Enterprise Law: Donoghue V Stevenson Essay

Question:

Discuss about the Enterprise Law for Donoghue v Stevenson.

Answer:

Issue:

The issue that has been identified in the given scenario is whether Kimberley and Charles can sue Elle for Negligence.

Rule

The law of Negligence ad been established in the remarkable case of Donoghue v Stevenson [1932] AC 562. In this case Lord Atkin held that a person is required to take reasonable care to avoid acts or omissions which are likely to cause any harm to the neighbour of such person. This decision became a remarkable one and made provisions for claiming damages for injuries or economic losses sustained by either of the parties due to the breach of duty of care of the other party. Negligence can be described as a legal wrong in which one of the parties sustains physical or economic damages at the hands of the other party, due to the failure of the latter party to take due care so as to avoid what may be perceived as a potential risk to a reasonable person. The judgment of this case enlisted the elements that are essential to prove negligence. Such elements are:

  • Duty of care of the defendant towards the claimant
  • Breach of such duty of care
  • Causation of damage sustained by the plaintiff
  • Remoteness of such damage

Duty of care

This can be regarded as the first and the foremost element in proving Negligence. For a party claiming damages due to the Negligent actions of the Other party he must first establish that the defendant had a duty of care to him. Such Duty of care is assessed by the Caparo test as established in the remarkable Caparo Industries PLC v Dickman [1990] UKHL 2. The Caparo test can be described as a threefold test in which the following are taken into consideration:

  • Whether the harm that was caused by the Negligent actions of the defendant was reasonably foreseeable
  • If a reasonable relationship of proximity existed between the parties
  • Is it reasonable and fair to impose the duty of care on the defendant.

Further it has been provided in the case Hackinshaw v. Shaw. (1984) 56 A.L.R. 417;that an affirmative duty would be imposed on the person who is the occupier of the premises that to take reasonable care for the purpose of ensuring that the premises is safe to those who enter them.

Breach of Duty of care

Breach of the duty of care is the second important essential for establishing Negligence on the part of the Defendant. The Objective test as established in the case Vaughan v Menlove (1837) 3 Bing. N.C. 467 is applied for the purpose of assessing whether the defendant breached his duty of care. The objective test takes into consideration the following factors:

  • Seriousness of the harm
  • How likely was the harm to be caused
  • Cost to be incurred by the Defendant to prevent the Harm
  • Utility of the Defendant’s conduct

Causation

It I to be mentioned that a claimant is only entitled to claim damages from the defendant if it is established that that the harm caused to the defendant was a direct cause of the defendant’s negligent actions. The courts apply the ‘But For’ test as established in the case Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428 to assess the causation of the damage. The “But For” test takes into consideration whether the damage would have been caused to the plaintiff had it not been for the negligent acts or omissions of the defendant. If it is assessed that the plaintiff regardless of the omissions or acts of the defendant would have incurred the losses or sustained the damage, then the plaintiff will not be entitled to claim damages.

Remoteness of Damage

The damage sustained by the plaintiff must not have been too remote to the defendant. As held in the notable case Wagon Mound no1 [1961] AC 388 a defendant is personally liable for the losses if if such loss was of a foreseeable kind. The legal principle of remoteness aims to restrict the liability of the defendant.

Application

It has been provided through the facts of the case that Kimberly, a guest of the Bed and Breakfast house and Charles, a passer-by was injured by the damaged shutters of the House. Thus to assess whether Elle can be held personally liable for the damages sustained by the aforementioned parties, it is important to assess whether Elle owed a duty of care to the aforementioned parties. This can be assessed by the application of the Caparo test. It is evident in this scenario that any reasonable person would have foreseen the damage likely to be sustained by any visitor of the House due to the broken shutters. A reasonable relationship of proximity existed between the aforementioned parties. Kimberley was a guest and Charles was a visitor. It has been provided in the case Hackinshaw v. Shawthat an occupier has a duty to take reasonable care to ensure that the premises is safe to anyone who enters it. And lastly it is reasonable to impose the duty on Elle as it was her duty to fix the shutters.

Elle breached her duty of care. This can be substantiated by the application of the objective test. Elle, in this case did not meet the standard of a reasonable person while discharging her duties as any reasonable person would have fixed the shutters so s to avoid causing harm to any visitor.

The damage sustained by the aforementioned parties was a direct consequence of the negligent act of Elle. It can be stated that they would have not sustained the damages had it not been for the negligent act of keep the broken shutters installed in the premises.

Further, it can be said that the damage caused to the parties was not too remote as any reasonable person would have clearly foreseen such damage.

Thus, all the elements of Negligence are established in this case and therefore Kimberley and Charles can sue Elle and claim damages for the injuries sustained by the same. .

Conclusion

Thus to conclude it can be said that Kimberley and Charles can sue Elle for negligence.

Issue

The issue that has been identified in the given scenario is whether John had been owed a duty of care to avoid the pure economic loss faced by him and if so by whom

Rule

Pure economic loss can be described as the damage sustained by an individual which is economic in nature and which is not accompanied by any damage to person or property. The Hedley Byrne v Heller case is the authority on the recovery of economic loss, whicharises out of negligent misstatement.

It was held in the aforementioned case that a negligent misstatement on the part of a party might give rise to an action for damages for the pure economic loss faced by the other party. It was further held that a party possessing the special skill or knowledge is required to know that such party has a duty of care to the other party who relies on the information or advice provided by the former party due to the skill and knowledge possessed by him. The case Hedley Byrne & Co v Heller & Partners had been accepted and applied in the Australian remarkable case Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556 by the High Court of Australia. However, in the latter case the justice Barwick CJ had given the judgment which deviated from the English concept of the principle of negligent misstatement by determining that a special relationship does not mandate the speaker to possess any specialised skill or knowledge. This decision was initially reversed however, the High court’s decision in the case San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (NSW) (1988) 162 CLR 340 reinstated the decision of the former case.

Application

As provided in the facts of the case it can be said that Jacob had consulted Rose and Geoff to adivise him on his decision of purchasing the small retail clothing called ‘Sport and Surf’ in Corulla. Rose owned a hair dressing salon in Cornulla and Geoff was a business broker who specialized in matching prospective buyers and sellers in the Hotel sector. Both of the them had been given the books of the Business as prepared by Water Accounting services, the usual accountants of the business. The profit made by the business had been misrepresented in the books of the business. Water Accounting services represented the profits of the business to be 120,000 dollars where as in reality it was only 12,000 dollars. Geoff advised Jacob to purchase the business relying on the misstatement. By relying on such misstatement Jacob Purchased the business for 250,000 dollars. Therefore in this case it can be stated in accordance with the decision of the Hedley Byrne & Co v Heller & Partners and Mutual Life & Citizens’ Assurance Co Ltd v Evatt that Water Accounting services had a duty of care towards Jacob. They breached such duty by misstating the fats and therefore Jacob is entitled to claim damages from Water Accounting services.

Conclusion

Thus to conclude, it can be stated Water Accounting Services owed a duty of care to Jacob.

Reference List:

Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428

Caparo Industries PLC v Dickman [1990] UKHL 2.

Donoghue v Stevenson [1932] AC 562

Hackinshaw v. Shaw. (1984) 56 A.L.R. 417;

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

Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1968) 122 CLR 556

San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (NSW) (1988) 162 CLR 340

Vaughan v Menlove (1837) 3 Bing. N.C. 467

Wagon Mound no1 [1961] AC 388

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