Supreme Court dismisses mining companies' claim that a local development plan mining ban was ultra vires and caused recoverable economic loss.

The Supreme Court

Keane C.J.

Denham J.

Murray J.

McGuinness J.

Fennelly J.

323/98 & 61/00

Between:

Glencar Exploration Plc. and Andaman Resources Plc.

Applicants

and

The County Council of the County of Mayo

Respondents

JUDGMENT delivered the 19th day of July 2001 by Keane C.J.

The factual background

The facts in this case, to the extent that they are not in dispute, are summarised with such admirable clarity in the High Court

judgment under appeal, that I can limit myself, for the purposes of this judgment, to a relatively brief résumé.

The applicants are two publicly quoted companies engaged in prospecting for and mining ores and minerals. On the 30th May 1968,

they were granted ten prospecting licences by the Minister for Energy for the purpose of exploring for gold in an area south of

Westport in Co. Mayo. Those licences were renewed from time to time and, during the period from the date on which they were

granted to the adoption by the respondents of what has been described as a “mining ban” in the County Mayo Development Plan on

17th February 1992, they expended a sum of £1,938,264 in prospecting for gold in the relevant areas. In July 1990, Mr. McCullough,

the managing director of the first applicant, had written to the respondents pointing out that the applicants’ exploration work in south

Mayo was well advanced and that they hoped to develop a gold mine in the area.

Although the results of the prospecting activities were highly encouraging, the applicants were of the view that, if the gold which

appeared to exist in these areas was to be commercially mined, a further substantial investment would be required. They accordingly

entered into a joint venture agreement with a company called Newcrest Mining Ltd., one of the largest Australian gold producers

(hereafter “Newcrest”) in November 1991. Under that agreement, Newcrest were to spend at least £1.6 million on further exploration

and, in return, was to be given a 51% interest in the venture. In February 1992, however, Newcrest withdrew from the joint venture

as a direct result, the applicants alleged, of the inclusion in the county development plan of the mining ban.

The applicants then applied for and were granted leave to institute the present proceedings by way of judicial review in the High

Court, in which they claimed inter alia the following reliefs:-

(1) Declarations that the respondents were not empowered by the relevant legislation to include the mining ban in the

County Mayo Development Plan and that it was ultra vires the legislation, unreasonable and contrary to constitutional

and/or natural justice;

(2) An order of certiorari quashing so much of the development plan as included the mining ban; and

(3) Damages for negligence and breach of duty, including breach of statutory duty.

A statement of opposition having been filed on behalf of the respondents, the substantive hearing of the claim for judicial review

came on before Blayney J. In a reserved judgment delivered on the 13th November 1992 and reported in (1993) 2 IR at p. 237, he

granted the declaration sought by the applicants that the mining ban was ultra vires the respondents’ powers under the relevant

legislation and was, accordingly, null and void. The applicants’ claim for damages was adjourned with liberty to apply.

The learned High Court judge found that the inclusion of the mining ban was ultra vires the respondents on two grounds:-

(1) That a development plan under Part 3 of the Local Government (Planning and Development) Act 1963 (hereafter “the

1963 Act”) must consist of a written statement and plan indicating the development objectives for the area of the

planning authority, that such development objectives must be positive in character and that an objective which aims to

prevent development cannot be such an objective;

(2) That the use of land for the purpose of winning and working of minerals is prima facie exempted development under

the relevant regulations, that only An Bord Pleanála may determine whether such development is or is not exempted

development and that, accordingly, the respondents could not, as a matter of law, include the mining ban in their

development plan.

The applicants had relied on a further ground in support of their claim, i.e. that the mining ban was in breach of the policy of the

government as conveyed to them in a letter dated the 16th December 1991 written on behalf of the Minister for Energy and that,

accordingly, the respondents had not had regard, as they were statutorily obliged to do, to the policy of the government. The learned

High Court judge, however, while satisfied that the respondents had acted in disregard of government policy, did not find it necessary

to come to any conclusion as to the effect in law of their having done so, having regard to his conclusion that, in any event, the

mining ban was ultra vires.

On the 11th December 1995, the applicants brought a notice of motion seeking directions as to the time and mode of trial of the

applicants’ claim for damages. It was ordered by consent that points of claim and defence should be delivered, that discovery should

be made by both parties and that the applicants should be at liberty to amend their claim for damages by extending it to a claim for

damages for breach of duty not to inflict damage by acting ultra vires and to respect the applicants’ legitimate expectations, for

misfeasance in public office and for wrongful interference with the applicants’ constitutional rights.

The application came on for hearing before Kelly J. In his written judgment delivered on the 20th August 1998, the learned High Court

judge dismissed the applicants’ claim for damages. In particular, while finding that the respondents were negligent in adopting the

mining ban, in the sense that they did something which no reasonable authority would have done, he was satisfied that the

negligence in question did not give rise to any right to damages.

The applicants have appealed to this court from the dismissal by the learned High Court judge of their claim for damages. While no

notice to vary the judgment in the High Court was served on behalf of the respondents, arguments were advanced to this court on

the hearing of the appeal to the effect that the findings of negligence by the High Court judge were erroneous in point of law.

The mining ban

It is now necessary to consider in some more detail the circumstances in which the mining ban was adopted by the respondents.

The question as to whether mining should be permitted in the Westport area gave rise to acute controversy in the early 1990s. It had

come to a head with the work carried out by Burmin Exploration and Development Plc. and Tara Mines Plc. on the slopes of Croagh

Patrick. There was similar opposition to a proposed development by Ivernia West in an area about a mile south east of the Westport

urban district area.

When the applicants obtained their prospecting licences, the development plan which had been made by the respondents under Part 3

of the 1963 Act did not contain a mining ban. In 1990, a new draft development plan was put on public display by the respondents.

Paragraph 3.6.1 of the draft plan, dealing with mineral extraction, was as follows:-

“It is clear that there are large potential mineral resources within the county from the scale of exploration currently

underway. Development of these resources will have major implications for the environment, water resources,

acquaculture, tourism and employment.

Policy

“It is the policy of the Council that where mining and quarrying developments would seriously injury the visual

environment, water resources, acquaculture, tourism, sites of archaeological, geological, historical, religious or scientific

interest, the development shall not be permitted.

“It is the policy of the Council that, as part of any planning application for the large scale extraction of minerals, an

environmental impact assessment under EC Directive 85/337/EC and SI 349 of the 1989 European Communities

(Environmental Impact Assessment) Regulations, 1989, shall be required by the Mayo County Council.

Objectives

“It is an objective of the Council to ensure, through control of mineral extraction developments, that the physical

environment, flora and fauna is reinstated, on a phased basis, and with land, farms and vegetation in keeping with the

natural environment.

“It is an objective of the Council to ensure that all forms of discharges from mineral extraction shall be strictly

controlled and monitored and that any breaches of such controls be prosecuted in accordance with the appropriate

legislation.

“It is an objective of the Council to ensure that adequate environmental safeguards are enforced to minimise

disturbance and nuisance during operations.

“It is an objective of the Council that features of archaeological interest are protected and preserved and if this is not

possible that they be properly surveyed and recorded.”

The mining ban was effected by an amendment to this section of the development plan which was passed at a meeting of the

respondents held on the 11th March 1991. It consisted of the insertion of a paragraph between the two paragraphs under the

heading “Policy” as follows:-

“It is the policy of the Council that no development and/or work shall take place in relation to minerals (as defined by the

Minerals Act 1940 as amended) in the areas shown dotted on map 10A.”

Map 10A indicated that the area in which mining was prohibited consisted of over 300 square miles extending from Achill Head in the

west to Westport in the east and from Ballycroy in the north to Inisturk Island in the south. There was already a Map 10 in the

development plan delineating what were described as “areas of special scenic importance” and which included some, though not all,

of the area delineated as the mining ban area in Map 10A. It should be noted that, at an earlier stage, the possibility of making a

special amenity area order in respect of the area subsequently affected by the mining ban had been considered by the respondents

but rejected by them.

