law of torts weekend lecture 2a lecturer: greg young contact: [email protected] negligence -duty...

LAW OF TORTS

WEEKEND LECTURE 2A

Lecturer: Greg YoungContact: [email protected]

NEGLIGENCE-Duty of care & Breach: Civil Liability Act-Damage

PURE ECONOMIC LOSS

VICARIOUS/CONCURRENT LIABILITY

Part 1A Duty of Care – more commentary

• Section 5B(1) provides a person is not negligent unless… (b) the risk was not insignificant.

- Wyong Shire Council v Shirt (1980) 146 CLR 40: risk must be “real” in the sense that a reasonable person would not “brush it aside as far-fetched or fanciful.”

- Is “not insignificant” in Section 5B(1)(b) more restrictive than “not far-fetched or fanciful” in Wyong Shire Council v Shirt ?


• Recreational Activities – Sections 5J to N

- The NSW Govt could not exclude the operation of the Trade Practices Act 1974, although the Federal Govt has done so by passing The Trade Practices Amendment (Liability for Recreational Services) Act 2002 proclaimed on 19/12/02


• Recreational Activities – Sections 5J to N- Issues of concern:

Is the commercial incentive for the safe provision of recreational & commercial activities gone?

What real bargaining power do consumers have in negotiating a contractual waiver?

Definition of recreational activity is broad and ambiguous.

Part 2 Personal Injury Damages

• Received assent on 18 June 2002• Section 11A:

(1) does not apply to claims excluded by Section 3B (eg. Damages for dust diseases, use of tobacco products, worker’s compensation…)(2) Part 2 applies regardless of whether the claim is brought in tort, contract, statute or otherwise(3) A court cannot award damages, or interest on damages, contrary to Part 2.

Part 2 Personal Injury Damages• Economic Loss:- Maximum for gross loss loss of earnings = 3 times

average weekly earnings: Section 12- 5% discount rate for future economic loss: Section

14• Gratuitous Attendant Care:- No damages awarded if the services are provided:

(a) for less than 6 hours per week, and

(b) for less than 6 months: Section 15(3)

Geaghan v D’Aubert [2002] NSWCA 260


• Non-economic loss (general damages):- No damages for non-economic loss unless assessed

at 15% of a most extreme case (eg. 15% = 1% or $3,500, 16% = 1.5% or $5,250, …26% = 8% or $28,000, …33% = $115,500…100% = $350,000): Section 16(1) & (3)

- Maximum non-economic loss = $350,000: Section 16(2)

- Maximum for non-economic loss indexed: Section 17- Courts/parties may refer to other awards of non-

economic loss in earlier court decisions: Section 17A


• Pre-judgment Interest:- No interest payable on damages for non-

economic loss or gratuitous attendant care: Section 18(1)

- If interest is awarded (eg. Past economic loss), the “relevant interest rate” is the Commonwealth Govt 10-year benchmark bond rate: Section 18(4)


• 3rd Party Contributions:- Where the award against the 3rd Party is not subject to

Part 2 (eg. Dust disease, tobacco use, workers’ compensation…): Section 19Step 1 Assess percentage of liability between the

defendant and 3rd party (eg. 50/50)Step 2 Assess damages against the defendant’s under

Part 2 (say, $200,000), then apply percentage of liability to that assessment (50% of $200,000 = $100,000)

Step 3 Assess the non-Part 2 damages against the 3rd party (say, $100,000), then apply percentage of liability to that assessment (eg. 50% of $100,000 = $50,000)


Exemplary, punitive & aggravated damages:• A court cannot award exemplary, punitive

or aggravated damages: Section 21

Structured settlements:• Agreement that provides for the payment

of all or part of an award of damages in the form of periodic payments: Section 22

Part 5 Liability of Public & Other Authorities

• Proclaimed on 6/12/02: Sections 40 to 46

• Provides specific additional protection for public authorities including:

- the Crown

- Government departments

- Local councils

- Other prescribed bodies


• Section 42 sets out the principles to apply in determining whether a public or other authority has a duty of care or has breached a duty of care including:

(a) the functions required to be exercised by the authority are limited by the financial and other resources that are reasonably available to the authority for the purpose of exercising those functions,

(b) the general allocation of those resources by the authority is not open to challenge,

(c) the functions required to be exercised by the authority are to be determined by reference to the broad range of its activities (and not merely by reference to the matter to which the proceedings relate),

(d) the authority may rely on evidence of its compliance with the general procedures and applicable standards for the exercise of its functions as evidence of the proper exercise of its functions in the matter to which the proceedings relate.


