Tuesday 10 October 2006 (2)

The second occasion where the burden of proof is effectively reversed is RES IPSA LOQUITUR: the thing speaks for itself.

The best example comes from the case of:Scott v London and St Katherines Docks [1865] – the claimant was passing the defendant’s warehouse when six sacks of sugar fell on him, causing him injury. The Judge at first instance found for the defendant as there was a lack of evidence as to negligence, but the Court of Appeal ordered a new trial. The situation applies where:

Ø It is so improbable that the action could happen without the negligence of the defendant
Ø The defendant had control over the events
Ø The defendant had means of knowledge denied to the claimant

CAUSATION is the third ingredient of negligence. It occurs on two levels:

Causation in Law
Causation in Fact

THE “BUT FOR” TEST – FACTUAL

Whether the damage would have been caused but for the breach of duty.

Barnett v Chelsea and Kensington Hospital Management Committee [1969] – the husband of the claimant went to the hospital casualty department complaining of vomiting. The doctor refused to examine him and told him to visit his own doctor the following day. He died five hours later of arsenic poisoning. It is evident that:

Ø The doctor owed the deceased a duty of care
Ø The defendant had breached that duty by not examining him

Yet there was no liability. Even if the examination had taken place he would have died before diagnosis and treatment could have been carried out. As the deceased would have died regardless of the breach, the breach was not the cause of the death.

The problem of proving a breach of a duty where more than one defendant may have caused the damage complained of was the subject of the important House of Lords decision in Fairchild v Glenhaven Funeral Services Ltd [2002]. In conjoined appeals covering a number of workers who had contracted mesothelioma during a time in which they had worked for more than one employer, the Court of Appeal said no liability attached to any of the employers as the claimants could not prove on the balance of probabilities the period of employment in which they inhaled the asbestos fibre which started the disease. The House of Lords said that the claimant can show that each employer’s negligence materially increased the risk of their contracting the disease. The injustice of denying a claimant a remedy outweighs any injustice caused by holding the defendant (who had been proven negligent) liable for injuries for which they might not have been responsible.

A later case was to reverse the decision, but it is restored to its present position by the Competition Act 2006, so the above decision is good law.

The test usually presents no difficulties, except:

PRE– EXISTING CONDITION. If damage is caused to the claimant due to a pre– existing condition rather than the negligence of the defendant, then the defendant is not liable for the full extent of the damage.

Cutler v Vauxhall Motors [1971] – the claimant grazed his ankle in an accident where the defendant was negligent. The claimant had a condition affecting the veins in his legs and an ulcer formed as a result. He was entitled to recover damages for the graze, but nothing further due to the pre-existing condition

OMISSIONS. Apparent in cases on industrial safety equipment.

McWilliams v Sir William Arrol and Co. Ltd [1962] – the claimant, a steel erector, fell to his death. He was not wearing his safety belt. The defendant gave evidence admitting a breach of their statutory duty in not supplying a safety belt, but submitted that the claimant would not have worn it in any event. The defendant was not liable as it was probable that the claimant would not have worn the belt and. therefore, would still have fallen. The burden of proof was on the claimant to show that the defendant’s breach of duty is a cause of death, and it was not established here.

MULTIPLE CAUSES. The claimant’s damage is as a result of more than one cause. The ‘but for’ test doesn’t provide an answer. For example:

A and B simultaneously fire guns, and C is struck by bullets from both guns. Applying the ‘but for’ test means that neither is liable. This is unjust, so both are liable.

Baker v Willoughby [1970] – the claimant took a new job after a road accident. In his new job he was subsequently shot in an armed robbery in the same (left) leg that was injured in the road accident. The leg was amputated. The defendant claimed that his liability was reduced towards the claimant because the amputation resulted from a shooting for which he could not be held responsible. The case went to the House of Lords. The argument was rejected as the claimant is being compensated not for the physical injury itself, but for the loss suffered as a result of that injury.

