Lecture # 3 Duty of care

Transcription

1 Introduction Lecture # 3 Duty of care By: Salik Aziz Vaince [ ] Negligence is essentially concerned with compensating people who have suffered damage as a result of the carelessness of others, but the law does not provide a remedy for everyone who suffers in this way. One of the main ways in which access to compensation is restricted is through the doctrine of the duty of care. Essentially, this is legal concept which dictates the circumstances in which one party will be liable to another in negligence: if the law says you do not have a duty of care towards the person (or organization) you have caused damage to, you will not be liable to that party in negligence, no matter how serious the damage. It is interesting to note that in the vast majority of ordinary tort cases which pass through the court system, it will usually be clear that the defendant does owe the claimant a duty of care, and what the courts will be looking at is whether the claimant can prove that the defendant breached that duty for example, in the huge numbers of road accident cases that courts hear every year, it is already established that road users owe a duty to other road users, and the issues for the court will generally revolve around what the defendant actually did and what damage was caused. Negligence has three main elements: 1) A duty of care, 2) Breach of the duty, 3) Damage caused by the breach. Definition A requirement that a person act toward others and the public with watchfulness, attention, caution and prudence that a reasonable person in the circumstances would. If a person's actions do not meet this standard of care, then the acts are considered negligent, and any damages resulting may be claimed in a lawsuit for negligence. Duty of care The first element of negligence is the legal duty of care. This concerns the relationship between the defendant and the claimant, which must be such that there is an obligation upon the defendant to take proper care to avoid causing injury to the plaintiff in all the circumstances of the case. Duty of care is a legal concept which dictates whether one party can be liable to another in negligence. The idea of a duty of care in the tort of negligence has developed through judges making decisions in cases. This started in a negligence case of Donoghue v Stevenson (1932) where the claimant (Mrs. Donoghue) went to a café with a friend. The friend bought her a drink of ginger beer and ice cream. The bottle of ginger beer had dark glass so that the content could not be seen. After drinking some of it, Mrs. Donoghue poured the rest out and then saw that it contained a dead (and decomposing) snail. VLC Publishers Page 1

2 This appalled Mrs. Donoghue and she became ill as a result of the sight and the ginger beer she had already drunk. Mrs. Donoghue had no direct claim against the manufacturer or the shopkeeper based on contract because she did not buy the ginger beer. Mrs. Donoghue s friend could claim against the café in contract, but had not suffered any loss apart from the fact that she had bought defective goods; she could get her money back, but nothing for Mrs. Donoghue s illness. Therefore, Mrs. Donoghue claimed damages against the manufacturer, Stevenson. Her claim was for the resulting shock and stomach upset, which she claimed was caused through drinking the ginger beer. The court had to decide whether her claim against the manufacturer of the ginger beer could succeed. This led to Lord Atkin s famous statement: The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer s question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be: persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. Duty of care refers to the circumstances and relationships which the law recognises as giving rise to a legal duty to take care. A failure to take such care can result in the defendant being liable to pay damages to a party who is injured or suffers loss as a result of their breach of duty of care. Therefore it is necessary for the claimant to establish that the defendant owed them a duty of care. The existence of a duty of care depends on the type of loss and different legal tests apply to different losses. The neighbor principle In Donoghue v Stevenson (1932), the claim of Mrs. Donoghue was successful. This case established the modern law of negligence and established the neighbor test. What Is the Neighbor Principle? Neighbor Principle is a principle that states that everyone must take sensible care to avoid acts or omissions which can be foreseen reasonably that are likely to injure a neighbor. A neighbor is a person who is so closely and directly affected by your actions that you ought to reasonably have them contemplate as being so affected. Neighbor Principle was developed by Lord Atkin from the famous case of Donoghue v Stevenson. The neighbor principle explains how we should apply reasonable care not to injure or hurt anyone, who comes into direct relationship with us or with whom we are involved with. The concept of the neighbor relationship outlines the practical boundary in which we owe a duty of care. Explanation The common law position regarding negligence recognized strict categories of negligence. This position was significantly changed in the case of Donoghue v Stevenson, in 1932, which established that a duty of care applied despite no prior relationship or interaction and was not constrained by privity of contract. Here, a duty of care was found to be owed by a manufacturer to a consumer, for negligence VLC Publishers Page 2

