Court of Appeal decision brings welcome relief to local councils
Who should read this
New South Wales local government entities
Things you need to know
The New South Wales (NSW) Court of Appeal recently held that planning certificates (also known as section 10.7 certificates, and formerly known as section 149 certificates) are not required to disclose site-specific information, overturning a decision made by the New South Wales Supreme Court which implied that local government entities were required to do so.
In the recent decision of Della Franca v Lorenzato; Burwood Council v Lorenzato  NSWCA 321 (Lorenzato), the NSW Court of Appeal gives some welcome relief to local councils issuing a planning certificate which is one of the prescribed mandatory disclosure documents under a contract for sale of land.
Lorenzato was the purchaser under a contract for sale dated 17 March 2011 (Contract) for a residential property (Property)within the Burwood local council area. Burwood Council issued a planning certificate which formed part of this Contract. This planning certificate did not disclose that nine years prior to completion under the Contract, Burwood Council had adopted a resolution concerning the acquisition of a drainage easement over an underground stormwater pipe on the Property. Della Franca, the vendor under the Contract, also did not disclose the existence of this resolution under its replies to requisitions on title.
Within the period between contract exchange and completion, the Property experienced multiple severe floods due to stormwater overflow, which alerted Lorenzato to a “collapsed” stormwater pipe owned by Burwood Council on the Property. Through further enquiries, it was found that in 2002, Burwood Council passed a resolution which entitled it to:
- negotiate the creation of an easement over that pipeline with Della Franca and reline the pipe; and
- compulsorily acquire the easement and to require future development of the property to include the establishment of an easement for drainage purposes.
Following the resolution, Burwood Council and Della Franca failed to negotiate the creation of the easement and Burwood Council wrote to Della Franca that it would not pursue the action of compulsory acquisition of the easement nor would it require future development of the property to include an easement.
Lorenzato commenced proceedings in the NSW Supreme Court against both Burwood Council and Della Franca claiming damages under the tort of negligent misstatements and that both Burwood Council and Della Franca were each under a duty of care to disclose the existence of the resolution and that there was a breach of the standard of care and loss was suffered caused by Lorenzato’s reliance on the planning certificate and replies to requisitions respectively.
In the initial hearing, the NSW Supreme Court found in favour of Lorenzato against both Burwood Council and Della Franca. In respect of the judgment against Burwood Council, the trial judge held that:
- the resolution was a Burwood Council policy that restricted development of the land because of the likelihood of flooding and therefore should have been disclosed under the planning certificate;
- the resolution had not been abandoned and was still current; and
- the issue of the planning certificate by Burwood Council was not an exercise by a public authority of a “special statutory power” but a “statutorily imposed obligation”. The exercise of a “special statutory power” would have enabled Burwood Council to benefit from an exclusion of civil liability in tort unless the action was so unreasonable that no authority having the power could properly consider the action to be a reasonable exercise of power (section 43A Civil Liability Act 2002 (NSW)).
Burwood Council then appealed to the NSW Court of Appeal against the trial judge’s decision.
The NSW Court of Appeal found that:
- a “policy” as described under planning certificates concerns the relationship of particular land to general floodplain levels rather than site-specific decisions, or even decisions relating to a number of sites ;
- the resolution was a specific decision affecting the Property and as such was not a policy because it was not a general statement of guidelines, principles or criteria of general application ;
- even if the resolution was a policy, it did not restrict development of the Property because of the likelihood of flooding, but rather, due to the proposed acquisition of an easement [84, 141];
- Burwood Council had treated the resolution as abandoned by virtue of Burwood Council’s letter to Della Franca indicating that the resolution was no longer being pursued ;
- Burwood Council’s issue of the planning certificate was indeed a “special statutory power” and Burwood Council had not acted unreasonably, and as such, could not incur any civil liability in doing so [21, 147].
This case helps to reaffirm the position that local government entities are not required to disclose specific decisions relating to a site in issuing planning certificates. Local government entities are also protected by the provisions of section 43A Civil Liability Act 2002 (NSW) when issuing planning certificates, which excludes any civil liability unless it acted unreasonably.
For further information on any of the issues raised in this alert, please contact one of the authors below.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.