[Torts] Negligent Misstatements and Defective Structure, public body liability



Negligent Misstatements and Defective structures

Builder negligence

In considering plaintiff’s claim against the builder, the case authority Bryan v Maloney will be considered. The case held that builders owe a duty on the basis of proximity in the sense that they is general reliance combined with assumption of responsibility. However, Maloney only considered residential, not commercial buildings. Also, it should be noted whether there is a CONTRACT that refuses any liability or assumption of responsibility by the builder. If there is a contract with such provision, Maloney will not be directly relevant.
Considering the vulnerability of the plaintiff, Woolcock could be considered and conclude that plaintiff could have reasonably protected himself by receiving an issue of warranty.

Council’s omission, overlooking defects (Public body liability; consider conjunctively with below for PBL)

Whether P’s property is for commercial or residential nature is crucial in determining the chance of recovery. If it is found to be for residential purpose, it will be hard to recover under Bryan v Maloney. However, Crimmins factors should still be explored. If commercial, key issues will be the application of factors from Barwick test (MLA v Evatt): 1) whether there was relationship of trust/reliance between P and the Council; 2) whether the council knew or ought to have known that P would rely (Tepko); 3) Whether P actually relied on the assurance; and 4) whether it was reasonable to rely on information (unreasonable for informal communication- Shaddock; Woolahra; Tepko).
Although Evatt involved an advisor, duty is not limited to only advisors (see Shaddock v Parramatta).
There will also be arguments about vulnerability where P of commercial nature would be able to self-protect by way of insurance or contract (Woolcock; Johnson Tiles v Esso per Gillard J).

Council’s liability in defective premises case

Under Sutherland Shire Council v Heyman, there will be no positive duty by the councils to ensure inspections are conducted. However, there are exceptional cases if there is ‘specific reliance’ by P. Also Heyman is decided under the proximity reasoning which is now rejected by the High Court.
Furthermore, Crimmins involved personal injury, not pure economic loss.
The most relevant case is Makawe, where Hodgson JA introduced the following salient features 1) foreseeability of loss 2) nature of loss 3) control of the risk 4) vulnerability 5) assumption of risk 6) reasonable reliance and 7) proximity.

Council could argue that section 35 limits their resources to enforce building regulations and therefore financial concern would be paramount.
However, all three of them- Heyman’s rule, economic loss policy reason from Crimmins and s35 of CLA, it would be unlikely for P to recover against the council.

Two-party negligent misstatements

Barwick test: knowledge of trust; information used for business or serious consequence; reasonable reliance.

Three-party negligent misstatements (public at large)

San Sebastian test should be used and for there to be a duty the defendant must have made the alleged representation and must have had intention to induce P.

Three-party negligent misstatements (not public at large)

Comparable judgments of Brennan and McHugh in Esanda v Peat Marwick need to be considered when information is voluntarily offered to public at large. Brennan J’s elements include: 1) whether defendant knew the purpose of which the report would be used by the plaintiff; 2) specific class of plaintiff; 3) likely that plaintiff will enter and 4) enters into transaction with reliance. McHugh’s elements are 1) assumption of responsibility and 2) whether defendant had the intention to induce the plaintiff to rely on such information provided.


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