Wednesday, November 29, 2006

 

Tuesday 28 November 2006

We began with the third, and least important, of the defenes to negligence, that of EX TURPI CAUSA. The courts may deny a cause of action to a claimant who suffers damage while participating in a criminal activity. In Ashton v Turner (1981) the claimant and defendant made a getaway from a robbery in a car driven by the defendant. The car crashed and the claimant was injured. It was held that no duty of care was owed to the claimant on the grounds of ex turpi causa.

Public policy prevented a person who had been convicted of a serious criminal offence from suing the health authority which, he claimed, failed to treat his mental condition with reasonable care, prior to the offence being committed. The claimant in Clunis v Camden And Islington HA (1997) had been convicted of manslaughter after being discharged from one of the defendant’s hospitals. Mr Clunis’ counsel tried to convince the Court of Appeal that the maxim ex turpi causa non oritur actio had no application in a tort action and that his client’s cause of action did not depend upon proof that he was guilty of manslaughter – rather that the doctors should have reasonably foreseen the circumstances in which he was likely to commit an act of homicide. Their Lordships held that the maxim did provide a valid answer to the claimant’s claim since the central issue did relate to the claimant’s own criminal activity.

One final point, the role of the rescuer. Where A’s negligence places B in danger and C is injured whilst attempting or effecting a rescue of B, then three branches of law may come into play. These are volenti, contributory negligence and causation. For example, by A’s negligence in crashing into B’s vehicle, B is rendered unconscious & his vehicle catches fire. C is injured in attempting to pull him from the blaze.


The situation is similar where the person who has been rescued is the person who has been negligent: Baker v Hopkins (1959). Dr Baker went down a well in an attempt to assist two workmen who had entered the well and thus exposed themselves to the risk of carbon monoxide poisoning. All three men died and successful actions were brought against the employer of the workmen.

We then turned to an examination favourite, well worth the learning – Defective Premises. This is a specialised area of negligence, liability governed primarily by two the OCCUPIERS’ LIABILITY ACT 1957 (applicable to lawful visitors) & 1984 (applicable to trespassers.

Vendors, landlords, builders or professional people may also be liable for a defective premises, as we shall see later.

Beginning with the 1957 Act. A claimant may claim for personal injuries and damage to property. This includes the property of persons who are themselves not visitors. The Act applies not only to land and buildings but also to fixed and moveable structures, including any vessel, vehicle or aircraft (s1(3)(a)).

There is no statutory definition of an occupier, & the term is misleading as the duty rests on the person who CONTROLS the premises, which is very different. Exclusive control is not necessary and there can be more than one occupier of premises, e.g. in a block of flats.

In Harris v Birkenhead Corp. (1976) the defendant issued a compulsory purchase order over a house, but when it was vacated they did nothing to board it up. The claimant (4 years old) entered through an insecure front door & fell from a 2nd floor window. The council was held to be the occupier, even though they weren’t in actual physical possession. The local authority had the legal right to control the premises to the exclusion of the former owner & were in the best position to avoid accidents.

The duty is owed to the ‘lawful visitor’, so who is he? Common law helps:


It is possible to place a limit on the lawful visitor, “Come in, but don’t ...”



Section 2(2) of the Act provides that the occupier owes a common duty of care to all lawful visitors:

The common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises or the purposes for which he is invited or permitted to be there.” So:


The Act provides four specific cases where an appropriate standard of care will be required:

s2(3)(a) – Children
s2(3)(b) – Exercise of a calling
s2(4)(a) – Warning of danger
s2(4)(b) – Independent contractors

Children - The act states:

An occupier must be prepared for children to be less careful than adults. If the occupier allows a child to enter the premises, then the premises must be reasonably safe for a child of that age.”

Glasgow Corporation v Taylor (1922): a seven-year-old claimant died after eating poisonous berries from a tree in a park. It was not fenced in, & there was no warning. The defendant was held to be liable.

The very young present a problem as to whether parents should have supervised them. It may come down to allocating liability between the parents & the occupier: Phipps v Rochester Corporation (1955). In Phipps it was stated that: “It would not be socially desirable if parents were, as a matter of course, able to shift the burden of looking after their children from their own shoulders to those who happen to have accessible bits of land”.

Remember that the 1957 Act did not apply to trespassers, & so common law tried to deal with it. In British Rail v Herrington (1972) the House of Lords decided that a duty of care was owed to child trespassers through a “basic duty of common humanity”.

Section 2(3)(b) provides that:

An occupier may expect that a person, in the exercise of his calling, will appreciate and guard against any special risks ordinarily incident to it, so far as the occupier leaves him free to do so.”

Roles v Nathan (1963): two chimney sweeps were killed by carbon monoxide gas while attempting to seal a sweep hole in the chimney of a boiler. The occupier was held not liable for the deaths.

General Cleaning Contractors v Christmas (1953): the occupier was held not liable to a window cleaner who was injured when a defective window closed suddenly, trapping the window cleaner’s hand and causing him to fall off the building. The window cleaner was expected to guard against the special risks incident to his calling. However, the claimant’s employer was in breach of his duty of care to provide a safe system of work for the window cleaners. That comes later.

The fact that a visitor has a specific skill is not sufficient in itself to absolve the occupier from liability where he has not exercised the required degree of skill. A fireman who has exercised reasonable care m an attempt to extinguish a negligently started fire will still be able to recover against the occupier of the premises: Salmon v Seafarer’s Restaurant (1983) approved by the House of Lords in Ogwo v Taylor (1988).

In Ogwo a fireman was injured by scalding steam created in the confined roof space of the house where the occupier had negligently started a fire. The fireman was wearing protective clothing but it proved to be inadequate for the conditions in which he was fighting this particular fire.

Section 2(4)(a) provides:

Where damage is caused to a visitor by a danger of which he had been warned by the occupier, the warning is not to be treated without more, as absolving the occupier from liability, unless in all the circumstances, it was enough to enable the visitor to be reasonably safe.”

In other words, the warning must be sufficient to cover the danger. A very general warning - Danger! - which does not give a visitor enough information to take steps to guard against the risk, would be inadequate to absolve the occupier.

Whether a warning has this effect is a question of fact in each case and the warning will not automatically discharge the duty. In Roles v Nathan (above) the sweeps were warned of the danger of flames so the section clearly applied.

Section 2(4)(b) provides:

Where damage is caused to a visitor by a danger due to the faulty execution of any work of construction, maintenance or repair by an independent contractor employed by the occupier, the occupier is not to be treated without more as answerable for the danger if in all the circumstances he had acted reasonably in entrusting the work to an independent contractor and had taken such steps (if any) as he reasonably ought in order to satisfy himself that the contractor was competent and the work had been properly done.”

All this means is that in order to discharge the common duty of care the occupier must have acted reasonably in entrusting the work to an independent contractor and have selected the contractor with reasonable care. Put simply, don’t get your mate who is a bricklayer to service the central heating, and don’t tell the properly trained independent contractor to cut corners to save a few bob.

Where appropriate the work must be properly supervised and checked when it is completed. If the job is of a technical nature, for example lift maintenance, the occupier may have discharged the duty by entrusting it to a competent contractor: Haseldine v Daw (1941): the claimant died when the lift hit the bottom of the shaft.

Where the job is straightforward such as clearing snow from a step, the occupier will be required to check that the job has been properly done: Woodward v Mayor Of Hastings (1945). In such circumstances, even a reasonably prudent non-expert could assess that the task had been performed inadequately and the steps remained a hazard to visitors entering the premises.

We will continue with this next week.

Thursday, November 23, 2006

 

Tuesday 21 November 2006

We were looking at remoteness of damage and began with two important decisions made by the House of Lords following the Wagon Mound decision.