• Section 43: an act or omission by an authority does not constitute a breach of a statutory duty, unless the act or omission so was unreasonable in the circumstances that no authority having the functions in question could properly consider the act or omission to be a reasonable exercise of it function.


• Section 44: Removes the liability of public authorities for failure to exercise a regulatory function if the authority could not have been compelled to exercise the function under proceedings instituted by the Plaintiff.

• Section 45: Restores the non-feasance protection for highway authorities taken away by the High Court in Brodie v Singleton Shire Council Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512

Part 6 Intoxication

• Proclaimed on 6/12/02: Sections 47 to 50• Section 48: Broadly defines as any person under

the influence of alcohol or drugs, whether or not taken for medicinal purposes and whether or not lawfully taken.

• Section 49: a court is not to consider intoxication as giving rise to any higher standard of care on the part of the Defendant.

Part 6 Intoxication

• Section 50: a court is not to award damages for harm where the Plaintiff’s capacity to exercise reasonable care and skill for their own safety was impaired as a consequence of intoxication and unless the Court is satisfied that the same harm would have occurred even if the person had not been intoxicated

: Where an intoxicated Plaintiff overcomes the hurdle of demonstrating that their intoxication did not contribute to their harm, there is a presumption of at least 25% contributory negligence unless the court is satisfied otherwise.

Part 6 Intoxication

Issues:- Definition of intoxication extends to prescription drugs.

Is a hospital exempt from taking special care for a patient when it knows that the side effects of the prescribed drug are drowsiness or aggression?

- Why should hoteliers not have a special duty of care to patrons?

- Why has judicial discretion been removed to assess contributory negligence?

Part 7 Self-Defence & Recovery by Criminals

• Proclaimed on 6/12/02: Sections 51 to 54• Section 52(1) & (2): No civil liability for acts in

self-defence of self, another or property, provided the act of defence is a reasonable response (objective) to the circumstances as perceived (subjective).

• Section 52(3): This section does not apply if the person uses force that involves the intentional or reckless infliction of death only to protect property, to prevent criminal trespass or to remove a person committing criminal trespass.

Part 7 Self-Defence & Recovery by Criminals

53 Damages limitations apply even if self-defence not reasonable response

(1) If section 52 would operate to prevent a person incurring a liability to which this Part applies in respect of any conduct but for the fact that the conduct was not a reasonable response in the circumstances as he or she perceived them, a court is nevertheless not to award damages against the person in respect of the conduct unless the court is satisfied that: (a) the circumstances of the case are exceptional, and (b) in the circumstances of the case, a failure to award damages would be harsh and unjust.

Part 7 Self-Defence in Recovery by Criminals

• Section 54: A court is not to award damages in respect of liability where at the time of death, injury or damage the Plaintiff was engaged in conduct that (on the balance of probabilities) constitutes a serious offence.

- A "serious offence" is an offence punishable by imprisonment for 6 months or more.

- This section operates whether or not the offence has been prosecuted and proved.

- The criminal conduct must have contributed materially to the risk of death, injury or damage.

Parts 8 & 9 Good Samaritans & Volunteers

• Proclaimed on 6/12/02: Sections 55 to 66• Parts 8 & 9 operate to protect Good

Samaritans and volunteers.• Section 58: no protection if the Good

Samaritan is under the influence of alcohol, impersonating a police officer or falsely representing that they have skills or expertise in providing emergency assistance.

Parts 8 & 9 Good Samaritans & Volunteers

• Section 60: Defines community work to mean work that is not for private financial gain and that is done for a charitable, benevolent, philanthropic, sporting, educational or cultural purpose. It excludes community service orders imposed by a court.

