Woolcock Street Investments Pty Ltd v CDG Pty Ltd

Citation: (2004) 216 CLR 515

The first respondent (CDG) designed the foundations of a warehouse and office complex for the then owner of premises. The appellant (Woolcock) subsequently purchased the premises. It then became apparent that the building was suffering substantial structural distress as a result of settlement of the foundations, requiring steps to be taken to prevent damage to property or person.
Woolcock alleged that CDG and its employee (the second respondent) owed to Woolcock, and had breached, a duty to take reasonable care in designing the foundations. The respondents denied that they owed a duty of care or that it had been breached.

A case was stated for the Queensland Court of Appeal, asking whether on agreed facts Woolcock’s statement of claim disclosed a cause of action in negligence. The Court of Appeal answered “No”, and Woolcock appealled.

Held, dismissing the appeal (per Gleeson CJ, Gummow, Hayne, Heydon, McHugh and Callinan JJ; Kirby J dissenting):

(i) Per Gleeson CJ, Gummow, Hayne, Heydon, McHugh and Callinan JJ: The respondents did not owe to Woolcock a duty to take reasonable care on the facts alleged in the statement of claim and agreed in the case stated: at [35], [114], [231].

Per Kirby J (dissenting): Woolcock should have its opportunity at trial to establish that a duty of care existed and was breached in the circumstances: at [175].

(ii) Per Gleeson CJ, Gummow, Hayne, Heydon, McHugh and Callinan JJ: Woolcock was not vulnerable to the economic consequences of any negligence of the respondents in their design of the foundations. The facts in the case stated did not reveal that Woolcock could not have obtained a warranty from the original owner of the premises or conducted investigations to discover the defects: at [31]–[32], [110], [212]–[213].

Per Kirby J (dissenting): Woolcock was vulnerable because of the fact that, without wisdom after the event, it had no reasonable opportunity of discovering, and protecting itself against, the latent defect of which it now complains: at [173].

(iii) Per Gleeson CJ, Gummow, Hayne and Heydon JJ: No duty of care was owed by the respondents to the original owner of the premises, there being no allegation in the statement of claim or inference open on the agreed facts that there was an assumption of responsibility by the respondents or known reliance by the original owner on the respondents: at [27].

(iv) Per McHugh J: The ratio decidendi of Bryan v Maloney, was limited to dwelling houses and did not extend to commercial buildings: at [71].

(v) Per McHugh J: Imposing a duty would have unsatisfactory consequences for the administration of justice and the efficiency of commerce, since claims may be brought many years after the construction of the building as a consequence of the doctrine that damage does not occur until the defect manifests itself: at [107]–[109].