THE LAW OF TORT: NEGLIGENCE

THE LAW OF TORT:NEGLIGENCE 21st July 2012 Lecturer: RowinGurusami

THE LAW OF TORT Tort is a civil wrong Not a breach of contract Not a crime Tort law is the name given to a body of law that addresses, and provides remedies for, civil wrongs not arising out of contractual obligations Covers intentional acts and accidents Lecturer: RowinGurusami

THE LAW OF TORT Individual v. Individual Sues for compensation or injunction Person who suffers legal damages can use tort law to recover compensation from the one responsible Unlike contract law, no need for existing relationship between the two parties Claim in tort based on general law of duties and rights Lecturer: RowinGurusami

TYPES OF TORT Negligence Conduct that is culpable because it falls short of what a reasonable person would do to protect another individual from foreseeable risks of harm Lord Colin Blackburn: “those who go personally or bring property where they know that they or it may come into collision with the persons or property of others have by law a duty cast upon them to use reasonable care and skill to avoid such a collision.” Lecturer: RowinGurusami

TORT OF NEGLIGENCE Elements required to be established: Duty of care Breach of duty of care Causation Damage Lecturer: Rowin Gurusami

DUTY OF CARE Legal obligation imposed on an individual requiring that they adhere to a reasonable standard of care while performing any acts that could foreseeably harm others Formalisation of the social contract, the implicit responsibilities held by individuals towards others within society Previously, it was thought granting an action without prior contractual relationship would undermine the fundamental principle of contract law Lecturer: RowinGurusami

DONOGHUE v. STEVENSON (1932) Landmark case: The neighbour principle HoL held every person owes duty of care to his ‘neighbour’; “to persons so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected” Actions only allowed if physical injury suffered Lecturer: RowinGurusami

DUTY OF CARE Hedley Byrne v. Heller modernised the doctrine by allowing claim for financial loss suffered The case of The Nicholas H (1995) summarised the tests developed in Anns v. Merton London Borough Council(1977) and Caparo Industries plc v. Dickman(1990) Lecturer: RowinGurusami

TEST IN THE NICHOLAS H (1995) Four tests used (at the discretion of judges) to determine whether duty of care exist: Was the damage reasonably foreseeable by the defendant at the time of act or omission? Is there a neighbourhood principle or sufficient proximity (closeness) between the parties? Should the law impose a duty of care between the parties i.e. is it fair and reasonable to do so? Is there a matter of public policy which exists or requires that no duty of care should exist? Lecturer: RowinGurusami

BREACH OF DUTY OF CARE In order not to breach a duty of care, defendant must generally meet the standard of a 'reasonable man’ (Blyth v. Birmingham Waterworks [1856]) Each case decided on facts (res ipsaloquitor) Lecturer: RowinGurusami

BREACH OF DUTY OF CARE Factors to be considered: Probability of injury (Glasgow Corporation v. Taylor [1992]) Seriousness of risk (Paris v. Stepney Borough Council [1951]) Social benefit Professions and skill Body of Opinion (common practice) Lecturer: RowinGurusami

CAUSATION Causation proves a direct link between the defendant’s negligence and the claimant’s loss and damage Test: that there was a factual link between what the defendant did or failed to do, and the loss and damage sustained by the claimant, that it was reasonably foreseeable at the relevant time that this behaviour would cause loss and damage of that type Lecturer: RowinGurusami

CAUSATION The ‘But for’ test defendant will be liable only if the claimant’s damage would not have occurred "but for" his negligence (South Australia Asset Management Corp. v York Montague Ltd (SAAMCO) (1997)) defendant will not be liable if the damage would, or could on the balance of probabilities, have occurred anyway, regardless of his or her negligence (Barnett v Chelsea and Kensington HMC [1969]) Lecturer: RowinGurusami

CAUSATION Difficult to prove causation if there are number of causes to injury (including negligent act) Court will decide, on facts, if negligent act most likely caused the injury (Wilsher v. Essex AHA [1988]) Lecturer: RowinGurusami

DAMAGE Claimant must demonstrate he suffered loss or damage as direct consequence of breach Loss as result of personal injury Damage to property Financial loss relating to personal injury Reputational Lecturer: RowinGurusami

DAMAGE Right to claim for purely economic loss is limited to cases where “a special relationship” is shown between the parties Often related to the nature of the duty to the plaintiff as between clients and lawyers, financial advisers, and other professions where money is central to the consultative services. Lecturer: RowinGurusami

REMOTENESS OF DAMAGE Even when causation proved, negligent claim can still fail if damage caused is ‘too remote’ Liability limited to damage a reasonable man could have foreseen (The Wagon Mound [1961]) HoL held remoteness test passed if some harm is foreseeable even if exact nature of injuries could not be (Jolley v London Borough of Sutton [2000]) Lecturer: RowinGurusami

