THE TORT OF NEGLIGENCE

Contents
1. Tort of Negligence
a. Origins of the tort of negligence b. Negligence as a cause of action 1. Duty of care 2. Breach of Duty 3. Damage

2. Negligent Misstatement
c. Pure Economic Loss d. Tort of Negligent Misstatement in Australia e. Unreasonable Reliance f. Duties owed to Third Parties

3. Defences a. Voluntary assumption of Risk b. Contributory negligence

4. Vicarious Liability

LAW OF TORTS
The Law of Torts is that branch of civil law that is concerned with civil wrongs, other than a breach of contract, which the law will redress by an award of damages. Some torts include negligence, trespass, conversion, detinue, nuisance and defamation. The most litigated tort is the tort negligence.

1. TORT OF NEGLIGENCE

a. Origins of the tort of negligence

A decomposed snail in Scotland was the humble beginning of the modern English law of negligence
The House of Lords decision in Donoghue v Stevenson [1932] AC 562 is accredited with having developed the tort of negligence. Mrs D and a friend were at the Wellmeadow Cafe. The friend purchased a bottle of ginger beer for Mrs D. Mrs D poured out some of the ginger beer into a glass and drank it. On pouring out the remainder, she also poured out a decomposing snail which had got into the bottle at the manufacturers. Mrs D suffered nervous shock, gastro-enteritis and depression, and was no longer able to work. She sued the manufacturers for compensation, however, the lower courts rejected her claim. Mrs D appealed the matter to the House of Lords where it was held that a manufacturer owes a duty of care to the consumer to ensure that manufactured goods do not have defects that are likely to cause injury upon use. The duty of care concept forms the basis of the common law action for negligence and can be found to exist in a range of relationships, not just manufacturer and consumer.

b. Negligence as a cause of action

In a common law action for negligence the plaintiff must prove the following elements on the balance of probabilities: 1. The defendant owed the plaintiff a duty of care; 2. The defendant breached that duty of care by failing to comply with the requisite standard of care; 3. The plaintiff suffered loss or damage as a result of the breach.

1. Duty of care
The existence of a duty of care is determined by reference to: (a)

Reasonable foreseeability test

2

In Donoghue v Stevenson Lord Atkins neighbour principle, although obiter, has provided the foundation for the establishment of a duty of care: The rule that you are to love your neighbour becomes, in law, you must not injure your neighbour; and the lawyers question, who is my neighbour? Receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who in law, is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. So the general rule is that the defendant owes a duty of care to all persons who it is reasonably foreseeable will suffer loss or damage as a result of the defendants acts or omissions. The question whether or not a duty of care is owed is a question of law and is determined objectively by asking whether a reasonable person, in all the circumstances of the case, would have foreseen the likelihood of injury. (b)

Was there a vulnerable relationship?

The reasonable foreseeability test is so broad that the courts have attempted to narrow down the situations in which a duty of care is owed with reference to other factors including the vulnerability of the plaintiff and control of the defendant. Relevant questions to ask are as follows:

1. Was the defendant in a controlling position through access to greater resources and knowledge than the plaintiff? 2. Was it reasonable for the plaintiff to be reliant on the defendant? 3. Was the defendant in such a position that required them to be protective of the plaintiff? (b) Are there any policy considerations?

Policy considerations also determine whether a duty of care is owed in the circumstances. This can include a wide range of factors such as the risk of creating unlimited liability amongst an indeterminate class, possible commercial or financial consequences, the impact on social or moral values, or even whether it is fair and equitable.

2. Breach of Duty
The duty of care will be breached when the defendant fails to exercise the required standard of care. This is objectively determined and is based on that standard which the ordinary, reasonable and prudent person would observe: Paris v Stepney Borough Council [1951] AC 367. 3

The factors that are relevant in determining the standard of care are as follows: (a) The magnitude of the risk (b) Conformity with established standards (c) Professional conduct

(a)

Magnitude of the risk

As a general rule, the higher the magnitude of the risk, the more careful a reasonable person will be. There are two elements that affect the magnitude of the risk, namely: (i) (ii) the likelihood of the occurrence, and the seriousness of the injury.

(i)

Likelihood of the occurrence

Bolton v Stone [1951] AC 850 Miss S lived opposite the northern end of the Cheetham Cricket Ground. She had just stepped from her garden gateway on to the pavement of the highway when she was struck on the head by a cricket ball and suffered injury. The fence surrounding the ground was 12 feet high and at the northern boundary, owing to a rise in the ground, was 17 feet above the level of the wicket. The distance from the wicket to the boundary was 78 yards. However, in the past 30 years, 610 cricket balls had been hit over the fence and onto the road. So the mere possibility that someone may be injured by the defendants action is not necessarily sufficient to render the defendant liable. There must be some probability of injury to the plaintiff.