3 in the production of his goods. Mrs. Donoghue's claim for damages for gastroenteritis and nervous shock were allowed, where a ginger beer manufacturer had negligently allowed a snail into a bottle, which she had consumed. Lord Atkin established liability on the basis that a neighbor principle existed between the two parties, to ensure reasonable care was taken in the production of the ginger beer, so as not to cause Mrs. Donoghue any unreasonable harm: Lord Atkin's speech established a neighbor principle, or a general duty that individuals must take reasonable care in their actions or omissions, so as not to cause harm to others proximate to them. It did not matter that Mrs. Donoghue was unidentified or unknown to the manufacturer; as the type of harm which occurred was foreseeable through the negligence of the ginger beer manufacturer. Duty of care for personal injury and property damage The existence of a duty of care for personal injury and property damage was originally decided by Lord Atkin's neighbour test from Donoghue v Stevenson. Prior to Donoghue v Stevenson, a claimant would have to establish an existing duty relationship in order to be successful. The neighbour test taken in its widest sense could be very broad allowing liability in a whole range of situations, however, subsequent cases narrowed down its application to only where a consumer was suing a manufacturer. However, in Anns, Lord Wilberforce sought to resurrect an all embracing test for duty of care: Anns v Merton London Borough Council [1978] AC 728 House of Lords Facts: The claimants were tenants in a block of flats. The flats suffered from structural defects due to inadequate foundations which were 2ft 6in deep instead of 3ft deep as required. The defendant Council was responsible for inspecting the foundations during the construction of the flats. Held: The House of Lords held that the defendant did owe a duty of care to ensure the foundations were of the correct depth. Lord Wilberforce introduced a two stage test for imposing a duty of care. This has since been overruled by Caparo v Dickman. Lord Wilberforce's two stage test (Anns test) "In order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. 1. Examine whether the loss was reasonably foreseeable and there existed a relationship of proximity. If so a prima facie duty of care arises. 2. The defendant may put forward policy considerations to negate liability. The first stage was essentially the elements of the neighbour test, however in order to address the fears of the floodgates ("Open the floodgates" is a phrase used to indicate or argue that if a court recognizes some cause of action it will lead to a dramatic increase in litigation. (Imagine the flood gates of a dam with large amounts of water coming out. The water is a metaphor for the litigation.)), this was subject to the second stage which provided a get out clause for defendants where there existed policy reasons for denying the imposition of a duty of care. Comments: Overruled by House of Lords in Caparo case; because it was seen as creating too broad a concept of duty of care and negligence (and therefore growth in the scope of liability). VLC Publishers Page 3

4 Back to the incremental approach Despite the efforts to allay fears of the floodgates, the Anns test was still considered too wide. In Caparo, the House of Lords overruled Anns and went back to the incremental approach whereby the claimant may only bring their action where they can establish an existing duty situation. In novel situations the question of whether a duty of care is now subject to the Caparo test. Caparo Industries Plc v Dickman [1990] 2 AC 605 [Facts: Caparo Industries purchased shares in Fidelity Plc in reliance of the accounts which stated that the company had made a pre-tax profit of 1.3M. In fact Fidelity had made a loss of over 400,000. Caparo brought an action against the auditors claiming they were negligent in certifying the accounts. Held: No duty of care was owed. There was not sufficient proximity between Caparo and the auditors since the auditors were not aware of the existence of neither Caparo nor the purpose for which the accounts were being used by them.] Lord Bridge's three stage test for imposing a duty of care, known as the Caparo test: The general test set in Caparo requires three elements to be demonstrated: 1. It was reasonably foreseeable that a person in the claimant s position would be injured, 2. There was sufficient proximity (closeness) between the parties, 3. It is fair, just and reasonable to impose liability on the defendant. It can be seen that the first two stages are taken directly from the original neighbour test. Fair, just and reasonable relates to the same policy considerations under the Anns test. In fact the Caparo test contains the same elements as Anns. The main difference being, that under Caparo it is the claimant that must put forward policy reasons for imposing liability whereas under Anns, liability would arise once the claimant had established reasonable foresight and proximity and the defendant had to demonstrate policy factors for negating liability. All parts of the test must be satisfied if there is to be a duty of care owed by the defendant to the claimant. Each part must be explained and proved separately. Caparo Test 1. The First Part Foreseeability This is an objective test: would a reasonable person in the defendant s position have foreseen that someone in the claimant s position might be injured? In Donoghue v Stevenson (1932) it can be seen that failing to stop a snail getting into a bottle will affect the consumer (Mrs. Donoghue) of the contents. This is a consequence of producing food that has foreign bodies in it, and a reasonable person in the defendant s position (a soft drink manufacturer) would foresee that the claimant (a consumer) might be injured. In Kent v Griffiths (2000) a doctor called for an ambulance to take a patient suffering from a serious asthma attack to hospital immediately. The ambulance control centre replied okay, doctor. The ambulance, without a satisfactory reason, failed to arrive within a reasonable time. The patient suffered a heart attack which could have been avoided if she had been taken to hospital earlier. It was reasonably foreseeable that the claimant would suffer harm from the failure of the ambulance to arrive. VLC Publishers Page 4

