The Facts

Blocked stormwater pipe causes flooding of Sydney property

A Sydney property was bought in 1989. The buyer was unaware of a stormwater pipe that ran under the property.

The pipe was owned by the local council and had been in existence since about 1904. It had significantly deteriorated over time and had become blocked.

During heavy rainfall, the pipe was no longer effective to drain stormwater from the street. The backed-up water would pool until it inundated the property.

Council abandons resolution to fix pipe and create easement

The council realised it would need to fix or replace the pipe and create a drainage easement to reduce the impact stormwater was having on this property and the adjoining landowners.

In 2002, council passed a resolution to either negotiate the creation of an easement over the existing pipeline with the seller, or otherwise compulsorily acquire an easement to rectify the stormwater problem on the property.

Although there were discussions about the creation of an easement between the parties over a number of years, negotiations between the property owner and the council broke down.

Shortly after, council notified the owner that it no longer intended to compulsorily acquire an easement. The pipe remained in a state of disrepair.

Property sold to unsuspecting buyer

In 2011 the owner sold the property to an unsuspecting buyer. Soon after the transaction was finalised, the property was impacted by stormwater on nine separate occasions. The council advised the buyer that the property was flooding because the pipe had effectively collapsed.

The stormwater pipe carried wastewater and effluent which had an offensive smell and left a polluted residue. Completely disenchanted, the buyer revisited prior communication with the seller and the council.

"The purchaser should make their own enquiries"

During the transaction, the buyer asked the seller if they were aware of any unregistered easements which affect the property, or if any part of the land was to be resumed.

The purchaser also inquired if the seller had received any notification, claim or requirement by a local authority, or if they were aware of any restriction on the use or development of the land.

The seller's response to these questions was "no" and that "the purchaser should make their own enquiries". The seller remained silent regarding their awareness of the pipe and the fact that it caused the property to flood.

Council fails to divulge existence or impact of collapsed stormwater pipe

Similarly, the council did not disclose its awareness of the impact of the stormwater pipe on the property, nor did the planning certificate attached to the contract disclose the council's resolution to create an easement.

The planning certificate stated whether the land was affected by a policy adopted by the council and whether the land was subject to flood-related development controls, or a restriction on the development of the land because of the likelihood of flooding.

The council's response to these questions was "no".

The planning certificate also provided "advice on other matters affecting the subject land of which council is aware.". The council's response to this point was also "no".

The council did not disclose the existence of the stormwater pipe, the council's ownership of it or the council's knowledge that the pipe regularly caused the property to flood.

Council's attempts to mitigate damage

The flooding caused significant damage to the improvements on the land. Council employees installed a pump to redirect the stormwater flow away from the carport, garage and house. However, the council had to start the pump manually and at times did not arrive in time to "flick the switch".

The council subsequently repaired the pipe and undertook remedial landscaping of the property. No further flooding occurred after the pipe was repaired.

The buyer brought a claim against the seller and the council for negligent misstatement and in nuisance for the damage caused by the flooding.

CASE A

The case for the buyer

CASE B

The case for the council and the seller
  • The existence of the stormwater pipe on the property significantly decreases its market value.
  • If I had been aware of the pipe's existence I would not have proceeded with the purchase.
  • Either the seller or council should have disclosed their knowledge of the pipe to me.
  • I asked the seller if they were aware of these encumbrances, but they said "no".
  • It's despicable that the council and the seller would deceive anyone like this. They are both liable.
  • The law should require the council to provide correct information in a planning certificate.
  • The council breached its duty of care by providing incorrect and misleading information.
  • The council should have disclosed the need for an easement consistent with its resolution.
  • The council owns the stormwater pipe, so it is liable for the significant damage to my property.
  • Property buyers have a responsibility to make their own enquiries in relation to any property.
  • The seller is not obliged to provide specific answers to general questions about the land.
  • The council should not be liable for flooding on land which does not reach flood-prone levels. A planning certificate is a statutory requirement, general in nature, and not land-specific.
  • The resolution was revoked when the council advised the owner it would not be pursued.
  • An action against council can only be sustained for negligence and we were not negligent.
  • The council prepared the planning certificate with reasonable care and skill and the details expressed on the certificate were not inaccurate or misleadingly completed.
  • As we acted in good faith, we rely on section 733 of the Local Government Act that provides statutory immunity from liability for councils in such circumstances.

So, which case won?

Cast your judgment below to find out

David Crossan
Buying a house
Stacks Law Firm

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