In Bolton v. Stone the English court was sympathetic to cricket players

(ii) Seriousness of the injury

Paris v Stepney Borough Council [1951] AC 367 P lost his left eye during an air raid in 1941. In 1947, while working for the Council, he was welding something when a piece of metal flew off and hit him in the right eye. He lost the sight in that eye, so that he was now totally blind. He was not wearing goggles at the time of the accident. The provision of goggles was not part of the defendants system of work.

(b)

Conformity with established standards

Conformity with the usual practice will generally go a long way towards rebutting an allegation of negligence. However, the fact that a defendant has behaved in the usual way will not necessarily absolve them from responsibility. Mercer v Commissioner for Road Transport and Tramways (NSW) (1936) 56 CLR 580 M was travelling in the leading tram of two trams coupled together when the driver collapsed and the coupled trams went out of control and crashed into the rear of another tram. M was injured. M argued that the accident would never have happened if a device known as the dead mans handle had been installed. [This device must be held in position by the driver in order to drive the tram. If the driver releases the handle (e.g. if they collapse), it springs back, applying the brakes and bringing the tram to a stop.] Expert witnesses on behalf of the Commissioner gave evidence that Sydney trams were up-to-date in their equipment and that the provisions for stopping trams were in accordance with general practice in the case of trams carrying both a driver and a conductor. The witnesses had no knowledge of any two-person trams which used the dead mans handle.

(c)

Professional conduct

In some circumstances a higher standard than that of a reasonable person is required. For example, where a person purports to have a particular skill the standard will be increased to that of a reasonably competent member of that profession or calling. Pacific Acceptance Corporation Ltd v Forsyth (1992) 175 CLR 479 P, a finance company, successfully claimed damages from its auditors for losses caused by the auditors failure to warn P of fraudulent and irregular features in loans made to a Mr Thompson and a group of companies with whom he was associated.

3. Damage
5

Once it has been established that the defendant owes a duty of care to the plaintiff and that the defendant has breached that duty, it must be established that the damage the plaintiff has suffered is recognised by the law as being recoverable. This third element of the tort of negligence involves the concept of causation. This means (a) causation in fact, and (b) causation in law. (a) Causation in fact

It must be shown that the defendants act or omission actually caused the damage that the plaintiff has suffered. If you can say that the damage would not have happened but for a particular fault, then that fault is in fact a cause of the damage; but if you can say that the damage would have happened just the same, fault or no fault, then the fault is not a cause of the damage: Cork v Kirby MacLean Ltd [1952] 2 All ER 402. This is referred to as the but for test. (b) Causation in law

Not all damage which has in fact been caused by the act or omission complained of is recoverable. The general rule for causation in law is that the defendant is liable for the kind of damage that is reasonably foreseeable as a result of the breach (i.e. the act or omission complained of). Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd [1961] AC 388 (The Wagon Mound (No 1)) The Wagon Mound was a ship from which furnace oil had been negligently spilled into Sydney harbour. The oil slick drifted 600 feet to the wharf where the wharf owner was carrying out repairs to another ship, the Corrimal. The wharf owner asked the ship owner about the danger and was told he could continue his work because the slick would not burn. The wharf owner allowed work to continue on the wharf, which sent sparks onto a rag in the water which ignited and created a fire which burnt down the wharf. In the ensuing fire, considerable damage to the wharf and the Corrimal occurred. The House of Lords determined that the wharf owner 'intervened' in the causal chain, creating a responsibility for the fire which canceled out the liability of the ship owner. In Australia, the concept of remoteness, or proximity, was tested with the case of Jaensch v. Coffey (1984) 155 CLR 549. The wife of a policeman, Mrs Coffey, suffered a nervous shock injury from the aftermath of a motor vehicle accident although she was not actually at the scene at the time of the accident. The court upheld in addition to it being reasonably foreseeable that his wife might suffer such an injury; it also required that there be sufficient proximity between the

plaintiff and the defendant who caused the accident. Here there was sufficient causal proximity.

NEGLIGENT MISSTATEMENT
It took some time for the courts to recognise negligence claims where the loss claimed was purely economic and attributable to incorrectly given advice and/or information. To succeed in a claim for negligence the plaintiff would need to show physical loss, such as damage to property or injury to the person. Any economic loss claimed would need to be consequential upon physical loss, such as loss of income or medical expenses as a result of the defendants negligence.

