Business & Corporations Law (CLWM4000) Case Study Analysis

This case study examines the legal issues surrounding a real estate developer, Jack Smith, and the Dandenong Council. The central issue revolves around whether the council can be held liable for negligence due to providing inaccurate information in a council certificate, which led to economic loss for Jack Smith. The solution analyzes the elements of negligence, including duty of care, breach of duty, causation, and economic loss, applying relevant case law to determine the council's liability. The analysis considers whether the council owed Jack Smith a duty of care, whether that duty was breached, and if the breach caused Jack's economic loss. The case explores the concept of negligent misstatement and the recovery of economic losses. The conclusion provides advice on Jack Smith's ability to recover his economic loss, based on the legal principles discussed and the application of those principles to the facts of the case.

1
Contents
Solution............................................................................................................................................2
Issue 1..........................................................................................................................................2
Law...........................................................................................................................................2
Application...............................................................................................................................2
Conclusion................................................................................................................................3
Issue 2..........................................................................................................................................3
Law...........................................................................................................................................3
Application...............................................................................................................................4
Conclusion................................................................................................................................4
Issue 3..........................................................................................................................................4
Law...........................................................................................................................................4
Application...............................................................................................................................4
Conclusion................................................................................................................................4
Issue 4..........................................................................................................................................4
Law...........................................................................................................................................5
Application...............................................................................................................................5
Conclusion................................................................................................................................5
Reference List..................................................................................................................................6

2
Solution
Issue 1
Can Dandenong Council be held to be under legal duty to take precautions against Jack Smith?
Law
In common law, there are several legal principles that exist and one of the principles is the law of
negligence. The general philosophy behind the law of negligence is that every plaintiff must be
protected by the defendant while undertaking any of his activities and is analyzed in Hill v Chief
Constable of West Yorkshire [1989]. This principle that revolves around the law of negligence is
developed in Donoghue v Stevenson (1932). In the said case, the plaintiff suffered fvrom injuries
agfter consuming ginger beer which contains a decomposed snail. The House of Lord submitted
that the manufcatrer onws a duty of care towards the plaintiff as the plaintiff is the neighbour of
the defenmanufcatuer. Lord ATkin raised the basic porincipel as to who then a neighboiur is and
thus basic question has resulted in the development of some of the essentail components that are
required to hold any defendant negligent. The components includes duty, breach and damages.
(Khan and Robson, 2012)
This application of law of negligence is also extended to public authorities/council. Now, the
main elements to prove negligence are:
Every defendant has an obligation that by no acts of his any loss should be caused to the
plaintiff.
The duty is applicable towards the plaintiff with whom the defendant is sharing the relationship
of proximity or nearness Mutual lifeand citizen's Assurance Co Ltd V Evatt [1971].
It is necessary that the plaintiffs must be foresee by the defendant reasonably ((Caparo Industries
PLC v Dickman [1990].
The duty is furthermore applied when the plaintiff and the defendant are in special relationship,
wherein the plaintiff is relying ion the advice of the defendant prior acting in any certain manner
(Shaddock and Associates Pty Ltd v Parramatta City Council (No 1). [1981].
These are the elements that must be kept in mind to impose a duty of care on the defendant.
Application
In order to purchase a land for building a township, Jack Smith wanted to make sure that such
land is not covered by any kind of road widening proposal by Dandenong council as the land

3
would cost $2 million and if the road is widened then Jack Smith would suffer a loss of $1
million.
Now, in such situation, since Dandenong council is aware that Jack Smith is relying on the
advice of the council, thus, as per shaddock and Associates Pty Ltd v Parramatta City
Council (No 1), the parties are holding a special relationship between themselves. In shaddock
and Associates Pty Ltd v Parramatta City Council (No 1), the council was in the knowledge of
the information sought by the plaintiff and thus there exists a special relationship amid the
parties wherein the council must provide care to the plaintiff as the plaintiff is relying on the
information from the council. Also, the council is fully aware that the information will affect
Jack and the position of Jack is also foreseeable by the council.
Thus, in every aspect, the elements of duty of care are comply with.
Conclusion
To conclude, it is submitted that both Jack and the council are sharing the special relationship
and the relationship of proximity. Also, the council can foresee the presence of Jack like a
normal prudent man and thus there is presence of duty of care amid the parties.
Issue 2
To evaluate the position of Dandenong council, is the duty is fulfilled against Jack Smith?
Law
The general philosophy behind the law of negligence is that every plaintiff must be protected by
the defendant while undertaking any of his activities. The care that is desired from the defendant
can only be met when the level/standard of precaution that is expected from the defendant in any
given circumstances must be met like a normal prudent man in the given situation. In Hedley
Byrne & Co Ltd v Heller & Partners Ltd [1964], the court held that the level of care is higher
when the danger or risk is high and vice versa. Various factors are construed before evaluating
the standard of care, that is, age of the plaintiuff, literacy, danger, effect, etc. (MacIntyre, 2018)
Further, when the defendant and the plaintiff are in special relationship wherein the plaintiff acts
are dependants upon the information so furnished by the defendant, then, held in Ministry of
Housing and Local Government v. Sharp (1970), that the level of care is much higher in

