Commercial Law: Duty of Care and Negligence Case Study Analysis

This case study examines a negligence claim against Wollongong Council by a real estate developer, Peter, who suffered economic loss due to an incorrect certificate issued by the council. The analysis covers key elements of negligence, including duty of care, breach of duty, causation, and remoteness of damage. It determines that the council owed a duty of care to Peter, breached that duty by failing to provide accurate information, and that Peter suffered direct economic loss as a result. The study also considers and dismisses the defenses of contributory negligence and voluntary assumption of risk. Ultimately, the case study concludes that Peter has grounds to sue Wollongong Council for negligence. Desklib offers similar solved assignments and resources for students.

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Issue 1
The first issue is to determine if Wollongong Council owes a duty to care towards Peter or
not as this is one of the key elements to prove the tort of negligence.
Law 1
In order to determine if a duty to care exists or not, the neighbour test ought to be used which
has been outlined in the famous Donoghue v Stevenson [1932] AC 562 case. As per this case,
a duty to care is owed to all the neighbours. A neighbour may be defined as any entity that
can be adversely impacted on account of the decision to take action or decide against acting
by the action doer.The critical element is that there should be reasonable chances of the other
party suffering damage or the damage should be foreseeable (Davenport and Parker, 2014).
Application 1
In the given scenario, when purchasing the block of land, Peter (a real estate developer)
obtained the certificate from the Wollongong Council in order to ensure that there are no
upcoming projects which can adversely impact his plans of developing apartments on the
land block. It is evident that Peter can be adversely impacted and this is foreseeable for the
Council at the time of issuing the certificate. Considering that the act of issuing an incorrect
certificate can impact a real estate developer, hence there is presence of duty to care on the
part of the
Conclusion 1
A duty to care does exist on the part of Wollongong Council directed towards Peter.
Issue 2
Another issue is whether there has been a breach of duty to care by Wollongong Council
based on their conduct towards Peter.
Rule 2
It is imperative that reasonable measures must be taken by the party bestowed with duty to
care. These would refer to the actions which any reasonable person under the given scenario
or circumstances would take so as to ensure there is no harm to the neighbour or potential

plaintiff. This has been highlighted in Vaughan v Menlove (1837) 3 Bing. N.C. 467 case
(Pendleton and Vickery, 2015).
Application 2
In the given scenario, it is apparent that Wollongong Council has breached the duty to care
that they owed to Peter considering the fact that while issuing the certificate they failed to
highlight the road widening proposal which was in place. It is reasonable to expect that
before the certificate being issued, the same should have been verified so that complete and
accurate information was presented. However, the council failed to take this measure which a
reasonable person would undertake in the situation presented.
Conclusion 2
There has been a breach of duty by Wollongong Council as it failed to take reasonable
measure to cross- verify the certificate before issuing the same.
Issue 3
Another issue is for Peter to prove that the losses suffered by him are not too remote and are
directly attributed to the actions of Wollongong Council.
Rule 3
An imperative element of tort of negligence is that the plaintiff should have suffered losses
and the same is attributed to the action or inaction of the defendant. As highlighted in Re
Polemis & Furness Withy & Company ltd. [1921]3 KB 560 case, the damage not being
remote can be established from the fact that the plaintiff would not have suffered to the same
extent if the defendant had not breached the duty to care (Latimer, 2016).
Application 3
In the given situation, damage in the form of economic loss has been suffered by Peter. This
is because a significant portion of the plot would be taken by the council for road widening. It
is apparent that this economic damage suffered by Peter is not too remote considering the fact
that if the certificate had mentioned about the road widening, then Peter would not have
suffered any economic loss.

Conclusion 3
The damages suffered by Peter are not remote.
Issue 4
It needs to be clarified if in order to limit potential liability, Wollongong Council can rely on
the defence of contributory negligence on part of Peter.
Rule 4
Contributory negligence arises when the claimant has acted in a negligent manner which is
responsible for the damages or losses incurred. This is a partial defence available to the
defendant in which the following two conditions ought to be satisfied as highlighted in Capps
v Miller [1989] 1 WLR 839 case (Gibson and Fraser, 2014).
 Proper care to prevent against losses has not been taken by the claimant.
 This lack of adequate care on the part of claimant proved to be a contributory reason
in the losses incurred.
Application 4
In the given circumstance, it is apparent that Peter did fail to take adequate care since he did
not bother to read the certificate before purchasing the land. However, this does not act as a
contributory reason for the economic loss incurred by Peter. This is because even if Peter had
read the certificate before land purchase, he still would have suffered the losses to the same
extent.
Conclusion 4
Wollongong Council cannot rely on the defence of contributory negligence in the given
scenario.
Issue 5
It needs to be clarified if in order to limit potential liability, Wollongong Council can rely on
the defence of voluntary assumption of risk on part of Peter.

Law 5
Voluntary assumption of risk is a complete but limited defence where if there is complete
waiver of liability from negligent party if the claimant had assumed the risk voluntarily.
However, in order for this defence to be applicable, it is imperative that the claimant must
voluntarily get into an oral or written agreement (implied or explocit) with the defendant
whereby the claimant absolves the defendant of any legal consequences of the actions having
understood the risks involved. As highlighted in Nettleship v Weston [1971] 3 WLR 370 case,
mere knowledge of risk is not enough and having agreement is necessary for this defence
(Lindgren, 2011)
Application 5
The council was expected to provide correct and complete information. Hence, by relying on
the certificate to make the land purchase, Peter did not assume any risk. Further, there was no
communication from the council highlighting any risk involved in utilising the certificate to
make the purchase decision. Infact, it is customary on the part of various buyers to rely on
such certificates.
Conclusion 5
Wollongong Council cannot rely on the defence of voluntary assumption of risk on part of
Peter.
Issue 6
The key issue is to outline if Peter can sue Wollongong Council for negligence and resulting
economic loss.
Law 6
Tort of negligence requires three conditions to be fulfilled. Firstly, there has to be a duty to
care towards the claimant. Secondly, this duty has to be breached by the defendant by not
taking reasonable measures required under the circumstance. Thirdly, losses should have
suffered by the claimant and same should not be too remote (Edlin, 2017).
Application 6

In the given scenario, there is a duty to care on part of Wollongong Council towards Peter.
This has not been fulfilled as a faulty certificate has been issued. Economic loss has been
incurred by Peter on account of the negligence of the council leading to issuance of incorrect
certificate. Besides, the defence of contributory negligence and voluntary assumption of risk
are also not applicable.
Conclusion 6
It can be concluded that Peter can sue Wollongong Council for negligence.

References
Davenport, S. and Parker, D. (2014) Business and Law in Australia. 2nd edn..
Sydney:LexisNexis Publications, pp. 123-124
Edlin, D. (2017) Common law theory. 4th edn. Cambridge: University Press Cambridge, pp.
67
Gibson, A. and Fraser, D. (2014) Business Law. 8th edn. Sydney: Pearson Publications, pp,
89
Latimer, P. (2016) Australian Business Law. 1st edn. Sydney: LexisNexis Study Guide, pp. 131
Lindgren, K.E. (2011) Vermeesch and Lindgren's Business Law of Australia. 12th edn.
Sydney: LexisNexis Publications, pp. 88
Pendleton, W. and Vickery, N. (2015) Australian business law: principles and applications.
5th edn. Sydney Pearson Publications, pp. 63-64