Australia: The cost of an inaccurate planning certificate

The recent decision of the Supreme Court in Geju Pty Ltd v Central Highlands Regional Council (No 2)1 concerns whether a council can be held liable for providing misleading information to an entity and, in particular, to an entity that did not request that information.

The decision distils key issues for local governments and potential purchasers of land:

  1. Does a local government owe a duty of care to a third party (including a potential purchaser) in issuing accurate information, namely, a statutory planning and development certificate2, even though that third party did not request the information from the Council and in fact is unknown to the Council? Such a duty may exist if, among other things, there:
    1. is evidence that the loss was foreseen or foreseeable;
    2. are sufficient salient features, particularly vulnerability, that, when combined, constitute a close relationship between the third party and the Council to give rise to a duty of care;
    3. is reliance by the third party upon the information provided by the Council;
    4. is a rational way to define a class of which the third party is a member.
  1. If a duty is owed, did the Council breach the duty?

BACKGROUND

The plaintiff, Geju Pty Ltd (Geju), purchased a block of land in Capella in 2008 believing that under the local planning scheme it was zoned as falling within the zone 'Town', precinct "Industrial". It was not. The land was zoned "Rural" but with a conditional approval for a material change in use which permitted some forms of industrial development.

The Court heard evidence that Geju would not have purchased the land if the true position had been known and Geju's guiding mind, Mr Birch, was misled by a 'Limited Town Planning Certificate' (the Certificate) issued by the defendant, the Central Highlands Regional Council (the Council). Further, the Certificate was not requested by Mr Birch or by anyone on his behalf, nor was it issued to Mr Birch or Geju. Rather, it was likely that Mr Birch obtained the certificate from the real estate agent handling the sale on behalf of the vendor.

DECISION

A number of key issues can be distilled from the decision:

  1. A Council which in the exercise of its public functions supplies information which is available to it more readily than to other persons, is under a duty to those whom it knows will reasonably rely upon it, to exercise reasonable care that the information given is correct: L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1).3
  2. Shaddock is not restricted in principle to apply only to the actual requestor of the information. Further, the Mid Density Developments Pty Ltd v Rockdale Municipal Council4 case provides that the duty extends to those dealing with the requestor.

    Accordingly, it did not matter whether the third party had requested the certificate – the Council owed it a duty to ensure the accuracy of the information contained in the Certificate.

  1. The loss was foreseeable - the uses to which land might be put is relevant to its true value. It was foreseeable that the Certificate would be shown to a prospective purchaser.
  2. Whilst the notion of proximity has been rejected by the High Court as being determinative of the existence and content of a duty of care, it remains important:
  3. "... a special relationship of proximity marked either by reliance or by the assumption of responsibility does not arise unless the person providing the information or advice has some special expertise or knowledge, or some special means of acquiring information which is not available to the recipient. Moreover, ordinary principles require that the relationship does not arise unless it is reasonable for the recipient to act on that information or advice without further inquiry. Similarly, ordinary principles require that it be reasonable for the recipient to act upon it for the purpose for which it is used."5

  1. A vendor or prospective purchaser could only obtain such a certificate or access the information such a certificate is supposed to contain from the Council. That is all that the plaintiff needed to show to demonstrate relevant vulnerability.
  2. A solicitor acting for the owners sought the certificate. Plainly it was for a serious purpose and its recipient was very likely to rely on it in making financial decisions.
  3. It was reasonable for Geju to rely upon the Certificate (notwithstanding the lot description was wrongly detailed in part of the Certificate). It is not reasonable that Geju assume the contents of the Certificate were incorrect and try to protect itself through other means, namely, contractually. That is not common practice.
  4. Geju was a member of an identified class (potential purchasers) to whom it was likely the Certificate would come and the Certificate would very likely lead Geju to enter into a transaction of the kind they did enter into.
  5. The duty applies to the intended recipient of the notice and potential purchasers (for a limited time. For example, the duty would likely extend to a potential purchaser seeking to purchase the land within four months of the certificate being given but probably not four years after the certificate was given). The duty may also extend to those with an interest in the accuracy of the Certificate such as financial institutions and guarantors.
  6. The Council breached its duty to the third party and caused it economic loss. Geju successfully claimed damages against the Council for negligent misrepresentation.

TAKE AWAY POINTS

Statutory planning and development certificates are important to financial decisions made by potential purchasers and relevant financial institutions. Failure to supply accurate information may mean a local government may be responsible for any economic loss suffered by an entity relying upon the certificate.

Time frames are short in which certificates must be supplied and often files have to be called in from archives meaning the real time an officer has to prepare the certificate may be limited. Giving the preparation of certificates work priority is important. Having reviewers is also an important step in maintaining integrity. It is also important that databases accurately reflect the real situation (particularly when there are subdivisions) and that such databases can be interrogated upon any query.

The duty to provide accurate information may extend to others who have not requested the information. That class is not indeterminate but common sense should prevail in this regard. Furthermore, councils should not suppose that potential purchasers should assume information provided by it will be inaccurate and so take other measures to protect themselves.

Footnotes

1 [2016] QSC 279

2 Sometimes referred to as a town planning certificate. There are three categories of certificate: limited, standard and full.

3 (1981) 150 CLR 225

4 (1993) 116 ALR 460

5 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, Toohey and Gaudron JJ at 265.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Kott Gunning
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Kott Gunning
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions