Post on 24-Dec-2015
transcript
2
PART VII - ECONOMIC LOSSPART VII - ECONOMIC LOSS
SECTION 1– Negligent and Fraudulent Misrepresentation
SECTION 2– Pure Economic Loss Other than by
Misrepresentation
3
Novel Categories of Negligence
cases not clearly covered by precedent– examples
• nervous shock
• pure economic loss
• public authorities
• non-feasance
5
Duty of Care
Courts are reluctant to find a duty of care owed by a defendant to a plaintiff if the damage suffered by the plaintiff is classified as pure economic loss
6
What is pure economic loss?What is pure economic loss?
it is not physical damage it is not economic loss which is
consequential on physical damage
7
POLICY CONSIDERATIONSPOLICY CONSIDERATIONS
the fear of indeterminate liability disproportion between defendant’s
blameworthiness and liability interrelationship between liability in tort
and contract the need for certainty the effect of insurance
8
Developing approach of the High CourtDeveloping approach of the High Court Hill v Van Erp (1997)
– concept of proximity is no longer supported by a majority of the High Court as a general principle or unifying theme
– the term proximity is still used by some members of the High Court as an umbrella term
9
Novel fact situationNovel fact situation
was the loss reasonably foreseeable? On a consideration of previously decided
cases– what additional factors over and above
reasonable foreseeability are required to establish the existence of a duty of care in the particular category of case
– are there any policy factors that weigh for or against the finding of a duty of care
10
Perre v Apand (1999) 73 ALJR 1190
Establishing a duty of care in case of pure economic loss– no majority view
• four possible approaches– the incremental
» McHugh, Hayne & Callinan JJ
– the legally recognised rights
» Gaudron J
– the protected interests - “salient features”
» Gleeson CJ & Gummow J
– the three-stage Caparo
» Kirby J
11
Categories of casesCategories of cases A number of categories can be identified from
decided cases concerning recovery of pure economic loss– negligent misrepresentation– economic loss resulting from damage to property of
another– failure of a professional person to perform an
undertaking or service properly– economic loss resulting from defective construction of
buildings
12
Continuing relevance of these categories
Following the decision in Perre v Apand– High Court is moving towards synthesising
instances of pure economic loss– identification of factors which will determine
existence of duty of care• may replace approach adopted in past cases
– particularly cases of pure economic loss resulting from negligent acts
• emphasis on features of control and vulnerability
– no uniform approach by members of Court
13
Negligent Misrepresentation
First category of case involving pure economic loss in which the courts recognised the existence of a duty of care– pure economic loss resulting from negligent
words
14
Hedley Byrne v Heller (1964)Hedley Byrne v Heller (1964)
no need to establish a contractual or fiduciary relationship
person giving the information must be possessed of special skill (or hold themselves out as having such skill)
assumption of responsibility by the speaker reasonable reliance by plaintiff no disclaimer of responsibility
15
Position in AustraliaPosition in Australia
MLC v Evatt (High Court) accepted that duty of care could arise
irrespective of contract or fiduciary relationship
Barwick CJ identified features of special relationship which would give rise to duty of care
16
FEATURES OF RELATIONSHIPFEATURES OF RELATIONSHIP
speaker knows or ought to know:– trusted by recipient to give information recipient believes
speaker has capacity to give– the information is of a serious or business nature
speaker knew or ought to have known that recipient intended to rely on the information
reasonable for recipient to seek or accept and rely on speaker advice
no need for recipient to actively seek the information or advice no requirement that speaker have special skill
17
Appeal to Privy CouncilAppeal to Privy Council
speaker must carry on business of giving advice or let it be known the claims to possess special skill in the field
18
Subsequent High Court DecisionsSubsequent High Court Decisions
Shaddock v Parramatta City Council (1981)– no requirement that speaker be possessed of special
skill (not necessary to decide in this case) San Sebastian (1986)
– determined that reliance was the most significant element in establishing proximity
– no requirement that statements made in response to request for information or advice
19
Esanda Finance Corporation Ltd v Peat Marwick HungerfordsEsanda Finance Corporation Ltd v Peat Marwick Hungerfords 1997 High Court decision confirms approach adopted in MLC v Evatt
and San Sebastian
20
Impact of decision in Perre v Apand
? whether decision in Perre v Apand will impact on the factors relevant to the establishment of a duty of care for negligently inflicted pure economic loss resulting from negligent misstatement.
Five Elements
a representation of fact defendant knew representation was false or
recklessly indifferent defendant intended plaintiff to rely on the
misrepresentation plaintiff did rely on the representation plaintiff suffered damage
CBC v Brown
misrepresentation of fact
– defendant gave written advice that customer financially stable
defendant knew representation was false
– question of fact defendant intended plaintiff to rely on representation
– not relevant that statement made to intermediary acting on behalf of a class of persons
effect of disclaimer– cannot exclude liability for deceit
did plaintiff rely on representation?– yes! they would have breached the contract
did the plaintiff suffer damage in fact and law?– loss was direct and foreseeable consequence of
the fraudulent misrepresentation
Krakowski v Eurolynx
Krakowskis – plaintiffs/appellants
Eurolynx– defendant/first respondent
Mallesons (Eurolynx’s solicitors)– second respondent
The representation
an allegation that the disclosed instrument of lease was not the exhaustive contractual arrangement between E and the lessee
falsity of the representation inducement fraud by Eurolynx
27
Next Week
Pure economic loss other than by representation– economic loss resulting from damage to property
of another– failure of a professional person to perform an
undertaking or service properly– economic loss resulting from defective
construction of buildings
Significance of decision in Perre v Apand