MAN1094

University of Surrey

Business Law and Ethics

Session 02 – The Law of Tort:
Nature, liability, defences Negligence including professional negligence

12th February 2019

Business Law and Ethics MAN1094
 Business News, Legislation and Case Law

 Negligent acts of a company can result in fines for breach of statute,

criminal charges or claim for compensation.
 Business Law & Ethics
Lecture Overview
 Today we are concerned with actions in tort

 Introduction to Tort Law

 Duty of care
 Breach
 Causation
 Damage
 Pure economic loss
 Vicarious liability
 Examples in business
Nature of the Law of Torts – What is a Tort?
 A civil wrong

 “A tort is the breach of a legal duty owed, independent of contract,

by one person to another, for which a common law action for
damages may be brought”.

 The breach of such a right or legal duty gives rise to a right to a

claim for damages.
 What is a Tortious Liability?

 Liability is imposed through the civil law and requires, in certain

circumstances, for the party to take reasonable care not to
negligently or intentionally cause harm.

 Many torts involve establishing ‘fault’ (blame) in order for a claim

to proceed. Exceptions to this general rule include vicarious
liability and claims under the Consumer Rights Act 2015 (see
Lecture 6).
 What is a Tort?
 Law of tort imposes a duty on individuals not to harm others.

 What is harm? Includes physical and psychiatric damage to a

person, their property, reputation and business interests.

 The person who commits a tort is known as the Tortfeasor

 If a claim is brought to court – Civil courts (County, High Court,

Court of Appeal etc.) Claimant v Defendant
 Tort and Contract

Tortious liability Contract

Obligations fixed by law Obligations fixed by parties

Owed to world at large Owed to a specific party

Aimed at protecting life Aimed at promoting

and property individuals interest
 Remedy of a Tort?
 In general a person found to have
committed a tort – Liable to
compensation, financial remedy.

 Equitable remedies by the courts also

include: Injunctions preventing tortfeasor
repeating action or conduct upon the
victim.
 Common Law Torts

 There are a number of torts – all of which have particular rules

governing liability. Examples of common law torts include:
 Negligence
 Nuisance
 Trespass
 Defamation
 Rylands v Fletcher (1868)
 Common Law Torts
 Separate torts form trespass to the person.
 Battery
 Assault

 False imprisonment

(Assault and battery can be brought as criminal offences also).

 Statutory Torts
 Examples of statutory torts:

 Consumer Protection Act 1987

 Occupiers’ Liability Act 1957
 Occupiers’ Liability Act 1984
 The Tort of Negligence
 The modern law of negligence was established in the case of:
Donoghue v Stevenson [1932] A.C. 562
 In order for a claimant to be successful in the law of negligence
the following must be established :
• duty of care was owed to the claimant,
• and that there was a breach of that duty by the defendant,
• injury (damage) was sustained to the claimant or their
property/reputation.
 The Tort of Negligence
 Therefore the law will impose a requirement in certain circumstances for the
defendant to take reasonable care not to cause loss or damage to another.

 Caparo Industries plc v Dickman (1990) - the leading case on duty of care

 In order to find whether or not a duty of care is owed, the following must be
established:
 It was reasonably foreseeable that the defendants failure to take care could

cause damage to the claimant and

 There was sufficient proximity between the claimant and defendant and

 is it fair and just and reasonable that the law should recognise a duty on the

defendant to take reasonable care and not to cause that damage to the
defendant
 Was loss reasonably foreseeable?
 A duty of care is owed when an individual can foresee that his or
her omissions would be likely to affect another.
 Foreseeability is judged by the expectations of a reasonable man.
 Knowledge is also of importance.
 Reasonable foreseeability of loss – Caparo v Dickman [1990];
 The defendant does not owe a duty of care to the world at large
 Proximity
 In order for a court to find a duty of care there must be a
proximate or sufficiently close relationship between the claimant
and the defendant.
 But proximity does not necessarily mean physically close – see
later slides
 Fair just and reasonable to impose a duty
 Generally when public policy must be taken into account
 Is it in the public interest to impose a duty of care?
 Could imposing duty prevent defendant from carrying out
job in future?
 Hill v CC of West Yorkshire (1989)
 Breach of duty
 There must be a breach of that duty for the
defendant to be liable.