There was support for the mining ban across party lines, two of its most enthusiastic supporters being Mr. Seamus Hughes and Mr.

Enda Kenny, who represented the Fianna Fáil and Fine Gael parties respectively on the Council. Indeed at the meeting of the

respondents held on the 11th March 1991, the vote in favour of amending the draft plan in this fashion was passed unanimously. The

amended draft plan was then put on display and various representations and objections were received and circulated to the

respondents. Among them was a letter from the applicants which, however, was received outside the statutory period for the receipt

of such representations.

On the 11th November 1991 the respondents, having considered the written representations received in relation to the mining ban,

resolved that the development plan should be amended so as to include the mining ban. The draft plan as amended would, in the

normal course, have been adopted by the respondents at their meeting in the following December. However, on the day of the

meeting, the letter already referred to on behalf of the Minister for Energy was received by them. That letter stated inter alia:-

“I am directed by the Minister to state that he views with grave concern the draft policy statement in relation to

minerals development in parts of County Mayo. The statement runs contrary to stated government policy that mineral

resources should be explored for and should be exploited where this can be done in an environmentally acceptable

manner. The statement, which implies that planning permission would be automatically refused to any mining project

means that there will, in fact, be no exploration investment whatsoever ...

“The Minister is of the view that there is in principle nothing fundamentally wrong with the existing planning procedures

and that it should be possible to accommodate the needs of both the mining industry and those concerned with the

environment within the current legal and procedural framework.

“Finally, I am directed by the Minister to state that it is his official view that the statement proposed for the draft

development plan should be deleted.”

In view of the contents of this letter, the meeting of the 16th December was adjourned. A motion was then proposed by six members

of the respondents to rescind the resolution of the 11th November 1991 which had approved the inclusion of the mining ban in the

draft development plan. At a meeting of the respondents on the 17th February 1992 that motion was defeated by 22 votes to 8.

The mining ban which was thus inserted in the development plan and which led to the institution of these proceedings was adopted

by the elected members of the respondents despite repeated advice from the officials of the respondents that it was not an

appropriate course to take. The relevant evidence is referred to in detail in the judgment of the learned High Court judge: it is

sufficient to say that the county manager, the senior executive planner and the county engineer were all of the view that the ban

was unwise for a number of reasons. First, it was in the interest of the council, through prospecting activities, to find out what

minerals were actually in the county, irrespective of whether or not permission to extract them was forthcoming: prospecting in the

area would be improbable if the mining ban was adopted. Secondly, each application for such permission, in the event of the mining

ban not being adopted, would be judged on its merits and in the light of all the relevant planning considerations and the provisions of

the EC Directives on the environment.

Mr. Hughes and Mr. Kenny appear to have been under the impression that the effect of the mining ban would not be to prevent any

mining development in the prohibited area: it would simply ensure that any application for permission was considered by the elected

members, who could then decide that a permission should be granted, although constituting a material contravention of the

development plan. It was, however, pointed out by the officials that this would not necessarily be the case, since, under the relevant

legislation, the application for permission would come before the elected members only where the county manager decided to institute

such a process. They also said that it was the duty of the elected members to take such steps as might be necessary to secure the

objectives in the plan and that, if the plan were adopted, the granting of a permission in defiance of it could well be successfully

challenged by an objector on the ground that the council were behaving irrationally and illogically. The difficulties arising from the fact

that the course adopted by them were also contrary to stated government policy were also pointed out to them.

The respondents were also advised as to the legal implications of the mining ban by one of the foremost authorities on planning law at

the time, Mr. Philip O’Sullivan S.C. (now Mr. Justice O’Sullivan). The county solicitor,

Mr. Michael Browne, in response to a letter from the county secretary on the 15th May 1991, pointed out that those who had

objected to the adoption of the mining ban might succeed in having the resolution declared invalid for a number of reasons, which he

enumerated, and said that he considered he should submit a detailed case to advise to senior counsel. He specifically referred to the

fact that it was public knowledge that the first named applicants had been prospecting in the relevant area for some time.

In his opinion, Mr. O’Sullivan said that he had not seen Map 10A but that since the terms of the ban referred to “areas” in the plural

he assumed that it referred to a number of different locations and that

“the map was prepared with the degree of attention to detail and care to limit the exclusionary prohibition to specified

amenity locations rather than by reference to a crude exclusionary policy.”

He went on:-

“In my opinion a planning authority is perfectly within its rights to make a decision in principle in its development plan

that no mining would take place in particular areas where they perceive such mining activities are in conflict with

amenity or other natural resources and to have a policy in the development plan stating this. A planning authority in

general is under a positive obligation to formulate policies and to express them in the development plan and in my

opinion the proposed amendment is doing just this. I assume the proposal is reasonable in the sense that it is made by

reference to objective criteria.”

Commenting on this passage in Mr. O’Sullivan’s opinion, the learned High Court judge said that had he seen Map 10A and been aware

of the evidence adduced in the hearing in the High Court, there could be little doubt but that he would have concluded that the ban

was nothing more than a “crude exclusionary policy”. He would also probably have concluded that the proposal could not be regarded

as reasonable, because it was not made by reference to objective criteria. However, as Kelly J. went on to point out, it appears that,

unfortunately, it was mistakenly thought by the respondents that they were legally empowered to impose the ban, despite the

important caveats in Mr. O’Sullivan’s opinion. The minutes of the meeting of 17th February 1992 record the manager as stating:

“The council was informed that it was legally entitled to include such a ban although advised not to do so.”

The High Court judgment

In his judgment, Kelly J., having set out the facts, went on to deal with the various legal headings under which the applicants’ claim

for damages was brought.

The first was the tort of misfeasance in public office. He said that he was satisfied that the applicants had not established that, in

opposing the ban, the elected members of the respondent were actuated by malice against the applicants or realised that what they

were doing amounted to an abuse of office. While he was of the view that considerable criticism could be made of the approach of

the elected members to the ban, he was satisfied that they were responding in good faith to the pressures brought to bear on them

by the electorate: while they had acted unlawfully, they had also acted honestly and in the belief that they were entitled in law to

adopt the ban.

As to the claim based on a breach of statutory duty, Kelly J. said that he was of the view that the duties imposed by the relevant

sections of the 1963 Act and the Local Government Act 1991 were for the benefit of the public or the government and that,

accordingly, no action for damages lay at the suit of an individual member of the public in respect of the alleged breach of duties.

As to the claim based on legitimate expectations, Kelly J. held that, while the applicants were entitled to expect that any application

they might make for permission would be fairly considered by the respondents, that expectation had not been frustrated, since no

such application had ever been made. He was also satisfied that, even if any legitimate expectations on their part had been

frustrated by the actions of the respondents, damages would not be available as a remedy in respect of it because of the absence of

a contractual relationship, or a relationship similar thereto, between the parties. He also rejected a submission that the applicants

were entitled, in the alternative, to damages for what was alleged to be a wrongful invasion of their property rights under the

Constitution.

As to the claim based on negligence, Kelly J. said that he had concluded that the respondents had acted negligently in adopting the

mining ban in the sense that they did something which no reasonable authority would have done. He expressed his conclusions as

follows:

“Whatever may have been the motives of the elected members, they set about achieving their goal in a way which, in

my view, no reasonable local authority in receipt of the advice which they obtained would have done. It is not the

function of elected representatives to slavishly give effect to their constituents’ demands come what may. They must

exercise a degree of judgment in any particular case.