The case of Spartan Steel & Alloy v Martin [1973] QB 27 (CA), 37 supports the traditional approach. The defendant had negligently cut a power cable leading to the plaintiffs factory. As a result goods in production at the time of the power cut were destroyed. The plaintiffs sued for compensation for the damage to those goods and the loss of profit consequent upon that damage. They also claimed the loss of profit on goods that could not have been manufactured that day due to the power cut. The court refused to award damages for the last claim as this was pure economic loss. Claims for pure economic loss were recognised by the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

a. Pure Economic Loss

Negligence claims for pure economic loss were recognised by the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. Hedley Byrne was a firm of advertising agents. A customer, Easipower Ltd, put in a large order. Hedley Byrne wanted to check their financial position and credit-worthiness and subsequently asked their bank, the National Provincial Bank, to get a report from Easipowers bank, Heller & Partners Ltd., who replied in a letter that was headed, "without responsibility on the part of this bank". It said that Easipower was, "considered good for its ordinary business engagements". The letter was sent for free. Easipower went into liquidation and Hedley Byrne lost 17,000 on contracts. Hedley Byrne sued Heller & Partners for negligence, claiming that the information was given negligently and was misleading. Heller & Partners argued there was no duty of care owed regarding the statements, and in any case liability was excluded. 7

The court found that the relationship between the parties was "sufficiently proximate" as to create a duty of care. It was reasonable for them to have known that the information that they had given would likely have been relied upon for entering into a contract of some sort. This would give rise, the court said, to a "special relationship", in which the defendant would have to take sufficient care in giving advice to avoid negligence liability. However, on the facts, the disclaimer was found to be sufficient enough to discharge any duty created by Heller's actions.

b. Tort of Negligent Misstatement in Australia

The Privy Councils decision in MLC v Evatt [1971] AC 793 sought to limit the Hedley Byrne special relationship to circumstances where the defendant was carrying on business of a kind calling for skill or competence or claimed such expertise: e.g. an accountant or an investment adviser. The High Courts decision in Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225 rejected the Privy Councils view in Evatt that liability should be limited to those engaging in activities involving skill or competence. In that case a developer sued a local council for damages for the loss he sustained upon relying on incorrect advice given by the council on two separate occasions regarding proposed road widening plans. The Court stated that a person who gives advice to another in circumstances where the adviser knows, or ought reasonably to know, that the person is likely to rely on the advice (i.e. where a special relationship exists), owes a duty of care not to be negligent in giving such advice and will be liable for economic loss if the advice is given carelessly. The High Court also held that the duty of care extended to those supplying advice or information in the course of discharging a government or administrative responsibility, and was not limited to commercial business activities; and that the plaintiff may be seeking mere factual information, as opposed to an expert opinion.

c. Unreasonable Reliance
The High Courts decision in San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act (1986) 162 CLR 340 stressed the significance of reasonable reliance when assessing the proximity of the parties in a claim for economic loss based on negligent miss-statement.

San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act (1986) 162 CLR 340 The appellants were developers who acquired land in Woolloomooloo relying on 8

a redevelopment plan, which was published in 1968 by the State Planning Authority and the Council of the City of Sydney. The plan allowed high density development and encouraged developers to acquire and consolidate properties. It was adopted and followed by the Council until 1972, when it was abandoned. The appellants sued for their resulting financial loss, and claimed that the plan had not been prepared with due care, because there had been a failure properly to investigate and to discover that the transport system lacked the capacity to accommodate the projected workforce, resulting in the plan not being feasible of implementation. They succeeded at first instance in the Supreme Court of New South Wales, but the Court of Appeal held that the respondents were not under a relevant duty of care to the appellants. The matter was appealed to the High Court. The appeal was dismissed. The court stated that if the appellants case was to succeed they must establish at least: (1) that the alleged representation was made; (2) that the Authority and the Council made the representation with the intention of inducing members of the class of developers to act in reliance on the misrepresentation. They had failed to establish matter (1), since the documents offered no assurance about the ultimate level of development or the continuing application by the Council of the proposed maximum space ratios. Brennan J summarised the law of negligent misstatement as follows: Where a representor gives information or advice on a serious or business matter, intending thereby to induce the representee to act on it, the representor is under a duty of care in giving that advice or information if three conditions are satisfied: (1) if the representor realises or ought to realise that the representee will trust in his especial competence to give that information or advice; (2) if it would be reasonable for the representee to accept and rely on that information or advice; (3) if it is reasonably foreseeable that the representee is likely to suffer loss should the information turn out to be incorrect or the advice turn out to be unsound. In the present case, even if the documents carried by implication a representation that the plan was feasible in a planning sense, the circumstances did not give rise to a duty of care, since it was unreasonable for a person contemplating a course of action which involved a risk of loss if a public authority did not exercise its discretion in a particular way to rely on the feasibility of a policy affecting the discretion when the discretion was one which must be exercised in the public interest.

