LGST101 Business Law
Week 11 – Negligence (Part 1)
Adjunct Faculty Terence Yeo
1.
Introduction to Tort Law
2
What is a tort?
▷ A tort is a civil wrong that causes the claimant to suffer loss or harm, that
results in legal liability for the person who commits the tortious act
▷ Put differently, the law of torts concerns the regulation of conduct amongst
members within a society and seeks to protect and uphold legal rights of
persons which have been wrongfully infringed
▷ Like contract law, remedies in tort law are generally compensatory in
nature
○ Albeit with a slightly different characterization of what
“compensatory” means
○ Remedies in tort law aim to put a party in the position he would have
been in had the wrong not occurred
3
Tort and contract law
▷ Contract law serves to uphold the legal rights and obligations which
have been voluntarily undertaken by parties
○ There is an agreement between the parties that gives rise to
the parties rights and obligations against one another
▷ Tort law does not require there to be a contract between the
persons in order to enforce the victim’s legal rights
○ Where a contract exists between parties, and the wrong has
both tortious and contractual characteristics, a party may elect
to claim in tort or in contract
○ In practice, he would bring both claims in the alternative, but
he can only recover his loss once
4
Tort and criminal law
▷ Criminal law is concerned with regulating societal conduct and protecting
its members through deterring, punishing, incapaciting and rehabilitating
▷ Tort law is largely compensatory in nature – it seeks to redress the loss or
damage which has been caused by the infringing actions of the counterparty
▷ Tort law is civil in nature - it involves private parties, whereas criminal law
deals with wrongs which are so grievous that the state feels the need to get
involved
○ A single wrong (e.g. fraud) can have both tortious and criminal
repercussions
5
Type of torts
▷ A useful way to classify tort law is with reference to the standard of
culpability required
▷ Some torts require proof of fault (i.e. acting with a particular state of mind),
while others impose strict liability (i.e. liability regardless of whether the
wrongdoer had a blameworthy state of mind)
▷ The standard of blameworthiness/fault, should not be conflated with the
concept of motive and/or malice
○ The latter deals with the person’s reasons for committing the act
○ Motive and malice are generally irrelevant in tort law
○ A person may have virtuously committed a wrong
6
Type of torts
▷ Strict liability torts – torts which impose liability irrespective of whether the
wrongdoer was at fault
e.g. product liability, some statutory torts, animal attacks
○
▷ Intentional torts – torts which require proof that the wrongdoer acted with a
particular intention
Objectively ascertained
e.g. conspiracy to injure, trespass, unlawful interference with trade,
inducement of breach of contract
○
○
▷ Negligence – tort which requires proof that the wrongdoer had failed to take as
much care as a hypothetical reasonable person in the wrongdoer’s position
would have taken in the circumstances
e.g. the tort of negligence
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○
2.
Negligence
8
Introduction
▷ The tort of negligence deals with legal liability and consequences
arising from negligent conduct
▷ In plain language, negligence connotes conduct, acts or omissions
performed carelessly or without proper care
○ This is the nub of the tort of negligence
9
Introduction
▷ However, not all negligent conduct will attract legal liability under
the tort of negligence
○ There are (and should be) legal rules that define the
appropriate parameters within which a claim for negligence
may be brought. These serve to delineate the circumstances in
which a careless act or omission that causes harm may result in
legal liability under the tort of negligence
10
Legal Requirements
▷ There are three requirements necessary for one to establish an action in the
tort of negligence. These are:
1. the existence of a duty of care owed by the defendant to the plaintiff
2. the defendant must have breached his or her duty of care to the plaintiff
3. the defendant’s breach must have caused damage suffered by the plaintiff.
Additionally, the resulting damage must not have been too remote
11
Legal Requirements
▷ The rules of remoteness and mitigation also apply to the ascertainment of
the type and quantum of loss
▷ If the legal requirements can be met, the plaintiff will succeed in his action
in negligence unless the defendant can raise one of the following valid
defences:
○ Illegality, voluntary assumption of risk, exemption of liability,
contributory negligence
12
3.
Duty of care
13
Duty of Care
▷ The starting point for an action in the tort of negligence is the duty of care
issue
▷ Under Singapore law, there is a two-stage test (preceded by a preliminary
requirement) to determine whether a duty of care exists between a plaintiff
and a defendant
▷ The two-stage test is premised on proximity and policy considerations, and
the application of the test is to be preceded by a preliminary requirement of
factual foreseeability
▷ What does this all mean??