5 In Jolly v Sutton London Borough Council (2000) a boy, aged 14, was paralysed when a boat he was attempting to repair slipped on top of him. The boat had been abandoned on land belonging to the council by a block of flats. The council knew that the boat was in dangerous condition and that children were likely to play on it. The House of Lords held that attempting to repair the boat was not so very different from normal play, so the injury to the claimant was reasonably foreseeable. In some cases the courts have decided that is not reasonably foreseeable that the claimant would suffer harm. For example, in Bourhill v Young (1943) a motorcyclist going too fast, crushed into a car and was killed. Mrs. Bourhill, who was eight months' pregnant, was about 50 yards away. She did not actually see the events take place but had heard the incident take place. When she saw the blood on the road, she suffered shock and her baby was stillborn. She claimed against the motorcyclist s estate. The court decided that the motorcyclist did not owe her duty of care as he could not have reasonably foreseen that she would be affected by his negligent driving. 2. The Second Part Proximity Even if the harm is reasonably foreseeable, a duty of care will only exist if the relationship of the claimant and the defendant is sufficiently close. This can be seen in the case of Osman v Ferguson (1993) where the police officers knew that there was a real risk of an attack on victim. The victim was the murdered by the attacker. The court held that there was a sufficiently close relationship between the police and the victim. However, the case did not succeed because it was ruled that it was not fair, just and reasonable to impose a duty of care on the police (which is the third part of the test). It involves the notion of nearness or closeness, and relationship. It embraces physical proximity (in the sense of space and time) between the two parties or their property. It also concerns proximity in relationships such as employer and employee or of a professional man and his client. It also includes in the sense of the closeness or directness between the particular act or course of conduct and the loss and injury sustained. It may reflect an assumption by one party of a responsibility to take care to avoid or prevent injury, loss or damage to another, or where a party relies on such care. Each case will be different. Proximity serves as a touchstone and control of the categories of case in which the common law will adjudge that a duty of care is owed. No proximity without foreseeability? It appears there can be no proximity without foreseeability, but foreseeability alone will not create a duty of care. Bourhill v Young [1943] HL (Sometimes referred to as "The Case of the Pregnant Fishwife") Mrs. Bourhill getting out of a tram she heard the noise of the collision but was in no danger. She went to the accident spot and saw the blood on the road and suffered nervous shock (she was pregnant at the time). She was not in proximity to Mr Young, so he could not reasonably foresee that his action of riding the motor cycle negligently would affect her. VLC Publishers Page 5

6 Rondel v. Worsley [1969] HL A client who lost his case sued his barrister for negligently conducting the case in court. Applying the neighbour test, the client is the barrister's neighbour whose actions or omissions in court would affect his client's case. The client lost because for reasons of public policy, the House of Lords held that barristers should have immunity from action for negligence in court. This decision was overruled in Hall v Simons [2000] Facts: One of several cases (conjoined cases) on similar issues, where claimants had done less well than they would but for negligence of their legal advisers. Held: It was no longer in the public interest that advocates should enjoy immunity from being sued for negligent acts concerned with the conduct of litigation whether in civil or criminal proceedings. 3. The Third Part Fair, just and reasonable The third part of the test, whether it is fair, just and reasonable to impose a duty of care is really a matter of public policy. The courts are usually reluctant to impose a duty on public authorities, as seen in the case of Hill v Chief Constable of South Yorkshire (1990) where it was pointed out that imposing a duty on police could lead to policing being carried out in a defensive way which would divert attention away from the suppression of crime, leading to lower standards of policing, not higher ones. However, in some circumstances the police do owe a duty of care. In the case of MPC v Reeves (2001) the police took a man into custody who was a prisoner known to be at risk of committing suicide. Whilst in custody he hanged himself in his cell. The court found that the police owed him a duty of care. Human Rights Act 1998 has a significant effect on duty situations Alexandrou v Oxford [1993] CA "The police were alerted by a 999 telephone call, followed by a recorded message. If as a result of that communication the police came under a duty of care..., it must follow that they would be under a similar duty to any person who informs them...of...any crime." Watson v BBBC [2000] CA Michael Watson a boxer suffered severe brain damage during a fight with Chris Eubank had there been better medical care ringside his injuries would not have been so severe had there been additional medical care available The system of licensing boxers with the British Board of Boxing Control (BBBC) created proximity of relationship. Psychiatric damage (Nervous Shock) A claimant who has suffered psychiatric damage (previously referred to as nervous shock) may make a claim in Negligence. The rules are refined to take account of the special nature of psychiatric damage, compared to personal injury or damage to property. Personal injury damages may include the head of damage for pain and suffering, including mental, if it flows from the original physical injury. Therefore the psychiatric damage rules apply where there is no physical injury. VLC Publishers Page 6

7 General restrictions A claim for psychiatric damage is limited by two requirements: 1. that the harm suffered is a medically recognised condition 2. that it is sudden rather than gradual damage These restrictions aim to: help determine genuine claims, prevent opening the floodgates and therefore limit possible liability for defendants. Medically recognised condition A claim for psychiatric damage must be based on the claimant suffering a medically recognised condition, induced by shock. Alcock v Chief Constable of South Yorkshire [1992] AC 310 House of Lords Facts: This case arose from the disaster that occurred at Hillsborough football stadium in Sheffield in the FA cup semi-final match between Liverpool and Nottingham Forest in South Yorkshire Police had been responsible for crowd control at the football match and had been negligent in directing an excessively large number of spectators to one end of the stadium which resulted in the fatal crush in which 95 people were killed and over 400 were physically injured. The scenes were broadcast live on television and were also repeated on news broadcasts. Sixteen claims were brought against the defendant for nervous shock resulting in psychiatric injury. At trial ten of the claims were successful. The defendant appealed against the findings in nine and the unsuccessful claimants appealed. The Court of Appeal found for the defendants in all of the claims. Ten appeals were made to the House of Lords. These included claims made by brothers, sisters, parents, a grand-parent and a fiancé. Two of the claimants had been at the ground but in a different area. Some had seen the events unfold on the television, some had heard about the events in other ways. Some had identified bodies at the makeshift mortuary. Held: The appeals were dismissed. Lord Oliver set out the distinction between primary and secondary victims. A primary victim one involved mediately or immediately as a participant and a secondary victim one who is no more than a passive and unwilling witness of injury to others. The claimants were all classed as secondary victims since they were not in the physical zone of danger. Lord Oliver openly used the word "policy" in explaining his decision. The first two types of claimant can claim under the normal rules of negligence. For secondary victims, three further tests apply: 1. Do they have a recognized psychiatric illness, caused by a sudden shock? 2. Are they within a class of people that the law allows to claim compensation for psychiatric injury as a secondary victim? 3. What was their proximity to the shocking event? For secondary victims to succeed in a claim for psychiatric harm they must meet the following criteria: 1. A close tie of love and affection to a primary victim 2. Witness the event with their own unaided senses 3. Proximity to the event or its immediate aftermath VLC Publishers Page 7

