Negligent Misstatement in Australia - Resolving the Uncertain Legacy of Esanda: Chapter 13

Abstract

This chapter analyses the confused state of the law of negligent misstatement in Australia since the High Court's decision in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 (HCA). It proposes a single, common set of rules for the determination of duty of care questions for all cases of pure economic loss caused by a plaintiff’s reliance on a negligent misstatement, whether they are of the two- or three-party type, even though the latter raise some complications (such as ‘indeterminacy’ and ‘remoteness’) that the former often do not. If such 'three-party' cases genuinely raises additional concerns of this type, they are better met, it is suggested, in other ways - for example through the imposition of legislative caps upon advisor liabilities in areas of particular market sensitivity - rather than through the placement by judges of arbitrary and unclear limits upon the scope of private law duties of care.

Keywords: negligence, misstatement, misrepresentation, hedley byrne, advice, auditor, solicitor, financial advice

JEL Classification: K13