1、CLAW5001 Legal Environment of Business,Overview of the Law of Torts: negligence + negligent misstatement,Patty Kamvounias,Discussion Question,Bill purchased “Royles,” a restaurant with magnificent views overlooking Windsor Bay at an auction in July 2003. He was concerned that the views would be obst

2、ructed if another storey was added to any of the neighbouring buildings so, before the auction, he rang the Windsor Bay Municipal Council (“the Council”) to ask whether any applications had been lodged within the past month seeking the necessary Council approval for the building of an additional sto

3、rey on any of those neighbouring buildings. The Council was not under any legal obligation to answer such queries and had no firm policy about whether it would do so. On previous occasions, however, it had supplied such information. When Bill telephoned the Council he spoke to Steven, the Councils C

4、hief Building Inspector. For business reasons, Bill did not tell Steven why he wanted the information. However, Steven had been asked for the same information by two other callers earlier that day who had both explained that they needed it because they were both considering buying “Royles” at the au

5、ction to be held the following day. Steven told Bill that no such application had been lodged. He also told Bill that he was too busy to check the Councils records but that, in any event, this was not necessary because all building applications had to go through him and he was certain that none had

6、been lodged during the past month. A few weeks earlier, the Council had issued a press release stating that it did not intend to approve any building applications in the Windsor Bay area for the next 6 months. Bill remembered reading that press release in the local newspaper. Unfortunately, Stevens

7、memory had failed him and he had in fact accepted a building application from one of “Royles” neighbours only a week earlier. The Council subsequently approved that application with the result that, when the building work was completed, “Royles” lost much of its view. Bill claims that since the loss

8、 of the view, the profits from the restaurant have fallen drastically. He wishes to take legal action against the Council and seeks your advice. Advise Bill.,2,3,Overview of Todays Lecture,Overview of the law of torts: negligence and negligent misstatement What is a tort? Torts, crimes and contract:

9、 overlap and differences Examples of torts The tort of negligence Essential elements Statutory reform Negligence and pure economic loss Liability for negligent misstatement Preview of next topic: product liability under statute,3,Overview of the law of torts definitions and examples,What is a tort?,

10、Tort = a civil wrong (other than a breach of contract) that the law will redress by an award of damages (Fleming) Latin origins of word tort (meaning twisted or crooked) word used to indicate a wrong or harm Torts are wrongs committed by tortfeasors (wrongdoers) Torts are civil wrongs giving person

11、right of action in certain circumstances when unlawful acts or omissions of wrongdoer infringe persons interests in their person, property or economic interests Usual remedy? Damages,5,What is a tort? How does tort law differ from criminal law?,Tort = a civil wrong The legal action is commenced by t

12、he person whos rights have been infringed; Civil proceedings The objective is compensation for the injured party Obligations imposed by law Contrast Crime = a criminal wrong (recall topic 3: legal liability) The legal action is commenced by the State/DPP; Criminal proceedings The objective is e.g. d

13、eterrence and/or punishment Obligations imposed by law Overlap: some torts are also crimes e.g. assault,6,What is a tort? How does tort law differ from contract law?,Tort = a civil wrong The legal action is commenced by the person whos rights have been infringed; Civil proceedings ; The objective is

14、 compensation Obligations imposed by law. No contract required. Contrast Contract = also a civil wrong (recall topic 4,5,6,7: contract law) The legal action is commenced by the person whos rights have been infringed; Civil proceedings; The objective is compensation Obligations imposed by the parties

15、. Contract required. (parties voluntarily agree to fulfil mutual obligations) Overlap: torts/contracts - contractual relationship may also give rise to duty in tort law (may have a choice as to type of legal action to bring),7,where do we find the law of torts?,Tort law has its origins in the common

16、 law BUT in recent years, legislation has modified some aspects of the common law,8,Different types of torts: protecting different interests,Different types of torts: protecting different interests,Different types of torts: protecting different interests,Different types of torts,All torts involve un

17、lawful interference with the interests of others Unlawful interference may be: Intentional OR Not intentional i.e. negligent (the focus of this topic) Why? Because tort of negligence dominates this area of law Few torts of strict liability (i.e. no element of fault; no intention or negligence on the

18、 part of the defendant),Negligence,Tort of negligence? circumstances when law imposes a duty on a person to take reasonable care not to cause harm to others Person will be negligent in the legal sense if they fail to take reasonable care to prevent injury, damage or loss to others whom they could re

19、asonably have foreseen might have suffered injury, damage or loss if that reasonable care had not been taken Negligence requires proof of: fault on the part of the defendant + injury, damage or loss to the plaintiff Who pays for negligent conduct? Government? Community? Person who suffers loss? Pers

20、on who causes loss?,a duty of care is not enough! essential elements of a negligence action,1. DUTY OF CARE Existence of a duty of care owed to the plaintiff by the defendant 2. BREACH OF THE DUTY OF CARE Duty/Standard of care breached by the defendant 3. CAUSATION Defendants breach of duty caused d

