NEGLIGENCE: THE EMPLOYERS DUTIES

Employers Liability in Negligence

May be personally liable to employees who injure themselves.
May be personally liable to employees who are injured by another employee or sometimes by an
independent contractor employed by the employer.
May be vicariously liable if one employee is injured by another employee.
NOTE:
Employees may also be able to recover from statutory workers compensation schemes.
Employees rights at common law may be restricted by the same schemes.
e.g. WorkCover Queensland Act 1996

Other Possible Causes of Action Against an Employer

The tort of breach of statutory duty (separate tort).
Breach of an express or implied term of the contract of employment (contracts).
Non-employees may be able to sue an employer on general negligence principles or in some other
select duty category.
Employers may be vicariously liable to non-employees injured by employees.

Summary
An employer may be:
Personally liable in negligence to injured employees and third parties;
Vicariously liable to employees and third parties injured by employees;
Liable otherwise e.g. breach of statutory duty.

Why may employers be liable to employees both personally and vicariously?

One answer: personal liability relates to negligence only; vicarious liability also relates to other
torts e.g. conversion.
More importantly: the historical context of the unholy trinity of defences once available at
common law to protect employers from liability to employees in negligence actions.

The historical context

The earliest English legislation was designed to prevent the workers who had survived the Black
Death of 1348 from demanding wage rises and/or leaving their current employer.
In the 17th century, it was legally permissible to discipline with a cudgel but not a sword.
The 19th century:
Industrial revolution (started c1750).
Relationship of master and servant is based upon the law of contract.
Jeremy Bentham and the philosophy of laissez faire i.e. there should be no restriction on
freedom of contract.
Legislation preventing workers collectives (i.e. trade unions).

The unholy trinity

Common Employment:
Based upon a fictitious term in the employment contract that servants accepted the
natural risks of employment including the natural risks of employment including
negligence by fellow employees.
Volenti non fit injuria:
Will only be available today in the most extreme cases e.g. ICI v. Shatwell
Contributory Negligence:
Abolished by statute as a complete defence.

Common Employment
Doctrine did not apply where the master had breached a personal duty of care
Therefore, as the courts became more sympathetic to servants the notion of a personal duty was
expanded.
Contributed to the development of workers compensation legislation.
Common employment as a defence was legislatively abolished in the mid 20th century.
The Employment Category
 The duty is owed through precedent, an established duty category.
It is the content and scope of that duty which may be contentious.
Traditionally the duty owed has been divided into 3 aspects:
Proper plant, appliances and works;
Competent selection of staff (established in Wilson v Tyneside Window Cleaning);
Safe system of work.
NOTE:
There are no fixed technical rules and decisions in similar cases are only a guide.
Need to balance the relevant factors because the risk is usually foreseeable.
Expert evidence is not conclusive.
Re the nature of the relationship compare:
Raimondo v. State of SA (1959)
Bankstown Foundry v. Braistina (1986)
Bus v. SCC (1989)

Raimondos Case (1959)

The nature of the relationship is not one of nurse and imbecile child.
Experienced painter and the risk of injury was very slight.
Employee could appreciate risk of injury as much as the employer.
Unlikely that warning would have made any difference.
Therefore, employer not found liable.
Esp. at page 517/8.

Braistinas Case (1986)

Appeal by the employer against:
1. The finding of liability.
2. The finding of only 10% contributory negligence.
Dismissed the appeal:
1. P conduct must be judged in the context of the finding of Ds failure to provide a safe
system of work.
2. Ps conduct was mere inadvertence, inattention or misjudgement.
Leading Authority presently.
At page 310, Once it is accepted that such use [of such hoist] would eliminate the risk of injury,
it is necessarily follows that a prudent employer exercising reasonable care would require that it
be used.
The employer must insist on a safe system, if it is not used, must sack the employee.

Bus v. S.C.C. (1989)

The law has progressed by placing an increased emphasis upon the relevance of the possibility of
negligence or inadventure on the part of the person to whom the duty is owed at page 90.
Defendants must anticipate carelessness on the behalf of others.

Premises and Tools

Davie v. New Merton Board Mills
The plaintiff got hit in the eye by a piece of a chisel, the employer was not liable because:
The defect in the tools was not discoverable on reasonable inspection AND
Bought from a reputable manufacturer.

