Thanks Grace,
So here's the update. Regarding the build, the council sent their boys out there to dig up the stormwater pipe to see if its still in use or if it is dormant. Lucky for me it is a dormant storm pipe and i think my builder is working with the council to grant us to build on top of it and so the building process will only be a week or two delay. ( a good outcome considering the thousands of things that could of arise from this discovery)
With respect to the 'implied easement' the battle is still continuing. I need to find out if the council have a duty of care to update the titles of any stormwater activitiy b/c in victoria they own the stormwater and drainage system.
However, the moral of this story in reality is that I really do believe that s32 does not tell you the whole picture and that you should always validate with the council of what is under your land before you buy...and thats really sad...