Boundary fire walls (or lack of)

Hi All
Has anyone heard of this one before?
The normal methods of handling an exposure to an adjoining Lot with a common owner are to amalgamate the titles, or install a fire wall, or insert an encumbrance on both Lot titles, but on the following occasion none of these occurred as follows:
A party purchases two adjoining industrial Lots
The party erects a large cold store adjacent to the common boundary on one of the Lots.
Council agrees that the undeveloped Lot is not “other property”, therefore a fire wall is not required.
A CCC is applied for, and Council state that *We therefore conclude an encumbrance on the titles is not required and the boundary wall of the subject building can remain un-fire rated throughout its life despite any future change of ownership of the adjoining Lot after the building has been completed and Code Compliance certificate issued".
The original party saved $500K by not building a fire wall, but severely disadvantaged any future purchaser of the undeveloped Lot.
A month later the undeveloped Lot was purchased by my client. The property file for the undeveloped Lot is huge, and my client did not pick up that the received level of radiation at 1.0m over the boundary is 120 kW/m2, not 16 kW/m2.
Effectively, from the above, if you purchase two undeveloped Lots, and build on one of the Lots, and then sell the undeveloped Lot, you do not need to supply a fire wall - according to this Council.
Is this legal? What am I missing? Comments please
Paul C