Wilson v Tyneside
Employer not liable because:
P experienced window cleaner.
D did issue warnings in writing and orally.
Duty not so high when premises not Ds.
P had cleaned those windows before and knew them to be unsafe.
Checking was not the trade practice.

Smith v. Austin Lifts

Employer 20% and owner 80% liable.
Had reported the defective door four times.
 Employer had reported defect to owner by the owner had done nothing.

Halleys Case
Employer liable when employee lost both legs below the knees.
Trainee shunter (17 years old).
Given no specific warnings.
Caused by his enthusiasm and zeal to do the job.
Since introduced a training programme.

The Current Standard

Braistinas Case (1989)
High Courts explanation that the changing and higher standards placed on employers reflect
community standards as to the responsibilities of employers and as to who should bear the cost of
compensating injured employees at pages 309 & 314.

Workers Compensation Legislation

An example of the tension between judicial and legislative law making.
Based on strict liability i.e. there is no need to prove negligence on the part of the employer, fault
is irrelevant.
Liability must arise out of or in the course of employment.
Causal or temporal link with employment.
Covers physical injury and disease.
Aggravation or acceleration of disease.
In some jurisdictions mental suffering.

Provides For:
Periodic payments for loss of earnings for a specified period.
Then further reduced until cuts off.
Hospital and medical expenses.
Death benefit for dependants.
Lump sum for the loss of a bodily function or part.
For example:
loss of nose $25 775
loss of smell $12 600
paraplegia $92 790
quadriplegia $103 100
genitals $50 300
loss of kidney $10 310
loss of fertility $15 465
loss of sexual function $30930

Generally:
An injured employee has 2 avenues of compensation:
Workers compensation.
Common law claim for damages less workers compensation.
Recent changes have included:
Caps on the amounts of damages.
Complete bans on employees access to Common Law.
Restrictions on common law actions:
Re types of compensation recoverable.
Re making choice between workers comp and the common law.
Substantive and procedural modification of common law.

WorkCover Queensland Act

A more restricted definiton of a worker.
Someone who works under a contract of service AND is a PAYE employee.
Compensation for work realted impairment of less that 20%
 Must irrevocably choose to either accept the WorkCover lumpsum entitlement or sue the
employer at common law.
non-certifiable injury (less than 20%)
All common law actions against employers are now subject to Ch 5 - Access to Damages -
which modifies the common law in regard to:
Nature of liability;
Nature and quantum of damages;
Orders as to cost;
Procedural matters.
For example Liability:
If common law actions is based on the failure to provide a safe system of work, must
prove that the employer made no genuine and reasonable attempt to put such a system
in place.
That the event giving rise to the injury was not solely as a result of inattention,
momentary or otherwise, on the workers part

The Employers Duty

An Employee:
At common law the contract of employment is a contract of service.
Generally this means that the employer has lawful authority or control over the
employee.
Also that the employer is vicariously liable.
Vicarious liability is based upon the notion that the employer is the best loss
spreader.
A Contractor:
An independent contractor has with the employer a contract for services.
Generally this means that the employer has no authority or control over how the
contractor provides the services required.
At common law the employer cannot be vicariously liable for the acts of a
contractor.
The employer of a contractor will only be liable if the person duty is, in law,
non-delegable.
An Employers:
For employers the duty owed to an employee is non-delegable.
The employers personal duty is to take care e.g. to set up a safe system of work.
The non-delegable aspect of that duty is to ensure that the contractor takes care
e.g. to set up a safe system of work.
Kondis v. State Transport Authority (1984)

Kondis v. STA
Kondis was Ds employee and injured by the negligence of an employee of an independent
contractor.
D cannot be held vicariously liable for the nelgligence of the employee because he was not Ds
employee.
D was nevertheless liable because it was in breach of its duty on the basis that it was a non-
delegable duty and so D was required to ensure that care was taken by the independent contractor
and its employees.

