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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Continued from Prior Lecture

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Did the Defendant’s Breach Harm the
Plaintiff?
The plaintiff must prove:
The plaintiff’s loss or injury was caused by
the breach. ‘But for (without) the defendant’s
conduct, would the plaintiff still have suffered
loss or injury? If the answer is ‘yes’, the
defendant is not liable. Also, if there were other
factors which caused the loss or injury apart
from the defendant’s conduct, then the
defendant is not liable. See Alexander V
Cambridge Credit Corporation Ltd (1987).
Pg. 96
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Did the Defendant’s Breach Harm the
Plaintiff? (Cont.)
The damage was not too remote. ‘Should a
reasonable person have foreseen the type of
loss or injury that resulted?
See Wagaon No. 11 Case (1961), p. 97.

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Two Main Defences to Negligence
1. Contributory Negligence – the most
common defence. The plaintiff’s damages
can be reduced by a percentage that
represents the extent to which they failed to
take reasonable care to prevent their loss or
injury. Under statue, the reduction can be
100%.

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Two Main Defences to Negligence
(Cont.)
2.Voluntary assumption of risk – a full
defence if the plaintiff willingly and
knowingly consented to accept the risk.
Under common law, it has ben restricted
mainly to sports injury cases. See Agar V
Hydge [2000], p. 94.
Under statue law, it can apply to all
negligence actions.

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Tort Actions Absorbed by Negligence Law

1. Occupier’s liability – parties who own or

control land, or any type of premises no
longer owe different levels of care to
different classes of entrants. Under
common law, they must take reasonable
care to avoid a reasonably foreseeable
risk of injury to all entrants. See
Hackshaw V Shaw (1984), p. 103 and
Australian Safeway Stores V Zaluzna
(1986), p. 103
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Tort Actions Absorbed by Negligence Law
(Cont.)
2. Bailment
A party who takes temporary possession of
goods (bailee) from the owner (bailor) is subject
to virtually the same duties and liabilities
imposed on negligence action.
3. Escape of Dangerous Substances
Rylands v Fletcher rule no longer applies. Usual
tests for negligence now apply to escapes of
dangerous substances that cause damage.
4. Nervous Shock - See Chapter 4.
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Special Categories of Negligence
1. Product Liability
People who suffer reasonably foreseeable
loss from defective products may sue
anyone in distribution chain. e.g. retailer.
Consumers usually rely on consumer
protection legislation.

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 Special Categories of Negligence (Cont.)

2. Pure Economic Loss

Courts conservative about negligence claims for
financial loss.
Loss by third parties as result of property
damage recognised in Caltex Case, p 105.
Areas where economic loss claims have been
successful include:
Negligent misstatement.
Professional negligence.
Defective structures.
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 Special Categories of Negligence (Cont.)

3. Negligent Misstatement
Plaintiff can sue for economic loss caused
by carelessly given advice/information.
Three major cases:
 Hedley Byrne Case (1964), p 107: Broker
not liable for loss caused by favourable
credit rating given “without responsibility”.

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 Special Categories of Negligence (Cont.)

3. Negligent Misstatement (Cont.)

MLC v Evatt (1968), p 107: Duty of care
owed by anyone who gives professional
advice in serious circumstances.
Shaddock’s Case (1981), p 107: Council
liable for developer’s loss after they wrongly
advised him land he wished to purchase was
not affected by road widening plans.
See tests in figure 3.9.

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 Special Categories of Negligence (Cont.)

3. Negligent Misstatement (Cont.)

Tests for negligent misstatement
Plaintiff must prove all of following:
Defendant gave false advice or information
in ‘serious circumstances’.
Plaintiff reasonably relied on defendant.
Defendant could reasonably have expected
plaintiff would rely on advice/information.
Defendant did not issue disclaimer.
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 Special Categories of Negligence (Cont.)

4. Defective Structures
A duty of care to residential property owners
is owed by:
Builders and others in building trade; Bryan
v Maloney, p 110.
Vendors who know about defects.
Public authorities e.g. councils.
Does not apply to commercial buildings;
Woolcock Street Investments, p 110.
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 Special Categories of Negligence (Cont.)

5. Professional Negligence
 Professionals owe standard of care that
would reasonably be expected of a
competent practitioner in their profession.

6. Landlords
 Have a duty to ensure their property is
kept in a safe state of repair.

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 Special Categories of Negligence (Cont.)

7. Auditors
Do not owe a common law duty of care to
potential investors or other non-shareholders.
Esanda Finance v Peat Marwick
Hungerfords, p 111.

8. Vicarious Liability
Employer usually liable for torts committed
by employees if conduct is directly related to
their employment. 18
 Special Categories of Negligence (Cont.)

9. Public Authorities and Highway (Road)

Authorities
Receive special protection from negligence
actions.
Road authorities under Federal, ACT, NSW
or SA law not liable for damages caused by
failure to conduct road works, unless aware
the risk could cause injury.

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 Special Categories of Negligence (Cont.)

10. Breach of Statutory Duty

Plaintiffs can sue for a breach of a duty of
care laid down in a statute.
Mainly cases in this area involve strict
liability imposed under workplace health and
safety laws.

11. Motor Vehicle Accidents

The right to sue has been severely limited or
replaced by statute. 20
New Civil Liability Act Reforms
Four Major Reforms
Reduced liability for specific
groups/occupations
Good Samaritans, volunteers and
community workers.
Recreational service providers.
Government authorities e.g. roads.
Peer based standard as defence for
negligent conduct.
No damages for cost unintended children.
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New Civil Liability Act Reforms (Cont.)
Restrictions on right to claim for negligence by
criminals, intoxicated persons and nervous shock
claimants.

Apology by potential plaintiff cannot be used to

show plaintiff was liable.

Reduced payouts for damages and legal costs.

Most significant are caps (limits) and thresholds.

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Continued in Part 2

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