“In this case, the evidence demonstrates that the provision of the mining ban was unnecessary. The existing planning

code was sufficient to protect all legitimate planning interests. This was the advice they received from their officials. It

was also the view made clear to them by the Minister for Energy. Not merely was it unnecessary from a planning point

of view, but the evidence was that it was in fact contrary to the best interest of the county because it would drive

away investment and exploration and the county would lose the chance of evaluating the benefits of any project put

forward for planning permission. Furthermore, there was in my view no objective justification for the adoption of the

ban. It was to operate in respect of all minerals, regardless of their method of extraction, value or the quantity likely to

be extracted. The ban was of enormous span and it was clear, particularly from the evidence of Mr. Dunleavy, that little

or no thought went into the nature or the extent of the ban. It was nothing more than a crude exclusionary policy.”

However, while Kelly J. was of the opinion that, to that extent, the respondents had acted negligently in adopting the mining ban, he

also came to the conclusion, having reviewed the authorities, that, in so acting, they were not in breach of any duty of care which

they owed to the applicants and that, accordingly, no actionable claim for damages for negligence had been established.

Although, as a result of those conclusions, Kelly J. was satisfied that the applicants’ claim for damages should be dismissed, he went

on to consider the extent of the damages to which they would have been entitled had they succeeded in their claim. He was of the

view that, if the damages were to be assessed as of the date of the mining ban, they would be entitled, at the most, to one-tenth of

the expenditure they had actually incurred, i.e. £193,826.40. If, however, the damages were to be assessed as of the date of the

trial, then they would have to be reduced further, because of the greater unlikelihood of permission ever having been granted as a

result of the enactment of a European Union habitats directive: in that event, the most they could have hoped to recover was one-

twentieth of the expenditure incurred by them.

Submissions of the parties

The claim of the applicants based on misfeasance in public office was not pursued in this court.

As to the claim based on breach of statutory duty and the applicants’ constitutional rights, Mr. Sreenan, S.C. and Mr. Brady, S.C. on

behalf of the applicants submitted that the judgment of Finlay C.J. in Pine Valley Developments Ltd. .v. Minister for the Environment

(1987) IR 23, left open the possibility of an action for damages arising from the commission of an ultra vires administrative action

where the action in question was in breach of a duty owed to a particular person. They submitted that where, as here, the breach of

a statutory duty had caused loss and damage to an individual, the latter was entitled to be compensated and that the granting of

any immunity to public authorities in such circumstances was not in accordance with the jurisprudence of the European Court of

Human Rights or of the Court of Justice of the European Economic Communities, citing in support the decisions in Osman .v. United

Kingdom (29 EHRR 245) and Francovich .v. Italy Case-6/90 (1991) ECR 1-5357. They further submitted that, in any event, even

adopting what they described as the restrictive interpretation of the tort of breach of statutory duty by the trial judge, the duty to

have regard to government policy was in fact for the benefit of a limited class of persons who were the beneficiaries of that policy,

i.e. the holders of mining licences.

As to the claim based on legitimate expectations, they submitted that the trial judge had been in error in treating their claim as based

on a representation, express or implied, that they would obtain planning permission. The legitimate expectation on which they relied

was that the respondents would act lawfully and with due regard to the advices they received from their officials and to relevant

government policy as communicated to them, that they would not seek to prejudge all applications for planning permission for mining

development within a substantial part of the area for which they were responsible and that they would act legally and fairly towards

the applicants. They submitted that it was clear from cases such as Fakih .v. Minister for Justice (1993) 2 IR 406, Dascalu .v.

Minister for Justice (unreported, 4th November 1999) and Philips .v. Medical Council (1991) 2 IR 115 that a person could legitimately

expect that public authorities would act in accordance with the law. They also cited in support the decision of this court in Duff .v.

Minister for Agriculture (1997) 1 IR 631. They further submitted that the trial judge was wrong in law in holding that damages would

not be available for a breach of a legitimate expectation in the absence of a subsisting contractual or equivalent relationship, citing in

support the decisions in Duggan .v. An Taoiseach (1989) ILRM 710 and Webb .v. Ireland (1988) IR 353.

As to the finding of the High Court that the claim for damages for negligence was not maintainable because of the absence of any

duty of care, they submitted that the existence of a duty of care had not been traversed in the points of defence furnished by the

respondents. On the assumption that the respondents were entitled to argue that no duty of care existed, they submitted that this

was not the law, having regard to the decision of the High Court and the Supreme Court in Ward .v. McMaster (1985) IR; (1988) IR

337. The duty of care arose by virtue of:

(a) the foreseeability of damage to the applicants as a consequence of the respondents’ action;

(b) the statutory framework under which the relationship between the parties existed;

(c) the relationship of proximity between the parties, there being no factors in the relationship between the parties that

would negative a duty of care;

(d) the absence of any factors that would make it “fair and reasonable” to relieve the respondents from any duty of care,

applying the formulation adopted by Costello J. at first instance in Ward .v. McMaster.

They further submitted that, if the criteria laid down by McCarthy J. in Ward .v. McMaster for determining whether a duty of care

existed were to be adopted, the argument for holding that the respondents were under a duty of care was even more compelling.

On behalf of the respondents, Dr. Forde S.C. submitted that, on the facts of the present case, no question of a legitimate

expectation, as that doctrine had been developed in the authorities in Ireland and the United Kingdom, arose. The applicants had

never applied for planning permission and, accordingly, could not contend that any expectation they might have of obtaining such a

permission had been frustrated by any action on the part of the respondents: the evidence, indeed, established that the applicants

had expressly refrained from applying for planning permission in order to preserve their possible claim for damages. In any event, he

submitted that the doctrine of legitimate expectation was a guarantee of procedural fairness, not of substantive outcomes, citing

Tara Prospecting Ltd. .v. Minister for Energy (1993) ILRM 771. Moreover, damages were not a remedy for the breach of a legitimate

expectation, assuming one existed, in the absence of a subsisting contractual or equivalent relationship. Webb .v. Ireland was not

authority for the proposition that a remedy by way of damages was available in cases of a breach of legitimate expectation: in that

case, there had been an express assurance that the plaintiff would be reasonably treated and the court had treated this as a form of

promissory estoppel rather than legitimate expectation.

As to the claim for damages based on a breach of statutory duty, Dr. Forde submitted that it had been clear since the decision in

Cutler .v. Wandsworth Stadium LD (1949) AC 398 that, for a liability to damages to arise, it had to be established that the legislature

intended that a breach of the Act should result in an award of damages in favour of a category of persons to which the plaintiff

belonged. The ultra vires act found by Blayney J. to have been committed by the respondents in adopting the mining ban was, at

most, a breach of a duty owed by the respondents to the public in general and not to any specific category of persons to whom the

plaintiff belonged.

As to the contravention alleged to have been committed of the duty under the 1991 Act to have regard to the policy of the

government, Dr. Forde submitted that the trial judge was erroneous in point of law in inferring from the evidence that the respondents

had acted in breach of their duty: both the trial judge and the applicants, in their submissions to this court, mistakenly assumed that,

because the respondents, having considered the Minister’s letter, had decided to proceed with the mining ban, they had acted in

disregard of the policy of the government. The 1991 Act did not oblige the respondents to implement government policy, but rather to

have regard to it in arriving at a decision. That did not mean, he said, that, having given appropriate consideration to the policy in

question, they were then obliged to give effect to that policy.

Dr. Forde further submitted that, in any event, even assuming that the respondents were in breach of their duty under the 1991 Act,

that was a duty owed at best to the government or one of its individual ministers and not to any category of persons to which the

plaintiff belonged.

As to the claim based on negligence, Dr. Forde took issue with the inferences of fact drawn by the trial judge from the evidence.

Since he had correctly found that the elected representatives believed with good reason that they had the legal power to impose the

ban, there was no basis for his finding that they had acted negligently. Specifically, he gave no reason for holding that the ban had

not been made by reference to objective criteria. Nor was it negligent for the elected representatives to act the contrary to the

advise of their officials on a matter of policy such as this on which their constituents had strong views. It was also not an act of

negligence on their part to decline to have regard to government policy, even supposing that that was what the elected

representatives did.

