The Queensland Supreme Court of Appeal has overturned a finding that the Central Highlands Regional Council owed a property purchaser (Geju Pty Ltd) a duty of care, and breached this duty of care by issuing an incorrect planning and development certificate to Geju Pty Ltd’s solicitors.
The essential findings of the Court’s decision can be summarised as follows:
(1) The local government – purchaser relationship is not a traditional duty of care category and the law in this area is not settled. In this case, the Shire was found not to owe a duty of care to the purchaser.
(2) Where there is a duty of care owed by the local government to a purchaser, solicitors acting for the purchaser will be apportioned liability if they do not discharge their duty of care to their client appropriately.
The purchaser, Geju Pty Ltd, sustained a loss purchasing vacant land at Capella in Central Queensland in reliance on a negligent misrepresentation in a limited planning and development certificate issued by the Peak Downs Shire Council. The certificate was issued to the purchaser’s solicitors. The owner subsequently sold the vacant land to the purchaser. Central Highlands Regional Council assumed the liabilities of Peak Downs Shire Council on 15 March 2008.
The judgment at trial ordered the Shire to pay the purchaser $852,205.50. The trial judge found the Shire owed the purchaser a duty to take reasonable care in describing the zone and precinct in the limited planning and development certificate. This duty was found to have been breached by inaccurately describing the zoning of the vacant land as ‘town’ and the precinct as ‘industrial’ when the correct zone was ‘rural’ and the correct precinct would not have been ‘industrial’ even if the correct zone was ‘town’.
The trial judge found that the purchaser was not contributorily negligent and there should be no apportionment of liability between the Shire and the purchaser’s solicitors who were involved in the purchase of the vacant land.
The appeal focused on three issues: whether the Shire owed the purchaser a duty of care; whether it was reasonable for the purchaser to rely on the certificate issued by the Shire in deciding to purchase the land; and whether there should be an appointment of liability against the purchaser’s solicitors of 45% of the purchaser’s damages.
Duty of Care
The Court of Appeal found that the Shire did not owe the purchaser the alleged duty of care. Upon analysis of past High Court decisions cited by the trial judge the Court disagreed that the law in this area was settled, stating there is no decision directly on the point of a local government owing a duty of care in these circumstances.
The purchaser did not establish that the Shire knew or ought to have known that the purchaser would rely on the certificate. Similarly, it was not established if it was reasonable for the purchaser to rely on the certificate without taking any other steps. The purchaser could have sought a warranty from the owner of the land in respect of the zoning. The argument that the purchaser was vulnerable because the Shire was the only source of information does not in itself justify imposing a duty of care.
Disposition of the Appeal
Ground 4 of the appeal was that the trial judge erred in fact in declining to make a finding of apportionment against the purchaser’s solicitors. Ground 5 stated that the trial judge ought to have reduced the purchaser’s damages by 45%, if the purchaser succeeded on its claim.
The Court found that, if a duty of care was owed by the Shire to the purchaser, grounds 4 and 5 would have been upheld as the purchaser admitted that the solicitor’s acts or omissions independently caused the purchaser’s loss. At trial the purchaser admitted that the solicitors owed a duty of care, and breached that duty of care by failing to identify that the certificate did not pertain to the vacant land, and this breach had caused loss.
This decision makes clear that a local government does not necessarily owe a duty of care to a purchaser of property when providing information concerning the planning status of land.
However, local governments should be aware that different factual circumstances can give rise to a duty of care, particularly where it is known that the information is being relied on. Local governments should therefore continue to ensure, as far as practicable, that any information given about the planning status of land is accurate.
For further information, please contact Graham Castledine.
Disclaimer: The information contained in this update is not advice and should not be relied upon as legal advice. Castledine Gregory recommends that if you have a matter in relation to which legal advice is required, you consult with your legal adviser.
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