Case Study: Negligence, Duty of Care, and Legal Defenses in Australia

This assignment presents a case study analyzing the legal principles of negligence and duty of care within the Australian legal system. It begins by defining the duty of care in the context of negligent misstatement, referencing the landmark case of Hedley Byrne & Co Ltd v Heller & Partners Ltd. The study outlines the elements required to prove negligence, including the defendant's duty of care, breach of that duty, and resulting damages to the plaintiff. It further discusses the 'reasonable reliance' principle and factors considered by courts in determining duty of care. The assignment then delves into the concept of breach of duty, highlighting the risk factors involved in determining the standard of care. It references relevant statutory laws, such as the Wrongs Act 1958 (Vic), and significant cases like Wyong Shire Council v Shirt. Finally, it explores defenses available to the defendant in negligence cases, including voluntary assumption of risk and contributory negligence, referencing relevant case laws such as Wooldridge v Sumner and Owens v Brimmell. The case study concludes by applying these principles to a hypothetical scenario, evaluating potential outcomes based on the legal concepts discussed.

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Table of Contents
Duty of care................................................................................................................................3
Breach of duty of care................................................................................................................4
Defences for negligence.............................................................................................................5
References..................................................................................................................................6
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Duty of care
Under common law in the law of torts, a negligent misstatement leads to a civil claim. It
basically, refers to a statement which may be negligently given by the defendant and that the
claimant relied on it, causing him harm and loss. Based on this harm or loss, a claim arises
for the claimant to sue the defendant.
Like other common law territories, it was introduced in Australia through Hedley Byrne &
Co Ltd v Heller & Partners Ltd, wherein it was established that it is the duty of defendant not
to cause economic loss to the plaintiff by negligently misstating some information that the
plaintiff acts upon and suffers loss or harm. The Courts have charted their path in umpteen
matters on this subject.
To claim the pure financial loss caused by the carelessness of the defendant and establish
liability, it is pertinent that that plaintiff must prove that it was the duty of the defendant to
prevent that pure economic loss, which was caused to the plaintiff. The onus is then on the
plaintiff to prove that: the defendant owed plaintiff a duty of care; by making the negligent
misstatement, the defendant breached that duty of care; and plaintiff suffered injury or
damage as a result of that breach. (Feinberg, Palmer and Core concepts and key questions.,
2007)
Since this duty of care is beyond reasonable foreseeability, it must be established in each
scenario as per the following considerations:
If the pure economic loss was caused by a misstatement of the defendant, the court relies on:
(Mullender, 1999)
 Reasonable reliance of the plaintiff to act on that the misstatement given by the
defendant;
The term ‘reasonable reliance’ plays an important part in determining the duty of care.
It includes knowledge and reliance. The contention that the defendant knows or
should have known that the plaintiff will rely on the statement given and that the
plaintiff did rely on that negligent statement alone.
 The expertise of the defendant in the subject matter of that statement;
 Request for that information which was provided by the defendant must have
come from the plaintiff;
 No financial gains to the defendant; and
 Disclaimer of liability of the defendant.
If the court determines that the defendant had the duty to care, then he will be held liable for
causing pure economic loss to the plaintiff, who can recover damages for such losses from
the defendant. In the matter of Shaddock & Associates Pty Ltd v. Parramatta City Council, a
solicitor representing Shaddock contacted the city council to check the details of a property
which was widening of roads that were already approved. The council did not provide those
details, and the property was purchased that subsequently resulted in losses. The City Council
was held liable for the negligent misstatement.
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In the present matter, Grace had visited Smith to seek his financial expertise and advice to
invest her superannuation fund. She relied on the information provided by Smith regarding
cryptocurrency and invested all her money, consequently losing it. Smith did have a duty of
care towards Grace since he was aware that Grace had followed her advice to invest in
cryptocurrency.
Breach of duty of care
The elements of breach of duty of care are clearly defined under the statutory laws as
compared to the common law. The breach of duty occurs where the defendant does not meet
the standard set by law. Breach of duty also referred to as dereliction, means failure to follow
the rules or duties set or expected to be followed. After the duty of care has been established,
it is important to highlight that there was a breach due to negligence, which caused the harm
or loss.(Linden, Feldthusen and Brecher, 2012).
