In Ku-ring-gai Council v Chan [2017] NSWCA, Ku-ring-gai Council undertook inspections of a property to ascertain whether there were any building defects, and then provided a certificate that the property was fit for occupation. After the property was purchased by Chan, serious structural defects manifested in the property. The Supreme Court held the Council liable for a breach of duty of care to the subsequent purchaser, on the basis that the Council was the Principal Certifying Authority and could reasonable expect that the purchasers would rely on the issued occupation certificate.

On appeal, the NSW Court of Appeal overturned this decision, finding that the Council did not owe the subsequent purchasers a duty of care. The Court found that the purchasers would have had only a general expectation that the Council had properly issued the certificate, and that there was no actual reliance on this expectation when making the purchase. In coming to its decision the Court also took into consideration the ability of the purchasers to rely on the statutory warranty scheme under the Home Building Act (1989) NSW.

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