Posted on December 9, 2020 by Liam Mulligan and Megan Hawley 36

Planning Certificates – Scope of Councils’ Immunity from Liability Limited

In the recent decision of Lorenzato v Burwood Council [2020] NSWSC 1659 (‘Lorenzato‘), the Supreme Court considered the scope of the immunity from liability in negligence enjoyed by public authorities such as councils under various pieces of legislation.

The Court 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 the then s149 of the Environmental Planning and Assessment Act 1979 (‘EPA Act‘) (now s10.7). The Court found that a Council resolution to acquire an easement over the property, to carry out works within the site of the easement and to require further easements over the property if it was developed, constituted a ‘policy‘ of the Council for the purposes of cl 7 of Schedule 4 to the Environmental Planning and Assessment Regulation 2000 (‘EPA Reg‘), which should have been disclosed on the planning certificate.

The Council was not able to rely on the statutory defences in either s43A of the Civil Liability Act 2002 (‘CL Act‘) or s733 of the Local Government Act 1993 (‘LG Act‘).

The Facts 

On 9 August 2010, Burwood Council (‘Council‘) issued a planning certificate in respect of a property under s149(2) and 149(5) of the EPA Act (‘Planning Certificate‘). In the Planning Certificate, Council did not disclose the following matters:

• 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‘).

Significantly, although cl 7 of Schedule 4 to the EPA Reg had been amended to remove the word ‘flooding‘ and a new cl 7A had been added on 16 February 2007, the Council had worded the Planning Certificate in accordance with the pre-16 February 2007 version of cl 7, together with the post-16 February 2007 version of cl 7A. The Planning Certificate issued by Council under s149(2) included the following:

7 Council […] policies on hazard risk restrictions 

Is the land is affected by a policy adopted by the Council […] that restricts the development of the land because of the likelihood of land slip, bushfire, flooding, tidal inundation, subsidence, acid sulphate soils or any other risk? 

No

The Easement Resolution related specifically to the subject property and provided as follows:

A  That Council proceed to negotiate the creation of an easement over the existing pipeline and then proceed to reline the existing pipe in its current location beneath the house. 

B  That, should Council be unable to gain consent from the owner, it proceed with compulsory acquisition of an easement over the existing pipeline (Future development of the property should include the establishment of an easement adjacent to the side boundary for drainage purposes). 

The plaintiff purchased the property unaware of the Stormwater Pipe, and the property was affected by multiple flooding events caused by overland flows of stormwater from the street. The cause of the flooding was determined to be the Stormwater Pipe, which had become blocked, causing stormwater to back up on the street and then pour down the plaintiff’s driveway.

Negligent Misstatement

The plaintiff brought an action against the Council for negligent misstatement, alleging that, in breach of Council’s duty of care, the Planning Certificate:

• contained incorrect and misleading information concerning matters prescribed for the purposes of s149(2) and (4) of the EPA Act, as it did not refer to the Easement Resolution, and
• failed to include advice on relevant matters of which Council was aware under  s149(5) of the EPA Act.

The Council also relied on the statutory defences under s43A of the CL Act and s733 of the LG Act in its defence.

The Court held that the Easement Resolution was a ‘policy‘ of the Council for the purposes of cl 7 of Schedule 4 to the EPA Reg. The resolution was a policy ‘… in the sense of a broad plan of action with multiple components, some of them contingent upon others or upon the course of events, drawn up to address a significant and persistent stormwater management problem that affected a number of landowners and users of a public road in one part of a local government area’ (at [246]).

As a result, the Court found that Council’s response of ‘No’ to Question 7 in the Planning Certificate was incorrect and misleading as the answer should have been ‘Yes’, as the Easement Resolution was a policy which restricted the development of the property due to the likelihood of flooding.

However, in respect of the provision of information on the Planning Certificate under s149(5), which the EPA Act says Council ‘may’ provide, the Court held that Council was under no obligation to refer to the Stormwater Pipe or Council’s powers in respect of it in the absence of an explicit request for that information. Council was therefore not liable for failing to advise of the presence of the Stormwater Pipe.

Statutory Defences

Section 43A of the CL Act significantly limits a council’s liability for the exercise of a ‘special statutory power‘. The Courts have previously held that a number of powers of councils are special statutory powers, such as the power to impose conditions on a development consent and the power to carry out traffic control works.

The Court held that the statements on a planning certificate under s149(2) of the EPA Act are not the exercise or failure to exercise a special statutory power. As a result, Council did not have available to it the defence under s43A of the CL Act. The Court’s findings suggest that the defence in s43A attaches to the issuing (or failure to issue) a planning certificate, rather than to any ‘individual particle of information‘ contained in the certificate.

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.

However, the Court also found that the defence under s733 of the LG Act did not apply to the misstatement in the s149(2) part of the Planning Certificate because the Council’s inaccurate response 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’.

Implications for Councils 

The case has significant implications for councils in respect of liability for the issue of planning certificates under the now s10.7(2) of the EPA Act.

Of particular concern is the finding that a resolution of a council can constitute a ‘policy’ which may need to be referred to on a planning certificate. We expect most councils do not have their systems set up to capture the terms of resolutions when preparing planning certificates. It should be noted that not all resolutions will be considered policies, but it may be a difficult task to identify those resolutions which involve a sufficiently broad plan of action which could constitute a policy, and those which do not.

The findings in respect of the defence in s733 of the LG Act are also concerning. Section 733(3) specifically says that the protection from liability extends to advice given on a planning certificate. However, in respect of hazards such as bush fire and coastal hazards, a s10.7(2) certificate only needs to note the existence of a policy which restricts development due to the likelihood of those risks. This case suggests that where a planning certificate is answering yes or no to the existence of a policy regarding such hazards, there is no protection afforded by s 733.

This finding, along with the finding that s43A of the CL Act is unavailable in respect of the content of planning certificates leaves councils exposed to liability in respect of the content of a planning certificate.

The decision in Lorenzato can be read here.

To discuss this blog, please contact Megan Hawley on (02) 8235 9703 or Liam Mulligan on (02) 8235 9715.