LAWS301 Lecture Notes
Part Three: Negligence
DUTY OF CARE.............................................................................................................................................. 3
ORIGINS AND DEVELOPMENT......................................................................................................................................3
Donoghue v Stevenson [1932] AC 562............................................................................................................4
Facts........................................................................................................................................................................... 4
Issue........................................................................................................................................................................... 4
Rule............................................................................................................................................................................ 4
Analysis...................................................................................................................................................................... 4

Hedley Bryne & Co Ltd v Heller & Partners Ltd [1964] AC 465........................................................................6
Facts........................................................................................................................................................................... 6
Issue........................................................................................................................................................................... 6
Rule - Negligent Misstatement..................................................................................................................................6
Analysis...................................................................................................................................................................... 7

Home Office v Dorset Yacht Co. Ltd [1970] AC 1004 (HL)...............................................................................9
Facts........................................................................................................................................................................... 9
Issue........................................................................................................................................................................... 9
Rule............................................................................................................................................................................ 9
Analysis...................................................................................................................................................................... 9

REDEVELOPING THE DUTY OF CARE TEST...................................................................................................................11
Anns v Merton London Borough Council [1978] ACT 728.............................................................................11
Facts......................................................................................................................................................................... 11
Issue......................................................................................................................................................................... 11
Rule - two stage inquiry...........................................................................................................................................11

Caparo Industries Plc v Dickman and Others [1990] 2 AC 605......................................................................12
Facts......................................................................................................................................................................... 12
Issue......................................................................................................................................................................... 12
Rule: the three-fold test...........................................................................................................................................12
Analysis.................................................................................................................................................................... 13
Result....................................................................................................................................................................... 13

South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2
NZLR 282........................................................................................................................................................14
Facts......................................................................................................................................................................... 14
Issue......................................................................................................................................................................... 14
Rule: assessing the duty of care in novel situations..................................................................................................14
Analysis.................................................................................................................................................................... 15

THE STATUS QUO IN NEW ZEALAND........................................................................................................................17
Attorney-General v Carter [2003] 2 NZLR 160...............................................................................................17
Rule.......................................................................................................................................................................... 17
Assumption of responsibility....................................................................................................................................17
The NZ approach to duty of care arising from negligent misstatements..................................................................18

Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324..................................................19
Facts......................................................................................................................................................................... 19
Issue......................................................................................................................................................................... 19
Rule.......................................................................................................................................................................... 19
Analysis.................................................................................................................................................................... 20
Result....................................................................................................................................................................... 20

Couch v Attorney-General [2008] 3 NZLR 725...............................................................................................21
Facts......................................................................................................................................................................... 21
Issue......................................................................................................................................................................... 21
Rule.......................................................................................................................................................................... 21
Application............................................................................................................................................................... 22
Elias CJ's Dissent.......................................................................................................................................................22

North Shore City Council v Attorney General [2012] NZSC 49.......................................................................23

1 EXAMINING THE DUTY OF CARE ANALYSIS....................................................................................................................25
Palsgraf v Long Island Railway Co, 248 N.Y. 339 (1928)...............................................................................25
APPLICATION OF THE ANALYSIS (CATEGORIES)...........................................................................................................26
Positive acts causing physical damage..........................................................................................................26
Mobil Oil Hong Kong Ltd v Hong Kong United Dockyards Ltd [1991] 1 Lloyds LR 309 (PC).......................................26
Marc Rich & Co v Bishop Rock Ltd [1996] 1 AC 211..................................................................................................27

Omissions.......................................................................................................................................................28
Stovin v Wise [1996] AC 923.....................................................................................................................................28

Mental Injury.................................................................................................................................................30 van Soest v Residual Health Management Unit [2000] 1 NZLR 179..........................................................................30

Misstatements...............................................................................................................................................32
Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321............................................................................32

Economic Loss................................................................................................................................................35
Scott Group Ltd v McFarlane [1978] 1 NZLR 533 (NZCA)..........................................................................................35
Connell v Odlum [1993] 2 NZLR 257.........................................................................................................................37

Defective Buildings........................................................................................................................................39
Body Corporate 207624 v North Shore City Council (Spencer on Byron) [2013] 2 NZLR 297....................................39

Public Authorities...........................................................................................................................................42
X (Minors) v Bedfordshire County Council [1995] 2 AC 633......................................................................................42

OTHER ELEMENTS OF NEGLIGENCE.............................................................................................................. 45
STANDARD OF CARE AND BREACH...........................................................................................................................45
Overseas Tankship Ltd v The Miller Steamship Co Pty Ltd (Wagon Mound (No 2) [1967] 617....................45
Facts......................................................................................................................................................................... 45
Issue......................................................................................................................................................................... 45
Rule.......................................................................................................................................................................... 45
Analysis.................................................................................................................................................................... 45

Goldman v Hargrave [1967] 1 AC 645...........................................................................................................47
Facts......................................................................................................................................................................... 47
Issue......................................................................................................................................................................... 47
Rule.......................................................................................................................................................................... 47
Analysis.................................................................................................................................................................... 48
Result....................................................................................................................................................................... 48

