Torts in Business

Question 1

What are the elements of tort of negligence?

Answer 1

1. Duty of care
2. Breach of duty
3. Resulting damage

Question 2

How to determine duty of care?

Answer 2

1. The Neighbour Principle (Donoghue v Stevenson)
   Duty of care exists when it is reasonably foreseeable that the act of omission will cause harm to the person (for physical harm and consequential economic loss)
2. The Spandeck Test
   i. Factual foreseeability: Defendant must reasonably foresee that the act of omission will cause harm to the plaintiff; will almost always be satisfied (Sunny Metal & Engineering)
   ii. Proximity: The closeness and directness of the relationship between both parties e.g. physical proximity, circumstantial proximity, causal proximity
   Once i and ii are established, a prima facie duty of care exist
   iii. Policy: Will imposing a duty of care on the defendant give rise policy reasons that will negate the prima facie duty of care? e.g.,
   Floodgates: opening defendant to liability of an indeterminate amount for an indeterminate time to an indeterminate class of people
   Contractual Relationships: Seek to regulate rights and obligations of parties
   Relative bargaining position of parties

Question 3

How to determine standard of care?

Answer 3

1. Defendant’s level of skill: The higher the skill, the higher the standard of care (Wells v Cooper)
2. Likelihood of harm: The higher the likelihood of harm, the higher the standard of care (Bolton v Stone)
3. Seriousness of harm: The more serious the harm, the higher the standard of care (Paris v Stephney Borough Council)
4. Cost of avoiding risk: Defendant should take all reasonable steps to minimise risk. If cost of avoiding risk is low, greater expectation to take reasonable steps to minimise risk, higher standard of care

Question 4

What is the doctrine to let the defendant prove that he is not negligent?

Answer 4

Res Ipsa Loquitor, which stands for “The event speaks for itself” and it shifts the evidentiary burden to the defendant, which has to prove that he is not negligent.
Conditions:
1. Situation is within exclusive control of the defendant
2. Harm would not have occurred if proper care had been taken
3. No other explanations

Question 5

How to determine if the resulting damage is claimable? (2 parts)

Answer 5

Causation In Fact
But-For Test: But for the defendant’s breach, would the plaintiff have suffered the harm? If no, there is causation in fact
Causation In Law:
What is the cause for legal responsibility?
Limits Causation In Fact
Novus Actus Interveniens: An intervening act which breaks the chain of causation, making the defendant not liable for further liability

Remoteness: Limits the scope of damages claimable against the defendant
1. Damages that are reasonably foreseeable are claimable (Bradford v Robinson, Wagon Mound No 1)
2. Defendant must take plaintiff as he finds him. If plaintiff’s pre-existing weakness makes him susceptible to further harm, defendant is liable to full extent of harm. (Egg Shell Skull Rule) (Smith v Leech Brain)

Question 6

What are the types of defences?

Answer 6

1. Volenti Non Fit Injuria
   Plaintiff consented to risk of injury with full knowledge and appreciation of risk involved, and agreed to continue. A complete defence
2. Contributory Negligence
   Plaintiff’s injury is partly contributed by his own fault. A partial defence, the court will apportion liability between both parties
3. Disclaimers
   Seeks to exclude/restrict liability in tort of negligence
   Must satisfy the requirements of reasonableness stated in UCTA s11

Question 7

What are the factors that affect proximity in the case of negligent misstatement?

Answer 7

1. Voluntary assumption of responsibility
2. Reliance by plaintiff on defendant
3. Circumstantial proximity
4. Causal proximity

Question 8

How to determine duty of care due to “special relationship”?

Answer 8

Hedley Byrne v Heller
1. Skills and expertise of statement maker
2. Statement maker’s voluntary assumption of responsibility
3. Statement maker knew/ought to know that plaintiff will rely on his statement

Caporo Industries v Dickman
1. Defendant knew/ought to know the purpose of statement required, and that the statement will be communicated to the plaintiff

Question 9

What is vicarious liability?

Answer 9

An employer is vicariously liable for a tort committed by his employee in the course of employment

Question 10

What are the two landmark cases for nervous shock cases?

Answer 10

1. Applying Spandeck Test to cases of nervous shock (Ngiam Kok Seng)
2. Secondary victim suffering severe trauma resulting from recognisable psychiatric condition might be able to claim from a negligent defendant (Pang Koi Fa)