BUS107 Commercial Law: Negligence of Wollongong Council Case Study

This assignment analyzes a commercial law case study involving Peter, a real estate developer, and Wollongong Council. Peter purchased land for development, but the council's denial of his application due to a road widening proposal significantly reduced the land's value. The assignment examines whether the council owed Peter a duty of care, whether the council breached this duty by failing to disclose the proposal, and if Peter can recover damages for pure economic loss. The analysis follows the IRAC method, exploring issues of negligence, standard of care, causation, contributory negligence, and voluntary assumption of risk. The conclusion determines the council's liability and Peter's potential to recover damages, supported by relevant legal principles and case law such as Donoghue v Stevenson, Caparo Industries PLC v Dickman, and Imbree v McNeilly.

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Commercial Law

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ISSUE 1
Did a duty of care is owed by Wollongong Council towards Peter?
RULE 1
In order to hold a party liable under a suit for negligence, it is important that the party
must owe a duty of care. This duty imposes an obligation on parties to ensure that they
maintain a standard while taking or not taking certain actions. In Donoghue v Stevenson
(1932) AC 532 case, the court provided the ‘neighbour test’ which can assist parties in
determining whether a duty is present or not. This test provides that the parties must
have a proximity relationship. The second element is that the injuries suffered by the
parties must be foreseeable. In this case, a customer drink remains of a dead snail which
was present in a beer bottle. The court provided that a proximity relationship was
present between the customer and the café owner and the risks were foreseeable; thus,
a duty of care is present (Stephenson, 2012).
APPLICATION 1
Wollongong Council is responsible for managing future projects in the area based on
which it owes a duty towards investors who rely on its certificate to decide whether
they should invest in the area or not. A proximity relationship exists between Peter and
the council since the decision of the council affects the interest of Peter. The loss faced
by Peter is foreseeable as well because the future projects in the area directly affect his
investment by reducing its value.

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CONCLUSION 1
Conclusively, a duty is owed by Wollongong Council to Peter.

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ISSUE 2
Did Wollongong Council fail to maintain a standard of care?
RULE 2
The party who owes a duty of care has to ensure that a standard is maintained to avoid
violation of such duty. The party has to ensure that he/she acts in a reasonable manner
to avoid breach of the duty. The general standard of care requires parties to take
reasonable care in all circumstances. In Paris v Stepney Borough Council [1950] UKHL 3
case, it was held that the parties who failed to act in a reasonable manner which is
expected in the particular scenario could be held liable for not maintaining a standard of
care (Martin, 2014).
APPLICATION 2
Wollongong Council is responsible for handling future projects in the area and includes
information regarding the same in the certificate. A reasonable person would have
included all the relevant information regarding future projects in the certificate since it
can cause damages to parties who are investing in the area. Therefore, the council
breached a duty of care by failing in to maintain a standard of care.
CONCLUSION 2
Conclusively, the standard of care is not maintained by Wollongong Council based on
which the duty is breached.

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ISSUE 3
Did the loss suffered by Peter is caused due to the actions of Wollongong Council and is
this loss is too remote?
RULE 3
In the judgement of Cork v Kirby MacLean Ltd [1952] 2 All ER 402 it was held by the
court that the parties could only claim damages for the injuries which are a direct result
of the negligence of the defendant. The injuries which are not caused due to the failure
of the defendant to maintain a standard of care cannot be recovered by the plaintiff
(Kotecha, 2014). Moreover, in the judgement of Overseas Tankship (UK) Ltd v The Miller
Steamship Co or Wagon Mound (No. 2) [1967] 1 AC 617 the court provided that the
injury which is too remote and not foreseeable cannot be recovered under a suit for
negligence.
APPLICATION 3
Wollongong Council was responsible for including details regarding future projects in
the certificate to ensure that parties investing in the area know about these changes.
The injury caused to Peter is a result of failure of Wollongong Council to disclose
relevant information regarding future road widening proposal. Thus, the injury of Peter
is caused due to the negligence of the council. The loss is also foreseeable since it is a
direct consequence of failure of the council to provide relevant information to the
investors; therefore, damages are not too remote.

