Case: Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 , 216 CLR 515
Outcome: followed
Claims for damages for " economic loss " arising by reason of alleged negligent misrepresentations " present peculiar difficulty ": Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 at [21] , [2004] HCA 16 ; 216 CLR 515 at 529 30. As Gleeson CJ, Gummow, Hayne and Heydon JJ observed: [21] Claims for damages for pure economic loss present peculiar difficulty. Competition is the hallmark of most forms of commercial activity in Australia. As Brennan J said in Bryan v Maloney [1995] HCA 17 ; [(1995) 182 CLR 609 at 632]: "If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition [ Dorset Yacht Co v Home Office [1970] UKHL 2 ; [1970] AC 1004 at 1027], sterilise many contracts and, in the well-known dictum of Chief Judge Cardozo [ Ultramares Corporation v Touche (1931) 255 NY 170 at 179], expose defendants to potential liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'." That is why damages for pure economic loss are not recoverable if all that is shown is that the defendant's negligence was a cause of the loss and the loss was reasonably foreseeable. [22] In Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65 ; [(1976) 136 CLR 529] , the Court held that there were circumstances in which damages for economic loss were recoverable. In Caltex Oil, cases for recovery of economic loss were seen as being exceptions to a general rule, said to have been established in Cattle v Stockton Waterworks [(1875) LR 10 QB 453], that even if the loss was foreseeable, damages are not recoverable for economic loss which was not consequential upon injury to person or property. In Caltex Oil, Stephen J isolated a number of "salient features" which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss [1976] HCA 65 ; [(1976) 136 CLR 529 at 576 8]. Chief among those features was the defendant's knowledge that to damage the pipeline which was damaged was inherently likely to produce economic loss [1976] HCA 65 ; [(1976) 136 CLR 529 at 576]. [23] Since Caltex Oil, and most notably in Perre v Apand Pty Ltd [1999] HCA 36 ; [(1999) 198 CLR 180] , the 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 [Stapleton, 'Comparative Economic Loss: Lessons from Case-Law-Focused "Middle Theory"' (2002) 50 UCLA Law Review 531 at 558 9]. ... [24] In other cases of pure economic loss (Bryan v Maloney is an example) reference has been made to notions of assumption of responsibility and known reliance. The negligent misstatement cases like Mutual Life &amp; Citizens' Assurance Co Ltd v Evatt [1968] HCA 74 ; [(1968) 122 CLR 556] and Shaddock &amp; Associates Pty Ltd v Parramatta City Council [No 1] [1981] HCA 59 ; [(1981) 150 CLR 225] can be seen as cases in which a central plank in the plaintiff's allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. And it may be, as Professor Stapleton has suggested ... that these cases, too, can be explained by reference to notions of vulnerability. (The reference in Caltex Oil to economic loss being "inherently likely" can also be seen as consistent with the importance of notions of vulnerability.) It is not necessary in this case, however, to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability. This case can be decided without doing so.