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Negligence and Professional Negligence Annotated Bibilography 2022

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Added on  2022/09/16

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Running Head: NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
NEGLIGENCE
According to the common law, tort of negligence can be explained as failure to take
reasonable care to avoid any foreseeable risk by any reasonable person amounting to an injury or
damage to the other person. However, existence of contractual relationship is a quintessential
element for a tort of negligence to apply and exist.
ELEMENTS OF TORT OF NEGLIGENCE
The provisions of Civil Liability 2002 governs the elements of negligence and establishes
the burden of proof on the plaintiff to prove the existence of the tort of negligence. There are
four elements of the tort of negligence namely; duty of care, breach of such duty of care, the
harm caused to the plaintiff is the result of the breach of duty of care, and lastly, the harm must
be actual.
Duty of Care:
Duty of Care is the first element of the tort of negligence. Existence of duty of care is an
essential element and such duty of care arises from a contractual relationship between the
plaintiff and the defendant. The duties owed by one party to the other can be of two kinds
namely; the general duty of care and the special duty of care. The general duties form the
element of tort of negligence meaning the reasonable duty of care towards other person as any
reasonable person would have done in normal situation. Thus, the actions of the defendant is
under scrutiny to assess the breach of duty of care under the tort of negligence. The first element
of duty of care can only be fulfilled if the duty of the defendant is established as a general duty
which shall be taken care of by any reasonable man under normal circumstances. On the
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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
contrary, the special duties include the imposition of statutory duties and other duties imposed by
case laws either in addition or in replacement of the existing regular duties of care.
Donoghue vs. Stevenson [1932]1 is the landmark case that has established the principles
for the test of duty of care. It was laid by Lord Atkin that the presence of duty of care shall be
determined by the usage of neighbouring principle. The quintessential element as laid down in
the case are two principles. Firstly the harm should be reasonably foreseeable and secondly, there
should be a proximate relationship between the parties to the case. It has further been established
by the Court that any reasonable man should be able to assess the harm. It has further been laid
down that the nature of the harm should be such that the culprit should be able to reasonable see
the same2. The court has further laid down the provision for the establishment of a proximate
relation between the parties for the existence of duty and care. In other words, duty and care
should have a proximity of relation for the estimation of negligence in a crime3.
Capro Industrues Plc vs. Dickman [1990]4, has laid down the three step test for the
estimation of presence of tort of negligence in any case. The tests are firstly, that the harm should
be foreseeable in nature. Secondly, proximity of relation should exist. Thirdly, the duty expected
from the defendant should be reasonable, just and fair as any other reasonable man would do in
normal circumstances. Further, the third party loss criteria was laid down in Esanda Finance
1 Donoghue vs. Stevenson[1932] AC 562
2 Grant v Australian Knitting Mills [1935] UKPC 62
3 Annets vs. Australian Station Pty Ltd [2002] HCA 35
4 [1990] 2 AC 605
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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
Corporation vs. Pear Marwick Hungerfords [1997]5 wherein it was held by the court that the the
third party loss would not recognized by the court if the loss was the out come of a risk which
was not reasonably foreseeable. In other words, the defendant could be held liable only for the
loss that was the outcome of the risk or harm that was reasonably foreseeable by any reasonable
man in normal circumstances6. The court has further recognized the rule of taking the plaintiff as
they are found by the plaintiff. In other words, the defendant could be held responsible only for
the reaction of the plaintiff which is unforeseen and such reaction is the outcome of the negligent
or intentional act of the defendant. This is called the “egg shell skull” rule7.
Breach of Duty:
The second element for the establishment of Negligence tort of the breach of duty. The
breach of duty can happen due to either commission or omission of an act leading to exposure of
risk to the plaintiff and hence, the harm is caused. The first test for the breach of duty was done
in McHale vs. Watson [1966]8. Various factors are weighed and taken into consideration by the
court for the establishment of this test including factors like likelihood of the harm, whether the
harm is serious, cost involved for the prevention of such harm, and defendant’s conduct.
5 [1997] 188 CLR 241
6 The Wagon Mound no 1 [1961] AC 388
7 Smith vs. Leech Brain & co. [1962] 2 QB 40
8 [1966] HCA 13 (7 March 1966), High Court (Australia)

