BTC1110 Notes

Consumer Protection Under the Australian Consumer Law (Sch2 of the Competition and Consumer Act) Prohibition of Misleading or Deceptive Conduct Section 18  

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A person o Legal and natural persons, including corporations Must not, in trade or commerce o The Act was not intended to cover all conduct of the business but only the “conduct … towards persons… with whom it may have dealings … activities or transactions which of their nature bear a trading or commercial character” Concrete Constructions v Nelson (1990) CACL 13.50 Engage in conduct that is misleading or deceptive or is likely to mislead or deceive o “Must convey a meaning inconsistent with the truth… although a statement which is literally true may nevertheless convey another meaning which is untrue, and be proscribed accordingly” World Series Cricket v Parish (1997) CACL 13.60 o Objective Test by the Courts (ACCC v Party, Competitor v Competitor)  Whether the conduct under consideration will mislead ordinary or reasonable members of the class to whom the representation is directed.  Campomar Sociedad, Limitada v Nike International Ltd (2000) CACL 13.60 Issue: Consumers believing a product is produced by Adidias. The average person would have thought that Campomar’s product was branded as a Nike product, as it was next to other Adidas fragrances. Hence it is misleading. Held: Campomar’s produce was misleading due to the similarities.  Apand v Kettle Chip Co (1994) The average person would have thought that Apand’s Country Kettle Chip would have been Kettle’s. Hence it is misleading.  Forrest and Fortescue Metals Ltd v ASIC (2012) CALC 13.61. ASIC alleged that Forrest and Fortescue engaged in misleading or deceptive conduct by announcing that it had made “binding agreements” with Chinese companies. Held: Not misleading as announcing was only showing what they intended to do.  McWilliamsWines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) CACL 13.90. McWilliams wanted to produce wine under the name “Big Mac”. Held: Conduct that merely tends to cause confusion will not ordinarily be sufficient to constitute misleading or deceptive conduct. There will be no misleading or deceptive conduct if comparisons between two products of the same name will avert the connection between the two products. McWilliam’s Wines v McDonald’s System of Australia (1980) claimed deceptive conduct because of McWilliam’s wine ‘Big Mac’ name – was dismissed because a reasonable person would not consider McDonald’s selling a wine product.  Parkdale Custom Built Furniture v Puxu (1982) CACL 13.100. Both producers produced furniture which were similar in shape, design and appearance. Held: There will be no misleading or deceptive conduct if there is a slight difference between two products. Products were always labelled to be different. *If Puxu were prevented from manufacturing suites this will cause Parkdale to have a monopoly. 

Advertisements: “rely on any meaning which was reasonably open to a significant number of the newspaper readership” Talmax Pty Ltd v Telstra Corporation (1997) CACL 13.62 It misled that Telstra was sponsoring someone they didn’t. Basically means if a significant number of readers would have been misled

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ACCC v Turi Foods (2012) CACL 13.65. Turi Foods was a producer of free range food and claimed that chickens enjoyed “free roaming” Held: Misleading general public about “free roam chickens” but the facts were that they were not. The advertisement implied that they are free to roam, hence it was misleading and deceptive conduct. Harvey Norman v ACCC: HN distributed catalogues showing the broadcast of 3D TV of the AFL. Issue: The broadcast was not available in all areas where catalogues were distributed. Held: HN were using deceiving and misleading conduct.

eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Promoter wanted to stop ticket scalping by refusing entry of ticket sold at a profit. Held: FCA held that the promoted had engaged in mislead or deceptive conuct because it did not have reasonable grounds for representing that a ticket sold for profit would in all cases be discovered or cancelled. Misleading Adviice – Clients v advisers. Also applies to firms who rely on complex financial instruments and financial services Wingecarribee Shire Council v Lehman Brothers (2012) CALC 13.130 Securities (SCDO) were misled to be a suitable investment during GFC for risk averse investors. They also deceptively stated that in the event of a GFC, these securities were not risky, but indeed was. Hence, misleading

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Misrepresentations in Pre-Contractual Agreements (Party v Contracting Party)  Parties should be clear when to be legally bound, during negotiations or after contract and should be explicitly expressed.  If the party intends to not continue with the contractual agreement after the other party is incurring expenses and/or doing work in reliance to the contract and continues to do so, knowing the other party is incurring expenses, this amounts to misrepresentation. BBB Constructions v Aldi (2012)  Pre-contractual agreements are not limited only to consumers and public at large, but dealings with businesses. Bevanere v Lubidineuse (1985) CALC 13.150 Deceptive actions by the principle of the appellant company, in charge told the other company that the first in charge would not leave the company, and relied on this idea to continue the purchase of the business and the contract, P already knew the employee intended to leave. During pre negotiations P misrepresented the employment of head employee.  ACCC v Metricon Qld Pty Ltd (2012) ACCC alleged that Metricon distributed brochures containing misleading information. Held: Metricon admitted that it engaged in misleading conduct.  Byers v Dorotea Pty Ltd (1986) CALC 13.160 Representations were made to the homebuyers. Representations were untrue. Held: Applicants were induced into entering into contracts by misleading statements.

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Scenario-based Misrepresentations  Mere Puffs  Will not breach s18

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Opinions, Predictions and Promises  Will breach s18 if the person did not genuinely hold their opinion or did not intend to fulfil their promise.  Will breach s18 if the person has a disadvantage and relied on the opinion or promise to be true under the disadvantage. Zhang v VP302 (2009) Silence or Non-disclosure o Does an average reasonable person in the business would have thought a certain implication and information based on the facts? o Is there a need to disclose this information?  Companies are not compelled to disclose information that would assist decision making (in regards to market strategy, financial, economic, operations) o The person relied on the disclosed information and the non-disclosed information would be related to a term of the contract  The party knew this and still have not disclosed information o The non-disclosure leads to a serious detriment to the person. o Objective Test Miller and Associates v BMW Aus Finance (2010) CACL 13.173. Miller the insurance broker did not disclose a noncancellable policy to BMW. Borrower defaulted and Lender wanted to seek money. Held: The courts unanimously held that the broker had not engaged in misleading or deceptive conduct. BMW had chances to ask about it but chose not to. S52 of TPA did not require party to disclose info that would enable another party of equal bargaining power and competence to avoid the consesquences of carelessly disregarding its own interests. Henjo v Collins Marrickville (1988) CALC 13.171. Henjo were selling a restaurant. Agent led buyer to believe that it could seat 128 people. However, legally the restaurant was only liscensed to seat 84 people. Held: The vendor keeping silent had engaged in misleading conduct as business knew that it was subjet to serious limitations upon its lawful seating capacity.