Bannerman, Brydone Folster & Co v Murray [1972] NZLR 411.....................................................................49
Facts......................................................................................................................................................................... 49
Issue......................................................................................................................................................................... 49
Rule.......................................................................................................................................................................... 49
Analysis.................................................................................................................................................................... 49

CAUSATION AND DAMAGES...................................................................................................................................50
Wilson & Horton Ltd v Attorney-General [1997] 2NZLR 513.........................................................................50
Facts......................................................................................................................................................................... 50
Issue......................................................................................................................................................................... 50
Rule.......................................................................................................................................................................... 50
Analysis/Application.................................................................................................................................................51

2 Duty of Care
Lecture 36: (11/08/20)
Four elements:

1. Duty of care
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The defendant owes the plaintiff a duty of care

2. Breach

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The defendant breaches their duty of care and were careless/unreasonable in doing so.

3. Causation

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The defendant's breach then caused damage to the plaintiff

4. Damages

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Because of the breach, the plaintiff has suffered loss and incurred costs that they should not be liable for.
If there are no costs incurred by the plaintiff, there is no claim for negligence.

Lecture 37: (14/08/20)

Origins and Development
Originally, negligence comes from 12th to 14th Century Trespass
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In the 12th century, you could trespass if there was a direct and forcible interference with a person or land.
In the 13th century, two writs developed - a writ of trespass to the person and one of 'trespass on the case'.
In the 14th century, there was a separation of trespass to the person, and 'trespass on the case'
(like negligence).

Trespass to the person - assault, battery, wrongful imprisonment.
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There must be directness
There must be fault - interference
The plaintiff does not necessarily need to prove damages - strict liability.

Trespass on the case - nuisance and negligence
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Can be direct or indirect
There can be liability without an intention to interfere
The plaintiff must prove damages.

3 Donoghue v Stevenson [1932] AC 562
Facts
The plaintiff alleged that she visited a café with a friend and consumed a tumbler-full of ginger beer,
poured from an opaque bottle, purchased by her friend from the owner of the café.
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A portion of the ginger beer was poured into a glass which was drunk by Donoghue - when her friend poured the remainder of the bottle, a decomposed snail floated out of the bottle.
Donoghue claimed that she felt ill from this sight, complaining of abdominal pain/
She was subsequently diagnosed with severe gastroenteritis (physical harm) and mental shock
(psychiatric harm).
The plaintiff sued the manufacturer of the ginger beer in tort.

Issue
The question before the House of Lords was whether if the allegations could be proved, the manufacturer owed any obligation of care to the consumer of their products:
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If there is a contractual basis between a consumer of a product and a manufacturer, negligence is not needed.
Here, there was no contractual relationship between both parties, because Donoghue's friend bought the ginger beer and it was not bought from the manufacturer directly.
The minority held that there was no duty, as the manufacturer was only liable in contract to which the plaintiff is not a party of - privity of contract.

Rule
Lord Atkin for the majority recognised that the case was irrelevant to privity of contract as the plaintiff was not suing on the contract but for the defendant's negligent conduct:
"a duty to take due care arises when a person or property of one was in such proximity to the person or property of another than, if due care was not taken,
damage might be done by the one to the other." - Lord Atkin at 581.
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An appropriate basis for imposing a legal duty to take care - proximity and foreseeability.

Analysis
General public sentiment dictates that a moral wrongdoer should pay for their carelessness which causes damage:
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"Love thy neighbour" translates to "you must not injure your neighbour" in law.
If Mr. Stevenson had not taken reasonable care to ensure his bottles are safe for human consumption, he should be held liable for the damage that it causes.
"The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then,
in law is my neighbour? The answer seems to be - 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 to the acts or omissions which are called in question." - Lord Atkin at 580.

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Although Stevenson was not the plaintiff's geographical neighbour, he was held to have owed a duty of care as there was no possibility of inspection due to the bottle being opaque.
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Stevenson was also held to have known that the absence of reasonable care in the preparation or putting up of the ginger beer would result in an injury to the consumer.

It was concluded that in the circumstances, a manufacturer owes a duty to the ultimate consumer to take reasonable care so that products are free from defects likely to cause injury.

1. Duty of care
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Stevenson's ginger beer contained a snail which caused injury to the ultimate consumer.
Therefore, the defendant did not comply with the duty of care.

2. Breach

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There were no processes for checking and ensuring that snails or other matter does not get into bottles before they are filled with ginger beer
This is not reasonable to ensure that bottles are free of defects likely to cause injury.
Therefore, there is a breach.

3. Causation

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Expert opinion - the snail in fact caused Donoghue's stomach pain and psychiatric shock.
No policy reasons not to extend the principle to this case - there were no laws to protect consumers at this time and imposing liability would meet the needs of ordinary people.

4. Damages

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Plaintiff suffered physical injury and psychiatric injury.

