Central Highlands Regional Council v Geju Pty Ltd [2018] QCA 38

SUPREME COURT OF QUEENSLAND

CITATION: Central Highlands Regional Council v Geju Pty Ltd [2018] QCA 38

PARTIES: CENTRAL HIGHLANDS REGIONAL COUNCIL (appellant) v GEJU PTY LTD ACN 010 714 799 (respondent)

FILE NO/S: Appeal No of 13451 of 2016 / SC No 4 of 2014

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Mackay – [2016] QSC 279

DELIVERED ON: 16 March 2018

DELIVERED AT: Brisbane

HEARING DATE: 24 May 2017

JUDGES: Fraser and McMurdo JJA and Brown J

ORDER: Allow the appeal.Set aside the orders made in the Queensland Supreme Court on 13 December 2016.The parties may make submissions about the costs of the proceedings in the trial division and on appeal in accordance with the Practice Direction.

CATCHWORDS: LOCAL GOVERNMENT – LEGAL RELATIONSHIPS AND PROCEEDINGS – LIABILITY FOR TORTS – NEGLIGENCE – PARTICULAR CASES – CARELESS OR NEGLIGENT STATEMENTS – where the appellant council issued a limited planning and development certificate to the new owner of a lot which incorrectly noted the lot as zoned industrial – where the lot was zoned rural – where a previous owner had successfully applied for a material change of use over the lot from rural to industrial that would lapse within four years of being granted – where the respondent purchaser relied on a statement in the limited planning and development certificate that the lot was zoned industrial when purchasing the lot – where the lot was worth considerably less than the purchase price as a result of its real zoning – where the limited planning and development certificate was not issued to the respondent – where the respondent argued that it was a member of an identified class of persons who the appellant knew or ought to have known would receive the information – whether the appellant owed the respondent a duty of care / Civil Liability Act 2003 (Qld), s 11, s 28, s 30(1), s 31(1)(a) / Integrated Planning Act 1997 (Qld), s 5.7.9 / Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36, considered / Bryan v Maloney (1995) 182 CLR 609; [1995] HCA 17, considered / Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241; [1997] HCA 8, considered / Geju Pty Ltd v Central Highlands Regional Council (No 2) [2016] QSC 279, related / L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225; [1981] HCA 59, considered / Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290; [1993] FCA 408, distinguished / Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556; [1968] HCA 74, considered / Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278, cited / Raftopoulos v Brisbane City Council [2012] QCA 84, considered / San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; [1986] HCA 68, considered / Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16, considered

COUNSEL: K N Wilson QC for the appellant / C C Heyworth-Smith QC, with M T de Waard, for the respondent

SOLICITORS: King & Company Solicitors for the appellant / Macrossan & Amiet Solicitors for the respondent

FRASER JA: The appellant appeals against a judgment given after a trial that the appellant pay the respondent $852,205.50. The judgment was for damages representing loss sustained by the respondent in purchasing vacant land at Capella in Central Queensland (“Lot 70”) in reliance upon a negligent misrepresentation in a limited planning and development certificate. The certificate was issued by the Peak Downs Shire Council to the owner of Lot 70, who subsequently sold the lot to the respondent. The liabilities of the Peak Downs Shire Council were assumed by the appellant council on 15 March 2008. For ease of reference, I will use the term “appellant” to refer both to the appellant and to its predecessor council.

The trial judge resolved the issues at trial as follows:

The appellant owed the respondent a duty to take reasonable care in describing the zone and precinct in the limited planning and development certificate it issued on 4 February 2008 to the solicitors acting for the owners of Lot 70, who subsequently contracted to sell that land to the respondent on 5 June 2008.

The appellant breached that duty by inaccurately describing the zoning of Lot 70 as “town” and the “precinct” as “industrial”. The correct zone was “rural”. If “town” had been the correct zone then the correct “precinct” for the land in any event would not have been “industrial”.

The respondent was not contributorily negligent.

The appellant’s breach of duty caused the respondent loss of $852,205.50. That amount is the difference between the value of Lot 70 at the date of purchase and what the respondent paid for it, less the amount of a settlement of the respondent’s claim against the solicitors who acted for the respondent in the purchase.

There should be no apportionment of liability between the appellant and those solicitors.

Senior counsel for the appellant identified three substantive issues requiring consideration in this appeal: first, whether the appellant owed the respondent a duty of care; secondly, whether it was reasonable for the appellant to rely on the certificate issued by the Council in deciding to purchase the land; and, thirdly, whether there should be an apportionment of liability against the respondent’s former solicitors of 45 per cent of the respondent’s damages, as assessed by the trial judge against the possibility that it might be found on appeal that an apportionment of liability should be made.

Duty of care

The first and second issues identified by the appellant’s senior counsel reflect the first two grounds of appeal:

“1. The learned trial judge erred in law and in fact in deciding that the Appellant owed the Respondent a duty of care in the circumstances of the case;

The learned trial judge erred in finding on the evidence that the reliance of Mr Birch on the certificate issued by the Appellant was reasonable.”

