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					                                           Chapter Two

                          SOME LEGAL ISSUES IN PRACTICE

       Contents
        Professional negligence.
        Contract law.
        Trade Practices and fair trading legislation, including misleading and deceptive conduct.
        Overview of Privacy legislation and the law of confidentiality.



Introduction

This chapter considers the major areas of civil liability for Surveyors, namely in
negligence, contract law and under statute, principally the Trade Practices Act 1974, and
the fair trading acts of States and Territories. Over the last decade, there has been a
growing trend to legal actions under this legislation. Currently, more than 20% of the
claims against Surveyors include a claim under this legislation. There are other areas of
potential liability, for instance, under various local government and planning legislation
and actions in trespass or passing off. However, these are not considered in this material.

1.     Negligence

The liability of a Surveyor for professional negligence may arise out of the individual
conduct of a Surveyor, a partner, an officer of a corporation or an employee for whom the
Surveyor is vicariously responsible and liable.

Liability for professional negligence takes place where the Surveyor causes loss through
the failure to exercise the level of care, skill and competence of an ordinary, competent
Surveyor carrying out work in the profession or in relation to a specialised branch of the
profession.

Unlike an action based on contract, before a person can take action in negligence, the
claimant must have suffered, or be likely to suffer, some injury, loss or damage.
Therefore, a Surveyor’s liability in tort for professional negligence is dependent upon the
person suing the Surveyor proving that they have suffered damage, which includes bodily
injury or economic loss, or that they are threatened with physical or property damage.

Due to the potential for unlimited application of the tort of negligence, the courts have
developed mechanisms or tests to control its application. Over many years, the courts
have laid down elements necessary in order to ground liability in negligence. The
plaintiff must establish the following elements:

(a)    The defendant owed a duty of care to the plaintiff,
(b)    The defendant breached the required standard of care,
(c)    The damage was reasonably foreseeable or not too remote, and
(d)    The breach of duty caused the damage to the plaintiff.


                                                                                                     1
     Case Example
      A Surveyor contracted to set out a proposed factory site for a client.
      The survey positioned the building incorrectly.
      When it was built, it extended 0.2m over a drainage easement. There is a
        potential claim by the client for negligence by the Surveyor. This claim
        would be that the Surveyor failed to meet the standard of care owed to the
        client and this led to damage to the client having to relocate the building, get
        approval from the Council or lose value for any sale of a non-complying
        building. Of course, there may also be an alternative claim for breach of
        contract. This is discussed later in the chapter.



It should be noted that the federal government is currently reviewing the law of
negligence as a result of the increase in the size of the claims made in recent years and
the impact that this has had on insurance premiums. The Ipp Report commissioned by
the federal government has recommended changes to the law to which governments at
federal, state and territory levels are now responding.1 Significant changes are now in
progress, including proposed amendments to the Trade Practices Act to make it
compatible with existing and proposed professional standards legislation. As it is not
possible to detail these changes at this time, it is suggested that the reader make enquiries
in his or her own jurisdiction.

(a)      Duty of care
A Surveyor can be liable to someone, other than a client, for breach of duty of care in
tort. This duty of care for a Surveyor may be seen either in the context of a Surveyor’s
non-professional duty of care or in the context of a Surveyor’s duty of care arising out of
professional conduct. It is not intended to deal with a Surveyor’s duty of care arising
from non-professional activities, but the following examples illustrate the potential
liability of the Surveyor for carrying out business activities, but of a non-professional
type.

Non professional liability
A Surveyor is retained to go to a building site to carry out certain survey work. The
Surveyor drives a vehicle onto the site and negligently knocks over a brick wall. That act
of negligence does not arise out of the Surveyor’s professional work and would not be
characterised as professional negligence. Similarly, if a Surveyor leaves equipment on a
site in such a manner that it is dangerous to persons walking over the site this could give
rise to a claim in negligence if someone is injured. Again, the person’s injury is not
caused as a result of any professional negligence, although the Surveyor’s professional
work is associated with it. The Surveyor’s liability in these examples is clearly not a
liability for professional negligence. However, it should be noted that a professional
indemnity policy may specifically cover some of these areas as well. Each policy must
be read carefully to determine precisely what it covers.



1
    See full text of the report at http://www.revofneg.treasury.gov.au/content/Report/PDF/LawNegFull.pdf


                                                                                                           2
Professional liability
In cases involving actual or threatened physical damage to property, the general common
law principles of negligence were laid down by the English House of Lords in the famous
case of Donoghue -v- Stevenson2. The court had to decide whether a manufacturer of a
soft drink owed a duty of care to a person who purchased the soft drink, although the
manufacturer and the purchaser had no direct contractual relationship. The question was,
did the defendants owe the plaintiff a duty of care? Lord Aitken expressed it thus:

“In English law there must be and is some general conception of relations giving rise to a
duty of care. The liability of negligence is no doubt based upon general public sentiment
of moral wrong doing for which the offender must pay, but acts or omissions are not of a
moral code, since you cannot in a practical world be treated so as to give a right to every
person injured by them to demand relief…the rule that you are to love your neighbour
becomes in law...you must not injure your neighbour; and the lawyer’s question – “who
is my neighbour?” receives a restricted reply. You must take reasonable care to avoid
acts or omissions that you can reasonably foresee would be likely to injure your
neighbour. Who then is my neighbour? The answer seems to be – persons who are so
closely and directly effected by my acts that I ought reasonably to have them in
contemplation as being so effected when I am directing my mind to the acts or omissions
which accord in question.”

The House of Lords found that the manufacturer and the purchaser of the drink were so
closely and directly related that the manufacturer owed the purchaser a duty of care.

Consequently, in the course of some work, a Surveyor could cause damage to the
property of a person who occupies premises adjoining that of the client or adjoining that
of the property or premises where the Surveyor carries on business. If so, then liability
to the adjoining occupier could arise in negligence. While the liability would arise from
the performance of a contract with a client, the liability to the neighbour is actionable by
the neighbour in tort, the area of actionable wrongs that includes negligence.

An Australian case highlights the potential liability for Surveyors. In Bryan –v-
Maloney3, B was a professional builder and constructed a residential dwelling for a client
in 1979. It was sold subsequently and then again in 1986 to the plaintiff. The plaintiff
inspected the house, specifically for cracks in the wall and found none. Six months after
the purchase, cracks began to appear. This cracking caused substantial damage to the
fabric of the house. Inadequate footings subsequently caused the cracking as they were
not strong enough to withstand the seasonal changes in the clay soil.