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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
Causation:
The tort of negligence is established on these elements. However, once the duty of care is
recognized and also that the same has been breached, the cause of the harm is assessed by the
court. In other words, the court assesses the proximate relation between the breach of duty and
the harm caused meaning that the court has to establish that the harm is the outcome of the
breach of duty. The causation for the breach of duty is assessed by prefixing the phrase “but for”
and then analysing the situation whether the harm caused was due to the duty breached by the
defendant9. The test can be assessed in a way that the injury or loss would not have happened
“but for” the duty breached by the defendant.
Harm:
The last and final element for the establishment of the existence of tort of negligence is
the harm. This means that the harm suffered by the plaintiff is the result of the negligent action
of the defendant duty to breach of duty of care that any reasonable man would have taken to
avoid the foreseeable risks in normal circumstances.
PRINCIPLES OF NEGLIGENCE IMPORTANT FOR AN ACCOUNTANT
Professional Negligence has been identified as the breach of duty of care exiting between
the professional capacity of the client and their professionals. The professional negligence is
established by the way of establishing the poor conduct or behaviour of the professional resulting
in the harm or damage to the client or the customer. Professionals are deemed to be the experts in
their discipline and are expected to maintain reasonable care while discharging their professional
9 March vs. Stramare (E & MH) Pty Ltd [1991] ] HCA 12, (1991) 171 CLR 506, High Court (Australia)
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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
duties and hence, any misconduct of such duty resulting in harm or damage to the client would
amount to professional liability.
For a claim of negligence to be successful and recognized by the court, the plaintiff has
the burden of proof to establish beyond reasonable doubt that conduct of the professional has
fallen below the professional standards of conduct and hence the consequences of harm to the
plaintiff. Professional misconduct can be of many types including poor advice to the clients,
unsatisfactory recommendation for the business strategy, failure to identify problems during
construction or architectural design of the building, failure to maintain confidentiality with the
clients, failure to advice tax relieves and so on. Professional negligence also recognizes loss of
money or property damage as a potential harm unlike the actual physical harm or damage in
other cases of negligence. Thus, the law is silent about the recovery of the economic loss hence,
paving way to alternate and numerous varied decisions including recovery of economic loss due
to professional negligence.
An accountant is a person with the expertise of accounting practice measuring, disclosing
as well as providing assurance about the information related to the finances of the client and such
information would be helpful for the investors, managers and other related authorities to make
decisions about optimum use of resources and effective allocation of such resources for
maximum outcome.
At par with any other profession, accountants are also expected to owe duty of care
towards their clients for discharging duties with reasonable care as any other reasonable person
would do in a normal situation. Failure of the accountants to skilfully perform their duty, the
client would suffer loss and hence, the cause of action for the tort of negligence would arise.
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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
Examples of mistakes from an accountant are accounting errors, incorrect advices, failure to
identify any measure of tax exemption, incorrect tax assessment, drawing personal interest from
the advice given to their clients. Establishment of claim of professional negligence depends upon
three elements, firstly, the duty of care, secondly, failure to comply their job with the
professional standards of conduct and ethics, and thirdly, such failure has resulted in loss to the
client. According to the Accounting Professional and Ethical Standards Board, it has been stated
that all the accountants including the members of the Board should comply with the standards of
professional conduct and ethics and maintain due care and professional competence. The primary
duty of the accountant is to maintain professional standards in the best interest of the client. In
Boyd vs. Ackley [1962]10, it has been held by the court that the presence of contractual
relationship between the parties undermines the existence of duty of care including the
professional standard of conduct and ethics and hence, any breach in such duty would result in
tort of negligence. In this case, the plaintiffs had sued the defendants for the claim of negligence.
The plaintiffs were a married couple and the defendants were accountants but close friends to the
plaintiffs. In addition, the defendants were also involved with the handling of accounting matters
with another company. Plaintiffs soon acquired a new company and hired the defendants to look
after the accounting affairs of the new company. The plaintiffs sued the defendants for
negligence and breach of professional duty of care resulting in overpayments being made by the
plaintiffs. The plaintiffs had argued on three grounds namely; the existence of fiduciary
relationship, contractual relationship and the defendants owed a duty of care towards the
plaintiffs and their company for which they were hired. The court held that the fiduciary and the
contractual duty existed between the partied by the way of hiring defendants for his accounting
10 32 D.L.R. (2d) 77

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NEGLIGENCE AND PROFESSIONAL NEGLIGENCE
skills for the plaintiff’s company. However, in Candler vs. Crane Christmas & Co [1951]11, it
was established that the defendant did not owe any duty of care to the plaintiff, but the
defendants had all the relevant knowledge at the time of discharging professional duty by sharing
information with the plaintiff. Thus, the plaintiffs were successful against the defendants in their
claim and the court recognised the existence of tort of negligence between the parties and hence,
the plaintiffs were able to recover their losses for the damages suffered.
11 2 KB 164
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BIBLIOGRAPHY:
Case Laws:
Annetts v Australian Stations Pty Ltd [2002] HCA 35
Boyd v Ackley [1962] 32 D.L.R. (2d) 77
Candler v Crane, Christmas & Co [1951] 2 KB 164
Caparo Industries Plc v Dickman [1990] 2 AC 605
Donoghue v Stevenson [1932] AC 562
Esanda Finance Corporation v Peat Marwick Hungerfords [1997] 188 CLR 241
Grant v Australian Knitting Mills [1935] UKPC 62
March v Stramare (E & MH) Pty Ltd [1991] HCA 12, (1991) 171 CLR 506, High Court
(Australia)
McHale v Watson [1966] HCA 13 (7 March 1966), High Court (Australia)
Smith v Leech Brain & Co [1962] 2 QB 40
The Wagon Mound no 1 [1961] AC 388
Legislations:
Civil Liability Act 2002
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