This is an extract of our Negligence Duty Of Care document, which we sell as part of our LAWS301 Law of Torts Notes collection written by the top tier of Univerity Of Otago students.
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Negligence: Duty of Care Winterbottom v Wright: where the negligent conduct complained of constitues a breach of a K, only a party to that K can sue. Donoghue v Stevenson Established duty of care to prevent positive acts causing injury/damage to person/property, liability's extent adjudged by test of remoteness. Didn't limit range of liability based on the type of damage caused, but left in place different common laws that did this. Satisfaction of neighbourhood principle is necessary but not sufficient. Sufficient for P to belong to a class of persons to whom harm was reasonably foreseeable
English expansion of the duty of care Hedley Byrne v Heller D may be liable for negligent statement causing P PEL by relying on statement to its detriment in a loss producing business transaction. Weakened two exclusionary rules; bar on recovering for PEL and negligent statement exclusions. Interpreted narrowly. Require: Negligent statement causing PEL where 'special relationship':
1. Voluntary assumption of responsibility by D to P for the accuracy of the statement
2. Reasonable detrimental reliance by P. Led to rapid expansion of scope of liability. Anns v Merton London Borough Council  AC 728 - Two Stage Test Similar facts to Bowen v Paramount Builders, land holders suing council for negligently inspecting faulty foundations. Developer designed, built a block of flats. Plans were sound, complied with bylaws, made pursuant to statute and adopted by council. But actual building was unsound: foundations not deep enough, not built in accordance w plans (and therefore bylaws). Flats were leased to the plaintiffs on very long term leases (999 year leases - common in UK) Flats subsided due to inadequate foundations. Long term lessees sued the council for cost of repairs; council's records were incomplete, not clear whether building inspector had inspected foundations. P argued in the alternative that the council was negligent either in failing to exercise its power under the bylaws to inspect at all, or negligent in failing to detect the defect; couldn't prove which had actually occurred. Council moved to strike out claim on ground that it owed the P no duty of care. HL: clearly reluctant to strike out claim prior to trial, but council had two strong arguments:
1. Nature of loss: Ps suffered no personal injury, no damage to property other than the defective building itself. Council relied on old precedent: where a latent structural defect caused deterioration of the structure itself, the claim is for PEL; loss of value. So P's complaint was that article was not worth as much as they had expected it to be worth; not recoverable in a tort action for negligence. Traditionally, P's remedy laid in contract against vendor.
2. Nature of conduct. Council had failed to safeguard Ps from others' conduct. This ran contrary to non-feasant rule: principle of no liability for negligent omissions. Therefore, no precedent for liability (no positive duty to inspect, or if there was a duty to inspect, it didn't add to plaintiff's loss in any way) under these facts. HL established a new rule creating a duty on the Council, and enforced this duty. In order to establish a duty of care in a particular situation, one need not bring the facts within those of previous situations which create a duty of care. The question has to be approached in two stages.
1. Whether, there is a sufficient relationship of proximity/neighbourhood between D/P that, in the reasonable contemplation of the D, the D's carelessness may be likely to cause the P damage ---in which case a prima fade duty of care arises. Plaintiff must establish proximity.
2. Whether there are considerations which should negative/reduce/limit the scope of the duty or the class potential Ps, or the damages to which a breach may give rise . Defendant must argue limits. The Anns test allowed Courts to increase the scope of the duty of care in order to get around former restrictive liability rules.
? East Suffolk Rivers Catchment Board v Kent
? Mount Albert Borough Council v Johnson used Anns in NZ
? Steeler v Porirua City Council went further and established a positive duty on Councils Gartside v Sheffield, Young & Ellis: CA Testatrix contracted solicitors (D) to make her new will, under which most of her estate would go to Gartside (P). The testator died before D executed the will. P sued D for negligence, claiming the value of the bequest. D claimed they owed no duty to P: P's loss was PEL, and didn't fall under the Hedley Byrne exception. Contract, not tort, covers promises to perform future actions, but P was not privy to testatrix-solicitor contract. P claimed solicitors owe a duty of care to beneficiaries of a proposed will to carry out instructions with due diligence and execute the will within a reasonable period. CA? conducted Anns two-stage test:
Was there a sufficient degree of proximity?
1. Designated beneficiary under proposed will (particularly when testatrix's circumstances dictate urgency, like here) was obviously and foreseeably likely to be closely and directly adversely affected by solicitor's carelessness that the solicitor should reasonably have his interests in mind.
2. Proximity not strengthened by actual reliance by P. Not essential for P to have relied to his detriment on assurances of the defendants. The P is harmed without any act on his party and the solicitor can reasonably foresee that his negligence will bring that about.
3. Duty extends to liability for foreseeable PEL regardless of absence of physical damage/injury/danger thereof. Policy reasons affecting the existence of duty Against:
1. To allow recovery in tort would erode the privity of the solicitor-client contract. But this goes against DvS, and many other tort cases where persons with contractual duties are liable to third parties nonetheless.
2. A solicitor might have to defend a claim while being required not to breach solicitor-client privilege. This possibility is remote, as estate would likely waive privilege, so insufficient.
3. Flaws in the proposed right of action; possibility of dual distribution under negligence + FPA or testamentary promises statute. But can still quantify damages taking into account these things, discount damages. For:
1. Recognition of duty serves two important social objectives: to compensate deserving plaintiffs and to promote professional competence. For solicitors this is a business risk; can spread risk with professional insurance, and sanctions discourage incompetence.
2. Duty would serve to enhance solicitor-client relationship; The drawing and execution of a will is intended to result in the benefit of third parties; if solicitor is negligent, the cli ent's expectations are disappointed.
