Tort 1. Negligence: Actionable Damage And Duty Of Care I

Front 1

Legal elements of negligence

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• damage - the gist of the action
• duty of care - defendant must owe claimant legal duty not to cause the harm complained of
• breach of duty - defendant has failed to meet this duty
• causation - breach of duty must have resulted in the harm complained of
• legal causation/remoteness harm must not be too remote
• defences

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Hinz v Berry [1970]

actionable damage - psychological harm

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FACTS Plaintiff watched from opposite side of rode where she was picking flowers as D's car crashed into her family's car, killing her husband and severely injuring her children. She became morbidly depressed after this.

HELD She was entitled to recover as she had demonstrated a recognised psychiatric condition as opposed to feelings of grief and sorrow.

Lord Denning MR: "In English law no damages are awarded for grief or sorrow caused by a person's death. No damages are to be given for the worry about the children, or for the financial strain or stress, or the difficulties of adjusting to a new life. Damages are, however, recoverable for nervous shock, or, to put it in medical terms, for any recognisable psychiatric illness caused by the breach of duty by the defendant. The way to do this isto estimate how much plaintiff would have suffered if, for instance, herhusband had been killed in an accident when she was 50 miles away; and compareit with what she is now, having suffered all the shock due to being present atthe accident."

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Rothwell v Chemical& Insulating Co Ltd [ 2007]

actionable damage - foreseeability - lack of proof of damage - de minimis principle

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FACTS R and others alleged that C had negligently exposed them to asbestos dust with the foreseeable consequences that they had developed pleural plaques, were at risk of developing one or more long-term asbestos-related diseases, and now suffered anxiety at that prospect. G also added a claim for damages for depression caused by his development of pleural plaguesNone of the claims could on their own establish a cause of action HC: the 3 claims put together, there was cause of action, C liable CoA: Wrong to aggregate the claims, C not liable. C not liable for psychiatric injury caused by fear of catching disease HoL: wrong to aggregate, C not liable. C not liable to G

ISSUES

Is there an actionable negligence claim where non-actionable claims are aggregated?

i. A non-actionable injury does not become actionable even if the anxiety causes a recognised psychiatric illness such as clinical depression. (Hoffmann LJ)

ii. Whether an injury is sufficiently serious to found a claim for compensation or too trivial to justify a remedy is a question of degree. The question then is how trivial must a claim be (Hoffmann LJ).

iii. Symptomless bodily changes with no foreseeable consequences, the risk of a disease which is not consequent upon those changes and anxiety about that risk are not, individually or collectively, damage giving rise to a cause of action. (Hoffmann LJ)

iv. The test of whether it is foreseeable that the employee of reasonable fortitude would suffer psychiatric injury depends upon the statistical evidence coupled with the test of a reasonable man as to whether the proven chain of cause and effect is reasonably foreseeable (Hoffmann LJ)

v. The answers to a test of foreseeability will vary according to, first, the precise description of what should have been foreseen and, secondly, the degree of probability which makes it foreseeable (Hoffmann LJ)

vi. It is not right to say that the law does not concern itself with matters of small moment or which are trivial in amount. (Hope LJ)

vii. Damages are given for injuries that cause harm, not for injuries that are harmless. Pleural plaques are a form of injury. But they are not harmful. (Hope LJ)

viii. Page v Smith does not apply for the psychiatric injury claim because G did not undergo a stressful situation and the causal chain between inhalation of asbestos and psychiatric injury much longer than the causal chain in Page v Smith. (Hope LJ)

ix. The aggregation theory fails not because the three elements, plaques, risk and anxiety, are in aggregation too trivial, but because none can sustain a tort action. (Scott LJ)

Last Word Nought plus nought plus nought equals nought. It is not like an accumulation of scratches (Scott LJ)

A claim in tort based on negligence was incomplete without proof of damage. In principle, neither the risk of future injury nor anxiety at the prospect of future injury was actionable. They could not, therefore, be relied upon to create a cause of action which would not otherwise exist.

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Damages(Asbestos-related Conditions) (Scotland) Act 2009

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The Act restores the right to claim damages for personal injury to those diagnosed as suffering from pleural plaques – benign scarrings of the lung membranes brought about by exposure to asbestos fibres. That right to claim damages had been removed by the decision of the House of Lords in 2007 in the case of Rothwell but the Scottish Parliament took the view that the pre-Rothwell position should be reinstated.

