Business Law: Negligence and Recovery of Economic Loss

Running Head: BUSINESS LAW
BUSINESS LAW
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Author Note

1BUSINESS LAW
Issue
The issue in this given case study is whether Kimberley and Charles are entitled to claim
damages from Elle due to her Negligence
Rule
The case Donoghue v Stevenson [1932] AC 562 laid the foundation of claims in Negligence by
establishing the neighbour principle. Lord Atkin in the this case stated that it is the responsibility
of a person to take reasonable care so as to prevent any harm likely to be caused to the neighbour
of the person by his negligent acts or omissions. The essential elements for proving negligence
as held in the case are enumerated below:
Duty of Care
Breach of duty of care
Causation of damage
Remoteness of damage
Duty of care
In order to prove negligence it is essential for the claimant to prove duty of care of the
defendant towards the claimant. Duty of Care is assessed by the Caparo test as established in the
case Caparo Industries PLC v Dickman [1990] UKHL 2. The Caparo test considers:
 Whether injury or loss sustained by the claimant was reasonably foreseeable to the
defendant
 Whether there was a relationship of proximity between the parties

2BUSINESS LAW
 Whether it is fair and reasonable to impose the duty on the defendant
As held in the case Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987) 162 CLR
479) the occupier of a premises has a duty to take reasonable care so as to ensure that such
premises is safe to the visitors
Breach of duty of care
In the case Vaughan v Menlove (1837) 3 Bing. N.C. 467, an objective test was applied to assess
whether the defendant had breached his duty of care. Such test assess whether a reasonable
person would have taken any additional steps to prevent any damage likely to be caused any
person.
Causation
The causation of the damage sustained by the claimant is assessed by the “But For” test as
established in the case Barnett v Chelsea & Kensington Hospital [1969] 1 QB 428
Remoteness of damage
To claim damages for Negligence it is important to establish that the damage sustained by the
claimant was not too remote to the defendant. In the case Wagon Mound no1 [1961] AC 388, it
was held a defendant can be personally held liable for the damage sustained if such damage was
of a foreseeable kind.
Application
As provided in the facts of the given case study it can be stated that Elle had a duty of are
towards Kimberley as Kimberley was a guest in the Bread and breakfast house. Thus a