8 4. The psychiatric injury must be caused by a shocking event Lord Ackner: "'Shock', in the context of this cause of action, involves the sudden appreciation by sight or sound of a horrifying event, which violently agitates the mind. It has yet to include psychiatric illness caused by the accumulation over a period of time of more gradual assaults on the nervous system." Chadwick v British Railways Board [1967] 1 WLR 912 Facts: This case arose from a horrific train crash in Lewisham in which 90 people were killed and many more were seriously injured. Mr Chadwick lived 200 yards from the scene of the crash and attended the scene to provide some assistance. He worked many hours through the night crawling beneath the wreckage bringing aid and comfort to the trapped victims. As a result of what he had witnesses he suffered acute anxiety neurosis and received treatment as an inpatient for 6 months. Held: His estate was entitled to recover. The defendant owed Mr Chadwick a duty of care since it was reasonably foreseeable that somebody might try to rescue the passengers and suffer injury in the process. LEACH V CHIEF CONSTABLE OF GLOUCESTERSHIRE CONSTABULARY [1999] 1 ALL ER 215 FACTS: The claimant suffered post traumatic distress disorder (PTSD) after acting as an appropriate adult during police interviews of Fred West, a notorious child murderer. ISSUE: Is PTSD a medically recognised condition? HELD: PTSD is a medically recognised condition. KRALJ V MCGRATH [1986] 1 ALL ER 54 FACTS: The plaintiff suffered pathological grief after her child died at birth. ISSUE: Is pathological grief a medically recognised condition? HELD: Pathological grief is a medically recognised condition. However, normal grief is not. VERNON V BOSLEY (NO 1) [1997] 1 ALL R 577 FACTS: The plaintiff suffered distress after witnessing firemen trying to rescue her children from car wreckage. ISSUE: Is distress a medically recognised condition? HELD: Distress is not a medically recognised condition. HICKS V CHIEF CONSTABLE OF THE SOUTH YORKSHIRE POLICE [1992] 2 ALL ER 65 FACTS: The victims were killed at the Hillsborough disaster. The claim was fear suffered prior to their deaths. ISSUE: Is fear a medically recognised condition? HELD: Fear is a not medically recognised condition as it is a normal emotion. Sudden event The psychiatric damage must be brought on by a sudden event. Even, if it is foreseeable that the claimant, under strain, may gradually suffer psychiatric harm. ALCOCK V CHIEF CONSTABLE OF SOUTH YORKSHIRE POLICE [1992] 1 AC 310 Lord Ackner:... 'Shock', in the context of this cause of action, involves the sudden appreciation by sight or sound of a horrifying sight or sound or a horrifying event, which violently agitates the mind. It has yet to include psychiatric illness caused by the accumulation over a period of time of more gradual assaults on the nervous system... VLC Publishers Page 8

9 W V ESSEX COUNTY COUNCIL [2001] 2 AC 592 FACTS: The claimants suffered psychiatric damage after being told that their foster child had sexually abused their children. ISSUE: Was the damage too remote? HELD: The House of Lords declined to strike out the claim on the basis that the claimants had only been told about, rather than witnessed the incident or its immediate aftermath. Therefore, all claims for psychiatric damage must be based on the claimant suffering a medically recognised psychiatric illness, or shock induced physical condition, caused by sudden shock. Is there a recognized psychiatric injury? Psychiatric injury is known as nervous shock. The term implies that claimants can seek damages because they are shocked as the result of the defendant s negligence, or perhaps upset, frightened, worried or grief stricken. This is not the case. In order to claim for so-called nervous shock, a claimant must prove that they have suffered from a genuine illness or injury. McLoughlin v O Brian (1983) HL Facts: D a driver who caused an accident, which injured C s family. C visited hospital saw injured husband and daughters. What she saw and heard from witnesses caused severe nervous shock. Distance and time are factors, but not legal restrictions. Held: Although not present at the accident, it was a reasonably foreseeable consequence of the defendant's negligence. C won Duty of care: primary victims The duty of care element is the difficult to prove in cases of psychiatric damage. A duty will only be owed if the claimant is a reasonably foreseeable victim. Therefore, claimants who suffer psychiatric damage (a medically recognised condition suddenly induced by shock) are categorised as primary or secondary victims. The classification is in relation to their proximity to the incident with slightly different criteria applied to determine if a duty of care is owed. The leading case on primary victims is a House of Lords decision, looking at a case involving pure psychiatric damage. PAGE V SMITH [1996] AC 155 FACTS: The plaintiff was involved in a minor car accident, caused by the defendant's negligence. The plaintiff suffered no physical injuries but since the accident he was unable to work due to chronic and permanent ME (muscle and joint pain). The plaintiff had previously suffered from mild, sporadic ME. ISSUE: Was a duty of care owed? HELD: A duty of care was owed. The plaintiff was a primary victim because he was involved in the accident. Lord Lloyd:.. A primary victim is someone was in the actual area of danger or reasonably believed he was in danger. A secondary victim is someone who witnesses injury to another or fears for the safety of another... VLC Publishers Page 9

