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HA2022 Business Law

Published : 14-Sep,2021  |  Views : 10


1.Select the party you wish to represent ie. Plaintiff or Defendant; You don’t have to choose both!
2. Research your selected case.
3. Read and understand your selected case.
4. Prepare and present a summary of the case and your selected party’s arguments.
1. Nagel v Rottnest Island Authority (1993)
2. Modbury Triangle Shopping Centre v Anzil (2000)
3. Roads and Traffic Authority v Dederer (2007)
4. Esanda Finance v Peat Marwick Hungerfords (1997)
5. Fallas v Mourlas (2006)
6. Rogers v Whitaker (1992)
7. Caltex Oil v Dredge (1976)
8. Perre v Apand (1999)


Shaddock V Parramatta City Council (1981) ALR 385

Issue: In Shaddock V Parramatta City Council (1981), Shaddock wanted to purchase a property. This property was located in an area that was under the governance of local council. Therefore, oral inquiries were made by the solicitor of Shaddock, and at the same time, he also asked the question from the Council by using the written standard form to ask if any proposal was present regarding this property according to which the roads in that particular area were going to be widened. In its reply, the Council had carelessly mentioned that it had not made any proposal for widening the roads in the area. However, the reality was that in fact such a proposal was present to widen the roads in that area. Consequently, the value of the property suffered a steep decline due to the proposal. Under these circumstances, the appellant claims that this loss was caused to them as they had relied on the erroneous information that was given to them by the Council, negligently but innocently. While deciding the case, the trial judge arrived at the conclusion that even if the respondent was careful when it erroneously mentioned that there was no such proposal but in this case, there was no duty of care present towards the appellant. The Court of Appeal also confirmed this verdict.

The result was that although a number of significant questions were present before the court, but the most important issue was related with the duty of care of the respondent towards the appellant concerning its negligently misstatements. Another issue before the court was to consider if the principle of liability that applies to negligently misstatements can also be applied in case of public bodies. Therefore the court has to consider the circumstances where it can be held that local government bodies are also responsible for the information that they provide to the general public.

Rule: According to the tort law, negligently statement can be described as an inaccurate statement, which has been made honestly, but carelessly. Generally, such as statement is made in the form of an advice. Such advice is given by one party having special skill or knowledge to the other party, which does not have the skill or knowledge. There are several different types of torts, and the roots of some of these can be traced back to the medieval times. Therefore these torts have been recognized since then. For the purpose of proving that one party has made a negligent misstatement, the other party is required to establish that the elements that are considered as essential for negligence are present (Hayes,1979). In order to achieve this objective, evidence needs to be presented in the court for establishing that the other party has committed a tort.

Either it was intentional or negligence. Similarly, the other requirement is to establish that an injury or damage was caused to the plaintiff due to start an act. As a result of the reason the the purpose of law of tort is to allow compensation to the innocent party instead of giving punishment to the wrongdoer, generally the principle is applied by the courts according to which the purpose is to place the victim in the same position where it would have been if the wrongful act would not have taken place (Seddon, 1981). It is also required in such cases that it should be approved before the court that one party owed a duty of care. This duty can be explained as the legal duty of care that one party owes towards the other party for the purpose of establishing liability under the tort of negligence. Therefore the duty of care requires that reasonable care should be exercised by a person. In this regard, reasonable care can be described as that would be used by any other reasonable person.

Due to this reason, it can be clearly stated that for the purpose of establishing liability for negligent misstatement, it should be established by the plaintiff that the defendant owed a duty of care to the plaintiff (Gravells, 1978). The next step is to fulfill the three stage test. This test is used for establishing that the defendant owed a duty of care to the plaintiff. In this case, the court has to see if under the circumstances, the defendant would have reasonably foreseen that injury or harm may be caused to the plaintiff by his act or omission. Similarly, there is another requirement, according to be just has to be considered the any factual or circumstantial association existed between the parties (Cane, 1981).

For establishing the duty of care, it has to be seen if the defendant could have foreseen that the plaintiff was vulnerable to harm as a result of such conduct. Hence, the above-mentioned requirements have to be satisfied for establishing that review of care was owed by the defendant in the case involving negligence or negligent misstatement. As the main purpose of the law of tort is to compensate the victims, the courts are under an obligation to see if a loss or injury has been suffered by the claimant due to the actions of the defendant (Stevens, 1964). After it is determined that the defendant owed a duty of care and there has been a big job this duty by the defendant, the court has to consider if any loss as being caused to the plaintiff. The 'remoteness test' requires that the connection of such loss should be evaluated against the standard of care breached by the defendant.