Ground 2 is a particular of the contention in ground 1 that the appellant did not owe the respondent a duty of care. The appellant’s argument invoked authority that, in a case of the present kind, a duty of care does not arise if it is not “reasonable for the recipient [of the information or advice] to act on that information or advice without further inquiry.”¹

Factual and legal background

The facts relevant to the duty question are largely uncontentious. In late March 2007 the owners (“Ford Property”) of a lot of land contracted to sell that lot to three corporations (“Mayfair Group”) for $484,000. The lot was in the Rural Zone. On 9 May 2007 Ford Property applied to the appellant for reconfiguration of the lot into two lots and for a material change of use from the Rural Zone to Industrial Use. On 22 August 2007 the council approved that application subject to conditions, including conditions specifically related to the change of use. That decision was communicated to Ford Property by letter from the appellant’s chief executive on 24 August 2007. The land the subject of this litigation, Lot 70, was created upon the registration of the survey plan on 5 October 2007. The approved material change of use from Rural to Industrial (described in the heading in the appellant’s letter as “rezoning 1 lot from Rural to Industrial”) would lapse on 24 August 2011 (four years after the date of the approval) unless the approved change of use happened within that four year period.² The approval allowed Lot 70 to be used for certain industrial purposes (“light and service industries”). The primary judge construed a condition of the approval as meaning that before the land was developed, which could occur at any time within the four year period for which the approval was in effect, the applicant/developer was obliged to supply a master plan of Lot 70 to the council,³ but held that the meaning was not clear and there was a potential for confusion.⁴

On 13 December 2007 the Mayfair Group settled their purchase of Lot 70.⁵ On the same day, solicitors (Anne Murray & Co) wrote to the council confirming that they acted for the purchasers and enclosing their cheque for $50.00 in payment of the council’s fee for a limited planning and development certificate.⁶ There was no evidence of what was said in the telephone discussion referred to in that letter. The letter was probably not sent before late January 2008.⁷ It is stamped by the council as having been received on 1 February 2008.

The respondent disputed the appellant’s submission that the letter made it plain that the certificate was requested on behalf of the new owners of Lot 70 (the Mayfair Group). The respondent referred to the circumstance that the letter referred to the solicitors “for the abovenamed Purchasers”.⁸ The inference that the appellant must have understood that the request to the chief executive officer for a limited planning and development certificate received on 1 February 2008 was made on behalf of the new owners of Lot 70 was appropriate, if not inevitable, in circumstances in which on 24 August 2007 the chief executive officer had signed the decision notice for the approval of the application by the former owner and by letter dated 13 December 2007, stamped as having been received on 14 December 2007, Anne Murray & Co wrote to the same chief executive officer confirming that settlement of the purchase by the Mayfair Group from Ford Property was effected on 13 December 2007.⁹

On 4 February 2008 the appellant, by its chief executive officer, issued and sent to Anne Murray & Co acting as the solicitors for the Mayfair Group a limited planning and development certificate. The certificate wrongly stated that the subject land was “Zone: TOWN Precinct: INDUSTRIAL”. The letter enclosing the certificate correctly identified the land as Lot 70 on SP 209731. The certificate wrongly identified the land as “Lot 15 on SP 191634” (a reference to a residential block on the other side of Capella). It also gave the correct street address, it contained a street map which depicted the correct street, it included a plan that correctly identified and depicted “Lot 70 SP 209731”, and a footer referred to “Limited Town Planning Certificate Lot 70 SP 209731”.

The trial judge was not persuaded that there would be any significantly different available uses of the land if it were in an industrial precinct in the town zone compared with the uses that were in fact available under the approved material change of use, but there were other differences of significance: if the certificate were accurate there would be greater scope to reconfigure the land into smaller lots, the ability to use the land for industrial purposes would not be qualified by the limited time available under the approved material change of use to act to secure that ability, and the right to use the land for industrial purposes would not have been put in doubt by the obscurity of the approval conditions in the appellant’s approval of the material change of use.¹⁰ For those reasons the trial judge concluded that the certificate was relevantly misleading.¹¹ The trial judge held that Lot 70 would have been more valuable if it had been zoned industrial instead of being in the rural zone with the benefit of the approved material change of use.¹²

When the appellant issued the certificate, the statutory provisions for planning and development certificates were contained in Division 3 of Chapter 5, Part 7 of the Integrated Planning Act 1997 (Qld).¹³ Section 5.7.8 provided that “[a] person may apply to a local government for a limited, standard or full planning and development certificate for a premises”, each application to be “accompanied by the fee set by resolution of the local government”. (It appears that the fee in this case was $50.00.) The information required to be contained in those certificates was prescribed by ss 5.7.9, 5.7.10 and 5.7.11. Section 5.7.9 required a limited planning and development certificate to contain a summary of the provisions of any planning scheme (including charges schedules) applying specifically to the premises, a description of any of the State planning regulatory provisions applying to the premises, and a description of any designation applying to the premises. Sections 5.7.10 and 5.7.11 required a standard planning and development certificate and a full planning and development certificate respectively to contain the same information together with additional information. Each of those kinds of certificates was required to contain or be accompanied by a copy of every decision notice for development approval that had not lapsed.

Chapter 5, Part 4 of the Act contained provisions for compensation for errors in planning and development certificates. Section 5.4.5 provided that a person who suffered financial loss because of an error or omission in a planning and development certificate was entitled to be paid reasonable compensation by the local government. Time limits for various claims for compensation to be made to a local government were specified in s 5.4.6. In relation to a claim for compensation under s 5.4.5, the specified time limit was “at any time after the day the certificate is given”. Under s 5.4.7 the local government was obliged to decide a claim for compensation within 60 business days after the claim was made to it, and the chief executive officer had ten business days thereafter to notify the claimant of the decision, the amount of compensation to be paid (if the decision was to pay compensation), and that the claimant might appeal against the local government’s decision. The Act did not prescribe the method of assessment of the compensation required by s 5.4.5. A person dissatisfied with the decision of the local government was entitled to appeal against the decision to the Planning and Environment Court, under s 4.1.34.

In conformity with the statutory provision prescribing the content of a limited planning and development certificate, the certificate issued by the appellant did not refer to its decision on 22 August 2007 to approve the application for a material change of use. Such information would only be provided in a standard planning and development certificate or a full planning and development certificate.

On 5 June 2008 the respondent entered into a contract to purchase Lot 70 from the Mayfair Group for $900,000. At an unknown time between February and June 2008, one of the principals of the Mayfair Group, Mr Coates, gave the certificate (or a copy of it) to Mr Adams, a real estate agent who acted on behalf of the Mayfair Group in the sale of Lot 70. Mr Adams had also acted as the real estate agent for Ford Property in the sale of Lot 70 to the Mayfair Group, which had settled on 13 December 2007.