The plaintiff commenced proceedings against the builder for damages arising from his
negligence. The High Court found that the builder owed a duty of care to the plaintiff. A
majority of the Court held:



2
    [1932] AC 562
3
    (1995) 128 ALR 163


                                                                                               3
“It is obviously foreseeable by such a builder that the negligent construction of the house
with inadequate footings is likely to cause economic loss…to the owner of the house at
the time when the inadequacy of the footings first becomes manifest. When such
economic loss is eventually sustained and there is no intervening negligence or other
causative event, the causal proximity between the loss and the builder’s lack of
reasonable care is unextinguished by either lapse of time or change of ownership.” (at
p171.)

Therefore, a Surveyor who carries out survey work that is causally related to actual or
threatened physical damage to property, may be liable to the person whose property is
affected even though the person claiming damage is not the Surveyor’s client.

The High Court case of Heyman -v- Sutherland Shire Council 4 further illustrates the law
of professional negligence. Heyman purchased a dwelling. The vendor, with the
appropriate Council approvals, had constructed it. The Council had not inspected the
footings. After Heyman purchased it, cracking started to appear due to inadequate
footings. Heyman had not made any enquiry of the Council about its approval before
completing the purchase. No certificate of compliance had ever been issued. Although
the Council was negligent in not inspecting the site, it was not liable because Heyman
had not relied upon the Council’s approval to purchase the property. The court was not
satisfied that there was a sufficient degree of relationship to give rise to a duty of care.
There was no reliance or dependence by Heyman on what the Council did or did not do.

However, where a Surveyor is liable to third parties for the negligent preparation of
reports and plans, a different set of laws has emerged. When such reports or plans are
relied on, there may be no actual or threatened physical damage, only pure economic
loss. The courts have created a separate duty of care for this branch of negligence. It is
called negligent mis-statement. The liability of a Surveyor for work characterised as
negligent mis-statement is a liability derived from the principles of Hedley Byrne -v-
Heller & Partners5. This whole area is discussed below.

(b)      The Standard of Care
Once the existence of a duty of care is established, the next step is to determine the
requisite standard of care, or benchmark, that the person was required to meet in order to
discharge the duty.

There can be no dispute that Surveyors are professional persons within the commonly
accepted use of that term. The statutory right to practise as a Surveyor depends upon a
person attaining academic and practical skills determined according to the standards of
persons already in the profession.

In any profession, there are bound to be varying degrees of skill and competence. Simply
put, some people are better at their jobs than others.


4
    (1984-5) 157 CLR 424.
5
    [1963] 3 All ER 575.


                                                                                             4
The appropriate legal standard is that a Surveyor will exercise a degree of care, skill and
competence that is to be expected of an ordinary, competent Surveyor carrying out work
in the profession or in relation to a specialised branch of the profession. Such a standard
of care will be implied in any contract. Whether a Surveyor has exercised that degree of
care, skill and competence is a question of expert opinion. The principles relating to the
standard of care for professionals have arisen out of a line of court decisions. In Voli -v-
Inglewood Shire Council6, the High Court held that an architect provided negligent
advice when he gave advice that a building was safe when it was not. In assessing the
standard of care of an architect, the court held:

       “An architect undertaking work in the way of his profession accepts the ordinary
       liabilities of a man who follows a skilled calling. He is bound to exercise due care,
       skill and diligence. He is not required to have an extraordinary degree of skill or
       highest professional attainments, but he must bring to the task he undertakes the
       competence and skill that is usual among architects practising their profession and he
       must use due care.” (at p.79 per Windeyer J.)

Thus a Surveyor would be required to demonstrate a fair, reasonable and competent
degree of skill. The profession is not the final arbiter of standards. That determination
rests with the court adjudicating in the matter.

Courts usually rely on the testimony of expert witnesses who give evidence as to current
acceptable standards of knowledge and performance, and it is usually against these
standards that a Surveyor accused of negligence or failure to perform to acceptable
standards is judged.

These standards are continually evolving in response to the needs of an everchanging
society and the results of improved technology. Currently, Governments are considering
changes to civil liabilities standards. This could have an effect on professional liability
standards also.

(c}     The Extent of the Duty of Care
For many years, the liability of a professional person was limited to a liability in contract.
While a professional person may have a duty at large like any other person, the liability
of a professional person for negligence in the performance of professional duties was to
the client only.

In Le Lievre -v- Gould7, a builder agreed to build some houses. The builder arranged for
a mortgagee to advance funds at various stages of the contract. The builder agreed with a
Surveyor to issue progress certificates for submission to the mortgagee for making
progress payments. In reliance on the certificates, the mortgagee advanced moneys to the
builder. It transpired that the certificates were wrong and the mortgagee overpaid the
builder. The mortgagee unsuccessfully sued the Surveyor. As there was no contract
with the mortgagee, it could not sue the Surveyor pursuant to any agreement.

6
    (1963) 110 CLR 74
7
    [1893] 1 QB 491


                                                                                             5
At that time, the law did not recognise that the Surveyor owed any duty of care to the
mortgagee, therefore the Surveyor was not liable.

However, with the law of negligence now well established, there have been some English
decisions where local councils have been sued successfully. These actions have come
about because residential buildings have been constructed in an improper manner and it
has been alleged that the local council, through the building inspector or engineer, should
have detected the defects in the building. It is worth recounting the facts and the decision
in one of these cases, as it deals specifically with a scenario Surveyors will be familiar
with and illustrates how liability may arise.

Dutton -v- Bognor Regis Urban District Council 8
In 1958, a builder commenced the development of an estate on the site of an old rubbish
tip. The local council approved the plans. That council, however, required its Building
Surveyor to inspect and approve the foundations before they were covered up. The
Surveyor did this and he approved the foundations and permitted the building work to
proceed. That inspection was carried out carelessly and the Surveyor failed to detect that
the house was being built on insecure foundations given the previous use of the land.
The house was duly completed and sold in 1960. It was subsequently sold to Mrs Dutton
a short time later. Before Mrs Dutton purchased the house, she noticed a crack in the
wall to which the staircase was attached. However, she completed the purchase without
having it surveyed or without obtaining a report about the crack.

The purchase was subject to a mortgage and the mortgagee carried out a survey report.
After this report, the mortgagee loaned to Mrs Dutton the money which she requested and
the purchase was completed in 1961. Some months later, further cracks appeared in the
walls and ceilings and the staircase slipped. Also, doors no longer closed properly. The
inadequate foundations were then diagnosed as the cause of the damage. Mrs Dutton
commenced proceedings in 1964 against the builder and the local council claiming
£2,240.00 being the cost of repairing the damage and £500.00 on account of the
diminution in value of the house. The proceedings against the builder were settled for
£675.00. The proceedings against the local council were resolved in the English Court of
Appeal in favour of Mrs Dutton. The court held:

1.       That the by laws imposed on the council a duty of care.

2.       That duty was owed to all such persons as the council could have been reasonably
         expected to foresee. The court held this included Mrs. Dutton.

3.       Because foundations are covered up, an inspector ought to have subsequent
         purchasers in mind when he inspects the foundations.

