Commercial Law Case Study: Duty of Care of Wollongong Council to Peter

This case study analyzes whether Wollongong Council owed a duty of care to Peter, focusing on the tort of negligence. The analysis examines the elements of duty of care, breach of duty, and causation of loss, citing relevant case law such as Donoghue v Stevenson and Caparo Industries PLC v Dickman. The document addresses whether the council breached its duty by failing to include information in a certificate, and whether Peter suffered economic loss as a result. Defenses such as contributory negligence and voluntary assumption of risk are also considered. The conclusion finds that Wollongong Council owed Peter a duty of care, breached this duty, and is liable for economic losses, while the defenses are not applicable.

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Commercial Law

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Issue 1
Whether Wollongong Council has a duty of care towards Peter?
Rule 1
The tort of negligence focuses on protecting an individual, property and economic interest of
a party from damages which are caused because another person failed to take reasonable care.
A person is only liable for negligence if such person owes another party a duty for ensuring
proper care and breach of which resulted in causing damages. A good example was given in
Donoghue v Stevenson [1932] AC 562 case in which the plaintiff gets sick after drinking
from a bottle in which decomposed remains of a snail were present. The court held a duty is
owed to customers and the defendant is liable for breaching such duty (Harpwood, 2009).
Lord Bridge provided “Caparo test” in order to determine whether someone has a duty in
Caparo Industries PLC v Dickman [1990] 2 AC 605 case. There are three elements in this
case which judge a person’s duty of case: proximity relationship, reasonable reason and
reasonable foreseeability to impose such duty.
Application 1
Wollongong Council owes a duty to care towards people who purchase property or land in
the Wollongong local area. The council has a duty to include the future proposal in the
certificate to avoid economic loss of people. Wollongong Council has proximity relationship
with people who make purchasing decisions based on its certificate; therefore, the council
owes a duty of care to Peter.
Conclusion 1
In conclusion, Wollongong Council owes Peter a duty of care because a proximity
relationship exists between parties.

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Issue 2
Whether duty of care was breached by Wollongong Council due to not meeting standard of
care?
Rule 2
In case a party failed to meet appropriate standards which resulted in causing damages to
another party, then it is considered breaching of duty for ensuring proper care. In Paris v
Stepney Borough Council [1950] UKHL 3 case, the court held that breach of duty occurs
when a person fails to take precautions that would be reasonable for a prudent person to take
(Greene, 2013).
Application 2
Wollongong Council did not include the information about road widening project in their
certificate even when they have a duty of care to ensure that complete information is included
in the certificate. As a reasonable person, they should have included such information to
avoid people from misguiding.
Conclusion 2
Therefore, Wollongong Council has breached the duty of care by not take precautionary
measures to provide complete information to people.

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Issue 3
Did Peter suffer loss due to Wollongong Council’s actions or are they too remote?
Rule 3
It is necessary that parties have a proximity relationship to establish the tort of negligence as
given in Perre v Apand Pty Ltd [1999] 198 CLR 180; in this case, the plaintiff faces the
consequences as a direct result of the defendant failure to fulfil the duty of care. Another
example was given in Sutherland Shire Council v Heyman [1985] 157 CLR 424 case in
which the court held that parties cannot demand damages for breach of duty in remote or non-
predictable losses (Goudkamp, 2015).
Application 3
The purchasing decision of Peter was directly affected by the certificate of Wollongong
Council, and due to their failure to provide complete information, Peter suffered losses.
Conclusion 3
Thus, Wollongong Council is liable for breaching the duty of care, and the losses are not too
remote because they are direct consequences of Wollongong Council’s actions.

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Issue 4
Can Wollongong Council claim for contributory negligence?
Rule 4
In Australia, the contributory negligence resulted in reducing the number of damages which
the aggrieved party can claim in case of the tort of negligence. In Imbree v McNeilly [2008]
HCA 24 case, the court held that to impose contributory negligence such negligence must
assist in causing damages. In contributory negligence, the party can only be liable if he/she
failed in taking reasonable care of own safety (Yihan, 2009).
Application 4
Although Peter failed to read the certificate of Wollongong Council before making his
purchase decision which can be constituted as contributory negligence, however, only he
knows that he did not read the certificate, therefore, Wollongong Council cannot prove the
contributory negligence of Peter.
Conclusion 4
Thus, due to lack of evidence, the defence of contributory negligence cannot be applied by
Wollongong Council.

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Issue 5
Can Wollongong Council claim for voluntary assumption of risk defence?
Rule 5
As provided in the judgement of White v Blackmore [1972] 3 WLR 296 case, a person cannot
demand damages for negligence if he/she recognise and accept the risk himself based on the
defence of voluntary assumption (Mullins, 2013). Just knowing about the risk is not
voluntary assumption; the party must have accepted the full risk of injury by not taking
appropriate actions which a reasonable person could have taken to avoid such risk. The
elements of voluntary assumption include voluntary, agreement and knowledge.
Application 5
Peter did not give his consent to Wollongong Council regarding the risk and no contract
constructed between the parties for sharing of the risk.
Conclusion 5
Thus, Wollongong Council cannot rely on the defence of voluntary assumption.

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Issue 6
Can Peter claim for economic loss based on negligence of Wollongong Council?
Rule 6
Generally, a duty of care is not owed to a party for avoiding any losses which are purely
economic and where the financial loss is not resulted due to damage of property or personal
injury which occur due to the negligence of parties. However, “Caparo test” given in Caparo
Industries PLC v Dickman case, provided three elements based on which parties can demand
damages for economic losses which are caused due to negligent misstatement (Mullender,
2009).
Application 6
The three elements given in Caparo tests including reasonable reason, proximity relationship,
and reasonable foreseeability to impose such duty are fulfilled in this case. Wollongong
Council has a proximity relationship with Peter since his purchasing decision can be affected
by their decision. The element of reasonable foreseeability is available, and it is reasonable
reason to impose the duty of care.
Conclusion 6
Thus, Peter can claim for economic losses from Wollongong Council based on their
negligence.

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References
Caparo Industries PLC v Dickman [1990] 2 AC 605
Donoghue v Stevenson [1932] AC 562
Goudkamp, J. (2015) A Revolution in Duty of Care?. Law Quarterly Review, 131, pp. 519-
525.
Greene, B. (2013) Course Notes: Tort Law. Abingdon-on-Thames: Routledge.
Harpwood, V.H. (2009) Modern Tort Law 7/e. Abingdon-on-Thames: Routledge.
Imbree v McNeilly [2008] HCA 24
Mullender, R. (2009) Negligence, Public Bodies, and Ruthlessness. The Modern Law
Review, 72(6), pp.961-983.
Mullins, G. (2013) Voluntary assumption of risk. Precedent (Sydney, NSW), (115), p.25.
Paris v Stepney Borough Council [1950] UKHL 3
Perre v Apand Pty Ltd [1999] 198 CLR 180
Sutherland Shire Council v Heyman [1985] 157 CLR 424
White v Blackmore [1972] 3 WLR 296
Yihan, G. (2009) Imbree v. McNeilly: A View from Singapore. Sing. J. Legal Stud., p.283.