Issue of fault and intention (causal link) There needs to be a causal link between the misleading conduct and damage. No need to prove the defended at fault or intended to mislead or deceive. This is a strict liability imposed on misrepresentation o There is no liability if: Yorke v Lucas (1985) CACL 13.174 (the exception – merely transmitting info)  the information is received from another firm  it is clear that the firm is not the source of information  firm is genuinely merely passing on information from the source.  Breaches 1. Provision of incomplete facts: a statement that is literally true but is misleading without the consideration of other facts will breach s18 2. Failure to disclose changed circumstances will breach s18 3. Failure to disclose information where applicant had reasonable expectation in all disclosed circumstances will breach s18 Exclusion Clauses  Explicit exclusion clauses for s18 are void. s18 still applies.  However, exclusion clause can be used as a factor in proving that misconduct has not occurred. It must be used in accordance with other factors to rebut misrepresentation. Butcher v Lachlan Elder Realty Pty Ltd (2004) CACL 13.177. Butcher wanted to o

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purchase a property which featured a pool. However, the pool was on govt. property. Disclaimer included that real estate agent did not have expertise to know. Held: does not result in misleading conduct. News and Media Section 19  Exempts certain information providers from misleading and deceptive conduct (news and media agencies)  Does not extend to advertising  Does not extend to contractual agreements made, even if the contract relates to publication ACCC v Channel Seven Brisbane (2009) Remedies for breach of s18 May recover the amount of loss or damage caused by misleading conduct. Individuals involved in the contracvention liable for damages (aided and abetted, induced, knowingly involved in any way in the contravention. Declare (CALC13.900) contract void, varying the terms, refusing to enforce and or all terms, directly refunds of money or return of property, and directing rapeis or render services. Other enforcement provisions(CALC 13.930): under takings, substantiation notices, public warning, nonpunitive orders, adverse publicity order, order disqualifying director. o

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Prohibition of Unconscionable Conduct Section 20 and Section 21 Relates to unconscionable conduct within the meaning of unwritten law Section 20 

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Definition: o Unwritten Law relates to common law and equity ACCC v CG Berbatis Holdings Pty Ltd (2003) CALC 13.220. Tenants in the shopping centre wanted to sell their business. However, can only sell if they can negotiate a new lease with the shopping centre. Shopping centre only agrees if they drop litigations. Issue: Shopping ccentre using its better bargaining position to negotiate deal. Held: Centre owner’s conduct did not constitute unconscionable conduct. Many contracts are made between parties of unequal bargaining power, and good conscience does not require parties to contractual negotiations to forfeit their advants or neglect their own interest. o Extends remedies available but is different with common law or equitable principles Exceptions: o Not unconscionable under unequal bargaining power ACCC v CG Berbatis Holdings Pty Ltd o Has to be on the extreme end of unconscionable conduct. Extra interest for late payments is not considered as extreme unconscionable conduct ACCC v Samton Holdings (2002) CACL 13.225. o General Legal Duties: Neither party is under duty to disclose. o Unless they are under special disadvantage and the other party has acted or have not disclosed according to that disadvantage ACCC v Radio Rentals (2005)

Relates to unconscionable conduct in connection with goods or services Section 21 

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Definition: o More specific, in trade or commerce, in connection with  The supply or possible supply of goods or services to a person (other than a public listed company)  The acquisition of goods or services from a person (other than a public listed company) Factors to consider: Section 22(1) 1. Relative strengths of bargaining power 2. Conditions imposed not reasonably necessary for the protection of legitimate interest of the supplier 3. The customer’s understanding of the documents ACCC v Radio Rentals (2005) CACL 13.250 where the customer was illiterate and Radio Rentals knew this and took advantage of this and contracted. 4. Undue influence, pressure or unfair tactics

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Amount of terms compared to another supplier Extent of supplier’s conduct in relation to other consumers Industry standards and regulation Disclosure of risks arising from supplier’s conduct How willing supplier was to negotiate terms of contract Contractual right to vary a term Supplier and Customer acting in good faith

ACCC v Lux (2004) (CALC13.250) Vacuum salesman sold on credit terms to a customer who is illiterate and unable to understand commercial matters. Coles using its greater bargaining power positiong to try to get a greater profit margin. Exceptions: o Intentional breach of contract knowing that the other party will sue Body Bronze International v FehCorp (2011).CALC 13.360 Remedies CALC 13.280 : o Pecuniary penalties o Civil Remedies o Injunction o Remedies applicable to the unconscionable conduct provisions of the ACL include o injunctions, damages, compensatory orders and other remedies, such as non-punitive orders o and adverse publicity orders. There are also civil pecuniary penalties with maximum o penalties of $1.1 million for a body corporate and $220,000 for a person other than a body o corporate, as well as disqualification orders, redress for non-parties and public warning o notices.

Specific False Representation Provisions Goods/Services Section 29 ACL includes provisions designed to protect consumers against fake representations made by a person in connection with the promotion and supply of goods, services and land. Must not supply goods or services that make a false or misleading representation: Section 29(1) Misrepresentation as to the quality of Goods 1. 2. 3.

Goods of a particular standard, quality, value, grade, composition, style or model or have had a particular history or previous use Services of a particular standard, quality or value or grade Goods are new

Unforced agreement 4.

Person has agreed to acquire goods/services

Misrepresentations of the person selling or past testimonials used 5.

Purports to be a testimonial by any person relating to goods/services a. Testimonial by any person b. Representation that purports to be a testimonial

Misrepresentation on industry standards and regulations 6. 7.

Goods have sponsorship, approval, performance characteristics, accessories, uses or benefits Person making representation has a sponsorship, approval or affiliation

Misrepresentations on the real cost to consumer

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Respect to Price of Goods or Services. a. ACCC v Dell (2002) CACL 13.350, relating to Section 29(1) Dell’s advertisements misleadingly does not disclose additional delivery charge, which changes the final price of computers for consumers. Held: Company’s conduct contravened provision. Prominently displayed price was not the price which would actulally be paid by customers. b. Nationwide News v ACCC (1996), relating to Section 29(1)(m) Misleading ‘free’ mobile phone offer actually amounted to $2K+ but was advertised as free over radio, television and radios.