IF THE KIND OF DAMAGE SUFFERED IS REASONABLY FORESEEABLE, IT DOES NOT MATTER THAT IT CAME ABOUT IN AN UNFORESEEABLE WAY: Hughes v Lord Advocate (1963). A portable tent was left over an exposed manhole. The tent was surrounded by paraffin lamps. A child, trespassing inside the tent, dropped one of the lamps down the hole, thereby causing an explosion in which the child suffered burns. Burning was a foreseeable type of damage, even though the precise manner of burning might not have been foreseen. This was the first opportunity of the House of Lords to consider the Privy Council’s preference for reasonable foreseeability as expressed in the Wagon Mound (No. 1). The Law Lords applied the test of reasonable foresight and further explained the nature of the test: “In order to establish a coherent chain of causation it is not necessary that the precise details leading up to the accident should have been reasonably foreseeable: it is sufficient if the accident which occurred is of a type which should have been foreseeable by a reasonably careful person.”

This has produced some strange results, e.g. Bradford v Robinson Rentals (1967) where the claimant suffered frostbite after travelling for his employer in an unheated van in terrible winter weather. The judge decided that the frostbite, albeit rare, was merely a form of injury which might be suffered after exposure to extreme cold. The defendant employer was, therefore, liable for the permanent injury caused by the frostbite.


2. PROVIDED THAT THE KIND OF DAMAGE IS FORESEEABLE IT DOES NOT MATTER THAT IT IS MORE EXTENSIVE THAN COULD HAVE BEEN FORESEEN. In Vacwell Engineering Co. v BDH Ltd (1971), the defendants supplied a chemical but negligently failed to warn that it was liable to explode on contact with water. When the chemical was placed in water there was a violent explosion which resulted in extensive damage. Some damage was foreseeable, even though the extent of the damage was unforeseeable. This did not matter, the defendants were held to be liable.

One particular example of the extent of damage principle is the so-called “egg-shell skull rule” - a defendant must take his victim as he finds him as regards his physical characteristics. In Smith v Leech Brain (1962), a negligently inflicted burn on the lip caused an employee who had a pre-malignant condition to develop cancer. The defendants were liable for the damage resulting from the claimants death even though death itself was not foreseeable.

A novus actus interveniens means a new and intervening act which may break the chain of causation.

If A negligently runs over B, who is subsequently run over by C, C’s action is unlikely to break the chain of causation, as this is a risk to which A’s negligence exposed B. But if C stole B’s wallet, the court would be unlikely to find A liable, as this was not a risk to which A had exposed B.

A novus actus interveniens may take one of three forms.

(1) A NATURAL EVENT. The courts are reluctant to find that an intervening natural event breaks the chain of causation as the claimant has no one else to sue. If the defendant negligently starts a fire and strong winds cause the flames to spread to the claimant’s property the court will not allow the wind to break the chain of causation. However, if the natural event causes damage simply because the breach of duty has placed the claimant in a position where the damage can be caused, the chain of causation will be broken, unless the natural event was likely to happen.
(2) ACT OF A THIRD PARTY. Where the defendant’s duty is to guard the claimant or his property against damage from a third party, the third party act will not break the chain of causation. In Stansbie v Troman (1948), the defendant decorator was told to lock the door when be went out. He failed to do so and the claimant’s jewellery was stolen. The thief’s action did not break the chain of causation. See also Smith v Littlewoods (1957) discussed previously.
(3) IT MAY BE THE ACT OF THE CLAIMANT HIMSELF. Where the claimants lack of care for his own safety and the defendant’s breach of duty are regarded as causes of the harm suffered, this is normally a question of contributory negligence. (See 6.2.) But there are circumstances where the claimants conduct may exonerate the defendant regarding the injuries suffered in the second event. The test is whether the claimant has acted reasonably. In McKew v Holland, Hannen and Cubbits (Scotland) Ltd (1969), as a result of the defendant’s negligence the claimant sometimes lost control of his injured leg. While holding his young daughter by the hand, the claimant attempted to descend a steep staircase with no hand rail. His leg gave way and after pushing his child back, he jumped to avoid falling and broke his ankle. The claimants decision to descend the staircase was the moment when he acted unreasonably; he took an unnecessary risk at that time, not when he decided to jump. In the agony of the moment such a choice might have been reasonable. Contrast with Weiland v Cyril Lord Carpets Ltd (1969) where the claimant was unable to adjust her bifocals as a result of a neck injury caused by the defendant’s negligence. She was worried about catching public transport in such a condition and went to her son’s office to ask for a lift home. On the way into the office she fell down a flight of stairs and was injured. The claimant was held to have been acting reasonably; the defendant was liable for those injuries.

Many difficult issues arise for the court to decide. The facts can be infinite, and the judges adopt a mixture of legal principles, policy & common sense to help them.

One illustration is provided where the claimant suffers injuries as a result of the defendant’s breach of duty. He becomes depressed and commits suicide. The question is whether the court wishes to compensate the estate or dependants of a suicide? There are a number of ways in which they can approach this:

Was the suicide caused by the breach of duty? “But-for” the accident would he have committed suicide?
Was the death too remote a consequence of the breach?
Was the suicide a novus actus interveniens of the claimant?
Could the deceased be regarded as being contributorily negligent in taking his own life?

This difficult issue was first raised by the facts of Pigney v Pointers Transport Services Ltd (1957) in which the claimant’s husband was injured in an accident at work. The head injuries which he sustained led to anxiety neurosis and depression. Some months later he hanged himself. The court allowed the widow’s claim under the FATAL ACCIDENTS ACT (now 1976) (later) and did not regard the suicide as a novus actus interveniens.

Pigney was considered in the unusual case of Meah v McCreamer (1986). The claimant had suffered severe head injuries in a car accident caused by the negligence of the defendant. After the crash, M underwent a personality change and began to attack women. He was successfully sued by two of his victims and M then tried to recover the damages payable to his victims from the defendants. Woolf J held that the damages awarded to the claimant victims were too remote. The loss was indirect and to allow the claimant to recover would expose those like the defendant to indefinite liability. There were also policy reasons against indemnification of the claimant for the consequences of his criminal activities.

We then turned to the three defences of:

Contributory Negligence - the claimant’s fault contributes to his own injury & damages are apportioned.
Volenti non fit injuria - the claimant voluntarily agrees to undertake the risk of harm at his own expense.
Ex Turpi Causa – a person involved in a criminal act may be denied an action

For example: Janet & John have been drinking together. Janet offers John a lift home, John accepts. Due to Janet’s negligent driving the car crashes and John is injured. John was not wearing a seat belt, is thrown forward and hits his head on the windscreen.

If John sued for negligence he could meet the defences of volenti & contributory negligence. Volenti would fail as John may be aware that Janet is drunk but did not consent to her negligent driving. Knowledge of a risk is not equal to consent to run the risk. A statutory provision would also operate to prevent the defence succeeding. John’s damages would be reduced for contributory negligence in riding with a driver who he knows is drunk and in failing to wear a seat belt.

If Janet & John were involved in a get-away from the scene of a crime at the time of the accident Janet could also raise the defence of ex turpi causa (illegality) to the action.

We’ll begin with contributory negligence. At common law if the claimant’s injury was caused partly by his own fault and partly by the negligence of the defendant then he (the claimant) could recover nothing. Important changes to the are were brought about by the LAW REFORM (CONTRIBUTORY NEGLIGENCE) ACT 1945. Section l(1) provides:

“Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such an extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage”.

Damage includes loss of life and personal injury. Property damage would also appear to be included as this was the case before the passing of the 1945 Act.

To establish a defence of contributory negligence the defendant must prove that the claimant was at fault and that the claimants contributory negligence was a cause of the injuries he suffered.

It is not necessary for the claimant to owe a duty of care to the defendant for him to be contributorily negligent. What is necessary is that the claimant has failed to take reasonable care for his own safety. Therefore, while a motorcyclist owes no duty to other road users to wear a crash helmet, by failing to do so he is guilty of contributory negligence if he suffers head injuries in a road accident while not wearing such a helmet: O’Connell v Jackson (1972).

Just as actionable negligence requires foreseeability of harm to others, so contributory negligence requires foreseeability of harm to oneself it follows that a person is guilty of contributory negligence if he ought reasonably to have foreseen that, if he did not act as a reasonable man would have acted, he might be harmed. The test for the standard of care expected of the claimant appears to be an objective one which varies according to the facts of the case.

