Professional Liability Guide

CHAPTER 1 – DUTIES

Oliver J then offered the following practical example:

‘If I employ a carpenter to supply and put up a good quality oak shelf for me, the acceptance by him of that employment involves the assumption of a number of contractual duties. He must supply wood of an adequate quality and it must be oak. He must fix the shelf. And he must carry out the fashioning and fixing with the reasonable care and skill which I am entitled to expect of a skilled craftsman. If he fixes the brackets but fails to supply the shelf or if he supplies and fixes a shelf of unseasoned pine, my complaint against him is not that he has failed to exercise reasonable care and skill in carrying out the work but that he has failed to supply what was contracted for.’ 30 Where a professional’s retainer contains an express term requiring a particular task to be undertaken or an outcome achieved, and which the professional fails to do, a breach will ordinarily be established. So a financial advisor whose retainer contains an express obligation to offer products selected only from an approved list of products carefully researched and approved by a team of research experts will breach that express obligation by recommending an unapproved product. The same result will likely ensue in respect of an implied duty to exercise reasonable care and skill in providing financial advice if the discharge of the duty requires an appropriate inquiry to be carried out to ascertain the product’s suitability. 31 Although in this latter case, the focus will be not so much on the express contractual obligations but on the exercise of reasonable care. The standard of care expected of a professional was set out by Windeyer J in Voli v Inglewood Shire Council 32 as requiring due care, skill and diligence, the competence and skill that is usual among professionals practising their profession, and due care. In considering whether a professional has failed to exercise the requisite standard of care and skill, the courts have consistently held that they must guard against hindsight bias: ‘the standard of care to be expected of a professional … must be based on events as they occur, in prospect and not in retrospect.’ 33 In the case of a solicitor or an accountant, the standard of care does not extend to ensuring that the advice given is correct in all respects 34 or, in the case of an engineer, that a design is perfect. 35 Rather, it is cast no higher than requiring the requisite degree of professional skill and care to be exercised in giving the advice or preparing the design. The implied warranties were previously contained under the Trade Practices Act 1974 (Cth) ( TPA ) (and comparable State and Territory legislation), which were replaced with a uniform national regime for the imposition of consumer guarantees under the Australian Consumer Law ( ACL ). The ACL is found in sch 2 of the Competition and Consumer Act 2010 (Cth) ( CCA ). The ACL applies under section 131 of the CCA as a law of the Commonwealth, which is applicable to the conduct of corporations. It also applies as a law of each State and Territory under their respective legislation, 36 extending its application to individuals. 30 Ibid 434–435. 31 Selig v Wealthsure Pty Ltd (2013) 94 ACSR 308, 423. 32 (1963) 110 CLR 74, 84. 33 Duchess of Argyll v Beuselinck [1972] 2 Lloyds Rep 172, 185; March v E & MH Stramare Pty Ltd (1991) 171 CLR 506, 515; Sali & Ors v Metzke & Allen [2009] VSC 48 [16]. 34 Heydon v NRMA Ltd (2000) 51 NSWLR 1, 53; Carmody v Priestley & Morris Perth Pty Ltd (2005) 30 WAR 318, 337. 35 Pullen v Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27. 36 Fair Trading Act 1989 (Qld) s 16; Fair Trading Act 1987 (NSW) s 28; Australian Consumer Law and Fair Trading Act 2012 (Vic) s 8; Fair Trading Act 1987 (SA) s 14; Fair Trading (Australian Consumer Law) Act 1992 (ACT) s 7; Consumer Affairs and Fair Trading Act 1990 (NT) s 27; Fair Trading Act 2010 (WA) s 19 and Australian Consumer Law (Tasmania) Act 2010 (Tas) s 6. Terms may also be implied into a contract for professional services by statute.

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