves been unable to offer a solution to the problem.

17. Conscious of the factors already mentioned, courts have sometimes dealt with the duty of care in relation to negligent misstatement without relating it to Lord Atkin's exposition in Donoghue v. Stevenson. However, the correct view is that, just as liability for negligent misstatement is but an instance of liability for negligent acts and omissions generally, so the treatment of the duty of care in the context of misstatements is but an instance of the application of the principles governing the duty of care in negligence generally. The special complications which arise in connexion with the imposition of a duty of care on the author of a statement can only be unravelled in a variety of factual situations. Decisions such as Hedley Byrne, Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt [1968] HCA 74; (1968) 122 CLR 556, on appeal (1970) 122 CLR 628; (1971) AC 793, and Shaddock & Associates Pty. Ltd. v. Parramatta City Council (No. 1) [1981] HCA 59; (1981) 150 CLR 225 are therefore to be seen as illustrations of the general duty of care in its application to particular instances of negligent misstatement.

18. The relationship of proximity is an integral constituent of the duty of care concept. We refer to that relationship in its broader sense, namely, as embracing a general limitation upon the test of reasonable foreseeability, this being the sense in which it has been discussed and applied in recent judgments in this Court (Caltex, at pp.574-576; Jaensch v. Coffey [1984] HCA 52; (1984) 58 ALJR 426, at pp 427-428, 440-442; [1984] HCA 52; 54 ALR 417, at pp 419-421, 442-446; Sutherland Shire Council v. Heyman [1985] HCA 41; (1985) 59 ALJR 564, at pp 579, 599; [1985] HCA 41; 60 ALR 1, at pp 29, 62-63; Stevens v. Brodribb Sawmilling Co. Pty. Ltd. [1986] HCA 1; (1986) 60 ALJR 194; 63 ALR 513). The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss. When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care. But when the economic loss results from a negligent act or omission outside the realm of negligent misstatement, the element of reliance may not be present. It is in this sphere that the absence of reliance as a factor creates an additional difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss.

19. In cases of negligent misstatement, reliance plays an important role, particularly so when the defendant directs his statement to a class of persons with the intention of inducing members of the class to act or refrain from acting, in reliance on the statement, in circumstances where he should realize that they may thereby suffer economic loss if the statement is not true. In these situations Caltex, which related to economic loss caused by a negligent act or omission, should not be regarded as excluding the existence of a duty of care.

20. Various attempts have been made to give precise expression to the conditions according to which the author of a statement will be liable in negligence for the loss sustained by a person who relies on it. In Evatt the plaintiff alleged that the defendants provided information and advice in response to a request and that they accepted the responsibility of giving that information and advice, knowing that the plaintiff intended to rely on it. Barwick C.J. (at pp.572-573) considered that whenever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for that other party to act on that information or advice, the speaker comes under a duty to take reasonable care in the provision of the information or advice which he chooses to give. On appeal the majority in the Privy Council placed liability on a narrower basis, confining it to those who carry on a profession, business or occupation involving the possession of skill and competence or who let it be known that they claim to possess skill and competence in the subject matter of the advice which they give. The minority in the Privy Council, after pointing out (at p.644; p.810 of A.C.) that "it is not possible to lay down hard and fast rules as to when a duty of care arises in this or in any other class of case where negligence is alleged", concluded (at p.646; p.812 of A.C.) that a duty of care arises "when an inquirer consults a business man in the course of his business and makes it plain to him that he is seeking considered advice and intends to act on it in a particular way" and the business man gives advice without warning or qualification.

21. In Shaddock Mason and Aickin JJ. applied Barwick C.J.'s statement of the principle of liability and Murphy J. seems to have adopted a similar approach (at pp.255-256). Gibbs C.J. found it unnecessary to decide whether the view of the majority or minority in the Privy Council in Evatt was correct and Stephen J. seems to have been prepared to accept the majority view for the purpose of deciding the case.

22. In Evatt and Shaddock the misstatement on which the plaintiff relied was made in response to a request - in the case of Evatt for information and advice, and in the case of Shaddock for information alone, although the distinction between information and advice is an unnecessary and often difficult one to draw (Evatt, at p.572; Shaddock, at pp.242-243). But there is no convincing reason for confining the liability to instances of negligent misstatement made by way of response to a request by the plaintiff for information or advice. The existence of an antecedent request for information or advice certainly assists in demonstrating reliance, which is a cornerstone of liability for negligent misstatement. However, such a request is by no means essential, though it has been suggested that instances of liability for misstatement volunteered negligently will be "rare" (Evatt, at pp 571-572; Lambert v. Lewis (1982) AC 225, at p 264). The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.

