Business Law and Commercial Law - The Law of Torts - NEGLIGENCE

Tort Definition

  • A tort is a civil wrong established by courts or parliament, not by private agreements.

  • The wrongdoer must compensate the victim whose rights have been infringed.

  • Tort law protects rights existing independently of any agreement.

  • Comparing Tort Law

  • Contract Law

    • Rights and duties come from voluntary agreements.

    • Breaching party compensates the innocent party.

  • Tort Law

    • Rights are legally granted to individuals through common law and statutes.

    • The wrongdoer compensates the innocent party.

  • Criminal Law

    • Guilty party faces criminal sanctions (fines, imprisonment).

    • Victim does not receive compensation from the guilty party.

Examples of Torts

  • Tort of Negligence

    • Determines legal liability for careless actions/inactions causing loss/damage.

      • Negligence: Careless behaviour falling below an acceptable standard.

      • Standard: Applies to everyone.

      • Purpose: Protects from unreasonable risk of harm.

      • Determination: Through rules set by courts and parliaments.

    • Other Examples

      • Defamation / Privacy

      • Trespass to land / goods

      • False imprisonment

Tort of Negligence & Statute

  • Wrongs Act (Vic)

    • Limits potential liability for negligence by:

      • Modifying common law principles (duty / breach / damage).

      • Restricting plaintiff’s rights in specific categories (e.g., professionals, volunteers, public authorities).

      • Placing caps on general/non-economic damages and loss of future earnings.

The Law of Negligence - Origins

  • Donoghue v. Stevenson (1928)

    • Landmark case establishing a duty of care.

    • Neighbour Principle:

      • A duty is owed to those closely and directly affected by one's actions.

      • Those who one ought reasonably to have in contemplation when acting or omitting to act.

      • Also known as the reasonable foreseeability of harm test

Negligence Criteria - Four-Step Process

  • Does the Defendant owe a duty of care towards the plaintiff?

  • If yes, has the Plaintiff suffered damage?

  • If yes, has the Defendant breached that duty of care

  • Are there any defenses?

First Australian Application of Neighbour Principle

  • Grant v Australian Knitting Mills [1936]

    • Facts:

      • Grant purchased woolen underwear, developed dermatitis due to excess sulphites, and was hospitalized for 17 weeks.

      • Grant sued the manufacturer.

    • Issue:

      • Did the manufacturer owe a duty of care?

    • Decision:

      • YES

Step 1: Duty of Care

  • Establishing whether a duty of care exists involves considering:

    • Reasonable Foreseeability

    • Established Categories

    • Novel scenarios

  • Established Duty of Care:

    • Most (90%) negligence actions are based upon an established duty of care.

    • Courts apply precedent to determine reasonable foreseeability.

    • Recognized relationships include:

      • Professionals

      • Manufacturers

      • Motorists

      • Occupiers of premises

      • Employer-employee

      • Banks - Financial Inst

      • Local council

Duty of Care (Novel Scenarios)

  • Tame v New South Wales

    • Facts:

      • Mrs. Tame involved in car accident; police incorrectly recorded blood alcohol reading (0.14).

      • Mrs. Tame suffered psychotic depressive illness and sued police in negligence.

    • Issue:

      • Did the police owe Mrs. Tame a duty?

    • Decision:

      • No duty of care owed.

    • Reason:

      • A matter of fact; reflection of community values

    • See also:

      • Osborne Park Commercial Pty Ltd v Miloradovic/Minister for Environment v Sharma

Duty of Care (Acts Causing Physical/Property Loss)

  • Generally not difficult to establish where an act causes direct physical loss or damage.

  • Examples:

    • Australian Safeway v Zaluzna

    • Modbury Triangle Shopping Centre v Anzil

    • Karatjas v Deakin Uni

Duty of Care (Acts Causing Mental Harm)

  • Common Law:

    • Reluctant to recognize pure psychiatric injury (independent of physical injury) as a loss that gives rise to a duty of care.

  • Cases:

    • Chester v Waverley City Council

    • Annetts v Australian Station

  • General Principle:

    • No duty to act except where there is a positive duty to act.

      • Parent/child, lifesaver/swimmer, teacher/student, occupier/visitor

  • Cases:

    • Rogers v Whitaker

    • CAL No.14 v Motor Acc Board

  • Duty of Care and liability for omissions.

