This question was answered by the Court of Appeal in September 2017 when the decision of Ku-ring-gai Council v Chan [2017] NSWCA 226 was handed down.
The Court of Appeal held that a Principal Certifying Authority (PCA) did not owe a duty of care to avoid pure economic loss to prospective purchasers when issuing an occupation certificate.
At first instance the Supreme Court held that the PCA, in this case the council, held a duty of care because the purchasers relied on the council to exercise care and skill when issuing the final occupation certificate; the council knew that the purchasers would rely on the occupation certificate being issued and that the council would have reasonably foreseen the purchasers would likely suffer economic loss if the certificate was incorrectly issued.
This was overturned on appeal and the Court of Appeal held that the council as PCA did not owe a duty of care and that the role of a PCA is regulatory as it is to be only satisfied about matters directed to authorising occupation and use of a completed building in accordance with the Building Code of Australia.
This case is all the more reason why purchasers should make sure that when purchasing a property, even a newly constructed property, that they obtain proper inspections. This is even more so if purchasing from an owner-builder where there will be no homeowners warranty insurance.
For any further advice or legal assistance on this issue, please contact us at Coutts Lawyers & Conveyancers on 1300 268 887