23. The appellants submit that where A engages in conduct which is intended to cause B or a class of persons to act in a particular manner, A comes under a duty of care to B or any member of the class who is induced to act in that manner. Alternatively the appellants submit that A comes under a duty of care where he has an interest in inducing such action. The American authorities invoked by the appellants are not expressly based on a proposition as wide-ranging as that first stated. By way of illustration, cases such as Rusch Factors, Inc. v. Levin (1968) 284 F.Supp. 85 and Rhode Island Hospital Trust National Bank v. Swartz, Bresenoff, Yavner & Jacobs [1972] USCA4 26; (1972) 455 F 2d 847 dealt, and were expressed to deal, with the liability of accountants for careless financial misrepresentations in certified financial statements supplied by the accountants to their clients in the knowledge that they were to be used by the clients in support of their application to the plaintiffs for funds. In Rhode Island Hospital Trust the accountants not only knew but acknowledged that the plaintiff bank sought the financial statements in connexion with loans which it was proposing to make to the corporation to which the financial statements related. The two decisions provide support for the proposition that, where a statement is made for the purpose of inducing the plaintiff, or the members of a limited class including the plaintiff, to commit themselves financially upon the basis that the statement is true, and the plaintiff acts in reliance on the statement, the law will impose a duty of care on the maker of the statement. This proposition is rather different from the appellants' first submission. The deficiency in that submission may be expressed by saying that it is necessary not only that A intends that B or members of a class of persons should act or refrain from acting in a particular way, but also that A makes the statement with the intention of inducing B or members of that class, in reliance on the statement, to act or refrain from acting in the particular way, in circumstances where A should realize that economic loss may be suffered if the statement is not true. In cases where the defendant intends the statement to operate as a direct inducement to action, the reasonableness of the reliance will not be a critical factor, although in other cases the defendant's appreciation of the reasonableness of reliance will be relevant.

24. The appellants' alternative proposition derives from the American Restatement of the Law of Torts (2d), at 552, which speaks of the liability of a person who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, for pecuniary loss caused to them by their justifiable reliance on the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Whether this principle of liability extends to liability on the part of statutory and local authorities in respect of negligent misstatements made in development plans was not made clear by the argument. In Australia the general interest which a local authority has in promoting or encouraging the development of its area would not ordinarily be classified as a "pecuniary interest". We do not consider that a general interest of this kind is enough to support the existence of a duty of care on the part of an authority in relation to statements made in development plans so as to make the authority liable for negligent misstatement in accordance with the appellants' alternative proposition.

25. It follows then that if the appellants' case is to succeed they must establish at least, amongst other things, (1) that the alleged representation was made, and (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 representation. The conclusion which we have reached is that the appellants have failed to establish the first matter and therefore the second matter cannot arise.

26. Paragraph 18 of the amended statement of claim alleges a number of representations: that the documents embodied the results of expert research, that they had been prepared in a proper and workmanlike manner and were based on sound town planning principles and principles as to the use and development of land and, finally, that the plans in relation to transportation were feasible of implementation. It is the last representation which constitutes the critical misstatement on which the appellants claim to have relied to their detriment. The earlier representations pleaded are no more than a step along the way, giving some colour or character to the critical representation which follows. True it is that a person reading the documents would infer in all probability that the Authority and the Council would have engaged in expert research and embodied that research, or part of it, in the Study documents. Whether a reader would also infer that the Study documents had been prepared in a proper and workmanlike manner in accordance with the principles already mentioned is perhaps more questionable. But these matters are by the way, because the documents contain no statement, express or implied, in terms of the earlier representations which are pleaded.

27. The absence of any assurance or representation of this kind is significant. It detracts from the force of the appellants' suggestion that the Study documents amounted to an invitation to developers to rely on the contents as a solid and unalterable basis for action by way of acquiring and developing properties in the area in accordance with its proposals. In the absence of some such assurance or representation it is not easy to see why the publication of plans or proposals intended to serve as a guide for future development should be held to impose an obligation on a planning or local authority to take care in making statements in those plans or proposals.

28. In the nature of things, being creatures of an administrative and political process, proposals of this kind are subject to alteration, variation and revocation. The implementation of a development plan inevitably generates planning and political pressure for changes at the instance of administrators, commercial interests, property owners, residents and other interest groups. Moreover, unless a development plan is given some entrenched or statutory status by relevant planning legislation it does not fetter the exercise by the responsible authority of its statutory discretions to approve or refuse development applications. A responsible authority, in exercising its statutory powers, has regard not merely to the contents of such a plan, but to the way in which the plan is working and to other matters which may be relevant to the exercise of its discretion. In particular, if, in the course of time, experience had indicated that the granting of development approvals by the Council in the Woolloomooloo area, in accordance with the maximum floor space ratios proposed in the Study documents, was creating a work force too large to be handled by the transport system, then the responsible authority may have refused to grant approvals in accordance with those maximum ratios.

29. There are, accordingly, two relevant characteristics of a development plan of the kind in question. First, there is the element of impermanence and capacity for modification and revocation. Secondly, the plan does not diminish the overriding discretion of the responsible authority to depart from the proposals incorporated in the plan when determining individual applications for development approval.