3. Framework of the duty in this class of case is defined and limited. Duty is owed to a limited class of people, for breaches during a defined period (between instruction and death), and liabilit y is limited by the size of the estate.
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House of Lords backtracking: The Caparo threefold test Caparo Industries plc v Dickman  2 AC 605, 617 -618 After Anns, the PC and HL emphasised the inability of any single general principle to provide a universal, practical test for whether a duty of care of a given scope is owed
Found necessary ingredients giving rise to a duty of care:
1. Foreseeability of damage
2. A relationship of 'proximity' or 'neighbourhood' These two do not give rise to a prima facie duty of care
3. Fair, just and reasonable that the law should impose a duty. Emphasised the categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied legal duties of care. Wished to extend duty cautiously and incrementally, rather than in massive swathes limited only by negativing policy considerations; endorsed Brennan J in Sutherland Shire Council v Heyman (1985) HCA Followed by... Murphy v Brentwood District Council  1 AC 398 HL decided Anns was wrong on its facts, and absolutely overruled it. Cost of remedying defect in a building, even a hazardous defect, is PEL, so not recoverable in negligence against either the builder or the council. Bowen and Steeler were wrongly decided; only basis for negligence liability for PEL is Hedley Byrne principle: in the light of Caparo to be applied narrowly and restrictively.
New Zealand Courts' Response South Pacific Manufacturing Co Ltd v NZ Security Consultants & Investigations Ltd; Mortensen v Lain  2 NZLR 282 (CA) Laings claimed insurance after business fire . Insurer hired D (Mortensen PI) to investigate arson. D reported that he believed P lit the fire intentionally; payout refused. P sued D for negligence. Issue: whether PI who has k with insurer to investigate a fire in property insured by insurer owes a duty to the insured party to take reasonable care in investigation. Court's approach to assessing the duty of care in novel situations The ultimate question is whether in the light of all the circumstances of the case it is just and reasonable that a duty of care of broad scope is incumbent on the D. i.e. The third step of the Caparo inquiry is now explicitly the overriding concern. Two broad fields of inquiry:
1. Degree of proximity or relationship Not just foreseeability. Consider degree of analogy with cases in which duties have been affirmatively established - recognises HL's concerns in Caparo. Assessment of competing moral claims; Lord Atkin in DvS, liability for negligence is based on public sentiment of moral wrongdoing requiring compensation. Balancing P's moral claim to compensation for avoidable harm vs D's moral claim to be protected from undue burden of legal re sponsibility.
2. Other policy considerations which negative or restrict or strengthen duty in this class of case. Public policy considerations; i.e. Moral claims of different groups if duty is imposed widely. Doesn't adopt Caparo test wholesale because: The same considerations are taken into account, one way or another; the precise road followed is not of critical significance. The Courts had followed Anns for 14 years without dissatisfactory results. But does substantially change the Anns test. Application in this case Proximity established a prima facie duty of care:
1. Direct and close nexus between D and P. Foreseeability - D must have known an adverse report would lead to the insurance claim being rejected. Moral claim strengthened because they had no obvious means of protecting themselves from liability.
2. D's moral culpability Burden of duty of care not out of proportion with moral culpability here; no conflict with contractual obligations, not unfai rly onerous because already has to take care.
3. Relevant legislation shows a public interest in the proposed duty. Private Investigators and Security Guards Act 1974 shows that the relationship between P and D is sufficiently proximate to c all for legislative oversight.
[looks more like a policy consideration than a proximity question?]
4. Clear parallel with cases where a duty of care has already been established Similar to Gartside (beneficiaries + testatrix) and Downside (debenture holder + receivers) (1) D voluntarily assumed responsibility to act carefully in undertaking a particular activity; unlike P in Hedley Byrne, just voluntarily undertaking a task which might impact adversely on the P if done negligently. (2) Similar dependence/power relationship in this case to Gartside - no actual reliance like in Hedley sense, but P was vulnerable dependant on D's care. (3) High degree of likelihood that careless performance would cause harm (really just restatement of close nexus point) Wider policy concerns justify denying the duty of care:
1. Courts do not wish to disturb the immediate contractual relationships between insured and insurer, and insurer and investigator. The P's here have a contractual remedy against the D, and if they don't, it's because they bargained this way for a lower pre mium; not justification for allowing greater recovery in tort than contract. When contracts cover the two relationships at issue, those contracts should ordinarily control the allocation of risk unless special reasons exist to warrant a direct suit in tort - Simaan General Contracting e.g. Oligopolistic trade practices or other market failures causing substantial inequality of bargaining power. A plaintiff with the opportunity under a primary contract to obtain contractual protection from a loss cannot expect society to provide further protection in tort.
2. A duty here would cut across other areas of tort law, and deprive Ds of the related defences. Investigator might be liable for defamation here, so should have those defences available. Can't import duty of care - Balfour. e.g. Qualified privilege; had a legal + moral duty to report beliefs to insurance company, who had legitimate interest in hearing it... Investigator might be liable for malicious prosecution - should then show proof of malice.
3. A duty of care could not be reasonably confined; it would be inherently expansive and unacceptably indeterminate.
CA said they weren't abandoning Anns approach, but was clearly influenced by HL and watered down the test by importing features of the Caparo test, and applied the test in a manner consistent with Caparo. Rolls Royce NZ v Carter Holt Harvey  CA CHH contracted with ECNZ to establish a cogeneration plant (cogeneration contract), and ECNZ contracted with RR to construct the plant (turnkey contract) CHH had no direct contractual relationship with RR. The plant was not built to specifications, and so CHH suffered economic loss.
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