200909 Enterprise Law QUESTION: At an awards night, Simon won a prize of $25,000. In his acceptance speech he thanked the donor and expressed the wish to use the money to allow him to devote himself to improving his hockey skills over the next two years, to an international level. During the function, Philippa, an accounting lecturer, approached Simon and told him she could help him. Simon was interested in what she had to say, although it was noticeable that Philippa had consumed alcohol. She had no hesitation in recommending Simon invest all his money in shares in a new company, High Flyers Ltd, whose disclosure documents Philippa had recently received. Simon voiced some concerns in that he knew nothing about shares, but he did know that leaving the money in a bank account would probably not generate enough money on which to live for the next two years (food, accommodation, etc). Philippa said that she was an expert, that he could trust her, and to give her a call the next day for more details. The next day Simon followed Philippa's advice and spent the money on purchasing the shares in High Flyers Ltd, without phoning her back as he had misplaced her business card. Confident he was financially secure, Simon and his friend, Peter, went to Springfield National Park to undertake a bush walk. Recently a creek had been rerouted and there was a notice posted by the Park Rangers stating they were undertaking an environmental study of the effect on established trees where their roots were now submerged under the rerouted creek. It was a windy day when Simon and Peter went to the Park. They were swimming in a popular swimming hole when a fourwheel drive vehicle, driven by Jacob, bumped a tree that had its roots in the water. The tree fell on Peter who suffered very serious injuries. Simon felt he was an extremely lucky guy so decided to have a small party. He went to the liquor shop to buy some alcohol. The bottles he wanted were on the top shelf. He had to stretch to reach the first and second bottles, which he placed in his trolley, but probably overstretched to reach the third bottle. Just as he was taking the third bottle off the shelf his footing slipped and he fell over. As he hit the ground the third bottle smashed and cut his hand. Unfortunately the cut has damaged nerves in his hand such that he will never have the skills which could have made him a great hockey player. On his way home from the hospital, after treatment for his hand, Simon heard on the radio that High Flyers Ltd had been placed into liquidation. He has lost his money. Advise Simon and Peter fully of their chances of pursuing negligence claims. Special Topic - How to answer a Law problem: A guided exercise on Negligence Now that we have done both modules on Negligence, we'll look at how to put the topics from each module together, and in what order, to produce an overall answer to a negligence problem. Treat the following as an exercise where I've started by giving some examples, but then handed it over for you to do the same with other aspects of the work involved. If you work through each of the parts I've left for you to do yourself, then you should have a good outline or structure that you can then use in the exam. First, list out the elements of the action - you can use these as headings for your paragraphs / an overall 'structure' for your paper if you wish. Identifying these 'elements' or headings ahead of an exam can be a really useful way to prepare - you might even like to set out a structure for yourself along the following lines. Every topic in Law will have these sorts of main headings / elements that you can map an answer onto (for instance we will see in Contracts that there are 4 elements to contract formation: Offer, Acceptance, Intention and Consideration). Here we'll look at these elements with reference to a Negligence problem though. To establish liability in a case of Negligence we've already seen that the plaintiff would need to prove all three of the following: Duty of Care Breach of Duty Damage Now write a bit more for each element, or heading, about how we work out whether or not that element is satisfied - these are what lawyers call the principles or the tests for each element. We went through these in the first module on Negligence ('Accidents and Mistakes'). To start you off with an example, you might explain Duty of Care as follows: Duty of Care: In order to establish that the defendant owes a duty of care to the plaintiff it must be shown that it is reasonably forseeable that the defendant's actions (or inaction) may cause harm to a person in the plaintiff's position. This is also known as the 'neighbour principle' from Donoghue v Stevenson. The above gives you a reasonable example of a couple of sentences explaining the duty of care element in a Negligence action. Note that this part stays the same no matter what the facts are - the trick is to work out whether or not the actual facts you have been given in the problem satisfy this test or not. Notice too that I have mentioned a relevant case here which, while not essential for Enterprise