Pure+Economic+Loss+Caused+by+Negligent+Statements

There must be a ‘special relationship’ between P and D, and that special relationship may be either continuing or ad hoc.
 * à General Principle**

__Continuing Relationships__
 * Exist where there is a contractual relationship between a professional and a client. Where such a relationship exists, the professional will owe a DOC to the client.

A ‘special relationship’ exists if:
 * à P must show a Special Relationship existed between the parties: //Hedley Byrne//**
 * The party seeking information or advice relied on the D to exercise reasonable care in providing the information;
 * Ps reliance on D was reasonable; and
 * D must have known, or ought to have known that P was relying on him.
 * Note –** if D has a financial interest, that should be enough to satisfy this test: **//MLC//**

__Special Skills__
 * à Issues with Special Relationships:**
 * D need not have a special skill with regards to the provision or advice, nor does he have to hold himself out as having special skills, in order for a DOC to exist: **//MLC v Evatt//**
 * However, it will be easier to show that the P reasonably relied on a professional than a non-professional.
 * There is no difference between a person who is in the business of providing information and a public body, which in the exercise of public functions, follows the practice of supplying information which is available to it more readily than such information is to the ordinary person: **//Shaddock//**

__Context__
 * DOC will only arise if the information has been imparted in ‘serious circumstances’: **//Hedley Byrne//**
 * If the situation is in a business context, but the procedure for finding out information is informal (e.g. oral, over the phone), there will be no DOC, especially if a more formal procedure is available: **//Shaddock//**

__Disclaimers__
 * If there is a disclaimed in relation to the advice given, it points towards there being no DOC: **//Hedley Byrne//**.

A DOC will be owed to a 3rd party if D responds to a request for information or advice in circumstances where D ought to have known that:
 * __3rd Parties__**


 * The request was made on behalf of a limited class of persons who were likely to rely on the information or advice provided; and **//Hedley Byrne//**
 * The information or advice would be relied on with regard to the particular transaction in question. **//Hedley Byrne//**
 * The statement would be communicated to P; **//Caparo//**
 * The statement would be communicated specifically in connection with a particular transaction; **//Caparo//**
 * P was very likely to rely on the statement for the purpose of deciding whether to enter into a transaction. **//Caparo//**.
 * Note -** It is not necessary that the P requested the information from the D, but it is more likely that a ‘special relationship’ existed if there was a request: **//San Sebastian//**

P must show:
 * à 3rd Parties - Test per //Esanda//**
 * The D knew, or ought to have known that the information or advice would be communicated to the P, either as an individual or as a member of a class.
 * The information or advice would be communicated for the purpose that would be very likely to lead the P to enter into a transaction of the kind the P did enter into.
 * The D knew, or ought to have known, that it was very likely the P would enter into the transaction in question, in reliance on the information or advice provided, and so risked incurring economic loss if the statement was untrue.


 * à Auditors**
 * per //Lowe Lippman//**
 * An auditor owes no DOC to a creditor for a report passed on to the creditor, even if the auditor knew it would be passed on.
 * Exception – if it was part of the auditor’s purpose in making the report to induce the creditor to act in reliance of it.
 * per McHugh in //Esanda// (Policy Considerations)**
 * Recognising a DOC would make auditor’s services more expensive, which may deter companies from using them.
 * Ps are likely to be big companies and can make their own enquiries without relying on auditor’s reports. It the P cannot rely on itself, DOC more likely.
 * Auditors are not responsible for the Ps loss.
 * Actions against auditors are complicated and lengthy, and the court should not waste time on them.


 * __Statutory Alternatives__**
 * à If ‘special relationship’ cannot be made out rely on Statutory Alternatives:**
 * **s.52(1) //Trade Practices Act –//** A corporation shall not, in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or decieve’.
 * The conduct in question must cause loss to the P: **//Bond Corp//**
 * **s.4(1) //Fair Trading Act// –** For the purpose of Part 2, if a person makes a representation about the future, including the doing of, or the refusing to do any act, and the person does not have reasonable grounds for making the representation, the representation is deemed to be misleading.


 * Back to Torts B**
 * Previous:**
 * Next:**