Therefore:
If an employee is injured through his or her own negligence then the employer may be liable
because:
It breached its personal duty of care e.g. failure to provide a safe system of work =>
Braistinas Case
Note: simply hiring the employee will not constitute a breach of the duty.
If an employee is injured by the negligence of another employee then the employer may be liable
because:
It breached its own duty of care (e.g. failure to provide a safe system of work).
 The employer is vicariously liable for the actions of the other employee e.g. Bus v. SCC
If an employee is injured by the negligence of an independent contractor then the employer may
be liable because:
It breached its own personal duty of care e.g. failure to provide a safe system of work.
It breached its non-delegable duty of care e.g. to set up a safe system of work e.g Kondis
v. STA

The Delegation Exception

The employers personal duty may, in very clear circumstances, be delegated to the employee who
is subsequently injured by his or her own negligence.
In those circumstances the employer will not be liable.
Witham v. Shire of Bright

Witham v. Shire of Bright

The delegation must be by mutual agreement.
The employee must be properly skilled and an appropriate delegate.
The whole of the aspect of the duty must be delegated.
The employee must be injured by reason of his or her own failure to properly fulfill the delegated
task.

Consider...
What happens when the employer and the employee are arguably the same person?
Nichol v. Allyacht Spars Pty Ltd
P was director of D who was injured whilst employed by D
Held that D not liable to the extent that P was responsible for the design of the
system of work.
This found to be 40%
Compare WorkCover, where directors are excluded from recovery.
Non-delegable Duties
Examples of other recognised categories:
Schools to students =>Commonwealth v. Introvigne
Hospitals to patients => Samios v. Repatriation Hospital
Hazardous activities on the Ds land
Stevens v. Brodribb Sawmilling Co Pty Ltd
Burnie Port Authority v. General Jones
This remains a developing area:
Northern Sandblasting v. Harris

Stevens v. Brodribb
Brodribb ran a logging operation which was overseen by a bush boss, an employee of Brodribb.
Stevens and Gray both worked for Brodribb when Stevens injured by Gray.
Gray was found negligent and liable to Stevens by he wants the deep pockets of Brodribb.
ALTERNATIVES
Stevens was an employee and Brodribb breached its personal duty of care i.e. failure to establish a
safe system of work.
Gray was an employee, so Brodribb was vicariously liable for Grays negligence.
If Stevens was an independent contractor then Brodribb breached a general duty of care owed to
Stevens and all others on the logging site.
If Gray was an independent contractor Brodribb owed Stevens a non-delegable duty of care to
ensure that Gray took care.
 Finally argued that the common law imposed strict liability where the defendent was engaged in
an inherently dangerous activity.
HELD:
Neither Stevens nor Gray were employees.
In all the circumstances of the case there was a duty of care owed but Brodribb was not in breach
of that duty (Deane J dissenting)
The majority held that it was not a non-delegable duty.
There is in Australian law no strict liability for extra-hazardous activities.
Mason J wrote the leading judgement in Kondis and distinguished that case in Brodribb:
Brodribb did not have the requisite control or supervision of the actions of Gray.
Stevens could not be said to reasonably expect that Brodribb would see to it, that due
care was exercised in the loading operation by Gray at p33.

Burnie Port Authority

Authority was the owner and occupied half of the building; P stored frozen foods in the other half.
Authority was building extensions using own workers plus independent contractors employees.
This is the case where the rule in Rylands v. Fletcher (1866) was abolished.
A non-delegable duty:
Central element of control.
Special dependence and vuneralbility.
Takes advantage of the control to introduce or to retain a dangerous substance or carry
out a dangerous activity and fails to take reasonable precaustions.
Considerations of utility - of being conveniently workable - and financial responsibility
at page 552.

Northern Sandblasting
Defective earthing system and when electrician was negligent in repairing stove, water pipe
system became live.
Tenants child touched tap, was seriously injured and subsequently died.
Electrician liable but seeking the deep pockets of the landlord.
Sued landlord for:
Breach of statutory duty under tenancy legislation.
Breach of the landlords personal duty because of the faulty earthing system and
defective stove.
Negligence on the basis that the landlord owed a non-delegable duty of care in relation
to the repair of the stove.