The appellant submitted that Mr Adams knew that Lot 70 was not zoned industrial because he had been involved in the process by which the lot was created. That submission is inconsistent with the trial judge’s findings, which reflect Mr Adams’ evidence. The trial judge found that Mr Adams believed that Lot 70 was an “industrial lot”, but that belief resulted from his misunderstanding of what Ford Property had done. When Lot 70 was sold to the respondent in 2008 Mr Adams knew that the land had been zoned rural and that there was an approval in place from the appellant for a material change of use allowing Lot 70 to be used as industrial land, and Mr Adams believed that Mr Ford and his surveyor must have complied with the conditions required to achieve the industrial zoning.¹⁴ Mr Adams did not understand that the material change of use might lapse after only four years. He held his belief that the land was industrial before the council issued the certificate in February 2008.¹⁵ Mr Adams, who had known the controller of the respondent, Mr Birch, for 25 years, gave evidence that he believed that he would have given Mr Birch the certificate during a social visit, sometime between February and May 2008,¹⁶ when Mr Adams gave Mr Birch an information memorandum relating to the proposed sale of Lot 70.¹⁷ The trial judge found that on an unknown date between February and May 2008, Mr Adams gave a copy of the certificate to Mr Birch, the principal of the respondent.¹⁸ Mr Coates wanted Mr Adams to invite expressions of interest for the purchase for Lot 70.¹⁹ Mr Adams told Mr Birch that Lot 70 was an industrial block in Capella.²⁰

The trial judge found that if the certificate had said that the property was zoned rural, Mr Adams would have checked with the Council and would not have made the representations he did make to Mr Birch that it was industrial.²¹ Mr Birch was an experienced developer and familiar with town planning matters.²² Mr Birch did not look at the certificate carefully after he received it from Mr Adams, but he saw the precinct described as industrial and the map depicting Lot 70 and concluded that Lot 70 was zoned industrial; if the certificate had instead indicated that the zoning was rural, Mr Birch would have made enquiries and on learning of the true situation would not have purchased the lot.²³ The trial judge found that it was explicable that Mr Birch did not notice the certificate on its face related to a lot other than Lot 70; the correct address was shown, the map at the foot of the certificate was accurate, and the covering letter referred to Lot 70. Mr Birch’s reliance upon the certificates was reasonable.²⁴

The respondent entered into the contact to purchase Lot 70 four months after the issue date on the certificate (4 February 2008) and after Mr Birch had been given a copy of the certificate weeks or months earlier. The respondent borrowed more than the entire purchase price of the lot. The contract settled on 1 August 2008. The respondent did not engage solicitors to act on its behalf until after it entered into the contract of 5 June 2008,²⁵ but the trial judge found that if the respondent’s solicitors had learned of the correct zoning the respondent could have extricated itself from the contract.²⁶ (The trial judge found that: when the solicitors were retained the contract was still conditional; the contract included a provision making it subject to the respondent obtaining sufficient finance to complete the contract; and because the lot was significantly less valuable upon the correct zoning than the amount of the purchase price, finance would not have been approved if the financier had been informed of the correct zoning.)

Consideration

The trial judge rejected the appellant’s argument that this was not one of the categories of case in which a duty of care has traditionally been imposed. The trial judge considered that the question whether the appellant owed the respondent the alleged duty of care was not novel; it was answered in the respondent’s favour by the High Court’s decisions in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords,²⁷ and by L Shaddock & Associations Pty Ltd v Parramatta City Council (No 1),²⁸ the continuing authority of which was affirmed in Woolcock Street Investments Pty Ltd v CDG Pty Ltd.²⁹ The trial judge also discussed the particular features of this case upon which the appellant relied as militating against a finding that a duty of care existed. In the course of that discussion, the trial judge referred to the decision of the Full Court of the Federal Court in Mid Density Developments Pty Ltd v Rockdale Municipal Council³⁰ as authority for the proposition that, in a situation very similar to the instant case, a duty of care is owed not only to a person who requests information but also to a person dealing with the recipient of the information.

The effect of the respondent’s argument is that the trial judge’s conclusions are correct for the reasons given by his Honour. The appellant argued that the cases cited for those conclusions do not support them.

The High Court has affirmed that, as Brennan CJ put it in Esanda,³¹ “mere foreseeability of the possibility that a statement made or advice given by A to B might be communicated to a class of which C is a member and that C might enter into some transaction as a result thereof and suffer financial loss in that transaction is not sufficient to impose on A a duty of care owed to C in the making of the statement or the giving of the advice.”³² In Bryan v Maloney,³³ Brennan J explained this aspect of the law in a passage that was subsequently approved by Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments Pty Ltd v CDG Pty Ltd:³⁴

“If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition, sterilize many contracts and, in the well-known dictum of Chief Judge Cardozo, expose defendants to potential liability ‘in an indeterminate amount for an indeterminate time to an indeterminate class’.”

In Shaddock the High Court held that a council was under a duty to take reasonable care to supply correct information in a certificate the council gave to a solicitor for an intending purchaser of land for redevelopment who had applied for such a certificate. Gibbs CJ concluded that “the person giving the information to another whom he knows will rely upon it in circumstances in which it is reasonable for him to do so, is under a duty to exercise reasonable care that the information given is correct” and a “public body, by following the practice of supplying information upon which the recipients are likely to rely for serious purposes, lets it be known that it is willing to exercise reasonable skill and diligence in ensuring that the information supplied is accurate”.³⁵ Mason J, with whose reasons Aickin J agreed, concluded that “when information (or advice) is sought on a serious matter, in such circumstances that the authority realizes, or ought to realize, that the inquirer intends to act upon it, a duty of care arises in relation to the provision of the information and advice.”³⁶ Those formulations reflect Barwick CJ’s conclusion in Mutual Life & Citizens’ Assurance Co Ltd v Evatt,³⁷ that (adopting the terms of Mason J’s approval of that conclusion in Shaddock³⁸) “whenever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to act on that information or advice, the speaker comes under a duty to exercise reasonable care in the provision of the information or advice he chooses to give.” Murphy J’s statement of the principle also referred only to a duty owed to persons to whom the statement is made.³⁹ None of those statements support the existence of a duty of care in the quite different circumstances of this case, in which the duty of care is alleged to be owed to a person other than the person to whom the appellant gave the certificate.