On the assumption that the trial judge was entitled to infer from the evidence that the respondents had acted negligently, in the

sense that they had done what no reasonable authority should have done, Dr. Forde submitted that this afforded them no cause of

action against the respondents. In the first place, the law of negligence was intended to provide redress for personal injuries and

physical damage to property: it was only in exceptional circumstances, which did not arise here, that liability could arise in negligence

for exclusively economic loss. He cited in this context the summary of the law in McMahon and Binchy on the Law of Torts, Third

edtn. Chapter 10. He further submitted that there was no authority for the proposition that a duty of care rested on a local authority

in circumstances such as the present: the decision in Ward .v. McMaster was clearly distinguishable. He said that it had also been

held in a number of cases that, such as Yuen Kun Yeu .v. Attorney General of Hong Kong [(1988) AC 175]; Pine Valley Developments

Ltd. .v. Minister for the Environment and Dunlop .v. Woolahara Municipal Council [(1982) AC 158] that where a decision in a policy

area by a public authority was in issue, liability in negligence should not normally arise. He said that the public policy underlying that

principle was reinforced, in the case of local authorities, by the fact that, if the respondents were made liable in the present case,

they would be liable to a surcharge.

Dr. Forde further submitted that the collapse of the joint venture agreement with Newcrest and the impossibility of getting other joint

venturers was not reasonably foreseeable by the respondents. He further submitted that the respondents’ resolution was not the

cause of any loss that the applicants’ claimed to have sustained: even if the resolution had not been adopted, the provisions of the

county development plan prohibiting mining and quarrying development which would impair the visual environment, etc., might well

have resulted in a refusal of planning permission. The collapse of the joint venture with Newcrest, moreover, was not caused by the

ban, but by the low price of gold, the failure of the government to take any action regarding the ban and the subsequent unilateral

act of Newcrest.

In reply, Mr. Brady submitted that, in determining whether a duty of care existed, the correct approach was to look first at the

conduct of the alleged wrongdoer and then determine whether, in the circumstances of the particular case, a legal relationship in the

form of a duty to exercise reasonable care existed. He submitted that this was in accordance with the well known tests adopted by

Lord Wilberforce in Anns .v. Merton LBC (1978) AC 728 and by Costello J. at first instance and McCarthy J. in this court in Ward .v.

McMaster. He also urged that, far from indicating any public policy against a finding of negligence in cases such as the present, the

statutory liability to a surcharge reflected a public policy in favour of making such findings where appropriate.

Conclusion

Before stating my conclusions on the issues that arise in this appeal, I think it appropriate to make some observations concerning the

decision of Blayney J. which gave rise to the claim for damages the subject of the appeal.

The first ground on which he found the resolution adopting the mining ban ultra vires was that it was not positive in nature but simply

constituted a restriction on a particular form of development. He based that conclusion on the undoubted fact that, by virtue of s.

19(2) of the 1963 Act, a development plan is to consist of a written statement and a plan indicating the “development objectives” for

the area in question. He pointed out that “development” is defined in s. 3(1) as “the carrying out of any works on, in or under land

...” From that, he inferred that the “development objectives” referred to must have as their aim the carrying out of works on, in or

under land and that they must be positive in character.

That is at least questionable, since sub-s. (2)(a)(i) states that the “development objectives” referred to may include objectives “for

the use solely or primarily ... of particular areas for particular purposes (whether residential, commercial, industrial, agricultural or

otherwise) ...”

Thus, in the case of agricultural land, development plans may, and frequently do, legitimately include provisions ensuring that, during

the currency of the plan, the land will continue to be used as agricultural land. Far from requiring the carrying out of any works on the

land, such an objective would have the effect of restricting any development which would involve a change of use of the land, save

for exempted development.

Even more critically, however, the learned judge does not appear to have had any regard to sub-s. (3) which provides that

“Without prejudice to the foregoing subsection and subsection (5) of this section, a development plan may indicate

objectives for any of the purposes mentioned in the Third Schedule to this Act ...”

At this point the word “objectives” is used without any qualification and the Third Schedule itself indicates a number of objectives

which can be achieved which do not require the carrying out of works of any sort, such as (of particular relevance in the context of

the present case) in Part 4 at paragraph 7:-

“Preservation of views and prospects and of amenities of places and features of natural beauty or interest.”

As to the second ground on which the learned judge found the mining ban ultra vires, it is undoubtedly the case that it was for An

Bord Pleanála, and not the planning authority, to decide in any particular case whether a particular development constituted an

exempted development or not. However, it seems to me that the prohibition of mining in a particular area could not, in law, have the

effect of restricting the carrying out of any exempted development. Under the then law, contained in the Local Government (Planning

and Development) Regulations 1977 (SI No. 65 of 1997) the following was an exempted development:-

“The use of land for the purpose of the winning and working of minerals, the carrying out of works incidental thereto

(other than open cast mining or surface working or the deposit of refuse or waste materials) and, in the case of land

other than land situate in an area to which a special amenity area order relates, the erection or placing of structures on

the land for such specific purposes.”

It will be noted that open cast mining or surface working is removed from the category of exempted developments and, accordingly,

the effect of the mining ban would have been to require permission to be obtained for any such development in the area of the ban.

No doubt the fact that the mining ban would not preclude purely underground mining would limit its efficacy to that extent, but it by

no means follows, in my view, that the ban was thereby rendered ultra vires.

It is noteworthy in this context that Mr. O’Sullivan advised the council that the imposition of the ban would be lawful, provided that

the prohibition was limited to specified high amenity locations and not by reference to a crude exclusionary policy. The ban might well

have been successfully challenged on the ground that it failed to meet the criteria identified by Mr. O’Sullivan but that did not

happen.

The parties naturally accepted that, there having been no appeal from the decision of Blayney J., it is binding as a matter of law for

the purpose of these proceedings. I would expressly reserve for another occasion the question as to whether the decision that the

mining ban was ultra vires on the grounds set out in the judgment of Blayney J. was correct in point of law.

I consider next the different headings under which it has been contended on the hearing of this appeal that the applicants were

entitled to damages.

(1) Breach of statutory duty and the applicants’ constitutional rights

The first breach of statutory duty alleged against the respondents arises out of the provisions of s. 19 of the 1963 Act which imposed

on the respondents an obligation to make a development plan for their area. The applicants cannot complain that the respondents did

not fulfil their obligation under that section, because they manifestly did. Their complaint is rather that the development plan which

they made in fulfilment of their obligation under the section contained, in the form of the mining ban, a provision which was ultra

vires. On one view, that complaint was met when the offending section of the plan was deleted in consequence of the judgment and

order of the High Court and it is difficult to see how, in those circumstances, a claim for damages for breach of statutory duty could

be well founded.

However, apart from that consideration, it seems to me that, in any event, a claim for damages for breach of the statutory duty

imposed by s. 19 could not arise in the circumstances of the present case. The applicants, in abandoning their claim based on the

tort of misfeasance in public office, have in effect conceded that the respondents, in adopting the mining ban, were not deliberately

and dishonestly abusing the powers conferred on them under the 1963 Act. The decision by the respondents to include the mining

ban constituted the purported exercise by them of a power vested in them by law for the benefit of the public in general. It was not

the fulfilment by them of a duty imposed by statute for the specific protection of particular categories of persons, the breach of

which may lead to an action for damages. It follows that the ultra vires exercise of the power in the present case could not of itself

provide the basis for an action in damages. This view of the law is authoritatively confirmed by the judgment of Finlay C.J. in Pine

Valley Developments .v. Minister for the Environment where he cited with approval the following statement of the law in the Fifth

Edition of Wade on Administrative Law at p. 673:-

“The present position seems to be that administrative action which is ultra vires but not actionable merely as a breach

of duty will found an action for damages in any of the following situations:

1. If it involved the commission of a recognised tort, such as trespass, false imprisonment or negligence.

2. If it is actuated by malice, e.g. a personal spite or a desire to injure for improper reasons.

3. If the authority knows that it does not possess the power which it purports to exercise.”

The learned Chief Justice added that he was satisfied that there would not be liability for damages arising under any other heading.