The liability of a party for making a negligent misstatement has been established by the court in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. In this case, a contractual or fiduciary relationship did not exist between the parties, that was earlier considered as necessary for invoking the duty of care. Similarly, the term 'special relationship' had been used by the court in this case, but it did not contribute much in establishing certainty in this area of law. But in this case, it has been stated by the court that for the purpose of establishing the presence of a special relationship, the party that had received the advice should have depended on the other party that such party will exercise due care for giving the advise and under the circumstances, it can be said to be reasonable that such party had relied on the other party in this regard.

Generally, it is implied in context of trade and commerce but it can also be implied in social context. Therefore, it is required that it should be apparent to the party giving the advice that the party receiving the advice is going to rely on its skill and judgment. Similarly in utual life and citizen's Assurance Co Ltd V Evatt [1971] AC 793 there are many who believe that unnecessary gloss has been placed on this formulation of duty by the Privy Council. Lord Diplock, who had delivered the majority judgment, stated that for the purpose of establishing that the duty exists in a particular case, the subject matter of inquiry requires that skill or competence should be applied that is beyond the level of skills that would be possessed by any reasonable person. In this context, it is also necessary that the party who is giving the advice should consider itself to have such scale and competence.

Similarly, it is also required that the party is willing to exercise such scale or competence. This can be seen in cases where the party, giving the advice is in the business of giving advise regarding such matters. It can be expressed in cases where the party has stated that the same standard of skill or competence will be applied that would have been applied by some other person who regularly gives advice in such matters. The duty of care will also exist if the party who is going to provide the advice, has some financial interest in the transaction regarding which the advice is being given.

Application: Therefore in the present case, it was noted by Gibbs CJ that it is not necessary to determine between the opposite views that have been mentioned in Evatt's case. However, it was also stated that it is not necessary that the defendant should be dealing in the business of giving such advice or the defendant should have held himself as such for the purpose of proving that the duty of care was present. Therefore the decision in Evatt's case has been distinguished on the grounds that it was not related to the public body that had to give answers to the queries made by the people. Our report stated that it can be considered that the Council falls within the parameters of the test that has been mentioned in Evatt's case as there is not much difference present between a public body and a business that gives advice concerning financial matters.

However, as opposed to Hedley Byrne and Evatt, it needs to be mentioned that the defendant in the present case was a public body. Still, the court did not face any problems while applying the principles that have been mentioned in these two cases to Parramata City Council. For this purpose, the court relied on the case titled Ministry of Housing v Sharp(1970) . As an authority that supports the extension of duty of care. But a difference exists between these two cases. In the other case, a statutory duty was present on part of the local council to register change on land but the council had failed to do so. But in the present case, it was noted that no statutory duty was present on part of the defendant to answer questions that have been asked by the solicitor of the plaintiff concerning the presence of a proposal to widen roads. Consequently, in this case the court expressly mentioned that the duty can be extended to government departments, local authorities or statutory authorities.

While a distinction was made by the Court of Appeal between public bodies having the statutory duty to give information and the bodies in case of which such duty is not present. The Court of Appeal held in this regard that if the duty to be careful can be imposed on the bodies where such statutory duty has not been imposed, it will result in severe restriction of the information that is given to the public by these bodies. It was also argued in this case that excited duties imposed on public bodies, they would be suffering from an undue burden. However, while dealing with this argument, Mason J held that this assertion was not supported by evidence. He further mentioned that as responsible public bodies, exercising the tasks that were variably for the people, these bodies will continue to provide information as only these bodies have access to such information. The court also recognize the fact that the public bodies may make efforts to escape liability or they may ask for a fee to provide such services, but these matters were not considered as relevant in the present case.


Under these circumstances, the court held that Parramata City Council owed a duty of care to the plaintiff. Consequently, the court held that the Council was liable to pay damages to the amount of $173,938. It was also helped by the court that the reader specialized nature of information and also giving you the importance of such information for the owner or the likely purchaser of the property, and also as a result of that it was related with the authority of the Council to exercise public functions and powers, a solid basis is present to held that the information was sought in case of a serious matter and as a result, a duty of care was present while giving such information.


Cane, P (1981) “The Metes and Bounds of Hedley Byrne”,55 ALI 862, 871

Gravells, N P (1978)“Negligent Misrepresentation: A Restrictive Approach” 94 LQR 334, 338

Hayes, R. (1979) “The Duty of Care and Uability for Purely Economic Loss” 12 Melb UL Rev 79, 118

Seddon, N C (1981) "”Fault Without Liability-Exemption Clauses in Torts”55 ALJ 22, 32-33.

Stevens, R (1964) “Hedley Byrne v Heller: Judicial Creativity and Doctrinal Possibility” 27 Mod L Rev 121

Case Law

Hedley Byrne v Heller [1964] AC 465

Ministry of Housing v Sharp [1970] 2 QB 223

MLC v Evatt(1970) 122 CLR 628

Shaddock(L) &Associates Pty Ltd v Parramatta City Council(1981) 36 ALR 385

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