TORTS LECTURE 8

PARTICULAR DUTY AREAS

Clary Castrissionclary@40k.com.au(p) 02 9221 4030

(a) Products Liability(b) Defective Structures(c) Professional opinions - done(d) Nervous Shock- done(e) Council and Public Authorities- done(f) Commercial Premises(g) Hotelier/Publican to Intoxicated Patron(h) Pure Ecomic Loss

Road Map for Today

PRODUCT LIABILITY• Common law:- Donohue v Stevenson [1932] AC 562- Grant v Australian Knitting Mills [1936] AC 85

a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care

PRODUCT LIABILITY

• Relevant Statutes:Sale of Goods Act 1923 (NSW)

Pt 4 Performance of the Contract (ss.30 to 40)Pt 6 Actions for Breach of the Contract (ss.51 to 56)

PRODUCT LIABILITY

• Relevant Statutes:

- Fair Trading Act (NSW)Part 4- NSW Consumer Safety and Information

Requirements

PRODUCT LIABILITY

• Relevant Statutes:

- Trade Practices Act 1974 (Cth)- now Competition and Consumer Act 2010 (from 1 January 2011)- Absolute mammoth! Australian Consumer Law

in Schedule 2 of Div 2 of Part XI

See www.consumerlaw.gov.au

Professional Opinion

• Civil Liability Act- s.5O Civil Liability Act 2002 “Peer

professional opinion” (ie. The UK “Bolam” test)

- S.5P Civil Liability Act 2002 “Duty to warn” remains

DEFECTIVE STRUCTURES

• Builders:Bryan v Maloney (1995) ATR 81- 320

• Architects:Voli v Inglewood Shire Council (1963) 110 CLR 74

Commercial Premises

• Thompson v Woolworths (Queensland) Pty Ltd (2005) 221 CLR 234 at 246-247

• Timberland Property Holdings Pty Ltd v Bundy [2005] NSWCA 419 at [25]-[27]).

Hotelier/Publican to Intoxicated Patron

• Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469– Facts – Held

Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469

• Majority 4 to 2 (McHugh & Kirby JJ dissenting) no duty of care owed by the Club• Gleeson CJ:14.The significance of a need for coherence in legal principle and values, when

addressing a proposal for the recognition of a new form of duty of care, was stressed by this Court in Sullivan v Moody[5]. Although there are exceptional cases, as Lord Hope of Craighead pointed out in Reeves v Commissioner of Police of the Metropolis[6], it is unusual for the common law to subject a person to a duty to take reasonable care to prevent another person injuring himself deliberately. … A duty to take care to protect an ordinary adult person who requests supply from risks associated with alcohol consumption is not easy to reconcile with a general rule that people are entitled to do as they please, even if it involves a risk of injury to themselves.

17. It is possible that there may be some circumstances in which a supplier of alcohol comes under a duty to take reasonable care to protect a particular person from the risk of physical injury resulting from self-induced intoxication[7]. However, the appellant cannot succeed in this case unless there is a general duty upon a supplier of alcohol, at least in a commercial setting, to take such care. I do not accept that there is such a general duty.

Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469

• Gummow & Hayne JJ:65. The appellant's contention that her collision with the driver's vehicle was

caused or contributed to by the Club's negligence in continuing to serve her alcohol, when the Club knew or should have known that she was intoxicated, was a contention that depended upon taking a number of steps, some (perhaps all) of which may be contested.

66. First, what exactly is meant by "serving" the appellant alcohol? Does it encompass, or is it limited to, selling alcohol which it is known that the appellant will consume? Does it extend to selling, to others, alcohol which it is suspected that the appellant will consume? How is the Club to control what other patrons may do with bottles of alcohol which the Club sells them? Given the uncertainties about how and from whom the appellant obtained alcohol during the second half of the day, these are questions that go directly to the formulation of the duty which is said to have been breached.

67. Secondly, the evidence of what the Club knew, or could reasonably be taken to have known, of what alcohol the appellant took during the day was very slight...

Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469

• Gummow & Hayne JJ:68. Unsurprisingly, there was no evidence which would have revealed that servants of

the Club could have (let alone reasonably should have) been able to observe how much the appellant drank during the morning. That is, as we say, unsurprising when it is recalled how many patrons attended the Club. About 100 or 120 had attended breakfast. Some of those patrons stayed at, and no doubt others came to, the clubhouse and the ground to attend the several football games to be played that day. There was, therefore, a large and shifting population to observe. If it is said that the Club owed the appellant a duty to monitor and moderate the amount that she drank, it owed all its patrons such a duty...

69.Next, what level of intoxication is said to be relevant? Does it mean not lawfully able to drive a motor car? Some drivers may not drive a motor car if they have had any alcohol. Other drivers may be unfit to drive after very few glasses of alcohol. Does "intoxicated" mean, as the primary judge held, "loss of self-control or judgment which is more than of minor degree"[16]? If that is so, many drinkers will arrive at that point after very little alcohol.