Misrepresentation on concerns regarding non-core issues 9. Concerns availability of facilities for the repair of goods/spare parts for goods 10. Concerns the place of origin of goods 11. Concerns the need for any goods or services (subsequent, accessories) Misrepresentation on Contractual Rights 12. Concerns the existence, exclusion or effect of condition, warranty, guarantee, right or remedy Misrepresentations regarding Payment to acquire Contractual Rights 13. Concerning a requirement to pay for a contractual right a. Wholly or partly equivalent to any condition, warranty, guarantee, right or remedy b. Person has made under law of Commonwealth, State or Territory Penalties: Section 151(1)  

$1.1M for corporations $220K for individuals

Country of Origin Representations:      

Goods must have been substantially transformed in the country of origin At least 50% of the cost of producing or manufacturing the goods has occurred in country of origin Applies to Made in Australia goods and imported goods. Does not apply to regions such as made in Tasmania or made in California. Product of Australia provided that all of significant ingredients and virtually all of production and manufacturing processes occur within Australia. Otherwise, a breach of Section 18, Section 29(1)(a) or (k) or Section 151(1)(a) or (k) o Relates to a misrepresentation of standard or quality

Sale of Land Section 30 ACL also provides provisions for the making of false or misleading representations in connection with the sale or grant of land. Must not lead a false or misleading representation in connexion with the sale or grant of an interest in land regarding: Section 30(1) 1. 2. 3. 4. 5. 6.

Sponsorship, Approval or Affiliation Nature of Interest in Land Price Payable for Land Location of Land Characteristics of Land The extent of the use of land is capable of lawfully executed a. Given v Pryor (1979) CACL 13.410 Whereby the advertisements for the sale of the land implied that houses can be built on that land, but couldn’t be due to a planning scheme by the government. The seller knew this, and amounted to misrepresentation.

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Existence or availability of facilities associated with the Land

Can be connected to the promotion of the land Videon v Barry Burroughs Pty Ltd (1981) A brochure linked to sale of land is enough basis. Penalties: Section 152(1)  

$1.1M for corporations $220K for other parties

Profitability of Certain Business Activities Section 37 ACL also provides provisions regarding false representations concerning the profitability or risk or any other material aspect of any business activity to considerable extent that can be carried on, at or from a person’s place of residence. Section 37(1) Further, Section 37 includes inviting a person to conduct business activities requiring performance, investment or both, a person must not make a representation that is false or misleading in regards to that business activity. Must not misrepresent risk and profitability. Eg. Investment banking is low risk, you should conduct this business activity. Section 37(2), Ducret v Colourshot CALC 13.440(1981) Franchisor misleads franchisee by stating that business has high ROI, when in reality this was not the case. Representation will not be misleading if they have reasonable grounds for making the representation Quinlivan v ACCC (2004) Penalties: Section 159(1)  

$1.1M for corporations $220K for other parties

Prohibitition of Other “Unfair Practices” 1. 2.

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Misleading Conduct in regards to employment Section 31 Offering rebates, gifts, prizes or other free items with the intention of not providing them as offered Section 32(1) e.g: offereing a ‘gift’ and increasing the price of original good to cover costs. o $1.1M for corporations, $220K for other parties Misleading Conduct in regards to the nature or manufacturing process of goods. Section 33 o Mislead public to the nature of, o Manufacturing process of, o Characteristics of, o Suitability of purpose, o Or quantity of goods produced o $1.1M for corporations, $220K for other parties Misleading conduct in relation to services. Section 34 o Mislead public to the nature of, o Characteristics of, o Suitability of purpose, o Or quantity of services performed o Dawson v World Travel Headquarters Pty Ltd (1981) The travel company had info on their brochures showing that a group holiday was 16 days when in fact it was 15. o $1.1M for corporations, $220K for other parties Bait Advertising Section 35 o Takes the form of attracting customers by the offer of goods at special prices only for the customer to be told on following up that the special price goods are sold but higher priced ones are available for sale. Subsections:

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A person, in trade or commerce, must not advertise (in the future) goods or services at a specified price if:  There is reasonable grounds for believing that the person will not be able to offer goods/services at that price for that period of time  In regards to the nature of the market  In regards to the nature of advertisement 2. A person, in trade or commerce, advertised (current or past), goods or services at a specific price  Person must offer such goods or services for that period  In regards to nature of market  In regards to nature of advertisement o Reardon v Morley (1980) CACL 13.540 Bait advertising was used, and circumstantial evidence was found that dealership was not willing to sell the Ford car at that price as purported in the ad. Only one car was offered at that price. o $1.1M for corporations, $220K for other parties Section 157(1) and (2) Accepting Payment without intending or being able to supply as ordered, or not at all. Section 36 Intended to prohibit the unsolicited issue of credit and debit cards. o $1.1M for corporations, $220K for other parties Section 158(1) Sending unsolicited credit or debit cards. Section 39 o A person must not send a credit card, debit card or any other article that may be used as such except:  At written request  In renewal or replacement of a card of the same kind previously sent to and used by her or him o $1.1M for corporations, $220K for other parties Section 161(1) Threatens and forces payment from a person for unsolicited goods or services Section 40(1),(2) and (4) o Unless that the person has reasonable cause to believe that there is a right to payment Liability for unsolicited goods: No liability for the recipient, furthermore, they become the owner: Section 41 o o

One month after notifying sender in writing Three months of receiving goods in absence of writing Section 41(2),(4)

They do not become the owner if: o o o

The recipient unreasonably refused to permit sender or owner of goods to take possession of them The sender or owner took possession of the goods during relevant period The goods were received in circumstances in which the recipient knew that the goods were not intended for her/him. Section 41(3)

Liability for unsolicited services: No liability for the recipient to pay, or for any loss or damage as a result of supply of services. Section 42 Penalties: o $1.1M for corporations, $220K for other parties Section 162(1) Goods o $1.1M for corporations, $220K for other parties Section 162(2) Services 9. Assertion of Rights to Payment for unauthorised entries or advetisements Section 43 Can’t make an advertisement then charge a person without permission. o $1.1M for corporations, $220K for other parties Section 163(1) and (2) 10. Pyramid Scheme Selling or Inducement Section 44 to Section 46 o $1.1M for corporations, $220K for other parties Section 164(1) and (2) 11. Multiple Pricing Section 48 o Goods have more than one displayed price o Supply takes place for a price that is not the lowest of the displayed price o $5000 for corporations, $1000 for other parties Section 165(1)

If there are multiple prices and prominently specifies a single price, $1.1M for corporations, $220K for other persons Section 166(1) 12. Referral Selling Section 49 (think of hospitatlity training) o Party gives rebate, commission or other benefit for giving referrals to supply goods or services to other consumers. o Contingent on an event occurring after contract is made. Section 49, ACCC v Giraffe World Australia (1999) CACL 13.630 o $1.1M for corporations, $220K for other parties Section 167(1) 13. Harassment and Coercion Section 50 o Must not use physical force o Must not use undue harassment or coercion – repeatedly troubled and unreasonableness o $1.1M for corporations, $220K for other parties Section 168(1) o

Enforcement and Remedies for Unfair Practices Resolutions: Actions must be commenced within six years of the date when the cause of action was accrued. Section 236(1) Cause of action would only accrue until actual loss or damage has been sustained Karedis Enterprises v Antoniou (1995) CACL 13.860 1.

