Sutherland Shire Council v Heyman

Sutherland Shire Council v Heyman concerned a dispute between the Sutherland Shire Council and Mr. and Mrs. Heyman regarding the Council's alleged negligence in approving building plans that did not comply with the Local Government Act 1919 (NSW). The Heymans, who purchased a property with a building that had been constructed in contravention of Council approvals, sought to recover damages from the Council for the cost of rectifying the defects. The matter ultimately came before the High Court of Australia.

The central legal issue before the High Court was whether a local council owed a duty of care to a subsequent purchaser of a property for economic loss arising from the negligent exercise of its statutory power to approve building plans. Specifically, the Court had to consider the scope of the duty of care owed by public authorities in the performance of their statutory functions and whether such a duty extended to protecting individuals from pure economic loss.

The High Court, in a joint judgment, held that the Council did not owe a duty of care to the Heymans. The Court reasoned that the statutory powers conferred upon local councils are for the benefit of the public at large, not for the protection of individual interests against economic loss. To impose a duty of care in such circumstances would be to create an indeterminate liability for the Council and would unduly fetter the exercise of its statutory discretion. The Court distinguished between a duty to prevent physical harm and a duty to prevent economic loss, finding that the latter was not established in this case. The principles of negligence, particularly concerning the existence of a duty of care, were carefully considered in light of the public nature of the Council's functions.

The High Court dismissed the appeal, upholding the decision of the lower court.