○
○
English and Singapore courts have been grappling with how to best set
out a test for duty of care for more than a century
We need to start at the beginning and follow the case law
14
Duty of Care – Historical Tests
Donoghue v Stevenson [1932] 1 AC 562
▷ Facts: Mrs Donoghue went to a cafe with a friend. The friend brought her a
bottle of ginger beer and an ice cream. The ginger beer came in an opaque
bottle so that the contents could not be seen. Mrs Donoghue poured half
the contents of the bottle over her ice cream and also drank some from the
bottle. After eating part of the ice cream, she then poured the remaining
contents of the bottle over the ice cream and a decomposed snail emerged
from the bottle. Mrs Donoghue suffered personal injury as a result. She
commenced a claim against the manufacturer of the ginger beer.
15
Duty of Care – Historical Tests
Lord Atkin:
"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.”
Donoghue’s claim succeeded. Manufacturers have a legal duty of care to the
ultimate consumers of their products if it is not possible for defects to be
identified before the goods are received
16
Duty of Care – Historical Tests
Anns v Merton LBC [1978] 1 AC 728
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. 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.
Issue: Whether the defendant (council) ought to owe a duty of care to the plaintiff
(lessee).
17
Duty of Care – Historical Tests
Lord Wilberforce:
"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. First
one has to ask whether, as between the alleged wrongdoer and the person who has
suffered damage there is a sufficient relationship of proximity or neighbourhood
such that, in the reasonable contemplation of the former, carelessness on his part
may be likely to cause damage to the latter—in which case a prima facie duty of care
arises. Secondly, if the first question is answered affirmatively, it is necessary to
consider whether there are any considerations which ought to negative, or to reduce
or limit the scope of the duty or the class of person to whom it is owed or the
damages to which a breach of it may give rise."
18
Duty of Care – Historical Tests
Caparo 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
19
Duty of Care – Historical Tests
There should not be a broad test to establish negligent liability (cf Anns). Instead, the
Court should take an incremental approach, i.e. relying on established authorities to
guide how novel questions should be decided or duties or care could arise.
Lord Bridge:
“What emerges is that, in addition to the foreseeability of damage, necessary
ingredients in any situation giving rise to a duty of care are that there should exist
between the party owing the duty and the party to whom it is owed a relationship
characterised by the law as one of "proximity" or "neighbourhood" and that the
situation should be one in which the court considers it fair, just and reasonable that the
law should impose a duty of a given scope upon the one party for the benefit of the
other.”
20
Duty of Care – Historical Tests
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 Caparo nor the purpose
for which the accounts were being used by them.
21
Duty of care – position in Singapore
Spandeck Engineering v Defence Science & Technology Agency [1999] 2 SLR(R) 65
Facts: There was a building contract between a contractor and the employer (the
party who commissioned the building project). A superintending officer was
engaged by the employer to administer and supervise the building project. The
contractor made a claim against the superintending officer for negligently
undervaluing and under-certifying works carried out by the contractor, resulting in
the contractor being underpaid. However, there was no contractual relationship
between the contractor and the superintending officer. The issue arose as to
whether the superintending officer owed the contractor a duty of care under the
tort of negligence in the absence of a contractual relationship.
22
Duty of care – position in Singapore
(Spandeck)
▷ Preliminary requirement: The court will enquire whether the defendant, on the
facts of the case, should be able to reasonably foresee that his negligence would
likely result in harm (any kind of harm) to the class of people which included the
plaintiff
○ The focus here is typically the foreseeability of the occurrence of harm and
the class of persons who may be affected by the negligent act/statement or
omission
○ The threshold requirement of “factual foreseeability” would likely be
fulfilled in almost all cases
23
Duty of care – position in Singapore
(Spandeck)
1.
Proximity stage: The concept of “proximity” focuses on the closeness of the
relationship between the plaintiff and defendant
▷ Relevant factors to establish proximity include physical, circumstantial as well
as causal proximity and encompasses the twin criteria of voluntary assumption
of responsibility and reliance. Other relevant factors may include the
defendant’s knowledge of risk of harm or of the plaintiff’s reliance or
vulnerability, and the defendant’s control over the situation giving rise to the
risk of harm
▷ If the proximity requirement is satisfied, a prima facie duty of care arises
24
Duty of care – position in Singapore
(Spandeck)
2.
Policy stage: The court will consider whether there are any considerations
that ought to negative or limit the duty that has arisen under the first stage
These policy considerations involve the “weighing and balancing of competing moral
claims and broad social welfare goals”
25
Duty of care – position in Singapore
(Spandeck)
▷ Additionally, the Singapore Court of Appeal affirmed that the test should be
applied incrementally, (i.e. when applying the test in each stage, judges ought to
refer to decided cases in analogous situations)
▷ In a novel situation, judge is not precluded from extending liability where it is
“just and fair to do so”, taking into account the relevant policy considerations
against indeterminate liability
26
Duty of care – position in Singapore
(Spandeck)
▷
On the facts of Spandeck, the superintending officer did not owe any duty to the contractor.