10 Primary victims are owed a duty of care in relation to pure psychiatric damage, if the risk of physical injury was foreseeable. The risk of psychiatric harm itself does not need to be foreseeable. Lord Lloyd:.. In an age when medical knowledge is expanding fast, and psychiatric knowledge with it, it would not be sensible to commit the law to a distinction between physical and psychiatric injury, which may already seem somewhat artificial, and may soon be altogether outmoded. Nothing will be gained by treating them as different 'kinds' of personal injury, so as to require the application of different tests in law... A case decided prior to the distinction between types of victim, shows the same underlying principles. The victim was essentially a primary victim. DULIEU V WHITE & SONS [1901] 2 KB 669 FACTS: The defendants negligently drove a horse drawn cart into a pub. The plaintiff, a pregnant barmaid, suffered shock leading to her having a miscarriage. ISSUE: Was a duty of care owed? HELD: A duty of care was owed. It was foreseeable that the defendants' negligence would cause the plaintiff to reasonably fear for her own safety. The plaintiff suffered a shock induced, recognised physical condition, a miscarriage. Therefore, a defendant owes a primary victim a duty of care not to cause pure psychiatric damage, if the risk of physical injury was foreseeable. Duty of care: secondary victims A secondary victim is a person less closely involved in the incident than a primary victim. Therefore, the test for establishing a duty of care is more stringent. As with all victims, a secondary victim must have suffered a medically recognised condition, as a result of sudden shock. The additional requirements for secondary victims are set out in the leading case, relating to the Hillsborough disaster. A large number of football supporters were killed and injured in the incident, which was caused by the negligence of police officers who allowed overcrowding in the stands. Many successful claims for damages were brought on behalf of those who suffered personal injuries at the football ground and primary victims who suffered pure psychiatric damage. ALCOCK V CHIEF CONSTABLE OF SOUTH YORKSHIRE POLICE [1992] 1 AC 310 The defendants, the police force, admitted negligence in allowing overcrowding but denied owing a duty of care to the spectators in relation to pure psychiatric harm. ISSUE: Was a duty of care owed? HELD: The defendant's did not owe the plaintiffs a duty of care. Therefore, the plaintiffs could not recover damages for the psychiatric harm. Lord Ackner:.. While it may be very difficult to envisage a case of a stranger, who is not actively and foreseeably involved in a disaster or its aftermath, other than in the role of rescuer, suffering shockinduced psychiatric injury by the mere observation of apprehended or actual injury of a third person in circumstances that could be considered reasonably foreseeable, I see no reason in principle why he should not, if in the circumstances, a reasonably strong-nerved person would have been so shocked. In the course of argument your Lordships were given, by way of an example, that of a petrol tanker VLC Publishers Page 10

11 careering out of control into a school in session and bursting into flames. I would not be prepared to rule out a potential claim by a passer-by so shocked by the scene as to suffer psychiatric illness... The House of Lords laid out test which must be satisfied in order to impose a duty of care to secondary victims: 1. It must be reasonably foreseeable that a person of normal fortitude in the plaintiff's position would suffer a psychiatric illness (foreseeability of psychiatric harm). 2. The plaintiff must have a close relationship of love and affection with the person endangered by the defendant's negligence (proximity of relationship). A secondary victim must have a close relationship of love and affection with the 'immediate victim' (the person endangered by the defendant's negligence). There is a presumption of such close ties if the relationship is that of a parent, child, and spouse and probably finance. However, the presumption is rebuttable if the defendant can produce evidence to the contrary. Similarly, the claimant may make representations to show that a sufficiently close relationship did exist. The House of Lords suggested the relationship of a bystander may be sufficient. 3. The plaintiff must be present at the incident or the immediate aftermath (proximity in time and space). A secondary victim must be present at the incident or the immediate aftermath and must see or hear it with his own senses. The need for proximity of time and space was established in an earlier case, approved in Alcock. MCLOUGHLIN V O'BRIAN [1982] 2 ALL ER 298 FACTS: The plaintiff suffered psychiatric harm after her husband and children were involved in a serious road traffic accident, caused by the defendant's negligence. The plaintiff was informed of the accident buy a friend who had witnessed the crash. The plaintiff arrived at the hospital about an hour after the crash and found family receiving medical attention. ISSUE: Was there sufficient proximity in time and space? HELD: There was sufficient proximity in time and space because the plaintiff saw her family in the immediate aftermath of the accident. It was within an hour of the crash and the victims were still in the same condition (covered in mud, oil and blood). Lord Ackner in ALCOCK V CHIEF CONSTABLE OF SOUTH YORKSHIRE POLICE [1992]:.. it is clear from McLoughlin's case that there may be liability where subsequent identification can be regarded as part of the 'immediate aftermath' of the accident... Even if this identification could be described as part of the 'aftermath', it could not in my judgment be described as part of the immediate aftermath... there was not sufficient proximity in time and space to the accident... Therefore, a secondary victim does not have to be present at the incident but must experience the immediate aftermath. The question of immediacy is determined on a case by case basis. GALLI-ATKINSON V SEGHAL [2003] EWCA CIV 697 FACTS: The claimant identified her daughter's body in a mortuary, approximately two hours after she was killed in car accident. VLC Publishers Page 11

