Currently, the city of Grimchester is liable for any injury incurred because of a city sidewalk in need of repair or maintenance.
The Now = (currently)
Injury incurred because Grimchester sidewalk needs repair → is liable or maintenance
The Should
Didn't know about should not danger beforehand → be liable or Didn't negligently fail to fix it
Evaluate
Since this unusual question stem wants something where Grimchester would currently be liable but shouldn't be, we need a situation where an injury occurs because a sidewalk needs repair/maintenance (currently liable) but Grimchester doesn't know about the danger beforehand or isn't negligent in trying to fix it (shouldn't be liable).
It seems like the middle sentence is teasing us with a hint: there are so many sidewalks that it's impossible to hire enough people to locate and eliminate every potential sidewalk danger.
Goal
We want a situation where someone gets injured on a Grimchester sidewalk, but they either didn't know about it yet or weren't able to get people there in time to fix it (not because of negligence, but just because they're spread too thin with resources).