The respondent pointed out that Gibbs CJ and Mason J⁴⁰ considered that it was not determinative that the council did not know the precise purpose for which the certificate was sought. That does not imply that, in the absence of some feature additional to the facts in Shaddock, a public body owes a duty of care to a person other than the recipient of the certificate.

Subsequently in San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (NSW),⁴¹ Gibbs CJ, Mason, Wilson and Dawson JJ referred to the question whether liability for negligent misstatement may arise where the statement was not made in response to a request for information or advice.⁴² They observed that such a request was “by no means essential, though it has been suggested that instances of liability for misstatement volunteered negligently will be ‘rare’” and stated:⁴³

“The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.

…

… two decisions [Rusch Factors, Inc v Levin (1968) 284 F. Supp. 85 and Rhode Island Hospital Trust National Bank v Swartz, Bresenoff, Yavner & Jacobs (1972) 455 F. (2d) 847] provide support for the proposition that, where a statement is made for the purpose of inducing the plaintiff, or the members of a limited class including the plaintiff, to commit themselves financially upon the basis that the statement is true, and the plaintiff acts in reliance on the statement, the law will impose a duty of care on the maker of the statement.

… it is necessary not only that A intends that B or members of a class of persons should act or refrain from acting in a particular way, but also that A makes the statement with the intention of inducing B or members of that class, in reliance on the statement, to act or refrain from acting in the particular way, in circumstances where A should realize that economic loss may be suffered if the statement is not true. In cases where the defendant intends the statement to operate as a direct inducement to action, the reasonableness of the reliance will not be a critical factor, although in other cases the defendant’s appreciation of the reasonableness of reliance will be relevant.”

The United States cases mentioned in the second paragraph of that passage of the reasons concerned accountants’ liability for careless financial misrepresentations in certified financial statements they supplied to their clients with knowledge that those financial statements were to be used by their clients as support for an application to the plaintiffs for funds.⁴⁴ The context, including that supplied by the concluding sentences of the first paragraph, the second paragraph, and particularly the third paragraph, confirms that the general expressions used in the first three sentences of the first quoted paragraph were not intended to convey that there is a duty of care to a third party to whom, without the author’s knowledge, the recipient communicates the author’s statement, merely because the author possesses or professes to possess skill and competence in the relevant area, or warrants or expressly assumes responsibility to the recipient for the correctness of the author’s statement.

In Esanda, Brennan CJ observed, citing San Sebastian, that there are some situations in which a plaintiff who has suffered pure economic loss by entering into a transaction in reliance on a statement made or advice given by a defendant may be entitled to recover without proving that the plaintiff sought the information and advice, and continued:

“But, in every case, it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into a such transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound. If any of these elements be wanting, the plaintiff fails to establish that the defendant owed the plaintiff a duty to use reasonable care in making the statement or giving the advice.”⁴⁵

That statement refers to a member of an identified class of persons who the appellant knew or ought to have known would receive the information. I respectfully disagree with the trial judge’s conclusion⁴⁶ that the respondent was a member of an identified class to whom it was likely that the certificate would come and the certificate would be very likely to lead it to enter into a transaction of the kind it did enter into. As the appellant submitted, there was no rational way to define a class of which the respondent was a member other than in very broad terms. The trial judge decided that the relevant class of persons to be considered included “potential purchasers of the property the subject of the Certificate”.⁴⁷ The class would also include owners and persons such as tenants, lenders and investors who might regard the zoning of the land as a material factor in serious financial decisions. It was foreseeable that Mayfair Developments might pass on the zoning information in the certificate to one or more of the people in the very broad class of persons who might rely upon that information in making serious financial decisions, but there is no basis in the evidence for concluding that the appellant knew or ought to have known that Mayfair Developments would do so, much less that the appellant intended, knew, or ought to have known, that a person would buy Lot 70 in reliance upon the zoning information in the certificate.

There is another factor which suggests that it was not proved that the appellant ought to have known that the zoning information in the certificate would be likely to induce a potential purchaser to buy the land for an industrial use. Four months elapsed after the date of issue of 4 February 2008 stated on the certificate before the respondent entered into the contract to purchase the lot on 5 June 2008. If there is a class of potential purchasers who a public body should consider would be very likely to be induced by such a certificate to buy the land without further enquiry about the zoning, that class would be confined to those to whom the certificate is supplied whilst it is reasonably considered to remain reliable despite the passage of time after issue of the certificate. It appears, however, the appellant did not argue at the trial that the delay between the date of issue of the certificate and the respondent’s entry into the contract made it unreasonable for the respondent to rely upon the zoning information in the certificate such as to preclude a finding that the appellant owed the respondent a duty of care. Putting that factor aside, it remains the case that the respondent did not establish any of the elements held by Brennan CJ in Esanda to be essential for the existence of the alleged duty of care.

Toohey and Gaudron JJ concluded in Esanda that a “relationship of proximity marked either by reliance or by the assumption of responsibility does not arise unless the person providing the information or advice has some special expertise or knowledge, or some special means of acquiring information which is not available to the recipient” and “unless it is reasonable for the recipient to act on that information or advice without further inquiry…for the purpose for which it is used”.⁴⁸ Their Honours’ reasons make it plain that satisfaction of those conditions was necessary but not necessarily sufficient to establish the then necessary relationship of proximity. Those reasons do not support the trial judge’s conclusion that it is settled law that a duty of care arises in the circumstances of this case.