d. Duties Owed to Third Parties

The High Courts decision in Esanda Finance Corporation Ltd v Peat Marwick 9

Hungerfords (1997) 188 CLR 241 set out the test of when a duty of care is owed by a defendant to a third party. Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 The appellant, Esanda Finance Corporation, loaned money to a corporation in reliance on a report prepared by a finance company, Peat Marwick Hungerfords. When the borrower defaulted on the loan, Esanda turned to the finance company to recover claiming it had acted in reliance on audited accounts which breached mandatory auditing standards in relation to their preparation. Central to this argument was that Esanda had suffered a loss which would not have occurred if not for reliance on Esanda's audited accounts, which were prepared in breach of auditing standards. The Court held that there was no cause of action successfully pleaded by the Appellant and that the appeal should be dismissed with costs. Although this order was unanimous, there were four different judgments emanating from the Court to explain why. This case is generally seen as authority for the proposition that auditors do not owe a duty of care to third parties. However, the case was decided using the multi-factorial approach with reasons against finding a duty being: that Esanda, as a corporation, was not vulnerable as it could have made its own enquiries regarding the financial position of the borrower; and that allowing the appeal may have given rise to indeterminate liability to the auditor. To be successful a plaintiff/third party must prove the following factors: (i) that the defendant/adviser knew, or ought reasonably to have known, that the information or advice given to their client would be communicated to a third party or to the class of which the plaintiff is a member;

(ii) That the information or advice would be so communicated for a purpose that would be very likely to lead a third party to enter into a transaction of a kind that the third party does enter into; and

(iii)That it would be very likely that the third party would enter into such a transaction in reliance on the information or advice from the defendant and thereby risk incurring economic loss if the defendants statement should be untrue or the advice should be unsound.

10

DEFENCES TO NEGLIGENCE (1) Volenti non fit injuria

This is a complete defence to an action for negligence and is available where the plaintiff voluntarily accepted the risk of damage at their own expense.

Voluntary assumption of risk occurs where: (i) (ii) (iii) the plaintiff had full and complete knowledge of the risk; the plaintiff had sufficient appreciation of the danger associated with the risk; and there was free and voluntary acceptance by the plaintiff of the risk.

Morris v Murray [1991] 2 WLR 195 The plaintiff and the defendant had enjoyed a prolonged drinking session before the defendant piloted a plane with the plaintiff as passenger, and negligently crashed it causing his own death and seriously injuring the plaintiff.

(2) Contributory negligence

Contributory negligence means that the plaintiff has not been sufficiently careful in looking to their 11

own safety/property so that, in part, their omission to do so has given rise to the damage that has been suffered. In order to rely on a defence of contributory negligence, the defendant must show that the plaintiff failed to take reasonable care in relation to their own safety/property and that this failure contributed to the damage suffered. Courts generally apportion the damages payable when contributory negligence is proved, therefore, it is only a partial defence. In Connors v Western Australian Government Railways Commission [1992] Aust Torts Rep 81-187 the plaintiff was hit by a train while crossing the tracks at Perths Loch St Station and had therefore contributed to his injuries.

VICARIOUS LIABILITY
Vicarious liability involves a person being liable for the negligent acts or omissions of another. Cassidy v Minister of Health [1951] 1 All ER 574 C went to hospital for an operation on two stiff fingers, but emerged with four stiff fingers. It wasnt possible to determine which hospital employees negligence had caused the damage. The Court held that there was negligence by the hospitals employees in the course of carrying out their duties and that the hospital was therefore vicariously liable for their actions. The reason that the employer is held responsible arises as a consequence of the employment relationship, which has the effect of making the employer an insurer of the employee. The action of the employee must be connected with their contract of employment which was not the case in Deatons Pty Ltd v Flew (1949) 79 CLR 370 where a hotel barmaid threw a glass of beer at an offensive customer which caused serious injury. The customer brought an action for assault against the barmaids employer. The High Court held that the barmaids actions were outside the scope of her employment. She was employed to serve drinks, not to carry out security.