A claimant may take up a position which is not dangerous in itself but where his failure to take precautions increases the extent of the harm which he may suffer, e.g. a passenger in a car fails to wear a seat belt. In Froom v Butcher (1976) the claimant suffered the following injuries in a car accident caused by the defendant’s negligence: broken ribs and bruises to his chest; head abrasions and a broken finger. The first two injuries would probably have been avoided if he had worn a seat belt. Lord Denning MR stated:

“The accident is caused by bad driving. The damage is caused in part by the bad driving of the defendant, and in part by the failure of the claimant to wear a seat belt.”

The wording of s1(1) of the 1945 Act gives the court an unfettered discretion to reduce the damages as it thinks “just and equitable”. Since Froom v Butcher failure to wear a seat belt in the front seats of cars has been made a criminal offence subject to certain exceptions.

It is uncertain as to whether there is an age below which children are not contributorily negligent. In Cough v Theme (1966) a girl of 13½ years of age was not contributorily negligent when she crossed the road in reliance on the encouragement of a lorry driver to do so. Similarly in Yachuk v Oliver Blais (1949) a nine year old boy was not expected to understand the dangers of petrol. He had bought the petrol to play with and was burnt when it ignited. If a minor were to be considered contributorily negligent, he should be judged by the standard of a reasonably prudent child not against the standard of a reasonably prudent adult.

Courts are also slow to ascribe contributory negligence to a workman injured in an accident at work.

Where a person attempts to rescue another and is injured in the attempt, the courts will be reluctant to find that the rescuer was careless for his own safety.

The claimant in Sayers v Harlow UDC (1958) was found to be 25% contributorily negligent when she attempted to climb out of the public lavatory in which she was trapped, by putting her weight briefly on the toilet roll holder.

In order for the defence to succeed, the claimant’s fault must be a legal and factual cause of the harm suffered. It is not necessary that the claimant’s fault be a cause of the accident itself.

In Jones v Livox Quarries (1952) 2 QB 608 the claimant was riding on the tow bar of a vehicle when another vehicle negligently ran into it and injured him. His damages were reduced as he was partly responsible for his own injuries. This was a risk to which he had exposed himself by has own negligence.

If he accepts a lift in a car knowing that the driver is intoxicated, then this amounts to contributory negligence - Owens v Brimmell (1977). Note that the defence of volenti is not appropriate here - we will cover this presently.

Section l(1) of the 1945 Act provides that the claimant’s damages shall be reduced by “such extent as the court thinks is just and equitable having regard to the claimant’s share in the responsibility for the damage”. In determining what this responsibility is the courts consider both causative potency and comparative blameworthiness.

If the test of causative potency is used the logical answer is that each case should end in a 50-50 apportionment as both are to blame. Fortunately the courts take a common sense approach, as shown in STAPLEY above.

In Fitzgerald v Lane (1988), the claimant had stepped into the traffic on a busy road. He was struck by the first defendant’s car and deflected into the path of the second defendant’s car. Both defendants were negligent and the claimant was contributorily negligent. The trial judge allocated a third of the responsibility to each party and reduced damages by one third. The House of Lords held that this was the wrong approach and that, where the claimant’s fault is a cause of the accident, the court should first determine the proportion of his blame and secondly determine the contributions of the separate tortfeasors. The claimant was considered to be just as much to blame as the two defendants and his damages were reduced by 50%. The remaining 50% was divided equally between the two drivers.

Volenti non fit injuria. It is a complete defence to the claimant’s action - just as contributory negligence was prior to 1945. A person can consent to an act which would otherwise amount to the commission of a tort.

A tort must have been committed before the defence becomes relevant. In Wooldridge v Sumner (1963), the Court of Appeal was concerned with injury to spectators at a sporting event allegedly caused by the negligence of a participant in the event. The court stated that before volenti became relevant, the defendant had to be in breach of duty. The standard of care owed by a participant to a spectator was not to act with reckless disregard for the spectator’s safety. The defendant was competing in a horse show. He took the wrong line whilst galloping around the arena and caused the claimant to think that he was in the horse’s path. The claimant fell into the horse’s path, whilst attempting to pull another spectator out of the way. Despite the temporary lapse of skill and control on the defendant’s part, he was not negligent. As no tort had been committed on the facts, volenti was irrelevant.

In relation to negligence the defence takes the form of assumption of risk. The application of volenti is controversial and some people take the view that it is only applicable in cases of express consent in that he was in a position to choose freely. The approach has changed in relation to employer/employee situations - see ICI v Shatwell (1965) where consent was implied from the circumstances.

Where the parties have reached an express agreement that the claimant will voluntarily assume the risk of harm, and the agreement is made prior to the negligent act, the defence will operate. If there is a contract between the parties then the defendant may attempt to exclude liability for negligence, but note the terms of the UNFAIR CONTRACT TERMS ACT 1977 and the UNFAIR TERMS IN CONSUMER CONTRACTS REGULATIONS 1994. A contractual relationship between the parties is not essential.

The rule does not apply to aeroplanes! In Morris v Murray (1990) the claimant agreed to be flown in the defendant’s light aeroplane, piloted by the defendant. Both men had been drinking heavily. The defendant crashed the plane, killing himself and injuring the claimant. The defence of volenti was successfully pleaded by the defendant’s estate.

One case in which the court was prepared to imply an agreement was ICI v Shatwell (see above). Two brothers working for ICI as shot firers jointly agreed to disobey their employer’s orders and statutory regulations. They tested detonators without taking the required precautions and the claimant (one of the brothers) was injured in an explosion. ICI were sued as being vicariously liable for the other brother’s breach of statutory duty. As the defence of volenti would have been available to the brother if he had been sued, it was available to the defendants. The court was prepared to imply an agreement from the facts.

For volenti to operate the claimant must have knowledge of the existence of the risk and its nature and extent. If the claimant should have been aware of the risk but was not, the defence will fail: Smith v Austin Lifts (1959).

Mere knowledge of the danger does not establish the defence. In Smith v Baker (1891), the claimant was employed by the defendants in a quarry. He was told to work under a crane lifting heavy stones which sometimes fell. A stone fell and injured him. The doctrine of volenti was held to have no application to harm sustained from the negligence of employers. The reason the employee keeps working is to keep his job and not because he consents to the risk.

For volenti to apply it is essential that the claimant has a genuine freedom of choice.

In Haynes v Harwood (1935) the claimant policeman was injured when horses, which had been negligently left unattended, bolted, and he attempted to stop them. As bystanders were in danger it was held that the policeman had not exercised that freedom of choice which was essential to the defence of volenti. However, if no one is in any real danger then volenti is applicable: Cutler v United Dairies (1933).

The principle applies to all rescuers, professional or otherwise: Chadwick v British Transport Commission (1967).

We’ll begin with ex turpi causa next time.

Wednesday, November 15, 2006

 

Tuesday 14 November 2006

We continued from last week by looking at a very important factor when considering whether there has been a breach of a duty of care, namely a person who claims to have a special skill. He is judged by the standards of a reasonable person possessing the skill which he claims to possess. A solicitor will have the skills of the ‘average’ solicitor, ditto the plumber and car mechanic. He does not have to be the best in his profession, by definition there can only be one.

This can be illustrated by cases of medical negligence. The rule was set in Bolam v Friern Hospital Management Committee (1957). The case is referred to as the “Bolam Test”. The test is the standard of the ordinary skilled man exercising and professing to have that special skill. A man need not possess the highest expert skill at the risk of being found negligent. . . (A) doctor is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art.”

So all that is necessary is to ask other people who possess the same skill.

If, within a profession, there exist areas of specialist expertise, the claimant is entitled to expect that the defendant will exercise reasonable skill by reference to the expertise claimed. The facts of Matrix Securities Ltd v Theodore Goddard (1997) concerned the alleged negligence of both specialist taxation solicitors and the counsel whom they instructed on behalf of their clients. Although, on the facts, there was no negligence on the part of either legal adviser, it was noted that a solicitor who instructs counsel should not accept, blindly, whatever advice the barrister gives, but should be prepared to exercise his/her own independent judgment as to the accuracy and quality of that advice.

