Negligence Summary Notes

Q3 Negligence A problem question requiring you to discuss, and then apply, the approach NZ courts take when asked to recognise a duty of care in a new situation. Key feature of Negligence: Reasonable performance of a skill, duty. Duty of Care: How do we establish a duty of care? - Anns two stage test of proximity and policy. - Caparo established the third stage, 'fair just and resonable'. Proximity: Stage 1: Foreseeability - Bishop Rock Stage 2: Reliance/ Vulnerability Stage 3: Assumption of Responsibility Stage 4: Contract or Statute? Stage 5: Novus Actus Interviens Policy: Stage 1: Indeterminacy Stage 2: Impact on duty of care Satisfy proximity, then satisfy policy, then ask overarching is it fair just and reasonable? If so, then there is a duty of care. If there is a duty of care, then you must ask was the duty of care breached? Did the breach of duty lead to the harm? Are there any defences? Hedley Byrne v Heller and Partners:Moves us away from physical act causing harm. Recognised liability for economic loss. Anns v Merton London: Two stage analysis: 1. Relationship of proximity. 2. If there is proximity, we look for policy - what impact would this have on the duty of care if we recognised it? Caparo Industries: Introduced a third limb. 3. Is it fair, just and reasonable to have a duty of care? Stage 1: Foreseeability: Palsgraf v Long Island Railway: if there is no hazard apparent to the eye of the reasonable person. South Australia Asset Management Co: Lending money, decided how much by looking at property values. Negligently valued. We can owe a duty of care, and can say it's been breached, but we still need to think about whether that duty is owed to the people claiming they have been harmed. Remoteness is also important - foreseeability. Indeterminacy - need finite rules, don't want them to owe an indeterminate liability. Need to be able to identify a class of people - can't have a duty of care to the entire world. Have to identify to whom it's owed, then to the scope of the duty. How is the scope of the duty to be determined? If there is a statutory background to what the defendant is doing, the statute may determine the duty for us. May go even further and describe the duties owed. If we don't have a statute, we might have a contract telling us how we expect this person to act. Only harms caused by the breach of duty are recoverable. Heaven v Pender: Working on a ship. Brett MR Everyone ought to have regard to the safety of others - any absence of reasonable care and skill will leave you to pay for the injuries. Donohue v Stevenson: His approach is that you must take reasonable care to avoid acts or omissions that you can reasonably foresee are likely to injure your neighbour (those who are so closely and directly affected by your acts that you ought reasonably have them in contemplation.) Stage 2: Reliance/Vulnerability: South Pacific: 'Vulnerability' from Rolls Royce case, shift away from talking about 'reliance'. Court looks at the relationship between the parties, trying to see who is simply proximate. Direct and close nexus between the defendant's negligence (if the def had been negligent), there would have been direct and close loss to the plaintiff. The insured was directly within the contemplation of the def investigator, when they conducted their investigation and reported to the insurer. The investigator must have known that an adverse report would be likely to lead to a denial of insurance. If we recognise a duty of care, this will be an incentive for investigators to use reasonable care when they investigate - promotes a high professional standard. Would be consistent with the policy goal to recognise a duty of care, but it is certainly not a strong enough policy factor to outweigh the concern with defamation law. One other very strong idea that comes through when we are trying to determine proximity. Didn't get talked about in South Pacific. The idea is the 'assumption of responsibility'. AG v Carter: Certificate of seaworthiness. Purpose of the certificate was maritime safety, not protecting the interests of buyers. Difficulty in seeing reliance if the alleged duty creates a conflict of duty. Stage 3: Assumption of Responsibility: AG v Carter:If someone has responsibility for something they have said, will probably be proximate and fair/just/reasonable, subject to policy factors. [26] in most cases there will not be any voluntary assumption, but will deem assumed responsibility when the def sees or ought to have seen that the plaintiff would rely on what was said. Defendant has three choices when they are asked to give advice or give a statement: 1. Say no 2. Proceed and give the advice or make the statement, without any qualification or disclaimer - normally will create a duty of care 3. Proceed, and say 'I will not take responsibility for it' - disclaim responsibility. In terms of an issue of proximity, since they were physically harmed, if they were that close as to be harmed, they must have had proximity. Mobil Hong Kong: Ship owned by defendant, negligently moored. PC seems to be suggesting that where it is physical harm, there is no novel duty analysis, just foreseeability. Bishop Rock: Ship surveyor, checking for seaworthiness. Not seaworthy, cargo lost. HL did accept that it was foreseeable physical damage. Question was is foreseeability sufficient to create a duty of care to the cargo owner. Relationship between the parties must be such that its obvious that there will be a risk of harm. In most cases of direct infliction of physical loss it is self evident that a civilised system of law would find a duty. The majority wanted to look at the context, not fair and reasonable to impose a duty of care. Maritime law has a very intricate body of rules for things lost at sea - rules didn't specifically cater to classification societies. Stovin v Wise: Council was roading authority, motorbike accident on the corner. Lord Nicholls does accept that the council was more than a bystander, had the power to fix the road. Mere existance of a power though, is not a duty. Caparo tripartite test. Duty to take positive action. Test of fairness and reasonableness is more difficult to satisfy in terms of a duty to act. HL: Council responsible for failing to act. Dorset Yacht: Inmates escaped while wardens slept, stole boat and damaged it. Independent and autonomous individuals. Were on an island, foreseeable that they would escape by boat. Wardens were asleep. The escape was foreseeable, and that it would be by boat. Duty owed in respect of actions by independent 3rd parties. Sleeping officers original cause of harm, foreseeable = enough to create liability. Smith v Littlewoods: Abandoned cinema, fire burned neighbours property. Knew or ought to have known that if they didn't prevent entry, that the vandals would cause damage not just to the cinema, but to the neighbours as well. Added up to a duty of care. Question is whether in all of the circumstances, a reasonable person would anticipate it as probable that if he did nothing about this, these events would occur. Has to be something more than just foresight, they must recognise it as a probability that if they don't act, harm will occur. 