• Section 61: No civil liability for a volunteer doing community work but does not extend to criminal acts, acts whilst intoxicated, a volunteer failing to exercise reasonable care and skill, actions outside the scope of the charitable organisation or contrary to instructions, where the volunteer is required by State law to be insured or motor vehicle accidents.

Part 10 Apologies

• Proclaimed on 6/12/02: Sections 67 to 69

• Section 68: Defined as an expression of sympathy or regret, or of a general sense of benevolence or compassion, in connection with any matter whether or not the apology admits or implies an admission of fault in connection with the matter.

Part 10 Apologies

• Section 69(1): An apology …

(a) does not constitute an express or implied admission of fault or liability by the person in connection with that matter, and

(b) is not relevant to the determination of fault or liability in connection with that matter.

Breach of Duty – General Principles

• Wyong Shire Council v Shirt (1980) 146 CLR 40 per Mason J: “In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant’s position would have foreseen that his conduct involved a risk of injury to the plaintiff… If the answer is in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do… The perception of the reasonable man’s response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have.”

Breach of Duty – Civil Liability Act

• Civil Liability Act does not apply to claims excluded by Section 3B (eg. dust diseases, use of tobacco products, worker’s compensation…)

• Section 5B(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):– (a) the probability that the harm would occur if care were

not taken,– (b) the likely seriousness of the harm,– (c) the burden of taking precautions to avoid the risk of

harm,– (d) the social utility of the activity that creates the risk of

harm.

Breach of Duty – Likelihood of Injury

• Section 5B(2)(a) the probability that the harm would occur if care were not taken

• Bolton v Stone [1951] AC 850

Breach of Duty – Seriousness of Risk

• Section 5B(2)(b) the likely seriousness of the harm

• Adelaide Chemical & Fertilizer Co. v Carlyle (1940) 64 CLR 514

• Paris v Stepney Borough Council [1951] AC 367

Breach of Duty – Cost of Avoiding Harm

• Section 5B(2)(c) the burden of taking precautions to avoid the risk of harm

• Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202

Breach of Duty – Utility of the Act of the Defendant

• Section 5B(2)(d) the social utility of the activity that creates the risk of harm.

• South Australian Ambulance Transport Inc. v Walhdeim (1948) 77 CLR 215

Proof of Negligence - General

• CIVIL LIABILITY ACT 2002 - SECT 5E: Onus of proof

- In determining liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.

Holloway v McFeeters (1956) 94 CLR 470

Proof of Negligence – Res Ipsa Loquitor

• “The action/thing speaks for itself”

• Nominal Defendant v Haslbauer (1967) 117 CLR 448

Damage in Negligence

Duty of care

Breach

Damage

Negligence


• Damage is the gist of the action in Negligence• The scope of actionable damage:

– property– personal– mental– pure economic loss

• Damage must be actual for compensation; no cause of action accrues until damage

• Limitations period therefore begin from the time of the injurious consequences of a conduct not from when the conduct first occurred


• For P to be successful in an action in Negligence, D’s breach of duty must cause damage to P or his/her property

CAUSATION 1

breach damage = Negligence

There must be a causal link between D’s breach of duty and damage to P or P’s property

Duty of Care

causation

CAUSATION 2: THE ELEMENTS

• Causation involves two fundamental questions:– the factual question whether D’s act in fact

caused P’s damage: causation-in-fact– Whether, and to what extent D should be held

responsible for the consequences of his conduct: legal causation

Causation – Civil Liability Act

• Section 5D General principles - (1) A determination that negligence caused

particular harm comprises the following elements:

- (a) that the negligence was a necessary condition of the occurrence of the harm ("factual causation"), and (b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused ("scope of liability").

