Errors in Planning & Development Certificate

Court Broadens Class to which Councils Owe a Duty in Providing Statutory Certificate    

A property developer who relied on the contents of an erroneous Limited Planning & Development Certificate when purchasing vacant land has succeeded in recovering its losses associated with that transaction from the relevant local government.

In June 2008, the Plaintiff, in conjunction with another company, purchased 10 hectares of vacant land for the price of $900,000.00.  The Plaintiff purchased the land in the belief that the land was zoned industrial and claimed to rely on the contents of a Limited Planning & Development Certificate, which had been issued by the Council some months earlier to a third party (ultimately the vendor in the Plaintiff's transaction).  The certificate contained a number of errors, the most pertinent being that it indicated the land was within the industrial zone.  In fact, the land was zoned rural but had industrial use rights pursuant to a Material Change of Use development approval. 

At the time of issue of the certificate, the Council was unaware that the vendor was intending to put the land up for sale.  Nor was the Council aware that the Plaintiff was intending to buy the land or would be relying on the contents of the certificate as issued.  Further, despite the Plaintiff retaining solicitors in June 2008 to perform due diligence in relation to its purchase of the property, the error in the certificate was not identified by its solicitors and contemporaneous enquiries as to the current status of the land were not made of the Council (which by then had been amalgamated). 

The Plaintiff subsequently brought proceedings in the Supreme Court against the Council, as the statutory successor to the Council that issued the certificate, alleging that it was negligent in the provision of the certificate and that the Council's negligence was the sole cause of the losses sustained on the purchase transaction. 

That the certificate was in error was not in dispute at trial.  Rather, the primary issue was whether the Council owed a duty of care to an entity not within its contemplation, where the ultimate purpose of the request was not known.  Issues such as reliance by, and vulnerability of, the Plaintiff were ventilated.

In finding in favour of the Plaintiff, the Judge determined that the Council ought reasonably to have known that information contained in the certificate would be conveyed to any potential purchaser of the land, irrespective of whether the identity of the purchaser was known to the Council or not.  Further, the Council did not need to know the precise purpose for which the certificate was to be used.  Rather, it was sufficient for the Council to have appreciated the certificate would be used for a "serious purpose" and relied upon by the recipient in making financial decisions involving the land.   Damages against the Council were assessed at $852,205.50. 

This decision broadens existing case law about the extent of the duty of care owed by a local government when issuing documents in response to a request for information.  Councils ought have in their contemplation, as someone who may be affected by incorrect information, not only the person actually requesting the information, but a much larger class - those that may, at a later point in time, come into receipt of the document and seek to rely on its contents.  At a more basic premise, this decision reinforces the need for local governments to ensure the accuracy of the information that is provided to prevent such claims from eventuating. 

Geju Pty Ltd v Central Highlands Regional Council (No 2)

The decision is presently the subject of an appeal to the Court of Appeal.  For more information on this article, or to discuss liability issues further, contact Mark Williams or Darius Isaacs on (07) 3243 0000.