COMPARE

Jobling v Associated Dairies [1982] – the claimant suffers a back injury as a result of the defendant’s breach of duty. It had occurred in 1973. The claimant had to take a lower paid job, and his income had been reduced by fifty percent. Before the trial in 1979 the claimant was found to be suffering from an unrelated back disease, rendering him totally unfit to work from 1976. The House of Lords limited the defendant’s liability to the period before the onset of disease. They criticised the reasoning in Baker, but did not overrule it.

This can be explained by way of a graph:

Tort Committed
2nd tort committed
The defendant’s liability is not reduced

Tort Committed
2nd act – not a tort, e.g. illness
The defendant’s liability is reduced
RECOVERABLE LOSS
The third element, and policy considerations will affect the outcome as the court does not wish to impose too heavy a burden on the defendant or his insurers.

The basic test for remoteness of damage remained until 1961 and was then changed by a Privy Council decision. The cases are:

Re Polemis [1921] – still provides the remoteness test in other torts
Wagon Mound No. 1 [1961] – provides the remoteness test in negligence

Polemis – the charterers of a ship loaded it with benzine; this leaked and the ship was filled with vapour. A stevedore negligently dropped a plank into the ships hold, which caused a spark. The ship exploded. The ship owners sued the charterers for their servants’ negligence. The charterers claimed that the loss caused by the negligence was too remote to be recovered. The Court of Appeal disagreed – AS LONG AS SOME DAMAGE TO THE CLAIMANT IS FORESEEABLE THE DEFENDANT IS LIABLE FOR ALL DAMAGE THAT DIRECTLY RESULTS FROM THE NEGLIGENCE.

A different approach was taken in:

Wagon Mound – the defendant negligently discharged oil into Sydney harbour. The oil spread to the claimant’s wharf where welding was taking place. The claimant was assured that there was no danger of the oil catching fire. Two days later it did, damaging the wharf and ships under repair. Damage was also caused by fouling to the wharf. The claimant sued, the case ended with the Privy Council – the defendant is not liable for the fire damage as they couldn’t have foreseen the risk of damage by fire. The KIND OF DAMAGE MUST BE REASONABLY FORESEEABLE, although neither the extent of the damage nor the manner of its occurrence need be reasonably foreseen.

NOVUS ACTUS INTERVENIENS
An act or event that breaks the chain of causation. This can occur in three ways:

Ø The act of the claimant himself
Ø An act of a third party
Ø A naturally occurring event

The courts are reluctant to allow novus as the claimant is left with no-one to sue. For example, A lights a fire in his garden and a strong wind causes flames to spread to B’s house. The court would not allow the wind to break the chain of causation.

McKew v Holland and Hannen and Cubitts [1969] – the defendant negligently injured the claimant, and as a result his leg sometimes ‘gave way’. Whilst descending a steep set of stairs, the leg gave way. The House of Lords held that the moment he decided to walk down the stairs (which had no handrail) broke the chain of causation.

Sayers v Harlow UDC [1958] – the claimant was locked in a lavatory and tried to escape by standing on the toilet roll holder. This gave way and she was injured. The court said that this act was not sufficient to break the chain, but stated she was 25% contributorily negligent for her own injuries.

Stansbie v Troman [1948] – the defendant decorator left the claimant’s house unlocked, contrary to instructions. A thief entered the property and stole jewellery. The Court of Appeal held that the loss was due to the defendant’s negligence, the chain of causation was not broken.

NEGLIGENT MISSTATEMENT
This tort is based on negligence and covers statements of fact and opinion.

The tort of deceit is based on fraudulent misrepresentation and covers only statements of fact.

Candler v Crane Christmas and Co [1951] – the defendant accountants prepared the company accounts. They knew that they were to be given to the claimant to persuade him to invest money in the company. The claimant did invest and suffered loss due to the accounts having been negligently prepared, giving a false impression of the company. The claimant sued in negligence. The case was settled by the Court of Appeal who confirmed that there is no duty of care, as there is no contractual relationship.

