Tort law assignment Essay Example for Free

Tort law assignment Essay Advise John as to claims that he may have against Brian in tort. For John to make a claim against Brian in tort the following three elements must be proved: whether Brian owes a duty of care to John, if that duty was breached and if the breach caused the damage. Liability for negligent misstatements causing pure economic loss have the usual requirements of duty, breach and damages but special treatment is necessary as people are less careful in what they say than in what they do on social and informal occasions. Lord Pierce in Hedley Byrne stated: â€Å"word are more volatile than deeds, they travel faster and are used without being expended† To establish the difference between ‘pure economic loss’ and economic loss which is consequent upon physical damage to property. This was defined in Spartan Steel v Martin 1973, where the loss was foreseeable but Lord Denning held a line must be drawn, and that the loss was better borne by the insures than by the defendants alone. The Misrepresentation Act 1967 states where there is a fiduciary relationship (a person to whom property or power is entrusted for the benefit of another) for example between a solicitor and a client liability arises here in contract and tort. There is no need to prove a duty of care exists. Brian who is a part qualified accountant advised John about the shares, but there was no contract involved so he wouldn’t be liable under contract and tort. Brian advised John to buy shares from Brighwater Ltd. so it was something Brian said to John and not did. Therefore, the area of deceit must be looked at. Deceit occurs when a person knowing or recklessly makes a false representation to the claimant. The leading case Derry v Peek 1888 outlined that no duty would be required in relationship to negligent misrepresentations. Therefore this case can’t be applied to Brian and John’s scenarios as action was only available for fraudulent misrepresentations. This was then overruled in Hedley Byrne v Heller 1964 where the possibility of claims for negligent misstatement was opened up. That a duty of care would arise in appropriate circumstances to give careful advice and that failure to do so would result in liability for economic loss. The House of Lords laid down strict guidelines for when this could apply: If there was a special relationship between the two partes, based on the defendants skill and judgement and the reliance placed upon it. The defendant (advisor) must posses a special skill relating to the type of advice given and must have realise that the claimant (advisee) would rely on that skill. The claimant receiving the advice must have acted in reliance on it as longs as it was reasonable to rely on the advice. To establish whether there was a special relationship between Brian and John the meaning of a special relationship must be looked at. In Chaudry V Prabhaker 1988 it showed that a purely social relationship can give rise to a duty of care, when carefully considered advice was being sought from a party with some expertise. Brian share a social relationship with John as they are friends, but this gave rise to Brian’s duty of care. As carefully considered advice was being sought from John who knew Brian would have some expertise about shares as a he was a part qualified accountant. It was in Yianni v Edwin Evans 1982 which established the existence of a special and that even if there is no contractual relationship between a building society surveyor and the house purchaser that a special relationship could exist. Brian and John did not sign a contract but a special relationship can still be established. Therefore under Hedley Byrne the first guidline has been established to prove there is a duty of care as there is a special relationship between Brian and John, It must be proved that Brian the advisor possessed a special skill relating to the type of advice he gave and must have realise that the John (advisee) would rely on that skill. In Mutual Life and Citizens Assurance v Evatt 1971 it was held that there would only be a duty of care if the party giving advice held himself out as being in the business of giving the advice in question. So, Brian owes John a duty of care as he is a part qualified accountant and he gave out advice about buying Brightwater shares, which is advice relating to the business of accountancy. The second guideline under Hedley Byrne has been established and Brian owes John a duty of care as he possessed a special skill relating to the advice he gave. John must prove that in receiving the advice he acted in reliance on it. As in Smith v Eric S Bush where it was held that if there is foreseeable reliance on advice that has been given that a duty of care is owed. John relied on Brian’s advice and considered it reasonable, as he invested all his shares in the company which shows there was foreseeable reliance. Therefore Brian owes John a duty of care and under Hedley Byrne the last guidline has been proven. However, there has been limitations on these three guidelines as in Caparo V Dickman 1990. The main principle being that the reliance is reasonably foreseeable to the defendant. For a duty of care to exist under Caparo the following must be established: whether the consequences were reasonably foreseeable, if there is a relationship of proximity between the parties, and if it’s fair just and reasonable to impose a duty. For the first part of establishing a duty of care it must be proved that the defendant’s act were reasonably foreseeable. In Kent v Griffiths 2000 it was reasonably foreseeable that the claimant would suffer harm from the failure of the ambulance to arrive. In Bourhill v Young 1943 the motorcyclist did not owe a duty of care as it was not reasonably foreseen that the claimant would be affected