THE HIGH COURT:

4/3 dismissed the appeal.
Brennan CJ and Gaudron J found that there was a breach of the personal duty to let the premises
in a fit condition.
Toohey and McHugh JJ found that there was a breach of a non-delegable duty.
Similar to Burnie.
Reasonable expectation of the tenants.
No policy reasons against.
Four Justices found that there was no non-delegable duty e.g. Kirby J:
Only now holding that Cavalier v. Pope (1906) does not apply in Australia:
Ther is no law against letting a tumble down house; and the tenants remedy is upon
the contract, if any.
Tenants are not especially vunerable and the landlord is not is actual occupation i.e. is
different from Burnie.
The legislature should change the law if necessary.
 VICARIOUS LIABILITY

Provides an alternative basis of liability.

The plaintiff will not necessarily be an employee.
The employer will be made legally liable for the tortious acts of an employee which damage a
third party.

Actions available to an injured Employee

1. Action against tortious employee/independent contractor.

2. Action against employer for breach of personal non-delegable duty.
3. Against employer on basis of vicarious liability only for acts of employee.

Actions available to injured third party

1. and 3. as above.

Theories of Vicarious Liability

Masters tort theory (employee as extension of employer)

Holds that the employer is liable because the employee has breached the employers duty.
Servants tort theory
Holds that the employer is liable for the breach by the employee of the employees duty.

Preferred Approach

Balance of authority favours the servants torts theory:

No need to establish a duty of care on part of the employer.
Shifts legal liability from the tortfeasor onto the employer.
Any defences available to the tortious employee will benefit the employer.

Establishing the Vicarious Liability of an Employer

1. Relationship of employer/employee between the defendent and the tortfeasor.

2. Tortious act committed by employee.
3. Tortious act committed in the course of employment.

1. Relationship of Employer/ee

Distinction between employee and an independent contractor.

Employees engaged under a contract of service.
Independent contractors engaged under a contract for services.

Tests:

Traditional Test:
Control test - what to do and how to do it.
Modern developments:
Lawful authority to command so far as there is scope for it:
Zuijs v. Wirth Brothers
Must look to the totality of the relationship between the parties.
Multi-factor approach: Stevens v. Brodribb Sawmilling

Multi-factor Test:

Relevant factors (non exhaustive):

control
 mode of remuneration
provision and maintenance of equipment
obligation to work
hours of work and provision of holidays
deduction of income (PAYE or PPS) tax
delegation of work by employee/independent contractor

Other relevant matters

ad hoc and gratuitous service

employer/ee relationship may still exist: Brooke v. Bool
loan of servant by one employer to another
original liable: Mersy Docks v. Coggins
did parties intend a transfer of control?
onus is on lending employer: McDonald v. The Commonwealth

3. When is an Act committed in the course of employment?

Act must be a wrongful mode of doing an authorised act.

Must be reasonably incidental to what employed to do.
Intentional torts.
Criminal conduct is not necessarily outside scope of employment:
Morris v. Martin
Lloyd v. Grace Smith Bros.
Frolic doctrine.
Employer will not be liable if employee on frolic not at all engaged in masters business:
Chaplin v. Dunstan
Storey v. Ashton
Express prohibition.
Does the prohibition limit the scope of employment or regulate conduct within the
scope? Rose v. Plenty

Indemnities

Employers have a right to claim indemnity from employees:

Lister v. Romford Ice
s312 (1) (b) WorkCover

Breach of Statutory Duty

Duty imposed on defendant by statute not by common law as in a negligence action.

6 Elements:
1. Civil right of action is created by statute: Tucker v McCann
2. The defendant is the person upon whom the duty was placed:
Darling Island Stevedoring
3. The plaintiff is a person for whose protection the statute was created to prevent:
Concrete Constructions v. Nelson
4. The damage suffered by the plaintiff is of the kind the statute was created to prevent:
Gorris v. Scott
5. The defendant was in breach of the duty created by the statute:
Waugh v. Kippen
6. The breach of the statute caused the plaintiffs injury: Waugh v. Kippen

Defences:
ICI v. Shatwell
Contributory negligence
Volenti non fit injuria
Delegation of statutory authority (not always refered to as a defence)
JIE not available
 DAMAGES

The Categories

Nominal (vindication of rights eg traspass to land).

Contemptuous (marks courts disapproval of plaintiffs action).
Aggravated (injured feelings form of compensatory).
Exemplary/punitive (punishing => Lamb v. Cotogno).
Compensatory (to put the plaintiff in the position they were in before the defendents
wrongdoing):
personal injuries;
property damage;
pure economic loss;
damage to reputation;
similar principles apply for each.

