Enterprise Law: Analysing Negligence and Duty of Care - Spring 2018

This Enterprise Law case study examines two scenarios involving negligence and duty of care. Part A analyzes whether Meghan and Catherine can sue Australian Post Department employees for injuries sustained due to escaped snakes, focusing on the elements of negligence: duty of care, breach of duty, causation, harm, and vicarious liability. It concludes that the employees and the Australian Post are liable. Part B addresses whether a financial institution or its employee, Merlin, had a duty of care towards a family who lacked English proficiency and business acumen. Applying the principles from Caparo Industries Plc v Dickman, the study finds that Merlin had a duty of care and was negligent in his advice, making both Merlin and his employer, BNQ, liable. The document provides a detailed analysis of relevant legal principles and their application to the given scenarios.

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Part A
Issue
In the given case, Meghan and Catherine have sustained the physical injuries in the form of
heart attack and the disability to walk respectively. This was because of the loose snakes that
escaped from the parcel from the Australian Post Department. The issue is whether Meghan
and Catherine can sue the employees of the Australian Post Department under the tort of
negligence.
Rule
The law for the negligence in Australia has been prescribed under the Tort law for
negligence. According to the tort for negligence, negligence has been defined as the failure of
exercising diligence and due care that would have been reasonably exercised by a prudent
person in the given circumstances (Latimer, 2016). The tort of negligence expressly covers
the harm caused by carelessness. According to the tort of negligence, the first party (the
plaintiff) must establish the following explained elements of negligence claims, in order to
sue the second party (defendant), in negligence. The elements of fault have been widely
established under the various case laws, the most popular being the Donoghue v. Stevenson
[1932] AC 562.
1. Duty of Care: According to the tort of negligence, the legal liability of the defendant
arises in the event of failure on his part to fulfil as responsibility, the beneficiary of
which is the plaintiff. Thus, the plaintiff has to establish that there existed a duty or an
obligation on the part of the defendant towards the plaintiff.
2. Breach of Duty: The second element that must be established in order to sue is that
there was a breach of the previously mentioned duty by the defendant. The defendant

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may subjectively expose the plaintiff towards the substantial risk of loss or injury. He
can also do so by failing to realise the said risk, which any reasonable person in the
given circumstances would have objectively realised. Thus, the breach can be either
subjective or objective.
3. Causation: In order to make the defendant held liable for the breach of duty, it must
be established that the loss or damage sustained were due to the cause of the particular
acts or omissions on the defendant’s part. Thus, as famously established in the case of
Tubemakers of Australia Ltd v Fernandez (1976) 10 ALR 303, it is required to be
established that breach of duty was the direct cause for the injury to the plaintiff.
4. Harm: In order to claim the damages from the defendant, it must be proved by the
plaintiff that the defendant's breach caused a harm, loss, or injury to him or her
Vaughan v Menlove (1837) 3 Bing. N.C. 467. Thus, it must be established that there
was a loss of a foreseeable kind, and only then the defendant can be held liable.
Vicarious Liability: The term is used to denote the existence of the secondary liability in
certain contracts (ACAS, 2018). The relationship of the employer and employee is that of
an agency relationship and the indirect liability arises in the case of the employer-
employee relationship. This is applicable on the grounds of the acceptance of the
responsibility for the acts done by the subordinates. As a result, the employer can be
made liable for the acts of the employee and this is applicable in cases of negligence
under tort law too.
Application
On application of the rules as stated above, the following findings must be noted.
Duty of care- The employees Harry and Will had suspected existence of some dangerous or
illegal thing in the box. Their suspicion is well depicted by the fact that they called the police

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for the same. Thus, there existed duty to take care of the parcel on the part of Harry and Will,
as responsible employees of the Australian Post Department.
Breach of Duty- The placing of the suspected box in an unlocked cupboard is the clear
breach of the duty on the part of the employees. Being the employees of the Australian Post
Department, it was anyway the duty of the employees to take the reasonable care of the
parcel box, and thus to keep it safely and properly.
Causation- Meghan and Catherine sustained harm due to the escaping of the snakes from the
box, which was not duly placed in a safe place by the employees. Thus, there is a direct
impact of the breach of the duty causing harm to Meghan and Catherine.
Harm- As stated in the case study, while Meghan suffered a heart attack because she was
distressed to see the snakes, Catherine was bitten by one of the snakes. Both Meghan and
Catherine have sustained severe and grave injuries to be able to sue under the negligence.
Vicarious Liability: As the Australian post shares the employer employee relationship with
Harry and Will, the employer will be secondary liable and responsible for the acts done by
the employee, in the same capacity while on the duty. I the given case, Harry and Will were
sorting out the mails when they came across the box and instead of keeping it properly, they
left it in open. Thus, the department of Australian post is also liable for the acts done by its
employees, due to the vicarious liability on its part.
Conclusion
Thus, as per the discussions conducted in the previous parts, it can be concluded that Meghan
and Catherine can successfully sue the employees Harry and Will under the tort of negligence
for the injuries sustained because of the escaping of snakes. On application of the rules of the
relevant laws, it can be established that the given case study fulfils the criteria laid down in

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this behalf. Moreover, they both can also sue the Australian Post, as the same is equally liable
for the negligence caused by its employees while on the employment.