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Criminal Penalties Subsection 151-168 a. Prosecutions must commence within three years of commission Section 212 b. Maximum penalties laid out, maximum penalty of $1.1M for corporations and $200K for individuals c. A corporation is liable for the conduct of its employees. IN ACL Must show proof of intention. d. Criminal proceedings may not be brought for contravention of general prohibition of misleading or deceptive conduct Section 18 or the prohibition on unconscionable conduct Subsection 20 to 22 or provisions concerning unfair contract terms Subsection 23 to 27, Section 217 e. Defences: If it was an honest mistake/ given false information or accident beyond control of defendant. Pecuniary (relating to money) Penalties Section 224(1) a. Court may order the payment of a pecuniary penalty determined by the court Section 224(1) b. Not to exceed maximum amounts Section 224(3) c. May not be ordered if person has (already) been convicted of an offence for the (essentially the) same conduct Section 225(1) d. ACCC v Harvey Norman (2011) CACL 13.711 Misleading conduct occurred in regards to selling new TVs with 3D Features advertised on all of Australia but only available to six major cities. Actual losses or damages, size of contravener and period of contravening conduct were factors that the judge considered to decide on penalties. Penalties amounted to $500K. e. SingTel Optus v ACCC (2012) CACL 13.712 Optus were advertising off peak and peak components of their internet service. When peak data is reached internet speeds are slowed without regard for the off peak data.A penalty must be sufficient to substantially affect the profitability of the contravening campaign and to deter other companies of doing the same. f. ACCC v Apple Pty Ltd (2012) CALC 13.712 Apple advertised the 4G ipad when they were unable to connect to the Australian network. Apple disregarded ACCC’s warning. They valued global uniformity more than the money. Injunction Section 232 a. Court is empowered to grant an injunction to restrain a person from engaging in conduct that constitutes a contravention of the ACL. Section 232 b. Court can restrain ancillary(acts which help an organisation) acts as attempting to contravene or being directly/indirectly knowingly concerned in a contravention. Section 233 c. Can be made by ACCC or ‘any other person’ i. Other persons are given access to the court to restrain misleading or deceptive practices which contravene provisions of the ACL Truth About Motorways v Macquarie Infrastructure Investments (2000)

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Damages Section 236 a. ACL grants the right of action to recover damages for the loss or damage suffered (reasonably arising) by the misconduct of another which contravened the statutory provisions. Section 236(1) b. Causal connection must be established between the loss and the infringing conduct. i. Wakefield Trucks v Lach Transport Pty Ltd (2001) CACL 13.810 Misrepresentation caused party to incur heavier consumption on petrol. Consequential damages were established to be the difference between actual and misrepresented value of consumption and defendant was entitled to this. c. Also applies to the loss of commercial advantage or benefit arising from the misconduct. Talmax v Telstra (1997) CACL 13.820 d. Punitive (subsequent damages arising from damages) are not recoverable under the ACL. Musca v Astle Corp (1988) CACL 13.820 e. Damages arising from gaining competitive advantage by misconduct can be claimed by competitors or persons who have lost profits due to the misconduct. Janssen-Cilag v Pfizer (1992) CACL 13.820 Liabilities of persons involved in contravention, natural persons such as employees are also liable: (a) aided, abetted, counselled or procured the contravention; or (b) induced, whther by threats or promise or otherwise, the contraventions; or has been in any way, directly or indirecetly, knowingly concerned in, or party to, the contravention; or has conspired with others to effect the contravention.

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Other Orders (eg. recission or variation of contracts) a. Compensation Orders Section 237 b. Orders for Non-Party Consumers (in behalf of class of consumers) Section 239 i. Court can execute an order in regards to the consumers affected by the contravention, even if they are not part of the litigation. c. Kind of Orders that may be made: i. Declaring whole or any part of a contract void ii. Varying terms of the contract iii. Refusing to enforce all or any of the contract iv. Refund of money or return of property v. Direct Payment for amount lost vi. Direct repair or provide parts and render specific services on the cost of the person who contravened vii. Direct person who contravened to execute an instrument that varies or terminates a transaction involving land Section 243 d. Must be made within 6 years of the date when the cause of action arose Section 237 (3) Other Enforcement Provisions a. Undertakings – written guarantees by the person who contravened Section 218 b. Substantiation Notice – remove the promotion of Section 219 i. Punishable by $16.5K for corporations and $3.3K for other parties Section 205(1) c. Public Warning Notice – issue a warning for the public Section 223 d. Non-Punitive Orders Section 246 i. Community Service Order ii. Probation Order (up to 3 years) iii. Disclosure Order iv. Order requiring publication of advertisement in specified terms e. Adverse Publicity Order Section 247 i. Order requiring publication of advertisement in specified terms f. Order to disqualify a person from managing Corporations Section 248(1)

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Liability of Persons Involved in Contravention (Personal Liability) Persons such as employees are liable for damages in a contravention of a corporation, wherby they have been closely involved in the contravention

Section 2(1) provides definition on the involvement of a person: o o o o

Has aided, abetted, counselled or procured the contravention Induced, by threats or promises, the contravention Indirectly or directly knowingly concerned in, or party to, the contravention Conspired with others to effect the contravention

Liability is excluded to persons who simply passed the misleading information or had not knowingly known that a contravention has occurred. Yorke v Ross Lucas (1985) CACL 13.830 Ross Lucas merely passed the information from the director in regards to the profitability of the business. For misrepresentation, the accessory must have actual knowledge that the information is false. Hatt v Magro (2007) CACL 13.860 Liability of Corporation for the Conduct of its Employees (Corporate Liability) Unfair conduct rests on the state of mind of the corporation, whether the corporation intends to commit the misconduct or misrepresentation. It is sufficient to show that a director, employee or agent of the corporation had this state of mind Section 139B (Competition and Consumer Act 2010) This generally applies to the ACL as well, so long as the corporation’s representative had authority, express or apparent, and acting within the ordinary course of business done in the usual manner. o o

Adelaide Petroleum NL v Poseidon (1990) Misconduct arising apparent authority holds corporation liable. Snyman v Cooper (1990) Misconduct arising from employee’s own interest and not behalf of company (without authority) is outside of the company’s liability.