12 ISSUE: Was there sufficient proximity in time and space? HELD: There was sufficient proximity in time and space, the claimant suffered psychiatric damage as a result of experiencing the immediate aftermath of the accident The proximity of time and space is also linked to the claimant's proximity of perception. MCLOUGHLIN V O'BRIAN [1982] 2 ALL ER 298 Lord Wilberforce:.. The shock must come through sight or hearing of the event or of its immediate aftermath... The question of whether watching live television coverage can amount to sufficient proximity of perception has been considered. 4. The plaintiff must see or hear the incident, or the immediate aftermath, with his own senses (proximity of perception). ALCOCK V CHIEF CONSTABLE OF SOUTH YORKSHIRE POLICE [1992] 1 AC 310 FACTS: Some of the plaintiffs watched a live broadcast of the incident on television. ISSUE: Was proximity of perception satisfied by watching the incident on television? HELD: The plaintiffs did not have proximity of perception. The television broadcast did not include suffering of identifiable individuals as the broadcasting ethics code prevented such images being shown. The plaintiffs watching footage from the stadium was not equivalent to seeing and hearing the event or its immediate aftermath. Lord Ackner:.. the simultaneous television broadcasts of what occurred cannot be equated with the 'sight or hearing of the event or its immediate aftermath'. Accordingly shocks sustained by reason of these broadcasts cannot found a claim... simultaneous broadcasts of a disaster cannot in all cases be ruled out as providing the equivalent of the actual sight or hearing of the event or its immediate aftermath The requirements narrow a defendant's liability towards secondary victims. Duties of care: economics loss Introduction A claimant's pure economic loss resulting from a defendant's carelessness can only give rise to a claim in Negligence if a duty of care is proved. For a duty of care to be owed by the defendant to a claimant there must be sufficient proximity in their relationship. Cases where the damage caused is pure economic loss are known as limited duty situations. This means that a claimant may only recover for pure economic loss exceptionally where it is possible to show a sufficiently close relationship between the claimant and defendant. Pure economic loss may arise in cases where there is no physical damage but loss has been caused by a negligent statement, rather than a negligent action. A claimant's pure economic loss resulting from a defendant's carelessness can only give rise to a claim in Negligence if a duty of care is established. Until 1964, the common law position was that there was no remedy for a negligently false statement in Negligence. VLC Publishers Page 12

13 Definition The general rule is that a defendant does not owe any duty of care to a claimant not to cause pure economic loss. Therefore, in general, if pure economic loss is the only damage suffered it is not recoverable. If a claimant suffers personal injury or damage to his property this may lead to economic losses, such as loss of income or cost of hiring a substitute, such losses are categorised as consequential economic loss. If a claimant suffers no personal injury or damage to property then his losses are purely economic. Therefore, pure economic loss is loss which is not consequential from personal injury or damage to property. In relation to economic loss: One of the most important distinctions always to be observed lies in the law's essentially different approach to the different kinds of damage which one party may have suffered in consequence of the acts or omissions of another. It is one thing to owe a duty of care to avoid causing injury to the person or property of others. It is quite another to avoid causing others to suffer purely economic loss To hold the maker of the statement to be under a duty of care in respect of the accuracy of the statement to all and sundry for any purpose for which they may choose to rely on it is not only to subject him, in the classic words of Cardozo C.J. to "liability in an indeterminate amount for an indeterminate time to an indeterminate class" Restricting liability The theory underlying limiting claims for pure economic loss is that these losses are potentially limitless. Without the special rule for economic loss, the floodgates would be open for an indeterminate number of claimants making claims for limitless amounts. CANDLER V CRANE CHRISTMAS & CO [1951] 2 KB 533 FACTS: The plaintiff lost money on his investment after relying on the defendant's carelessly compiled audit reports. ISSUE: Could the pure economic loss be recovered? HELD: The plaintiff could not bring an action because there was no contractual relationship between the parties. Hedley Byrne rule The common law position was significantly changed by this House of Lords decision. It created an exception to the general rule that pure economic loss could not be recovered in tort if caused by negligent statements. HEDLEY BYRNE & CO LTD V HELLER & PARTNERS LTD [1964] AC 465 FACTS: The plaintiffs, an advertising firm, extended credit for a third party (Easipower) on the basis of creditworthiness reference provided by the defendants, Easipower's bank. The reference was an innocent but negligent misrepresentation. Easipower went out of business and the plaintiff sought damages for pure economic loss from the defendants. ISSUE: Does the duty of care apply to statements that cause pure economic loss? VLC Publishers Page 13

