LAW501Sem
Commercial Law
Semester 2
2019
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Topic 3: Civil Liability
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Learning Objectives:
1) Evaluate the Tort of Negligence
2) Analyze the basic nature of tort law;
3) Distinguish between the key elements of the tort of negligence and its
significance in a business environment;
4) Categorize the tort of negligence in different areas
5) Evaluate the key elements of the tort of defamation, including defenses to
defamation and falsehood.
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What is a Tort
Tort, comes from an old French word
meaning wrong action – a conduct which
causes injury or loss and gives the person
the right to damages and other possible
civil remedies.
Main aim is to restore successful plaintiffs
to the position they would have occupied
if the tortious (wrongful) conduct had not
occurred.
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Criminal, Contract and Tort Actions
Contract actions – the plaintiff must prove, on
the balance of probabilities that the defendant
breached (broke) a contractual agreement.
Tort Law – the plaintiff must prove, on the
balance of probabilities that the defendant
breached a special non-contractual legal
obligation, and loss or injury resulted. Plaintiff
and defendant need not be in a commercial
relationship. Example: if you lose money after
relying on free advise from a financial planner,
that person may be liable ‘in tort’. Another
example can be medical negligence claims.
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Criminal, Contract and Tort Actions
(Cont.)
Criminal actions – the State (through the
prosecutor) must prove beyond reasonable
doubt that the accused breached a criminal
statute, and usually, that this conduct was
intentional. No damages are awarded. All
fines are paid to the State.
Some wrongful conduct may lead to
criminal prosecutions as well as actions in
contract or tort.
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Criminal, Contract and Tort Actions
(Cont.)
Example:
A rafting guide takes his paying passengers into very
rough waters and decides ‘to give them a thrill’. The
raft tips. One passenger drowned and several other
injured. The guide could face criminal charges, such
as manslaughter. The passengers could also sue the
rafting company and the guide ‘in contract or
negligence’. However, they may lose that right if
they agreed in writing to accept the risks involved.
Following recent statutory changes, providers of
dangerous recreations activities can exclude
themselves from liability for personal injury.
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Limitation Period On The Right To Sue
3 years from when the plaintiff first knew,
or could reasonable have learnt, about the
wrongful conduct.
A person who finds that a surgical swab was
left in their stomach from an operation ten
years ago, would probably not be banned
from lodging a claim OR
12 years, no matter when discovery
occurs. This ‘long stop’ period applies in
New South Wales, Victoria, Western
Australia and Tasmania.
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Limitation Period On The Right To Sue (Cont.)
Claims by minors or people who claim an
injury caused their disability must commence:
Within 6 years after they reach 18 years (21 in
the ACT).
A child who suffered brain damage at birth
could, in theory, delay taking action until 24
years old.
In New South Wales, Western Australia,
Tasmania, these claims must commence: within
6 years or within 3 years of discovery if the
plaintiff have ‘capable parents or guardians’. 9
Limitation Period On The Right To Sue (Cont.)
in other jurisdictions, minors retain the
common law right to commence an action up
to six years after turning 18.
All these limitations periods can be
extended if a court determines it is
appropriate.
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Impact of Negligence on Business Life
Negligence law – concerned with whether
people have been so careless or faulty, or
breached a special legal duty that they
should be liable for the loss they have
caused.
Most important tort in business life.
Examples: careless surgery, faulty products,
failure to erect warnings signs, bad financial
advice, defective buildings and injuries to
trespassers.
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Common Law Negligence Actions
To prove negligence under common law the
plaintiff must show, on the balance of
probabilities, that:
1. The defendant owes the plaintiff a duty of
care;
2. The defendant breached the duty of care;
and
3. The plaintiff suffered loss that was caused
by the breach.
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Flow chart of broad tests for negligence
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When does a Defendant owe a Duty of
Care?
The defendant owes a duty of care if it is
reasonably foreseeable that their conduct,
including a failure to act, would have caused
harm to people in the same class (situation)
as the plaintiff and they occupied a
‘controlling’ position over a ‘vulnerable’
plaintiff.
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Modern negligence:
The ‘Snail in the Bottle Case’
The general test for modern negligence was
established by Donoghue V Stevenson
[1932], best known as the ‘Snail in the
Bottle’ Case. Prior to this decision, most
negligence claims were based on contract
or very limited special tort relationships.
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Replacement of the Proximity Test
Until the late 1990s, whether there was a duty
of care, also relied heavily on the proximity test
– was there a sufficiently close connection
between the plaintiff and the defendant?
For example, a driver who negligently hit a
motorcyclist, was also liable for the nervous
shock suffered by the victim’s wife when she
saw her husband’s injuries in hospital?
See Jaensch V Coffey (1984) 155 CLR 549.
