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

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