Comunicación para el cambio social:

25.54 Liability for negligent misstatement is simply a variation of liability for negligence generally. Plaintiffs must still show that the defendant owed them a duty of care, that he or she breached that duty and that there was a resulting loss. The Civil Liability Acts also apply to negligent misstatements just as they do to negligence generally. The major difference between the two is whether the person making the misstatement owed the plaintiff a ‘duty of care’: see [25.4] and following.

Assumption of responsibility by the adviser

Reasonable reliance by the advised Negligent misstatement

‘Assumption of responsibility’ and ‘reliance’

25.55 In Australia the question is resolved by asking whether the maker of the statement

‘assumed responsibility’ for its accuracy and whether the plaintiff ‘reasonably relied’ on it. If so, anyone giving advice can be liable, and liability can result from even ‘off-the-cuff ’ advice given in circumstances where the adviser could reasonably have foreseen that the other person would act on it.

Shaddock and Associates v Parramatta City Council (1981) 150 CLR 225; 36 ALR 385; [1981] HCA 59

FACTS The Parramatta City Council was asked by a developer whether land he intended to acquire was aff ected by a road-widening proposal. It advised him that it was not. In fact it was.

ISSUE Was the Council liable?

CASE EXAMPLE

Copyright

LexisNexis.

Sample

only.

DECISION A special relationship had arisen between the parties when the Council gave the developer information or advice in circumstances where it should have realised that it was being trusted to give it accurately. That relationship was suffi cient to create a formal duty of care. The Council was liable.

25.56 The critical importance of both assumption of responsibility and reasonable reliance was well illustrated in San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; 68 ALR 161; [1986] HCA 68.

San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; 68 ALR 161; [1986] HCA 68

FACTS The New South Wales State Planning Authority developed a number of ‘study documents’ for redeveloping Woolloomooloo and they were placed on public exhibition. The plan was later abandoned but in the interim the plaintiff — allegedly relying on the plan — purchased land in the area. It sued the Government, alleging that it had been negligent in publicising the plan.

ISSUE Was the New South Wales Government liable?

DECISION The ‘study documents’ were not a fi rm representation that redevelopment would occur — they were only a guide to what might occur; ‘an expression of present intention and future expectation’. In other words, there had been no ‘assumption of liability’ by the Government nor any reasonable ‘reliance’ by the developer. The Government was not liable.

CASE EXAMPLE

25.57 That reasoning was confi rmed in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241; 142 ALR 750; [1997] HCA 8, where the respondent auditors (Peats) were held not liable for Esanda’s losses when a company to which it had lent money (allegedly relying on its published accounts and Peat’s audit report) could not repay the loans. Esanda argued that Peats knew that loan providers and creditors were likely to be the prime users of audited fi nancial statements and that Peats therefore owed them a duty to ensure that the accounts and audit report were reliable.

The High Court held that the mere fact that it was reasonably foreseeable that creditors might rely on the report was not enough. Esanda also had to show that Peats had owed it a specifi c ‘duty of care’. That would only be the case if it had assumed responsibility for the accuracy of the information when it was, or should have been, clear that Esanda would access the information, would act on it for a serious purpose and would suffer loss if it was inaccurate. As Brennan CJ put it (at CLR 252; ALR 757):

Copyright

LexisNexis.

Sample

only.

In every case, it is necessary for the plaintiff to … prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff … for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into … and thereby risk the incurring of economic loss if the statement should be untrue or the advice … unsound.

If any of these elements be wanting, the plaintiff fails to establish that the defendant owed the plaintiff a duty to use reasonable care in making the statement or giving the advice.

Therefore, to establish liability for negligent misstatement there must be an ‘assumption of responsibility’ by the defendant (in the knowledge or expectation that the advice or information will be acted on) and ‘reliance’ by the plaintiff (in the reasonable expectation that the plaintiff will take due care in providing him or her with that information or advice). See also Tepko Pty Ltd v Water Board (2001) 206 CLR 1; 178 ALR 634; [2001]

HCA 19.

Copyright

LexisNexis.

Sample

only.

Summary

25.58 This chapter set out to explain:

■ the proof required to establish the tort of negligence;

■ what must be shown to establish that a duty of care exists;

■ what must be shown to prove a breach of the duty of care;

■ when a defendant will not be liable for a breach of the duty of care;

■ the three main defences to a negligence action; and

■ what negligent misstatement is.