70.All of these questions would have to be answered in deciding what duty of care was owed. None can be answered in isolation. All would require consideration of the purpose for which it is said that the duty alleged is to be imposed.

Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469

• Callinan J:

131 I am also of the opinion that in general - there may be some exceptional cases - vendors of products containing alcohol will not be liable in tort for the consequences of the voluntary excessive consumption of those products by the persons to whom the former have sold them. The risk begins when the first drink is taken and progressively increases with each further one. Everyone knows at the outset that if the consumption continues, a stage will be reached at which judgment and capacity to care for oneself will be impaired, and even ultimately destroyed entirely for at least a period.

PURE ECONOMIC LOSS

• What is pure economic loss?• Pure economic loss related to damage to objects or

persons • ‘Indeterminacy

– Liability of the defendant to “an indeterminate class, for an indeterminate time, and in an indeterminate amount” Ultramares Corp v Douche (1931) 174 NE 441

Pure economic loss

• 2 types:– Negligent acts leading to pure economic loss,

and– Negligent statements leading to pure economic

loss

1. Negligent Misstatement Causing Economic Loss

• Early on: no liability. Pulsey v Freeman (1789); Norton v Asburton [1914] AC 932

• Why?– Words are more volatile than deeds. They travel fast and far

afield. They are used without being expended and take effect in combination with innumerable facts and other words. Yet they are dangerous and can cause vast financial damage.. Damage by negligent acts to persons or property on the other hand is more visible and obvious; its limits are more easily defined. (per Lord Pearce in Hedley Byrne & Co v Heller [1964] AC 465 at 534.

Hedley Byrne & Co v Heller• Facts• How could DOC arise? Special Relationship

– If someone possessed of a special skill undertakes quite irrespective of contract to apply that skill for the assistance of another person who relies on such skill, a duty of care will arise’ (per Lord Morris)

• Mutual Life & Citizens’ Assurance v Evatt [1971] AC 793

Shaddock & Associates Pty Ltd v Parramatta CC (1981) 150 CLR 225

• Facts• Held

– In minority: Gibbs CJ and Stephen J– Majority: Mason, Aikin and Murphy JJ

• Norris v Sibberas [1990] VR 161– It would not be reasonable to rely upon advice or information given

by another unless the person giving it either professed to have some special skill which he undertook to apply for the assistance of another or was so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry.

THE ISSUE OF SKILL

• With all respect I find it difficult to see why in principle the duty should be limited to persons whose business or profession includes giving the sort of advice or information sought and to persons claiming to have the same skill and competence as those carrying on such a business or profession, and why it should not extend to persons who, on a serious occasion, give considered advice or information concerning a business or professional transaction. (Gibbs J in Shaddock)

Later Clarifications

• Butcher v Lachlan Elder Realty (2004) 218 CLR 592– “The mere fact that a person had engaged in the

conduct of supplying a document containing misleading information did not mean that that person had engaged in misleading conduct: it was crucial to examine the role of the person in question” (Gleeson CJ, Hayne and Heydon JJ)

• Tepko Pty Ltd v Water Board (2001) 206 CLR 1

Factors the court will look at• Nature of relationship• Special skill (either actually possessing it or holding

oneself to possess it)• Nature of subject matter• Reliance- reasonable reliance creates DOC, actual

reliance establishes breach• Context of interchange: professional? Social?

Information requested?

2. Negligent Act causing pure economic loss

• Originally- no common law DOC: Leigh & Sullivan v Aliakmon Shipping Co Ltd [1986] AC 785

• Why?• What is pure economic loss caused by

negligent act?• Indeterminacy

– Perre v Apand (1999) 198 CLR 180

THE ‘CALTEX PRINCIPLE’:Caltex Oil (Aust) Pty Ltd v The Dredge

“Willemstadt” (1976) 136 CLR 529

• Facts

• Held- Mason J– Liability arises when: A defendant can

reasonably foresee that a specific individual as distinct from a general class of persons will suffer financial loss… This approach eliminates the prospect that there will come into existence liability to an indeterminate class of persons. (at 593)

THE ‘CALTEX PRINCIPLE’:Caltex Oil (Aust) Pty Ltd v The Dredge

“Willemstadt” (1976) 136 CLR 529

Australia beyond Caltex• Indeterminacy: Johns Period Furniture v Commonwealth

Savings Bank (1980) SASR 224• Christopher v Motor Vessel “Fiji Gas” [1993] Aust Tort

Reports 81-202• Johnson Tiles v Esso Australia [2003] Aust Tort Reports

81-962– 1.Reasonable foreseeability of injury;– 2. Whether there is a relationship of proximity; and– 3. Identification and consideration of competing salient

features for and against the finding of a DOC

(a) Products Liability(b) Defective Structures(c) Professional opinions - done(d) Nervous Shock- done(e) Council and Public Authorities- done(f) Commercial Premises(g) Hotelier/Publican to Intoxicated Patron(h) Pure Economic Loss

Wrap-Up