Defences for Unfair Practice Provisions There are certain defences available to a defendant prosecuted for contravention of the unfair practices provisions 1.

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Contravention was caused by a reasonable mistake of fact, including one of reasonable reliance to information supplied by another person. Section 207(1) a. However, information must not have been supplied by employees, director or agents of the organisation that the defendant is acting in representation of. Section 207(2) b. Thorp v CA Imports Pty Ltd (1990) CACL 13.690 Relied on Department of Trade on the definition of “Made in Australia” as 50% of manufacturing costs were incurred in Australia, and relied on the is information to convey to its consumers that their product was “Made in Australia. Was not contravening unfair practice provisions. Contravention was caused by the default of another person, to an accident or some other cause beyond defendant’s control. Section 208(1) a. Defendant took reasonable precautions and exercised due diligence to avoid the contravention. Defences against innocently publishing offending advertisements a. A person whose business is to publish/arrange for publication of advertisements b. Received the advertisement for publication in the ordinary course of business c. Did not know and had no reason to suspect that the publication would amount to a contravention of an offence provision Subsection 209, 251

Look up thalidomide case!

(1) Tort damages want to restore party to original position as best they can before commission of the tort (2) Tort damages are also punitive damages to punish (3) Contract damages under expectations damage, want to put them in position of where they would have been had the contract been performed (future position) (4) Reliance damages for relying on the contract that was breached (5) Law of contracts damages does not punish or deter breach

Tort of Negligence Damages are now recovereable not only for negligent infliction of physical damage but also for financial loss. Negligence emerged as an individual tort following the landmark decision. In this case Donoghue’s friend ordered a ice-cream drink for him. And at the end when they poured the remainder of the ginger beer into the glass, a decomposed snail was found. Donoghue sued for the illness he suffered as a result. Could not sure for contract because there was only a contractual relationship between Donoghue’s friend and the restaurant, and not ACL as the product itself was not misrepresented. Donoghue v Stevenson (1932) established that there is an action arising from negligence if: 1. 2. 3. 4.

The defendant owed the plaintiff a duty of care The defendant was in breach of duty of care The defendant’s breach of duty was the cause of plaintiff’s loss (causation) The damage suffered by plaintiff was not too remote (remoteness)

Duty of Care A liability for negligence will not arise unless the defendant owed the plaintiff a duty of care! Duty of care arises due to the “neighbour principle”(simple test of foreseeability) –Arised from law of law not to injure your neighbour. You must take reasonable care to avoid acts or omissions which you can reasonable forsee which would likely to injure your neighbour. A neighbour is someone who is foreseeability of harm on another person based on one’s own actions. A manufactuer must contemplate the effects on the final consumer. Donoghue v Stevenson (1932) CACL 14.60. A defendant owes a duty of care in pure nervous shock actions if: Tame v New South Wales (2002) CACL 14.91 Tame was involved in a car accident and the police officer mistakenly took a wrong BAC reading. Tame became obsessed and suffered psychological harm as a result of the wrong reading. Tame sued the cop for negligence.   

Defendant had the plaintiff or persons in his or her position in mind when contemplating acting or failing to act The defendant’s conduct would have caused a person of normal fortitude to suffer nervous shock Defendant ought to have reasonably foreseen that his or her act or omission might cause nervous shock to a person of normal fortitude Held: Cop did not behave negligently as he was not able to see his error to cause such a reaction.

A defendant owes a duty of care, and can liable for damages if nervous shock occurs: Wicks v State Rail Authority (2010) CACL 14.93 Two officers first at the scene of the crime tried to sue for nervous shock caused by the scenes of a train derailment. However, they did not succeed because they were not at the scene when the event happened. They would’ve won if they witnessed it. 

A result of defendant’s negligence

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Plaintiff witnesses, at the scene the victim being killed, injured or put to peril (in this case, victims were under pain over an extended period of time) If plaintiff does not witness the above, any damages arising from nervous shock is outside the defendant’s duty of care.

There are three natures for Duty of Care: 1. 2. 3.

Positive Infliction of Harm Liability for Omissions Pure Economic Loss

Category 1: Duty of Care and Positive Infliction of Harm CALC 14.410 The existence of the duty of care depends on whether the harm suffered by the plaintiff was reasonably foreseeable. Application of the Objective Test is required, whether to see that the harm suffered was reasonably foreseeable:   

A reasonable onlooker Would have foreseen the possibility of injury To certain individuals involved in the particular event

Lynch v Lynch (2002) A pregnant mother driving carelessly sustains injuries to her unborn foetus. It can be reasonably foreseen that driving recklessly can sustain damages to an unborn foetus if the driver was the pregnant woman herself, and therefore liable. Bowditch v McEwan (2002) medical practitioner liable for harm to unborn baby when working on the mother. Tame v NSW : Respondent did not owe duty of care. Check explanation process of decision Category 2: Duty of Care and Liability for Omissions The plaintiff suffers harm is brought about by the defendant;s failure to act, not by a positive infliction of harm. *Positive action. A person cannot be seen as negligent when they try to help someone when they suffer heart attack. Applies under:  

Where the parties are in a pre-existing relationship which contains features such as reliance and dependence Where the defendant is in charge of or has control over another person or property.

Examples:     

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Doctor and Patient – duty to warn a patient of material risk in proposed treatment Rogers v Whitaker (1992) Prison Authority and Prisoner – safety of inmates rest on authority NSW v Bujdoso (2005) Employer and Employee – protect employee from harm brought by third party assailants Chomentowski v Red Garter Restaurant (1970) Occupier and Occupant (Leaser and Leasee) – no duty of care for harm done by third party assailant caused to occupant Modbury Triangle Shopping Centre v Anzil (2000) Occupant and Patrons – duty of care for the protection of patrons in a venue Modbury Trianle Shopping Centre v Anzil (2000) [In this case a third party harmed another on the venue, and venue is not liable], distinguished from Adeels v Mourabak [ in this case the restaurant had a duty of care to stop violent and disorderly conduct to prevent injury as a result] Publican and Patron (Licensee of Bar and Bar customers) – duty of care for monitoring their safety by minimising consequences of alcohol CAL No 14 v Motor Accidents Board (2009) CACL 14.150 [In this case customer was drinking heavily and demanded bar staff to hand over keys. Motorist died. Bar tender was not liable because owed no duty of care at common law to customer which requires them to monitor and minimise consequences of alcohol consumed”.

