According to a court judgement, the council approved the 11-storey building at 36-42 Princess Street, which includes the ground floor Coles supermarket, in 1997 after selling the land to Brighton-Le-Sands developer Oceanview Group Holdings Pty Ltd.

The court ruled the council was negligent and breached its statutory duty by incorrectly approving the height as under 25 metres and failing to refer the application to the NSW Fire Brigades.

An independent town planning consultant advised the council in 1996 that draft conditions of consent should include a fire safety system, as was then required by Building Code of Australia (BCA) for developments of more than 25 metres.

The council imposed no such condition when it approved the building application, and admitted the calculation of height, of 24.995 metres, incorrectly excluded mezzanine levels.

During construction, council officers observed car park sprinklers could not be installed because of the ceiling height.

NSW Fire Brigades rejected a report on alternative solutions commissioned by the developer, while Connell Wagner refused to certify that "sprinklers were unnecessary''. The council advised the owners' corporation in 2003 not to commence any major fire safety works.

Justice Clifford Einstein said the council's "inability to bind the exercise of its discretion into the future'' was "obvious''.