In the present case, paragraphs 2 and 3 in the passage cited are clearly not applicable. It will be necessary to consider at a later

point in this judgment whether the ultra vires act in the present case involved the commission of the tort of negligence.

The applicants sought to rely on the reference in the passage quoted to an administrative action which is “not actionable merely as a

breach of duty” and submitted that it was, accordingly, envisaged that in some instances at least an ultra vires administrative act

might be actionable as a breach of duty. That is undoubtedly so, but only where, as pointed out by the learned Chief Justice, the

statutory duty in question is imposed on the body concerned for the specific protection of the rights of individuals. It is clear that this

is not such a case.

As for the damages allegedly sustained by the applicants as a result of the breach of their constitutional rights, a similar claim was

made in Pine Valley, but was also rejected. In that case, the ultra vires decision by the Minister for Local Government (as he then

was) to grant permission for the development of the plaintiff’s lands was treated by Finlay C.J. in the course of his judgment, as

having probably contributed towards a diminution in the value of the land in the plaintiff’s hands. Similarly, it could no doubt be said in

the present case that the imposition of the mining ban contributed to a reduction in value of the property right represented by the

prospecting licences which was vested in the applicants. Finlay C.J., however, said that

“That fact, itself, however, does not, in my view necessarily mean that an injustice was done to the plaintiffs and I am

certain that that does not constitute an unjust attack on the plaintiffs’ property rights ...

“I am satisfied that it would be reasonable to regard as a requirement of the common good an immunity to persons in

whom are vested statutory powers of decision from claims or compensation where they act bona fide and without

negligence. Such an immunity would contribute to the efficient and decisive exercise of such statutory powers and

would, it seems to me, tend to avoid indecisiveness and delay, which might otherwise be involved.”

I am satisfied that those considerations also apply to the present case. The remedy available to persons affected by the commission

of an ultra vires act by a public authority is an order of certiorari or equivalent relief setting aside the impugned decision and not an

action for damages, to allow which, in the case of public officials, would be contrary to public policy for the reasons set out by Finlay

C.J. in the passage just cited.

It was urged in the present case that this view of the law was not in accordance with the provisions of the European Convention on

Human Rights and Fundamental Freedoms as applied by the European Court of Human Rights in Osman .v. United Kingdom. At the time

of writing, the Convention is not part of our domestic law. However, I am in any event satisfied that the decision in Osman is of no

assistance to the applicants. That was a case in which the courts in the United Kingdom had struck out proceedings for negligence

against the police brought by the family of a victim of manslaughter. The Court of Appeal had done so on a preliminary application on

the basis of a so-called exclusionary rule laid down by the House of Lords on grounds of public policy in Hill .v. Chief Constable of

West Yorkshire (1989) AC 53. That was held to be in breach of Article 6(1) guaranteeing to everyone the right to have any claim

relating to civil rights and obligations brought before a court or tribunal. However, that was because the court was considering a claim

in negligence and not one based on an ultra vires act. It was, moreover, a case in which the merits of the applicants’ claim having

regard to the facts of the particular case had never been the subject of an adjudication by a competent tribunal. In the present

case, the plaintiffs’ claim based on negligence has been fully considered and rejected by the High Court and has been the subject of a

fully argued appeal to this Court.

It was also submitted that the decision in Pine Valley and of the High Court in the present case were not in accordance with EC Law

as laid down by the Court of Justice in Francovich .v. Italy. However, the decision in the latter case was to the effect that an action

for damages would lie against a public authority in a member state which had acted in breach of EC Law where damage had been

sustained as a result. The applicants’ claim for damages in the present case is grounded on alleged breaches of Irish law and not of

EC Law.

(2) Legitimate expectation

The doctrine of legitimate expectation, as it has come to be called, derives, it would seem, from the jurisprudence of the European

Court of Justice, although some have seen it as also constituting a development of the English doctrine of promissory estoppel. It

made its first appearance in our law in Smith .v. Ireland and Others, (1983) ILRM 300 where Finlay P., as he then was, found on the

facts that it had not been established that a legitimate expectation of the plaintiff had not been met. In Council of Civil Service

Unions .v. Minister for the Civil Service (1985) AC 374, Lord Diplock said that it arose in the case of decisions which affected other

persons by

"(a) altering rights or obligations of that person which are enforceable by or against him in private law; or

(b) ... depriving him of some benefit or advantage which either

(i) he had in the past been permitted by the decision maker to enjoy and which he can legitimately expect to be

permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on

which he has been given an opportunity to comment, or

(ii) he has received an assurance from the decision maker will not be withdrawn without giving him first an

opportunity for advancing reasons for contending that they should not be withdrawn.”

In the same case, Lord Roskill said:

“As the cases show, the principle is closely connected with ‘a right to be heard’. Such an expectation may take many

forms. One may be an expectation of prior consultation. Another may be an expectation of being allowed time to make

representations especially where the aggrieved party is seeking to persuade an authority to depart from a lawfully

established policy adopted in connection with the exercise of a particular power because of some suggested exceptional

reasons justifying such a departure.”

There is authority in Ireland for the proposition that, to the extent that the doctrine of “legitimate expectation” exists in our law, the

circumstances in which it arises are those identified in the passages cited. As Costello J. pointed out in Tara Prospecting Limited and

Another .v. Minister for Energy and Others (1993) ILRM (a case coincidentally also arising out of the exploration of gold in County

Mayo) at p. 783:

“... The case law developed in England has established that a duty to afford a hearing may be imposed when such

expectations are created by public authorities. The correlative right thus arising is therefore a procedural one. And it is

important also to recognise that the claim I am now considering is a very different one. It is not that the legitimate

expectations which the applicants held entitled them to a fair hearing (such a right arising from constitutional and well

established common law principles I have already considered), but that they created a right to the benefit itself which

should be enforced by an order of mandamus ...”

Having considered the authorities in Ireland and elsewhere, he then went on to hold inter alia that

“In cases involving the exercise of a discretionary statutory power the only legitimate expectation relating to the

conferring of a benefit that can be inferred from words or conduct is a conditional one, namely, that a benefit will be

conferred provided that at the time the Minister considers that it is a proper exercise of the statutory power in the light

of current policy to grant it. Such a conditional expectation cannot give rise to an enforceable right to the benefit should

it later be refused by the Minister in the public interest.”

It has been said that this is an unduly restrictive approach and that there is no reason, in logic or principle, why the doctrine cannot

be successfully invoked so as to declare a person entitled, in an appropriate case, not simply to fair procedures, but to the benefit

which he was seeking in the particular case. (See the decisions of the High Court in Duggan .v. An Taoiseach (1989) ILRM 71 and

Abrahamson .v. Law Society of Ireland 1996) 1 IR 403.)

It is unnecessary, however, in the context of the present case to determine whether the more expansive approach suggested by

those decisions is to be preferred to the view of the law taken by Costello J. in Tara Prospecting Ltd. and Anor. .v. Minister for

Energy and Others. The applicants cannot, and do not, complain that they were deprived of a benefit in the form of a grant of

planning permission which, in the language of the doctrine, they reasonably and legitimately expected to receive. They never applied

for such a permission. Their complaint is that the respondent imposed an improper and illegal constraint on the manner in which they

would propose to consider an application from the applicants for permission, in the form of the mining ban. That unlawful fetter on the

powers of the applicants was removed by the decision of the High Court and thereafter the doctrine of legitimate expectations

ceased to have any relevance in this case.

It should also be pointed out that the judgment of Finlay C.J. in Webb .v. Ireland, on which the applicants also relied, proceeded on

the basis that the facts in that case gave rise to a sustainable claim based on promissory estoppel, rather than on the doctrine of

legitimate expectations as that doctrine has been explained in the other authorities to which I have referred. Webb was, moreover, a

decision which turned upon particular facts - specifically the assurance that the finder of the chalice would be honourably treated -

which have no parallel in the present case.