In Woolcock Street Investments, Gleeson CJ, Gummow, Hayne and Heydon JJ observed of the negligent misstatement cases that they “can be seen as cases in which a central plank in the plaintiff’s allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided”.⁴⁹ In Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288⁵⁰ Crennan, Bell and Keane JJ, after observing that in some cases of pure economic loss, of which Bryan v Maloney⁵¹ was cited as an example, reference had been made to “notions of assumption of responsibility and known reliance”, stated that the plurality in Woolcock Street Investments⁵² noted that the exception to the general rule for negligent misstatement recognised in cases such as Mutual Life & Citizens’ Assurance Co Ltd v Evatt and L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) “depends on proof of an assumption of responsibility by the defendant and known reliance on the defendant by the plaintiff.” That way of expressing it might comprehend cases where the defendant “ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence”,⁵³ but it is inconsistent with the duty arising where reliance by the plaintiff is merely foreseeable and no other feature of the case favours the existence of the duty.

In Mid Density the Full Court of the Federal Court (Gummow, Hill and Drummond JJ) held that a council owed a duty of care to a purchaser of land in respect of three certificates the council issued which wrongly communicated that the council had no information which would indicate that the land was subject to the risk of flooding. The council issued one certificate, in respect of part of the land, to the vendor before the appellant entered into the contract to buy the land. After the contract was made, the council issued two further certificates, in respect of different parts of the land, directly to the appellant. The court held that the circumstance that the first certificate was not issued directly to the appellant did not preclude a holding that the council owed a duty of care to the appellant, it being “sufficient if the mis-statement is made to members of a limited class of persons, including the plaintiff, with the intention that those persons should rely thereon in deciding whether to commit themselves financially”.⁵⁴

The respondent submitted that there was no relevant distinction between Mid Density and this case. As the appellant submitted, the additional feature of that case that justified a finding that the council owed a duty of care to an intending purchaser was the finding by the Full Court that the council knew and intended that potential purchasers, which included the plaintiff in that case, would rely upon the certificate in deciding whether to commit themselves financially. It is not clear that the Full Court set out all of the relevant evidence bearing upon the council’s knowledge and intention, which was not the focus of the appeal in that case, but the Full Court did refer to the circumstance that the council issued the other two certificates directly to the purchaser and to evidence that the council officer responsible for the issue of the certificates “knew that purchasers would be likely to rely upon the answers given to the various questions in the certificates” and sought to make the answers accurate “with the intention that purchasers should rely on them as being accurate”.⁵⁵ In relation to the certificate that the council issued to the vendor before the contract was made, the Full Court applied the principle articulated by Gibbs CJ, Mason, Wilson and Dawson JJ in San Sebastian when holding that it “is sufficient if the misstatement is made to members of a limited class of persons, including the plaintiff, with the intention that those persons should rely thereon in deciding whether to commit themselves financially”.⁵⁶ The evidence in this case does not justify a similar finding. The respondent argued that an inference to that effect should be derived from the appellant’s omission to adduce evidence that it did not have any such knowledge or intention. That submission reverses the onus of proof, which lay throughout upon the respondent.

The respondent relied upon the statutory provisions governing the issue of limited planning and development certificates and for compensation for errors in such certificates. (At the trial the respondent relied upon the former but not the latter provisions.) The respondent argued that an intention by the appellant that potential purchasers, including the respondent, should rely upon the certificate could be derived from the appellant’s statutory obligation to supply the certificate in circumstances in which (as Toohey and Gaudron JJ observed in Esanda⁵⁷) “it is known, or ought reasonably be known, that it will or may be acted upon for a serious purpose, and loss may be suffered if it proves to be inaccurate.”

The significant features of the statutory scheme are that any person was entitled to apply to the appellant for a limited planning and development certificate (s 5.7.8), the appellant was under a statutory obligation to supply to any such applicant a limited planning and development certificate containing information about the zoning of the land (s 5.7.9), and any person suffering financial loss because of an error or omission in such a certificate was entitled to reasonable compensation by the local government (s 5.4.5).⁵⁸ In Raftopoulos v Brisbane City Council⁵⁹ Chesterman JA, with whose reasons Muir JA and P Lyons J agreed, stated that compensation under s 5.4.5 was allowed where the applicant for the certificate, being the person to whom the certificate issued, suffered financial loss because of the error or omission. Section 5.4.5 does not provide that the right to compensation is available only to the person who applied for and received the certificate. Whether any such limitation is implied was not in issue in Raftopoulos v Brisbane City Council. In my respectful opinion there is no sufficient basis for imposing any such limit upon the statutory right to reasonable compensation.

The respondent’s claim in the trial division was not for breach of the statutory duty or for compensation under the statute. The circumstance that the statutory provisions provide for compensation to a person who sustains financial loss as a result of errors or omissions in certificates without any of the common law limitations upon the circumstances in which a duty of care is owed does not justify the court in discarding those limitations in a common law claim. Nor does the statutory obligation amount to evidence that the appellant knew or intended that a defined class of persons which included the respondent would rely upon the certificate in deciding whether to purchase Lot 70. To the extent to which the statutory provisions suggest that the appellant should have foreseen that persons other than the applicant for a certificate might suffer economic loss by relying upon an incorrect certificate, that does not differ from the factual basis of the decision in Shaddock’s case, in which the council had adopted a practice of issuing certificates without any statutory backing. The statutory provisions may be enlisted in support of a conclusion that it is reasonable to rely upon zoning information in such certificates, but the plaintiff’s reliance in Shaddock was found to be reasonable in relation to certificates issued by councils before the enactment of such statutory provisions.⁶⁰ Known reliance (or, an assumption by the defendant of responsibility to the plaintiff, which seems to amount to much the same thing in a case of this kind) has generally been regarded as an important feature in claims for financial loss caused by negligent misstatement where a duty of care has been held to exist. Upon the facts of this case the statutory provisions do not justify the existence of a duty of care in the absence of known reliance.

