Council’s new duty of care – Part 2

Buller District Council and Swordfish Co Limited, a property developer, have been before the High Court a couple of times debating whether or not the council owes a duty to take reasonable care in issuing its s224 certificates and registering consent notices. A further cause of action about council’s statutory duties has also been debated but that is not the focus for this article.

Council has tried to strike out Swordfish’s statement of claim. Swordfish say council breached a duty to take all reasonable care in issuing its section 224(c) and consent notices. The problem arose on a staged subdivision consent. Stage 1 was completed. A section 224(c) certificate for stage 1 issued and a consent notice was registered against the titles. Unfortunately reading all of those together it appeared that the earth fill and flood protection conditions for stage 2 and 3 had also been complied with, which was not the case. Swordfish purchased the land under that misapprehension and now has to spend more preparing the land for subdivision. They consider Council should compensate them as they got it wrong.

The High Court has not struck out the claim, which was what Council wanted. But it’s not the case that a new duty of care is automatically established. Rather, a Council will need to consider the possibility of such a duty, breach of which would give rise to a damages claim, whilst the parties determine what to do next.

Inevitably one expects Council’s to take even more care in drafting of their resource consent conditions and consent notices. More care may mean more time and more money for developers to pay. One of the High Court judges noted that in the building context Council’s risk is managed by employing building inspectors or assessors to make the assessments for them and that the cost of so doing can then be passed on to applicants. They suggested something similar could be considered here.

It goes without saying that purchasers of property should still take all proper care doing their due diligence, especially if a staged subdivision consent applies or if the consent notice indicates there remains conditions to be complied with. If the LIM and other documentation is not clear, direct inquiries should be made of Council.