(3) Negligence

There are two preliminary matters which must first be considered.

It was submitted on behalf of the applicants that the existence of a duty of care had not been traversed in the points of defence

furnished by the respondents. However, at paragraph 19 of the points of defence the respondents denied that they were guilty of

negligence or breach of duty and the particulars of negligence and breach of duty are also expressly denied in paragraph 22. It was

clearly implicit in those pleas that the respondent was contending that it was under no duty of care or, if it was, that it was not in

breach of the relevant duty. Apart from that consideration, whether a duty of care existed in the particular circumstances of this

case was a matter of law and, on the orthodox view of the function of pleadings, the absence of a duty of care did not have to be

expressly pleaded by the respondents. There is, of course, no question of the applicants having been taken in any way by surprise

either in this court or in the High Court, having regard to the detailed written submissions furnished in both courts on the legal

aspects of the case, and I would, accordingly, reject the submission based on this pleading point.

The second issue is in relation to the findings of fact made by the learned trial judge. As already noted, although no notice to vary

had been served on behalf of the respondent, Dr. Forde argued that the inferences of fact drawn by the trial judge from the evidence

were not justified.

Although the trial judge found that the respondents had acted negligently in adopting the mining ban, I think that it is clear that, in

so finding, he was not holding that they had been in breach of any duty of care they owed the applicants: a finding to that effect

would have been inconsistent with the conclusions he later reached, after a consideration of the authorities, that the respondents

had not been in breach of any duty of care they owed the applicants. He did, however, conclude that, in adopting the mining ban,

they had done something which no reasonable local authority would have done.

I am satisfied that this was an inference which the trial judge was entitled to draw from the evidence and is not one which should be

set aside by this court. The uncontested evidence was that the ban was adopted in the face of unequivocal advice from the officials

of the respondent that it was unnecessary in planning terms and would be contrary to the interests of the people of County Mayo,

since it would be a disincentive to investment and exploration and the absence of any prospecting would mean that the county would

not know the extent of its mineral resources. The ban, moreover, was clearly to operate in an arbitrary manner and could not be

objectively justified as being solely designed to protect high amenity locations. I will return at a later point to the question as to

whether the trial judge was correct, in point of law, in also holding that the respondents had acted unlawfully in acting, as it was

claimed they did, in disregard of government policy.

The next, and final, issue which has to be determined is as to whether the trial judge was correct in point of law in holding that,

although the respondents’ action in adopting the mining ban was properly characterised as one which no reasonable planning authority

could have taken, it did not constitute a breach of a duty of care owed by the respondents to the applicants as a result of which

they suffered loss and are entitled to damages.

This has resulted in a impressively wide ranging discussion in this court as to the nature of the modern tort of negligence. The

starting point is obviously the famous passage in the speech of Lord Atkin in Donoghue .v. Stephenson (1932) AC 562 which, however

often quoted, must be set out here again, but including an introductory passage, which is of critical importance, and is frequently

omitted:-

“At present I content myself with pointing out that in English law there must be, and is, some general conception of

relations giving rise to a duty of care, of which the particular cases found in the books are but instances. The liability for

negligence, whether you style it such or treat it as in other systems as a species of ‘culpa’ is no doubt based upon a

general public sentiment of moral wrongdoing for which the offender must pay. But acts or omissions which any moral

code would censure cannot in a practical world be treated so as to give a right to every person injured by them to

demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy. The

rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question,

Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you

can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems

to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in

contemplation as being so affected when I am directing my mind to the acts or omissions which were called in

question.”

The opening passage indicates that, in Lord Atkin’s view, while the law of negligence involves some general conception of relations

giving rise to a duty of care, it necessarily embodies rules of law which limit the range of complainants and the extent of their remedy.

The well known biblical reference is then followed by Lord Atkin’s clarification of the dicta in Le Lievre .v. Gould (1893) 1 QB 491 which

suggested that the duty of care arose because of the “proximity” of the person or property injured to the person or property which

caused the injury. He pointed out that “proximity” in this context should not be confined to “mere physical proximity” but should

extend “to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound

to take care would know would be directly affected by his careless act.”

That was clearly an essential clarification when what was under consideration was the duty of the manufacturers of articles to the

ultimate purchaser with whom they had no relationship in contract.

Finally, it should be noted that in Le Lievre .v. Gould, in a passage cited with approval by Lord Atkin (subject to the qualification just

mentioned), Lord Esher said

“If one man is near to another, or is near to the property of another, a duty lies upon him not to do that which may

cause a personal injury to that other, or may injure his property”.

That passage is of importance for two reasons. It makes it clear in the first place, that, in general, the law of negligence is directed

to a positive act which causes injury or damage rather than a failure to take action so as to prevent such injury or damage. No doubt

in the course of a particular operation an omission to do something may render the defendant amenable in damages: the failure of a

motorist to give a required signal which results in an accident converts a blameless form of driving into negligent driving.

The second feature of the law of negligence identified in that passage is that, in general, for a defendant to be found guilty of

negligence the careless act must have caused personal injury to, or damage the property of, the plaintiff. The law of negligence

normally does not afford redress to those who have suffered what has come to be described in the authorities as “economic loss”

simpliciter.

Lord Atkin’s speech in Donoghue .v. Stephenson thus established (or on another view, apparently his own, simply confirmed) that

reasonable foreseeability on the part of the defendant that his actions would be likely to injure the plaintiff was a necessary but, of

itself, insufficient condition of liability in negligence. It was also necessary for the plaintiff to establish that there was a relationship of

“proximity” between himself and the defendant which gave rise to the legal duty to take care that the foreseeable consequence was

avoided. However, in cases where the damage occurred outside the familiar territory of the highway and the workplace, the

application of these principles has led, throughout the common law world, to a vast range of judicial decisions not always easy to

reconcile.

So too with the principle that no action for negligence lay in respect of purely economic loss. A major qualification of that principle

was established in Hedley Byrne .v. Heller and Partners Ltd. (1964) AC 465 in the case of pecuniary loss caused by a negligent

misstatement, but until the much discussed decision of the House of Lords in Junior Books Ltd. .v. Veitchi Co. Ltd. (1983) 1 AC 520 it

remained the law in both England and Ireland that, negligent misstatement apart, no action in negligence lay in respect of such

damage.

In the following passage in his speech in Anns .v. Merton London Borough Council (1978) AC 728 at 751, Lord Wilberforce set out the

principles which in his view determined the existence of the scope of a duty of care:-

“Through the trilogy of cases in this House, Donoghue .v. Stephenson, Hedley Byrne & Co. Ltd. .v. Heller and Partners

Ltd. and Home Office .v. Dorset Yacht Company Ltd. the position has now been reached that in order to establish that a

duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of

previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two

stages. First, one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage,

there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former,

carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises.

Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations

which ought to negative, or to reduce or limit the scope of, the duty or the class of person to whom it is owed or the

damages to which a breach of it may give rise ...”

In later English cases, doubts were expressed as to whether this formula was of such universal applicability as a superficial reading

might suggest. In Governors of the Peabody Donation Fund .v. Sir Lindsay Parkinson and Company Limited (1985) AC 210 at 240 Lord

Keith of Kinkel said of this reading of the passage (and an observation of a similarly general nature by Lord Reid in Dorset Yacht

Company Ltd.):

“This is a temptation which should be resisted ... in determining whether or not a duty of care of a particular scope was

incumbent on a defendant it is material to take into consideration whether it is just and reasonable that it should be so.”

In Yuen Kun Yeu .v. Attorney General of Hong Kong, the judicial committee of the Privy Council said that the two step test had “been

elevated to a degree of importance greater than it merits, and greater perhaps than its author intended.”