4.       The damage, in fact, occurred when the foundation was made and the period of
         limitation commenced to run from that time.
8
    (1972) 1 All ER 462


                                                                                           6
5.        Mrs Dutton was not barred from recovering the financial loss because in her case
          she had suffered physical damage through the deterioration of the house.

6.        The liability to subsequent purchasers also applied to builders and developers and
          was not confined to the local council.

This case highlights the duty of care owed by Surveyors when undertaking their work and
how far this duty extends. It demonstrates the potential field of claimants that may arise
should something go wrong.

Clearly, today a Surveyor in many instances may owe a duty of care where no contractual
nexus exists.

Negligent Mis-statement
One of the most common forms of professional liability for a Surveyor arises out of a
Surveyor’s negligent statements. That is, a Surveyor’s unintentional failure to report
accurately to the client or others, in writing or otherwise, in relation to the particular
services provided. This could be in the form of an incorrect statement (information or
opinion) or a material omission. Claims for damages characterised as arising from
negligent statements are frequently claims for economic loss.

The English House of Lords in the case of Hedley Byrne9 laid down the legal principles
in relation to actions for negligent statements. In essence, where a person possessed of a
special skill or information undertakes to apply that skill or supply that information for
the assistance of another person, or identifiable group, who relies on that skill or
information, then a duty of care will arise. This is irrespective of any contractual link.

In 1963, the House of Lords decided that liability for professional negligence included
claims for negligent statements by persons who were not clients of the professional
involved. However, there must be reasonable reliance on the advice in circumstances
where it was reasonably foreseeable that they would do so. In addition, there must be a
special relationship between the maker of the statement and the person who has suffered
the damage. Thus the law of negligent statements places an additional requirement on
the plaintiffs to establish their cases. It is appropriate to consider the Hedley Byrne case
in detail.

Hedley Byrne –v- Heller & Partners.
A customer enquired whether his bank could provide him with information about a
person with whom the customer was contemplating a business transaction. The bank
made enquiries of a second bank whose customer was the person with whom the first
bank’s customer was considering the transaction. The second bank supplied information
to the first bank that passed it onto their customer. The first bank’s customer relied upon
it and entered into the business transaction.


9
    [1963] 3 ALL ER 575


                                                                                               7
The other party to the transaction went into liquidation and the first bank’s customer
suffered economic loss and sued the second bank for negligent statement. The second
bank unsuccessfully defended the claim on the basis that there was no contract. The
House of Lords held that the second bank owed the first bank’s customer a duty of care
independent of any contract.

In the case of Hedley Byrne, the plaintiff did not apply to the defendant directly for
information and at no time was the defendant ever aware of the existence or identity of
the plaintiff. Nor was the defendant aware of the purpose for which the information that
it gave had been sought. As it turned out, the information that it gave was wrong and it
was held that the defendant owed a duty of care to the plaintiff.

It is now accepted that a Surveyor may have a contractual duty of care to his clients and
also owe a duty of care in the law of negligence to third parties that rely upon information
or advice given by a Surveyor in the course of business. In addition, a Surveyor may owe
a duty of care to third parties for the manner in which a Surveyor carries out survey work,
irrespective of any reliance on information or advice supplied by the Surveyor to the
client.

The common law principles derived from Hedley Byrne were considered by the High
Court of Australia in the case of Shaddock –v- Parramatta City Council10. The judges in
that case re-stated the general principles relating to the law of negligent mis-statement in
Australia. The giving of advice or information in relation to business or professional
transactions will give rise to a duty of care. If the person giving the information or advice
is a person with special skill and the information or advice is relied upon by a person,
and as a result of that reliance suffers damage, then liability may attach.

The High Court stressed the need for there to be a professional or business purpose or
circumstance that makes it clear to the person from whom information is being sought the
gravity and importance of the inquiry.

In the case of Hedley Byrne and Shaddock, the courts recognised the possibility of
minimising the risk of liability or a duty of care by use of a disclaimer or qualification at
the time of the giving of advice or information. What is a suitable disclaimer or
qualification will depend upon the acts and circumstances of each case. There is some
judicial doubt whether Surveyors may always exclude themselves from the performance
of the duty of care by some express reservation. However, any reservation or exclusion
may be taken into account when considering whether or not a duty of care has arisen, see
MLC Assurance Co -v- Evatt11. The nature and effectiveness of disclaimers or
qualifications will be dealt with in Chapter Five.

Sometimes a Surveyor is retained to carry out an identification survey on behalf of a
purchaser of a property. Typically, the purchaser provides the survey to the mortgagee
who, in reliance on the survey, advances money to the purchaser to complete the

10
     (1981) 150 CLR 225
11
     (1968) 42 ALJR 316 at 321


                                                                                            8
transaction. Suppose, subsequently it is found that the survey was inaccurate and that, as
a consequence, the value of the land was overstated. If the purchaser defaults on the
mortgage payments, then the mortgagee may sell the property to make good its loan and
interest. If the mortgagee is not able to recover fully from the sale of the property, then it
has suffered loss and the Surveyor may be liable in negligence for the loss based on the
principle in the Hedley Byrne case. This is despite the fact that the Surveyor had no
actual knowledge that the mortgagee had placed reliance on the defective survey.

(d)     Foreseeability and Damages
What damages flow from a breach of a duty of care in tort has been a matter of
considerable legal confusion. The confusion arises due to the range of different tests
used by courts to restrict the application of negligence over the years. These tests are
necessarily general in nature using words such as “reasonable foreseeability” and
“proximity” to determine whether a plaintiff has a right to recover any loss. This
approach is designed to place outer limits on the application of this branch of the law. It
was mentioned earlier in the chapter that this whole area is under review at national level
and is set to change.

To ascertain the extent of damages recoverable against a Surveyor for the negligent
breach of a duty of care in tort, two inquiries have to occur. The first question is one of
fact. It is whether the relation between the breach of duty of care and the damage
suffered by the third party is one of cause and effect in accordance with objective notions
of physical sequence. If no such causal nexus exists, that puts an end to the matter.

The test used is one of reasonable foreseeability. Was it reasonably foreseeable that the
action or inaction by the defendant would lead to the loss or damage? Thus risk of loss or
damage must not be far-fetched or fanciful. To an extent, this is an artificial exercise and
the application will vary from one fact situation to another. Thus, even though the
principle may be clear, the outcome on a particular set of facts may not always be. The
test does not require that the defendant was able to foresee damage to the plaintiff for a
particular person, but rather to a range or class of persons of which the plaintiff is a
member.

The second question is whether, or to what extent, the Surveyor should be liable for the
consequences that the Surveyor’s conduct has actually helped to produce. As a matter of
practicality, the courts impose a limitation upon the legal responsibility because the
consequences of an act theoretically could stretch into infinity. The task for the court is
to select those factors that are of sufficient significance to justify the imposition of
liability and to draw a line beyond which the third party must either shoulder the loss or
seek reparation from another source.