4
comparison with what a normal prudent man would have acted in the given situation. In Ministry
of Housing and Local Government the negligent acts of the emplyee resulted in causing harm to
the minstry considerng the fact that they both are in sspecial relationhsip and thus the level of
care is high in comparison to the normal human being.
Application
The council is aware that Jack is making his decision of buying the land only on the information
so provided. Thus, it is the duty of the council to make sure that all the relevant information must
be given to Jack. But, considering the situation and the position that council hold in the given
situation, the level of cares that is cater by the council fall short off what a normal prudent man
would have acted in the given situation.
Conclusion
Since the council has not provided its level of care, thus, there is breach of duty of care.
Issue 3
Can Jack Smith have sustained loss because of the breach of duty by Dandenong council?
Law
There are three elements that are needed for the compliance of law of negligence and to hold any
defendant liable for negligence, that is, duty, breach and damage.
The damage so caused can be held to be part of the law of negligence, when, the loss so caused is
the outcome of the breach and so there is presence of the element of causation. Also, the damage
is not far and is not remote. In Sayers v Harlow Urban District Council [1961], the loss caused to
the plaintiff by falling from the toilet roll was held to be too remote the loss that can be predicted
by a normal human being.
Application
Now, the council shares special relationship with Jack and thus is under duty of care. But, this
duty is violated by the council. Now, by not providing the relevant information, Jack suffers a
loss of 1 million which is directly caused because of breach and the loss is also not remote.
Conclusion
It is submitted that all the damage that is caused by Jack is the result of the breach of duty on the
part of Dandenong council and thus the damage is the result of the negligence of the council

5
Issue 4
Can Smith have any power to recover the economic loss so suffered because of the negligence of
Dandenong council?
Law
Every defendant has a duty that his acts must not cause harm to the plaintiff. When this duty is
not cater with and because of such violation, there is damage caused to the plaintiff, then, the
defendant is considered to be negligent.
Now, as per Caltex Oil (Australia) Pty. Ltd. v. The Dredge "Willemstad" (1976), every plaintiff
has the power to receive the economic loss so suffered by him. This loss is the financial loss that
is caused to the plaintiff because of the breach. So, losses in monetary terms are considered as
economic loss and are recoverable under the law of negligence.
Application
Dandenong council owns a duty which was violated and which resulted in loss to Jack Smith.
The economic loss that is caused to Jack Smith is the reduction in the value of the land that is
caused because of the raid widening proposal, that is, 1 million. So, it is the economic loss is
suffered and Dandenong council must pay the same.
Conclusion
Jack has the power to sue Dandenong council for the losses that are caused to him and has all the
power to recover the economic losses so suffered by him.

6
Reference List
Books/articles/Journals
MacIntyre, E. (2018). Business Law, Pearson UK, 22-Feb-2018.
Khan, K and Robson, M. (2012). Clinical Negligence, Routledge.
Case laws
Caltex Oil (Australia) Pty. Ltd. v. The Dredge "Willemstad" (1976).
Caparo Industries PLC v Dickman [1990] UKHL 2
Donoghue v Stevenson [1932] UKHL 100.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964].
Hill v Chief Constable of West Yorkshire [1989] AC 53.
Latimer v AEC Ltd [1952]
Ministry of Housing and Local Government v. Sharp (1970),
Mutual lifeand citizen's Assurance Co Ltd V Evatt [1971] AC 793.
Shaddock and Associates Pty Ltd v Parramatta City Council (No 1). [1981] HCA 59.
Sayers v Harlow Urban District Council [1961].
San Sebastian Pty Ltd v The Minister (1983).