Council's duty to keep LIMs accurate and up-to-date

In June's edition of LG Law we covered the requirements of Land Information Memoranda ("LIM") under the Local Government Official Information and Meetings Act ("the Act"), in particular section 44A(2) (ba) and (bb), which were inserted pursuant to section 18 of the Health (Drinking Water) Amendment Act 2007.  A recently released High Court judgement appears to have made the requirement to provide accurate and up-to-date information under section 44A more stringent. 

In Altimarloch Joint Venture Limited v Moorhouse, the Court found that a territorial authority would have breached a statutory duty if it issued a LIM containing information that was inaccurate. 

Background

In 2004, the Moorhouses sold the remaining part of their Altimarloch property to the plaintiff, who intended to establish a vineyard on the land.  However, the Moorhouses had carried out a subdivision in 2001, and sold half of the land's water permit A and half all of water permit B to a third party.  While this transfer was noted in a valuation report, the plaintiff nevertheless based the decision to purchase on a LIM issued by Marlborough District Council ("MDC"), which contained no records of the water permits being transferred.  As a result the plaintiff subsequently found out they had purchased land that does not have enough water entitlement for their proposed vineyard.  The plaintiff sought damages from the Moorhouses and Marlborough District Council. 

Is the Council liable for issuing a LIM containing inaccurate information?

MDC, which is a unitary authority, attempted to discharge liabilities on several grounds.  Firstly it claimed that water permits are issued by regional authorities under section 30(4)(f) of the Resource Management Act 1991, and the MDC was issuing a water permit in its capacity as a regional authority, and therefore not subject to section 44A which governs territorial authorities.  Wild J rejected the claim as an attempt to artificially separate the Council's roles as territorial and regional authority at its convenience. 

MDC then went on to claim that a disclaimer at the bottom of the LIM limits any liability the council will assume for the use of the LIM.  Wild J disagreed with the claim, and stated:

"The "warnings" are not a general disclaimer of liability.  Any such disclaimer would be ineffective because it would cut across the statutory duty imposed by s44A."

MDC went on to argue that the plaintiff neglected to follow up on some indirect clues and carry out the necessary steps that would have eventually led to the discovery of the water permit situation, and downplayed the decisiveness of the information contained in the LIM.  However, the Court found that the plaintiff was not required to examine information in addition to what is provided under the LIM, given the statutory obligation requiring territorial authorities to keep information in the LIM accurate and up to date. 

Quantum

While the quantum of damages has yet to be determined, the Court has apportioned 34% of the liability to MDC, which is likely to be a significant sum judging by the amount of damages the plaintiff claimed to have suffered.  We note that should a scenario involve a territorial authority as the sole defendant as a result of issuing an inaccurate LIM, such territorial authority may have to front up for all the damages resulting from the mishap, an amount which could be daunting for authorities of any size. 

Implications

The resulting effect of the judgement is the increased demand on territorial authorities to keep information in LIMs up-to-date and accurate at all times, and have adequate insurance policies in the event of liabilities arising out of an inaccurate LIM being issued and relied upon.  As Wild J concluded:

"It will also be necessary for all councils to now take steps to ensure that they are adequately insured against the risk of providing erroneous LIMs."

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Last updated: 31 July 2008

This article is intended to be brief in nature and should be used for information only. It should not be relied on as legal advice.