Commercial Law Case Study: Economic Loss and Negligence in Australia

This case study examines a commercial law dispute concerning Peter's claim for economic loss against Wollongong Council. The issue revolves around whether the council's actions constitute negligence. The analysis delves into the principles of negligence, including duty of care, breach of duty, causation, and remoteness, referencing relevant legal precedents such as Donoghue v Stevenson and Hedley Byrne & Co Ltd v Heller & Partners Ltd. The application section evaluates the facts, highlighting Peter's vulnerability and the council's potential breach of duty. The conclusion supports Peter's claim, asserting the council's liability for negligent omission. The case study provides a comprehensive understanding of negligence in commercial law, focusing on economic loss and the application of legal principles in an Australian context.

Running head: COMMERCIAL LAW
Commercial Law
Name of the Student
Name of the University
Author note

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Issue
The issue in this case is related to the fact that whether Peter can claim compensation
for economic loss in negligence from Wollongong Council.
Rule
This case study discusses the theory of negligence as it has been observed in the
matter of Donoghue v Stevenson [1932]. This case is applicable in the given case study. It
was established in this scenario that if because of the behavior of an individual has an effect
on the wellbeing of another individual, the aggrieved party will be treated as the neighbor. On
the other side, the person whose actions affect is said to owe a duty of care to the neighbor.
Hence, the concept of tort of negligence describes a scenario when a person fails to carry out
the duty of care for the aggrieved individual as per the principle of neighbor in this situation.
There can be a breach of duty in such a situation when the defendant will have the ability to
overlook the injury that had arose because of the actions of the defendant. Hence, there are a
few existing essentials of negligence that can be evidenced when the situation is related to the
claims of negligence.
Duty of care is the first and foremost essential that should be present. In this scenario,
the defendant must owe a duty of care to the plaintiff. Thus, he should ensure that the care is
properly provided and executed consistently. It can however be implied that the defendant
should have undertaken the probable measures to prevent the damage that has been caused to
the plaintiff due to his actions.
Breach of duty to take care is the second essential that is related to the concept of
negligence. As per this essential, if any kind of breach is done to the first essential by the
defendant and have caused damage to the plaintiff, then he will be held negligent.

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Causation is the third essential linked to the concept of negligence. The term
causation arises when the plaintiff has been injured and hurt due to the activities of the
defendant. In the case of Barclays Oyster Pty Limited and Another v Ryan [2002] it has been
observed and held that the Court had provided the test of but for that it has to be determined
that if the reason of the damage was a direct result of the defendant’s activities. Hence, in
case of the acts of the negligence, the plaintiff had suffered the loss and damage. If it did not
arise at the first instance then it would not have sustained the injury or have gone through any
sort of losses.
Remoteness is the last essential associated with negligence. In this element, it arises
that when there was an indirect consequence of the actions of the defendant, he will be held
liable for the injury. Hence, it must not be that much distant and this kind of damage was
established in the case of Spartan Steel & Alloys v Martin [1972] EWCA. However, the
reason for economic loss was caused due to negligence and it can be caused due to negligent
words. In the case of Byrne & Co Ltd v Heller & Partners Ltd [1964], the concept of
negligent words had occurred by creating economic loss. In such a case, the rule was
overruled and the Court had permitted for the growth of pure loss that had an outcome in the
use of negligent words. Therefore, in a few specific cases, the Court had decided that there
was a scope of restoration from the economic loss that was permitted only if the plaintiff had
provided evidence stating that a duty of care had existed between the plaintiff and the
defendant.
For determining that if the theory of duty of care exists then few of the factors must
be followed thereafter. Vulnerability must be taken care of if the plaintiff has failed to
pursue any kind of proper steps for forestalling the negligence that the defendant had
committed and he will owe a duty of care. Thus, the Court can consider the practical
possibilities that are available to the plaintiff for preventing negligence. Control is applicable

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in such a situation where the defendant has the authority to control the occurrence of
negligence. Hence, it will be treated as a breach of duty of care. Assumption of reliance
defines a scenario where the defendant had the possible knowledge that the plaintiff had faith
on the responsibility of the defendant since duty of care will be owed by him.
Standard of care refers to a situation where the only degree of prudence and caution
is needed of an individual who is under the duty of care. However, the standard of care are
relatively dependent on specific circumstances. Such a situation was mentioned in the case of
Chaina v Presbyterian Church (NSW) [2014]
Assumption of risk is referred to as a defense in the law of torts that helps in
reducing the right to recovery of the plaintiff against the voluntary injury caused by the
defendant. The defendant will only succeed in such a situation only if the defendant can
provide evidence that the plaintiff had knowingly assumed the risks at the time of issuing.
Contributory negligence refers to a common law jurisdictions where a defense to a
claim depends on the negligence, which is an action in tort. Contributory negligence was
stated in the case of Podrebersek v Australian Iron and Steel [1985] HCA 34
The Australian Law refers to a situation where there is negligence claims for
economic loss. It can be observed here that the plaintiff had suffered from loss of monetary
issues but it did not harm or damage anything physically. Thus, usually the Courts do not
permit such kind of scenario. The economic loss arises when the plaintiff generally goes
down any kind of financial loss. Economic loss can also occur due to negligent acts can
occur as well as have been observed in the case of Arthur JS Hall & Co v Simons [2002]. In
this matter, the Court had exclaimed that such kind of a recovery is not impossible if the
defendant was aware of the facts that due to the negligent acts, economic los will arise to the
plaintiff.

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Application
It can be noticed from the facts that the certificate was obtained from Wollongong
Council by Peter. It was prior to acquire that particular block of land. However, on the other
hand, the Council did not state that widening of the road would reduce the size of the block.
Thus, Peter did not revise the certificate while purchasing the land despite the road proposal
in the certificate regarding to the purchase. If the road proposal was not specified in the
certificate then Peter will have no other option. He will be forced to purchase the land. In this
situation it was observed that Peter was in a vulnerable position. Peter failed to go through
the certificate even when the details were provided in the certificate. In such a situation the
concept of negligence and breach of duty to care will be applied. Hence, the Council the
Council purchased that particular land whereas on the certificate it was stated that the
proposal of road widening was permitted to Peter.
Conclusion
Lastly, the conclusion states that due to the negligent omission committed by
Wollongong Council to Peter will be recovered.

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References:
Arthur JS Hall & Co v Simons [2002] 1 AC 615, 681
Barclays Oyster Pty Limited and Another v Ryan [2002] HCA 54 at [211]
Byrne & Co Ltd v Heller & Partners Ltd [1964]
Chaina v Presbyterian Church (NSW) [2014]
Donoghue v Stevenson [1932] UKHL 100, SC (HL) 31, AC 562
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Podrebersek v Australian Iron and Steel [1985] HCA 34
Spartan Steel & Alloys v Martin [1972] EWCA