ICAS TC Business Law Module 8 Flashcards
Donoghue v Stevenson 1932
Facts: A friend bought a bottle of ginger beer for Mrs Donoghue’s consumption.
Mrs D drank part of the bottle’s contents until she discovered a decomposing snail in
the drink. She became ill and wished to claim against the manufacturer of the ginger
beer. The manufacturer argued that as there was no contract between himself and
Mrs D, he did not owe her a duty of care and, consequently he had no liability to her.
Held: The House of Lords took the view that the manufacturer should have been able
to foresee that someone other than the person buying the drink would actually
consume it.
Therefore, the court decided that the manufacturer did have a duty to the ultimate
consumer, Mrs D, to take reasonable care to ensure snails did not fall into their
bottles, even where no contractual relationship existed with the ultimate consumer.
Hedley Byrne Ltd v Heller & Partners 1964
Facts: HB were advertising agents. They asked for a credit reference from Heller &
Partners (Heller) – the bankers of a new client. The credit reference provided by
Heller amounted to a negligent misstatement but included a disclaimer of legal
responsibility.
Held: In the circumstances of the case the disclaimer did mean that Heller avoided
liability. However, the House of Lords took the opportunity to consider whether there
could be a situation where a duty of care to avoid causing financial loss by negligent
misstatements could arise in a situation where no contract existed between the
parties.
The House of Lords held (obiter dicta) that, in principle, a duty of care could be owed
between parties in a special relationship to take reasonable steps to minimise the
risk of pure economic loss. So, had it not been for the disclaimer included by Heller in
the credit reference they provided, they would have been liable to HB for a breach of
duty of care.
Home Office v Dorset Yacht Co Ltd 1970
Facts: Officers supervising a group of male young offenders who were camping on an
island negligently created the opportunity for the boys to escape, which some of them
took advantage of. The fugitives stole a boat which they crashed into other boats
anchored in the harbour.
Held: The supervisors owed a duty of care to the owners of the damaged boats.
Caparo Industries plc v Dickman 1990
Facts: C, a shareholder in Fidelity plc, made a successful takeover offer for the
remaining shares in F based on the accounts of F as audited by the defendants. C
received the accounts from F in its capacity as shareholder. It was subsequently
discovered that the auditors had failed to discover errors in the accounts which
resulted in the accounts overvaluing F. C then sued for recovery of its pure economic loss in paying more for the shares in F than it would have done had it known F’s true financial position.
Held: Although the auditors owed a duty to the shareholders as a body (i.e. their
contract with the company required them to report to the shareholders in general
meeting), they did not owe a duty of care to individual or prospective shareholders in
the absence of any special relationship. The House of Lords identified three criteria
which should be satisfied before a duty of care should be held to be owed namely:
Was the harm reasonably foreseeable?
Was there a relationship of proximity between the parties?
Considering the circumstances, is it fair, just and reasonable to impose a duty
of care?
Hughes v Lord Advocate 1963
Facts: Workmen left unattended an open manhole in the middle of the road at the end
of their shift. They had erected a canvas shelter over the manhole and had placed
paraffin warning lamps around the shelter. Two young children came upon the site
and went into the shelter, taking a paraffin lamp in with them. One of the children
knocked the lamp into the manhole, which burst into flames (expert evidence showed
that a paraffin lamp was extremely unlikely to explode in such a way). The boy then
fell into the hole himself and was badly burned.
Held: Even although it was unforeseeable that a child would be injured in such a way,
considering that an unattended site such as this would be likely to constitute an
allurement for young children, it was foreseeable that there was a risk of injury by
burning. Since that was what in fact occurred, the nature of the damage was
reasonably foreseeable and the boy won his case.
Bourhill v Young 1942
Facts: Y, a motorcyclist, crashed into a car and died as a result of his own negligence.
Mrs B was a pedestrian who happened to be in the vicinity at the time of the accident.
She didn’t actually see the accident but she heard it and saw blood on the road. She
claimed to have suffered nervous shock which lead to a miscarriage.
Held: Although the court accepted that the defender/defendant owed a duty to nearby
road users, in Mrs B’s circumstances, as she had not seen the collision and had not
been at risk of physical injury there was no relationship of proximity between her
and the motorcyclist and so no duty of care could arise.
Hill v Chief Constable of West Yorkshire Police 1988
Facts: Mrs H was the mother of the last victim of the Yorkshire Ripper, Peter Sutcliffe.
The police had had Sutcliffe in custody but released him. He then abducted and killed
Mrs H’s daughter. Mrs H sued the police for damages claiming that they had been
negligent in releasing Sutcliffe and, had they not, her daughter would not have been
killed.
