Dansar Pty Ltd v Byron Shire Council

Dansar Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a claim for pure economic loss against Byron Shire Council (the respondent). The dispute arose from the Council's role as the consent authority for a development application and its responsibility for the management of sewerage works. The appellant sought an allocation of sewerage capacity, which was a prerequisite for obtaining development consent.

The central legal issues before the Court of Appeal were whether the Council owed a duty of care to the appellant when implementing an earlier decision regarding the allocation of spare sewerage capacity, whether the existence of such a duty was compatible with the Council's statutory functions and obligations, and whether other features of the relationship between the parties justified imposing a duty of care. The Court also considered the relevance of the distinction between policy and operational decisions in this context.

The Court of Appeal, comprising Macfarlan, Meagher and Leeming JJA, dismissed the appeal. The reasoning focused on the established principles governing the imposition of a duty of care in cases of pure economic loss, particularly in the context of public authorities exercising statutory powers. The Court found that the Council's actions in allocating sewerage capacity were undertaken in the exercise of its statutory functions and that imposing a duty of care in this scenario would be inconsistent with those functions and the broader public interest. The distinction between policy and operational decisions was considered, but ultimately the Court concluded that the Council's conduct did not give rise to a novel duty of care. The appeal was dismissed with costs.