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CONCLUSION 3
Conclusively, the negligence of the council caused the loss to Peter and such loss is not
too remote as well.

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ISSUE 4
Can Wollongong Council reduce the amount of damages based on contributory
negligence?
RULE 4
If a person is not careful to ensure his/her own safety, then the court can divide the
payment of damages by reducing the liability of the defendant. In Imbree v McNeilly
[2008] HCA 40 case, the court provided that the injury of the claimant is also caused due
to his failure to ensure his own safety based on which the court reduced the amount of
damages by 30 percent (Kiel-Chisholm and Devereux, 2015).
APPLICATION 4
Peter did not check the certificate before investing in the area based on which he failed
to act safely. However, Wollongong council cannot prove that appropriate standard to
ensure the safety is not maintained by Peter based on which the council cannot rely on
the defence of contributory negligence.
CONCLUSION 4
Conclusively, due to lack of evidence to prove the negligence of Peter, the amount of
damages cannot be reduced by the council based on contributory negligence.

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ISSUE 5
Can Wollongong Council reduce the amount of damages based on voluntary assumption
of risk?
RULE 5
In case the plaintiff is aware of the risk involved in a particular scenario yet he/she
decides to accept the risk, then the damages for the loss suffered by the claimant cannot
be recovered. In Reeves v Commissioner of Police for the Metropolis [2000] 1 AC 360 case,
the court provided that if the party who has suffered the injury was aware regarding the
risk and an agreement was formed between the parties regarding acceptance of the risk,
then a suit for negligence cannot be claimed to recover damages (Priel, 2013).
APPLICATION 5
Peter was not aware of the road widening project which was proposed by the council.
No agreement was formed between the parties regarding acceptance of the risk. Thus,
the defence of voluntary assumption of risk cannot be applied in this case.
CONCLUSION 5
Conclusively, the council cannot reduce the amount of damages by voluntary
assumption of risk.

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ISSUE 6
Can Peter recover damages for pure economic loss from the council?
RULE 6
In order to hold a party liable under a suit for negligence for economic loss, the parties
have to prove that a duty was owed and such duty was breached. In Caparo Industries
PLC v Dickman [1990] UKHL 2 case, it was held that three elements must be present to
recover economic loss in a suit for negligence which includes existence of duty, breach
of duty and just and equitable to provide damages (Golden, 2018)).
APPLICATION 6
The economic loss suffered by Peter is directly caused due to negligence of Wollongong
Council who owed a duty of care. These damages are a result of breach of duty by the
council. It is just and fair to order the council to pay damages for the loss suffered by
Peter.
CONCLUSION 6
Conclusively, Peter can recover damages for pure economic loss from the council.

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REFERENCES
Caparo Industries PLC v Dickman [1990] UKHL 2
Cork v Kirby MacLean Ltd [1952] 2 All ER 402
Donoghue v Stevenson (1932) AC 532
Golden, P. (2018) Who has a duty of care to keep midwives safe?. British Journal of
Midwifery, 26(1), pp.62-63.
Imbree v McNeilly [2008] HCA 40
Kiel-Chisholm, S. and Devereux, J. (2015) The ghost in the machine: Legal challenges of
neural interface devices. The Tort Law Review, 23(1), pp.32-44.
Kotecha, B. (2014) Q&A Torts. Abingdon: Routledge.
Martin, J. (2014) Key Cases: The English Legal System. Abingdon: Routledge.
Overseas Tankship (UK) Ltd v The Miller Steamship Co or Wagon Mound (No. 2) [1967] 1
AC 617
Paris v Stepney Borough Council [1950] UKHL 3
Priel, D. (2013) The Political Origins of English Private Law. Journal of Law and
Society, 40(4), pp.481-508.
Reeves v Commissioner of Police for the Metropolis [2000] 1 AC 360
Stephenson, G. (2012) Sourcebook on Tort Law 2/e. Abingdon: Routledge.