Where hospital treatment is provided by a specialist unit of medical staff (for example in an intensive care unit) there is no concept of “team negligence”. Rather the standard of care to be expected of any individual member of the team is to be determined by reference to the post held by the doctor and the acts which the doctor has elected to perform. Inexperience as such is no defence and a junior doctor may meet his or her own duty of care by seeking the advice and skilled assistance of a more specialist doctor/colleague: Wilsher v Essex Area Health Authority (1987) in the Court of Appeal. We will return to this case later.

The Bolam test is applicable to diagnosis and treatment. A different question is the extent to which a doctor should inform a patient of the risks inherent in a particular course of treatment, so that the patient can give “informed” consent. In Sidaway v Bethlem Royal Hospital Governors (1985), a case we have already discussed, the claimant suffered from neck pains and was advised by her surgeon that she should have an operation. The surgeon did not tell her that there was a 1% risk of damage to the spinal cord from such an operation. The claimant consented to the operation but suffered damage to her spinal cord, without negligence on the part of the surgeon. The House of Lords held that there is no doctrine of informed consent in English law.

There will be some situations where the doctor considers that disclosure of certain information regarding risks will undermine the patient’s ability to cope with his condition. Here a doctor will be justified in remaining silent about the risks. The difficulty in these cases is the medical view that patients may not undertake treatment likely to be beneficial if they know that there is even a slight risk involved. Balanced against this is the patient’s right to know, so that he can give consent based on genuine choice.

So far as proving the breach is concerned, the basic rule is that he who alleges must prove. The burden of proof lies on the claimant to prove (on civil standard) that the defendant acted without reasonable care. To this there are two exceptions, one statutory and one coming from the common law.

Section 11 CIVIL EVIDENCE ACT 1968 provides that a conviction on a criminal charge is admissible as evidence in a civil case based on the same facts. To escape liability the defendant must prove he was not negligent. This could apply, for example in motor accident cases. If the defendant has been convicted of dangerous driving then a rebuttable presumption of negligence is created. Whilst this might seem difficult it is not necessarily the case that driving through a red traffic light (a crime) amounts to negligence (a tort).

Of far more importance to us is RES IPSA LOQUITUR, which means that the thing speaks for itself. In some circumstances the court are prepared to accept that the defendant is negligent without hearing detailed evidence. The origins lie in the case of Scott v London and St Katherines Docks (1865), where the claimant was struck by some bags of sugar when walking past the defendant’s warehouse.

In order to utilise res ipsa loquitur the claimant must prove three things:

(1) the thing causing the damage or the event must have been under the defendant’s exclusive control. This means that the mere occurrence of the accident should point to negligence on the part of the defendant and no-one else. A straightforward example can found by comparison of two cases, both involving the railways. In Gee v Metropolitan Railway (1873) the claimant leaned against a train door shortly after it left the station, and fell out. As the door had recently been under the control of the defendants, there was evidence of negligence on their part. Contrast with Easson v London & North Eastern Railway (1944) where the claimant fell from the train some seven miles out of the station. Res ipsa loquitur was held not to apply as any of the other passengers could have interfered with the door.
(2) the accident should be of a sort that does not happen in the absence of negligence. Scott explains this nicely. For example, stones are not normally found in buns, barrels do not normally fall from upstairs windows, unless there has been negligence on someone’s part.
(3) there must be no explanation for the accident. If all the facts are known, the only question is whether negligence can be inferred. A defendant can escape liability by giving an explanation for the accident which is consistent with absence of negligence on his part.

A very strange example appears in the case of Widdowson v Newgate Meat Corp. (1997). The claimant suffered from a serious mental disorder and could not give reliable evidence about the accident in which he was knocked down by a van whilst he was walking along a dual-carriageway one night. The vehicle in question was being driven by an employee of the defendants and they chose to call no evidence leaving the judge in the difficult position of having no evidence from either party! The Court of Appeal held that in such circumstances res ipsa loquitur assisted the claimant to establish a prima facie case against the defendants which they had failed to defend at their peril. The claimant was, however, found to be 50% contributorily negligent.

The third ingredient of the tort of negligence is concerned with causation and remoteness of damage. Until the claimant has suffered damage there is no action. This can be contrasted with torts actionable per se, for example trespass and libel.

The claimant must prove that the damage suffered was caused by the defendant’s breach of duty (referred to as causation in fact) and that it was not too remote (causation in law).

Causation in fact is concerned with the question of whether as a matter of fact the damage was caused by the breach of duty. If a person is found dead on a railway crossing having been run over by a tram, and a train has failed to sound a warning before using the crossing, all the elements of negligence are present. The railway company owes a duty of care to persons using the crossing. There is a breach of duty by not sounding a warning. The claimant has suffered damage. But there is no negligence action until it is established that the train that ran over the claimant was the one that failed to sound a warning.

Remoteness of damage arises where causation in fact is established, but the damage is not regarded as having been legally caused by the breach of duty. A cut off point where the defendant ceases to be liable is established and beyond this point the damage is said to be “too remote”. For example, remember the example concerning the woman with the tray of tea who witnesses an RTA?

The rules for assessing remoteness of damage (below) operate to limit the overall extent of the defendant’s liability to the claimant. Where a further event occurs, after the breach of duty, which contributes to the damage, this later event may amount to a novus actus interveniens, a new and intervening act. It breaks the chain of causation and renders any new damage too remote.

The “but-for” test exists to ask whether “but-for” the action of the defendant the consequence would not have occurred. In Barnett v Chelsea And Kensington Hospital Management Committee (1969), the claimants husband complained of vomiting and pain when he attended the defendants’ hospital. No examination was ordered and he was referred to his own doctor. Five hours later he died of arsenic poisoning. The defendants were in breach of duty by not examining him, but tests showed that he would have died even if the doctor had examined him. Diagnosis and treatment could not have been effective in preventing the death. As the deceased would have died regardless of the breach of duty, that breach was not a cause of his death.

Dingley v C.C. Strathclyde [2000]: the claimant suffered whiplash in a road accident and was off sick for three days. Seventeen days later came the onset of MS. There was evidence that the trauma may lead to MS, but the House of Lords said that there was no proof of a causal link.

The problem of proving a breach of a duty where more than one defendant may have caused the damage complained of was the subject of the important House of Lords decision in Fairchild v Glenhaven Funeral Services [2002]. In conjoined appeals covering a number of workers who had contracted mesothelioma during a time in which they had worked for more than one employer, the Court of Appeal said no liability attached to any of the employers as the claimants could not prove on the balance of probabilities the period of employment in which they inhaled the asbestos fibre which started the disease. The House of Lords accepted that Wilsher had been correctly decided on its facts, but applied the principle in McGhee (which had been doubted in Wilsher) and reversed this decision. It is enough, said Lord Bingham, that the claimant can show that each employer’s negligence materially increased the risk of their contracting the disease. The injustice of denying a claimant a remedy outweighs any injustice caused by holding the defendant (who had been proven negligent) liable for injuries for which they might not have been responsible.

The above case was distinguished by the Court of Appeal in Barker v Corus [2006]. The case was not concerned with mesothelioma, but another industrial disease. The court held that the joint defendants were not jointly & severably liable (as in Fairchild), but severably liable only. This means that the claimant would have to sue each and every one of the defendants

Section 3 Compensation Act 2006 was enacted to overcome the decision of the Court of Appeal, and restore the position to that of Fairchild.

We then looked at multiple causes, both successive or concurrent.

Where the causes are successive and the second defendant’s breach of duty of the causes the same damage as that of the first defendant, the “but-for” test will exonerate the second defendant. In Performance Cars Ltd v Abraham (1962) the second defendant’s car negligently collided with the claimant’s car. The claimant claimed £75 as the cost of a respray, but, at the time of the accident, the car already required a respray as a result of a collision with the first defendant. The second defendant was not liable, as the need for the respray did not arise from his breach of duty.

