The details contained in a LIM (Land Information Memorandum) report often have a significant impact on whether or not you purchase a property. A LIM contains information about protected trees and buildings, building and resource management compliance issues, land use consents, subdivision consents, building permits/consents, land features such as flooding and storm water, environmental protection issues, soil contamination, land stability and other general information.  All of these things affect what you are able to do with the property once purchased, and therefore impact on the value of the property.

But what happens if it turns out that the LIM was not entirely accurate? If the Council has omitted pertinent details from the LIM that affects the value of your property, then you may be able to sue the council which issued the LIM, and recover the value of your losses.

The issue was considered in a recent Supreme Court decision  Altimarloch Joint Venture Limited v Marlborough District Council & Ors (Unreported ). The Supreme Court reaffirmed the decision of the Court of Appeal that a local Government Council can be held liable for negligent misstatements made in a LIM.

The Court concluded that while the Council could not be held liable for information provided over the counter, it could be held liable for information provided in a LIM.

In the  Altimarloch  case, the purchasers had relied on the LIM to ascertain whether the water rights attached to the land.  The purchasers needed a certain amount of water to be able to erect a winery business on the property. The water rights disclosed on the LIM had previously been sold but the Council had not updated their records. The value of the land was detrimentally affected by the loss of these water rights.

In this particular case, the Council was not called upon to contribute to the losses suffered by the purchasers as the purchasers had been able to recover the losses from the vendors.  However, the Supreme Court concluded that the Council could be liable from negligently issuing a LIM. Therefore if the plaintiffs’ losses had not been recoverable from the vendors, then the Council would have had to pay.

The  Altimarloch case has created a huge interest among Councils which may lead to Councils making more effort to ensure that the correct information is provided in a LIM report.

Smith & Partners have acted successfully for several clients to bring cases against Council where there have been issues arising out of errors or misstatements in LIM reports.

To discuss your options in  property disputes, please contact our property disputes team by phone on 09 836 0939 or email partners@smithpartners.co.nz