21、amage to the plaintiff 4. REMOTENESS OF DAMAGE The damage suffered by the plaintiff is not too remote,Negligence: duty of care Common law,Common law: duty of care in the beginning. leading case House of Lords,16,Donoghue v Stevenson 1932 AC 562,Common law: duty of care leading case,Donoghue v Steven

22、son 1932 AC 562 Mrs D went with a friend to a caf where the friend bought her a drink (ginger beer) Ginger beer was manufactured by the defendant; was supplied in a sealed opaque glass bottle Mrs D drinks some of the ginger beer. Her friend pours the remainder into a glass (along with decomposed rem

23、ains of a snail) Mrs D suffers shock and severe gastroenteritis Note: i. No contract between Mrs D (pl.) and the caf; no contract between Mrs D. and the manufacturer (def.) (recall privity of contract rule) Why is this significant? ii. Mrs Do does not sue caf owner; does not sue her friend. Why? Mrs

24、 D sues the manufacturer alleging failure to take reasonable care in manufacturing and bottling the ginger beer,Common law: duty of care leading case,Donoghue v Stevenson 1932 AC 562 per Lord Macmillan “ The law takes no cognizance of carelessness in the abstract. It concerns itself with carelessnes

25、s only where there is a duty to take care and where failure in that duty has caused damage. In such circumstances carelessness assumes the legal quality of negligence and entails the consequences in law of negligence. What, then, are the circumstances which give rise to this duty to take care? In th

26、e daily contacts of social and business life human beings are thrown into, or place themselves in, an infinite variety of relations with their fellows; and the law can refer only to the standards of the reasonable man in order to determine whether any particular relation gives rise to a duty to take

27、 care as between those who stand in that relation to each other.”,Common law: duty of care leading case,Donoghue v Stevenson 1932 AC 562 (product liability principle) “A manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form

28、 in which they left him with no reasonable prospect of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumers life or property, owes a duty to take reasonable care.”,Common law: d

29、uty of care leading case,Donoghue v Stevenson 1932 AC 562 per Lord Atkin (neighbour principle) “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

30、avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who then, in law, is my neighbour:those 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

31、 to the acts or omissions which are called into question.”,Common law: duty of care leading case,Donoghue v Stevenson 1932 AC 562 House of Lords (3-2 majority) held: Negligence is an independent tort A contractual relationship is not required Defendant manufacturer owed Mrs D a duty of care in the m

32、anufacture of the ginger beer to ensure it was free from defects likely to cause injury to health Manufacturer of food owes a duty to the consumer (narrow ratio) Product liability principle (wider ratio) Neighbour principle (even wider ratio) Recall topic 2: problems identifying the ratio of a case

33、Uncertainty as to width of ratio? Significance of this decision?,common law: duty of care a few years later in Australian courts.,22,Grant v Australian Knitting Mills Limited 1935 UKPCHCA 1 ; (1935) 54 CLR 49,common law: duty of care,Grant v Australian Knitting Mills Limited (1935) 54 CLR 49 Dr Gran

34、t buys woollen underwear manufactured by the defendant. He wears the underwear and gets a skin disease (severe dermatitis) and has to spend 17 weeks in hospital. Dr Grant sues the retailer for breach of contract (see topic 9 ) Dr Grant sues the manufacturer for negligence Evidence before the court t

35、hat the skin disease was caused by sulphur dioxide in the underpants (underwear was contaminated by chemical because of fault in the manufacturing process). Grant could not detect and had no reason to suspect the presence of the chemical irritant. Court approves product liability principle (extends

36、D v S because not limited to one type of manufacturer) Court approves product liability principle in relation to hidden defects (extends D v S but not too much because emphasises hidden defect ) Court applies the principle in D v S and finds that defendant manufacturer (Australian Knitting Mills) wa

37、s negligent,Student case presentation week 13,common law: duty of care,Lord MacMillan in Donoghue v Stevenson 1932 AC 562 “ .the categories of negligence are never closed.” Since then, many categories of duty of care have been recognised/established Manufacturer consumer employer employee school pup

38、il driver of vehicle - other road users occupier of land user of land hospital - patients professionals (e.g. accountant/auditor/lawyer) clients,Negligence: duty of care statutory reform,Negligence: Common law + Legislation,An increase in amount of damages awarded by the courts + An increase in the

39、cost of liability insurance = “a tort law crisis”? Problem areas: medical negligence; public liability insurance Government review of the law of negligence: Justice Ipp - Ipp Report (September 2002) statutory reform of the common law similar but not uniform legislation in each State) Civil Liability

