In the matter of Ku-ring-gai Council v Chan, the purchasers, Ms Chan and Mr Cox, acquired a residential property in Wahroonga that had extension works carried out by the previous owner-builder Mr Acres. As the Principal Certifying Authority (PCA), the Ku-ring-gai Council conducted inspections to determine if an occupation certificate could be issued. On inspection of the premises, the Council failed to identify any significant structural defects and granted the occupation certificate despite the works carried out was structurally defective. Ms Chan and Mr Cox obtained a building report based on a visual inspection only and subsequently purchased the property following the report.  However, it was later discovered that the renovated property indeed had structural defects and did not comply with the approved plans. The certifier had neglected to detect all these structural defects. Subsequently, the purchasers filed a claim against the owner-builder Mr Acres for breaching the statutory warranties of the Home Building Act 1989 (NSW). They also held the Ku-ring-gai Council and the engineer accountable for their failure to exercise due care towards themselves as prospective purchasers. 

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At trial, the NSW Supreme Court rejected the claim against the engineer, ruling that there was no duty of care owed to the purchasers. However, the Court held that the Council had a duty of care towards the purchasers, which it breached by granting the occupation certificate. Moreover, the Court established that the Council was obligated to indemnify the owner-builder.

 

On appeal, the NSW Court of Appeal overturned the previous decision, concluding that the Claimants had failed to establish that the Council owed them a duty of care. Specifically, there was no actual reliance by the purchasers on the occupation certificate issued by the Council. The Court also determined that the Council was not obligated to indemnify the owner-builder as it had not undertaken to supervise compliance. 

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