The case of Central Highlands Regional Council v Geju Pty Ltd  QCA 38
concerned an appeal by the Central Highlands Regional Council to the Court of Appeal against an earlier decision of the Supreme Court of Queensland to award damages against the Council for negligent misrepresentation of the current zoning of the land.
The case concerned the issuing of a limited planning and development certificate by the Council to the real estate agent of the seller of land, which incorrectly described the zone as "Town" and the precinct as being "Industrial" when in fact the land was zoned "Rural".
After receiving the limited planning and development certificate from the seller's real estate agent, the purchaser acquired a block of vacant land at Capella in Central Queensland.
The purchaser claimed damages on the basis that the Council negligently misrepresented the present zoning of the land and that it would not have purchased the land if the Council had not made the representation.
The Supreme Court at first instance found that the purchaser was a member of an identified class of persons likely to receive the certificate and to whom the certificate would be very likely to lead the purchaser to enter into a transaction of the kind it did enter into, and that the Council therefore owed the purchaser a duty to take reasonable care in describing the zone and precinct in the certificate.
The Court further found that the Council breached that duty by incorrectly describing the zone and precinct in the certificate and awarded damages for the difference between the price paid and the actual value of the land.
The Council appealed the decision of the Supreme Court on the following grounds:
- that it did not owe the purchaser a duty of care in the circumstances of the case;
- that the reliance on the certificate by the purchaser was not reasonable; and
- that if the claim were to succeed, there should be an apportionment of liability against the purchaser's solicitors and the Council's damages should be reduced by 45%.
The Court of Appeal allowed the appeal and found that the Council did not owe a duty of care in this case, but that if it did, there should be an apportionment of liability against the purchaser's solicitors.
Council did not owe the purchaser a duty to take reasonable care in the issuing of the planning and development certificate
The Court of Appeal considered the cases relied on by the Supreme Court at first instance to impose a duty of care. The Supreme Court at first instance found that this was not a novel case and that a duty of care was owed by reference to the High Court's decisions in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 and L Shaddock & Associations Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 as affirmed by Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515.
The Supreme Court also referred to the decision of Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 as authority for the proposition that "a duty of care is owed not only to a person who requests information but also to a person dealing with the recipient of the information".
The Court of Appeal relevantly stated the test from Esanda as follows (our emphasis):
"it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into a such transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound."
The Court of Appeal found that whilst it was foreseeable that the seller might pass on the zoning information in the certificate to one or more of the people in the very broad class of persons who might rely upon that information in making serious financial decisions (such as an interested purchaser), there was no basis for concluding that the Council knew or ought to have known that the seller would do so or that the Council intended, knew, or ought to have known, that a person would buy the land in reliance upon the zoning information in the certificate.
The Court of Appeal further noted that in this case, four months had elapsed since the date of issue of the certificate and the date that the purchaser entered into the contract to purchase the land and that the identified class of potential purchasers "would be confined to those to whom the certificate is supplied whilst it is reasonably considered to remain reliable despite the passage of time after issue of the certificate".
The Court of Appeal further distinguished in Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 on the basis that in that case there was evidence that the Council knew and intended that potential purchasers would rely upon the certificate in deciding whether to purchase the land.
The purchaser submitted that the intention on the part of the Council that potential purchasers should rely upon the certificate could be ascertained from the Integrated Planning Act 1997 (Qld)
which required the Council to provide a limited planning and development certificate to an applicant and which also provided compensation provisions where the applicant for the certificate suffered financial loss because of an error in the certificate.
The Court of Appeal noted, however, that the claim the subject of the proceedings was not made under the statutory provisions but under the common law. The Court of Appeal also noted that the purchaser was not the applicant for the certificate in this case.
The Court of Appeal found that in any event the statutory provisions did not prove knowledge by the Council of the reliance, just that it would be reasonable to rely on the information in the certificate and that this was not sufficient to justify the existence of a duty of care in this case.
The Court of Appeal considered the vulnerability of the purchaser but did not find any other basis to impose a duty of care in this case. Accordingly, the Court of Appeal found that the Council did not owe the purchaser a duty of care.
Court found that in the event that the Council did owe the purchaser a duty of care, a finding of apportionment against the purchaser's solicitors was appropriate
In the Supreme Court it was alleged that the purchaser's solicitors were negligent in failing to take steps to obtain an accurate planning and development certificate which identified the correct property and zone.
The Supreme Court declined to make a finding of apportionment against the solicitors on the basis that there was no evidence that any search reasonably open to the purchaser or its solicitors would have revealed the true status of the land.
The Court of Appeal, however, found that it was not relevant whether the solicitors would have discovered the true zoning of the land if they had fulfilled their duty of care as it was admitted that the solicitors' acts or omissions independently caused the purchaser's loss.
Accordingly, the Court of Appeal found that if the Council did owe the purchaser a duty of care, then an apportionment of liability against the purchaser's solicitors in the amount of 45% was appropriate.
The Court of Appeal ultimately allowed the appeal and set aside the original judgment.
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