Often an event, the suffering of damage, has been due to multiple causes. The
contribution of other factors to the loss may be an argument available to the Surveyor to
argue lack of causation or the quantum of damages. There may be contributory causes
such as the third party’s failure to minimise the damage and mitigate the loss. The actual
quantum of such damages often takes a considerable period to determine.



                                                                                              9
This is due to the absence of any knowledge on the part of the Surveyor or the Surveyor’s
legal advisers as to the extent, if any, of any failure by the third party to act responsibly in
mitigating any losses or damage.

Damages that can be recovered by a third party may be physical, psychological or
economic in nature.

Below are some examples of classes of damages that may be recoverable:

     A mortgagee may be able to recover the damages if it can prove that it would not
      have advanced moneys to its client had it not been for the Surveyor’s (erroneous)
      report.

     An owner of a dwelling may have to reconstruct a house and incur costs such as rent
      during the renovations due to the failure of the Surveyor to properly survey the
      building site.

     A Surveyor may also be liable for the psychological distress to the persons who suffer
      the damage. Such damage may be extreme, for example, if there has been a nervous
      breakdown and the person suffers loss of income or opportunity as a result of the
      actions of the Surveyor. This would be subject to changes in the law currently being
      made arising from the Ipp Report.

There may be circumstances whereby a person suffers purely economic loss, but no
actual or threatened physical harm as a result of the negligence of a Surveyor. It may be
that another person has suffered actual or threatened physical damage as a result of the
Surveyor’s professional negligence. In fact, the economic loss may have taken place in
circumstances where the first person never relied upon, or perhaps even knew of, the
Surveyor’s work.

Such a case arose in Caltex Oil (Australia) Pty Limited -v- Decca Survey Australia
Limited12. Pursuant to an arrangement, the Australian Oil Refinery supplied oil to
Caltex at its Banksmeadow terminal. The oil passed through a pipeline, owned by the
Australian Oil Refinery, running along the bottom of Botany Bay. In 1971, a dredge was
using suction methods for the purpose of deepening a channel in Botany Bay. Amongst
other things, the dredge operator was relying upon certain charts prepared by Decca.
There was an error in the charts. Partly due to the error in the charts, the dredge operator
damaged the pipeline. As a result, the supply of oil to Caltex was disrupted. Caltex did
not suffer any property damage, but suffered financial losses during the period that it took
to repair the damaged pipe. Caltex successfully sued Decca. Every judge had things to
say about Caltex’s rights to recover economic loss, notwithstanding that Caltex had not
suffered actual property damage. The reasons for finding that Caltex was able to recover
its economic loss varied between the judges. The principles arising from this judgement
included:

12
     (1976) 136 CLR 529


                                                                                              10
1. Damages for economic loss, not consequential upon injury to the plaintiff’s personal
   property, are recoverable where the defendant has knowledge or means of knowledge
   that the plaintiff individually, and not merely as a member of an unascertained class,
   would be likely to suffer economic loss as a result of negligence.

2. The test for determining the line between recovery and non-recovery of damage for
   economic loss is that of a sufficient degree of proximity between the tortious act and
   the resultant economic loss so as to give rise to a duty of care.

3. Economic loss is recoverable when an appropriate duty of care is found to exist.
   Consequently, the defendant will be liable for economic loss due to negligent conduct
   when he can reasonably foresee that a specific individual, as distinct from a general
   or indeterminable class of persons, will suffer financial loss as a consequence of his
   conduct.

4. Persons causing damage by a breach of duty of care should be liable for all the loss,
   unless there are acceptable reasons of public policy for limiting recovery. The
   proposition that economic loss not connected with physical damage to the property of
   Caltex was not recoverable was unacceptable and there was no reason for limiting the
   recovery of such economic loss.

In a recent High Court decision, a valuer was held liable for damages arising from a
negligent property valuation. Although the lender sought the valuation, the mortgage
insurer also relied it on. This possibility was known to the valuer – see Kenny & Good
Pty Ltd -v- MGICA Limited13.

The courts have continued to recognise this category of pure economic loss, see for
example, Hill-v-Van Erp14. Recovery will be permitted where the court finds that the
plaintiffs have been both restricted and vulnerable to the loss whether or not they could
be specifically identified at the time of the loss.

On the basis of this principle, a Surveyor could be liable to the tenant of a building
where, as a result of the Surveyor’s professional negligence, the tenant’s right to occupy
the premises is threatened due to the potential physical damage of the building. The
tenant would probably have no right to sue the Surveyor for the cost of repairing or
protecting the building as this would rest with the owner of the premises. However, the
tenant would suffer economic loss in relation to the loss of the benefit of the tenancy if
the building was damaged, especially if the tenant was carrying on business from the
premises. On the principles laid down in Caltex Oil and subsequent cases, the tenant may
have a good cause of action against the Surveyor for any economic loss suffered.

Surveyors as Employees – Vicarious Liability
Employers may be vicariously liable for the standard of care and competence of their
employees, but not for the actions of independent contractors.

13
     (1999) 199 CLR 413
14
     (1997) 71 ALR 487


                                                                                            11
Independent contractors are distinguished by the amount of control/autonomy they have
in undertaking the work and also they provide their own tools of trade, whereas
employees generally receive their work requirements from their employer.

Where vicarious liability is established, the nature and extent of that liability will be the
same as if the employer itself was negligent. The liability of an employer in those
circumstances is derived from three interlocking factors.

1. There has been a negligent act or omission committed by a person, in this case an
   employee.

2. That there is a special relationship between the person who committed the negligent
   act or omission and the person sought to be made liable, in this case the relationship
   of employer and employee.

3.    That there is a connection between the negligent act or omission and that relationship
      of employment, in this case that the negligent work is carried out in the course of
      employment.

In general, if those three elements are present, then an employer will be vicariously liable
to third parties for the negligent acts or omissions of an employee carried out in the
course of employment. Thus in these circumstances, an employer will be legally
responsible for the damage caused by the negligence of employees. If any of those
elements are missing, the employer will not be vicariously liable. Whether all the
elements are present is a matter of fact for a court to determine depending upon the
circumstances of each case.

Employees are not always able to use their employer as a shield to avoid liability for their
own professional negligence. At common law, an employee is not exonerated for claims
for damages suffered by third parties caused by acts and omissions carried out in the
course of employment. However, the federal Insurance Contracts Act 1984 has
abolished the right of recourse by insurers against employees where the loss occurred in
the course of employment and was not serious or wilful misconduct. Although it is usual
for third parties to seek recovery from an employer, a third party may join the employee
as a party to any action in order to increase the amount of information able to be obtained
during the discovery process.