The primary judge also held that the vulnerability of the respondent, arising from the circumstance that the appellant was the only potential source of the information the certificate was supposed to contain, justified the imposition of a duty of care. The content of the general concept of vulnerability in this context was considered by the High Court in Woolcock. In that case a trustee company retained the defendant to design foundations of a commercial building. Many years later the plaintiff bought the building. The vendor did not warrant that the building was free from defects and it did not assign whatever rights it had against the defendant in respect of defects to the plaintiff. After substantial structural defects were manifested in the building the plaintiff sued the defendant for the cost of rectifying defects upon the footing that the defendant had owed and breached a duty to take reasonable care in designing the foundations. Gleeson CJ, Gummow, Hayne and Heydon JJ rejected the alleged duty of care, holding that the alleged and admitted facts with reference to which the appeal was decided did not show that the plaintiff could not have protected itself against the alleged economic loss by negotiating with the vendor for a warranty of freedom from defect or an assignment in lieu of the vendors’ rights against third parties in relation to defects.⁶¹ Their Honours considered that “‘[v]ulnerability’ in this context referred to a plaintiff’s “inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.”⁶²

Although the reasonableness of the plaintiff’s reliance must be a relevant feature, that language focuses upon the ability of the plaintiff to take steps to protect itself from the defendant’s negligence rather than upon the reasonableness of the plaintiff’s failure to take such steps. The examples given by their Honours are consistent with that focus: in Perre v Apand Pty Ltd,⁶³ there was nothing the growers could do to protect themselves from the economic impact of the defendant’s negligence in sowing a crop which resulted in the plaintiffs’ land being quarantined; in Hill v Van Erp,⁶⁴ an intended beneficiary could do nothing to ensure that the client’s solicitor properly performed the client’s retainer; but in Esanda “the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor’s certification of the accounts of the company.”⁶⁵ The present case is closer to Esanda than Perre and Hill.

The trial judge noted that the appellant did not adduce evidence explaining how the error in the limited certificate occurred or that the same error would not have occurred if it had been asked to issue a standard or full certificate, but a failure to refer to the approval of the material change of use in a standard or full certificate would have been a different error. The trial judge also noted that there was no evidence that it was usual practice to require a standard or full certificate when a matter of importance to an applicant, such as a potential purchaser, was the zoning information which would be included in a limited certificate.

Upon the trial judge’s findings, it may not have been unreasonable for Mr Birch himself to have failed to seek a standard or full certificate, but the respondent admitted the appellant’s allegation that the solicitors retained by the respondent after entry into the contract, Anne Murray & Co, were negligent by failing to take steps or recommend the respondent take steps to obtain an accurate planning and development certificate.⁶⁶ The trial judge considered that the respondent did not fail to act reasonably by not retaining solicitors before entering into the contract, on the ground that it was notorious that people do not do so. Whilst it is notorious that purchasers of residential properties in Queensland commonly do not retain solicitors before entering into contracts, it is not at all clear that the same is true in relation to commercial contracts of this kind. There was no evidence on the topic and the suggested fact is not one which is capable of being the subject of judicial notice. The respondent’s controller was an experienced property developer and familiar with town planning matters. The prudence of the respondent retaining a solicitor before contracting in this case was positively suggested by the fact that the certificate expressly identified the lot to which it related as a lot other than Lot 70. That, as the trial judge accepted, Mr Birch did not notice that aspect of the certificate tends merely to confirm that it would have been prudent for the respondent to retain solicitors.

The trial judge considered that the plaintiff demonstrated its vulnerability because there was nobody other than the appellant from which a vendor or prospective purchaser could obtain the certificate or access the information the certificate is supposed to contain. So much was true in relation to the road widening proposal of the Parramatta City Council, the non-disclosure of which led to the litigation in Shaddock, but the High Court did not regard that factor as justifying the imposition of a duty of care to avoid economic loss in the absence of known reliance by the plaintiff. The argument for vulnerability is weaker in this case because the respondent did not establish that the appellant was the only reliable source of the relevant zoning information. The parties presented competing arguments upon the question whether the vendor to the respondent, the Mayfair Group, must have known that the certificate was inaccurate. There was no direct evidence and no finding upon the question whether Mr Coates or anyone else representing the Mayfair Group read the certificate or the copy of it provided to the Mayfair Group’s agent. The trial judge found, as an inference from the fact that the solicitor for the Mayfair Group sought the certificate that “it was for a serious purpose and its recipient was very likely to rely on it in making financial decisions”.⁶⁷ It does not follow that the Mayfair Group had actual knowledge of the contents of the certificate. But in circumstances in which Ford Property applied for and obtained the approval of the reconfiguration and material change of use after contracting to sell the land to the Mayfair Group and before settlement of that contract, it seems likely that the Mayfair Group was informed of the terms of the approval before that settlement. The respondent, which bore the onus of proving facts supporting the alleged duty of care, neither alleged nor proved that an enquiry of the Mayfair Group about the current zoning of Lot 70 before entry into the contract in early June 2008 would not have elicited a copy of, or the information in, the approved application for a material charge of use, subject to conditions, for four years from August 2007.

The respondent could have sought a warranty from the Mayfair Group that the land was zoned industrial. The trial judge rejected that possibility as a relevant consideration, upon the basis that it assumed that a prospective purchaser should assume that a certificate issued by the appellant was potentially misleading.⁶⁸ That reasoning does not establish that the respondent was vulnerable in the way explained in Woolcock. The Mayfair Group might have been prepared to give a warranty if it did not know that Lot 70 could be used for industrial purposes only upon the terms set out in the appellant’s approval of the material change of use. If, as seems more likely, the Mayfair Group did know that that Lot 70 could be used for industrial purposes only upon those terms, the Mayfair Group might have informed the respondent of the true facts in response to a request for a warranty.

