Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225
Tort; Negligence; duty of care; liability for misstatements causing purely economic harm.
Facts: Shaddock & Associates, a property development company, wanted to buy some land and redevelop it. The company's solicitor telephoned the Parramatta City Council and asked if there were any road widening proposals that would affect the land. He was told there were not. The solicitor also requested and was sent a certificate from council which indicated there were no proposals to widen adjacent roads. Shaddock then bought the land, but the information given on the phone and in the certificate was wrong; the council had an existing proposal to acquire a third of the land Shaddock had just bought, to widen a road. Shaddock suffered financial loss as a result of relying on the wrong information and he sued the council in Negligence.
Issue: Did the council owe Shaddock a duty of care when providing the information?
Decision: The High Court held that no duty of care arose from advice given over the telephone, because that advice was essentially informal. However a duty of care arose from the advice given in the written certificate and the council was accordingly liable for the loss.
Reason: Gibbs CJ said (at [4]):
"It would appear to accord with general principle that a person should be under no duty to take reasonable care that advice or information which he gives to another is correct, unless he knows, or ought to know, that the other relies on him to take such reasonable care and may act in reliance on the advice or information which he is given, and unless it would be reasonable for that other person so to rely and act."
Mason J said (at [20]):
"[W]henever a person gives information or advice to another upon a serious matter in circumstances where the speaker realizes, or ought to realize, that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to act on the information or advice, the speaker comes under a duty to exercise reasonable care in the provision of the information or advice he chooses to give."