McDonald v Commonwealth Development Bank of Australia

In *McDonald v Commonwealth Development Bank of Australia* [1991] NSWCA 195, the New South Wales Court of Appeal considered an appeal by the plaintiff, McDonald, against the Commonwealth Development Bank of Australia. The dispute concerned the Bank's alleged breach of a duty of care owed to McDonald in relation to the provision of financial advice and the management of a loan facility.

The central legal issues before the Court of Appeal were whether the Bank owed a duty of care to McDonald in its dealings with him, and if so, whether that duty had been breached. Specifically, the court had to determine the scope of the Bank's obligations, particularly concerning the advice it provided and its conduct in relation to the loan facility granted to McDonald's company.

The Court of Appeal, applying established principles of negligence and the law of contract, found that the Bank did owe a duty of care to McDonald. This duty arose from the special relationship that existed between the Bank and McDonald, given the Bank's expertise and McDonald's reliance on its advice. The court held that the Bank had breached this duty by failing to exercise reasonable care and skill in its dealings with McDonald, particularly in relation to the advice provided and the management of the loan. The court reasoned that the Bank's actions fell below the standard expected of a prudent financial institution in similar circumstances, leading to financial detriment for McDonald. The appeal was allowed, and the matter was remitted for assessment of damages.