While unusual, technically at common law an employer may be able to sue an employee
for a contribution or indemnity for any damages awarded against the employer due to the
negligence of the employee. The right of an employer to recover those damages in such
circumstances was settled by the House of Lords in the decision of Lister -v- Romford
Ice and Cold Storage Co Limited15. Legislation, in some states, has changed this
decision, but it is instructive to consider the facts in Lister’s case before turning to the
legislation.


15
     [1957] 1 All ER 125


                                                                                                12
Lister was a driver employed by Romford Ice & Cold Storage Company Limited. During
the course of his employment, he was reversing his truck in the yard of the slaughter
house. Lister negligently ran down his father, who was also an employee of Romford Ice
& Cold Storage Company Limited, during that manoeuvre. The father successfully
obtained damages against Romford Ice & Cold Storage Company Limited who were
vicariously liable for the negligence of Lister. The insurers of Romford Ice & Cold
Storage Company Limited against whom a claim had been made on the Policy
commenced proceedings against Lister for contribution or indemnity in respect of the
verdict which Lister's father might obtain. The insurer claimed damages for negligence
or breach of Lister's contract of employment. Lister did not deny negligence, but he
attempted to deny liability to his employer. Lister alleged that it was a term of his
contract of employment that his employer would indemnify him against proceedings for
carrying out his employment in a negligent manner. He also alleged that it was a term of
his contract of employment that he would have the benefit of his employer's insurance
that covered its liability in respect of the proceedings brought by Lister's father.

The House of Lords held that Lister in driving negligently had breached his contractual
duty of care to his employer.

However Lister’s case has been overturned by legislation in some jurisdictions16.
Accordingly, employees in these states are entitled to indemnities from employers, except
in cases of serious or wilful misconduct. In all other Australian states and territories, at
least in theory, the employer may bring an action for contribution against the relevant
employee. However, this is considered unlikely for industrial relations reasons.

In most cases, Surveyors have professional negligence insurance in place to cover such
circumstances. As discussed above, the Insurance Contracts Act limits such actions
against employees for negligence claims to serious and wilful misconduct.

In Boral Resources (Queensland) Pty Ltd v Pyke17, an employee fell asleep while driving
a prime mover continuously for 16 hours. He had also consumed sufficient alcohol for a
blood alcohol content of 0.11 per cent. The Supreme Court of Queensland found that this
was serious and wilful misconduct so as to give a right of indemnity to the insurer against
the employee.

2.     Liability in Contract Law

A contract is a legally binding agreement between two or more parties. The contract
establishes the obligations of the parties, what is to be provided, how the contract is to be
performed, how much it will cost and when it will be done. Contracts may be formal in
nature, for example, a contract under seal (also known as a deed). They may also be
informal either in writing or oral or a mixture of each. There are also implied contracts
16
    In New South Wales - the Employees Liability Act, South Australia - the Wrongs Act
s.27C and the Northern Territory – the Law Reform (Miscellaneous Provisions) Act
s.22A.
17
   (1989) 93 ALR 89.


                                                                                           13
that arise from circumstances where the law implies a set of binding contractual
obligations, for example, purchases from vending machines.

A contract for survey work arises when a Surveyor is requested to do survey or other
consulting work and he/she agrees to do so. The arrangement may be oral or in writing or
a combination of both. Even where there is no written agreement, a Surveyor usually
makes notes as to the matters that are required to be carried out. In the course of carrying
out survey work, Surveyors may interpret plans and marks, manage major projects, carry
out measurement and calculations, prepare reports and plans, write letters and ultimately
send a memorandum of fees.

It is rarely specifically stated at the outset that the fee will be paid when the work is
carried out. This is a term and condition of the arrangement that would be implied by
law. However, there must be clear evidence as to the fee to be charged for the work. In
addition, it is rarely specifically stated that the Surveyor will carry out the work in a
proper and competent manner consistent with the standards of competence of the
profession. Again, this is a term that would be implied by law. What other terms and
conditions will form part of the contract whether they be express or implied, oral or in
writing will usually depend upon all the circumstances surrounding the making of the
contract.

  Case example
   Surveyor asked to mark out the boundaries for intended pipeline to be laid over
      50kms.
   Contract specifically states that survey must be completed within six months of
      the date of the contract.
   Surveyor was unable to complete the survey plans within the time specified.
  Where there is no intervening factor preventing the surveys from being conducted,
  then the client may have the right to end the contract, as well as sue for any damage
  arising out of the breach. In this case, there may also be an action brought for
  misleading and deceptive conduct under the Trade Practices Act (see next section).


Implied terms of a contract fall under the following headings:-

1 Terms implied by the courts as a matter of law or fact
2 Terms implied by legislation.

Terms implied by the courts
Although courts are loathe to imply terms into contracts, there are several recognised
categories where this has been done:

1. Professionals must carry out their contractual duties with reasonable care and skill.
2. Banks owe an implied contractual duty of secrecy to their customers.
3. In any commercial dealings involving a business, industry or profession, the court
   may imply a term or terms not specifically stated in the contract. In this instance, the



                                                                                          14
   terms claimed to be implied must be capable of clear expression and be identifiable
   from past dealings. The dealings must have been regular enough to be a course of
   dealings and there must be no conflict with the express terms of the contract.
4. Where the implied term will give business efficacy to the contract. The terms must
   be capable of clear expression and necessary to give effect to the contract. It must be
   fair and reasonable to both parties and not conflict with the express terms of the
   contract18.

For Surveyors, several of the above categories may apply; particularly 1 and 3.
Confidentiality is another important matter that may be implied in a contract where it is
not specifically mentioned. Circumstances surrounding negotiations or the nature of the
work may involve strict confidentiality. This topic is further addressed at the end of the
chapter.

Terms implied by legislation
There are various implied terms for the sale of goods covered by legislation in Australia,
its states and territories. However, the focus here is on the implied terms for contracts for
services, including surveying related services.

The Trade Practices Act 1974 provides that where a corporation supplies, in the course of
a business, services to a consumer there is an implied warranty “that the services will be
rendered with due care and skill and that any material supplied in connection with those
services will be reasonably fit for the purposes for which they are supplied.”19.

It is important to note that this section applies only to consumer transactions. The Act
states that it is a consumer contract if and only if, firstly, the services did not exceed
$40,000 in value (or as this prescribed amount may be amended from time to time).
Secondly, that where the price is greater than this amount, it is still a consumer contract,
and therefore the warranty applies, if the “services were of a kind ordinarily acquired for
personal, domestic or household use or consumption.”20.

Although this provision does not apply to transportation or storage of goods or a contract
of insurance, it would apply to contracts for the provision of surveying services within
the limits set out above. Thus where Surveyors carry on business as a corporation, there
is not only an implied common law duty of reasonable care and skill, but also a limited
statutory equivalent. This statutory term cannot be excluded from a contract. However
the provider of the service (e.g. a Surveyor) can limit liability under the implied terms
where the re-supply of the service is not of the type normally acquired for personal,
domestic or household use.