Public Authorities and Omissions: Crimmins v Stevedoring Industry Finance Committee (1999) CACL 14.170 set out the following test for whether a statutory authority owes a common law duty not to omit, but to take positive action: 1. 2. 3. 4. 5.

6.

Forseeability – Did the act or omission of the defendant includes a failure to exercise statutory powers resulting injury to the physical state or to the interests of the plaintiff? No, no duty Scope of Protection – By reason of the defendant’s statutory or assumed obligations or control, did the defendant have power to protect a specific class including the plaintiff? No, no duty Vulnerability – was the plaintiff or their interests so vulnerable that the plaintiff could not reasonably be expected to adequately safeguard themselves or their interests from harm? No, no duty Risk of Harm – did the defendant know, or ought to have known the risk of harm to a specific class including the plaintiff if powers were not exercised? No, no duty Liability to the Defendant – would such a duty impose liability with respect to the defendant’s “core-policy making” or “quasi-legislative” functions (relates to legal implications of the duty to act positively)? Yes, there is a duty. Are there any supervening reasons in policy to deny the existence of a duty of care? Yes, there is a duty

Graham Barclay Oysters v Ryan (2002) CACL 14.170 The government was not given any specific powers or functions with respect to oysters or industry. Council had no control over risk of contamination. (Point 2 above) . Not liable. Nagle v Rottnest Island Authority (1993) A public authority that manages and controls land, parks, reserves or other public area can come under a duty to take steps to protect members of public against foreseeable danger in that area. If the recreational activity is clearly dangerous than no liability. Category 3: The Duty of Care in Pure Economic Loss Plaintiff suffers no injury or physical damage to their property but is simply financially worse off as a result of defendant’s negligence. Five Principles which are relevant in determining the duty issue in an economic loss case: 1. 2.

3. 4.

5.

Reasonable Foreseeability Indeterminacy of Liability a. Court would refuse to recognise duty that would lead to liability indeterminate amount for an indeterminate time to an indeterminate class (basically unlimited liability) b. Ultramares v Touche (1931) CACL 14.265 The accountants showed a balance sheet that showed a business to be in a good financial position when they were insolvent. Held: Accountants were not liable for the blunder as sstablishing a duty of care on failure of accountants to discover fraud places an indeterminate liability on accountants for all fraud cases involving accountants. The Individual Autonomy Factor a. Court rejects a duty of care that is tied with the legitimate protection a person’s business or social interests only. Vulnerability to Risk a. Plaintiff was likely to suffer damage if reasonable care was not taken by them. b. Relates more to plaintiff’s ability to protect themselves, regardless of the defendant’s measures to ease or eliminate the consequences of loss Wolcock Street Investments v CDG (2004) CACL 14.220 c. Johnson Tiles v Esso (2003) Plaintiffs could have taken considerable steps to protect themselves from interruption of gas supply. Further, business insurance was available to them to cover these losses. In this case, their vulnerability was negated. Defendant’s Knowledge(actual or constructive) of the Risk (and its magnitude) a. Perre v Apand (1999) Defendant’s farm was diseased, preventing plaintiff’s farm from continuing business. The legislation prevented importation of any crop within 20km of diseased crops. Defendant knew this consequence due to the laws imposed by government in terms of diseased crops. Also plaintiffs could have protected themselves against the risk.

Categories of economic loss wherethe courts have allowed recovery.: 1. Negligent Misstatement 2. Plaintiff’s Loss flowed from damage to a third party 3. Plaintiff’s Loss caused by defective product or structure 4. Plaintiff’s Loss was the result of professional negligence 1. Negligent Misstatement: Also check Ultramares v Touche. Hedley Byrne & Co Ltd v Heller & Partners (1964) CACL 14.267 An advertising company was to place an ad for Easipower. It sought credit references from a merchant bank, written report shows they were credit worthy. However, Easipower was not credit worthy. They were unable to recover the money. House of Lords held that law implies a duty of care in making of statements and that a negligent, through honest, statement may give rise to an action for damages. Careless acts arising from misstatements could lead to great repercussions. There needs to be a fiduciary relationship between two parties: 1. 2. 3. 4. 5.

One party trusts (or in reliance of) another The other party has access, or have known to have access to specific information Gives the best of the information to make an advice or information Reasonable for the receiving party to seek and act on this advice or information Receiving party relies on this advice or information Special relationship explained in Mutual Life and Citizens’s Assurance Co Ltd v Evatt (1968) When a person gives info or advice to another and is sought for a serious matter (e.g: Business). A relationship arises when speaker realises that he is being trusted. Particularly if the info is only of special access to the speaker. The speaker has to give his best information under the circumstances. It is reasonable for the person to receive the info and as such the speaker must use a duty o care to utilise with reasonable care the sources of info at his disposal to employ with reasonable care what capacity he has for judgement in relation to the matter and to exercise reasonable care in the expression of what he is prepared to covey by way of info or advice. San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (1986). Publication of a revelopement plan by the State Planning Authoirty and the Sydney City Council were scrapt. However, San already purchased the land, and suffered an economic loss as a result. Plaintiffs argued that they have falsely represented the plan as feasible. HC held that the alleged representation was not made.

Where there is so, exists a duty of care to reasonably utilise information and knowledge, reasonably employ capacity for judgement and reasonably express and convey this information or advice to the other party.

Shaddock & Associates v Parramatta City Council (1981) Government owed a duty of care to the provision of advice or information to the kind that called for skill and competence that the council professed to possess. Shaddock inquired about the property, however the council was negligent as to not giving Shaddock the information for proposed redevelopment that would restructure the property. Shaddock trusted the Government (1), and the Government had the skill, knowledge and competency (2,3) and Shaddock relied on their information to make a decision (5). Disclosing extra information would have not placed any unreasonable burdens for the council. City council had was under a duty of care in relation to provision of advice or giving of info.