If the second defendant has caused similar or increased damage and the first defendant is sued, then a different approach is taken. In Baker v Willoughby (1970), the claimant suffered injuries to his left leg as a result of the defendant’s negligence. Before the trial, the claimant was shot in the left leg during an armed robbery and had to have his left leg amputated. Even if the robbers could have been identified and sued to judgment, they would only have been liable for depriving the claimant of a damaged leg. The House of Lords held the defendant liable for the ongoing disability caused by their earlier negligence, irrespective of the fact that the robbers had deprived the claimant of the leg in question. Lord Pearson commented: “The supervening event has not made the appellant less lame nor less disabled nor less deprived of amenities. It has not shortened the period over which he will be suffering. It has made him more lame, more disabled, more deprived of amenities. He should not have less damages through being worse off than might have been expected.”

This approach was distinguished in a later House of Lords case where the defendant’s breach of duty was followed by a natural event. In Jobling v Associated Dairies (1982) the claimant suffered a back injury as a result of the defendant’s breach of duty. It had occurred in 1973. The claimant had to take a lower paid job, & his income had been reduced by 50%. Before the trial in 1979 the claimant was found to be suffering from an unrelated back disease, rendering him totally unfit to work from 1976. The House of Lords limited the defendant’s liability to the period before the onset of disease. They criticised the reasoning in Baker, but did not overrule it.

So what’s the difference between the two? Well, in Baker v Willoughby there were two torts (negligence & trespass) whereas in Jobling there is only one (negligence).

Damages may be denied even though the claimant has established a causal link between the breach of duty and his damage. Policy considerations again play a part, the courts do not wish to impose too high a burden on the defendant and his insurers. In these cases the damage is said to be “too remote.”

The basic test remained the same until 1961 and was then changed by a Privy Council decision. The earlier test, however, still provides the basis of the remoteness test in some other torts.

At one stage it was sufficient that physical damage was a direct consequence of the defendant’s breach of duty - Re Polemis (1921). A plank was negligently dropped into the hold of a ship. Benzene vapour in the hold was ignited by a spark caused when the plank was dropped. The ship was destroyed in the ensuing fire. “Once the act is negligent, the fact that its exact operation was not foreseen is immaterial.”

Note that for the defendant to be liable at all, he must owe the claimant a duty of care. For a duty to arise, some damage must be reasonably foreseeable. In Polemis some damage was foreseeable as a result of the dropping of the plank, which establishes the duty. The explosion was a direct result of the breach and, therefore, was not too remote even though the kind of damage could not have been foreseen.

This test was rejected by the Privy Council in Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co. (The Wagon Mound (No. 1)) (1961). The defendants negligently discharged fuel oil into Sydney Harbour. Some time later the oil spread to the claimant’s wharf, where welding operations were in progress. A spark from a welding torch ignited the oil and caused considerable fire damage to the wharf. The oil also caused fouling to the wharf. The trial judge found that it was not foreseeable that fuel oil on water would catch fire, but that some foreseeable damage in the form of fouling was caused. It followed that there was a duty of care and a breach of that duty. However, the Privy Council held that the defendants were not liable for the fire damage. They applied a test for remoteness of damage of whether the type of damage suffered was a reasonably foreseeable consequence of the defendant’s breach of duty. As it was not foreseeable that the oil would catch fire on water, the fire damage was an unforeseeable type. It was in fact the opinion of experts that oil, of this type and in these conditions, would not ignite. Their Lordships expressed the opinion that RE Polemis should no longer be considered as good law (for negligence claims only) because it was not consistent with ideas of justice or morality that for an act of negligence, however slight or venial . . . the actor should be liable for all consequences however unforeseeable and however grave, so long as they can be said to be ‘direct’”.

This test is less favourable to the claimant as it involves the court making fine distinctions between types of damage, but in practice the attempt to narrow the definition has been avoided by a number of devices.

We will continue with this next week.

Wednesday, November 08, 2006

 

Tuesday 7 November 2006

We continued with our consideration of a pure economic loss. In Murphy v Brentwood DC (1991) a seven judge House of Lords overruled their own previous decision in Anns v Merton BC. Briefly, it was held that a local authority is not liable in negligence to a building owner or occupier for the cost of remedying a dangerous defect, which resulted from the negligence of the authority in not ensuring that the building was erected in accordance with building regulations.

In 1970 the claimant purchased from a construction company one of a pair of semi-detached houses newly constructed on an in-filled site on a concrete raft foundation to prevent damage from settlement. The plans and calculations for the raft foundation were submitted to the local council for building regulation approval prior to the construction of the houses. The council referred the plans and calculations to consulting engineers for checking and on their recommendation approved the design under the building regulations and byelaws. In 1981 the claimant noticed serious cracks in his house and discovered that the raft foundation was defective and that differential settlement beneath it had caused it to distort. The claimant was unable to carry out the necessary repairs to the foundation, which would have cost £45,000, and in 1986 the claimant sold the house subject to the defects for £35,000 less than its market value in sound condition. He brought an action against the council claiming that it was liable for the consulting engineers’ negligence in recommending approval of the plans and alleging that he and his family had suffered an imminent risk to health and safety because gas and soil pipes had broken and there was a risk of further breaks. The judge, who found as a fact that the claimant had been exposed to an imminent risk to health and safety, held the council liable for the consulting engineers’ negligence and awarded the claimant damages of £38,777, being the loss on the sale of the house and expenses. The council appealed to the Court of Appeal, which held, following existing House of Lords authority, that the council owed a duty of care to the claimant to see that the house was properly built so that injury to the safety or health of those who lived in it was avoided and that it was in breach of that duty when it approved plans for a defective raft foundation. The court accordingly dismissed the appeal. The council appealed to the House of Lords.

It was held that when carrying out its statutory functions of exercising control over building operations a local authority was not liable in negligence to a building owner or occupier for the cost of remedying a dangerous defect in the building which resulted from the negligent failure of the authority to ensure that the building was designed or erected in conformity with the applicable standards prescribed by the building regulations or byelaws but which became apparent before the defect caused physical injury, because the damage suffered by the building owner or occupier in such circumstances was not material or physical damage but the purely economic loss of the expenditure incurred either in remedying the structural defect to avert the danger or of abandoning the property as unfit for habitation, and, since a dangerous defect once known became merely a defect in quality, to permit the building owner or occupier to recover his economic loss would logically lead to an unacceptably wide category of claims in respect of buildings or chattels which were defective in quality, and would in effect introduce product liability and transmissible warranties of quality into the law of tort by means of judicial legislation. The council accordingly had owed no duty of care to the claimant when it approved the plans for a defective raft foundation for the claimant’s house. The appeal would therefore be allowed. Anns v Merton London Borough Council [1977] overruled.

Two years earlier their Lordships reached the same decision in D & F Estates v Church Commissioners [1989]. The claimants complained that the plaster had fallen from the walls of their new flats. It had not been mixed in accordance with instructions. The House of Lords held that this was a pure economic loss, so only recoverable under the Hedley Byrne principles.

The problem in both cases is that the court are saying that the claim is for the difference in value between a perfect and imperfect building, i.e. a pure economic loss, even though in both cases physical damage had been caused to the properties.

There is an oddity here that has been created in the context of buildings which are defective but have not caused damage to person or other property. A valuer who prepares a negligent valuation survey can be sued by the purchaser who “relied” on the report: Smith v Bush [1989] but the original tortfeasor whose negligence created the inherent defect in the building cannot be sued because the owner’s loss is pure economic loss (see  above cases)!

Most negligence actions are concerned with positive conduct which causes damage to the claimant, but what is the position where the defendant fails to act and thereby causes damage to the claimant? – an omission.

In Donoghue v Stevenson (1932) Lord Atkin referred in the neighbour test to, “acts or omissions...” What he meant by omission, however, was an omission in a course of positive conduct, for example where a person is driving a car and omits to apply the brakes. The conventional view was that there was no liability in negligence for a simple failure to act for another person’s benefit unless there was a positive duty to do so.

