Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

In reaching its decision, the Court reviewed the contract between the builder and the developer and the standard purchase contract between the developer and subsequent purchasers and noted that: ƒ both contracts contained express provision for the quality of work promised and provided mechanisms for achieving that quality if not initially provided; ƒ the design-and-construct contract contained mechanisms to allocate risk between the parties and a specific mechanism for the builder to rectify any defects (including latent defects); and ƒ the purchase contracts also provided the subsequent purchasers with mechanisms for rectifying the defects. 69 In view of these express provisions, the Court was not prepared to find that the developer and the purchasers could not protect themselves from any lack of care on the part of the builder. Accordingly, they were not vulnerable in the sense required by the test, and the builder did not owe the Owners Corporation a duty of care. 70 So, the plurality in Brookfield recognised that (subsequent to Bryan v Maloney ) the plurality of the High Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd 71 (where the Court had spoken in terms of known reliance and the assumption of responsibility) noted that in decisions such as Perre v Apand Pty Ltd , 72 Hill v Van Erp 73 and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords, 74 the concept of vulnerability was alluded to as the rationale for the exceptions to the general rule that damages are not recoverable for economic loss which is not a consequence of an injury to person or property. In Brookfield , ‘vulnerability’ was clarified to involve the plaintiff’s inability to protect itself from pure economic loss arising from the defendant’s want of reasonable care. 75 Breach At common law, the test for whether a duty of care has been breached is set out authoritatively by Mason J in Wyong Shire Council v Shirt as follows: ‘In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant’s position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man’s response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant’s position.’ 76

[our emphasis]

69 Ibid, Particularly the examination of the contractual terms in the plurality judgment, 215. 70 French CJ, 204–205, Hayne & Keifel JJ, 210–211, the plurality, 214 and Gageler J, 245.

71 (2004) 216 CLR 515. 72 (1999) 198 CLR 180. 73 (1997) 188 CLR 159. 74 (1997) 188 CLR 241. 75 Brookfield per French CJ, 200, and Hayne and Keifel JJ, 209 and 210. 76 (1980) 146 CLR 40, 47–48.

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