Perre VS Shaddock. CALC 14.295 In shaddock plaintiffs were vulnerable as the city council was the only place they could have gotten the information. The defendents known or should’ve known. Also City council knew or ought to know that the recipient intended to rely on the info (reasonably foreseeable). Esanda v Peat Marwing Hungerfords (1997) Esanda a financer relied on the audit statemetns of PMH. However, Excel one of the business’s PMC audits went bankrupt. PMH misstated the Financial position of Excel. No duty of care is owed to the general public for a use of the financial statements published by PMH. There needs to be sufficient relationship between one party to the other, and this was not the case here. Esanda relied on public reports created by PMH to make a financial decision to work with Excel, but had no special relationship with PMH. PMH should have foreseen that their audits could have been used by a specific class of the public, but was not enough to give rise to duty of care. Reasonably foreseeable that the statements might be used by 3 rd parties was not enough. In every case must establish that: defendant knew reasonably the info or advice given would lead to a transaction that would have a risk in economic loss. 2. Economic Loss Flowing from Damage to the Property of a Third Party: CALC 14.340 Third party may be able to recover damages arising from negligence of a party. Caltex Oil v The Dredge ‘Willemstad’ (1976) AOR had a pipeline which transferred Caltex’s oil. When the pipeline was damaged Caltex suffered economic loss as a result. Held: Caltex could claim losses. Conditions for negligence (foreseeability of damages) still need to be satisfied, and a causal link established. Breach of the Duty of Care Involves the consideration of whether the defendant has met the standard care required by the law of negligence. The standard expected is that of the “reasonable man.” (arising from normal and considerable human affairs) Blyth v Birmingham Waterworks Co (1856) CACL 14.390 It is important to consider the standard of care relative to(these are not looked at in isolation but weighted against one another):  

Significance of Harm 1. Risk is not far-fetched or fanciful 2. Failure to respond to a risk of harm that is not insignificant Risk Implications Factors Section 5B(2), Civil Liability Act 2002 3. The probability of the risk of injury  Defendant may be justified in disregarding a foreseeable risk if the probability is small and a reasonable man would disregard the risk.  Bolton v Stone (1951) CACL 14.400 Probability of getting hit by cricket ball is unlikely, and that to actually prevent the risk they would have to stop playing cricket. Hence, case was dismissed.  Romeo v Conservation Commission of the Northern Terriroty (1998) CALC 14.400. Plaintiff who had been drinking with friends at Dripstone Cliffs, fell down a 6 metre cliff. A assessment of the probability of injury was done. Held: Not liable. Shaw v Thomas (2010) Held that there was a low probability of a falling from a double bunk was low probability. The court found that the duty of the plaintiff could have extended to include a ladder or guard rail near the bunk bed. 4. The gravity of the harm  The more serious the risk, the greater the demand for precaution on the part of the defendant.  If the defendant’s activity is dangerous, then “a prudent person would take higher degree of care.” Burnie Port Authority v General Jones (1994) CACL 14.410

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Where the plaintiff, to the defendant’s knowledge has a particular susceptibility which increases the gravity or seriousness of risk Paris v Stepney Borough (1951) Brakoulias v Karunaharan (2012) Mrs B suffered a heart attack as a result of taking prescribed drugs given by Dr K. Suing for negligence. Held: Dr K was not negligent in her management and treatment of Mrs B. Rogers v Whitaker (1992) There is a standard of care to give warnings to patients that a potential complication that could possibly directly arise in the medical activities which has considerable risk and implications even if the risk is minimal. HC said “ the standard of reasonable care and skill required is that of the ordinary skilled person exercising and professing to have that specialised skill”. (must get peer professional opinon for defence). Surgeon must warn of the risk of a surgery even though it is very rare (especially if the person is already blind in one eye). Paris v Stepney Borough Council (1951) defendant employer knew that the plaintiff (the employee) was blind in one eye. An accident caused by the negligence of providing goggles made him completely blind. The gravity of complete blindness was taken into consideration. Held: liable.

Risk Aversion Factors Section 5B(2), Civil Liability Act 2002 5. The burden of eliminating the risk  “One must balance the risk against the measures necessary to eliminate the risk.” Watt v Hertfordshire CC (1954) CACL 14.430  The easier it is to eliminate the risk, the less likely a defendant’s failure to take precautionary steps would be justifiable. Courts take into consideration the costs involved in eliminating risks and also the risks that these steps may themselves involve. Mercer v Commisioner for Road Transport and Tramways.  Graham Barclay Oysters v Ryan (2002) Costs of cessation of Wallis Lake oysters or removal or operations in the area constituted “Alleviating action of the most difficult, expensive and inconvenient type.” Defendant was not reasonably expected to remove ALL of the risk.  Woods v Multi-Sport Holding Pty Ltd (2002) Market availability of a protective helmet was the issue for the indoor cricket game organiser to provide for the players.  The rules of the game did not include the use of protective gear, and the design and manufacter of the head gear had yet to be completed. Held: not liable. 6. The utility (for the greater good) of the defendant’s conduct The gravity of the risk is also weighed against the utility or social value of the defendant’s conduct. When determining breach of the duty of care, the defendant’s compliance or non compliance with applicable statutory standards are considered. However not conclusive. compliance with the appropriate traffic regulations may still be found to have been in breach of the duty of care owed to other road users.  Life-saving activity outweighed the risk of injury to the plaintiff Watt v Herfordshire CC(1954) CACL 14.460  Soldiers injuring terrorists would be considered acting in utility for the greater good, and as suck exempted from a breach of duty of care.

Once the standard of care also relates to what a reasonable person would have done in regards to the risks(an objective and impersonal test): 

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What a person of the same circumstance and demographic o Trade skills and expertise required for a profession o Knowledge of the person at the same level of profession Relative to the situation at hand Would have done Also if it is a very young person may give way to standards of a child.

Standard of Care for Professionals, Defence against Liability: Section 5O Civil Liability Act 2002 (NSW)

1.

2. 3. 4.

A person practising a profession does not incur a liability in negligence arising from professional service if it is established that the professional acted in a manner that (at the time provided) was widely accepted in Australia by peer professional opinion as professional practice However, court may dismiss peer professional opinion if the opinion is irrational One of the many differing peer opinions in Australia can still be relied on Peer professional opinion need not be universally accepted but merely widely accepted.

