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After driving for about 2 minutes I parked my car to do an errand. I then got back into the car which failed to start. The car engine turned over so no fault with the battery but engine didnt engage, despite trying several times. After about an hour a mechanic arrived, briefly asked the problem and then we tried the ignition again, this time it started. Mechanic advised that there was little more he could add although it would appear to have been a flooded engine. I asked whether I should now let the car rest but he advised that I should now drive the car for a while and problem would sort itself out. All good news? Not quite.

An hour later I was heading up a steep hill on the the Albany highway when the engine lost all power. I came to a stop immediately, got out of car with the family as engine was now smoking.

Car refused to start, AA was then called and picked up the car returning it to the local garage.

Following detailed inspection the current advice is that the engine is now in need of serious repair to the tune of $5k- $6k. Question is simply, do I have a claim against the original mechanic and what is the duty of care owed?

In this instance it seems that the mechanic has no liability whatsoever.
As the symptom you described to the mechanic was "cranking over but not starting" but when he arrived it immediately started, he would have no way of knowing what the fault was - and flooding would be quite a likely cause, given that the car had only been driven for 2 minutes prior to stopping, so the engine was still cold. This senario is the most common cause of flooding on injected engines.
The mechanic has done nothing wrong in this case.