30. These characteristics point to the conclusion that, in the absence of indications to the contrary, it will not readily be inferred that a plan intended to serve as a guide to future development contains an assurance that it will be continuously and inflexibly applied in the future. Rather it is an expression of present intention and future expectation which would in ordinary circumstances deter developers and businessmen from relying on it as a solid and unchangeable foundation for development approvals. Instead, they make their own assessment and rely on their advisers and consultants, recognizing that the function of the public documents is to provide a general and flexible planning framework within which developers and businessmen are expected to make their own judgments.

31. The Study documents in the present case contain statements which confirm that the redevelopment plan was of the kind already discussed and that its proposals were by no means permanent and unalterable. The foreword to the Study, which was one of the three documents comprising the plan, stated that "Its purpose is to stimulate ideas on the part of landowners and others and to serve as a guide in the control of development". The Study then outlined five basic objectives, one of which was:

"That the redevelopment proposals for Woolloomooloo
as a whole be flexible enough to permit
redevelopment to occur in stages by a variety of
private developers, but at the same time be so
designed as to ensure that ultimately the complete
pattern of development will form a total,
integrated environment, incorporating the highest
standards of civic design with safety and
efficiency of movement for both pedestrians and
vehicles."

After referring to a number of discrete geographic sectors "for which general planning policies (were) envisaged", the Study stated that "A final three-dimensional concept for the whole area cannot be determined at this stage as much depends on the eventual extent and pattern of site consolidation".

32. This comment draws attention to the difficulty of estimating the ultimate level and pattern of development. The difficulty of estimating the extent of site consolidation depended, not only on the willingness of private developers to participate in that activity, but also on the support of the Commonwealth, which was an extensive land owner in the area, and on the extent to which roads could be closed. And there was a problem of assessing the extent to which the Council, in the determination of development applications, would adopt and apply the maximum floor space ratios. True it is that all these contingencies were not mentioned. However, the statements which we have just quoted would have alerted anyone reading the Study documents to the fact that its authors specifically disclaimed any prediction as to the ultimate level of development.

33. The contents of the Study documents therefore reinforce the impression, conveyed by the general character of the proposals, that, subject to one possible exception, the Study documents were offering no assurance about the ultimate level of development or the continuing application by the Council of the maximum floor space ratios. The possible exception was the specific statement in the brochure that "A work-force of 35,000 and a resident population of 9-10,000 is envisaged when the area is fully redeveloped".

34. Another statement, made in the foreword to the Study was as follows:

"... 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."

This statement is the first of the six steps outlined above by Glass J.A. in the Court of Appeal, by which the appellants seek to establish the existence of the representation that it was feasible for the transport system to handle a workforce of between 50,000 and 90,000 persons. This argument depends upon a number of assumptions - the area available for development, which hinged on factors such as the extent of Commonwealth participation and the extent of road closures; the degree of site consolidation; a low level of residential use compared with commercial use; and a low level of non-office commercial use in relation to office commercial use. The Study documents gave no assurance in respect of these matters and, as we have seen, they were not matters capable of precise evaluation. Moreover, the alleged implied representation is inconsistent with the express statement that a workforce of 35,000 was envisaged. There is, accordingly, no basis for finding that the Study documents contained a representation in the terms suggested.

35. The general nature of these documents and the appellants' failure to establish that they contained any representation or assurance about either the ultimate level of development, beyond the estimate of a workforce of 35,000, or the continuing application by the Council of the maximum floor space ratios, is fatal to these appeals. The absence of any such representations or assurances makes it impossible to say that the Authority or the Council came under a duty of care to the appellants in the manner alleged.

36. For these reasons the appeals should be dismissed.

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 (N.S.W.). 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.

2. 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 (N.S.W.) were deemed to be the Council of the City of Sydney. Subsequently, an elected Council took office. Nothing turns on this.

3. 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.

4. 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 ..."

5. 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.

6. 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.

7. 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.

8. 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 (N.S.W.). 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] HCA 41; (1985) 59 ALJR 564, at pp 590-591; [1985] HCA 41; 60 ALR 1, at p 48; Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co.Ltd. (The Wagon Mound) (No.1) [1961] UKPC 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.

9. 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.

10. 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.

11. 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 [1977] UKHL 4; (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] HCA 64; (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.

12. For my part, I understand Lord Atkin's general conception of proximity in a different way: see Jaensch v. Coffey [1984] HCA 52; (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).

13. 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. [1963] UKHL 4; (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."

14. 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] HCA 59; (1981) 150 CLR 225, per Gibbs C.J. at pp 230-231; Mutual Life & Citizens' Assurance Co.Ltd. v. Evatt [1968] HCA 74; (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] HCA 65; (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.

15. 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?

16. 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.

17. 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."

18. 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.

19. 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.

20. 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.

21. 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.

22. 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.

23. 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.

24. 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.

25. The appeals must be dismissed.

ORDER

Appeals dismissed with costs.

Order that the amounts given by the appellants as security for the costs of each respondent be applied towards the taxed costs of that respondent. In the event that the said amounts exceed the taxed costs of each respondent order that the excess be paid to the appellants.