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Part B
Issue
The issue in the given case study is that whether there was an existence of duty of care and
the liability on the financial institution or its employee and financial adviser Merlin, in the
light of the given circumstances of the case study.
Rule
The duty of care is the essence of the tort of negligence. The absence of the duty of care will
render the other elements of the tort, i.e. the existence of damage, harm, breach of the duty
and others, to be meaningless. The duty of care refers to the responsibility to act with
diligence and due care in the given circumstances, in way that a prudent person would do so
(Kelly, Schwartz and Partlett, 2015). The existence of the duty to care varies from case to
case, depending upon the events. However, the tort law has prescribed certain relationships,
in which the duty of care is said to be implied (Mulheron, 2016). These relationships are that
of-
- A parent and a child
- A doctor and a patient
- A solicitor and a client
In the above-mentioned relationships, law regards that the first person owes a duty to care
towards the second person, even when it is not expressly mentioned about the same.
Apart from the above-mentioned implied relationships, there have been prescribed certain
conditions to be fulfilled to regard that the duty of care exist in the given situation. The
conditions were famously established in the case of Caparo Industries Plc v Dickman [1990]
2 AC 605. These have been listed as follows.

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 The plaintiff and the defendant must be in a proximate relationship with each other.
 The situation must be such that the defendant is in a position to foresee a harm that
may be caused, in the given circumstances; and
 The duty must be imposed in a just and fair manner depending upon the terms and
conditions of the each case.
The fulfilment of all the three mentioned conditions, states that there existed a duty of care. In
addition to this, the secondary liability arises for the employer, on account of the employer
employment relationship. Thus, if an employee has a duty to care, the employer by default
would be liable for the same and the acts done by the employee in the said capacity.
Application
In the given case the family members were not acquainted with the English language and as
per the background of the family member, they were not versed and capable enough of
entering into business transactions on their own. As a result, the solicitor advised them to
avail the services of the financial institution named BNQ. One of the employees of the said
financial institution, Mr Merlin, the financial advisor provided inadequate and irresponsible
services to the family members.
On application of the rules of the duty of care, it can be said that there existed a proximate
nature of relationship between Merlin, being the financial adviser of the family and the
family members. In addition to the above, being knowledgeable about the nature of the
transaction, Merlin would have been aware of the consequences of the transactions that the
family members had entered into, on the basis of the advice rendered. Thus, it can be said that
the principles of the Caparo Industries Plc v Dickman, are being established and that there

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existed a duty of care on the part of Merlin, in the capacity of the financial adviser, to take
reasonable and due care.
Conclusion
Thus, as per the discussions conducted in the previous parts it can be concluded that there
was an existence of the duty of care on the part of Merlin. Being negligent towards
performing his duty reasonably and prudently, he will be liable under the tort of negligence.
In addition to the above, the employer entity BNQ will also be liable for the acts done by its
employee.

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References
ACAS, (2018) Understanding what vicarious liability means for employers. [online]
Available from: http://www.acas.org.uk/index.aspx?articleid=3715 [Accessed on 09/09/2018]
Caparo Industries Plc v Dickman [1990] 2 AC 605
Donoghue v. Stevenson [1932] AC 562.
Elaw Resources. (2018) Negligence [online] Available from: http://www.e-
lawresources.co.uk/Negligence.php [Accessed on 09/09/2018].
Kelly, K., Schwartz, V. E. and Partlett, D. F. (2015) Prosser, Wade, Schwartz, Kelly, and
Partlett's Torts, Cases and Materials. US: Foundation Press.
Latimer, P. (2016) Australian Business Law 2016. Sydney, NSW: CCH Australia Limited.
Mulheron, R. (2016) Principles of tort law. UK: Cambridge University Press.
Stickley, A. P. (2016) Australian torts law. LexisNexis Butterworths.
Tubemakers of Australia Ltd v Fernandez (1976) 10 ALR 303.
Vaughan v Menlove (1837) 3 Bing. N.C. 467