Heads of Damage (non exhaustive)

loss of earning capacity;

hospital, medical and care expenses
=> Griffiths v. Kerkemeyer - gratuitous care expenses;
pain and suffering;
loss of expectation of life;
loss of amenities or enjoyment of life.

Organisation of Heads

pecuniary and non-pecuniary; OR

special and general

Special and General:

Special:
past hospital and medical (to date of judgement)
past loss of earning capacity (to date of judgement)
General:
future hospital and medical;
future loss of earning capacity;
past and future gratuitous services;
pain and suffering;
 loss of expectation of life;
loss of amenities or enjoyment of life.

Pecuniary and Non-Pecuniary:

Pecuniary:
past (point of trial) and future (likely expectation of death) hospital, medical and care
expenses;
past and future loss of earning capacity.
Non-Pecuniary:
past and future pain and suffering;
past and future loss of expectation of life;
past and future loss of amenity or enjoyment of life.

Fundamental Principles

eggshell skull rule;

once and for all rule;
lump sum rule;
duty to mitigate;
the indemnity principle - so far as $$$ is able.

Eggshell Skull Rule

Eg Medlin v. SGIO
the voluntary premature retirement of the Professor of Philosophy.
D must take P as that part is found with all weaknesses, beliefs, capacities and attributes.

Once and For All

Eg Griffiths v. Kerkemeyer
at the time of trial, cared for by family and fiancee;
gratuitous care;
diability giving rise to the NEED for the care;
paid to the plaintiff and now held in trust for the carer.

The Lump Sum Rule

Eg Sharman v. Evans
aged 20 at time of MVA and became quadriplegic, with epilepsy, brain injury, pain etc and fully
aware of her loss.
no procedure for future review or for staggered payments at common law or in Queensland.
The sum awarded in most cases will be wrong (ie too little) - only certainty.

Duty to Mitigate

Eg Boyd v. SGIO (1978)

failure to agree to a blood transfusion, because of parents belief was unreasonable (sort of
contradicts the eggshell skull principle).
burden of proof on the defendant;
 plaintiff can recover costs associated with mitigation even if it fails.

The Indemnity Principle

The pecuniary sum which will put P in as near as possible position s/he would have been if s/he
had not been the victim of Ds wrongdoing:
interest on sums up to date of judgement;
vicissitudes of life taken into account.
The is concern to prevent double dipping
set offs;
discount to take into account getting the amount in a lumpsum
Eg Sharman v. Evans:
para 20yo
loss of earning capacity damages reduced
=> to the extent that the money would have been spent on living
expenses because that already covered by damages for nursing home
expenses.
Another example:
P now has a reduced life expectancy and will die aged 45, would have
retired at 65 years:
=> will be compensated for the loss of earning capacity to the age of 65
years;
=> the amount P would have spent on living expenses between 45 and
65 years will be deducted because now P will not have that expense;
=> if likely to commit suicide there will be a further percentage
reduction.

The Indemnity Principle

Intereston damages awarded from date of cause of action arose to date of judgement;
amounts already received may be set off unless they are required to be repaid;
amount of damages may be discounted to take into account:
=> the fact that normally would not get the amount in a lump sum:
=> the vicissitudes of life.

Interest

Is paid on monies awarded to date of judgement;

In Queensland:
the rate is discretionary - the Supreme Cout Act 1995 s.47
for pecuniary loss the usual rate is half the commercial rate ie about 6%
for non-pecuniary loss the usual rate is one quarter of the commercial rate ie about 2-3%

Set Offs

Monies paid by employer as sick pay and workers compensation paymetns will be set off (ie
deducted) from the damages award.
Social security and medicare payments must be repaid to government and so will not be set off.
Charity intended to benefit the Plaintiff will not be set off.

Future Earning Capacity

Calculated by reference to what would have earned nett and after expenses deducted:
Wynn v. NSW Insurance
 should future childcare and housekeeping expenses be deducted?
No because essentially private or domestic in character
If would not have worked then no award.
Very difficult to assess for younger people.
The total is discounted to take into account the fact that it is received as a lump sum and can be
invested immediately.
In Queensland the rate is set by s16 Supreme Court Act 1995 at 5%.
The investment option is also supposed to compensate for future inflation.
The amount may be further reduced to take into account the vicissitudes of lefe.
Malec v. Hutton
Wynn v. NSW Insurance

Hospital, medical and care

Medicare subsidies will have to be repaid to the government for past expenses.
There is some authority that inflation may be taken into account for future expenses but today
would probably be regarded as too speculative.