There are four key aspects, known as risk factors, which help in determining the standard of
care that must have been followed by the defendant:
i) Likelihood of causing the harm
If there is a greater risk of occurrence of harm, then more safety or precautions must have
been undertaken by the defendant.
ii) the seriousness of the injury
If the possibility of injury or the consequences is severe, then the level of precautions that
should be taken become higher.
iii) importance of the activity
The seriousness of risk due to the action must be justified and be related.
iv) Measures to avoid harm or loss
A balanced approach must be followed to balance the risks against the measures necessary to
avoid that foreseeable harm or loss.
From common law, the claim of negligence has evolved to become a subject under statutory
law, specifically for determining the number of damages that can be awarded in these
matters. It is envisaged in the Wrongs Act 1958 (Vic).
There are two approaches here: the first one specifies that for particular statutory duty, the
court must follow the statutory legal remedy and further, follow the common law duty of
care. The issues of foreseeability even with low probability was the subject matter of Wyong
Shire Council v Shirt. In this matter, the court opined that the defendant was liable even for
any foreseeable risks. However, it is important that such a foreseeable risk is not far-fetched
or fanciful.
Various reforms were introduced to replace the test of foreseeability as laid down in the
matter of Wyong Shire Council v Shirt. Additionally, amendments to the Act clarified that
foreseeability is necessary, but not the only condition to consider negligence. With the
insertion of Section 48 in the Wrongs and Other Acts (Law of Negligence) Act 2003, it was
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specified that a person will not be considered to be negligent in case of failure to take
precautions unless the risk was foreseeable, significant and that a reasonable person must
have taken the necessary precautions.
Defences for negligence
In case of negligence, the following 3key defences are available with the defendant to prove
that he was not liable for the harm or loss incurred to the plaintiff:
i) Voluntary assumption of risk (complete defence);
ii) Contributory negligence (not a complete defence, only reduces the number of
damages proportionately); and
iii) Delay in claiming (technical defence).
Let us know examine the voluntary assumption of risk in detail:
Valentino fit injuria: It refers to the voluntary act of the plaintiff to assume the legal risk on
his own. It is a complete protection to an action of negligence (statement as well as
act/omission). For this defence, it must be aptly clear that the claimant or plaintiff acted
voluntarily and was not affected by the action or statement of the defendant. (Bachmann,
2003).In the matter of Wooldridge v Sumner, the plaintiff, a professional photographer, sat
on the edge of the arena during a horse show. He was injured by a horse whose rider lost its
control. It was held that the rider's collapse to control his horse was an error of judgement and
was not a result of negligence. It was the plaintiff himself who did not regard for his safety
during the event.
It is critical that the ‘voluntary' or free will of the plaintiff/claimant is clear in such matters
for the defence to be applied. Also, it must be agreed upon between the parties that the
plaintiff is acting voluntarily in assuming the risk. In the matter of Owens v Brimmell, both
the parties spent evening drinking alcohol together. Later, the plaintiff accepted lift from the
defendant, who he was aware was drunk. The defendant, while driving met with an accident,
causing serious injuries to the plaintiff. The defence of voluntary risk was not accepted, but
due to contributory negligence, his award was reduced. (Spamann, 2015)
In the present case, Smith can use the defence of voluntary assumption of risk since Grace
did not return to him for investment, but had merely informed him about her choice.
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References
Bachmann, G. (2003). "Volenti non-fit inuria" - How to make a principle work. German Law
Journal, 4(10), pp.1033-1042.
Feinberg, R., Palmer, S. and Core concepts and key questions. (2007). Torts. New York:
Kaplan Pub.
Hedley Byrne & Co v Heller & Partners [1964] AC 465
Linden, A., Feldthusen, B. and Brecher, J. (2012). Negligence. Markham, Ont.: LexisNexis.
Mullender, R. (1999). Negligent Misstatement, Threats and the Scope of the Hedley Byrne
Principle. Modern Law Review, 62(3), pp.425-434.
Owens v Brimmell [1977] 2 WLR 943
Shaddock & Associates Pty Ltd v. Parramatta City Council [1981] HCA 59; 150 CLR 225
Spamann, H. (2015). Monetary Liability for Breach of the Duty of Care?. SSRN Electronic
Journal.
Wooldridge v Sumner [1963] 2 QB 43
Wyong Shire Council v Shirt (1980) 146 CLR 40
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