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AXA General InsuranceLtd v Lord Advocate [2011]

actionable damage - lawfulness of Damages (Scotland) Act 2009

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The Damages (Asbestos-related Conditions) (Scotland) Act 2009 was neither outside the competence of the Scottish Parliament nor subject to judicial review on the grounds of irrationality, unreasonableness or arbitrariness. The Scottish Parliament had viewed the non-actionability of asymptomatic pleural plaques as a social injustice which justified intervention by the legislature. The number of people involved, their concentration in socially disadvantaged areas, and the anxiety generated by a diagnosis of pleural plaques meant that that was not a view that could be dismissed as unreasonable. The means were proportionate to the aim. A claim could succeed only if the exposure to asbestos was a result of the employer's negligence, and the effect of the Act was restricted to new and pending claims.

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Donoghue v Stevenson [1932]

duty of care - 'neighbourhood principle'

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FACTS "snail in the bottle" case, involved Mrs Donoghue drinking a bottle of ginger beer in a café in Paisley, Renfrewshire. A dead snail was in the bottle. She fell ill, and she sued the ginger beer manufacturer, Mr Stevenson. The House of Lords held that the manufacturer owed a duty of care to her, which was breached, because it was reasonably foreseeable that failure to ensure the product's safety would lead to harm of consumers.
Lord Atkin: “….in English law there must be, and is, some general conception ofrelations giving rise to a duty of care, of which the particular cases found inthe books are but instances”.

The ‘neighbourhood principle’: “Youmust take reasonable care to avoid acts or omissions which you can reasonablyforesee would be likely to injure your neighbour. Who, then, in law is myneighbour? The answer seems to be – persons who are so closely and directlyaffected by my acts that I ought reasonably to have them in contemplation asbeing so affected when I am directing my mind to the acts or omissions whichare called into question”.

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Anns v Merton LondonBorough Council [1978]

duty of care - Lord Wilberforce's two stage test - broad concept of duty of care

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FACTS A block of flats in which the claimants were tenants suffered from a structural defect because of foundations which were too shallow. The council was responsible for inspecting the flats during their construction.

The House of Lords held that the defendant did owe a duty of care to ensure the foundations were of the correct depth. Lord Wilberforce introduced a two stage test for imposing a duty of care. This has since been overruled by Caparo v Dickman.

Lord Wilberforce's two stage test: "First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter—in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise."

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Murphy v BrentwoodDistrict Council [1991]

duty of care - overruling Anns v Merton

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FACTS The defendant local authority failed to inspect the foundations of a building adequately, with the result that building became dangerously unstable. The claimant, being unable to raise any money for repairs, had to sell the house at a considerable loss, which he sought to recover from Brentwood District Council.

HELD This action failed as the loss was identified as a pure economic loss.This judgment was rejected in many other Commonwealth jurisdictions, notably Canada, Australia, Singapore, and New Zealand, all of whom preferred the two stage Anns test of proximity and policy. The damage suffered by C was not material or physical damage. D was not liable for pure economic loss of the cost of remedying defects To permit C 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. Overrules Anns v Merton two stage test

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Peabody Donation Fundv Sir Lindsay Parkinson [1984]

duty of care - just and reasonable - material considerations

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FACTS D the local authority approved building plans for 245 houses which included flexible drains. C installed rigid drains instead of flexible drains, on his architects' advice. The local authority's inspector was aware of the departure from the plans, but he did no use his power to require C to relay the drains.Two years later the drains had to be re-laid resulting in loss of probably £1,000,000 to C.

Held: It was material to consider whether it was just and reasonable to impose a duty of care. C were responsible for ensuring that their own drains conformed with the approved plan. The local authority owed no duty to C to exercise their powers which exist for the protection of other persons - not for that of the person in default. It was not reasonable or just to impose upon them a duty to pay for C's loss arising through the advice of their own architects and contractors C could not say after the event "You knew what we were doing; you should have required us to stop." That would allow the owner, without seeking new approval from the council, to throw that system to the winds in favour of a defective system, and then visit the consequences upon the council for not stopping him.

Lord Wilberforce in Anns v Merton London Borough Council [1978] said it was:"necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise ..."C lost

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Yuen Kun-Yeu v AG forHong Kong [1987]

duty of care - requirements - considering public policy

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FACTS D, a commissioner licensed deposit-takers in Hong Kong. C deposited money with a licensed deposit-taker who went into liquidation, and he lost the money. C alleged that D knew, or ought to know that the deposit-taker was a fraudster, so was negligent licensing the deposit-taker.

Held: The requirements for duty of care were foreseeability of harm, and a close and direct relationship of proximity between the parties. Only rarely would the question of whether public policy required the conclusion of liability fall to be considered. Since the commissioner had no day-to-day control over the deposit-taker there was no proximity, and the nature of the ordinance was not such as to warrant reliance by Y on the soundness of a deposit-taker licensed under it.