CAUSATION-IN-FACT

• Causation in fact relates to the factor(s) or conditions which were causally relevant in producing the consequences

• Whether a particular condition is sufficient to be causally relevant depends on whether it was a necessary condition for the occurrence of the damage

• The necessary condition: causa sine qua non

CAUSATION

• To be successful in a claim for a remedy, P needs to prove that the loss for which he/she seeks compensation was caused in fact by the D’s wrongful act

• Traditionally, the test whether D’s wrongful act did in fact cause the loss is the ‘but for’ test

THE ‘BUT FOR’ TEST

• But for the D’s conduct, the injury to P would not have happened:– Waller v James (Wrongful life – IVF case with

failure to test or advise about the dangers of the father’s AT3 deficiency)

THE FUNCTION OF THE ‘BUT FOR’ TEST

• Two functions:– The primary (negative) function is to assist in

eliminating factors which made no difference to the outcome

– The second (positive) function: it helps to identify a condition or a factor which may itself then be subject to a test of legal causation

THE ‘BUT FOR’ TEST IN THE HIGH COURT

• Fitzgerald v Penn ( 1954) 91 CLR 268– ‘Causation is all ultimately a matter of common sense….[It]

is not susceptible of reduction to a satisfactory formula’(per Dixon, Fullagar and Kitto JJ)

• March v E& MH Stramare (1991) 171 CLR 506*The but for test gives rise to a well known difficulty in cases where there are two or more acts or events which would each be sufficient to bring about the plaintiffs injury. The application of the tests gives the results, contrary to common sense, that neither is a cause. The application of the tests proves to be either inadequate or troublesome in various situations in which there are multiple acts or events leading to the plaintiff's injury (per Mason J)

THE ‘BUT FOR’ TEST: IMPLICATIONS OF A COMMON SENSE APPROACH

• Bennett v Minister of Community Welfare (1992) 176 408– ‘if the but for ‘ test is applied in a practical common

sense way, it enables the tribunal of fact, consciously or unconsciously, to give effect to value judgments concerning responsibility for the damage. If ..the test is applied in that way, it gives the tribunal an unfettered discretion to ignore a condition or relation which was in fact a precondition of the occurrence of the damages’

THE ‘BUT FOR’ TEST IS NOT EXHAUSTIVE

• Bennett: ‘ causation is essentially a question of fact to be resolved as a matter of common sense. In resolving that question, the ‘but for’ test , applied as a negative criterion of causation, has an important role to play but it is not a comprehensive and exhaustive test of causation; value judgments and policy considerations necessarily intrude (per Mason CJ , Deane and Toohey JJ)

MULTIPLE CAUSES

• Where the injury or damage of which the plaintiff complains is caused by D’s act combined with some other act or event, D is liable for the whole of the loss where it is indivisible; where it is divisible, D is liable for the proportion that is attributable to him/her

MULTIPLE CAUSES: TYPES• Concurrent sufficient causes

– where two or more independent events cause the damage/loss to D ( eg, two separate fires destroy P’s property)

• Successive sufficient causes• Baker v Willoughby; • Faulkner v Keffalinos (1971) 45 ALJR 80; • Jobling v Associated Dairies Ltd [1982](dormant

spondylotic myelopathy activated); • Malec v Hutton [1990] 169 CLR( possible future spinal

condition)– D2 is entitled to take P (the victim) as he finds him/her– Where D2 exacerbates a pre-existing loss/injury (such as hasten

the death of P) D2 is liable only for the part of the damage that is attributable to him

THE ELEMENTS OF CAUSATION

Causation

Factual(Causation in fact)

Legal

LEGAL CAUSATION

• Factual causation in itself is not necessarily sufficient as a basis for D’s liability

• To be liable, D’s conduct must be the proximate cause of P’s injury

• P’s harm must not be too remote from D’s conduct

REMOTENESS

• The law cannot take account of everything that follows a wrongful act; it regards some matters as outside the scope of its selection. In the varied wave of affairs, the law must abstract some consequences as relevant, not perhaps on grounds of pure logic but simply for practical reasons Per Lord Wright Liebosch Dredger v SS Edison [1933] AC 449

Case Law on Remoteness

• Earlier position in Common Law– Re Polemis:- the ‘directness element’

• The current position:– The Wagon Mound (No. 1)– The Wagon Mound (No. 2)

INTERVENING ACT

• An intervening act breaks the chain of causation and may relieve D of liability. To be sufficient to break the chain, it must either be a:– human action that is properly to be regarded

as voluntary or a causally independent event the conjunction of which with the wrongful act in or omission is by ordinary standards so extremely unlikely as to be turned a coincidence ( Smith J Haber v Walker [1963] VR 339

INTERVENING ACT 2

• A foreseeable ‘intervening act’ does not break the chain of causation– Chapman v Hearse