Care Expenses

In recent years the most contentious area has been the Griffiths v. Kerkemeyer component for
gratuitious care.
Van Gervan v. Fenton 1992 HC
Lynch v. Lynch 1991 NSWCA
Kars v. Kars 1997

Van Gervan v. Fenton

Ps wife provided gratuitious care for her husband who injured by Ds negligence;
gave up full time job as a nurses aid
at first instance and on appeal damages were assessed based on her loss of wages minus travelling
expenses
P successful in appeal to HC
the market cost, as a gneral rule, is the amount to which the defendent must pay as
damages...in some cases the market cost may be too high...the case will be rare indeed
where income forgone by the carer will be the appropriate rate.

Lynch v. Lynch

P was seriously injured in a MVA

Her mother was bothe the driver/D and the gratuitious carer
Common law rule that could not recover because then the tortfeasor would be paying twice, once
in kind and once in money
but D was compulsorily indemnified by the third party insurer.

Kars v. Kars

The same situation arose in Queensalnd with P being the wife and d being the driver in the MVA
and the gratuitious carer.
HC unanimously dismissed the appeal by D (insurance company).
A review of the relevance of insurance to the common law development of liability in tort may be
relevant and timely.
The problem for this principle operating outside the area of compulsory insurance is more
apparent that real.
Need to protect P against the vicissitudes of life ie husband unable to care for her.

Griffiths v. Kerkemeyer

Kars v. Kars: we prefer to reduce the anomalies and absurdities

 But:
Queensland - severely reduced in work place actions because of WorkCover.
Victoria - abolished for MV or work place actions
Tasmania - abolished entirely.
NSW, SA & WA limited quantification.

Non-pecuniary loss

With non-pecuniary dmages generalyy, the trend is towards standardisation.

But for past and future pain and suffering the award is entirely subjective so if unconscious P
receives nil
Generally see => Sharman v. Evans and Skelton v. Collins
for past and future loss of expectation of life, subjective and ibjective components with a
standardised sum for the objective.
For past and future loss of amenities it is the same but for the objective it is minimal because of
overlap with loss of expectation and often combined.

Death

At common law if P or D died the cause of action died with them.

In Queensland see s66 of the Succession Act 1981 and ss17-23 of the Supreme Court Act.

Succession Act s66

Actions for or against the deceased survive for or against the estate.
Deceased P cannot receive:
non-pecuniary damages;
future probable earnings;
calculated without reference to loss or gain to the estate.

Supreme Court Act

ss17 - 22 basically action can be brought for the losses suffered by the dependants (including de
facto spouses) of the deceased P
Nguyen v. Nguyen
loss of wifes and mothers gratuitous services
Jones v. Schiffman
age, appearance, inclination, experience, obligations to children and parents
and the value of freedom to remarry.
 ECONOMIC LOSS:
NEGLIGENT AND FRAUDULENT MISREPRESENTATION

What is Pure Economic Loss?

It is not physical damage.

It is not economic loss which is consequential on physical damage.

Policy Considerations

The fear of indeterminate liability.

Disproportion between defendants blameworthiness and liability.
Interrelationship between liability in tort and contract.
The need for certainty (debunked).
The effect of insurance per Stephen J in Caltex Oil.

New Approach of the High Court

Van Erp v. Hill

Concept of proximity is no longer supported by a majority of the High Court as a general
principle or unifying theme.
The term proximity is still used by some members of the High Court as an umbrella
term.

Novel Fact Situations

Was the loss reasonably foreseeable?

If yes, then by anoloy, induction and deduction from previous like cases, and overtly assessing
relevant policy considerations, what (if any0 additional factors must be shown?

Categories of Cases

Negligent misrepresentation;
Economic loss resulting from damage to property of another;
Failure of a professional person to perform an undertaking or sevice properly;
Economic loss resulting from defective construction of buildings.

