IRAC ANALYSIS

Jack Smith the Real Estate Developer

Jack Smith is a real estate developer. He develops residential townhouses in the Dandenong local area. He purchases a large block of land for $2 million and plans to build 50 townhouses on the block at a considerable profit. But Dandenong Council denies his developmentapplication on the basis of a road widening proposal that will substantially reduce the size of theblock of land. This road widening proposal reduces the value of the block of Jack Smith's land to $1 million.

Jack Smith obtained acouncil certificate from Dandenong Council before he purchased theblock of land. He reviews the information in the certificate. If the block of land had been subject to a road widening proposal then it should have been disclosed by Dandenong Council in the certificate. There is no such disclosure in thecertificate. As Jack Smith didn't bother to read the certificate before he purchased the land, he is relievedto find the council has made this

mistake. He secretly knows that if Dandenong Council had beencareful and included the road widening disclosure in the certificate, he would not have seen it andgone ahead with the land purchase anyway.

Jack Smith now wants to sue DandenongCouncil in negligence for economic loss. Dandenong Councilclaims that negligence only applies to physical actions, not written words, and is only applicable tophysical damage to people or their property, not economic loss.

Advise Jack Smith