Introduction to Business Law (BUS101) TRIMESTER 2 2014
GROUP PROJECT - 3
1 Students have previously been informed that the case for study is Esanda Finance
Corporation Limited v Peat Marwick Hungerfords, a 1997 decision of the High Court of
Australia and presently the leading Australian case on liability for negligent advice or
misstatements.
2 A copy of the case was posted on Moodle a week ago. Because the judgments are lengthy,
specific passages are highlighted in the version posted on Moodle.
3 The project assignment now requires students to provide answers to the following
questions, which are all based on the highlighted passages from the reasons for judgment of
the court.
4 The total word count for answers submitted should be between 1000 and 1200 words.
Students are encouraged to structure their answers in point form.
5 Total marks for questions 1 to 5 are 25, being the 25 marks of a student's possible 100 marks
for the subject upon which the student’s final grade will be based. The questions are not of
the same value since some of them require more time for research and expression. The
marks which will be allocated to each of the questions are indicated, in italics, after the
questions.
6 Students are reminded that all members of a group will receive the same mark, being the
mark assigned to the project report handed in. There can be no question of assigning
individually different marks to members of a group, even where some members of the group
feel that a disproportionate effort has been made by other members of the group. For this
reason, students were advised to choose their fellow group members carefully lest some do
the heavy lifting while others are passengers.
7 Reports must be handed in by week 12 as follows:
? an electronic copy is to be lodged with Turnitin; if you are unaware of how to do this
seek assistance from the library;
? a hardcopy must be handed in no later than the last tutorial to be attended by a
member of your group in week 12;
? the hardcopy must have a cover page listing by name and student number all
members of that group.
8 In any situation in which plagiarism is reasonably suspected (albeit not exceeding the
Turnitin similarity index) the authors of the report may be individually subject to oral
examination on the questionable material.The questions
Question 1
What was the legal issue in this case which the High Court had to determine? [3 marks]
Question 2
? What did the court declare to be the legal difference between what is required to succeed in
a claim for
(a) damage (financial loss) arising from physical injury to persons or property; and
(b) -pure economic loss- arising from negligent advice or a statement?
? Explain the extra element which the court identified as being needed in negligent
misstatement/pure economic loss cases which makes them different from ordinary
negligence cases? [3 marks]
Question 3
? How did Esanda “plead” (ie, frame) its claim that the auditor owed a duty of care to it?
? What reasons did the judges give in rejecting this argument by Esanda? [3 marks]
Question 4
Several of the judges point out what is significantly missing from the way Esanda pleaded its case. It
is these missing elements which, the judges are saying, point to the lack of a duty of care owed by
the auditors to Esanda. What are these missing elements? [3 marks]
Question 5
All the judges referred to other cases (some from other countries) as persuasive precedents in this
field of law. State what were the relevant tests which the judges identified in each of the following
cases as being needed to establish the reliance which would then create a duty of care in negligent
misstatement cases? [10 marks- 2 each]
? Hedley Byrne & Co Ltd v Heller and Partners Ltd
? Caparo Industries Plc v Dickman
? Mutual Life and Citizens Assurance v Evatt
? San Sebastian Pty Ltd v The Minister
? Shaddock & Associates v Parramatta City Council
Question 6
What similarities (ie, similar elements) do you see in the tests prescribed the cases listed in question
5? [3 marks]