Negligent Misrepresentation

First category of cases involving pure economic loss in which the courts recognised the existence
of a duty of care.
Hedley Byrne v. Heller (1964)
No need to establish a contractual or fiduciary relationship;
Person giving the information must be possessed of special skill (or hold
themselves out as having such skill);
Assumption of responsibility by the speaker;
Reasonable reliance by plaintiff;
No disclaimer of responsibility.
Position in Australia
MLC v. Evatt (High Court)
 Accepted that a duty of care could arise irrespective of contract or fiduciary
relationship;
Barwick CJ identified features of special relationship which would give rise to
duty of care.
On appeal to the Privy Council they found that the speaker must carry on
business of giving advice or let it be known the claims to possess special skill
in the field.
Features of Relationship (Endorsed by HC)
Speaker knows or ought to know:
Trusted by recipient to give information recipient believes speaker has capacity
to give;
The information is of a serious or business nature.
Speaker knew or ought to have known that recipient intended to rely on the information.
Reasonable for recipient to seek or accept and rely on speaker advice.
No requirement that speaker have special skill.
Subsequent High Court Decisions
Shaddock v. Parramatta City Council (1981)
No requirement that speaker be possessed of special skill (not neccessary to
decide in this case)
San Sebastian (1986)
Determined that reliance was the most significant element in establishing
proximity.
No requirement that statements made in response to request for information or
advice.
Esanda Finance Corporation Ltd v. Peat Marwick Hungerfords
1997 High Court decision.
Confirms the approach adopted in MLC v. Evatt and San Sebastian.

Fraudulent Misrepresentation

Five Elements
A representation of fact.
Defendant knew representation was false or recklessly indifferent.
Defendant intended plaintiff to rely on the misrepresentation.
Plaintiff did rely on the representation.
Plaintiff suffered damage.
CBC v. Brown
Misrepresentation of fact:
Defendant gave written advice that customer financially stable.
Defendant knew representation was false:
Question of fact.
Defendant intended plaintiff to rely on representation:
Not relevant that statement was made to an intermediary acting on behalf of a
class of persons.
Effect of disclaimer:
Cannot exclude liability for deceit.
Did plaintiff rely on representation?
Yes! They would have breached the contract.
Did the plaintiff suffer damage in fact and law?
Loss was direct and foreseeable consequence of the fraudulent
misrepresentation.
Krakowski v. Eurolynx
 Krakowskis plaintiffs/appellants.
Eurolynx defendant/first respondent.
Mallesons(Eurolynxs solicitor) second respondent.
The representation:
An allegation that the disclosed insturment of lease was not the exhaustive
contractual arrangement between E and the lessee.
Falsity of the representation.
Inducement.
Fraud by Eurolynx.

Economic Loss Resulting from Damage to the Property of Another

Spartan Steel & Alloys Ltd v. Martin & Co

The Plaintiffs claim:
Damaged material (physical damage).
Loss of profit on the material (consequential economin loss).
Loss of profits on further melts (pure economic loss).
Caltex Oil v. The Dredge Willemstad
Loss suffered by Caltex:
Oil lost from pipeline (physical damage);
Increased transportation costs (pure economic loss).
Limitations on the persons or class of persons to whom a duty of care owed for pure
economic loss - different reasoning adopted by each member of the court.
Gibbs J
Economic loss recoverable in negligence where the defendant has knowledge of
the plaintiff individually and not merely as a member of an unascertained class.
Question of facts in the circumstances of each case.
Application to the Facts:
The defendant knew that the pipeline linked the terminal and the
refinery.
The defendant knew the function of the pipeline.
The defendant should have had Caltex in its contemplations.
Mason J
The defendant will be liable when he/she can reasonably foresee that a specific
individual, as distinct from a general class of persons, will suffer financial loss
as a consequence of his conduct.
Application to the Facts:
The dredge and Decca were aware of the pipeline.
That the pipeline carried oil etc.
That it linked AOR and Caltex.
The pipeline carried refined products to Caltex.
These products were used by Caltex in its business.
Negligence resulting in damage to the pipeline would result in loss of
oil and increased transport costs.
Stephen J
Identified a sufficiently close degree of proximity.
Application to the Facts:
Knowledge of the likelihood of economic loss.
Knowledge of the use and existence of the pipeline.
Damage to the property of a third party (AOR).
The nature of the detriment suffered by the plaintiff.
The nature of the damages claimed being a direct consequence of the
detriment suffered (not merely loss of profits).
Jacobs J
Looked for physical propinquity beween the acts or omissions of the defendant
and the property of the plaintiff resulting in a foreseeable physical effect on the
property of the the plaintiff.
Application to the Facts:
 The physical effect on the property (crude oil) of the plaintiff was
immobilisation.
The risk was reasonably foreseeable.
Murphy J
Recovery from pure economic loss should only be disallowed if there were
acceptable reasons of public policy for so limiting recovery.
Application to the Facts:
On the facts it was not acceptable to limit the right to recovery by the
plaintiff to avoid a multitude of claims or on the basis that the size of
the claims was disproportionate to the capacity of the wrongdoer to
pay.
Christopher v. The Motor Vessel Fiji Gas
The view of the majority in Caltex was that damages based upon purely economic loss
not connected with damage to the personor peroperty of the plaintiff are not, in general,
recoverable.
Ball v. Consolidated Rutile
Damage suffered by plaintiffs:
Loss of and damage to trawl gear (physical damage), AND
Loss of value of missed catches (pure economic loss).