Law, will improve your marks if you can support your discussions of the principle / test with relevant cases. You may wish to add other cases - particularly if the facts in your problem seem similar to the facts in a case you have studied. That's usually a sign that the case is a good addition, remembering our doctrine of precedent here too - that cases with similar facts should be decided the same way. Now, add in similar statements of the principles / tests for the other 2 elements of Negligence, below. Add relevant case authorities if you want to improve your marks. Cases can be added within the text in brackets, eg as '(Donoghue v Stevenson)' and there is no need for legal citations in exams. Breach of Duty ............. Damage ........... Once you've worked out how you are going to describe the tests / principles for each element, we move on to apply those tests to the facts of the problem. To illustrate, consider the following simple problem (the exam problem will not be this simple, but we'll use this one as an example!): Adam buys a hamburger from Hungry Johns for his best friend Eve. As Eve eats the hamburger she notices a rat's tail poking out from under the lettuce. She realises that the unusual taste that she had just mentioned to Adam was not a figment of her imagination. Eve later suffers terrible gastro, has nervous shock and is off work for a month. Hungry John's is unable to explain how the contamination occurred because it complies with every health regulation and is acknowledged to have the most hygienic premises in the country. Advise Eve of any claim she may have under the tort of negligence. Now consider whether or not these facts match the statements of principle for each of the elements or not. You might write something like (notice how the 'paragraph' on duty of care is filling out or expanding with each step of this process): Duty of Care: In order to establish that the defendant owes a duty of care to the plaintiff it must be shown that it is reasonably forseeable that the defendant's actions (or failures to act) may cause harm to a person in the plaintiff's position. This is also known as the 'neighbour principle' from Donoghue v Stevenson. In this situation, Hungry John's does owe a duty of care towards Eve, because it is reasonably foreseeable that if they do not take care in their food preparation and contamination occurs, then a person eating their food could become unwell. This fact situation is very similar to the facts in Donoghue v Stevenson itself, when a bottle of ginger beer was partly consumed before a decomposed snail was discovered in the bottle. In that case the fact that the bottle had been bought by a person other than the lady who ultimately consumed the ginger beer did not prevent the lady from winning her case against the maker of the ginger beer. The 'neighbour principle' that was established by this case meant that anyone who could reasonably be affected by the maker's actions could potentially have a case, regardless of whether or not s/he bought the ginger beer him/herself. So Hungry John's owes Eve a duty of care, and the first element of Negligence is satisfied. The above is now a fairly good explanation of this element, which is enhanced by the comparisons with the facts of Donoghue v Stevenson. While it isn't strictly necessary in order to pass that you have that comparison with other cases, it will improve your marks if you can do it accurately. Now do the same for the other two elements, Breach of Duty and Damage - applying your tests or principles to the facts given above. [Hint: Breach of Duty is satisfied where it is reasonably foreseeable that harm will occur unless precautions are taken - here, to ensure the food is not contaminated, a reasonable 'person' in Hungry Johns position would take such precautions, and the risk itself is a serious one (food poisoning) ... Damage is also satisfied as the contamination clearly caused Eve's illnesses and those illnesses are certainly within the scope of liability). OVERALL, it appears that we have satisfied each of the 3 elements required to establish liability for Negligence. That means Eve would have a case. But that isn't the end of the answer. Next we need to consider whether there are any defences that Hungry John's might want to rely on to excuse themselves. The defences are described in detail in Module 5. Importantly note that although you must cover all 3 of the elements in order to make out the case in the first place, because all 3 must be present, once we start looking at defences you have more scope to choose which ones you think should apply to the case in question and to focus your answer on those ones, with perhaps just a brief mention of those that obviously don't apply. This is a fairly important part of problem answering technique - knowing which parts you must cover, and which parts involve a choice of sorts, then making that choice well so that your answer targets the defences (in this topic) that are the most likely to apply. In outline, the defences to negligence are: Defences 'on the elements': do you think