Business Law Case Study: Ellen's Meditation Studio Dispute

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Business Law- Case Study
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Table of Contents
Introduction................................................................................................................................3
Issue 1........................................................................................................................................4
Issue 2: Contract Law..............................................................................................................5
Issue 3: Tort of Negligence......................................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9
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Introduction
The assignment focuses on discusses various laws related to tort, negligent misstatement
made by the public authority and contract of lease. The laws are discussed with the given
case study of Ellen. Ellen is a graduate and wishes to establish a Meditation Studio in a
Paddington. In order to confirm the lease with the landlord she needs some information
regarding the area. For seeking the information, she heads to the council officer who
negligently answers her queries. Later, Ellen suffers a nervous disorder because of the
disturbance created by the builders. The assignment talks about the issues which decides the
rights of Ellen.
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Issue 1
Whether Ellen has a claim against the council in relation to the advice she received?
Rules and Relevant Law: The provision of s29 of the Civil Liability Act 2002 states that
when a person suffers a mental harm as a consequence of negligent conduct of the defendant,
then he/she can claim against such negligent person. Section 431 defines the action should be
taken against the public authorities in the circumstances in which they commit breach of their
duty. The provisions of s40 of the Act shall apply to in analyzing whether or not the Act
applies in the given case. The section states that the Act shall apply in deciding the civil
liability of tort. Hence the provisions are applicable in the current scenario2.
Application: In the given case there has been negligence on the part of council officer. As
consequence from the negligence, Ellen has suffered nervous disorder which eventually
resulted in loss of her earnings and threatened her career. The council officer had the
statutory duty to provide all the relevant information required by Ellen and to also warn her
regarding future disturbance3.
Conclude: Thus, after evaluating the circumstances of the case, it has been concluded that
there has been breach of Statutory duty on the part of council officer. Hence, Ellen can claim
against the council. The damages shall be assessed as per the provisions of s26E of Civil
Liability Act 2002.
1 Civil Liability Act, 2002
2 Rhee, R.J., 2012. The Tort Foundation of Duty of Care and Business Judgment. Notre Dame L. Rev., 88,
p.1139.
3 Velasco, J., 2014. A Defense of the Corporate Law Duty of Care. J. Corp. L., 40, p.647.
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Issue 2: Contract Law
Has there been breach of Contract between Ellen and Land Lord for non-payment of rent?
Rules and Relevant Law: Provisions of the Conveyancing Act 19194 and Residential
Tenancies Act 19875 states the rules regarding the contract of lease in NSW (New South
Wales). A lease is a binding contract between the landowner and the tenant. For creating the
contract of lease for the properties situated in the NSW and Victoria a standard form is used.
The tenant is responsible for the payment of the utility cost whereas the owner is responsible
for the payment of the property taxes. The lease is made with the commitment of occupying
the property for 6 or 12 months. In NSW, for the termination of the lease 14 days’ notice
must be served. In case late fees paid by the tenant, the owner may charge the fee but he
cannot charge the interest on the unpaid rent. The late payment fee charged by the contract
can be 5% of the rent unpaid. But this does not amount to breach of the lease.
Application: In the given case, Ellen has fallen late in paying the rent but the case is not that
she hasn’t paid the rent at all. The above stated rules shall apply and as the consequence of
application of above mentioned rule, there is no breach of contract of lease between the
landlord and Ellen. Nevertheless, the landlord may charge Ellen with the late fee payment on
the unpaid amount of the rent. In the famous case of Gershin v. Demming6, the court held that
charging late fee at the rate of one percent on the rent of month is not unreasonable.
Conclude: Hence, in the present case, it has been concluded that Ellen has not committed
the breach of the contract though she may be charged for the late fee on the unpaid amount of
rent but the landlord cannot charge the interest on the unpaid amount. Also, if the landlord or
Ellen wish to terminate the contract, then they must serve a notice 14 days prior to the
termination.