Although it was foreseeable that the negligent certification of the works would deprive the
contractor of the moneys he was entitled to, the proximity requirement was not satisfied.
This was because the building contract between the employer and contractor stated that in
the event of a dispute related to the contract or the works, either the employer or
contractor may refer to an arbitrator for resolution. The presence of the arbitration clause
in the building contract and the contractual arrangement of the parties (the employer,
contractor and superintending officer) led the court to hold that the superintending officer
was not employed to exercise care towards the contractor, and therefore had not assumed
such responsibility towards the contractor (but towards the employer. . The contractor,
being content for its rights of compensation to be safeguarded by contractual arrangement
with the employer, could not be said to have relied on the exercise of care by the
superintending officer. Under the policy consideration stage, the court noted that since the
parties had chosen to regulate their relationship(s) by contractual arrangement, this should
not be undermined by the imposition of a tortious duty of care on the superintending
officer towards the contractor.
27
Duty of care – position in Singapore
(Spandeck)
28
Duty of care – various scenarios
▷
The Spandeck test is to be applied incrementally. It is thus important to understand the
various scenarios and cases relevant to the issue of duty of care
▷
There are two key concepts to take note of: (1) type of conduct; and (2) type of damage
▷
Although the Spandeck test applies regardless of the type of damage, not all types of
damage arising from negligent conduct are equally recoverable
▷
Physical damage and property damage arising from positive acts are generally recoverable
as compared to pure economic losses. Further, claims in negligence for psychiatric harm are
normally more restrictive than a similar claim for personal injuries arising from the
defendant’s negligent acts
29
Duty of care – various scenarios
▷
We will look at four scenarios:
1.
Negligent act or omission causing personal injury or physical damage
2.
Negligent act or omissions causing economic loss
3.
Negligent act or omissions causing psychiatric harm
4.
Negligent misstatements
30
Negligent act or omission causing
personal injury or physical damage
▷
Straightforward application of the Spandeck test
▷
In cases where personal injury is caused by the positive act of the defendant, the
requirement of “reasonable foreseeability” would normally be satisfied
▷
Under Singapore law, a party cannot be liable for a mere omission
▷
However, an omission may give rise to liability where there is a special relationship
between the plaintiff and defendant based on a voluntary assumption of responsibility by
the defendant towards the plaintiff, or control by the defendant over the third party
conduct; and where the defendant knew or ought to know that the third party has created a
source of danger on the defendant’s premises and the defendant failed to take reasonable
steps to prevent the danger from damaging the plaintiff’s property
31
Negligent act or omission causing
economic loss
▷
“Pure economic loss” occurs where a party's injury is only economic or financial in nature
▷
Where the claims being made relate to situations of “pure economic loss”, the
circumstances in which a duty of care will be found to exist are more confined as a matter of
law
32
Negligent act or omission causing
economic loss
Animal Concerns Research & Education Society v Tan Boon Kwee [2011] 2
SLR 146
▷ Facts: A non-profit society engaged a company as contractor to
construct a shelter for animals. The contractor appointed Tan, director
of the company, as clerk of works for the building project. Under the
contract, the contractor was obliged to level the site by using surplus
earth (a process known as “backfilling”) but instead used materials
which resulted in the pollution of the environment. As a result, the
society had to excavate the contaminated portions of the site and
thereby incurred economic losses.
33
Negligent act or omission causing
economic loss
Animal Concerns Research & Education Society v Tan Boon Kwee [2011] 2
SLR 146
▷ Held: In the claim in negligence against Tan for the economic losses,
the court held that the clerk of works owed a legal duty to the society
to supervise the backfilling. Applying the Spandeck test, it was
reasonably foreseeable that the society would suffer some loss or
damage if Tan did not take care in supervising the backfilling.
34
Negligent act or omission causing
economic loss
▷ On the proximity requirement, there was clearly physical proximity as
the society was lessee of the site and the clerk of works was obliged to
be physically present at the site to carry out his duties. Tan, in
procuring the contractor to appoint himself as clerk of works, was
adjudged to have voluntarily assumed the responsibilities of a clerk of
works and held himself out as having the qualifications and skills
necessary to fulfil the role of a clerk of works. In addition, Tan, in
declaring in a form submitted to the Building and Construction
Authority that he was not linked to the contractor, knew or ought to
have known that the society would rely on him to act in the society’s
interest as the clerk of works.