Consider: If X has fallen into a river and is drowning.  X calls for help. Y is walking along the bank and hears X. There is a lifebelt provided on the bank, but Y just walks by. There is no liability on Y as he owes no duty of care to X, unless there is a special relationship which gives rise to a duty to act.

What of Y had begun a rescue attempt and then withdrew, making X’s position even worse? By embarking on a positive act, does Y undertake a duty?

It would surely be strange to say that the person who does nothing has no liability, whilst a Good Samaritan could be sued!

The question of liability for omissions came before the House of Lords in Smith v Littlewoods Organisation Ltd (1987). Lord Goff said that there was no duty to prevent persons deliberately inflicting damage on another person. There were, however, four exceptions to this principle:

  1. where there was a special relationship between the parties, such as a contractual relationship;

  2. where there was a special relationship between the defendant and the third party. This could arise where boys escape from a detention centre and cause damage, e.g. Home Office v Dorset Yacht Co. [1970]);

  3. where the defendant negligently causes or permits a source of danger to be created, which is then interfered with by third parties, e.g. Haynes v Harwood (1935); children threw stones at an unattended horse, a policeman was injured when attempting to stop the horse as it bolted.

  4. where the defendant knew or had means of knowledge that a third party was creating a danger on his property and failed to take reasonable steps to abate it. Examples of this arise in the tort of nuisance, e.g. Goldman v Hargrave (1966). A bolt of lightning hit a rd gum tree. The owner cut it down, but left it to burn itself out. It spread to his neighbours land, and burnt his house down.

Related to this is liability for the acts of third parties. When will A be liable to B for the negligent act of C?  Any question of A’s liability will normally concern his omission to exercise control over C.

Lamb v Camden London Borough Council (1981), the defendants negligently damaged a water main which caused flooding to the claimants premises. The occupier moved out and squatters took over the house causing damage. The court was concerned with the defendant’s liability for the damage caused by the squatters. The issue was treated as one of remoteness of damage and it was concluded that the damage was too remote a consequence of the breach of duty.

Perl (Exporters) Ltd v Camden London Borough Council (1984), the defendant council owned adjoining premises. Number 142 was let to the claimant, and #144 was divided into flats. There was no lock on #144, and thieves entered #142 by knocking a hole through the adjoining wall. The Court of Appeal held that the defendants were not liable, mere foreseeability was not sufficient to establish a duty. Policy factors are at work here; the claimant would be insured against this type of loss.

The issue came to the House of Lords in Smith v Littlewoods Organisation Ltd (above). The defendants purchased a building and left it empty. A fire started in it which seriously damaged the claimant’s property. The fire had been started by vandals (who had started fires on other occasions) but this fact was not known to the defendants. The court held that there was a duty on persons to ensure that their property was not a source of danger to neighbouring properties. But this duty would only extend to preventing damage being caused by vandals where such damage was reasonably foreseeable. As the defendants had not known of the previous fires no duty was owed.

That’s it for the establishment of a duty of care, so now we turn to the breach.

Once the claimant has established that the defendant owed him a duty of care, he must show that the defendant was in breach of that duty – did the defendant’s conduct fall below the required standard? If it did, then the conduct will amount to negligence and the defendant will be in breach of duty.

The standard of care expected of a particular defendant is set by the law, but the question whether the defendant fell below the standard is one of fact, to be determined by reference to all the relevant circumstances. Policy considerations may affect the outcome.

An objective standard of care is taken and the defendant’s conduct is weighed against that to be expected from the “reasonable man”. The most frequently cited definition of breach of duty was given by Alderson B in Blyth v Birmingham Waterworks Co. (1856):

“Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.”

You just need to refer to the reasonable man test.

No account is taken of individual disabilities or peculiarities, as the test is objective. A learner driver will be judged by the same standard as a reasonably prudent, qualified driver: Nettleship v Weston (1971).

There is a subjective element to the ‘reasonable man’ test because the standard is that of the reasonable man in the particular circumstances in which the defendant found himself at the time of the accident. In Glasgow Corporation v Muir (1943), an urn of hot tea was being carried down a narrow passage when, for an unexplained reason, one of the handles was released and children were scalded. The manageress of the cafe was alleged to have been negligent in allowing the urn to be carried by a party of visitors past a queue of children buying ice creams. The House of Lords held there was no negligence as, on the facts of the particular case, it could not have been foreseen that such an accident would occur. Lord MacMillan described the ‘reasonable man’ as being free from over-apprehension (every path is best by lions) and from over-confidence. He fits in between.

The defendant will only be liable if the reasonable man would have foreseen damage in the circumstances prevailing at the time of the alleged breach of duty. In Roe v Minister of Health (1954), the claimant was paralysed after receiving an injection in hospital with a syringe into which phenol had leaked. At that time it was not known that phenol could get into the syringe through cracks invisible to the naked eye. The defendants were therefore not negligent, as they could not have foreseen the accident. The circumstances in which the accident had occurred were only discovered some time after the event. The court must avoid judging the defendant with “the benefit of hindsight”.

Minors have no immunity, but are rarely sued as they have no cash/insurance. If he is sued he is judged against that of a reasonable child of the same age. In Mullin v Richards (1998) the Court of Appeal unanimously confirmed the appropriate measure of foreseeability of harm to be that of an ordinarily prudent child of the same age, and in the same circumstances, as the defendant. Here both claimant and defendant were 15 year old schoolgirls engaged in a mock fight with plastic rulers, during which one ruler broke and a piece of plastic entered the claimants eye, causing her to lose sight in that eye. On the facts of this case the Court of Appeal could not find evidence of lack of reasonable care on the part of the defendant and concluded that the accident was no more than a commonplace game in which there was no justification for attributing foresight of significant personal injury.

Many factors may operate in isolation or conjunction but there is also a policy element behind many of the courts’ decisions, e.g. in deciding whether to make a finding of fault in a medical negligence case, the court may take into account, when setting the standard of care, the effect on a Health Authority’s (HA) finances or the morale of the members of that professional group whose practices are being questioned. Factors will include:


We’ll look at each in turn.

PROBABILITY OF HARM
Nearly every human action involves some risk of harm to others, but it will not necessarily result in liability. The greater the risk of damage, the more care that must be taken.

In Bolton v Stone (1951), the claimant was struck by a cricket ball while she stood outside her house. The ball had been hit 100 yards and cleared a 17 foot fence some 78 yards from the batsman. This had occurred only six times in 30 years. The defendants were held not liable as the risk was so small that the reasonable man would have been justified in disregarding it.

Compare with Hilder v Associated Portland Cement Ltd (1961), the defendants allowed children to play football on waste ground next to a road. Balls frequently went onto the road and one caused a motorist to crash, killing him. The likelihood of a passer-by being hit by a ball was considerable and the defendant occupier of the waste ground was held liable.

THE MAGNITUDE OF LIKELY HARM
The greater the injury risked, the greater the precautions required. In Paris v Stepney Borough Council (1951), a one-eyed welder, employed by the defendants, lost his sight because he was not provided with safety goggles. The defendants were negligent because they were aware of his disability and should have taken greater care.

In Withers v Perry Chain Co. Ltd (1961) the claimant was prone to dermatitis and was given the most grease-free job available. She still contracted dermatitis, but the defendant employers were not liable – they had done all that was reasonable, bar refusing to employ her.

THE IMPORTANCE OF THE OBJECTIVE TO BE ACHIEVED
The court may balance the risk against the importance of the objective to be achieved by the defendant, often known as social utility.

Watt v Hertfordshire County Council (1954), a fireman was injured by the sudden movement of a heavy jack in a vehicle which was not adapted to carry it. The jack was needed at the scene of an accident to save the life of a trapped person. The defendants were not negligent as the objective of taking the jack to the accident as quickly as possible to save a life justified the risk.

However, the utility of the defendant’s activities does not justify all risks. A balance must be achieved with other factors and those driving emergency vehicles are not excused automatically from all the normal rules of the road.