DEFENCES TO NEGLIGENCE Contributory Negligence Damages awarded can be reduced if shown claimant contributed to his injury Court will calculate claimant’s share of blame Sayers v. Harlow UDC [1958] – climbing out of locked toilet cubicle deemed contributory negligence Lecturer: RowinGurusami

DEFENCES TO NEGLIGENCE Volenti non fit injuria No damages awarded if proved that claimant expressly or impliedly consented to risk (e.g. waivers in dangerous sports) ICI v. Shatwell [1965]: If someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they cannot then sue if harm does in fact happen. Lecturer: RowinGurusami

DEFENCES TO NEGLIGENCE Exclusion Clauses Clauses that seek to exclude or limit liability for negligence will be subject to the Unfair Contract Terms Act. If it concerns personal injury or death, those clauses are void. Lecturer: RowinGurusami

PROFESSIONAL NEGLIGENCE Covers the situations in which the defendant has represented him or herself as having more than average skills and abilities Still need to establish duty of care, and its breach Lecturer: RowinGurusami

Hedley Byrne & Co Ltd v. Heller and Partners Ltd [1963] Bank provided negligent misstatement of company’s financial resources (with disclaimer) Bank avoided liability because of the disclaimer Although not liable under contract law (disclaimer), bank still guilty of negligence as it breached duty of care. Ober Dicta (persuasive statement, not part of ratio) Lecturer: RowinGurusami

HEDLEY BYRNE Hedley Byrne important because it recognised liability in situations where there is no contractual relationship between parties (special relationship) Liability only extends to “people the defendant knows or should know” will rely on the information or advice Lecturer: RowinGurusami

JEB FASTENERS v. MARKS, BLOOM & Co [1982] Auditors inflated profit of company which was, on basis of report, taken over Held that auditors not liable as buyers would still have acted the same (no causation) However, court noted that auditors did owe duty of care through foresight (i.e. that someone would rely on their accounts) Lecturer: RowinGurusami

CAPARO INDUSTRIES PLC v. DICKMAN AND OTHERS [1990] Important case redefining the concept of professional negligence Audit report showed profit instead of loss. Caparo bought more shares & takeover. Court held auditor’s duty owed to body of shareholders as a whole and not extending to potential investors nor to existing shareholders increasing their stakes Lecturer: RowinGurusami

THE CAPARO DECISION HoL held there were two very different situations for persons giving advice: Preparing information in knowledge a particular person contemplating a transaction would rely on that info whether to go forward or not (special relationship) Preparing statement for general circulation to be foreseeably relied upon by persons unknown to professional for various different purposes Lecturer: RowinGurusami

THE CAPARO TEST Harm must be a "reasonably foreseeable" result of the defendant's conduct A relationship of "proximity" between the defendant and the claimant (as defined in Donoghue v. Stevenson) It must be "fair, just and reasonable" to impose liability Lecturer: RowinGurusami

ELEMENTS TO BE CONSIDERED Purpose for which statement made Purpose for which statement communicated Relationship between maker of statement, recipient and any 3rd party Size of any class to which recipient belongs State of knowledge of maker Reliance by the recipient Extracted from MacNaughton (James) Paper Group Ltd v. Hicks Anderson & Co (1991) Lecturer: RowinGurusami

DEVELOPMENT OF DOCTRINE SINCE CAPARO ADT Ltd v. BDO Binder Hamlyn (1995): Accountant specifically advising on takeovers should demonstrate higher standard of care Lecturer: RowinGurusami

COMPANIES ACT 2006 s507: misleading or false statements s532: exemption clause avoiding liability is void s534: liability limitation agreement between company and auditor Lecturer: RowinGurusami

VICARIOUS LIABILITY Doctrine whether someone is liable for the tortious acts of someone else. Eg. Employer – Employee Important because injured party can seek a remedy against a financially responsible defendant. Lecturer: RowinGurusami

EMPLOYER - EMPLOYEE Must be an employee, not an independent contractor - The control test (will be elaborated upon in employment law chapter) Must have acted in the course of employment (Lister v Hesley Hall Ltd 2001) - Tortious acts of employee were so closely connected with nature of his work Lecturer: RowinGurusami

AGENCY Principle is liable for a tortious acts of the agent acting within the limits of his authority Agent must also have been carrying out acts for which he was appointed as agent (Ormrod v Crossville Motor Services 1953) Similar principle applies for partnerships (thus partnership liable for tortious acts of any part acting in ordinary course of business of the partnership) Lecturer: RowinGurusami

THE LAW OF TORT: NEGLIGENCE