Held: To impose a duty of care on the police in such circumstances would result in the
police carrying out their duties in a ‘detrimentally defensive manner’ and being more
concerned with avoiding civil liability than catching criminals. As to impose a duty of
care in these circumstances would cause more harm than good, it was, therefore, not
fair, just or reasonable to impose a duty of care.
Scott v London and St Katherine Docks Co 1865
Facts: the pursuer/claimant was hit by six large bags of sugar which fell from the
defender/defendant’s warehouse window. The pursuer/claimant could not explain why
the bags had fallen but argued that bags of sugar could not have fallen in the way that
they did, without negligence. The pursuer/claimant argued res ipsa loquitur.
Held: the facts spoke for themselves and it was up to the defenders/defendants to
prove that they were was not negligent in allowing the bags to fall from the warehouse
window.
Wilsher v Essex Area Health Authority 1988
Facts: A baby born prematurely became blind after birth. The claimant argued that
the doctor had acted negligently by failing to notice that the baby had received a high
dose of oxygen which resulted in its blindness.
Held: Based on the evidence led, the House of Lords found that there were a number
of possible causes of the blindness, only one of which was the high oxygen dose
received by the baby. In this particular case, the court could not identify which one
factor actually caused the baby’s blindness, so no direct causal link could be shown.
McKew v Holland, Hannen & Cubitts (Scotland) Ltd 1970
Facts: In the course of his employment, McKew sustained an injury to his left leg due
to the negligence of his employer. Not long after the accident he tried to descend a
steep set of stairs without a handrail and without asking for help. Halfway down the
stairs, his left leg gave way and he took the decision to jump to the bottom of the stairs
causing severe injury to his right leg.
Held: The employer was not liable for injuries to the right leg because McKew’s
conduct constituted a novus actus interveniens which broke the chain of causation.
He should have asked for help to descend the stairs with his injured left leg.
The Wagon Mound 1961
Facts: A ship, the Wagon Mound, was docked and being refuelled when some of the
fuel oil was negligently allowed to leak into the water. The fuel drifted to a wharf 200
yards away where welding equipment was being used. Safety precautions were taken
by the wharf owner but the welding work continued. A spark fell onto a piece of cotton
waste floating in the oil and started a fire which damaged the wharf. The wharf
owners sued the charterers of the Wagon Mound.
Held: The claim by the wharf owners failed. In this case, pollution was the
foreseeable risk for the charterers, not fire.
ADT Ltd v BDO Binder Hamlyn 1995
Facts: Binder Hamlyn was joint auditor of BSG. They signed off the audit as
showing a true and fair view of BSG’s financial position. BSG’s audited accounts
were published in October 1989 for the year to 30 June 1989. ADT was considering
buying BSG and, as part of that process, asked Binder Hamlyn to confirm the audited
accounts. In January 1990 a Binder Hamlyn audit partner attended a meeting with an
ADT director where he confirmed that he ‘stood by’ the audited accounts.
Thereafter, ADT then proceeded with buying BSG for £105m. After the sale had
gone through it became clear that the audit had overvalued BSG and that ADT had
paid considerably more than necessary. ADT sued Binder Hamlyn for the difference.
Held: Binder Hamlyn were responsible for the statement that the audited accounts
represented a ‘true and fair view’ of BSG’s financial position and on which ADT had
relied. The audit work had, in fact, been carried out negligently and Binder Hamlyn
was liable for the excess consideration paid by ADT for BSG. In this case, BDO were
held to have assumed a duty of care to ADT.
Sayers v Harlow UDC 1958
Facts: The pursuer/claimant became locked in a public toilet cubicle because of a
faulty lock. She tried to climb out of the cubicle and, in doing so, she injured herself.
She made a claim against Harlow UDC in respect of her injuries.
Held: The method used by the pursuer/claimant to attempt to climb out of the cubicle
contributed to her injuries and the compensation awarded to her was, consequently,
reduced.
Titchiner v British Railways Board 1983
Facts: The pursuer/claimant was a 15 year old girl who climbed through a gap in a
fence and trespassed onto a railway line owned by the defender. Whilst walking along
the railway line she was hit by a train. She sued the BRB under
the Occupiers’ Liability (Scotland) Act 1960 for failing in their duty of care to keep their
premises safe.
Held: The House of Lords held that the fencing was adequate and that Titchiner had
voluntarily accepted the risk of injury by breaking through the fencing. Hence, the
BRB were not liable to her for her injuries.
Kirby v National Coal Board 1958
Facts: K, a miner, went into a field adjoining the mine to smoke a cigarette. This was
prohibited both by his employer and under statute. His striking the match caused an
explosion.
Held: K was using his break for his own purposes. He was no longer doing what he
was employed to do - mining - but was on a ‘frolic of his own’ - smoking. His
employer was not vicariously liable.