Moreover, in the compressed form adopted by Lord Wilberforce, it was open to the possible interpretation that foreseeability alone

was a sufficient criterion of liability. It was also seen as eroding the distinction, already noted, between positive acts causing injury or

damage and a failure to prevent such injury or damage.

Ultimately, in Caparo Industries Plc. .v. Dickman, a different approach was adopted, epitomised in a passage in the judgment of

Brennan J. in the High Court of Australia in Sutherland Shire Council .v. Heyman (1865) 60 ALR 1 at 4344 as follows:-

“It is preferable in my view that the law should develop novel categories of negligence incrementally and by analogy with

established categories, rather than by a massive extension of a prima facie duty of care restrained only by undefinable

considerations which ought to negative, or to reduce or limit the scope of the duty, and the class of person to whom it

should be owed.”

In Caparo, Lord Bridge summed up the approach in England as follows:-

“What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a

duty of care are that there exists between the party owing the duty and the party to whom it is owed a relationship

characterised by the law as one of ‘proximity’ or ‘neighbourhood’ and the situation should be one in which the court

considers it fair, just and reasonable that the law should impose a duty of a given scope on the one party for the benefit

of the other.”

The law in Ireland must now be considered. The decisions in both Donoghue and Stephenson and Hedley Byrne and Heller and

Company Ltd. have been considered and adopted by our courts in a number of cases and unquestionably represent the law in this

jurisdiction. It has also been said (see, for example, the Third Edition of McMahon and Binchy on the Law of Torts, Chapter 6) that

the two stage test adopted by Lord Wilberforce in Anns is also the test which must be adopted in this jurisdiction, having regard to

the decision of this court in Ward .v. McMaster.

The plaintiffs in that case, a married couple, had purchased a house from a builder. Shortly afterwards, they discovered that it

contained serious structural defects which, if not repaired, would render it dangerous and a risk to health. The plaintiffs had bought

the house with the assistance of a loan from the local authority under the relevant housing legislation. They had not had any

independent examination of the house by a surveyor carried out before they bought it, but it had been examined on behalf of the

local authority by an auctioneer. The plaintiffs sued both the builders/vendor and the local authority. Their claim against the latter

was based on the contention that the local authority should have known that the plaintiffs, not being persons of means, would be

unlikely to retain their own independent surveyor and would have relied on an appropriate inspection having been carried out on behalf

of the authority. In fact, as already noted, the examination was carried out by an auctioneer who was not a qualified surveyor and

whose report did not reveal the defects in the house.

In the High Court, the plaintiffs’ claim against both the builder and the local authority succeeded. Although the damage which resulted

was, on one view, purely economic loss, Costello J. in the High Court was satisfied that it was recoverable in the light of the decision

in Junior Books Ltd. .v. VeitchiCompany Ltd. Having considered the authorities in England, he stated the legal principles which were

applicable in determining whether a duty of care arose in the circumstances of that case to be as follows:-

"(a) When deciding whether a local authority exercising statutory functions is under a common law duty of care the

court must firstly ascertain whether a relationship of proximity existed between the parties such that in the reasonable

contemplation of the authority carelessness on their part might cause loss. But all the circumstances of the case must

in addition be considered, including the statutory provisions under which the authority is acting. Of particular significance

in this connection is the purpose for which the statutory powers were conferred and whether or not the plaintiff is in the

class of persons which the statute was designed to assist.

(b) It is material in all cases for the court in reaching its decision on the existence and scope of the alleged duty to

consider whether it is just and reasonable that a common law duty of care as alleged should in all the circumstances

exist.”

In the case of the local authority, he held that it was within the reasonable contemplation of the second named defendant that

carelessness on its part in carrying out the valuation of the house might be likely to cause damage to the purchaser. It was

consistent with the local authority’s public law powers that they should be accompanied by a common law duty of care in favour of

the plaintiffs and he further held that, for similar reasons, it was “just and reasonable” that the court should hold that a duty of care

arose in that case.

The local authority appealed to this court which unanimously upheld the judgment of Costello J. However, although there was, as in

this case, an extensive debate as to the nature and scope of the duty of care, Henchy J. was satisfied that the facts of the case

were such that it could be decided in accordance with what he described as “well established principles”. In his view, the relationship

between the first named plaintiff and the local authority was such that the latter owed a duty to him to take due care in the

valuation of the house since they should have known that, in the light of his lack of means, he would rely on their having carried out

an appropriate valuation. There is, accordingly, nothing in his judgment to indicate that he was adopting the more expansive view of

the extent of the duty of care, rightly or wrongly attributed to Lord Wilberforce in Anns, rather than the more restrictive approach

subsequently adopted in the English authorities.

By contrast, in the only other judgment delivered in this court, McCarthy J. expressly endorsed the two stage test adopted by Lord

Wilberforce and added

“Whilst Costello J. essentially rested his conclusion on the ‘fair and reasonable’ test, I prefer to express the duty as

arising from the proximity of the parties, the foreseeability of the damage, and the absence of any compelling exemption

based upon public policy. I do not, in any fashion, seek to exclude the latter consideration, although I confess that such

a consideration must be a very powerful one if it is to be used to deny an injured party his right to redress at the

expense of the person or body that injured him.”

As to the passage already cited from the judgment of Brennan J. in Sutherland Shire Council .v. Heyman, the learned judge

commented that “This verbally attractive proposition of incremental growth ... suffers from a temporal defect - that rights should

be determined by the accident of birth.”

Finlay C.J. and Griffin J. said that they were in agreement with the judgments of both Henchy J. and McCarthy J.: Walsh J. confined

his concurrence to the judgment of McCarthy J.

While the decision in Ward .v. McMaster has been treated by some as an unqualified endorsement by this court of the two stage test

adopted by Lord Wilberforce in Anns, it is by no means clear that this is so. As already noted, Henchy J. was satisfied that the case

could be decided by reference to “well established principles” and made no reference in his judgment to the two stage test in Anns.

Since Finlay C.J. and Griffin J. expressed their agreement with both the judgments of Henchy J. and McCarthy J., it is not clear that

the observations of the latter in relation to the two stage test in Anns necessarily formed part of the ratio of the decision. Given the

far reaching implications of adopting in this jurisdiction a principle of liability in negligence from which there has been such powerful

dissent in other common law jurisdictions, I would not be prepared to hold that further consideration of the underlying principles is

foreclosed by the dicta of McCarthy J. in Ward .v. McMaster.

In considering whether that approach, or the more cautious approach favoured in Caparo Industries Plc. .v. Dickman and Sutherland

Shire Council .v. Heyman should be adopted, I think it is helpful to refer again to the philosophy reflected in Lord Atkin’s approach in

Donoghue .v. Stephenson. The bystander who sees a building on fire and knows that there are people inside no doubt foresees that if

he waits for the fire brigade to arrive rather than attempting to rescue them himself they may die. But the law has never imposed

liability in negligence on a person who fails to act as a more courageous citizen might in such circumstances. A strict moral code

might censure his timidity: the law of negligence does not. It is precisely that distinction drawn by Lord Atkin between the

requirements of morality and altruism on the one hand and the law of negligence on the other hand which is in grave danger of being

eroded by the approach adopted in Anns as it has subsequently been interpreted by some. There is, in my view, no reason why courts

determining whether a duty of care arises should consider themselves obliged to hold that it does in every case where injury or

damage to property was reasonably foreseeable and the notoriously difficult and elusive test of “proximity” or “neighbourhood” can be

said to have been met, unless very powerful public policy considerations dictate otherwise. It seems to me that no injustice will be

done if they are required to take the further step of considering whether, in all the circumstances, it is just and reasonable that the

law should impose a duty of a given scope on the defendant for the benefit of the plaintiff, as held by Costello J. at first instance in

Ward .v. McMaster, by Brennan J. in Sutherland Shire Council .v. Heyman and by the House of Lords in Caparo Industries Plc. .v.

Dickman. As Brennan J. pointed out, there is a significant risk that any other approach will result in what he called a “massive

extension of a prima facie duty of care restrained only by undefinable considerations ...”