Other values may be less easy to assess. Road accident deaths are many, and could certainly be reduced by imposing a speed limit of 5 mph, but the consequences of this would be unacceptable in an industrialised society. What about the social utility of playing cricket - Bolton v Stone?

THE BURDEN OF TAKING PRECAUTIONS AGAINST THE RISK
Once a risk has been identified as being reasonably foreseeable, the difficult question arises of whether the defendant should have taken precautions against the risk. If the cost of eliminating the risk is out of all proportion to the extent of the risk the defendant will not be obliged to take preventative measures - Bolton v Stone again!

In Latimer v AEC Ltd (1953), the floor of the defendant’s factory became flooded after heavy rain. They took all possible steps to minimise the danger, short of closing the factory. The claimant slipped and was injured, but the defendants were held not liable. The court weighed the degree or extent of the risk against the cost of eliminating it.

CONFORMITY WITH ACCEPTED PRACTICE
Conformity with standard and accepted practice may be sufficient to fulfil the standard of reasonable care.

The Court of Appeal has clarified the standard of care to be expected of an auctioneer. In Luxmoore-May v Messenger May and Baverstock (1990) the defendants, it was alleged, had negligently failed to identify two pictures belonging to the claimants as those of a celebrated painter. At a subsequent auction of the paintings they were sold for £840, and a few months later they were sold again for £88,000. The claimants claimed the difference between the two prices. The Court of Appeal considered the standard of care and skill to be expected of provincial auctioneers to be similar to that of a general medical practitioner. “Since the valuation of a picture of which the artist was unknown was not an exact science and pre-eminently involved an exercise of opinion and judgment which by its very nature might be fallible… the court would be slow to hold that a valuer was guilty of professional negligence merely because he failed to spot (an antique of unrecognised worth) if he had done his job honestly and with due diligence.” On these facts, the defendants were not negligent, since divergent views about the painter could have been held by experts of similar standing.

Failing to follow usual practice is usually good evidence of negligence, but in Brown v Rolls Royce (1960) the claimant contracted dermatitis at work. Washing facilities, but not barrier cream, was supplied by the defendants. The cream was supplied in other firms (usual practice) but there was argument over its effectiveness. The claimant was unable to show that she would have not suffered dermatitis had the cream been supplied, hence the defendants were not liable.

The final issue is one of special skill, so important that we leave this until next week.

Wednesday, November 01, 2006

 

Tuesday 31 October 2006

Arriving back from our break, we began by looking at a PURE ECONOMIC LOSS.
It is the first word ‘pure’ that must be remembered, for we are to consider other types of economic loss shortly.

The difficulty created for tort law by negligent statements is that they usually cause economic rather than physical damage. You must remember that I have already said, many many times, that it is possible to claim for an economic loss caused by a negligent statement, but not a negligent act.

An economic loss is usually a matter of contract law, tort is more reluctant to recognise such losses as actionable unless they are caused intentionally for example in the tort of deceit (considered only briefly in the syllabus) and the economic torts (not in the syllabus).

If you look at Donoghue v Stevenson and add another dimension to it, it helps to explain things. Just suppose that the claimant had also been sick down her clothes as well as suffering illness from the contaminated drink. She would have been able to recover for her personal injury and the damage to her property, but could not claim for the cost of the ginger beer. Why? This is a claim for an economic loss. As she had not bought the beer she had no contract, and couldn’t claim for the cost of the beer in contract law.

Emerging liability for economic loss in tort lies in the area of negligent (mis)statement.

Before 1963 an action on a statement would lie where:

The statement formed a term of a contract.
The statement was made fraudulently (tort of deceit)
The statement caused physical damage (negligence).
The statement was made maliciously (malicious falsehood).
The statement damaged reputation (defamation).
The statement preceded a contract and the claimant sought rescission in equity for misrepresentation (Misrepresentation Act 1967 – yet to exist).

However, no action would lie for a negligent statement causing pure economic loss: Candler v Crane Christmas & Co. (1951). The dissenting judgment of Denning LJ is important. He stated that accountants owed a duty of care to their:

“employer or client, and. . . any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts so as to induce him to invest money or take some other action on them. I do not think, however, the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts.”

Two significant developments occurred during the 1960s. The MISREPRESENTATION ACT 1967, s2(1), provides that where a person has entered into a contract, after a misrepresentation has been made to him by another party to the contract, and has suffered loss as a result, then the representor will be liable in damages unless he can prove that he had reasonable grounds to believe and did believe that the facts represented were true. It was not necessary to prove a duty of care, but there must have been a contract. Three things were needed:

Statement of fact, not opinion.
Made by one party to the contract to another party.
Misrepresentation induced the sale.

In 1963 the House of Lords laid down the basis for an action in the tort of negligence for statements: Hedley Byrne & Co. v Heller & Partners Ltd (1964). The claimants were advertising agents and asked their bank to obtain a credit reference on one of their clients from the clients’ bank. The credit reference negligently stated that the clients were “good for their ordinary business transactions” and the reference contained a disclaimer. The House of Lords held that in appropriate circumstances there could be a duty of care, and approved the dissenting judgment of Denning LJ in CANDLER (above). However, the defendants were not liable on these facts because of the disclaimer clause. This disclaimer clause is to figure later.

The neighbour test was rejected as being inappropriate to deal with the difficulties of statements. The biggest difficulty is that when a statement is made it tends to have a wider circulation than a product. If the statement is incorrect it may cause a considerable amount of damage to a large number of people. A defective product on the other hand will probably only cause damage on one occasion.

Instead of the neighbour test, the court said that there had to be a special relationship between the parties. This has three elements:

(1) special skill
(2) reasonable reliance
(3) knowledge of the type of transaction

Let’s look at them one at a time:

The defendant must be possessed of a special skill. In Esso Petroleum Co. v Mardon (1976) 801, Esso had made statements to Mardon as to the estimated throughput of a garage. Mardon’s rent on the garage was calculated on the basis of the throughput. The estimate had been made negligently and it was held that Esso owed a duty to take reasonable care in giving the advice. As Esso’s statement also amounted to a misrepresentation, an action would have arisen under the MISREPRESENTATION ACT 1967 (although it didn’t exist at the time the facts arose).

A special skill is possessed when a statement is made during the course of a business transaction where the representor knows his statement will be relied on. No duty arises if the statement is made on a social occasion, i.e. one where it would be unreasonable to expect the defendant to be exercising due care, although the case of Chaudhry v Prabhakar (1989) suggests otherwise. The claimant had asked a friend who had some knowledge of cars, to find a suitable one that had not been involved in an accident. The defendant found one and recommended it. The claimant bought it, but it was found to have been in an accident. The defendant was found liable but counsel had already conceded that a duty of care was owed. The decision has been criticised many times, and is the only success of a statement on a social occasion.

The second element is that the claimant must reasonably rely on the defendant’s advice. Some cases stated that it was vital, whilst others denied its relevance. Best to say that it is required. It must be foreseeable that the claimant will so rely but this factor is not sufficient in itself. What is the position regarding a surveyors’ negligence in connection with valuation of houses? If the valuation is carried out negligently & the house is worth less than was paid for it, does the surveyor owe a duty of care to the purchaser? The problem can be seen thus:

Surveyor Þ Þ ÞBuilding Society Þ Þ Þ Purchaser

Two contracts exist, but neither is of help to the question. In Yianni v Edwin Evans & Sons (1982) a house was valued for the claimants by the defendants at £12,000. Relying on this the claimants borrowed £12,000 from the building society who had arranged the valuation. The claimants soon discovered that work amounting to £18,000 was required to repair the property. The judge found for the claimants, basing his decision that a large proportion of house buyers rely completely on such a valuation and do not have a full structural survey carried out. This fact is well known to surveyors who carry out such work. Unsurprisingly, surveyors did not welcome the decision, and they began placing disclaimers in their evaluations.