• Negligent medical treatment subsequent to negligent injury would not necessarily remove liability for D1 unless the subsequent injury was ‘inexcusably bad’, so obviously unnecessary or improper that it fell outside the bounds of reputable medical practice– (Mahony v J Kruschich Demolitions)

THE LAW OF TORTS

PARTICULAR DUTY AREAS

(a) Products Liability(b) Defective Structures

(c) Nervous Shock(d) Hoteliers/Clubs

(e) Pure Eco Loss(f) Negligent Misstatement

(g) Liability of Statutory Authorities

PRODUCT LIABILITY

• Common law:

- Donohue v Stevenson [1932] AC 562

- Grant v Australian Knitting Mills [1936] AC 85

PRODUCT LIABILITY

• Relevant Statutes:

Sale of Goods Act 1923 (NSW)Pt 4 Performance of the Contract (ss.30 to 40)

Pt 5 Rights of the Unpaid Seller Against the Goods (ss.41 to 50)

Pt 6 Actions for Breach of the Contract (ss.51 to 56)

PRODUCT LIABILITY


- Fair Trading Act (NSW)Pt 4 Consumer Protection (ss.38 to 40)

Pt 5 Fair Trading (ss.41 to 60, including s.42 Misleading or deceptive conduct and s.44 False representations)

PRODUCT LIABILITY


- Trade Practices Act 1974 (Cth)Pt V Div 1 Consumer Protection (ss.51AF to

65A, including s.52 Misleading and deceptive conduct)Pt V Div 2A Actions against manufacturers and

importers of goods (ss.74A to 74L)Pt VA Liability of manufacturers and importers for

defective goods

DEFECTIVE STRUCTURES

• Professional negligence:

- s.5O Civil Liability Act 2002 “Peer professional opinion” (ie. The UK “Bolam” test)

- S.5P Civil Liability Act 2002 “Duty to warn” remains (ie. Rogers v Whittaker)

• Builders:Bryan v Maloney (1995) ATR 81- 320

• Architects:Voli v Inglewood Shire Council (1963) 110 CLR 74

DEFECTIVE STRUCTURES

• Councils & Statutory Authorities:

- Pt 5 Civil Liability Act 2002, especially s.42 determining duty of care and breach of duty in relation to functions, allocation of resources, range of activities and reliance on general procedures/applicable standards

- Common law:Heyman v Sutherland Shire Council (1985) 157 CLR 424

Shaddock v Parramatta CC [No.1] (1981) 150 CLR 424Parramatta CC v Lutz (1988) 12 NSWLR 293

NERVOUS SHOCK• What is nervous shock

– An identifiable mental injury recognised in medical terms as a genuine psychiatric illness.

– The sudden sensory perception that , by seeing hearing or touching – of a person, thing or event, which is so distressing that the perception of the phenomenon affronts or insults the plaintiff’s mind and causes a recognizable psychiatric illness

– It is a question of fact whether it is reasonably foreseeable that the sudden perception of that phenomenon might induce psychiatric.

• Pt 3 Civil Liability Act 2002 “Mental harm” (ss.27 to 33), especially:– S.30 Limitation on recovery for pure mental harm arising from shock ie.

Witness at the scene the victim being killed, injured or put in peril, or the plaintiff is a close family member of the victim

– S.32 Duty of care ie. Defendant ought to have foreseen that a person of normal fortitude might… suffer a recognisable psychiatric illness if reasonable care were not taken.

Nervous Shock:The The Nature of the Harm

• The notion of psychiatric illness induced by shock is a compound, not a simple, idea. Its elements are, on the one hand, psychiatric illness and, on the other, shock which causes it. Liability in negligence for nervous shock depends upon the reasonable foreseeability of both elements and of the causal relationship between them

• Post-Traumatic Stress Disorder• Pathological grief disorder

THE VICTIMS• Primary victims

– What needs to be reasonably foreseeable ? Some personal injury, physical or psychiatric, to the primary victim

• Page v Smith [1996] 1 AC 155 (HL) a victim of a road accident caused by another's negligence claimed damages solely for psychiatric illness

