Semester 2 Exam Case Law

Question 1

Contractual Capacity

Answer 1

As the company is a person, it can enter into contracts with persons inside and outside the company.

Lee v Lee’s Air Farming Ltd[1961] AC 12 (PC) (the workmen’s compensation case)

When he died in a crash, the question arose whether he was a ‘worker’ for the company. The Privy Council ruled that he was, establishing the principle of legal personality, where a company and its owner are separate entities. This allowed Mrs. Lee to claim compensation for her husband’s death.

Question 2

A duty to act within powers

Answer 2

Eclairs Group Ltd v JKX Oil & Gas plc - The directors used power in the company’s articles to disenfranchise a group of shareholders, who were due to vote against the company at the upcoming AGM. The proper purpose rule would apply to provisions in the articles. Exercising the power to disenfranchise members is not a proper purpose.

Question 3

A duty to promote the success of the company

Answer 3

Mutual Life Insurance Co of New York v Rank Organisation Ltd

shareholders claimed discrimination when Rank Organisation Ltd excluded them from a share offer. However, the court dismissed the complaint, ruling that the directors had acted in good faith and in the company’s interest, and that the shareholders’ rights had not been affected.

Question 4

Duty to exercise reasonable care, skill, and diligence

Answer 4

• Re Barings plc

Barings Bank collapsed due to the activities of a rogue trader. Disqualification proceedings were brought against three former directors based in London for serious management failures

Question 5

Duty to avoid conflicts of interest

Answer 5

Bhullar v Bhullar

established that directors must avoid conflicts of interest, particularly regarding corporate opportunities. A director bought an adjacent property without informing the company, breaching his duty to communicate opportunities

Question 6

Wrongful trading and fraudulent trading

Answer 6

Lifting the corporate veil – Prest v. Petrodel Resources Ltd.

It confirmed the principle of corporate personality but allowed piercing the corporate veil in limited circumstances, such as when assets are held on trust

Question 7

Wrongful trading

Answer 7

Re Produce Marketing Consortium Ltd

The directors were held liable for wrongful trading, as they should have realized the company’s liquidation was unavoidable

Question 8

Duty of Care

Answer 8

Donoghue v Stevenson (1932, HL)

Claimant became ill after drinking ginger beer with a snail at the bottom. Her friend had bought the drink, so had no contract with the café.

Established that every person owed a duty of care to his ‘neighbour’ who was somebody that a person could reasonably foresee would be injured by his acts or omissions

Question 9

Three stage test for establishing ‘duty of care’:

1. Was the harm or loss caused reasonably foreseeable?

Answer 9

(Margereson v JW Roberts (1996) pulmonary illness - asbestos)

The court ruled that the defendant, owner of an asbestos factory, should have foreseen the risk of pulmonary injury due to asbestos dust exposure. This ruling held the company liable

Question 10

Three stage test for establishing ‘duty of care’:

2. Was there a sufficient relationship of proximity between the claimant and the defendant for a duty to be imposed?

Answer 10

West Bromwich Football Club Ltd. v El-Safty (2006) – football club- doctor proximity

The court ruled that Mr. El-Safty, who treated a player from West Bromwich Albion Football Club, did not owe a duty of care to the club and no contract existed between them. This reinforced the principle that a doctor’s primary duty of care is to the patient, not the employer

Question 11

Three stage test for establishing ‘duty of care’:

3. In all circumstances is it fair, just, and reasonable that the law should impose a duty on the defendant?

Answer 11

(Robinson v Chief Constable of West Yorkshire Police (2018)

This case clarified the police’s liability to the public. An elderly woman was injured by police officers during an arrest attempt. The court ruled that the police owed her a duty of care, applying ordinary negligence principles, and rejected any special police immunity

Question 12

2nd Element: Breach of Duty

No allowance is made for the defendant’s particular level of experience/ resources/ competence

Answer 12

(Nettleship v Weston (1971)

a learner driver crashed during a lesson, injuring the instructor. The court ruled that learner drivers should meet the same standard of care as qualified drivers.

Question 13

Exceptions to standard of the “reasonable person”:

• children depending on age

Answer 13

Orchard v Lee_

a school dinner lady was injured when a 13-year-old boy ran into her while playing tag. She sued for negligence. The court ruled that the boy, behaving as a typical child of his age, had not breached his duty of care

Question 14

Exceptions to standard of the “reasonable person”:

• professional depending on profession

Answer 14

Phillips v Whiteley Ltd

a woman’s ears were pierced by a jeweller, leading to an infection. The court ruled that the jeweller was not liable as they were not expected to meet the standard of a surgeon. The standard of care was that of a jeweller performing such work

Question 15

The courts may use a form of “cost-benefit analysis”
1. The probability of harm

Answer 15

1. The probability of harm (Bolton v Stone)

a cricket ball from a nearby field injured a woman outside her home. The court ruled the cricket club was not negligent, considering the low likelihood of harm

Question 16

The courts may use a form of “cost-benefit analysis”

2. The potential seriousness of the damage

Answer 16

(Paris v Stepney Borough Council)

a one-eyed garage worker was blinded in his remaining eye due to a workplace accident. The court ruled that the employer was negligent for not providing safety goggles, considering the worker’s known vulnerability