14 HELD: The lower courts found that the pure economic loss could not be recovered as the defendant did not owe the plaintiff a duty of care. The House of Lords found that a duty of care was owed. However, the defendants had used an effective disclaimer of liability, so the losses were not recoverable. The Hedley Byrne rule states that a duty of care is owed if there is a special relationship between the claimant and defendant. A special relationship arises if there is an assumption of responsibility by the defendant (if the defendant knows the claimant is relying on their special skill) and the claimant reasonably relies on the defendant's statement. Application The Hedley Byrne decision has been applied in a number of cases. CORNISH V MIDLAND BANK PLC [1985] 3 ALL ER 513 FACTS: The plaintiff agreed to guarantee her husband's loan application, by signing a second mortgage on her house. The bank clerk, employed by the defendant, advised the plaintiff of the implications of signing the mortgage. However, the clerk inadequately explained the document and failed to highlight that signing meant the plaintiff was liable for informed all her husband's past, present and future borrowings. Shortly after the mortgage was signed the marriage broke up. Despite being aware of the marriage breakdown the defendant made further loans to the husband. When the mortgage was redeemed the plaintiff was left with very little money from the sale of the house. ISSUE: Was a duty of care owed? HELD: A duty of care was owed as the bank clerk had taken it upon himself to advise the plaintiff, it was reasonably foreseeable that she would rely on the advice and he should have made sure it was complete and correct. CHAUDHRY V PRABHAKAR [1989] 1 WLR 29 FACTS: The plaintiff asked the defendant, a friend who claimed to be knowledgeable about cars, to help her purchase a vehicle. The plaintiff bought a car after the defendant recommended a car which he stated had not been in any accidents. The car had visible damage and the defendant had not enquired about the cause. The car was in fact unroadworthy, due to a previous accident. ISSUE: Was a duty of care owed? HELD: Court of Appeal found that a duty was owed by the defendant as he knew the plaintiff had relied on his advice, on the basis of his claim that he was knowledgeable about cars. The decision in Chaudhry v Prabhakar [1989], has been criticised as it seems to contradict dicta in Hedley Byrne that suggested a duty could only arise where the advice was sought and given in a business context. WELTON V NORTH CORNWALL DISTRICT COUNCIL [1997] 1 WLR 570 FACTS: The plaintiff spent money on extensive refurbishment of their guest house, after being negligently informed by an environmental health officer, employed by the defendant, that the premises would be shut down if the work was not carried out. ISSUE: Was a duty of care owed? HELD: A duty of care was owed. It was reasonable for the plaintiffs to rely on the advice of the environmental health officer, who was in a position of authority. VLC Publishers Page 14

15 Therefore, the case law followed the Hedley Byrne rule and found that a special relationship, would give rise to a duty of care in relation to negligent statements. Refining the rule JAMES MCNAUGHTON V HICKS ANDERSON [1991] 2 QB 295 FACTS: The plaintiff was negotiating with a third party about a takeover bid. The third party instructed the defendant, their accountants, to prepare accounts as quickly as possible. The plaintiff relied on the accounts which were carelessly drawn up to make a bid. The plaintiff subsequently made a loss. ISSUE: Was a duty of care owed? HELD: The Court of Appeal found that the defendant did not owe a duty of care to the plaintiff. There was insufficient proximity for a special relationship as the defendant did not know the accounts would be sent to the bidder for the particular transaction. MORGAN CRUCIBLE V HILL SAMUEL [1991] CH 295 FACTS: The plaintiffs were bidding to take over a third party company, to whom the defendants were advisers. During the bidding process a number of negligent representations were made, which led to the plaintiff making a loss. ISSUE: Was a duty of care owed? HELD: The defendants did owe a duty not to negligently mislead the plaintiff. There was sufficient proximity because the plaintiff's identity and the nature of the transaction were known. Extending the rule The exception seems to have been extended in some specific circumstances, where the Hedley Byrne and Caparo requirements have not been satisfied. HENDERSON V MERRETT SYNDICATES LTD [1995] 2 AC 145 FACTS: The plaintiffs made substantial losses through investing in Syndicates, negligently managed by the defendants. ISSUE: Was a duty of care owed? HELD: The House of Lords found a duty of care existed as the defendant had negligently performed a professional service. Furthermore, damages could be recovered for a negligent omission in the performance of a professional service which led to pure economic loss. SPRING V GUARDIAN ASSURANCE PLC [1995] 2 AC 296 FACTS: The plaintiff was not employed due to a negligent reference provided by the defendant, his previous employer, to a third party (prospective employer). ISSUE: Was a duty of care owed? HELD: The House of Lords found that a duty of care was owed. The case is not a traditional Hedley Byrne case, as the defendant did not provide the plaintiff with advice which he relied upon. However, Lord Goff reasoned that the scope of the Hedley Byrne rule could be extended, as the decision was originally based on the fact that the defendant had assumed responsibility for the plaintiff's economic welfare. Therefore, he put forward that the plaintiff in this case had entrusted his affairs to the defendant tasked to write the reference. WHITE V JONES [1995] 2 AC 207 VLC Publishers Page 15