• Motor Accidents Compensation Act 1999, s 141 bars claims to all except primary victims as drivers, relatives or those who were present at the scene at the time of the accident

• Secondary Victims– Close relationship

• Jaensch v Coffey• S.30 Civil Liability Act “Close member of the family” and “spouse or partner”

defined

– proximity/nearness to accident or aftermath• Bourhill v Young• Mount Isa Mines v Pusey

Hotelier/Publican to Intoxicated Patron

• South Tweed Heads Rugby League Football Club Limited v Cole & 1 Or [2002] NSWCA 205

• Facts - On the evening of 26 June 1994, Ms Cole was seriously injured when struck by a motor vehicle driven by Mrs Lawrence. Ms Cole had been drinking at the Club’s premises and had consumed a large quantity of alcohol throughout the day.

South Tweed Heads Rugby League Football Club Limited v Cole & 1 Or

• Ms Cole arrived at the Club at around 9.30am and attended a "champagne" breakfast at which free Spumante was available. When the free supply ceased Ms Cole and a friend purchased and consumed further bottles of Spumante. Ms Cole was refused service at the bar in the afternoon because of her intoxicated state. Ms Cole stayed at the Club and its surrounds for the day and was ejected between 5.30 and 6pm for being intoxicated. The Club had offered to call a taxi for Ms Cole as well as offering her the use of the Club bus and driver. One of the men Ms Cole was with had told the Club manager that he would look after her. At some time after this Ms Cole left the Club.


• Mrs Lawrence's vehicle hit Ms Cole at around 6.20pm. She had been travelling within the speed limit, it was dark and she had her lights on low beam at the time of the accident. Mrs Lawrence's evidence was that she had not seen Ms Cole until it was too late to avoid the collision. Ms Cole, who was wearing black clothing, suffered serious injuries from the accident and has continuing disabilities.


• The trial judge held that Mrs Lawrence had been negligent in that she had failed to keep a proper lookout while driving. Her liability for the injuries suffered by Ms Cole was assessed at 30%. The Club was also held liable for continuing to serve Ms Cole when she was intoxicated. The Club's liability was also assessed at 30%. His Honour held that Ms Cole had contributed to her injuries by failing to take reasonable care for her own safety and assessed that she had contributed 40% to her injuries.


• MVA - Ipp JA (Santow JA & Heydon JA agreeing):

“To a person stationary at the point of impact and facing north, Mrs Lawrence's vehicle must have been visible for at least 100 metres ... A vehicle travelling at 70 kilometres per hour travels at 19.4 metres per second. Therefore, the vehicle must have been visible to Ms Cole for at least five seconds. It must also have been clearly audible. Yet it seems that she took no avoiding action. When the impact occurred, she was on the roadway in front of Mrs Lawrence's vehicle. I infer that Ms Cole's grossly intoxicated state was the reason for her omission to take precautionary measures. This could be the only explanation for her failure, over a period of five seconds, to avoid the oncoming vehicle. ...


MVA - Ipp JA (Santow JA & Heydon JA agreeing):

“Ms Cole's behaviour was so outside the norm in failing to move away from the path of Mrs Lawrence's vehicle that it becomes a matter of total speculation in attempting to establish what she was doing shortly before she was seen by Mrs Lawrence...

I conclude that the evidence was not capable of establishing facts from which it could properly be inferred that Mrs Lawrence drove her vehicle negligently. I would uphold her appeal. ”


• Duty of the Club: Ipp JA

“...[T]he source of alcohol she acquired that afternoon is a matter of mere speculation. There are at least three possibilities. The first is that Club employees served alcohol to Ms Cole within the building. The second is that she acquired alcohol from others outside the building. The third is that she was provided with alcohol purchased for her inside the building by friends or persons in whose company she was. In my view, there is no reliable basis whereby a greater degree of likelihood can be ascribed to any of the three. Thus, in my opinion, while it was undoubtedly so that, when Ms Cole left the Club at about 5.30 pm, she was very drunk and had been drunk long before that time, the evidence was not capable of establishing on a balance of probabilities that, after the 12.30 pm bottle, she purchased alcohol from the Club or that the Club supplied alcohol to her.


