Makawe Pty Ltd v Randwick City Council

Makawe Pty Ltd (the developer) brought proceedings against Randwick City Council (the consent authority) concerning the flooding of a basement car park in a home unit building. The flooding was caused by fluctuations in the water table. The developer sought to recover damages for the pure economic loss suffered as a result of this flooding.

The central legal issue before the Court of Appeal was whether the consent authority owed a duty of care to the developer, a purchaser of the home unit building, in relation to the pure economic loss arising from the flooding of the basement car park. This involved considering whether the council's approval of the development and building applications created a duty of care to prevent such foreseeable economic loss.

The court considered the principles of negligence and the recovery of pure economic loss. It was held that the council, in its role as a consent authority approving development and building applications, did not owe a duty of care to a subsequent purchaser of the building to prevent pure economic loss arising from a failure to take into account the potential impact of the water table on the basement car park. The court reasoned that the council's functions were regulatory and did not extend to assuming responsibility for the economic viability or structural integrity of a development in a way that would impose a duty of care to individual purchasers for pure economic loss.

The appeal was dismissed with costs.