Development applications in NSW cannot be challenged on the grounds that they contain misleading and deceptive statements in breach of the Trade Practices Act (Cth) 1974, nor do developers owe purchasers or developers of adjoining land a duty of care to avoid economic loss caused by inaccurate statements in development applications.
This follows the NSW Supreme Court's long-awaited decision in the case of Street v Luna Park Sydney Pty Limited  NSWSC 1 handed down last week (Clayton Utz acted for two of the successful defendants).
Thrills, spills and litigation
Sydney's famous Luna Park sits on the harbour in a prime position close to the Harbour Bridge. Unsurprisingly this is also a popular place to live. Some residents object to the terrified screams generated by happy thrill-seekers, and joined with a developer to sue the Park and the second defendant.
Their claims centred on two development applications (DAs) lodged by the second defendant which were silent as to the intention to locate thrill rides in an extension to the site. By doing this, they said, the second defendant engaged in misleading and deceptive conduct in breach of section 52 of the Trade Practices Act. In the alternative, they claimed negligent misrepresentations were made to them.
The residents claimed that they suffered damage by purchasing their properties on the misapprehension that only children's rides would be located in the northern extension, and paid more than their properties were worth if affected by a proposal to operate thrill rides in the extension. The developer claimed that it converted its property to a residential apartment block, when, had it known of any proposal to operate adult thrill rides in the extension, it would have instead retained it for commercial uses, which would have been more financially beneficial.
Not misleading, and not in trade or commerce either
Justice Brereton found that neither DA was misleading or deceptive. In reaching his decision, he started by emphasising that "in considering whether the alleged representations were conveyed, the whole of the context, and the whole of the document, are relevant" and then pointed out that:
"Lodging a development application does not import a representation that the applicant will undertake the development in question if consent is granted. A development application is an application for permission - or consent - to do something that otherwise would be prohibited by law. The lodging of a development application conveys no commitment on the part of the applicant to proceed with the development if consent is granted...The granting of development consent, let alone the making of a development application, does not involve any obligation to implement the consent, nor any representation that, if consent is granted, it will be implemented".
Even if a DA contained this sort of representation, it could not breach the Trade Practices Act as the relevant conduct was not "in trade or commerce" because:
- the representations in the DAs were not directed towards persons who had a potential or actual trading or commercial dealing or transaction with the second defendant - there was no potential or actual trading or commercial dealing or relationship between the second defendant and the consent authority; and
- even if the representations were considered to be directed to owners and occupiers of potentially affected properties, they were not persons who had a potential or actual trading or commercial dealing or transaction with the second defendant.
Were the DAs negligent misrepresentation?
No. There was no duty of care owed to the plaintiffs (as potential purchasers or developers of neighbouring properties) to avoid foreseeable risk of economic loss caused by inaccurate or misleading statements in the DAs.
This case has important implications for all developers and property owners:
- the lodgement of a development application is not conduct "in trade and commerce" and is therefore not capable of being misleading and deceptive under the Trade Practices Act.
- developers do not owe purchasers or developers of adjoining land a duty of care to avoid economic loss occasioned by inaccurate statements in development applications.