Hypothetical ILAC Question: Negligence in Property Investment Advice

This case study examines a hypothetical scenario involving Charles, a property investment advisor, and Andrew, his client. Andrew seeks Charles's advice on a property investment opportunity, and Charles, in his haste, fails to conduct a flood search. Based on Charles's advice, Andrew invests his life savings in the property, which is subsequently damaged by a flood. The analysis focuses on whether Charles owed a duty of care to Andrew and whether his advice constituted negligent misstatement. The study applies relevant legal principles, including the elements of fault, damage, and remedy, as well as the criteria for establishing a duty of care. It concludes that a special relationship existed between Andrew and Charles, making Charles liable for damages under the tort of negligent misstatement, as his insufficient information led to Andrew's financial losses. The case highlights the importance of professional diligence and the potential consequences of failing to meet the required standard of care.

Running Head: MISSTATEMENT
Hypothetical ILAC Questions
Name
Affiliation
Instructor
Date

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Misstatement
Misstatement
A tort is defined as an omission or a wrongful act that leads to civil actions in court against a
party that omitted or performed a wrongful act. In this scenario, the misstatement is a tort
which entails the making of inaccurate statements in an honest way but also in a careless
manner. This is usually a form of advice from a professional advisor to a party that does not
possess the desired knowledge or skill. In this particular scenario, Charles is a professional
who deals with property investment and property valuation. He is also the sole business
owner of “Homeguru Property Investments”. As such, this shows that he has the
qualifications as a professional, (Roberts, 2017, 23). On the other hand, Andrew seeks
Charles’ opinion about “a very exciting property investment opportunity on the Gold Coast”
hence the need for advice from Charles whom he has heard about his property valuation
and property investment business. Basing on Charles’ advice, Andrew invests his entire life
savings ($800,000) in the Gold Coast Property, (Rose, 2017, 77). This was after Charles had
conducted a Standard Property Search, forgetting to do a flood search of the property.
Issues
From the facts above, the main issues that come into light are: whether Charles owes a duty
of care to Andrew. A determination of whether his advice was a misstatement hence the
need to take liability and pay for damages will also be made
Law
To start with, the element of the fault has to be established. This seeks to answer whether
Charles negligently committed the act of misstatement, or intentionally. Secondly, actual

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Misstatement
damage has to be assessed. Andrew has the onus of proving that he suffered damages or
loss as a result of the tort by Charles who is the tortfeasor in this case. Lastly, Obtaining a
remedy is an element here too. Compensation is part of the law of Torts and victims are
usually compensated instead of punishing who is wrong or guilty. This aims at putting
Andrew back into his initial life where he could enjoy his life savings, (Douglas, 2018, 490).
After this consideration, the duty of care is determined. For one to be held liable, the
defendant must owe a legal duty of care to the plaintiff, (Zipursky, 2018, 1). A proper
definition here is the duty to take or maintain reasonable care or skill which can be done by
a reasonable person. Andrew has to prove that Charles had a duty of care. For this to be
proven, three elements have to exist. First, foreseeability should be achieved. This entails
the chances of harm or damages being caused because of Charles’ omission to conduct a
flood search. In case he had conducted it, Andrew could not have invested in the flood-
prone are thus avoiding losses. The second test is proximity. A physical link has to be
established between Charles and Andrew. Here, the two met in two occasions, second being
to get the full details of the investment. The last is a vulnerability. Charles’s omission made
Andrew vulnerable to the harm that ensued. As such, these elements exist in entirety.
Application
Standard of care is provided by chapter 2, Division 1 of the Civil Liability Act 2003. One
breaches a duty if leads to the occurrence of a risk which is foreseeable, the risk is
significant and reasonable actions or precautions should have been taken by a professional
like him. Further, it was highly probable that Andrew could incur losses because there was
no care taken by Charles when he did not conduct a flood search. Precautions could have
been taken so that losses could be avoided.

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Misstatement
Conclusion
A special relationship exists between Andrew and Charles because Charles is a professional
in his field hence he should avoid mistakes. Andrew on the other hand, sought his advice so
that he could make a sound decision- basing on Charles’ expertise. The information
provided by Charles was not sufficient hence the damages caused by floods leading to the
depreciation of property value. As such, Andrew is eligible for damages from Charles under
the negligent misstatement as a Tort.

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Misstatement
References
Douglas, M. (2018). Characterisation of breach of confidence as a privacy tort in private
international law. University of New South Wales Law Journal, The, 41(2), 490.
Roberts, M. (2017). Negligent Misstatement in the Court of Appeal. 23
Rose, A. M. (2017). The Reasonable Investor of Federal Securities Law: Insights from Tort
Law's Reasonable Person & Suggested Reforms. J. Corp. L., 43, 77.
Zipursky, B. C. (2018). Expressivism, Corrective Justice, and Civil Recourse. Jotwell: J. Things
We Like, 1.