Negligence Criteria - Four-Step Process

  • Does the Defendant owe a duty of care towards the plaintiff?

  • If yes, has the Plaintiff suffered damage?

  • If yes, has the Defendant breached that duty of care

  • Are there any defenses?

Step 2: Breach of the Duty of Care

  • The common law answer involved a two-step test:

    • Would a reasonable person in the defendant’s position have foreseen that their acts (or omissions) posed a risk of harm to the plaintiff?; and

    • Was the defendant’s response to the risk reasonable?

  • Applying the “negligence calculus (laid down in the case of Wyong Shire Council v Shirt (also known as Wyong factors”

  • Sec 48(1) A person is not negligent in failing to take precautions against a risk of harm unless:

    • (a) The risk of injury was foreseeable (that is, it is a risk of which the person knew or ought to have known); and

    • (b) The risk was not insignificant; and

    • (c) In the circumstances, a reasonable person in the person’s position would have taken those precautions

  • 2.Sec 48(2) – “the negligence calculus” – In determining whether a reasonable person would have taken precautions against a risk of harm the court is to consider, inter alia, the following:

    • (a) The probability that the harm would occur

    • (b) The likely seriousness of the harm

    • (c) The burden of taking precautions (cost and inconvenience) to avoid the harm

    • (d) The social utility of the activity that caused the harm

  • Wrongs Act (Vic)

Step 2: Breach of the duty of care

  • Sec 48(1) - So reasonableness is assessed against what a reasonable person in D’s position would have done in the same circumstances:

    • Not what the reasonable person, blessed with hindsight, could have done (don’t examine a 2015 accident with 2025 spectacles)

    • What a “perfect” person would have done

    • Objective test – but certain characteristics or circumstances must be taken into account, including the skills/knowledge of the defendant.

    • E.g., Specialists have to act like reasonable specialists

      • If D is a brain surgeon- act as a reasonable brain surgeon not an ordinary doctor; A tax adviser - act as a reasonable tax adviser not an ordinary lawyer.

  • Young children are expected to exercise only the standard of care of a child of the same age and experience

  • Individual characteristics generally irrelevant – inexperience, ineptitude, impairment

Step 2: Breach of the duty of care

  • Risk was reasonable foreseen

  • But risk was not insignificant

  • What would other ordinarily skilled intensive care paramedic would have done?

    • Whitton v Dexus Funds

    • Queensland v Masson

Step 2: Breach of the duty of care

  • If the risk was foreseeable (s 48(1)(a)) and was not insignificant (s 48(1)(b)) we then go to the second limb and answer the overarching question: would a person in D’s position have taken the precautions suggested by P?

  • Second limb: The reasonableness of the response: s 48(2).[note - Statute adopts the common law (Wyong) approach balancing the following four factors

    • (a) The probability that the harm would occur

    • (b) The likely seriousness of the harm

    • (c) The burden of taking precautions (cost and inconvenience) to avoid the harm

    • (d) The social utility of the activity that caused the harm

Step 2: Breach of the duty of care - The reasonableness of the response

  • (a) The probability of the occurrence of risk or injury

    • When a risk is small, a reasonable person can ignore it.

    • What a reasonable person must not do is create a risk that is substantial.

    • Consider probability of conduct as well as probability of harm/injury.

    • Examples:

      • RTA NSW v Dederer

      • Bolton v Stone

  • (b) The gravity/seriousness of the harm if an injury occurs

    • The more serious the risk the greater need for a reasonable person to take precautions.

    • This has particular relevance where:

      • i the activity is dangerous, or

      • ii P has a particular vulnerability.

    • [Note again, time for assessing the risk is the time of the incident, not the time of the trial (especially in medical cases)

    • Examples:

      • Rogers v Whitaker

      • Paris v Stepney Borough Council

Step 2: Breach of the duty of care - The reasonableness of the response

  • (c) The burden of eliminating the risk (expense and inconvenience)

    • Need to balance risk and the measures necessary to eliminate the risk.

    • The presence or absence of practical precautions available to D is a significant factor.

    • P must prove precautions were available and, in failing to take such precautions, D failed to act reasonably.