The question whether vulnerability is a governing concept in negligent misrepresentation cases was identified but not answered in Woolcock.⁶⁹ Assuming vulnerability to be an important concept in such cases, it is not established on the facts of this case merely if it was reasonable for the respondent to rely upon the certificate without taking any other steps. Reliance has been regarded as “an indicator of vulnerability”,⁷⁰ but the High Court has so far not held that a duty of care arises in negligent misstatements cases merely because it is foreseeable that a plaintiff unknown to the defendant falls within a broadly defined class of persons who might suffer economic loss by reasonably relying upon a statement made by the defendant. Such a holding would seem to be difficult to reconcile with the analyses in Shaddock and the general statements about the misrepresentation cases in Woolcock and Brookfield.

The trial judge quoted the following passage from the reasons of Allsop P (with whom Beazley and McColl JJA agreed) in Precision Products (NSW) Pty Ltd v Hawkesbury City Council:⁷¹

“The circumstances in which the common law will impose a duty of care to avoid causing pure economic loss have been the subject of considerable debate and uncertainty in Australia since Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad”. Since then, in a series of cases in the High Court culminating in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (Bryan v Maloney; Hill v Van Erp; Esanda Finance Corporation Ltd v Peat Marwick Hungerfords; Pyrenees Shire Council v Day; and Perre v Apand) the High Court has identified an approach based on the presence, in the particular circumstances, of “salient features” that, when combined, constitute or reflect a sufficiently close relationship to give rise to a duty of care. Such salient features include the inherent likelihood of the production of economic loss (Caltex Oil (Australia) (at 576)) and assumption of responsibility and known reliance (Bryan v Maloney and the negligent misrepresentation cases). The most important of these features, however, is vulnerability, in the sense discussed in the joint reasons of Gleeson CJ, Gummow J, Hayne J and Heydon J in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (at 530 [23])…”

Consistently with the observations about misstatement cases in Woolcock and Brookfield, Allsop P referred to assumption of responsibility and known reliance as salient features in negligent misrepresentation cases. In Dansar Pty Ltd v Byron Shire Council⁷² Meagher JA (with whose reasons Leeming JA agreed) observed that “vulnerability arises because of the recipient’s known reliance on the defendant as the source of advice or information.” In this case the respondent did not prove that the appellant knew or ought to have known that the respondent, or an identified class of persons of which the respondent was a member, would rely upon the appellant’s certificate.

The absence of any limitations in the statutory provisions upon the right to reasonable compensation for persons who suffer financial loss because of an error or omission in a planning development certificate stands in stark contrast with the common law restrictions upon rights to sue for financial loss resulting from reliance upon misstatements. The relative liberality of the statutory right to reasonable compensation might explain why the parties were unable to cite any decision in a Queensland court concerning a common law action of the present kind against a local government. Whether or not that is the explanation, the absence of any decision directly on point makes it necessary to decide the appeal with reference to the broad statements of principle in the High Court and other cases I have discussed and an evaluation of the salient features of the case. My conclusion is that the collection of features upon which the respondent relied does not justify a conclusion that the appellant owed the respondent the alleged duty of care.

I would allow the appeal upon the ground that the appellant did not owe the respondent the alleged duty of care.

Causation

The issues identified by the appellant’s senior counsel (see [3] of these reasons) do not comprehend ground 3 in the notice of appeal:

“3. The learned judge erred in law and in fact in deciding that the Appellant’s breach of the duty of care found to be owed by it to the Respondent caused the Respondent loss, in terms of s. 11 Civil Liability Act 2003 (Qld).”

That ground of appeal was addressed only in one short paragraph of the appellant’s amended outline of argument by the contention that, “difficulties that beset the Respondent’s claim because of the lack of its vulnerability also ought to have led the learned trial judge to find that the Respondent had failed to prove causation, as required by s 11 Civil Liability Act 2003”. Footnotes to that submission referred to only four paragraphs out of the 31 paragraphs in the section of the primary judge’s reasons concerning causation.⁷³ Ground 3 should be rejected. The trial judge’s conclusion that the respondent’s loss was caused by the appellant’s breach of the alleged duty of care was soundly based in the evidence which is reflected in the findings summarised in [16] and [17] of these reasons.

Apportionment

The third issue identified by senior counsel for the appellant (see [3] of these reasons) reflects grounds 4 and 5 in the notice of appeal:

“4. The learned trial judge erred in fact in declining to make a finding of apportionment against Anne Murray & Co.;

Having regard to the evidence, and the admissions made by the Respondent, the learned trial judge ought to have reduced the Respondent’s damages by 45%, if the Respondent otherwise succeeded on its claim.”

The respondent admitted the appellant’s pleaded allegation that the respondent’s claim was an “apportionable claim” within the meaning of s 28 of the Civil Liability Act 2003 (Qld). Section 31(1)(a) of the Civil Liability Act provides that in any proceeding involving an apportionable claim “the liability of a defendant who is a concurrent wrongdoer in relation to the claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just and equitable having regard to the extent of the defendant’s responsibility for the loss or damage”. The term “concurrent wrongdoer” is defined in s 30(1) as meaning “a person who is 1 of 2 or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim”. The respondent’s amended reply admitted the appellant’s allegations that:

The solicitors retained by the respondent to act in the purchase of Lot 70, Anne Murray & Co, owed the respondent a duty of care to exercise reasonable care, due skill and diligence when attending to the purchase of that lot, and protecting the respondent’s interests in relation there to, including conducting all proper searches and enquiries to ascertain the relevant planning scheme information and value of the lot.

If the content of the certificate was inaccurate as the respondent alleged, the solicitors failed to exercise reasonable care, skill and diligence in the discharge of the duty of care it owed to the respondent by failing to identify that the certificate did not pertain to the lot and in failing to take steps, or recommend that the respondent takes steps, to obtain an accurate planning and development certificate which correctly identified the lot or in failing to advise the respondent to obtain an independent valuation of the lot.

