Council liable for developer’s economic loss flowing from issue of inaccurate zoning certificate23 January 2017 | State Local Authorities
Local Council held liable for issuing a planning certificate which contained incorrect information even though 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 certificate upon receipt of a request and payment of the relevant fee. The certificate was requested and obtained by a firm of solicitors acting for a company associated with the plaintiff. The evidence was unclear as to exactly how the certificate came to be received by the plaintiff. 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” and it also referred to the wrong block of land. Council disputed it owed a duty to the plaintiff given that the certificate was not issued to it.
The plaintiff alleged that it would not have purchased the land if the true position had been known and that it had been misled by a limited town planning certificate (the certificate) issued by Council. The plaintiff claimed damages against Council for negligent misrepresentation.
The Council argued that despite longstanding legal authority, it should not be liable to the plaintiff because it was not to know that someone other than the person to whom the certificate was issued would suffer loss. The court rejected that argument on the basis that the authorities have never restricted the application of a duty of care to the actual recipient of the information provided. The court also noted that the established authorities are clear that it is not necessary for the imposition of a duty of care for the Council to know the purpose for which the information is sought.
In dismissing Council’s argument that there was no relevant vulnerability on the part of the plaintiff, the court observed that there was no body other than Council from which a vendor or prospective purchaser could obtain a certificate or access the information the certificate was supposed to contain. The court commented that the Council was in no position to be critical of the plaintiff when the Council chose not to to lead evidence of how or why the error in the certificate occurred. The court went on to dismiss the Council’s argument that a purchaser such as the plaintiff is not vulnerable if they do not retain a solicitor before entering into a contract. The Council’s argument that the plaintiff was not vulnerable because it could have protected itself by the adoption of appropriate contractual terms was also rejected. The court acknowledged that whilst it is possible to bargain for protection in a contract for work that the other party to the contract is to perform, it is not possible to require a contracting party to warrant the accuracy of information provided by a third party. The court therefore concluded that in the circumstances, a duty of care was owed by the Council and was clearly breached.
The court awarded damages to the plaintiff in the sum of $1,127,205.50 for the difference between the price paid and the real value of the land as well as acquisition, holding and borrowing costs plus interest.
Implications for you
The decision is a clear warning to local authorities to ensure that the information contained in any documents are carefully checked for accuracy before being issued. The provision of defective information has costly ramifications because the courts are clearly unwilling to accept that parties relying on such information are in a position to protect themselves from the consequences of Council errors.