Sherson & Associates Pty Ltd v Bailey

Sherson & Associates Pty Ltd (the appellant) appealed to the New South Wales Court of Appeal against a judgment of the Supreme Court of New South Wales that found it liable in negligence to the respondent, Mr. Bailey. The dispute concerned economic loss suffered by Mr. Bailey as a result of building defects in a property he purchased, which he alleged were caused by the negligent advice and services provided by Sherson & Associates.

The Court of Appeal was required to determine several key legal issues. These included whether Sherson & Associates owed a duty of care to Mr. Bailey, whether that duty was breached, and whether the breach caused the economic loss suffered by Mr. Bailey. Crucially, the court had to consider whether Mr. Bailey's own actions or omissions constituted a *novus actus interveniens* (a new intervening act) that broke the chain of causation, or whether he failed to mitigate his loss or aggravated it. Furthermore, the court had to assess the application of the *Limitation Act 1969* (NSW), specifically whether Mr. Bailey had the capacity, with reasonable diligence, to discover the damage within the relevant limitation period. The court also considered an application by the appellant to amend its pleadings after the close of evidence.

The Court of Appeal, in its reasoning, analysed the principles of negligence, particularly in the context of economic loss arising from professional services. It examined the evidence to determine if the appellant's conduct fell below the standard of reasonable care expected of a professional in its field. The court also applied the principles relating to causation, considering whether the appellant's negligence was a necessary cause of Mr. Bailey's loss, and whether any subsequent events broke that causal link. The court's assessment of the *Limitation Act* involved determining when Mr. Bailey acquired the requisite knowledge of the damage. The court ultimately dismissed the appeal, upholding the primary judge's findings on liability and causation, and refused the application to amend pleadings.