Ku-ring-gai Council v Chan

Case [2017] NSWCA 226

Court of Appeal


Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Ku-ring-gai Council v Chan [2017] NSWCA 226
Hearing dates:25 November 2016 Supplementary written submissions 28, 29 November 2016
Decision date: 07 September 2017
Before: McColl JA at [1];
Meagher JA at [2];
Sackville AJA at [115]
Decision:

1. Appeal allowed.
2. In relation to order 1 made on 3 June 2016:
(a) Set aside the judgment for the first and second respondents against the appellant in the amount of $510,096.76.
(b) Note that the amount of the judgment against the third respondent and in favour of the first and second respondents, and the only amount that the third respondent is liable to pay, is $592,559.57.
3. Set aside orders 4 and 5 made on 3 June 2016.
4. Order that the first and second respondents’ claim against the appellant by their Amended List Statement be dismissed.
5. Order that the third respondent’s cross-claim against the appellant be dismissed.
6. Order that the first and second respondents pay the appellant’s costs of the appeal.
7. Direct that the appellant and first and second respondents confer with a view to agreeing on the costs orders that should be made between them in relation to the proceedings at first instance in order to give effect to these reasons. Having done so, they are to file agreed Short Minutes within seven (7) days of the making of these orders and, in the absence of agreement, to file with Meagher JA’s Associate within fourteen days (14) of the making of these orders written submissions, not exceeding three pages, with respect to the costs orders they seek. Any remaining costs question is to be decided on the papers.

Catchwords: TORTS – negligence – duty of care – pure economic loss – reliance – vulnerability –where council as principal certifying authority retained by owner-builder issued occupation certificate under Environmental Planning and Assessment Act 1979 (NSW), s 109D(1)(c) in relation to structurally and non-structurally defective building works on residential property – where subsequent purchaser of property enjoyed benefit of statutory warranties against owner-builder under Home Building Act 1989 (NSW), s 18B – whether council owed subsequent purchaser duty to take reasonable care in issuing occupation certificate – where owner-builder agreed with council that he was responsible for compliance with laws and approvals – whether council liable to indemnify owner-builder due to careless issue of occupation certificate
Legislation Cited: Building Professionals Act 2005 (NSW) ss 63, 65
Building Professionals Regulation 2007 (NSW), Pt 4, divs 2, 3
Conveyancing (Sale of Land) Regulation 2005
Civil Liability Act 2002 (NSW), Pt 4, ss 5B, 5D, 5R, 34, 35, 43, 43A
Environmental Planning and Assessment Act 1979 (NSW), Pts 4, 4A, ss 4, 76A, 81A, 109C, 109D, 109E, 109H, 109L, 109M, 121B
Environmental Planning and Assessment Regulation 2000 (NSW), regs 145, 162A, 162B
Home Building Act 1989 (NSW), Pts 2C, 6, ss 3, 18B, 18C, 18D, 18E, 18G, 30, 76A, 92, 95, 95, 101, 102, 103B
Home Building…

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Ku-ring-gai Council v Chan [2017] NSWCA 226
Case
[2017] NSWCA 226
Decision Date

CaseChat Overview and Summary

The appeal in *Ku-ring-gai Council v Chan* concerned whether a council, acting as a principal certifying authority, owed a duty of care to a subsequent purchaser of a residential property when issuing an occupation certificate. The property had been built by an owner-builder who had agreed with the council that they were responsible for compliance with all laws and approvals. The building works were found to be structurally and non-structurally defective, and the subsequent purchasers sought to recover economic loss from the council, arguing it had carelessly issued the occupation certificate.

The central legal issue before the Court of Appeal of New South Wales was whether the council owed a duty of care to the subsequent purchasers to take reasonable care in issuing the occupation certificate, notwithstanding the owner-builder's statutory warranties and their agreement with the council regarding compliance. The court also considered whether the council was liable to indemnify the owner-builder for any loss arising from the careless issue of the certificate.

The Court of Appeal allowed the appeal, setting aside the judgment that had been entered against the council in favour of the subsequent purchasers. The court reasoned that the council, in its role as a certifying authority, did not owe a duty of care to subsequent purchasers in relation to the economic loss arising from defective building works. This conclusion was based on established principles concerning the recovery of pure economic loss in negligence, particularly where the loss arises from defective building work and statutory warranties already exist. The court found that the purchasers' reliance on the council's certificate was not of a kind that would found a duty of care in this context, especially given the owner-builder's direct statutory obligations and contractual responsibilities. Consequently, the subsequent purchasers' claim against the council was dismissed.

Orders

Orders of the court

1. Appeal allowed.

2. In relation to order 1 made on 3 June 2016:

(a) Set aside the judgment for the first and second respondents against the appellant in the amount of $510,096.76.

(b) Note that the amount of the judgment against the third respondent and in favour of the first and second respondents, and the only amount that the third respondent is liable to pay, is $592,559.57.

3. Set aside orders 4 and 5 made on 3 June 2016.

4. Order that the first and second respondents’ claim against the appellant by their Amended List Statement be dismissed.

5. Order that the third respondent’s cross-claim against the appellant be dismissed.

6. Order that the first and second respondents pay the appellant’s costs of the appeal.

7. Direct that the appellant and first and second respondents confer with a view to agreeing on the costs orders that should be made between them in relation to the proceedings at first instance in order to give effect to these reasons. Having done so, they are to file agreed Short Minutes within seven (7) days of the making of these orders and, in the absence of agreement, to file with Meagher JA’s Associate within fourteen days (14) of the making of these orders written submissions, not exceeding three pages, with respect to the costs orders they seek. Any remaining costs question is to be decided on the papers.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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