Posted on March 7, 2022 by Megan Hawley and James King 14

Court of Appeal reinstates broad council immunity from liability for planning certificates

The Court of Appeal has unanimously allowed both appeals against the decision of the NSW Supreme Court in Lorenzato v Burwood Council [2020] NSWSC 1659. The Supreme Court had held that the Council was liable to the purchaser of a residential property for damages arising from a negligent misstatement in a planning certificate issued by the Council under then s149 (now s10.7) of the Environmental Planning and Assessment Act 1979 (‘EPA Act‘).

The Court of Appeal found that there were no negligent misstatements made in the relevant planning certificate and the Council had a defence available to it in any event.

Relevant Background

On 9 August 2010, Burwood Council (‘Council‘) issued a planning certificate in respect of a property under ss149(2) and 149(5) of the EPA Act (‘Planning Certificate‘). The Council did not disclose the following matters in the Planning Certificate:

• the existence of a 400mm diameter pipe owned by Council which had been laid beneath the property in the early 1900s, over which a dwelling and pool had subsequently been built, and which carried stormwater run-off from a 5.2ha catchment of long established residential development (‘Stormwater Pipe‘); and
• a resolution adopted by Council in 2002, for the acquisition of an easement over the Stormwater Pipe and for the later establishment of a drainage easement along the western boundary of the property if the property was developed (‘Easement Resolution‘).

The plaintiff purchased the property unaware of the above matters, and the property was affected by multiple flooding events caused by overland flows of stormwater from the street as a result of blockage of the Stormwater Pipe.

The proceeding before the Supreme Court

The main question before the Supreme Court was whether a resolution of Council for the acquisition of an easement over the Stormwater Pipe and for the later establishment of a drainage easement along the western boundary of the property if the property was developed (Easement Resolution) should have been included on the Planning Certificate. In summary, the primary judge relevantly held that:

1. The Easement Resolution was a Council ‘policy’ which restricted the development of the property due to the likelihood of flooding within the meaning of the Environmental Planning and Assessment Regulation 2000 (‘Regulation‘) cl7 Sch 4 (as it then was);
2. The policy had not been revoked or abandoned prior to the issue of the Planning Certificate;
3. The Council therefore incorrectly answered Question 7 (Is the land affected by a policy adopted by the Council that restricts the development of the land because of the likelihood of flooding?) in the Planning Certificate;
4. In breach of a duty owed to Ms Lorenzato, the Council did not use reasonable care in issuing the Planning Certificate;
5. Section 43A of the Civil Liability Act 2002 (‘CL Act‘) which limits civil liability of public authorities for the exercise of special statutory powers did not apply. The Supreme Court found that the issue of a planning certificate was not the exercise of a special statutory power by the Council; and
6. Nor did s 733(1)(a) of the Local Government Act (‘LG Act‘), apply, as the issue of a planning certificate was not the furnishing of advice in relation to the likelihood of flooding.

We previously discussed the decision of the Supreme Court  here.

Negligent Misstatements

The primary issues in the appeal were whether the following constituted negligent misstatements:

• the Council’s statement in the Planning Certificate that the land was not affected by a policy that restricts the development of the land because of flooding;
• the Council’s statement in the Planning Certificate that development on the land was not subject to flood related development controls; and
• the Council’s failure to disclose in the Planning Certificate the existence of the Stormwater Pipe.

The Court of Appeal found that the Easement Resolution was not a ‘policy’, it was more accurately described as an operative decision in respect of a specific subject. Further, even if the Easement  Resolution was a ‘policy’, it was not one which ‘restrict[ed] the development of the land because of … flooding‘. At most, the Easement Resolution indicated that Council would be likely to take the indicated steps in the future and would impose a condition requiring a relevant easement to be granted in favour of Council.

The Court also found that the Easement Resolution had been abandoned by the Council by the time of issue of the Planning Certificate in 2010 and had been superseded by other notices in the meantime. Neither these later notices nor the Easement Resolution were current policies at the time the Planning Certificate was issued and so there was no misstatement.

The Court upheld the finding of the primary judge that flood related development controls are restrictions set according to the location of a property relative to a Flood Planning Level. There was no misstatement in the Planning Certificate by not including a Code of Stormwater Management because that is not a flood related development control.

For the final issue, the Court found that the partial restriction upon full development of the land because of the presence of a drain on it and/or an easement over it, had only an indirect connection with flooding. As a result, failing to disclose the existence of the Stormwater Pipe was not negligent. The Council’s duty of care did not extend to volunteering information beyond that specified in the Regulation.

The Standard of Care and Defences

Exercise of special statutory powers

The Court of Appeal overturned the Supreme Court’s finding that issuing a planning certificate under s149 of the EPA Act was not the exercise of a special statutory power because it was a statutorily imposed obligation. The Court of Appeal stated that a ‘power does not cease to be a power because there is a duty to exercise it … there is no reason to distinguish between the performance of a duty and the exercise of a discretionary power in fixing the standard of care.‘

As a result, the Court of Appeal went on to consider whether the power conferred by then s149 of the EPA Act was ‘of a kind that persons generally are not authorised to exercise without specific statutory authority‘. As the issuing of planning certificates under s149 of the EPA Act is a function conferred only upon a council, it was found to be a special statutory power.

The Court of Appeal found that the primary judge’s statement that the plaintiff’s cause of action for negligent misstatement was not based on the Council’s exercise of, or failure to exercise a special statutory power was unsupportable.

There could be no finding that the statements in the Planning Certificate were so unreasonable that they could have breached the standard imposed by s43A(3) CL Act and so Council could not be held liable.

Advice given in good faith by Councils

Section 733 of the LG Act provides a defence in respect of advice given in good faith by a council relating to the likelihood of land being flooded or the nature and extent of flooding. It contains similar defences in respect of advice in respect of coastal hazards or bushfire risk.

The Court found that the primary judge had misapprehended s733 by finding that the Council’s answer to Question 7 was ‘… advice concerning the non-existence of any policy of a particular description’ not advice ‘relating to the likelihood of [the property] being flooded‘.

The Court stated that the disclosure required under cl 7 of Sch 4 to the Regulation was limited to policies that restrict the development of land ‘because of the likelihood of … flooding‘. The circumstance in this case was the precise circumstance to which s733 was intended to apply and the defence was available.

Implications for Councils

The judgment in this case has reinstated the position with regard to councils’ obligations in issuing of planning certificates as it was previously understood .

The findings confirmed that a resolution of a council does not ordinarily constitute a ‘policy’ and so does not need to be referred to on a planning certificate.

The Court also confirmed that the defences under s733 of the LG Act and s43A of the CL Act are both available where a planning certificate is answering yes or no to the existence of a policy regarding such hazards.

The decision in the Lorenzato appeal can be read here.

To discuss this blog, please contact Megan Hawley on (02) 8235 9703 or James King on (02) 8235 9722.