1. If we create a source of danger in our premises, and we can reasonably foresee that trespassers will come in and spark that off. 2. If the defendant knows, or at least ought to have known, that the third party has already created a risk of fire, or started a fire, and doesn't do anything to prevent the damage - then we can hold them responsible. Economic Loss: Hedley Byrne v Heller: Bank referee, sued the bank for carelessly giving a reference. Lord Morris: Incremental approach, logical progression to recognise a new duty. If the person is paid to give advice, and they give it negligently, the person accepts responsibility for that advice - payment is consideration for contract. Same for the bank: Someone who is not a customer make a deliberate request for definite advice. Bank is under no duty to give the advice, but if they give it gratuitously, then it is logical to see them as under a duty to exercise reasonable care. Liable if they are negligent, but because there is no consideration, there is no contract. Words: When people are giving opinions or making statements, even the most careful of people will make definite statements in an informal occasion - no assumption of responsibility if the occasion is social or formal. Words are fluid, can be broadcast without the knowledge of the maker. Thus, we must be very careful when attaching liability to words: All three law lords say different things: Lord Reid: Three criteria. Reliance/vulnerability. Reasonable for him to place that trust. The person gave the information when he knew or ought to have known about this reliance. Person being asked for advice has three choices: Say yes, say no, say yes and give disclaimer. Lord Morris: Says duty will arise if person has a special skill, and they undertake to apply that skill for the benefit of someone else, and that person reasonably relies on the application of skill. Lord Devlin: There is an assumption of responsibility in circumstances which, but for the absence of consideration, there would be a contract. Within that context, if there is an express undertaking to take care, they will hold that person to it. Limiting the Class of People to Which the Duty is Owed: Scott Group v MacFarlane and also Caparo Industries: Annual accounts prepared by companies, people look at these to see how the company is doing, rely on them when buying shares. In both cases the auditor did not perform at the level of a reasonable auditor, and the accounts were prepared with mistakes. Clear that there was reliance, and loss because of that reliance. Woodhouse J: Refers to a famous quote from an American case (p571) Cardozo CJ quote. Worries that if there is liability for negligent misstatement, we might have liability for an indeterminate amount for an indeterminate time to an indeterminate class - this is a bad thing, too much indeterminacy. Woodhouse doesn't like this approach though, states four points as giving a duty of care: 1. The auditors have a special skill (Lord Morris in Hedley Byrne) 2. They gave their advice in a deliberate fasion (not informal), so have accepted liability to all those they can reasonably foresee will need to use their opinion and rely upon it. 3. Can use the reports and accounts, but the people using them can't look behind them, no possibility of intermediate examination. 4. Duty owed to anyone who might need that information to make significant decisions about the accounts. Cooke J: Talks about the class of people - says the auditor should have disclaimed. But the disclaimer won't go very far, it's words! Says Hedley Byrne isn't helpful, just look for proximity. In this case, the company was ripe for takeover, so virtually certain that people would be looking at the accounts. Only one person who will actually buy the company, so the class of people affected is just one. (But people prepare bids, time and effort into trying to takeover - not worth it if the company is worth less than they think).Elias CJ and Anderson J (Minority): Look at Dorset Yacht, if theres a special risk, as oppose to members of the public, then you can create a class - William Bell amongst his workmates. Richmond P: Looks at whether the auditors have assumed a responsibility. Doesn't seem reasonable to attribute liability unless the maker of the statement has applied his mind to a particular purpose that the advice would be relied upon for. Because the accounts are so widely available, assumption of responsibility to all of these people would be too general. Lord Bridge: Defendant must be fully aware of the nature of the transaction that the plaintiff has in contemplation - advice communicated directly to the plaintiff and knows that it is very likely that the plaintiff will rely upon this advice. If we have a single plaintiff with a single purpose in contemplation of the statement maker, the defendant could clearly be expected to anticipate reliance for the very purpose for which the information is given. In those circumstances it is very easy to see a duty of care. Test: (a) the defendant knew his statement would be communicated to the plaintiff as an individual or as a member of an identifiable class (parameters), specifically in connection with a particular transaction or transactions of a particular kind. (b) for a particular purpose (c) plaintiff has to be very likely to rely on this statement for this particular purpose.

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