16 FACTS: The defendant, a solicitor, was asked to prepare a will, but negligently failed to do so before the testator died. The plaintiffs would have been beneficiaries had the will been completed. ISSUE: Was a duty of care owed? HELD: The House of Lords found that the defendant's assumed responsibility to the testator could be extended to the plaintiffs. Therefore, the courts have extended the Hedley Byrne rule, based on the assumption of responsibility, beyond the original scope of negligent statements and have included negligent provision of services. The reasoning for these extensions have been varies however, there seems to have developed two tests for establishing a special relationship either: the Hedley Byrne and Caparo principles in negligent statement cases or the broader assumption of responsibility test in relation to the provision of services. Disclaimers The most common defence to a claim to recover damages for pure economic loss caused by a negligent statement is that a valid disclaimer exists. This defence was relied upon in Hedley Byrne. However, there are now statutory limitations on defendant's attempting to exclude liability for negligence. SMITH V ERIC BUSH AND HARRIS V WYRE FOREST DC [1990] 1 AC 831 FACTS: The conjoined cases involved plaintiffs who were house buyers who suffered pure economic loss. The houses were negligently valued by the defendants, who were surveyors employed by third parties, the mortgage lenders. The defendants argued that disclaimers exempted them from liability. ISSUE: Were the disclaimers valid? HELD: The House of Lords found that the defendants owed a duty of care to the plaintiffs as they were proximate third parties. The UCTA 1977 applied as the valuations were provided in the course of business. The courts found that the disclaimers were unreasonable. Lord Griffiths highlighted the following factors as important in determining whether a disclaimer is reasonable: Did the parties have equal bargaining power? Would it have been reasonably practicable to obtain the advice from an alternative source taking into account considerations of costs and time? How difficult is the task being undertaken for which liability is being excluded? What are the practical consequences of the decision in relation to the parties' ability to bear the loss involved, especially with regard to insurance? Damage to a third party's property Damage to a third party's property may result in pure economic loss. For example, if A borrows an item from B and this item is damaged due to the defendant's negligence. B may make a claim for the damaged property. However, A may not make a claim for any pure economic losses incurred, such as having to hire a substitute item. SPARTAN STEEL & ALLOYS LTD V MARTIN & CO LTD [1973] 1 QB 27 VLC Publishers Page 16

17 FACTS: The plaintiffs owned a factory where they manufacture stainless steel. The factory's electricity was supplied by a direct cable owned by a third party (Midlands Electricity Board). The defendants were contractors, who carelessness carried out road works and damaged the cable supplying electricity to the factory. Therefore, the Electricity Board had to shut down the electricity supply, to mend the cable; this took fourteen and a half hours overnight. The factory was usually working continuously, twenty four hours a day. When the power was shut off, there was metal being melt processed in a furnace. The melt process required a constant temperature and therefore needed electricity supply. If the plaintiff had left the mixture in the furnace without any power supply it could damage the machinery. Therefore, the plaintiff used an alternative method to melt the metal, using oxygen, however, this produced material worth a lot less money (the physical damage was assessed at 368 and the loss of profit 400). The plaintiffs also lost the opportunity to load the furnace a further four times during the time that the power supply was cut (losing l 767 in profit). ISSUE: Which losses could the plaintiff recover? HELD: The plaintiff could recover for the damage to the melt in the process underway when the electricity was cut and the loss of profit on that melt ( 368 and 400). This was the cost of physical damage to the plaintiff's property (the melt) and consequential economic loss (the lost profit). However, the plaintiff could not recover for the loss of profit during the whole period that the electricity was off. This was pure economic loss caused by damage to the property of a third party (the damaged cable belonged to the Electricity Board). Lord Denning:.. I think the question of recovering economic loss is one of policy. Whenever the courts draw a line to mark out the bounds of 'duty' they do it as a matter of policy so as to limit the responsibility of the defendant... Therefore, if a defendant negligently damages property belonging to a third party, which leads to A suffering pure economic loss, there is an insufficiently close relationship between the defendant and A, so no duty of care is owed and losses are not recoverable. No physical damage Pure economic loss may arise where there has been no physical damage. WELLER & CO V FOOT & MOUTH DISEASE RESEARCH INSTITUTE [1966] 1 QB 569 FACTS: The foot and mouth disease virus was negligently released by the defendant. The plaintiff operated a cattle market, which had to close due to the foot and mouth outbreak. Therefore, the plaintiff lost revenue, through the market closure. ISSUE: Could the plaintiff recover for the loss? HELD: The plaintiff could not recover the loss, as it was not caused by physical damage, it was pure economic loss and no duty of care was owed by the defendant. Therefore, pure economic loss without physical damage is not recoverable. Defective goods or property The general rule is that a claim for defective goods can be made under contract law. VLC Publishers Page 17