Western Districts Developments v Baulkam Hills Shire Council (2008) 160 LGERA 422
Tort; Negligence; duty of care in cases involving purely economic harm; the requirement of vulnerability
Facts: Western Districts Developments (WDD), a property development company, purchased a block of land from Wati Pty Ltd. Prior to selling the land, Wati had obtained the approval of the Baulkam Hills Shire Council for the subdivision of the land. The council's approval required compliance with various statutory provisions, and unfortunately the council granted the approval without taking due care to ensure that these requirements were met. As a result, after buying the land, WDD found itself liable to pay additional 'developer charges' of about $50,000. Had the council properly carried out the statutory requirements, these charges would have been payable by Wati before the sale to WDD.
Issue: Did the council owe a duty of care to prevent economic harm to future purchasers of land which the council had approved for subdivision?
Decision: In the circumstances, the council owed a duty of care to WDD because, as a future purchaser of a subdivision, WDD was in a position of vulnerability.
Reason: As a purchaser, WDD was not in a position to protect themselves from a failure by the council to exercise reasonable care in the exercise of its powers to approve subdivisions. It would be unreasonable to expect WDD to assume that the council had not, or would not, exercise its powers properly. WDD could not realistically be expected to protect themselves against this possibility.