Lord Macmillan - the categories of negligence are not closed.
"There are other instances than of articles of food and drink where goods are sold intended to be used immediately by the consumer, such as many forms of goods sold for cleaning purposes, where the same liability must exist."
What if Stevenson did not produce the ginger beer?
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During this time, manufacturers often have bottles with their names printed on them.
The bottles were re-used. Manufacturers would obtain bottles with other people's names on them and would sell them with their own product in them.
There were multiple manufacturers of ginger beer in this region of Scotland - Stevenson argued at trial that the ginger beer was in fact not his product.
The Court did not accept this argument - his name was still on the bottle. If he wants to ensure his product is not being falsely labelled, he must protect his brand.
Product liability - if a manufacturer produces a product which is defective in some way, the manufacturer may be liable even if there are multiple buyers before the ultimate consumer.

5 Hedley Bryne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Lecture 38: (18/08/20)
A duty of care of a negligent statement arising from a pure economic loss might arise when

1. 2.

3. 4.

There is a special relationship between the parties - sufficient proximity
The party giving advice has voluntarily assumed the ability to do that
The third party has relied on advice
It is reasonable for the third party to rely on that advice.

Facts
Hedley Bryne is an advertising agency. They want to enter into a contract with Easipower who will be starting an advertising campaign.
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Hedley Bryne knows that Easipower's parent company has gone into liquidation
They are worried that Easipower will go into liquidation. They also know that Easipower may want the advertising contract to save their business from going bankrupt.
Hedley Bryne contacts their bank National Provincial and ask them to investigate by calling
Easipower's bank, Heller & Partners.
National Provincial sends a note to Heller & Partners - "without responsibility on the part of this bank" it said that Easipower was "considered good for its ordinary business engagements".
National forwards this to Hedley Bryne, relying upon the statement when entering the contract.
Easipower goes into liquidation, and Hedley Bryne suffers economic loss - they sue Heller &
Partners for negligence.

Issue
Hedley Bryne argues that Heller & Partners were negligent in providing bad information
(misstatements) which breaches their duty of care.
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Hedley Bryne argues that Heller should be responsible for their pure economic loss under their contract with Easipower, despite Heller not being privy to that contract.

The trial judge held that although Heller was negligent, they owed no duty of care:
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There were no communications between the plaintiff and defendant. There was also no fiduciary relationship.
The Court of Appeal similarly held there was no duty of care.
Hedley Bryne appealed this decision and the case came before the Privy Council.

Rule - Negligent Misstatement
Lord Reid began by disposing of the argument that there was no sufficiently close relationship between the parties which gives rise to a duty of care:
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The defendants had argued that they did not know the precise purpose of the inquiries and did not even know whether National Bank wanted the information for its own use or another's use.
"I would reject that argument. They knew that the inquiry was in connection with an advertising contract, and it was at least probably that the information was wanted by the advertising contractors. It seems to me quite immaterial that they did not know who these contractors were: there is no suggestion of any speciality which could have influenced them in deciding whether to give information or in what form to give it." - Lord Reid at 482 6 

Here, there was a negligent misrepresentation made directly to the person seeking information,
opinion or advice - degree of necessary proximity did not need to be determined.

Analysis
Lord Reid also held that appellant's argument based on Donoghue v Stevenson did not have any direct relevance to this case - differences between negligent words and negligent acts.
"Apart altogether from authority, I would think that the law must treat negligent words differently from negligent acts… Quite careful people often express definite opinions on social or informal occasions… and they often do that without taking that care which they would take if asked for their opinion professionally or in a business connection… there can be no duty of care on such occasions… But it is at least unusually casually to put into circulation negligently made articles which are dangerous." - at 483
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A negligently act will only cause a one-off accident, so it is not difficult to find the necessary degree of proximity between the negligent manufacturer and the injured consumer.
However, words can be broadcast without the consent or foresight of the speaker/writer.
Speaker should not owe a duty to every ultimate 'consumer' who acts on their words to their own detriment.
"In general, an innocent but negligent misrepresentation gives no cause of action.
There must be something more than the mere misstatement… The most natural requirement would be that expressly or by implication from the circumstances the speaker or writer has undertaken some responsibility…"

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Derry v Peek - directors of a company made false statements in a prospectus, investors sued in fraud. House of Lords held that the directors believed their statements were true despite having no reasonable grounds for their belief. The directors were negligent but not fraudulent as there can be no fraud without dishonesty.
Lord Reid held Derry v Peek to be a case on fraud as it did not establish any universal rule on negligent misrepresentation.
Nocton v Lord Ashburton - a solicitor was sued for fraud. Fraud could not be proved, but solicitor was held liable for negligence.
"The whole of the doctrine as to fiduciary relationships, as to the duty of care arising from implied as well as express contracts, as to the duty of care arising from other special relationships which the courts may find to exist in particular cases, still remains…" - Lord Haldane in Robinson v National Bank of Scotland Ltd

Lord Reid accepts Lord Haldane's view that a duty to take care should not be limited to fiduciary relationships but exist in other special relationships:
"where it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him.
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This is assessed at the objective standard of what a reasonable person would have done - they would have three options if they knew they were being trusted or relied upon 7

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