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
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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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