This test was rejected by the High Court in
Perre V Apand [1999] HCA 36, which is
covered in detail. 16
Duty of Care: Vulnerability and
Control Tests
Was the defendant able to control the plaintiff,
and aware of this ability to control?
Did the plaintiff rely on the defendant?
Was the defendant legally obliged to protect the
plaintiff’s interests?
Duty of care extends to people with disabilities
where it is reasonably foreseeable that such
people are at risk from the plaintiff’s act or
omission. See Haley v London Electricity Board
[1965] AC 778
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Res ipsa loquitor
(the thing speaks for itself)
Sometimes plaintiffs argue they are not
required to prove a duty of care.
Instead they base their claim on Res ipsa
loquitor
In other words, the mere fact that the
accident occurred is a clear indication that
the defendant is at fault.
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No duty to rescue
Under common law (and statutory) law
one is not obliged to help someone in
danger unless you caused their
predicament or owe them some special
duty of care, such as duty of a teacher
owes to a child or a police (civil servant)
to the public.
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No duty to warn of obvious risks
There is no duty to warn about or prevent an
obvious risk – one that a reasonable person
in the same circumstances would have tried
to avoid.
Obvious risks include that are common
knowledge and have a low probability of
occurring.
Risks that are not prominent, conspicuous
or physically observable may also qualify.
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Example: An obvious risk
Mitchell fell and was injured at a university
award ceremony because she forgot her
seat was retractable.
She claimed the university should have
issued warnings.
Her negligence claim failed because the
risk would have been ‘glaringly obvious’ to
a reasonable person. University of
Wollongong v Mitchell [2003] NSWCA 94
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No liability for an inherent risk
A person is not liable for harm that results
from the materialization (occurrence) of
an inherent risk, which is one that ‘cannot
be avoided by the exercise of reasonable
care and skill’.
S51 NSW Civil Liability Act 2002
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When is there a duty to warn about an
obvious risk?
Under the Civil Liability Acts, the defendant may
owe a duty of care to warn about an obvious risk,
if:
The plaintiff requested advise or information
about it;
The defendant is required by written law (statute
or regulation) to give such a warning; or
The defendant is a professional and there is a
risk of death or personal injury to the plaintiff
through these services.
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‘Obvious’ and ‘significant’ risks of harm
during recreational activity.
A defendant is not liable for harm that results from
‘the materialization of an obvious risk of a dangerous
recreational activity engaged in by the plaintiff’.
This appears to mean that a person whose conduct
causes harm is not liable, if:
The harm takes place during a ‘dangerous
recreational activity’, which must involve a
significant risk of physical harm; and
The risk of the harm would have been clear to a
reasonable person in the plaintiff’s situation. See
Fallas V Mourlas: The Drunken Kangaroo
Shooters Case [2006]
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Did the defendant breach the duty of
care?
Under common law, the defendant fails to satisfy
a reasonable standard of care if:
(a) The risk of injury was reasonably foreseeable;
and
(b) The defendant failed to do what a reasonable
person should have done in the circumstances.
If the plaintiff cannot satisfy either of these tests,
the defendant is not liable. In practice there is
often an overlap between issues of duty of care
and standard of care.
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Statutory changes to duty of care
Previous common law is replaced with 3 party
statutory test. The plaintiff must prove the
answer is ‘yes’ to all the following three tests:
Was the risk foreseeable? That is, did the
defendant know or should the defendant
have known, there was a risk?
Was the risk ‘not significant’? That is, was it
not ‘far-fetched’ or ‘fanciful’
Would a reasonable person in the
defendant’s circumstances have taken
precautions? 26
New Tests in Practice
Factors determining reasonable standard of
care confirmed in Wyong v Shire Council v
Shirt, p 93. They have also been incorporated
into Civil Liability Acts:
1. Probability (likelihood) of harm; no
liability if the risk is small and a reasonably
careful person would not worry about it.
Bolton v Stone, p 92.
2. The gravity (likely seriousness) of harm;
where the doctors or surgeons give detailed
warnings about the remote risks in surgery.
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New Tests in Practice (Cont.)
1. Degree of effort required to eliminate the
risk: the plaintiff must prove that there was
an alternative that the defendant could have
used to avoid the risk. The Flying Fox Case,
p 94.
2. Social utility or benefit of the defendant’s
conduct. A defendant is not liable if they can
prove the plaintiff voluntarily and with full
knowledge of the risks put themselves in a
position where the defendant could cause
them loss or injury. Agar v Hyde, p 94.
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Standard of Care from Skilled People?
Skilled people must meet standard
of a reasonably competent
practitioner.
Standard of care has been reduced
in limited circumstances eg. learner
drivers, see Cook v Cook, p 95.
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To be continued….
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