Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
Tort; Negligence; duty of care; establishing a duty of care in cases of purely economic harm; 'vulnerability'.
Facts: CDG, a firm of consulting engineers, designed foundations for a warehouse and office complex which was to be built for the owner of a block of land. The owner of the land decided against doing soil tests before the building work commenced. Some years after the complex was completed, the owner sold it to Woolcock Street Investments (Woolcock). A further year later, signs of structural stress in the building became apparent. The stress was caused by the settling of the soil or foundations. Fixing the problem would be expensive. Woolcock alleged that CDG had owed it a duty of care to avoid economic loss, and that CDG's failure to design adequate foundations for the site had caused such loss (the expense of rectifying the problem).
Issue: Did CDG owe a duty of care to Woolcock, a subsequent purchaser of the building?
Decision: In the circumstances, CDG did not owe a duty of care to Woolcock.
Reason: Gleeson CJ, Gummow, Hayne and Heydon JJ said (at [23]):
"[T]he vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. 'Vulnerability', in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, 'vulnerability' is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant."
In this case, Woolcock could have taken independent steps to avoid the risk of harm, for example, by employing an engineer of its own to inspect the building before buying it.