Tort of Negligence: Case Study of Peter the Real Estate Developer

This case study discusses the tort of negligence in the context of Peter, a real estate developer, and the Wollongong City Council. It covers the duty of care, breach of standard of care, and economic loss. The council's negligence led to pure economic loss for Peter, and he is entitled to compensation. The article cites relevant Australian common law cases to support the arguments.

Business and Corporations Law

Case Study: Peter the Real Estate Developer
Issue 1
In order to successfully sue the Wollongong council for economic loss and negligence it is
important for Peter has to prove that the council owed him a duty of care.
Rule 1
Under the Australian common law regarding the tort of negligence it has been stated that if due
to the act or conduct of a third party which is unreasonable or careless in nature some other
person suffers a loss which might be physical or economic loss then the wrongdoer is to
compensate the victim. It is clear that Peter in this case suffered pure economic loss. In this case
Wollongong council had a duty of care towards peter in providing the relevant information.
(Barker et al., 2012). Due to the incomplete information rendered by the council in the certificate
peter bought that piece of land and later on the proposal got rejected. It is clear that he has
suffered pure economic loss as half of the property will go down in a road widening project.
Hence the common law states that he should be compensated for the economic loss. Being the
area council Wollongong had the responsibility of rendering accurate information to him(Luntz
et al., 2017). In this case the Wollongong council showed a completely non caring attitude
towards Peter by not informing him the issue of road widening proposal. Even though there was
no physical or property damage in this case there was pure economic loss which has to be
considered equal to the above mentioned losses (Deakin, Johnston and Markesinis, 2012). The
caltex 011 aust ltd v the dredge Willemstad [1976] provides the right platform to discuss
economic loss in this situation. The court of law in this case gave a strong reply stating that
economic loss has to be considered while calculating the extent to which the plaintiff was
prejudicially affected.
Application 1
In order to establish a case on the ground of negligence it is essential to prove that respondent
could have foreseen the damage that occurred or a man with reasonable prudence could have
predicted the same (Epstein and Sharkey, 2016). In the present scenario the council was much
aware that in the same block a road widening proposal exists but still due their callous attitude

they overlooked the matter and didn’t mention the same to peter. As a result of which peter
bought the land hoping of no encumbrance in the same. Hence it is clear that the Wollongong
City Council were not able to act as reasonably which is extremely important for a fair deal
where no party is affected especially from the economic point of view (Levine et al., 2016).
Conclusion 1
To conclude it could be stated that Wollongong City Council owed a duty of care to inform Peter
about the road widening project and hence there was clear negligence on their part that led to
pure economic loss and the council is liable to be sued for this (Stickley, 2016).
Issue 2
To be able to successfully sue Wollongong City Council for tort of negligence it is important to
prove that the council breached the standard of care.
Rule 2
As per the tort of Negligence rule in the country it is considered negligent behavior of a party if
it is able to foresee a problem and not do anything about it. In this case the Wollongong council
clearly knew that the block of land purchased by Peter has some part of it involved in road
widening project still it provided Peter a certificate giving him the green signal to continue with
the project (Rhee, 2012). The risk involved in the case was not insignificant in nature, they were
aware that based on the council certificate peter is going to proceed with the purchase of the
land. Christopher v MV "Fiji Gas" (1993) and Perre v Apand (1999) 198 CLR 180 are two of
the cult cases that decided to go against the claim stating that the defendant did not have the
means of knowledge to see the damage or economic loss of the claimant which made it easier for
them to actually give the verdict, but in this case it is clear that Wollongong Council in-spite of
knowing that the road widening proposal includes some part of the land of Peter that he recently
purchased gave a clear certificate for the land which is making it intentional from the side of the
council (Fisher, 2012). Hence the Caltex case have rise to a exclusory rule which helped to
develop a strong point for the cases related to pure economic loss where there is no physical
injury or property damage. A major case that establishes the rule for economic loss in case of
negligence is Hedley Byrne & Co Ltd v Heller & Partners Ltd where it was clearly announced

that when a party provides a statement and is relied upon by the other party due to the expertise
possessed it becomes the job of the other party to be more proactive which was lacking from the
side of Wollongong Council. There is clearly a fiduciary relationship of trust and confidence
which was breached in this case and Peter ended up with pure economic loss (Miller and Perry,
2012).
Application 2
The action of negligence is clear on the part of the council and for a man like Peter who dealt
with the council in a fair manner was at the receiving end. It was the legal obligation on part of
Wollongong council that they render appropriate information to any person asking for the same.
But while giving clearance certificate to the applicant peter they missed out the main information
regarding the land and were well aware of the consequences for the same (Goldberg, Sebok and
Zipursky, 2016). Hence the council was at major fault in providing incomplete information.
Conclusion 2
To conclude it could be said that there was breach in taking standard care while undertaking the
duty by the council. It has been the breached by the council which eventually led to Peter
suffering pure economic loss and hence he is clearly entitled to receive compensation from the
council (Luntz et al., 2017).
Issue 3
Wollongong Council had possibly argued that the loss suffered was not physical in nature hence
it cannot come under the purview of negligence under tort.
Rule 3
While calculating the damages that occurred in tort of negligence both kinds of losses has got the
recognition under the Australian common law that is the physical injury or injury to property as
well as the economic loss. The present case is unlike Hedley Byrne & Co Ltd v Heller &
Partners Ltd where there was negligent misstatement but in this case the council provided the
certificate on the merit of the land and hence it is not negligent misstatement (Bouckaert and De

Geest, 2013). Due to this negligent misstatement peter had to suffer economic losses which is
very high in amount. The argument put forwarded by the council was completely vague.
Application 3
In this case just because of the clearance certificate rendered by the council peter bought that
land. Even if the proposal of road widening came later on after the issuance of the certificate then
also it was the sole responsibility of the council to inform about the same to peter within the
stipulated time. This was not done by the council. (Zamir, 2012).
Conclusion 3
Hence it can be very well stated that the council is responsible for the loss suffered by peter and
his claim for the same is very reasonable enough. There was no voluntary assumption of risk
involved.

References
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Goldberg, J.C., Sebok, A.J. and Zipursky, B.C., 2016. Tort Law: Responsibilities and Redress.
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Zamir, E., 2012. Loss aversion and the law. Vand. L. Rev., 65, p.829.