I observe, in this context, that it has been suggested in England that the difference in approach between Anns and Caparo may

ultimately be of no great significance, since the considerations which, in a particular case, may negative the existence of a duty of

care under the Anns formulation are consistent with an assessment as to whether it is just, fair and reasonable to impose such a duty

in the particular circumstances. (See the comments of Lord Hoffman in Stovin .v. Wise (1996) AC 923 at p. 949.)

In the present case, we are concerned with negligence alleged against a public authority in the performance of a statutory function.

The circumstances in which a duty of care can be said to arise in the case of such authorities when exercising statutory functions

has also given rise to an enormous volume of decided cases in the common law world, to many of which we were referred. There are,

of course, many instances in which a public authority will be liable in negligence because the duty of care imposed on the law by them

is no different from that arising in private law generally. Obvious examples are the duties owed by local and other public authorities

arising out of their occupation of premises or their role as employers. In such cases, the plaintiff does not have to call an aid the fact

that the defendants may have been exercising a statutory function: their duty of care as occupiers, employers, etc., is no greater,

but also no less, than that of their counterparts in the private sector.

Difficulties have arisen, however, in determining whether, and to what extent, a statutory authority can be made amenable in

damages for the negligent exercise of a power which they were entitled, but not obliged, to invoke. In Anns, it had been held that,

although a local authority was not under a duty to inspect the foundations of buildings, it could be made liable where proper

consideration had not been given to the question as to whether they should inspect or not. In Siney .v. Dublin Corporation (1980) IR

400, this court held that, where a flat had been provided by a local authority pursuant to their duties under the relevant housing

legislation, they were obliged to take reasonable care to ensure that it was fit for human habitation and that, accordingly, they were

liable in damages because appropriate humidity tests had not been carried out in order to determine whether the flat would be

sufficiently ventilated. In Ward .v. McMaster, as we have seen, the local authority were found liable in damages for having failed to

carry out a valuation by a qualified surveyor in circumstances where it could not be suggested that they were under a statutory duty

to provide themselves or anyone else with such a valuation, although they were undoubtedly authorised so to do. Again, in the

judgments of Costello J. at first instance and McCarthy J. in this court, Anns is cited with approval as authority for the proposition

that a duty of care arises in such circumstances.

In Anns, it was suggested that the imposition of a duty of care in cases of this nature was justified where the nature of the statutory

power was such that it was obviously the intention of the legislature that it would be exercised and that, accordingly, a negligent

failure to exercise what were described as “operational” powers or duties could give rise to liability. In subsequent cases in England,

however, it has been said that the distinction between policy and operations may not be a particular useful guide in determining

whether a duty of care should be found to exist in any particular case. Similar considerations apply to the distinctions drawn in some

of the authorities between discretionary and non-discretionary decisions.

For the purposes of this case, it is sufficient to say that the mere fact that the exercise of a power by a public authority may confer

a benefit on a person of which he would otherwise be deprived does not of itself give rise to a duty of care at common law. The facts

of a particular case, however, when analysed, may point to the reasonable foreseeability of damage arising from the

non-exercise of the power and a degree of proximity between the plaintiff and the defendant which would render it just and

reasonable to postulate the existence of a duty of care. That approach is consistent with the reluctance of the law to impose liability

for negligence arising out of an omission to act rather than out of the commission of positive acts which may injure persons or

damage property. In the present case, the decision by the respondents that they would not grant planning permission for any mining

development within the area covered by the ban was, on the assumption that it was intra vires, the exercise by them of a statutory

power which would result in the withholding of a benefit from the applicants which would foreseeably result in their suffering financial

loss. But, although such a loss was undoubtedly reasonably foreseeable, when one bears in mind that the powers in question were

exercisable by the respondents for the benefit of the community as a whole and not for the benefit of a defined category of persons

to which the applicant belonged (as in Siney and Ward .v. McMaster), I am satisfied that there was no relationship of “proximity”

between the plaintiffs and the respondents which would render it just and reasonable to impose liability on the respondents.

In considering whether such a relationship of “proximity” existed and whether it would be just and reasonable to impose a duty of

care on the respondents, I think one also has to bear in mind that this was not a case in which it could reasonably be said that the

applicants, in incurring the expense of their prospecting activities, could be said to have been relying on the non-negligent exercise

by the respondents of their statutory powers. Their position is in contrast to that of the plaintiffs in both Siney and Ward .v.

McMaster where, in each case, they belonged to a category of persons for whose benefit a particular statutory framework had been

created and who might reasonably be said to have relied on the local authority in each case taking reasonable care in the exercise of

the statutory powers vested in them. The applicants in the present case could rely on no more than a general expectation that the

respondents would act in accordance with the law which is not, in my view, sufficient to give rise to the existence of a duty of care.

It is also far from clear that the applicants have established that what the High Court judge found to be the unreasonable manner in

which they had adopted the mining ban caused the damage of which they complain. Had they observed the criteria which Mr.

O’Sullivan S.C. had advised were appropriate in adopting the ban they would still have been found to have acted ultra vires in the

High Court on the grounds set out in the judgment of Blayney J. Accordingly, even if they had confined the ban to a significantly

smaller area in a manner which could have been justified on objective criteria relating to the need to protect areas of particular scenic

beauty, and which included those areas in which the applicants were prospecting, it would still have been set aside on those grounds.

I should add that I am also satisfied that Dr. Forde was correct in submitting on behalf of the respondents that it had not been

established that the respondents had acted in breach of their statutory obligation pursuant to s. 7(1)(e) of the Local Government Act

1991 to

“have regard to ...

(e) policies and objectives of the government or any Minister of the government in so far as they may affect or relate

to its functions ...”

There was no evidence to indicate that the respondents simply ignored the letter from the Minister for Energy: on the contrary, they

adjourned the meeting at which they were to make the vital decision so that the Minister’s views could be considered. The fact that

they are obliged to have regard to policies and objectives of the government or a particular Minister does not mean that, in every

case, they are obliged to implement the policies and objectives in question. If the Oireachtas had intended such an obligation to rest

on the planning authority in a case such as the present, it would have said so.

There remains the question of economic loss. The reason why damages for such loss - as distinct from compensation for injury to

persons or damage to property - are normally not recoverable in tort is best illustrated by an example. If A sells B an article which

turns out to be defective, B can normally sue A for damages for breach of contract. However, if the article comes into the possession

of C, with whom A has no contract, C cannot in general sue A for the defects in the chattel, unless he has suffered personal injury or

damage to property within the Donoghue .v. Stephenson principle. That would be so even where the defect was latent and did not

come to light until the article came into C’s possession. To hold otherwise would be to expose the original seller to actions from an

infinite range of persons with whom he never had any relationship in contract or its equivalent.

That does not mean that economic loss is always irrecoverable in actions in tort. As already noted, economic loss is recoverable in

actions for negligence misstatement. In Siney, economic loss was held to be recoverable in a case where the damages represented

the cost of remedying defects in a building let by the local authority under their statutory powers. Such damages were also held to be

recoverable in Ward .v. McMaster, the loss being represented by the cost of remedying defects for which the builder and the local

authority were held to be responsible. In both cases, the loss was held to be recoverable following the approach adopted by the

House of Lords in Anns. While the same tribunal subsequently overruled its earlier conclusion to that effect in Murphy .v. Brentwood

District Council (1991) 1 AC 398, we were not invited in the present case to overrule our earlier decisions in Siney and Ward .v.

McMaster. I would expressly reserve for another occasion the question as to whether economic loss is recoverable in actions for

negligence other than actions for negligent misstatement and those falling within the categories identified in Siney and Ward .v.

McMaster and whether the decision of the House of Lords in Junior Books Ltd. .v. Veitchi Company Ltd. should be followed in this

jurisdiction.

I would dismiss the appeal and affirm the order of the High Court.