 The question of breach is concerned with the

standard of care which has to be reached
 Breach of duty and Standard of Care
The reasonable man test

“Negligence is the omission to do something which a

reasonable man, guided upon those considerations which
ordinarily regulate the conduct of human affairs would do, or
doing something which a reasonable and prudent man
would not do”. Blyth v Birmingham Waterworks Co (1856)
11 Exch 781 per Alderson B at 784
 Standard of care - Reasonable Man Test

 Objective test - involves the following:

 Defendant must act with the same care and skill expected from a
reasonable person
 No allowance for lack of intelligence.
 Must take account of shortcomings of others [ Nettleship v Weston (1971)]
 Special skill = higher standard. [Bolam v Friern Hospital (1957)]
 Obligation to display professional skill
 Where a reasonable person could not have foreseen the injury, no duty
owed – see additional notes Fardon v Harcourt – Rivington [1932]
 Consequential harm
 Consequential harm - damage must be proved :

 The breach must have given rise to the harm (known as factual
causation)– the ‘but for test’
• Barnett v Chelsea & Kensington Hospital Management Committee (1969)
 Multiple causes – breach materially contributed to harm
 Balance of probabilities – standard of proof
 The harm must not be too remote from the breach – legal causation
• The type of damage must be foreseeable – not the extent
• Overseas Tankship (UK) Ltd v Morts Dock Engineering (The Wagon Mound No
1)[1961] and No 2 [1967]
 Psychiatric harm/shock

 Primary victims
 Claimant can recover damages as result of physical injury or
from reasonable fear or apprehension of danger to physical
safety
 Dulieu v White (1901)
 Psychiatric harm cont.
Secondary victims

• Claimant witnesses someone else being harmed or endangered.

Control mechanisms limit claims in this area
• Alcock v CC of South Yorkshire (1991)
 Mere economic loss
 In general there is no liability in cases where the loss is merely
economic or monetary unless these arise out of foreseeable injury
to the claimant (or damage to his/her property)

 There is an exception for ‘negligent misstatements’ in such cases

mere economic / monetary loss may be recoverable
 Professional Negligence
 Tort of negligence extends to damages suffered as a result of
negligent advice and statements provided by professionals – such
as Accountants, Auditors, Lawyers and Doctors.

 The law on Negligent Misstatement is an important area of law –

in particular in relation to professionals.
 Negligent Misstatement
 Thefollowing cases show the development of the law on
Negligent misstatement :
 Candler v Crane, Christmas & Co [1951]
 The key case on Negligent misstatement is now :
 Hedley Byrne & co Ltd v Heller and Partners Ltd [1963]
 Hedley Byrne
 House of Lords found (obiter) that a duty could arise and
a Claimant can recover against Defendant in respect of
negligence for pure economic loss where:
 A special relationship of trust and confidence exists between
the parties and
 The party preparing the advice has voluntarily assumed the risk
and
 The Claimant has relied on the advice or information and
 Such reliance was reasonable in the circumstances
 Negligent Misstatement
 The law in this area is still developing.

 The following case law outline the key principles on which the duty
of care in negligent misstatements is established:

 Caparo Industries plc v Dickman [1990]

 Morgan Crucible Co plc v Hill Samuel Bank Ltd [1991]
 Coulhard v Neville Russell [1998]
 Sayers v Clarke v Walker ( a firm) [2002]
 Harlequin Property (SVG) Ltd v Wilkins Kennedy (A Firm) [2017] 4 W.L.R. 30
(See SurreyLearn)
 Defences to Negligence
 The most common defences to tort actions are