• Duty of the Club: Ipp JA

“The conclusions to which I have come are determinative of the Club's appeal. In my view, the Club's appeal should be upheld on the ground that it was not established that it committed a breach of the duty of care found by Hulme J. Nevertheless, as the issues relating to the scope of the duty of care were touched on in argument, and as the case may be taken further, I shall express my views upon those matters and also upon the consequences of Ms Cole refusing the Club's offer of safe transport.”


• Extension of the duty of care?: Ipp JA:

“In my opinion, the Club owed to Ms Cole only the ordinary general duty of care owed by an occupier to a lawful entrant. The scope of that duty should not be enlarged to an extent that required the Club to cease serving alcohol to Ms Cole when it knew that it was likely that she would become intoxicated, or when she was obviously intoxicated. In my opinion, as a general proposition, considerations of personal responsibility, autonomy, practicality and certainty override those factors such as foreseeability, proximity, control and vulnerability which have persuaded some courts, in similar circumstances, to extend the scope of the general duty of care.


• Extension of the duty?: Ipp JA (Santow JA agreeing)“There may, however, be circumstances which bring about a different result. For example, it may be that where a person is so intoxicated as to be completely incapable of any rational judgment or of looking after himself or herself, and the intoxication results from alcohol knowingly supplied by an innkeeper to that person for consumption on the premises, the scope of the duty of care of the innkeeper will be extended to require reasonable steps to be taken for the protection of the intoxicated person. But Ms Cole's case was not put on this basis and it is not necessary to deal with the issue.”

PURE FINANCIAL LOSS

• What is pure economic loss?– It is generally understood to deal with matters of

tortious liability for loss that is neither consequential upon death and personal injury of the claiming victim nor upon the infringement of the victim's property.

• Pure economic loss related to damage to objects or persons

• 'Pure' pure economic loss by reliance

PURE ECONOMIC LOSS: EARLY DEVELOPMENTS

• Earlier cases restricted claims for pure economic loss to instances where misrepresentation was fraudulent or where a duty arose from breach of statute, contract or fiduciary obligation

– Palsey v Freeman (1789); Norton v Asburton [1914] AC 932• The policy basis: the fear of imposing liability "in an indeterminate amount for

an indeterminate time to an indeterminate class" • 1963: Limited recognition of a duty of care for negligent advice leading to

economic loss:– Hedley Byrne Co Ltd v Heller Partners Ltd– ‘If someone possessed of a special skill undertakes quite irrespective of

contract to apply that skill for the assistance of another person who relies on such skill, a duty of care will arise’ per Lord Morris

• 1970: Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt (1970) 122 CLR 628 (The emphasis seemed to be on advice provided by someone possessed of the a special skill)

NEGLIGENT MISSTATEMENT• In general D is liable for negligent advise/information that is provided to P which

P relies and suffers economic loss – Shaddock v Parramatta CC (House affected by road widening program)

– San Sabatian Pty Ltd v Minister Administering Environmental Planning (Whether Minister and the Sydney City Council liable for the negligent preparation by the State Planning Authority and publication by the Council of a redevelopment plan containing representations in reliance upon which developer had acquired land and sustained a loss.)

What emerges is that in Australian law, the duty of care in relation to statements has been extended beyond statements made to a particular person for a particular purpose and even beyond statements made to a third person for the known purpose of communication to the person who sustains the loss. There are circumstances in which the maker of a statement owes a duty of care to a person who reasonably relies on the statement although the statement was not made to that person either directly or purposely through a third person.

– Esanda Finance v Peat Marwick: (in reliance upon the audited accounts, the plaintiff entered into transactions whereby it lent money to companies associated with Excel, accepting a guarantee from Excel, and purchased debts from Excel. The transactions resulted in loss to the plaintiff by reason of Excel's financial position.)

THE ISSUE OF SKILL

• With all respect I find it difficult to see why in principle the duty should be limited to persons whose business or profession includes giving the sort of advice or information sought and to persons claiming to have the same skill and competence as those carrying on such a business or profession, and why it should not extend to persons who, on a serious occasion, give considered advice or information concerning a business or professional transaction. (Gibbs J in Shaddock)

THE CONDITIONS• Special relationship between P and D: such a relationship would

not be found to exist unless, at least, the maker of the statement was, or ought to have been, aware that his advice or information would in fact be made available to and be relied on by a particular person or class of persons for the purposes of a particular transaction or type of transaction.