Under some state legislation, there are also implied terms as to due skill and care and that
the services are fit for the purpose for which those services are commonly purchased.21

18
   (see Westernport Pty Ltd –v- Hasting Shire Council (1977) 180 CLR 266)
19
    Section 74.
20
    Section.4B(1)(b).
21
    For example see Ss 91 & 92 of the Goods Act 1958 (Vic).


                                                                                           15
In claims for breach of contract, the only party able to sue the Surveyor is the party for
whom the Surveyor has undertaken the contract. It is only with the client that there is a
contract. Who is the client will normally be easy to determine because the Surveyor will
know with whom the Surveyor has had conversations or from whom the Surveyor has
received letters requesting the Surveyor to carry out survey work. However, a person
dealing with a Surveyor may represent various interests and it will be a question to be
determined from time to time whether a Surveyor has a contract with more than one
person or entity.

It is good business practice to commit the details of any agreement to writing.
Agreement on the precise details of the contract from the outset can prevent disputes
from arising at a later stage. Essentially, it may be regarded as a means of prudent
planning and risk management. In its simplest form, a written contract should include the
following:

    The parties to the contract and their contact details;
    The goods/services to be provided;
    The price or consideration for the receipt of the goods or performance of the services,
     including any other charges such as GST;
    The time of delivery of the goods or provision of the services and whether time is of
     the essence of the contract;
    Any other special term or condition; and
    A dispute resolution clause setting out the mechanism for the resolution of any
     disputes between the parties. In the absence of this, the courts will have to be the
     ultimate recourse for the parties.

It is worth noting that email has now become a dominant form of communication in
business. The content of emails may form a binding contract between the parties, as they
are evidence, potentially, of the negotiations and agreement reached between them. It is
no substitute for a properly drafted and executed contract however.

It should also be mentioned that care should be taken not to sign contracts with
provisions that limit the ability of the Surveyor, or its insurer, to make a full claim where
the other party has not fulfilled the provisions of the contract. Legal advice should be
sought in these cases to clarify the precise impact of these clauses on any insurance
policy.

    REMEMBER READ CONTRACTS CAREFULLY AND DO NOT SIGN ANYTHING YOU DO
    NOT UNDERSTAND.



Breach of Contract
There are two distinct types of contractual breach, each one leading to the potential for a
different outcome. Where the breach is of a condition of the contract, then the plaintiff
can rescind the contract and sue for damages. Where the breach is of a warranty, then


                                                                                            16
the plaintiff is unable to rescind the contract, but can claim damages resulting from the
breach.

A condition of the contract is a fundamental term, something that goes right to the heart
of it. For example, this may be the accurate measurement of boundaries under a
surveying contract. On the other hand, a warranty is a term of the contract that is of
more secondary importance and its breach does not wash away the very basis of the
contract itself. Which terms are conditions or warranties will vary from contract to
contract and is ultimately a decision for the courts.

Whether a Surveyor has breached a condition or warranty of the contract, the client can
sue the Surveyor for breach of contract claiming any damage, loss or injury suffered by
the client as a result of the breach. As far as money can do it, the person suffering the
damage is entitled to be placed in the same position as if the contract had been performed
properly. The court assesses damages. Where the contract is rescinded due to a breach
of a condition, the contract is void and, as far as possible, the parties to the contract return
to their original positions prior to entry into the agreement. This will not be done where
there is an innocent third party involved in the contract and who will be adversely
affected by this solution.

The precise nature and quantum of damages may take time to assess. In order to
ascertain what damages flow from a breach of contract, a court is required to examine
whether a particular loss caused by the breach of contract was within the contemplation
of the parties at the time the contract was entered into. If it is, then the loss is not too
remote and therefore recoverable. Damages that are too remote at law are not
recoverable. Note, however, the remoteness test in contract may not give the same result
as in tort law. The quantum of damages is determined by examining the circumstances
surrounding each contract. The person suffering damage must be able to demonstrate
that there is a causal connection between the breach of contract and the damage that has
been suffered. Damages may be physical damage, mental distress or economic loss. If
no damage has been suffered as a result of the breach of contract, then the client is only
entitled to recover what are known as nominal damages. A claim for mere breach of
contract, without actual damage occurring, would be most unusual.

Where damages are not an appropriate remedy for the plaintiff, superior courts have the
discretion, within certain rules, to grant other remedies such as an injunction to stop
someone undertaking a specific activity. It may also grant a writ of specific performance
to force the other party to carry out the contract in accordance with its terms.

In most circumstances relating to survey work where there has been a breach of contract,
the client will have suffered consequential or economic loss. Such damages are
unliquidated damages. These are damages that are not capable of precise calculation.
For example, these damages may include the cost of relocating a building incorrectly
erected in reliance on an inaccurate Survey Certificate. They may also include the cost of
inconvenience to the client arising from the delay in completing a building such as extra
rental costs. They may be in the form of economic loss relating to finance charges or



                                                                                             17
some other form of economic loss in relation to the carrying on of a business. By
contrast, liquidated damages are damages that are capable of precise calculation, for
example, where the amount of loss is prescribed in the contract.

3       Trade Practices Legislation

Until the mid 1980s, the Trade Practices Act 1974 had limited application to survey work
as it did not include it as one of the services protected and it only applied where services
were provided by corporations. Amendments to the Act and the enactment of Fair
Trading legislation in all states and territories have increased its reach enormously.
Below is a summary of the major provisions of the legislation that could affect
Surveyors. The Fair Trading legislation has mirrored many of the consumer protection
provisions of the Trade Practices Act and made them apply to services delivered by
“persons” not just corporations. Thus the combined impact of all of this legislation
means that it applies to most corporations and individuals.

Misleading and deceptive conduct
One of the broadest provisions to catch both contractual and non-contractual matters is
s.52 of the Trade Practices Act (and its state and territory equivalents). It states:

“Corporations shall not, in trade or commerce, engage in conduct that is misleading or
deceptive or is likely to mislead or deceive.”22

Consumers and businesses have used this provision to seek remedies for a wide range of
conduct caught within the breadth of the section. In order to establish a breach, there is
no requirement to show the existence of a contract or that there was intention, knowledge,
motive, fault or negligence by the defendant. This is known as a strict liability provision.