The solicitors are, in relation to the claims for negligence or breach of duty, a person who is 1 of 2 or more persons whose acts or omissions caused independently of each other the loss and damage that is the subject of the claim and is thereby a “concurrent wrongdoer” pursuant to s 30(1) of the Civil Liability Act.

Any liability of the appellant in relation to each of the claims for negligence or breach of duty is limited to an amount reflecting that proportion of the loss and damage claimed that the court considers just an equitable having regard to the extent of the appellant’s responsibility for the loss and damage.

The appellant also alleged that the amount which was just and equitable having regard to the extent of the appellant’s responsibility for the loss and damage was nil or, in the alternative, no more than 10 per cent. The respondent denied that allegation as untrue and alleged that the appellant’s responsibility for the loss and damage was greater than “nil” or “no more than 10%”. The respondent alleged that it was unable to plead further to the allegation as the appellant had failed to plead the causal connection between the respondent’s loss and the conduct of Anne Murray & Co.

At the trial the appellant did not call any evidence upon the apportionment issue but submitted that the relevant facts were admitted on the pleadings and the assessment was to be done by reference to those facts. The trial judge accepted that the respondent had admitted that its claim was an “apportionable claim”, that Anne Murray & Co owed the respondent the alleged duty of care, that the breach of duty and the nature of the breach were established, and that causation of the loss was also conceded. The trial judge was also prepared to proceed upon the assumption that a competent solicitor would have noticed the incorrect lot number and at least made enquiry of the appellant about the true status of the land. The trial judge nevertheless declined to make a finding of apportionment against Anne Murray & Co, upon the basis that the appellant had failed to prove that any search reasonably open to the respondent or its solicitors would have revealed the true status of the land; there was thus no evidence to guide the trial judge as to the relevant importance of the acts of the parties in causing the damage, which made it impracticable to arrive at a just apportionment. The trial judge went on to discuss the apportionment upon a hypothetical basis that a search would have revealed the crucial information, concluding that in such a case a substantial apportionment in the order of 45 per cent would be appropriate.

The appellant argued that the respondent’s admissions did supply the information necessary to make the apportionment that was made only on a hypothetical basis by the trial judge; by their pleadings, the parties had agreed that the apportionment should be conducted upon that very basis. The respondent argued that the appellant’s argument failed because it did not adduce evidence that the likely outcome of any enquiry of the Council by Anne Murray & Co would have corrected the error in the certificate. The respondent referred to evidence of a subsequent enquiry by a different person who was told that the land was zoned industrial, thereby confirming the error. It argued that the admission of the allegations of fact did not amount to an admission that what the solicitor did was causative of loss, and that it put causation in issue by the allegation that it could not plead further because the appellant had failed to plead the causal connection. In the respondent’s submission, the missing ingredient concerned the causal potency of the admitted breach of duty. The respondent also argued that it was open to the trial judge to find that the just and equitable apportionment was nil per cent.

As to the last point, the trial judge did not make an apportionment of nil per cent. Rather, the trial judge declined to make any apportionment. As to the more substantial point, the admitted allegations include allegations that it was negligent of the solicitors to fail to take steps to obtain an accurate planning and development certificate which correctly identified the property and, in the context of that allegation, that the negligence of the solicitors was an independent cause of the loss and damage the subject of the respondent’s claim. It was therefore not necessary to speculate whether the respondent’s solicitors would have discovered the true zoning status of the land if they had fulfilled the duty of care they owed to the respondent. The fact was necessarily admitted as an aspect of the respondent’s admission that the solicitors’ acts or omissions independently caused the respondent’s loss.

The respondent’s denial of the appellant’s allegation that the just and equitable extent of the appellant’s responsibility for the loss and damage was nil or no more than 10 per cent is in no way inconsistent with that conclusion. It is entirely consistent with the absence of any dispute that there should be an apportionment. The respondent’s allegation that it was unable to plead further because the appellant had failed to plead the causal connection was not admitted by the appellant and does not detract from the respondent’s admissions.

If, contrary to my conclusion, the appellant owed the respondent the alleged duty of care, I would uphold appeal grounds 4 and 5.

Proposed orders

I would allow the appeal and set aside the judgment against the appellant entered in the trial division. At the request of the parties made at the hearing of the appeal, I would order that the parties are at liberty to make submissions about the costs of the proceedings in the trial division and on appeal in accordance with the Practice Direction.

McMURDO JA: I agree with Fraser JA.

BROWN J: I respectfully agree with Fraser JA and the orders his Honour proposes.

Footnotes

1. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 265 (Toohey and Gaudron JJ). ↩

2. Integrated Planning Act 1997 (Qld), s 3.5.21; [2016] QSC 279 at [26]-[27]. ↩

3. [2016] QSC 279 at [20]-[25]. ↩

4. [2016] QSC 279 at [23], [36]. ↩

5. [2016] QSC 279 at [17]. ↩

6. The respondent’s pleaded case that those solicitors acted for the respondent in sending that letter was not proven and it was rejected by the trial judge: [2016] QSC 279 at [8], [14], [17] (13 December 2007). See also [2016] QSC 290 at [8]. ↩

7. [2016] QSC 279 at [17], footnote 3. ↩

8. [2016] QSC 279 at [8]. ↩

9. [2016] QSC 279 at [17]. ↩

10. [2016] QSC 279 at [52]. ↩

11. 2016] QSC 279 at [53]. ↩

12. [2016] QSC 279 at [37]-[52]. ↩

13. References in these reasons to the Integrated Planning Act are to reprint No 8H, which contains the provisions as in force on 23 November 2007. There were no relevant changes to those provisions by 4 February 2008, when the appellant issued and sent the certificate to the solicitors for the Mayfair Group.