• If the representor realizes or ought to realize that the representee will trust in his special competence to give that information or advice;

• If it would be reasonable for the representee to accept and rely on that information or advice;

• 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."

ADVICE versus INFORMATION

• Although the giving of advice must always necessarily require an exercise of skill or judgment, and the giving of information may not necessarily do so, a person giving information may be so placed that others can reasonably rely on his ability carefully to ascertain and impart the information…

THE ‘CALTEX PRINCIPLE’

• Property damage may constitute the basis for the claim in pure economic loss: before Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. it appeared to have been established that a plaintiff who sustained economic loss which resulted from loss or damage negligently caused to the property of a third person was not entitled to recover damages

– Caltex v Oil v The Dredge Willemstad– Perre v Apand (1999) (HC) D introduced plant disease onto land

of one farmer in SA by supplying infected seeds for planting; WA regs prohibited import into WA of potatoes grown within 20 km of land affected last 5 years

– Christopher v MV ‘Fiji Gas’

OTHER SITUATIONS OF PURE ECONOMIC LOSS

• Bryan v Maloney – It was not open to the trial judge or the Full Court to find that

the owner relied on the builder, or to infer reliance. There was no evidence that she knew the identity of the builder before deciding to purchase. Nor was there evidence that she inquired whether the house had been built by a qualified builder

– The owner can recover damages for pure economic loss only if she establishes a sufficient relationship of proximity between the builder and the owner so as to give rise to a duty of care on the part of the builder not to cause such economic loss

– It is difficult to see why, as a matter of principle, policy or common sense, a negligent builder should be liable for ordinary physical injury caused to any person or to other property by reason of the collapse of a building by reason of the inadequacy of the foundations but be not liable to the owner of the building for the cost of remedial work necessary to remedy that inadequacy and to avert such damage

OTHER SITUATIONS OF PURE ECONOMIC LOSS

• Hawkins v Clayton (Failure to notify executor of the death of testatrix substantial fine imposed as a result of death duties)

• Van Erp v Hill (Failure of solicitor to ensure that spouse of beneficiary did not witness execution of will with resultant economic loss to P)

VICARIOUS RELATIONS AND AGENCY

• An agent acts for the principal; but the liability of the principal for the act of the agent is not based on vicarious liability

• The liability of the principal is based on the maxim: qui facit per alium, facit per se [he who acts through another, acts in person]

• The agent acts in a representative capacity and has the authority to act for the principal but is not necessarily a servant

VICARIOUS LIABILITY

• Vicarious liability makes D (usually the master/employer) liable for the torts of another (usually his or her servant/employee) although the master is without any blame or fault.

• Vicarious liability arises only in respect of the torts of the servant

• The master/employer is therefore responsible only for the torts of the servant and not the independent contractor

• For the master/employer to be held liable, the tortfeasor must:

– be a servant– commit the tort in the course of his or her

employment

SERVANTS AND INDEPENDENT CONTRACTORS

WHO IS A SERVANT?

• A servant is one who is under a contract of service to another an independent contractor is under a contract for services

• The contractor is paid for the job by results rather than for time spent, receives a fee or commission, the servant receives wages

• The contractor is usually employed on a casual basis, the servant on a permanent basis

• The contractor usually specifies his/her work schedule and supplies his/her own tools

• The master may select the servant for the task

WHO IS A SERVANT?: THE CONTROL TEST

• If the Master controls what the employee does and how it is done, then the employee is a servant. The relationship will give rise to Vicarious Liability.

• Zuijs v Wirth Bros: The case of the trapeze artist• What is essential is whether there is lawful authority

to command or give directives if there is scope for it.• Stevens v Brodribb Sawmilling) • Articulate Restorations v Crawford

‘IN THE COURSE OF EMPLOMENT’

• D is liable only if the servant committed the tort in the course of his or her employment– Deaton v Flew– Morris v Martin

law of torts weekend lecture 2a lecturer: greg young contact: [email protected] negligence -duty...

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