4 Conveyancing Act 1919
5 Residential Tenancies Act 1987
6 Randi GERSHIN, Sally Kogod, Erica Burten, Joanna Aronson, Betsey Abramson and Darryl Sherman,
Appellants-Defendants, v. Sheree DEMMING, Appellee-Plaintiff. No. 53A01-9704-CV-118.
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Issue 3: Tort of Negligence
Has there been negligent statement by the council worker?
Rules and Relevant Law: As per the provisions of Law of Negligence and Limitation of
Liability Act, 2002, a plaintiff can claim damages from respondent in case of any injury or
harm suffered by him/her. As per s4 of the Act, injury includes, psychological injury, any
disease suffered, pre-natal injury, aggravation or recurrence of an injury. Under s5 it is stated
that the injury must be the consequence of the negligence. Division 2 of Part 2 of the Act
states the defendant’s Duty of Care. It connotes that the defendant is liable for negligence if
he has not taken reasonable care as a person of reasonable discretion would have.
A negligent misstatement implies that certain person had the duty to state a statement clearly
and accurately, the statement delivered by the person must not be vague or ambiguous. When
a person delivers a statement carelessly but with an honest intention, it is known as Negligent
misstatement7. In order to claim damages or injury suffered from the negligent misstatement
certain elements needs to be proved:
 The plaintiff must prove that the defendant has committed the torturous act either
negligently or intentionally.
 The onus of proof is on the plaintiff that he has suffered the harm as a consequence of
the act done by the defendant
 The court determines the remedy to be awarded to the plaintiff to him/her in the
position where he/she would have before suffering the damages.
Application: In the present case the council officer made a statement negligently, assuring
Ellen that there shall be no issue and everything will be fine, regarding the property which
Ellen wanted to possess through lease. Eventually, Ellen suffered mental injury resulting into
nervous disorder. In the famous case of Hedley Byrne & Co Ltd v Heller & Partners Ltd8, the
court held that, there must be sufficiently proximate relationship between the parties for the
creation of duty of care. If the plaintiff agrees to work as per the advice of the defendant it
does not implies that plaintiff has agreed voluntarily to suffer the damages. In the present
scenario, the officer had a duty to go through the report submitted and should have warned
Ellen for the disturbance which made Ellen suffer.
7 K. Barker, W Swain and R Grantham (eds), The Law of Misstatements (Oxford, Hart
Publishing , 2015) pp 319-344
8 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
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Conclude: Thus, after the critical analysis of the case and provisions applied, it is concluded
that Ellen may claim damages from Officer as the nervous disorder she is suffering from is
due to the negligent statement made by the Officer. The Officer was under duty to warn Ellen
as per s209 of the Act. Ellen can claim remedy against the officer under sections 8, 29, 30 and
3210 of the Act.
9 Law of Negligence and Limitation of the Liability Act, 2008
10 Part 3 of Law of Negligence and Limitation of the Liability Act, 2008
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Conclusion
After the thorough study of the case various laws has been applied in deciding the right of
Ellen. In the above study there has been analysis of the laws applicable in the current case. In
the case there has been application various case laws as well. The study shall help in deciding
the rights of a person who has suffered the civil wrong.
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References
 Conveyancing Act 1919 and Residential Tenancies Act 1987
 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
 K. Barker, W Swain and R Grantham (eds), The Law of Misstatements (Oxford, Hart
Publishing , 2015) pp 319-344
 Law of Negligence and Limitation of Liability Act 2008, [online] Available at:
https://www.legislation.gov.au/Details/C2016Q00058/Html/Text#_Toc197935214.
[Accessed on 10th May 2019]
 Law of Negligence Limitation of Liability Act 2008, s 40, 43 and 44
 Randi GERSHIN, Sally Kogod, Erica Burten, Joanna Aronson, Betsey Abramson and
Darryl Sherman, Appellants-Defendants, v. Sheree DEMMING, Appellee-Plaintiff.
No. 53A01-9704-CV-118.
 Rhee, R.J., 2012. The Tort Foundation of Duty of Care and Business Judgment. Notre
Dame L. Rev., 88, p.1139.
 Velasco, J., 2014. A Defense of the Corporate Law Duty of Care. J. Corp. L., 40,
p.647.
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