by his negligent driving. Brian owes John a duty of care as it is reasonably foreseeable that there is risk involved if Brian advises John to buy shares in Brightwater Ltd. Is there a relationship of proximity between the two parties? This can be through a legal relationship or physical closeness. In Osman v Ferguson 1993 there was a sufficient close relationship between the parties compared to Hill v Chief Constable of South Yorkshire 1998 where the relationship between the police and the victim was not sufficiently close. There is a relationship between Brian and John of friends, so there is a sufficiently close relationship between them. Is it fair just and reasonable to impose a duty of care? It was not held fair just and reasonable to impose a duty of care on the police as there was not a relationship of proximity in Hill v Chief Constable of South Yorkshire. In Capital v Hampshire County Council 1997 it was held fair to impose a duty on the fire brigade. So, it would be fair just and reasonable to impose a duty of care on Brian as he is a part qualified accountant who advised John to buy the shares, so he owed John a duty of care to give careful advice. Therefore Brian satisfies all three stages of the Caparo test and it would be held by the courts that he did owe John a duty of care. Guidance on the factors to be taken into account in establishing a duty of care have been provided by the Court of Appeal in James McNaughten v Hicks Anderson 1991: The purpose for which the statement was made The purpose for which it was communicated The relationship between the person giving the advice, the person receiving the advice and any relevant third parties The size of any class that the person receiving the advice belonged to. The degree of knowledge of the person giving the advice. Reliance by the advisee. In taking these factors into account, Brian’s purpose for which he made the statement ‘trust me, buy their shares you will be on a winner’ was so that John would buy the shares. The purpose Brian communicated the advice for was for John to take action and invest in Brightwater Ltd. The relationship between Brian and John is that they are friends and John was relying on Brian to give him guidance about buying shares. To consider Brian’s knowledge at the time he made the statement was that he had professional knowledge of an accountant, because even if he was only part qualified he would be judged against the standard of a fully qualified accountant. John relied on Brian’s advice, as he was his friend and because he thought Brian was giving him reasonable advice, which he took and then invested shares in the company. Under James Macnaughton all 6 factors have been proven and Brian would owe John a duty of care. Now that it has been proved that Brian owes John a duty of care it must be proved that he breached the duty. For a breach of duty to be proved the following must be taken into consideration: the degree of risk, standard of care and proof of breach. The degree of risk must be high as in Hayley v London Electricity Board where there was a known risk. Brian advised John to buy the shares and there was a high risk that John could lose his money as buying shares is a risky business. So it has been proved that there was a high risk John would lose his money. The standard of care was established in Blyth v Birmingham Waterworks 1856 which introduced a reasonable man test that if the defendant falls against the standard of care a reasonable man would take there is a breach of duty. Brian fell against the standard of care a reasonable man would take as he advised John to buy the shares to be ‘on a winner’ which Brian could not have been certain about so he breached his duty. Specific rule apply to specific people so considerations will be made for different types of people. Mullin v Richards 1998 showed children can be held for negligence. Nettleship v Weston 1971 showed learners would be judged against the standard of a reasonable competent driver. The standard of care expected was that of a similarly qualified expert as in Bolam v Friern Hospital 1957. Therefore even though Brian was only a part qualified accountant, he still fell below the standard expected of a similarly qualified accountant, as he advise John wrongly about the shares and has breached his duty. Proof of breach ‘res ipsa loquitar’ fact speak for themselves rule. The claimant must show that the defendant was in control of the situation that caused the claimants injury and that it was cause by negligence. John can prove that Brian was the reason he lost all of his investment, because if it wasn’t for Brian advising him to buy the shares he wouldn’t have lost the money. Now that breach of duty has been proven, it must be proven that the damages suffered were caused by the breach of duty. This can be proved using the ‘but for’ rule as in Barnett v Chelsea and Kensington1969 where the claimant wouldn’t have suffered the damages ‘but for’ the defendants breach of duty. ‘John wouldn’t have lost out on his investment ‘but for’ Brian advising him to buy the shares. If the ‘but for’ is proven but the damages are too remote from the defendant breach of duty then there is no liability as in Wagon Mound 1961. However John lost all his investment as the company went into liquidation so the damage is not remote. Overall, it has been proven that Brian owes John a duty of care, that he breached the duty and that the damages suffered were caused by his breach so he would be liable! References: Turner C. and Hodge S. (2007) Unlocking Torts. Oxon: Book point Ltd Hogdson J. and Lewthwaite J. (2004) Tort Law. New York:Oxford Press Harpwood V. (2009) Modern Tort Law. Oxon: Routledge-Cavendish McBride N. and Bagshaw R. (2008) Tort Law. Essex: Pearson Education. Cooke J. (2009) Law of Tort. Essex: Pearson Education.