Gaffney v Cranston McEachern and Co

The case involved a dispute between Gaffney and Cranston McEachern and Co. Gaffney sought compensation for economic loss he claimed arose from negligent advice provided by Cranston McEachern and Co, a firm of accountants. The High Court of Australia was tasked with determining the legal principles governing liability for economic loss caused by negligent advice.

The primary legal issue was whether a duty of care existed between an accountant and a client in relation to economic loss caused by negligent advice. The court considered whether such a duty of care could be established in the absence of a pre-existing contractual relationship between the parties. The court also needed to determine the appropriate test for establishing liability in cases involving purely economic loss.

The court held that a duty of care could indeed exist between an accountant and a client for economic loss caused by negligent advice, even in the absence of a contractual relationship. However, the court also clarified that establishing such a duty of care required the plaintiff to satisfy the requirements of the "foreseeability test". The court further held that the foreseeability test required the plaintiff to demonstrate that it was reasonably foreseeable that their economic loss would result from the defendant's failure to exercise reasonable care and skill in providing the advice.

The court concluded that while a duty of care did exist, the plaintiff had not satisfied the foreseeability test. Therefore, the plaintiff's claim for compensation for economic loss caused by negligent advice was dismissed. The court did not make any orders in relation to the costs of the proceedings.