Hungry John's could argue that one of the elements (Duty of care; Breach of Duty; or Damage) has not been satisfied? On the facts of this particular problem that seems unlikely, but for exam purposes, show that you are aware of this type of defence, but that it doesn't appear to apply to this fact situation and then move on (mention this, yes, but don't spend a lot of time on defences that the facts quite clearly don't apply to). Note too that of course a more detailed problem question could raise questions about the elements - consider the facts of the tutorial problem for instance, where there was a question as to who really did cause the plumbing to fail in James' shop - was the plumber or the Water Board actually the cause, or partially the cause, instead of Aspect ... General defences include defences such as: o Assumption of risk: is there an obvious risk or an inherent risk involved in eating at a Hungry Johns such that Eve should be treated as having taken the risk on herself? o Intoxication: Eve does not appear to be intoxicated on these facts, but note that even if she was, that would not remove the problem which was about a contaminant in her food - intoxication as a defence applies in situations where the plaintiff has caused the harm or injury to themselves because they were intoxicated - so that one would actually has no relevance here, even if Eve were drunk when she consumed the burger. o Contributory Negligence: has Eve done anything to contribute to the situation herself, such that she should be at least partly responsible? o Non-delegable duties, and expiry of the limitation period (ie, the 3 years (usually) within which the action must be brought) do not appear to be relevant here - nor is it a recreational activity, dangerous or otherwise, nor does it happen in the course of committing a crime ... As a general suggestion, I would prepare a short statement of the test / principles (and case authorities if you wish to extend your answer) for each of the defences mentioned above - along the same lines as you have done for the 3 elements of the action earlier on, but be prepared to deal with some only very briefly - like the last dot point above where I've mentioned several that obviously don't apply here. So overall, we need to consider whether Eve would succeed against Hungry Johns on the (very brief) facts given. Unless something more were added to the facts, the situation is that all 3 elements of the action appear to be satisfied and then that Hungry Johns does not seem to have any defence. As an aside, consider how the facts would change if it could be proved (which one would guess is probably what happened) that a disgruntled employee placed the rat's tail in the burger ... In that situation, Hungry Johns could argue that there was no causation - ie, that something other than themselves was the true cause of the harm, but that would in turn lead to a consideration of vicarious liability which, put simply, means that the employer will be responsible for any acts of the employee that are done within the scope of their employment - which then raises further questions about whether contaminating food is within the scope of employment or not ... we will look at vicarious liability in a little more detail in our Employment module, but for the moment it is likely that Hungry John's would still be liable under the vicarious liability principle, at least without further facts. The fact that this was done deliberately would not destroy Eve's case. However, conmsider again how the answer might change if it was a third party, not an employee who did this - perhaps wanting to upset Eve. In that situation Hungry Johns would have a much stronger argument that there is no causation (at least that it is not caused by them). I'll conclude with a 'skeleton' outline of the topic that might be helpful as a sort of checklist for your problem - and with the advice that you might consider preparing a statement of the tests / principles for each of these listed items, but be prepared to decide which ones to give the most emphasis to in the actual exam, noting that application of the tests to the facts of the case is probably the key thing markers are looking for in law problems, in addition to coverage of any compulsory elements and good explanations of the tests / princples. Negligence outline The plaintiff first needs to prove all 3 of the following: 1. Duty of care (and do also consider the different requirements for duty of care in a case of negligent advice / negligent misstatement in Topic 3 of Module 5) 2. Breach of Duty 3. Damage caused by the Breach If we have all 3 of the above then there is a case for the Defendant to answer. Potential defences include: 1. Defences on the elements 2. Assumption of risk 3. Contributory negligence 4. (Dangerous) recreational activity 5. Intoxication 6. Commission of a Crime And finally we might consider whether there is any vicarious liability involved, in particular if there are employees / employers in the facts. I hope this outline, and the rest of this exercise, will be helpful to you all