Will you get sued when it all goes wrong?The legal perspective

Grant MitchellPartnerMinter Ellison

Q: Will you get sued when it all goes wrong?

A: Probably

Q: Who are the targets?

A: (a) Polluter;(b) Vendor;(c) Lessor;(d) Consultant;(e) Auditor;(f) Remedial works contractor;(g) Council;(h) Developers;(i) Selling agent.

The cases

(a) ‘conduct’(b) ‘transactions’ (c) ‘advice’

Basis 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

- make written records/email of statements

. 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

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.

(2) However, professional opinion cannot be relied on for the purposes of this section if the Court considers that it is

irrational.(3) 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.

…

The litigation experience

. How it starts;

. How long it takes;

. The role of the lawyers;

. How much does it cost;

. The Courtroom experience.