Business Law !

TORT REVISION

Introduction

A Tort is a Civil Wrong carried out by one party

(tortfeasor/defendant) against another

(claimant /injured party)

It arises as a result of a breach of a duty

imposed by law. Allowing the injured

party to sue for damages

1. Tortfeasor/defendant had a DUTY to act / behave in a

particular way

2. Plaintiff MUST SHOW that the tortfeasor BREACHED

DUTY OWED

3. Plaintiff suffered an INJURY / LOSS AS A RESULT OF

THE BREACH

Three Elements of a Tort

Contractual Liability VS Tortious Liability

Based on a contractual

relationship between the parties

Seeks to give effect to voluntary

agreements between parties

Usually only owed to parties to the

agreement

Based on duty imposed by law

Seeks to protect people from

certain types of harmful conduct

Owed to a wide range of persons

Three General Elements of Tort

• Tortfeasor/defendant had a DUTY to act / behave

in a particular way

• Plaintiff MUST SHOW that the tortfeasor’s

behaviour did not conform to the duty owed owed

• Plaintiff suffered an injury / loss as a result

ww

w.d

erb

y.ac

.uk/l

aw

Donoghue v Stevenson (1932)

 Donoghue v Stevenson [1932] UKHL precedent in Scots delict law and English tort law by the House of Lords.

 It laid the foundation of the modern law of negligence, establishing general principles of the duty of care.

Facts: Mrs Donoghue went to a cafe with a friend. The friend brought her a bottle of ginger beer and an ice cream. The ginger beer came in an opaque bottle so that the contents could not be seen.

Mrs Donoghue poured half the contents of the bottle over her ice cream and also drank some from the bottle. After eating part of the ice cream, she then poured the remaining contents of the bottle over the ice cream and a decomposed snail emerged from the bottle.

Donoghue v Stevenson (1932)

 Donoghue v Stevenson [1932] UKHL (Cont.d)

Facts (Cont.d)

Mrs Donoghue suffered personal injury as a result. She commenced a claim against the manufacturer of the ginger beer.

Held:

Her claim was successful.

This case established the modern law of negligence and established the neighbour test (principle of duty of care) laid down in Lord Atkin’s ratio decidendi

Anns v London Borough Council [1978] AC 728

Facts:

The claimants were tenants in a block of flats. The flats suffered from structural defects due to inadequate foundations which were 2ft 6in deep instead of 3ft deep as required. The defendant Council was responsible for inspecting the foundations during the construction of the flats.

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.

Note: This has since been overruled by Caparo v Dickman.

Anns v London Borough Council [1978] AC 728

Lord Wilberforce's two stage test:

1. Examine whether the loss was reasonably foreseeable and there existed a relationship of proximity. If so a prima facie duty of care arises.

2. The defendant may put forward policy considerations to negate liability.

The first stage was essentially the elements of the neighbour test, however in order to address the fears of the floodgates, this was subject to the second stage which provided a get out clause for defendants where there existed policy reasons for denying the imposition of a duty of care.

Test for establishing whether a duty of care exists

Caparo v Dickman (1990)

 Caparo Industries pIc v Dickman [1990] 2 AC 605 HL

Facts

Caparo Industries purchased shares in Fidelity Plc in reliance of the accounts which stated that the company had made a pre-tax profit of £1.3M. In fact Fidelity had made a loss of over £400,000. Caparo brought an action against the auditors claiming they were negligent in certifying the accounts.

Held:

No duty of care was owed. There was not sufficient proximity between Caparo and the auditors since the auditors were not aware of the existence of Caparo nor the purpose for which the accounts were being used by them.

Caparo v Dickman (1990)

 Caparo Industries pIc v Dickman [1990] 2 AC 605 HL

Held (Cont.d)

Lord Bridge:

Laid down ‘The Caparo test’

“What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of "proximity" or "neighbourhood" and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other.”

Caparo v Dickman (1990)

 Caparo Industries pIc v Dickman [1990] 2 AC 605 HL

Held (Cont.d)

 Lord Bridge in relation to economic loss:

 “One of the most important distinctions always to be observed lies in the law's essentially different approach to the different kinds of damage which one party may have suffered in consequence of the acts or omissions of another.

 It is one thing to owe a duty of care to avoid causing injury to the person or property of others.

 It is quite another to avoid causing others to suffer purely economic loss…

Caparo v Dickman (1990)

 Caparo Industries pIc v Dickman [1990] 2 AC 605 HL

Held (Cont.d)

 Lord Bridge in relation to economic loss (Cont.d):

 …To hold the maker of the statement to be under a duty of care in respect of the accuracy of the statement to all and sundry for any purpose for which they may choose to rely on it is not only to subject him, in the classic words of Cardozo C.J. to "liability in an indeterminate amount for an indeterminate time to an indeterminate class" (Ultramares Corporation v. Touche (1931) 174 N.E. 441, 444).”

Factors relating to breach of duty of care.

Bolton v Stone

Bolton v Stone [1951] AC 850 HL

Facts:

Miss Stone was injured when she was hit by a cricket ball outside her home. She brought an action against the cricket club in nuisance and negligence. The cricket field was surrounded by a 7 foot fence.

In fact, the pitch was sunk ten feet below ground so the fence was 17 feet above the cricket pitch.

