Council not liable for developer’s economic loss flowing from issuing of inaccurate planning certificate
Queensland Court of Appeal overturns trial judge decision and finds local council not liable for issuing a planning certificate which contained incorrect information, given that the certificate was not requested by or issued to the plaintiff.
- Whether a local authority owed a duty to a prospective purchaser when issuing a planning certificate.
The plaintiff purchased a block of land in 2008 believing that under the Local Planning Scheme, it was zoned as “Town” and “Industrial”. In fact, the land was zoned “Rural” but with a conditional approval for material change of use which permitted some forms of industrial development.
The Integrated Planning Act 1997 (Qld) required the Council to produce a planning certificate upon receipt of a request and payment of the relevant fee. A limited planning certificate was requested and obtained by a firm of solicitors acting for the prior owner of the property (from whom the plaintiff purchased the property) after they purchased the property. The content of the certificate came to be in the possession of the plaintiff prior to their purchase of the land. It was not in issue that the certificate issued by the Council was defective in a number of respects. In particular, it indicated that the zoning was “Industrial” when in fact the correct zone was “Rural”. It also referred to the wrong block of land.
The plaintiff alleged that it would not have purchased the land if the true position had been known. The plaintiff claimed damages against Council for negligent misrepresentation. Council disputed it owed a duty to the plaintiff given that the certificate was not requested by or issued to it.
The Decision at Trial
The trial judge found that the Council did owe a duty to the plaintiff to take reasonable care in describing the zone and precinct in the certificate. He was satisfied that the plaintiff was within the recognised class of persons where a duty of care is owed when providing information and advice which would be likely to lead a party into a transaction in reliance on the information and advice thereby risking economic loss if the statement was untrue or the advice was unsound. The trial judge found that the class of persons to be considered included a potential purchaser of the property, the subject of the certificate.
The Decision on Appeal
The Queensland Court of Appeal overturned the decision of the trial judge finding that “there was no rational way to define a class of which the respondent [the plaintiff] was a member other than in very broad terms”. The Court of Appeal found the class would not only include potential purchasers and owners but also tenants, lenders and investors. It was foreseeable that the previous owner (and the entity for which the certificate was requested) might pass on the information to any of that broad class of persons. The Court of Appeal found there was no basis for concluding that the Council intended, knew or ought to have known that a person in the class of persons of the plaintiff would buy the property in reliance upon the zoning information in the certificate without further enquiry. The Court of Appeal held that the class of persons would be confined to those to whom the certificate is supplied.
Implications for you
Local Councils may take some comfort that the Court of Appeal decision brings the matter back in line with the High Court decisions for pure economic loss claims arising from negligent misstatements. Nevertheless, the decision by the trial judge does show that there can be a relatively fine line between being in the class of persons to which a duty is owed and outside that class. It is therefore a reminder that local authorities need to take care when exercising their statutory powers, such as issuing a planning certificate, to ensure that the information contained in them is accurate.
Central Highlands Regional Council v Geju Pty Ltd  QCA 54