The section is made more potent by the impact of section 51A of the Act. This provision
states that, in relation to representations as to future conduct, a representation shall be
deemed to be misleading unless it was based on reasonable grounds when it was made.
Both the case example quoted previously and the one following are instances of
representations as to future conduct. If the statement is not based on reasonable grounds,
then it is deemed to be misleading and the onus is on the Surveyor to prove that it was
not. Effectively, this section reverses the onus of proof in cases where there are
statements being made or opinions being given in relation to future events, including




22
  For the equivalent provisions applying to persons rather than corporations see: s.11 Fair Trading Act
1985 (Vic); s.42 Fair Trading Act 1987 (NSW); s.56 Fair Trading Act 1987 (SA); s.10 Fair Trading Act
1987 (WA); s.38 Fair Trading Act 1989 (Qld); s.14 Fair Trading Act 1990 (Tas); s.12 Fair Trading Act
1992 (ACT); s.42 Fair Trading Act 1987 (NSW); s.42 Consumer Affairs and Fair Trading Act 1990 (NT).


                                                                                                      18
forecasts or predictions. Moreover the provision cannot be excluded by exemption
clauses in a contract.

This section clearly applies to the provision of professional services, including surveying
related activities. For example in Bond Corporation Limited -v- Thiess Contractors Pty
Limited & Anor23, the court held that the advice of a professional engineer was caught by
the section and made the broader statement that it was applicable to professional services
generally. In Multiplex Constructions Pty Ltd -v- Amdel Ltd24, an architect was liable
for incorrectly stating that a building was free of asbestos.


Case example
 A Surveyor entered into an agreement to prepare a plan of subdivision and lodge it
   with the local council for approval.
 When the Surveyor entered the contract, he assured the client that there would be no
   problems getting the plan approved.
 Unfortunately, the plan was not approved and the client had already incurred
   expense to develop the site based on the Surveyor’s apparent assurance of approval.
   The client may bring an action for misleading or deceptive conduct under the Trade
   Practices Act as the client may argue that it has been misled. It is not relevant that
   the Surveyor did not intend to mislead the client. There are also possible actions for
   negligent mis-statement and breach of contract. This illustrates that Surveyors must
   be clear and not overstate the position, in this case, that approval is a certainty.
   Equally clients should be told not to proceed with anything until approval is
   received.

There are three essential elements required to establish misleading or deceptive conduct
under federal or state legislation:

     There is a corporation (or person);
     The activity complained of occurs in trade and commerce; and
     That there is actually misleading or deceptive conduct or conduct that is likely to
      mislead or deceive.

The major area for discussion is the third element; what constitutes misleading or
deceptive conduct. Over the last 20 years, the courts have held that this element does not
require an active representation in order to be caught; a circumstance may be misleading
even where there is silence. There is no need to prove carelessness or even misconduct to
be successful. The categories of actions brought under this provision include advertising,
unfair competition and pre-contractual negotiations. Actions have been brought in
relation to real estate contracts, financial advice, and sale of businesses and franchise
arrangements. It is easy to envisage a Surveyor becoming embroiled in such actions, for
example, where preliminary advice about the suitability of land for a certain purpose
23
     [1987] ATPR 40-771
24
     (1991) ATPR 41-154


                                                                                            19
turns out to be incorrect. Based on this, the person enters into a contract to buy and
develop the land only to discover it is inappropriate for the purpose specified. In each
case, the plaintiff will have to establish that reliance has been placed on the Surveyor’s
advice or opinion. The reliance does not need to be the sole factor in reaching a decision.
However, it must be a significant one.

The courts have taken a strong view that exemption clauses, or other devices that attempt
to exclude liability, are not always effective. One way in which some companies deal
with this is to get the other party to sign a document stating that no reliance is placed on
any representations made except those representations mentioned in the formal contract.
This is an attempt to confine representations made only to those actually written into a
contract. The ultimate effectiveness of these clauses will depend on their precise terms
and the circumstance of a particular case. Another way of minimizing the risk of this sort
of action is to encourage the other party to seek independent legal advice, particularly
where the other party may not have a strong understanding of the subject matter of the
contract.

From the point of view of a Surveyor, the Trade Practices Act provides a greater range of
potential remedies for plaintiffs than the common law actions do. This is another reason
why actions under this section are growing in frequency.

Thus section 52, when combined with the potential remedies, has considerably extended
the areas of possible liability under the law.

False representations in relation to land
This is a more specific action under the legislation and for this reason may not be
preferred to the broader reach of section 52. It could well apply to business conducted by
Surveyors; however it would more likely apply to businesses directly involved in land
transactions.

Section 53A of the Act provides, in part, as follows:

“A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the
possible sale or grant, of an interest in land or in connexion with the promotion by any
means of the sale or grant of an interest in land:
………..
(b) make a false or misleading representation concerning the nature of the interest in the
land, the price payable for the land, the location of the land, the characteristics of the
land, the use to which the land is capable of being put or may lawfully be put or the
existence or availability of facilities associated with the land.
…….”

This is a more targeted provision than section 52, discussed earlier. It does not require
proof of intention or belief by the representor merely that the representation was made
and that it was false or misleading. It is not necessary that the representation have been
made to the plaintiff, only that this person has suffered damage as a result of it.



                                                                                             20
From the excerpt above, this provision could easily apply to survey-related work. For
example, where property being prepared for sale is incorrectly described as a result of an
identification survey, then the purchaser may have an action against the Surveyor if it
suffers loss as a result of the purchase of the property. In most cases, plaintiffs would
also include an action for misleading or deceptive conduct and the appropriate common
law remedies e.g. contract law or negligence.

 Unconscionable conduct
Federal and state consumer protection legislation such as the Trade Practices Act and
Contracts Review Act in New South Wales could be another source of potential liability
for Surveyors.

The Trade Practices Act provides civil remedies where a corporation, in trade or
commerce, in connection with the supply of goods or services to a person, engages in
conduct that is unconscionable.25 Unconscionable conduct is conduct that is so one-sided
or extreme that it is a shock to the conscience of a fair-minded person. Such conduct may
arise, for instance, where there is unequal bargaining power between two parties to a
contract and the party with the superior position uses it to inflict extremely onerous
obligations on the other party. Although generally courts are reluctant to intervene in
contracts struck between the parties, they will do so where the conduct is regarded as
unconscionable. The Act provides a non-exhaustive list of matters that may be taken
into consideration by a court when considering whether conduct is unconscionable or not.

Such legislation has wide ranging powers to set aside contracts or parts of contracts that
are harsh and unjust or are not reasonably necessary for the protection of someone’s
legitimate interests in the contract. But the legislation precludes a corporation from
obtaining any relief under it.

Although it may be unlikely that Surveyors will be in a position to take advantage of a
superior bargaining position in the way described above, the legislation could have a
direct impact on disclaimer clauses, as opposed to explanatory clauses or qualifications,
of unnecessary breadth that are incorporated into contracts to limit or exclude liability for
breach of contract or negligence. However, it will be most unusual that Surveyors will be
able to incorporate disclaimer clauses at the time of entering into the contract in order to
exclude the Surveyor’s liability to the client. Any disclaimer clause incorporated into a
survey report after the making of the contract to limit liability to a client would have no
force or effect. Such a clause really falls beyond the terms and conditions of the contract
and a court would not enforce a condition imposed unilaterally after the contract has been
settled, unless the other party agreed to it. Therefore a disclaimer clause imposed
subsequently would not affect the original contract or limit a Surveyor’s liability for
breach of contract or negligence. In any event, the terms of section 52 cannot be
excluded and to the extent the conduct of a Surveyor is misleading or deceptive, then this
provision will override any conflicting clause in the contract.