Lord Keith:"Foreseeability of harm is a necessary ingredient of such a relationship, but it is not the only one. Otherwise there would be liability in negligence on the part of one who sees another about to walk over a cliff with his head in the air, and forbears to shout a warning." C lost

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Caparo Industries v Dickman [1990]

duty of care - tripartite test - foreseeability - sufficient proximity - fair, just and reasonable to impose duty of care

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FACTS C had purchased shares in F as part of a takeover bid and, placing reliance on the report of an accounting firm, TR with whom D was a principal member.TR’s report was found to be falseC suffered a loss and instituted an action against D and directors of F, a public company in respect of which the report had been prepared, alleging negligent misstatement.C claimed they would not have made the bid but for the misstatement

HC: D owed no duty of care to C as investors. Also D owed no duty of care to C as an individual shareholder. Hence, D is no liable. CoA: D owed no duty of care of C as investor but D owed duty of care to C as an individual shareholder. Hence, D is liable. HoL: D owed no duty to D as investor and as individual shareholder.

ISSUES When would an Auditor be Liable for Negligent Misstatement to a Potential Investor or Individual Shareholder?

i. Negligence should no longer be assessed on the basis of broad general principles as set out in Donoghue v Stevenson. Instead it should follow a distinct and narrow path through the different duty of care that the law imposes (Bridge LJ)

ii. One of such instances where different treatment of duty of care is essential is in regards to the different kinds of damage which one party may have suffered in consequence of the acts or omissions of another. i.e., causing injury as opposed to causing another to suffer purely economic loss. (Bridge LJ)

iii. In Negligence law, Phrases such as “foreseeability,” “proximity,” “neighbourhood,” “just and reasonable,” “fairness,” “voluntary acceptance of risk,” or “voluntary assumption of responsibility” have no precise definitions. (Roskill LJ)

iv. Negligent misstatement test requires that there be “proximity” between plaintiff and defendant such that the defendant knew that his statement would be communicated to the plaintiff, either as an individual or as a member of an identifiable class, specifically in connection with a particular transaction or transactions of a particular kind and that the plaintiff would be very likely to rely on it for the purpose of deciding whether or not to enter upon that transaction or upon a transaction of that kind. (Bridge LJ).

v. The test of proximity in these cases is: did the accountants know that the accounts were required for submission to the plaintiff and use by him? (Bridge LJ)

vi. In addition to foreseeability and a relationship of proximity, a duty will only be imposed where the court considers it fair, just and reasonable. (Bridge LJ)

Last Word It would depend on specific cases whether auditor will be held liable and even cases with similar features might be decided differently. (Oliver LJ)

Auditors won.

Steps to establish duty of care are:

a) Is there an existing case, which would hold there to be a duty of care? If not then ask three questions.

1. Was loss to the claimant foreseeable?

2. Was there sufficient proximity between the parties?

3. Is it fair, just and reasonable to impose a duty of care?

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MarcRich & Co AG v Bishop Rock Marine Co Ltd [1994]

duty of care - using the Caparo test

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FACTS A surveyor acting on behalf of the classification society had recommended that after repairs specified by him had been carried out a vessel should be allowed to proceed. It was lost at sea.

Held: The cargo owners could not recover damages from the classification society. There was no contact between them. It was not even suggested that the cargo owners knew of the survey, they simply relied on the owners to keep the vessel sea worthy and to look after the cargo. The classification surveyor did not owe a duty of care to the ship owners. The decision turned essentially on considerations of policy in relation to the role of a classification society in the context of the insurance of risks A duty of care in this case would have severe consequences for both marine insurance and freight costs, furthermore, it might lead to the classification society refusing to survey high-risk vessels with potentially harmful consequences for the public safety at sea.

SAVILLE LJ: thesethree matters overlap with each other and are really facets of the same thing...the... so-called requirements for a duty of care are not to be treated as whollyseparate and distinct requirements but rather as convenient and helpfulapproaches to the pragmatic question whether a duty should be imposed in anygiven case.

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Bhamra v Dubb(t/a lucky caterers) [2010]

duty of care - foreseeability

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The liability of caterers at a Sikh Wedding for the death of a guest through allergic reaction to egg. There is generally no duty to warn guests of the potential presence of egg. But in this instance, there was clearly a duty not to serve egg at the wedding, because the consumption of eggs is prohibited in the Sikh religion. Dubb found in breach of duty of care.

Moore-Bick LJ:“…it has long been established that whenconsidering the question of foreseeability the court must have regard to thekind of damage which the defendant can or should reasonably foresee as beingthe likely consequence of the act or omission in question.”