12

BUSINESS LAW Code: 76639689 Time remaining:

Number of pages: 3 (Double Spaced) Number of sources: 5 Deadline: November 07, 04:19PM Order type: Essay Category: Law Academic level: Undergraduate Style: Harvard Preparing

1 Files [?]

0. Tort_of_Negligence__modefied_1.docx 20:25 03 Nov 2011 0.35Mb

Preferred language style: English (U.K.)

BUSINESS LAW

13

Instructions to Students

This assignment comprises ONE question that is based on: TORT OF NEGLIGENGE.

The maximum word limit is 700 words (+ -10%).

When answering this question you need to:

(1) Work out what issue in the Law of Negligence the problem relates to e.g. whether or not a duty of care is owed to Jess.

(2) Then apply the principles of law that were covered in the topic to the issues raised in the problem i.e. the elements of the tort of negligence.

(3) Wherever possible refer to cases that support these principles.

(4) Provide a conclusion.

14

Note: When referring to cases that support the principles applied you do not have to provide details about those cases i.e. you do not need to go through the facts and decisions of the cases referred to. All you need to provide is the case citation. This is the reference for that particular case.

For example, you would reference the famous case of the snail in the bottle as follows:

Donoghue v Stevenson [1932] AC 562; [1932] All ER Rep 1.

The case citation may be given in text, as a footnote or in a reference list at the conclusion of the paper.

If cases are listed in a reference list at the end of your paper they must be listed in alphabetical order according to the first letter of the case name as follows:

Anns v Merton London Borough Council [1978] AC 728; [1977] 2 All ER 492 Bugge v Brown (1919) 26 CLR 110 Chapman v Hearse (1961) 106 CLR 112; [1962] ALR 379 Dumont v Miller (1873) 4 ALJR 152

Your teacher has explained the IRAC method which can assist you to

15

format your answer.

Assignment Question:

You are a legal adviser employed by Navitas Legal Services. Jess, a shop assistant, came to see you for some advice in relation to an incident that happened to her recently.

FACTS:

A month ago Jess met her friend Tom for some lunch at an Italian caf, Taste of Italy. Tom went up to the counter and ordered a bowl of minestrone soup for himself and a dish of pasta with black olives and tomato sauce for Jess.

After consuming most of her pasta Jess noticed an unusual black object at the bottom of the bowl. Assuming that it was an olive Jess bit into it and to her horror realised that it was in fact an insect. Upon closer examination it was revealed to be a cockroach. Jess immediately

16

became violently ill and had to be taken to hospital by ambulance.

Subsequent testing by the Department of Health revealed that the olive and tomato sauce that had been used that day at Taste of Italy contained traces of the cockroach insect. The sauce had been supplied to the restaurant in a sealed bottle from the manufacturer, Pronto Products. The presence of cockroach parts could not be detected upon reasonable examination of the bottle as they could easily be mistaken for bits of black olive.

Jess spent several days in hospital recovering from the food poisoning. As a result of the incident she has incurred medical expenses. Not only has she also experienced pain and suffering she was unable to work at her job for two weeks has therefore not been paid.

TASK:

Your task is to advise Jess whether she has any legal claim in relation to the incident she has described.

If there is a potential legal claim you will need to inform Jess against whom the claim can be made and the consequences if her claim should succeed.

17

I have to use these three elements in my assignment.

Negligence as a cause of action In a common law action for negligence the plaintiff must prove the following elements on the balance of probabilities:

1. The defendant owed the plaintiff a duty of care; 2. The defendant breached that duty of care by failing to comply with the requisite standard of care; 3. The plaintiff suffered loss or damage as a result of the breach.

The IRAC method which can assist you to format your answer: I = ISSUES R = RULES A = ANALYSIS / APPLICATION C = CONCLUSION

IMPORTANT NOTE:

You must only use or apply the AUSTRALIAN LAW ONLY.

18

Note: All the information you need to do this assignment in these documents which I upload:

1- Tort of Negligence. 2- Low Assignment.

MAKE SURE ALSO THAT YOU USE THE BUSINESS LAW BOOK

GIBSON, A AND FRASER D 2011, BUSINESS LAW (5th EDITION) PEARSON AUSTRALIA.

http://www.pearson.com.au/Catalogue/TitleDetails.aspx?isbn=9781442525276

I WILL UPLOUD AND SEND TO YOU THE LUCTURE OF TORT OF NEGLIGENGE THANKS.

--

19

Waiting for your reply whether you will fully meet the above requirement and avoid revisio

20