25
     Section 51A.


                                                                                             21
Disclaimer clauses should not be confused with qualifications that properly form part of
the content of a survey report or survey advice. Disclaimer clauses, explanatory clauses
and warning notes are discussed more fully in Chapter Five.

Of course, it may be that a Surveyor could be the victim of unconscionable conduct, in
which case this provision will be very useful provided that the Surveyor was carrying on
business as an individual or partnership and not as a corporation. Corporations are not
able to bring an action under this provision.

At common law, the court also has the power to set aside a contract that it considers to be
unconscionable. In essence, this may arise in circumstances where one party to an
agreement is at a special disadvantage as the result of an unfair condition in it. The court
will only set aside the contract where it is clear that the party in the superior position has
abused this position 26.

4. Federal Privacy Legislation and Confidentiality

The Privacy Act 1988 has been extended to cover the private sector throughout Australia.
It came into force on 21 December 2001. The Act regulates the manner in which
businesses collect, use, store and disclose personal information. Personal information is
information or opinion about an identifiable individual or someone that is capable of
being identified. So it would include lists with names and addresses and any file details
relating to the work being done for private clients. The Act requires the observance of
the 10 National Privacy Principles (NPPs) set down in the Act unless an organisation or
industry body registers its own separate code of practice with the Privacy Commissioner.

The NPPs cover the following areas:

      Collection of personal information
      Use and disclosure of personal information
      Data quality standards – accurate, complete and up to date
      Data security
      Openness – provide details of way in which information is managed
      Access and correction
      Use of personal identifiers
      Anonymity principle
      Restrictions on the transfer of data overseas
      Special requirements for the use of sensitive information (including health data and
       criminal record).

The Act does not apply to acts or practices relating to personal information between
employers and employees, activities of a non business nature involving the collection of
personal information (personal, household or domestic use) or where the transfer of
information is between related companies.

26
     See Commercial Bank of Australia Ltd -v- Amadio (1983) 151 CLR 447


                                                                                              22
From 20 December, 2002, the Act was extended to small businesses defined as
organizations with an annual turnover from all sources of $3 million or less, but only if
the business is:

   trading in personal information (e.g. buying or selling a mailing list); or
   related to a larger business (a related body corporate); or
   a contractor that provides services under a Commonwealth contract.

Thus, in practice, the legislation will mainly apply to the larger surveying businesses with
annual turnover exceeding $3 million.

The legislation provides a mechanism for complaints to the Privacy Commissioner who,
in turn, has the power to conciliate any dispute. Failing this approach, the matter can be
referred to a tribunal for adjudication. Although monetary compensation may be
awarded, the legislation does not provide for criminal sanctions.

Some states have also passed legislation covering the state public sectors, for instance,
the Victorian Information Privacy Act 2001.

In terms of client files, as a matter of risk management Surveyors should retain these at
least until the expiration of any limitation of action period – see the next chapter for
details.

Surveyors should review the personal information they currently hold in light of the new
obligations under the privacy legislation. For further information see
http://www.privacy.gov.au

Confidentiality
This is a related concept but has more to do with the relationship created between two or
more parties in relation to information. Surveyors are involved frequently in confidential
relationships with clients and other parties, for example, local authorities. Therefore it is
an important area. As a matter of law, confidentiality may arise in the following
categories:

1. Under the terms of a contract e.g. an employer may require that
   employees/contractors agree not to disclose any confidential information including
   trade secrets and other proprietary information;
2. Under statute where, for example, employees of government offices are required to
   keep prescribed information confidential;
3. Apply to information received where a special relationship exists (e.g. doctor/patient
   or lawyer/client), where the information becomes privileged and cannot even be
   disclosed in court; or
4. Be express or implied by the manner in which the information is communicated to
   another party, for example, when someone is told to keep a secret. This may be more
   difficult to prove than in the other categories.


                                                                                            23
Thus the law of confidentiality has extensive reach. In a survey environment, it is likely
to arise by way of contractual condition or where confidential information is
communicated outside of a contractual situation – categories 1 and 4 above.
Employment and client contracts may contain confidentiality clauses. In the case of
category 4, it may arise, for example, where a surveyor, in the normal course of his work,
is made aware of confidential information about a proposed development from one
developer and either unthinkingly or inadvertently discloses this information to another
developer who may be in competition with the first developer, or who may be able to use
the information to his own advantage. Misuse of confidential information could lead to a
court injunction or other proceedings against the Surveyor.

Further reading
Fleming, Law of Torts (9th ed.) The Law Book Company, Sydney, 1998.
Joyce and Norris, Valuers Liability (2nd ed.) Australian Institute of Valuers & Land
Economists, Deakin ACT, 1994.
Miller, Annotated Trade Practices Act (23rd Ed.) The Law Book Company, 2002.
Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract Butterworths, Australia,
1997.
Trindade and Cane, The Law of Torts in Australia (3rd ed.), Oxford University Press,
Australia, 1997.


  Key Points for Review
      Surveyors may be liable for their professional conduct under various laws including
        contract, torts (negligence) or specific legislative provisions.
      Generally, negligence requires the plaintiff to establish the existence of a duty of care,
        that the requisite standard of care was breached, that the conduct caused the damage and
        it was reasonably foreseeable.
      Surveyors must take care not to make negligent statements of opinion or information
        when consulting or providing advice. The principle in Hedley Byrne extends the reach of
        negligence to this situation.
      Damages may be awarded for purely economic loss in certain circumstances (see Caltex
        case).
      Contracts may be express or implied by law. The terms of a contract may be conditions
        or warranties depending on their importance to the existence of the contract itself. A
        party to a contract may rescind a contract for a breach of a condition, but not for a breach
        of a warranty. Damages may be payable in either case.
      Surveyors should, as a matter of good practice, reduce the essential terms of a contract to
        writing so that all the parties are clear on their rights, duties and obligations.
      The use of misleading and deceptive conduct provisions of the Trade Practices Act and
        fair trading acts of each state and territory has become an important means of seeking
        redress for professional mistakes. It has a very broad reach and a wide range of remedies
        available to a successful plaintiff. It has seen increasing use in disputes against
        Surveyors.
      Privacy laws now apply to most businesses in various ways so it is important that
        Surveyors understand the federal privacy principles and how they apply in practice.
      The law of confidentiality may provide some important commercial protection for
        Surveyors.                                                                         24

				
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