Causation of Damage Plaintiff must prove that the breach of duty caused the particular harm, a test or element of “factual causation”: not enough to just show duty of care and also breach of. A hypothetical test involving another scenario with the same facts “but for” (or without) the defendant’s negligence is the basis for deciding causation. If the plaintiff would have not suffered without the negligent act or omission, then the negligence is taken to be effective. Strong v Woolworths Limited (2012) CACL 14.505 Strong had to use crutches and a chip on the floor caused her injury. Plaintiff cannot locate where the chip was dropped but there were high probabilities that Woolworths’ inability to clean its floors led to the plaintiff’s injuries. If Woolworths adhered to cleaning measures, then the plaintiff would have not suffered. (Hypothetical Test) Modbury Triangle Shopping Centre v Anzil (2000) CACL 14.508 Shopping centre worker was injured when set upon by assailants in an unlit shopping centre car park. Whilst poor lighting may have facilitated the attack it had nothing to do with the plaintiff’s injuries. Plaintiff could have still suffered with proper lighting, and the link between the attack and the lighting is weak (Hypothetical Test) [ not established that whether the failure to provide security personnel resulted in shootings] Chappel v Hard. A doctors surgery caused the plaintaiff’s voice to be lossed. Althoguht the operation was conducted with reasonable care and skill and surgery would have been required at a later date, the plaintiff, had she been aware of the risks, would have delayed the surgery and taken steps to have it performed by the most experienced surgeon in the field. Rosenburg v Percival (2001) the plaintiff patient was unable to establish she had been made aware of temporomandibular joint complications, she would have not gone with the procedure. *any failure to warn of the risk such complication was not a case of the plaintiff’s harm. Tabet v Gett: unable to establish that the injury suffered would not have happened ‘but for’ the defendant doctor’s negligent delay of treatment. Plaintiff argued the “loss of chance” should be recognised as actionable damage. Amaca v Booth (2011) it is not enough for the plaintiff to show that the defendant’s negligence increased the risk of injury. A causal connection must exist between the conduct and the injury. Other intervening causes must also be considered in assessing the causation, whether these intervening causes can break the chain of causation. Bennet v Minister of Community Welfare (1992) CACL 14.508 Remoteness of Damage (relates to scope of liability) Test for Remoteness of Damage is whether the damage was reasonably foreseeable by the defendant. Wagon Mound No 1 (1961) CACL 14.520. Ship negligently spilt a quantity of oil, oil floated to service an ignited causing damage to the dock. held:The resulting havoc leading to the destruction of the wharf was not reasonably foreseeable by the defendant. It was not reasonable to expect that an oil spill nearby a wharf could cause cotton wick to ignite by fire and destroy a wharf. Wharf destruction was remote. “ a man must be considered to be responsible for the probably consequences of his/her act. To demand more of him is too harsh a rule, to demand less is to ignore that civilised order requires the observance of a minimum standard of conduct”.

Wagon Mound No 2 (1967) CACL 14.530 The same incident happened, and it was clear that there were fire damage from previous events. Due to the past damages arising from oil spills, it was reasonable to expect that this may happen again if another oil spill takes place. Wharf destruction was not remote due to past events. Rowe v McCartney (1976) defendant drove negligently and struck a telegraph and became a quadriplegic. The plaintiff (the passenger, suffered psychiatric illness. Courts held that this was not reasonably foreseeable in the cirumcstances. Defences to an Action in Negligence 1.

2.

Contributory Negligence (failure to take reasonable precautions against a foreseeable risk or injury) (to be contributory the plaintiff’s negligency must be causally relevant to the damages suffered.  Portion of damages contributed by the plaintiff not recoverable Section 10 Law Reform (Misc Provisions) Act 1965 NSW  Plaintiff’s contributory negligence must be relevant to the damaged suffered  Has plaintiff taken reasonable care to his/her own safety?  Must be pleaded by the defendant  Onus of proof rests on defendant  The apportionment is worked out by comparison to the party’s degree of departure from the standard of a reasonable man Pennington v Norris (1956)  The greater the risk or greater the negligence put upon the person to himself, the less the defendant’s negligence would impact them.  An assessment of damages done if it is completely defendents fault. And a pertange is deducted which is the plaintiff’s fault.  Liftronic Pty Ltd v Unver: Held reduced plaintiff’s damages by 60%, the defendant had in place a safe stystem of lifting if it had been used by the plaintiff, would have prevented the plaintiff’s injury.  BMW Australia Finance v Miller & Associates Insurance Broking (2009) The carelessness of the plaintiff not making enquiries regarding insurance policies is a contributory negligence. Voluntary Assumption of Risk  Plaintiff consented to the risk freely.  Plaintiff has fully appreciated the risk.  Is a complete defence  With voluntary presumption, the presumption is that the plaintiff is aware of the risk involved. The onus is on the plaintiff to show how he/she was not aware of that risk.  Bathurst Regional Council V Standard & Poor’s, Local Governemtn Financial Services and ABN Armo (2012) Duty of care vs Esanda case – sole purpose of ratings agency is to provide info to communicate to investors for them to rely upon to inviest. Vs Perre v Apand case – courts rejected indeterminate as it is determined to protect against indeterminate liability not multiple plaintiffs. Also S&P argued that the councils were not vulnerable because they could of protected themselves from loss by seeking their own advise, courts rejected the ratings agency had a “extremely strong capacity” to meet all financial obligations. Negligence misstatement : the speaker realises or shold realise that the recipient intents to act upon the advice in connection with a serious matter and it was reasonable for the recipient to rely on the advise. Breach of duty of care S&P argued that the GFC was unforeseeable. Courts rejected this argument. Though the GFC was not reasonably foreseeable does not mean the harm was not foreseeable. Damages, determining factual causation. Remoteness: Succeed under s18?

Torts of Strict Liability

Any person who partakes in dangerous activity within his or her premises is strictly liable to take reasonable care to avoid a reasonably foreseeable risk of injury or damage to the person or property of another. Burnie Port Authority v General Jones (1994) CACL 14.600. Defendant owed plaintiff a duty of care for the contractual activites of others. Fire causing damage to the plaintiff was reasonably foreseeable. Vicarious Liability A person is sometimes regarded by the law as responsible for the acts or omissions of another person. The acts of negligence caused by that person may have been the fault of another. Hence, there is vicarious liability. Eg. A is guiding B, B initiates activity, C is injured and it was found that A and B have been negligent in taking reasonable care to their actions. Arises when there is a special relationship:  

Specific legal authority to tell worker what to do and how to do it Humberstone v Northern Timber Mills (1949) CACL 14.620 Does not apply to employers of independent contractors(i.e servants) since contractors are not directly controllable, in terms of direct acts and omissions of the contractor’s employees Hollis v Vabu (2001) CACL 14.620

Other factors in terms of employer-employee relationship:   

Mode of Remuneration Power of Dismissal Provision of Equipment

Liability depends on: 

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Level of control that a person has on another, whilst negligence occurs – the greater the control of another party, the more likely they are liable. Mersey Docks and Harbour Board v Griffith (Liverpool) Ltd (1947). Apellants hired a crane and operator. It was held that the stevefores were not liable for the crane driver’s negligence because they had no authority to tell him how to handle the crane while carrying out the work. Relevance to the employment or task at hand – must be relevant to the work or task at hand, otherwise the party is not liable for the unrelated actions of another NSW v Lepore (2003) CACL 14.640 where employer not laible for the predatory sexual behaviour of employee.