 Illegality
• Statutory authority
• Volenti non fit injuria
• Contributory negligence
• Necessity
 Exclusion of liability
 Changes in Law from 1st October 2015
Consumer Rights Act 2015
 The extent to which a liability may be excluded is provided in :
Consumer Rights Act 2015 (CRA 2015)
 Vicarious Liability
 A person may be vicariously liable for the acts of another – most
common - employer vicariously liable for acts/omissions of
employees
 An employer will be liable for the torts of a worker if:
o he is an employee
o who committed the tort
o ‘connected with his employment’
 Vicarious liability
 Anemployer is liable for any acts of unlawful
discrimination carried out by its employees during the
course of their employment. This is unless the employer
can show that it has taken such steps as were
reasonably practicable to prevent those acts.
 Vicarious liability
 The Lister test - Lister v Hesley Hall Ltd [2001] UKHL 22
 To establish vicarious liability, it is necessary to satisfy both of the
requirements of the following two-stage test:
● there must be a relationship between the perpetrator
and the person alleged to be liable which is capable of
giving rise to vicarious liability; and
● the connection between the wrongful act or omission
and the relationship between the perpetrator and the
person alleged to be liable must be sufficiently close so
that it would be just and equitable to impose liability
 Vicarious liability
 Cases:
Majrowski v Guy’s and St Thomas’ NHS Trust [2006] HL

 Wallbank v Wallbank Fox Designs Ltd [2012] EWCA Civ 25

 Vicarious liability
 Vaickuviene and ors v J Sainsbury plc [2013] CSIH 67
“whether there is a connection, and if so whether it is a close one, between
what the wrongdoing employee was asked to do and the wrong he
committed, having regard…to the risks involved in the employee's work… If
the harassment is an 'unrelated and independent venture' of the employee,
rather than one connected to his authorised duties, vicarious liability will not
attach”.
 Vicarious liability
 Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11

“There was nothing wrong with the "close connection" test of vicarious liability
adumbrated in Lister v Hesley Hall Ltd [2001] UKHL 22, [2002] 1 A.C. 215
and the law would not be improved by a change of vocabulary. Applying that
test, the employer of a petrol kiosk attendant who had subjected a customer
to an unprovoked assault was liable for his actions.”
 Vicarious Liability – Key Case Law

The Supreme Court BBC 02.03.16

 Vicarious liability
 Cases:

Fletcher v Chancery Lane Supplies Ltd [2016] EWCA Civ 1112

“A judge had had no legitimate basis to find that an employer was

vicariously liable for its employee who had walked across the road
and collided with a cyclist. The employee had not given evidence
and it had been impossible to know if crossing the road had been
sufficiently connected to his work at the time to make it
reasonable to hold his employer to account.”
Legal News, Legislation and Case Law
Professional Negligence & Duty of Care
Harlequin Property (SVG) Ltd v Wilkins Kennedy (A Firm) [2017] 4 W.L.R. 30

 Case Law
Queen's Bench Division
(Technology & Construction Court).
Legal News, Legislation and Case Law
Auditing Activities May Give Rise To Tortious Claims

“…Britain’s four biggest accountancy

companies are facing fresh scrutiny, with
the head of the industry watchdog calling
for the competition regulator to
investigate their auditing activities
following the collapse of Carillion. ....”

The Guardian 30.01.18

Legal News, Legislation and Case Law
Professional Negligence Brings Potential Tortious Claim
5th February 2018

“…In a particulars of claim form, filed on

31 January, Bracewell-Smith alleges that
Linklaters was negligent and in breach of
its duty of care in relation to advice given
on loan notes she received in exchange
for her stake in the club....”

Legal Week 05.02.18

Using the Library online databases – Video Support

Video Support Tutorial to assist with finding and using a legal database
with additional support. Available on SurreyLearn.
 REMINDER - Preparation For Tutorial 2
Log into the Lexis Library or Westlaw databases and
locate the following cases:
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 3 W.L.R. 101

Devine v McAteer[2008] P.N.L.R. 31

Each student needs to have read the above cases prior to Tutorial
2 and complete the following :
- Determine why these two cases have a connection.
- What area of law surrounds these two cases.