40、 Act 2002 (NSW),Negligence: Common law + Legislation,Civil Liability Act 2002 (NSW) Modifies the common law E.g. criteria for breach and standard of care; causation; scope of liability; defences to negligence claim Restricts the plaintiffs right to recover in certain circumstances E.g. injury arisin

41、g from recreational activity; actions involving defendants who are public authorities and volunteers Reduces the amount that can be awarded for personal injuries E.g. cap on amount that can be awarded for general damages,28,.au/au/legis/nsw/consol_act/cla2002161/,Long Title: An

42、Act to make provision in relation to the recovery of damages for death or personal injury caused by the fault of a person; .,Civil Liability Act 2002 (NSW) very wide scope: “any claim for damages for harm”,Section 5A (1) This Part applies to any claim for damages for harm resulting from negligence,

43、regardless of whether the claim is brought in tort, in contract, under statute or otherwise.,Civil Liability Act 2002 (NSW) very wide definition of “harm”,Section 5 Definitions In this Part: harm means harm of any kind, including the following: (a) personal injury or death, (b) damage to property, (

44、c) economic loss. negligence means failure to exercise reasonable care and skill. personal injury includes: (a) pre-natal injury, and (b) impairment of a persons physical or mental condition, and (c) disease.,Civil Liability Act 2002 (NSW) no duty of care - statutory modification,Section 5H No proac

45、tive duty to warn of obvious risk (1) A person ( the defendant ) does not owe a duty of care to another person ( the plaintiff ) to warn of an obvious risk to the plaintiff. (2) This section does not apply if: (a) the plaintiff has requested advice or information about the risk from the defendant, o

46、r (b) the defendant is required by a written law to warn the plaintiff of the risk, or (c) the defendant is a professional and the risk is a risk of the death of or personal injury to the plaintiff from the provision of a professional service by the defendant. (3) Subsection (2) does not give rise t

47、o a presumption of a duty to warn of a risk in the circumstances referred to in that subsection.,Civil Liability Act 2002 (NSW) statutory modification what is an obvious risk?,Section 5F Meaning of “obvious risk” (1) For the purposes of this Division, an obvious risk to a person who suffers harm is

48、a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person. (2) Obvious risks include risks that are patent or a matter of common knowledge. (3) A risk of something occurring can be an obvious risk even though it has a low probability of occurrin

49、g. (4) A risk can be an obvious risk even if the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable.,Civil Liability Act 2002 (NSW) duty of care - statutory modification,Section 5G Injured persons presumed to be aware of obvious r

50、isks (1) In proceedings relating to liability for negligence, a person who suffers harm is presumed to have been aware of the risk of harm if it was an obvious risk, unless the person proves on the balance of probabilities that he or she was not aware of the risk. (2) For the purposes of this sectio

51、n, a person is aware of a risk if the person is aware of the type or kind of risk, even if the person is not aware of the precise nature, extent or manner of occurrence of the risk.,Civil Liability Act 2002 (NSW) no duty of care - statutory modification,Section 5I No liability for materialisation of

52、 inherent risk (1) A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk. (2) An inherent risk is a risk of something occurring that cannot be avoided by the exercise of reasonable care and skill. (3) This section does not ope

53、rate to exclude liability in connection with a duty to warn of a risk.,Civil Liability Act 2002 (NSW) no duty of care - statutory modification,Section 5L No liability for harm suffered from obvious risks of dangerous recreational activities (1) A person ( the defendant ) is not liable in negligence

54、for harm suffered by another person ( the plaintiff ) as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the plaintiff. (2) This section applies whether or not the plaintiff was aware of the risk.,Civil Liability Act 2002 (NSW) duty of care - sta

55、tutory modification,Section 5K Definitions In this Division: dangerous recreational activity means a recreational activity that involves a significant risk of physical harm. recreational activity includes: (a) any sport (whether or not the sport is an organised activity), and (b) any pursuit or acti

56、vity engaged in for enjoyment, relaxation or leisure, and (c) any pursuit or activity engaged in at a place (such as a beach, park or other public open space) where people ordinarily engage in sport or in any pursuit or activity for enjoyment, relaxation or leisure.,Negligence: duty of care Pure eco

57、nomic loss,Pure economic loss,Economic loss to the plaintiff arising from Damage to property of a third party Negligent words/misstatement “pure economic loss cases treated differently from typical case where plaintiff suffers personal injury and/or property damage for many years, these cases failed

58、 because courts held that no duty of care in the circumstances (or the damage was too remote) For duty of care to arise in cases of pure economic loss, law requires, something more than foreseeability of loss,Pure economic loss,Caltex Oil (Australia) Pty Ltd. v The Dredge Willemstad (1976) 136 CLR 5

59、29 Gibbs J: “it is still right to say that as a general rule damages are not recoverable for economic loss which is not consequential upon injury to the plaintiffs person or property. The fact that the loss was foreseeable is not enough to make it recoverable. However there are exceptional cases in which a defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will