35
Negligent act or omission causing
psychiatric harm
▷ “Psychiatric harm” refers to to recognised psychiatric illnesses, not
mere mental distress, anxiety or disappointment not associated with
any physical injury suffered by the plaintiff arising from a negligent act
or omission of the defendant
▷ The problem with psychiatric harm cases is generally to establish
proximity
▷ It is not difficult to establish loss for psychiatric harm where there has
also been physical injury – a straightforward application of the
Spandeck test would allow this
36
Negligent act or omission causing
psychiatric harm
▷ More difficult is where the victim has not suffered the physical injury,
but is merely a witness
▷ Courts have required the witness to either be (a) of close ties; and (b)
either contemporaneous or in the immediate aftermath;
37
Proximity in psychiatric harm
▷ Circumstantial proximity
○ The closeness of the relationship between the plaintiff and the
primary victim, such as parent–child and husband–wife
relationships, though this does not necessarily exclude the other
types of relationships
○ “The closer the tie (not merely in any relationship, but in care), the
greater the claim for consideration”: McLoughlin v O’Brian [1983]
1 AC 410
38
Proximity in psychiatric harm
▷ Physical proximity
○ Proximity of the plaintiff to the accident in time and space (i.e.
through sight and sound of the event or its immediate aftermath)
○ No requirement to have witnessed the accident and the victim’s
injury contemporaneously if they witness it in the immediate
aftermath
▷ Causal proximity
○ The means by which the shock is caused
39
Duty of care – Negligent act or
omissions causing psychiatric harm
McLoughlin v O’Brian [1983] 1 AC 410
▷ Facts: The husband of the claimant (C) and their children were involved
in a road traffic accident at around 4 p.m. with a lorry driven by the first
defendant and owned by the second defendant. C, who was home at
the time, was informed of the accident at around 6 p.m. by a neighbour,
who drove her to hospital to see her family. Upon arrival, she learned
that her youngest daughter had been killed and witnessed the nature
and extent of the injuries suffered by her husband and other children. C
alleged that the impact of what she heard and saw caused her severe
shock resulting in psychiatric illness and brought an action in
negligence against the defendants.
40
Duty of care – Negligent act or
omissions causing psychiatric harm
Held: The lorry driver defendant was liable and the claimant was entitled
to recover for the psychiatric injury received. There was no reason to limit
recovery to contemporaneous witnesses. Witnesses in the “immediate
aftermath” could also establish the necessary proximity.
41
Duty of care – Negligent
misstatements
▷ The following factors should be considered when determining whether
a duty of care has arisen between a plaintiff and a defendant in respect
of a negligent misstatements
○ the skill and expertise of the maker of the statement;
○ whether the maker of the statement knows or ought to know that
the other person will rely on the statement; and
○ whether the maker of the statement voluntarily undertakes or
assumes responsibility for making the statement.
○ Further, where the relationship between the maker of the
statement and the recipient is akin to contract, a duty of care is
likely to arise:
42
Duty of care – Negligent
misstatements
▷ Why are negligent misstatements treated differently from negligent
acts or omissions?
○ Because words are “more volatile” than deeds, whilst damage by
negligent acts to persons or property is more ”visible and obvious”
○ Statements made to a particular party may be conveyed or
transmitted by the recipient to a third party or parties, whose
identities may not be known to the maker of the statements, and
the impact of those statements on the recipients may not have
been contemplated by the maker
○ On the other hand, the effects of physical injury or property
damage arising from one’s negligent acts (such as negligent
driving) are normally more obvious and direct.
43
Duty of care – Negligent misstatements
causing economic loss
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 3 WLR 101
▷ Facts: Hedley Byrne were advertising agents placing contracts on
behalf of a client on credit terms. Hedley Byrne would be personally
liable should the client default. To protect themselves, Hedley Byrne
asked their bankers to obtain a credit reference from Heller & Partners
(‘H&P’), the client’s bankers. The reference (given both orally and then
in writing) was given gratis and was favourable, but also contained an
exclusion clause to the effect that the information was given ‘without
responsibility on the part of this Bank or its officials’. Hedley Byrne
relied upon this reference and subsequently suffered financial loss
when the client went into liquidation.
44
Duty of care – Negligent misstatements
causing economic loss
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 3 WLR 101
▷ Held: The court found that H&P’s disclaimer was sufficient to protect them from
liability and Hedley Byrne’s claim failed. However, the House of Lords ruled that
damage for pure economic loss could arise in situations where the following
four conditions were met:
(a) a fiduciary relationship of trust & confidence arises/exists between the
parties;
(b) the party preparing the advice/information has voluntarily assumed the
risk;
(c) there has been reliance on the advice/info by the other party,
and
(d) such reliance was reasonable in the circumstances.
45