A witness who lived in the same road as the claimant but close to pitch said that five or six times during the last 30 years he had known balls hit his house or come into the yard.

Element 3:

 The Claimant Suffered loss or damage as a result of the defendant’s breach of duty

 The defendant must have caused the claimant’s loss or damage. This is a factual matter which is usually assessed by the ‘but for’ test.

 ‘But for test’ - The claimant must prove, on the balance of probabilities, that the defendant’s negligence caused or materially contributed to the injury or loss sustained. (Although where there are multiple causes the ‘but for’ test can be disregarded where the defendant’s breach had materially contributed to causing the claimant’s injury by significantly increasing the risk of him contracting a disease.)

Element 3:

 The Claimant Suffered loss or damage as a result of the defendant’s breach of duty

 Remoteness of Damage - an objective test, the defendant is only responsible for the damage which a reasonable man would have foreseen as a likely consequence of his action.

 The loss or damage suffered by the claimant must be of a type that was reasonably foreseeable, i.e. the damage must not be too remote.

Barnett v Chelsea & Kensington HMC (1968)

 Facts:

 C went to hospital complaining of vomiting but was sent home by hospital doctor.

 Later that night C died (someone has put arsenic in his tea).

 Hospital was not liable for negligence.

 2 elements were satisfied - Doctor owed a duty of care & breached that duty.

 BUT final element was not present: C’s death was not as a result of breach as

 C would have died anyway – there was no antidote.

Claims for psychiatric injury: no physical injury

Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310 House of Lords

Facts:

This case arose from the disaster that occurred at Hillsborough football stadium in Sheffield in the FA cup semi-final match between Liverpool and Nottingham Forest in 1989.

South Yorkshire Police had been responsible for crowd control at the football match and had been negligent in directing an excessively large number of spectators to one end of the stadium which resulted in the fatal crush in which 95 people were killed and over 400 were physically injured.

Primary vs Secondary Victims

Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310 House of Lords

Facts (Cont.d):

The scenes were broadcast live on television and were also repeated on news broadcasts.

Sixteen claims were brought against the defendant for nervous shock resulting in psychiatric injury. At trial ten of the claims were successful.

The defendant appealed against the findings in nine and the unsuccessful claimants appealed.

The Court of Appeal found for the defendants in all of the claims.

Ten appeals were made to the House of Lords.

Primary vs Secondary Victims

Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310 House of Lords

Facts (Cont.d):

The Court of Appeal found for the defendants in all of the claims.

Ten appeals were made to the House of Lords.

These included claims made by brothers, sisters, parents, a grand-parent and a fiancé.

 Two of the claimants had been at the ground but in a different area.

 Some had seen the events unfold on the television, some had heard about the events in other ways.

 Some had identified bodies at the makeshift mortuary.

Primary vs Secondary Victims

Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310 House of Lords

Facts (Cont.d):

Held:

The appeals were dismissed.

Lord Oliver set out the distinction between primary and secondary victims.

- A primary victim one involved mediately or immediately as a participant and a

- secondary victim is one who is no more than a passive and unwilling witness of injury to others.

Note: The claimants were all classed as secondary victims since they were not in the physical zone of danger.

Primary vs Secondary Victims

Alcock & ors v Chief Constable of South Yorkshire [1992] AC 310 House of Lords

Facts (Cont.d):

Held:

For secondary victims to succeed in a claim for psychiatric harm they must meet the following criteria:

1. A close tie of love and affection to a primary victim

2. Witness the event with their own unaided senses

3. Proximity to the event or its immediate aftermath

4. The psychiatric injury must be caused by a shocking event

Primary vs Secondary Victims

 Generally no duty of care is owed to avoid causing another to suffer a loss which is purely economic.

 That is - one where the financial loss is not related to a personal injury or damage to property.

 However, where the economic is caused by negligent mis- statement as oppose to a negligent act liability may be imposed:

Economic Loss

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Facts:

Hedley Byrne were advertising agents placing contracts on behalf of a client on credit terms. Hedley Byrne would be personally liable should the client default.

To protect themselves, Hedley Byrne asked their bankers to obtain a credit reference from Heller & Partners (‘H&P’), the client’s bankers.

Economic Loss

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Facts (Cont.d):

The reference (given both orally and then in writing) was given for free and was favourable, but also contained an exclusion clause to the effect that the information was given ‘without responsibility on the part of this Bank or its officials’.

Hedley Byrne relied upon this reference and subsequently suffered financial loss when the client went into liquidation.

Economic Loss

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Held:

The court found that H&P’s disclaimer was sufficient to protect them from liability and Hedley Byrne’s claim failed.

However, the House of Lords ruled that damage for pure economic loss could arise in situations where the following four conditions were met:

(a) a fiduciary relationship of trust & confidence arises/exists between the parties;

(b) the party preparing the advice/information has voluntarily assumed the risk;

(c) there has been reliance on the advice/info by the other party, and

(d) such reliance was reasonable in the circumstances.

Economic Loss

For further development see:

Caparo Industries PLC v Dickman [1990] UKHL 2 AC 605 HL

The House of Lords, following the Court of Appeal, set out a "three-fold test". In order for a duty of care to arise in negligence:

1. harm must be reasonably foreseeable as a result of the defendant's conduct (as established in Donoghue v Stevenson),

2. the parties must be in a relationship of proximity, and

3. it must be fair, just and reasonable to impose liability

Economic Loss