Will you get sued when it all goes wrong?
The legal perspective
Grant Mitchell
Partner
Minter Ellison
Q:
Will you get sued when it all goes wrong?
A:
Probably
Q:
A:
Who are the targets?
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Polluter;
Vendor;
Lessor;
Consultant;
Auditor;
Remedial works contractor;
Council;
Developers;
Selling agent.
The cases
(a)
(b)
(c)
Basis
.
.
.
.
‘conduct’
‘transactions’
‘advice’
of liability
breach of contract
nuisance
Negligence; negligent misstatement
breach of statute
s52 Trades Practices Act 1974 (Cth)
52(1) A corporation shall not in trade or commerce engage in
conduct that is misleading or deceptive or is likely to mislead or
deceive.
A
The Polluter
-
the occupant of the site
contractors
Liable to:
-
owner; subsequent owner
owners/occupiers of other sites
injured persons
Basis of liability
-
Environment Protection Act s104
negligence; nuisance
non-delegable duty (extra-hazardous
activities or substances)
occupier’s liability (injury)
Q:
So how does it all go wrong for a vendor?
-
Inaccurate Form 1
-
Misleading statement concerning the
site
.
Purchaser not obliged to settle;
.
Contract can be avoided;
.
Purchaser can sue to recover
losses.
Self-protection for a vendor
-
supply correct information
special conditions in the contract of
sale
.
Purchaser accepting responsibility
for any contamination;
.
Contractual indemnities from a
purchaser for any liability;
-
clear contractual terms
get agreement under s103E of the
Environment Protection Act
-
make written records/email of statements
So, how does it all go wrong for a consultant/auditor?
.
Report might not cover what is required by
legislation;
.
Inadequate testing;
.
Report might make assessments and
predictions that are not sustainable on the
evidence;
.
Report might contain opinions which are not
reasonable in the circumstances;
.
Report might be based on inaccurate
information;
.
Unreasonable decision to report (or not report)
to the EPA contamination that affects or
threatens groundwater (s83A of the EP Act);
.
Report might not meet requirements of brief.
Basis of liability
.
.
.
.
.
.
Section 52 Trade Practices Act;
Section 56 Fair Trading Act;
Section 74 Trade Practices Act;
Negligent misstatement;
Negligence;
Breach of contract.
Caltex v Charben Haulage [2005] FCAFC 271
.
Caltex going to sell its service station site. Retains EES to
prepare report to perform audit of the site and partially
supervise and validate the remediation;
.
EES understands that report may be used for potential
purchaser;
.
Caltex deliver report to potential purchaser (Charben
Haulage);
.
EES report stated ‘the site had been validated in accordance
with the relevant contamination guidelines’ and ‘the site
was suitable for residential land use in accordance with the
relevant guidelines’;
.
Evidence that EES should have undertaken additional
testing. However this was not required by the guidelines.
TPA claim fails;
negligent misstatement not properly pleaded or
advanced;
negligence – no duty owed.
Protection for a consultant/auditor?
.
Clear terms of retainer;
.
Limitation of liability/limitation of time
clauses;
.
Indemnity clauses;
.
Resist cost pressures from clients;
.
Insurance;
.
Civil Liability Act 1936 (SA), s41 ‘The
professional’s defence’
The ‘Professional’s’ Defence
Civil Liability Act 1936, s41:
41
Standard of Care for Professionals
(1)
A person who provides a professional service incurs no liability
in negligence arising from the service if it is established that
the provider acted in a manner that (at the time the service
was provided) was widely accepted in Australia by members of
the same profession as competent professional practice.
However, professional opinion cannot be relied on for the
purposes of this section if the Court considers that it is
irrational.
The fact that there are different professional opinions widely
accepted in Australia by members of the same profession
does not prevent any one or more (or all) of those opinions
being relied on for the purposes of this section.
(2)
(3)
…
The litigation experience
.
.
.
.
.
How it starts;
How long it takes;
The role of the lawyers;
How much does it cost;
The Courtroom experience.