Ku-ring-gai Council v Chan

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.