Question 17

The courts may use a form of “cost-benefit analysis”

3. The practicality/cost of protection – cost of avoiding harm is not disproportionate- easier to take precautions

Answer 17

(Latimer v AEC Ltd)

factory worker slipped on a flooded floor, injuring his ankle. The court ruled that the employer, AEC Ltd, had taken all reasonable precautions to minimise risk, including mopping up and spreading sawdust, and was not negligent

Question 18

The courts may use a form of “cost-benefit analysis”
4. The potential benefits of the risk - reasonable risks during emergency situation

Answer 18

(Watt v Hertfordshire County Council)

a fireman was injured when a heavy jack fell on him during an emergency rescue. The court ruled the council was not negligent, considering the urgency of the situation, the high social utility of saving a life, and the relatively low risk of injury

Question 19

Proving the Breach of Duty

Answer 19

Ward v Tesco Stores (1976) – yoghurt spilled on the floor of the store)

the court applied the doctrine of res ipsa loquitur, ruling that the accident was more likely due to negligence than anything else. The burden of proof was on Tesco to show the spill hadn’t been there long enough to be dealt with

Question 20

3rd Element: Causation
Factual Causation

Answer 20

(Chester v Afshar (2004)

The doctor had failed to inform her of a small risk associated with the surgery. The court ruled that even though the patient might have consented to the surgery at some point, the doctor was liable for not informing her of the risks

Question 21

3rd Element: Causation
Multiple causes:

Answer 21

(McGhee v National Coal Board)

worker contracted dermatitis after his employer failed to provide washing facilities, causing prolonged exposure to brick dust. The court ruled that the employer’s negligence materially increased the risk of the worker developing dermatitis, satisfying causation

Question 22

Remoteness of Damage

Answer 22

he Wagon Mound (no.1) (1961)

It involved an oil spill from a ship, leading to a fire when the oil was ignited. The court ruled that the defendant was not liable for damages that were not reasonably foreseeable

Question 23

Remoteness of Damage and the Eggshell Skull Principle

Answer 23

Smith v Leech Brain

an employee suffered a burn that led to cancer due to a pre-existing condition. The court applied the “eggshell skull” rule, holding the employer liable for all consequences of their negligence, regardless of the victim’s vulnerability

Question 24

Contributory negligence

Answer 24

Froom v Butcher – failure to wear a seatbelt – damages reduced by 20 per cent

Question 25

Consent

Answer 25

(Smith v Baker (1891) – defence of consent failed – drilling holes in a quarry –injured by the stone above

Question 26

Illegality

Answer 26

(Ashton v Turner (1980) –. The court dismissed the claim, stating that one participant in a crime does not owe a duty of care to another

Question 27

the multiple test

Answer 27

Ready Mixed Concrete v Minister of Pensions and National Insurance (1968)

The court found that the driver had enough freedom in performing his duties, such as choosing the vehicle and managing fuel, which indicated he was an independent contractor, not an employee

Question 28

The application of the Ready Mixed Concrete criteria

Answer 28

Warner Holidays Ltd v Secretary of State for Social Services (1983)

This case concerned the status of some entertainers who worked at a holiday camp for the summer season, developed the economic reality test and they were deemed as employees, not ICs

Question 29

Potentially fair reasons for dismissal: Redundancy

Answer 29

The case of Murray v Foyle Meats (2000) gives the test for redundancy:

• Has the employee been dismissed?
• Has there been a reduction in the need for employees to do the particular kind of work?
• Is the dismissal wholly or mainly because of this reduction?

Question 30

Dismissal for Gross misconduct

Answer 30

Burchell v British Home Stores (1980)

• The employer believed the employee was guilty
• The employer had reasonable grounds for believing that
• The employer had carried out as much investigation as possible in the circumstance

Question 31

Age

Answer 31

O’reilly v BBC - won her age discrimination claim after being dropped from the show when it moved to a prime-time slot. The tribunal upheld her claims for age discrimination and victimisation

Question 32

Disability

Answer 32

Environmental Agency v Donnelly (2013) – parking place

The Employment Tribunal found the Environmental Agency guilty of discrimination for not providing a parking space, harassment via email, and unfair dismissal.

Question 33

Pregnancy and Maternity

Answer 33

South West Yorkshire Partnership NHS Foundation Trust v Jackson (email about potential redundancy not accessible by the person on mat leave)

Question 34

Religion or belief

Answer 34

R v Registrar General of Births, Deaths and Marriages (2013)

wished to marry in a Church of Scientology chapel. The court ruled that the chapel could be recorded as a “place of meeting for religious worship”

Question 35

Sex

Answer 35

English v Thomas Sanderson Blinds Ltd (stereotypes – homophobic comments – harassment)

Question 36

Direct discrimination

Answer 36

Amnesty International v Ahmed (2009) – Sudanese woman denied a position due to her ethnic origin (researcher for Sudan – conflict of interest)

Question 37

Indirect discrimination

Answer 37

London Underground Ltd v Edwards

Edwards, a single parent and train driver, claimed indirect sex discrimination when London Underground changed its rostering system