    • Examples:

      • Graham Barclay Oysters v Ryan

      • Woods v MultiSport

  • (b) The social utility of the defendant’s conduct

    • Where the social utility of an activity is sufficiently high - a reasonable person would not have taken precautions against the identified risk of harm (e.g. rescuing people from impact of floods, cyclones, etc.)

    • Example:

      • Watt v Hertfordshire

  • The above four factors - considered collectively and balanced against each other, not to be looked in isolation [Tapp v Aus Bushmen’s Campdraft Rodeo Assn Ltd]

Negligence Criteria - Four-Step Process

  • Does the Defendant owe a duty of care towards the plaintiff?

  • If yes, has the Plaintiff suffered damage?

  • If yes, has the Defendant breached that duty of care

  • Are there any defenses?

Step 3: Damage – Causation and Remoteness

  • Common law requirements:

    • (a) Causation

      • The defendant’s negligence must cause (or materially contribute to) the damage suffered by the plaintiff [P must prove that ‘but for’ the breach, the loss or damage would not have occurred].

    • (b) Remoteness

      • The damage must not be too remote from the defendant’s conduct – i.e. it must be reasonably foreseeable.

Step 3: Damage – Causation and Remoteness

  • Statutory requirements:

    • The statute requires that two questions (previously address at common law) should be kept separate:

      • i. how did the harm occur; and

      • ii. whether legal responsibility should be attributed to the defendant

  • Section 51 General principles

    • (1) A determination that negligence caused particular harm comprises the following elements:

      • (a) that the negligence was a necessary condition of occurrence of the harm (“factual causation”); and

      • (b) that it is appropriate for the scope of the defendant’s liability to extend to the harm so caused (“scope of liability”).

Step 3: Damage – a) Causation

  • Section 51 General principles

    • (1) A determination that negligence caused particular harm comprises the following elements:

      • (a) that the negligence was a necessary condition of occurrence of the harm (“factual causation”) [restatement of the common law ‘but for’ test of causation]

  • Factual Causation: not generally an issue where P suffers physical injury. However two situations prove difficult:

    • 1. Omissions; 2. Failure to warn (medical cases)

    • 1. Omissions- there is difficulty in determining whether D’s negligence was the cause of injury where D failed to act. The court has to determine what would have occurred if D had acted

      • Strong v Woolworths

      • Chappel v Hart

    • 2. Failure to warn (medical cases)

Step 3: Damage – b) Remoteness

  • Section 51 General principles

    • (1) A determination that negligence caused particular harm comprises the following elements:

      • (a)…. (b) that it is appropriate for the scope of the liability to extend to the harm so caused (“scope of liability”).

    • (4) For the purposes of deciding the scope of the liability, the court is to consider…whether or not and why responsibility for the harm should be imposed on the party who was in breach of the duty

  • It is only necessary that the kind of injury be reasonably foreseeable:

    • not the precise nature or extent

    • Once the damage is reasonably foreseeable the extent of the damage that actually results is irrelevant

    • Examples:

      • Overseas Tank v Mort (Wagonmound 1 &2) Wharf

Negligence Criteria - Four-Step Process

  • Does the Defendant owe a duty of care towards the plaintiff?

  • If yes, has the Plaintiff suffered damage?

  • If yes, has the Defendant breached that duty of care

  • Are there any defenses?

Step 4: Defenses

  • March v Stramere

    • 4.1 Contributory Negligence

      • P failed to take reasonable care for their own safety

      • Damages that are assessed will be reduced to reflect the plaintiff’s own contribution to the damage

    • 4.2 Voluntary non fit injuria

      • Plaintiff fully aware of the risk &

      • freely accepted

      • Note: No damages

Summary - Negligence Criteria

  • Does the Defendant owe a duty of care towards the plaintiff?

    • Duty of care

      • Established Categories

      • Novel Categories

  • If yes, has the Plaintiff suffered damage?

    • Damages

      • Causation

      • Remoteness

  • If yes, has the Defendant breached that duty of care

    • Breach of the Duty of Care

      • The risk was foreseeable

      • The risk was Not insignificant

      • Reasonableness of the response (Wyong factors)

        • probability of risk

        • Gravity/seriousness of the harm

        • burden of eliminating the risk

        • social utility of the defendant's conduct

  • Are there any defenses?

    • Defenses

      • Contributory Negligence and Voluntary Assumption of risk