Liability for Negligent Misstatement Essay Example | Topics and Well Written Essays - 2000 words

Liability for Negligent Misstatement - Essay Example It has been said that the critical point regarding liability for negligent misstatement is not the expertise of the adviser, but the dual requirements of assumption of responsibility by the adviser and reasonable reliance upon that advice by the other party. Changes have been happening in the last decade in Australian negligence law, both in respect to negligent advice and negligence causing pure economic loss (Baker and Manderson 2001). These are reflected in the nuances in the decisions arrived at by the High Court of Australia of the following cases. Case 1: San Sebastian Pty. Ltd. v. The Minister (1986) 68 ALR 161 (Database HCA/1986/68.html). Appellant companies in the High Court of Australia are business developers who sued respondents in the Supreme Court of New South Wales for their loss from alleged negligence of the State Planning Authority and the Council of the City of Sydney, in the preparation and publication of a plan for the redevelopment of the Woolloomooloo area of Sydney City, and also for failing to warn the appellants of the subsequent abandonment of the plan. In giving advice or information, a representor is said to be under a duty of care if the following are satisfied: 1) The representor realizes or ought to realize that the representee will trust in his especial competence to give that information or advice; 2) If it would be reasonable for the representee to accept and rely on that information or advice; and 3) If it is reasonably foreseeable that the representee is likely to suffer loss should the information turn out to be incorrect or the advice turn out to be unsound. (Database HCA/1986/68.html). The decision of the High Court which ended with a dismissal of the appeal said that the condition of reasonable reliance is unsatisfied and that even both parties believed falsely that the plan was feasible, if there is no fraud, the defendants not liable to compensate the plaintiffs for the losses they incurred in relying on the feasibility of the plan. The representation or that which caused the loss complained of is limited, the court said. The Council and the Authority did not induce any developer to buy property in simply saying "this plan is feasible," the High Court said. In the case at bar, such duty of care did not result between the giver of information and the intended user because it could reasonably be expected that the recipient would seek independent advice before relying on the statement, especially for a serious business purpose. The case is relevant and supports the proposition. The proximity relationship (second requirement) was all the more appreciated because distinctions were made between private and public officials and their functions. Case 2: Tepko Pty Ltd and Others v Water Board, High Court of Australia, 5 April 2001 [2001] HCA 19; (2001) 178 ALR 634 (In Sykes 2001). By a 4 to 3 majority, the High Court upheld the trial judge's finding that there was no duty of care owed in making a particular costs estimate. The three plaintiffs and appellants to this appeal were Tepko Pty Ltd, Mr. Neal's company and Mr, Neal himself, who was one of three shareholders in Tepko, and the defendant was the Water Board. As recorded in Stykes (2001) - In the early to middle 1980s the plaintiffs were involved in a proposal to subdivide for residential development dairy farmland owned either by Tepko or Mr. Neal which