The dissenting voice of Lord Denning should be remembered. He though that a duty of care should be owed towards:

A third party to whom the defendant shows the accounts, or
Any other person to whom they know their employer is going to show the accounts

so as to induce them to invest money, or take some other action on them.

He would not stretch the duty to include strangers of whom the defendant had heard nothing, and to whom their employer without their knowledge may choose to show their accounts.

All dissenting judgments are obiter, but it was to become the ratio of:

Hedley Byrne v Heller and Partners [1964] – the appellants were advertising agents who became doubtful about the financial position of a client, E Ltd. The appellant bankers enquired from E Ltd’s bankers (the respondents) as to the financial position of E Ltd. The defendant replied that E Ltd was a respectably constituted company, considered good for its ordinary business engagements. The advice was given with a disclaimer. Relying on the advice the appellants lost £17,000+ when E Ltd went bust. An action for negligent misstatement was begun, and ended at the House of Lords.

The action failed because of the disclaimer, but that is not important. The court stated that in appropriate circumstances a duty of care could arise to give careful advice and that failure to do so could give rise to liability for economic loss caused by negligent advice. The appellants had to overcome two barriers (apart from the disclaimer):

The judge in Hedley Byrne refused to apply the Donoghue duty of care because:

An ACT affects only a few people, but once a negligent misstatement is made people could be affected for a lengthy period of time.
Even prudent people make statements on social occasions which may influence others without taking the care that they might in a business situation.

The purpose of Hedley Byrne lies in the concept of a ‘SPECIAL RELATIONSHIP’. Without it there can be no duty of care. Look for:

A special skill
Reasonable reliance on it
The defendant being aware of the type of transaction that is to be based on the advice
SPECIAL SKILL
Mutual Life Assurance Co v Evatt [1971] – a three to two majority decision in the Privy Council, that an insurance company does not owe a duty of care in giving investment advice, their liability under Hedley Byrne does not, therefore, arise. The minority (Lords Reid and Morris) held that a duty would arise only where the claimant made it clear that he was seeking considered advice and intended to act on it in a specific way.

It is this minority view that has gained acceptance as it excludes advice given informally, e.g. on a social occasion, strangers chatting on a train etc.

Examples where this minority view have been followed:

Esso Petroleum v Mardon [1976] – the claimant relied on Esso as to the throughput of petrol at a garage.

Spring v Guardian Assurance PLC [1994] – concerning a reference.

Caparo Industries v Dickman [1990] – the accountants prepared the accounts in accordance with the Companies Act 1985 and the investor loses cash. To establish a duty of care a claimant must show:

REASONABLE RELIANCE
The advice must be given in circumstances which the reasonable person in the defendant’s position would appreciate that his advice would be likely to be relied on.

The House of Lords had said in Caparo Industries that the circumstances could differ infinitely, there can be no necessary assumption that those features found to create a relationship in one case will necessarily determine liability in another.

Chaudhry v Prabhaker [1988] – the claimant asked a friend who had some knowledge of cars to find a suitable one that had not been involved in an accident. The defendant found a car and recommended it to the claimant. She bought it, it had been in an accident and so she sued. A duty of care exists as per the Hedley Byrne principles.

What happens where the representor attempts to exclude liability knowing that reasonable reliance is to be made on the statement?

Smith v Bush [1989]
Harris v Wyre Forest District Council [1989]

Both decisions made simultaneously by the House of Lords. Valuations were carried out on properties for the claimant’s by the defendant’s. A disclaimer was inserted in the valuations. Three questions were answered on appeal:

(1) Was a duty of care owed to the claimant? Certainly yes to the claimant, but not subsequent purchasers because of proximity
(2) Did the disclaimer fall within the ambit of Sections 1, 11 and 13 UNFAIR CONTRACT TERMS ACT 1977? – although not relevant here
(3) Did the notice satisfy the requirement of reasonableness under S2(2)? The court looked at the bargaining power of the parties, could advice have been obtained from another source?, and the practical consequences of the decision.

The disclaimer was held not to be reasonable.

As someone has taken my notes I am aware that some of the above was not discussed in the class.