The House of Lords considered the issue of a duty of care in two linked cases: Smith v Bush; Harris v Wyre Forest District Council (1989). The questions requiring answers were:

Was a duty of care owed to the claimant? The unanimous decision was ‘yes’, approving of the decision in Yianni. The surveyors were aware that the claimant would probably rely on the valuation, and it was just and reasonable to impose a duty in such circumstances. The duty is limited to the purchaser; it does not extend to subsequent purchasers.

Did the disclaimers fall within the scope of the UCTA 1977? They agreed that it did, although this was denied by the defendants.

Did the notice satisfy the tests of reasonableness? Section 11(3) UCTA 11977 helps. The House of Lords considered the bargaining power of the parties; whether it would have been practical to seek advice from a further source; the difficulty of undertaking the task for which liability is being excluded; the practical consequences of the decision. It was decided that the risk should fall on the surveyor, the disclaimer is unreasonable. The caveat regarding modest homes and industrial premises was emphasised.

In Merret v Babb [2001] the Court of Appeal followed Smith v Bush. Here the employer of the surveyor had gone bust, and the court held the valuer personally liable.

How is the loss calculated? The House of Lords were at odds with the Court of Appeal here. Consider this:

A. Valuer (V) negligently overvalues property at £100,000
B. Lender (L) lends 90% of valuation £90,000
C. True value of property at date of loan £70,000
D. Amount recovered on sale of property £40,000

Court of Appeal approach:

B (90,000) - D (40,000) = £50,000 (judged at date of sale)

House of Lords approach:

A (100,000) - C (70,000) = £30,000

The House of Lords approach is based on how much security the lender would have had if the information given had been correct and how much security the lender had at the time of the loan.

This ruling has implications for other professions, whose members are asked to provide information and give advice, for example solicitors. Where the third party is a beneficiary under a will there a few potential problems. In Ross v Caunters (1980) a beneficiary under a will was deprived of his inheritance due to the incompetence of a solicitor. It was held that a duty of care was owed to the beneficiary under a will that he made for a client.

This was affirmed by the House of Lords in White v Jones (1995):

March 1986 - Testator quarrels with the claimants - his 2 daughters. He cut them from his will.

June 1986 - The reconciliation. A letter is sent to the solicitor instructing him to prepare a new will with gift of £9,000 to each claimant.

17 July 1986 - The solicitor receives the letter, but does nothing.

16 Aug 1986 - The solicitors clerk asks the firm’s probate department to draw up a will/codicil with the new dispositions. Arranges to visit testator on 17/9/86.

14 Sept 1986 - Testator dies.

The claimants sue for negligence, but the Trial Judge finds that no duty of care exists. There was an appeal to the Court of Appeal which was allowed, and this was affirmed by the House of Lords on 3 grounds:

(1) It was foreseeable by the defendant that the claimant would suffer financial loss.
(2) There was sufficient proximity between the solicitor & the beneficiaries.
(3) It was just & reasonable, a solicitor was in breach of his professional duty & no other remedy was available.

Compare this with Hemmens v Wilson Browne (A Firm) (1993). The defendant solicitors drafted a document at the request of P, giving the claimant the right to call on P to pay her (the claimant) £110,000 to buy a house. The document was defective as it did not confer any enforceable rights to the claimant (no consideration). Some weeks later P called upon Hemmens to fulfil his promise & he refused. She sued. The action failed. The solicitor had been negligent, damage to the claimant was reasonably foreseeable, & there was a sufficient degree of proximity, but it would not be fair, just or reasonable to impose a duty of care because Hemmens was still alive & could also sue the solicitor or take other steps to rectify the situation.

The third requirement of the special relationship is that the defendant must have some knowledge of the type of transaction for which the advice is required, although he need not have knowledge of the actual person who relies on the information.

This has been considered by the House of Lords in the context of auditors in Caparo Industries Plc v Dickman (1990). It was that a company’s auditors do not owe a duty of care to potential investors whether they are already existing shareholders increasing their holding in the company, or members of the public. The allegedly negligent statement was put into general circulation and might foreseeably have been relied upon for a variety of different purposes by total strangers to the defendants. The defendant auditors were not liable for their alleged negligence, because, as Lord Oliver stated:

“To widen the scope of the duty to include loss caused to an individual by reliance on the accounts for a purpose for which they were not supplied and were not intended could be to extend it beyond the limits which are so far deducible from the decisions of this House. It is not, as I think, an extension which either logic requires or policy dictates .”

What this means is a defendant takes on a responsibility for giving advice to a known recipient for a specific purpose, being aware that the advice would be followed.

Hedley Byrne principles were applied by Lord Goff in Spring v Guardian Assurance (1994). Two other of their Lordships also found for the claimant but without resort to Hedley Byrne. The majority held that a duty is owed by the provider of a reference to the subject of the reference for economic loss which flows from the negligent provision of a reference. An ex-employer was required by LAUTRO rules to provide a reference for the claimant. An unsatisfactory reference effectively curtailed the claimant’s chances of getting work in the financial services industry. An action for defamation might lie if the content of the reference was defamatory but such actions are usually met by the defence of qualified privilege. Their Lordships did not consider that the recognition of a duty in the tort of negligence would undermine the policy embodied in the defence of qualified privilege. (See Chapter 17 for a discussion of the tort of definition and relevant defences.)

Spring was followed by the EAT in TSB v Harris [2000] where it was held that an accurate and truthful reference may not be a fair and reasonable reference.

Until the Hedley Byrne decision in 1963 there was a general principle that pure economic loss was not recoverable in a negligence action.

Pure economic loss must be distinguished from economic loss which is consequential to physical damage (i.e. damage to the claimant’s person or property). An example of consequential economic loss would be loss of wages as a result of injuries received in a negligently caused car accident. An example of pure economic loss would be suffered by a person, kept waiting in the queue of traffic which built up behind the car accident, the loss of earnings, but who had no actual damage to his own body or property.

The principle of non-recovery is said to stem from Cattle v Stockton Waterworks Co. (1875). The defendants negligently burst a water main, thereby adding to the claimants expense in building a tunnel which he was under contract with a third party to build. The claimant was unable to recover this expense as it was pure economic loss. The court was concerned with opening the floodgates (ouch!) of litigation.

Cattle illustrates a recurring problem in this area: where A has made a contract with B, and C acts negligently, thereby making it more expensive for A to complete his contract.

The Hedley Byrne decision had the effect of allowing a claim for pure economic loss caused by a negligent statement. Did this decision have any effect on liability for negligent acts?

This was considered by the Court of Appeal in Spartan Steel & Alloys Ltd v Martin & Co. (1973). The defendants negligently severed an electricity cable, causing the claimant’s factory to shut down. The claimant claimed under three different heads:

damage to goods in production at time of power cut (physical damage)
loss of profit on (a) (consequential economic loss)
loss of profit on goods which could not be manufactured due to the power cut (pure economic loss)

The Court of Appeal allowed (a) & (b), but not (c). If such claims were allowed the potential losses could be enormous. Only the one factory had been affected; what if it had been 10 factories? Companies could insure against losses such as (c), to shift the loss to a defendant would impose a crippling burden.

The decision was followed in Muirhead v Industrial Tank Specialities Ltd (1986), the claimant contracted with the first defendant to install a tank for him to store his lobsters. The second defendant supplied the pumps for the tank. The third defendant made the pumps. The pumps failed and the claimant lost his stock of lobsters. The first defendant went into liquidation and the claimant sued the third defendant in negligence. He was able to recover for the physical damage to the lobsters but not for his other losses which were pure economic loss.

Finally, the House of Lords considered the pure economic loss question where goods are damaged in transit: The Aliakmon [1986]. The claimant had suffered economic loss when goods which he had contracted to purchase were damaged at sea. At the time of the damage the risk (but not ownership) of the goods had passed to the claimant. The claimant claimed that he was owed a duty of care by the defendants who had damaged the goods. The loss was classified as economic loss rather than physical damage as the goods at the time of damage were owned by a third party. The House of Lords held that no duty was owed. Where property is damaged then a person must be the owner of or in possession of that property in order to sue in negligence, as otherwise the loss is pure economic loss.

We begin next week with the important House of Lords decision in Murphy v Brentwood DC [1991].

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