Failure of a professional person to perform an undertaking or service properly

Disappointed beneficiary.
The position in England:
Ross v. Caunters [1980] Ch 297 (no longer useful in Australia)
See esp. per Lord Wilbourforce
White v. Jones [1995] 2 AC 207 (used in Hill v. Van Erp)
Before Will prepared, testator died.
Majority determined DOC to beneficiaries under Will:
Desire to do practical justice.
Rejected policy arguements [L. Gough] on grounds that Will unique
form of transaction.
The position in Australia:
Watts v. Public Trustee for Western Australia [1984] WAR 97
Ross v. Caunters applied, no longer good law.
Seale v. Perry [1982] VR 193
No DOC owed.
Hawkins v. Claytons Utz (1988) 164 CLR 539 (text page 218-20)
Proximity used by majority to determine DOC.
Hill v. Van Erp (1997) 142 ALR 687
Hill v. Van Erp
Brennan CJ:
Accepted that practical justice tends in favour of a remedy.
Did not accept that duty arose through extension of principles in Hedley Byrne
v. Heller
Necessary to define the elements additional to mere foreseeability which would
allow recovery.
claim onyl by intended but disappointed beneficiary.
Duty owed is in the performance of work in respect of which he owes a
corresponding contractual duty to the testator.

Dawson J:
Adopted the incremental approach.
Something more than reasonable foreseeability is required to establish a DOC.
 What is sufficient or necessary in one case is a guide to what is
sufficient or necessary in another.
Proximity is result of a process of reasoning; not the process itself.
Relationship of proximity established by assumption of responsibility and
reliance.
Toohey J:
Agreed in general with the reasoning of Dawson J.
Gaudron J:
There were no policy factors which operated to deny the existence of a duty of
care.
Policy favoured the finding of a DOC.
The contractual relationship between the testator and the solicitor was relevant:
A duty assigned to a thrid party would only arise where the alleged
duty was consistent with the duty owed to the client.
The element of control was relevant.
The nature of the loss wsuffered was the loss of:
A precise legal right which, in turn, has resulted in economic loss.
Gummow J:
There were no policy reasons to disallow recovery.
Recognition of a duty did not interfere with any existing legal right:
The facts of the case fell within a gap in the law.
Duty arose as a result of a complex of factors (at page 530).

Defective Buildings

Cases in which the plaintiffs property is and always has been defective.
Traditionally no duty of care in tort.
English Cases:
Anns Case 1978
Junior Books v. Veitchi (1983)
D & F Estates v. Church Commissioners for England (1989)
Murphy v. Brentwood (1990) - overruled above case.
In Australia:
Particular category of case involving liability in tort for defective structures.
Bryan v. Maloney
Diminution in value of the house categorised as pure economic loss.

EXAMPLES OF OTHER TORTS:

CONSPIRACY AND INTERFERENCE WITH CONTRACT

Disappearing Torts

Rylands v. Fletcher (1866)

The occupier of land,
Brought or kept on the land anything dangerous and if it escaped,
Strictly liable for all the natural and probable consequences if it did escape.
Burnie Port Authority v. General Jones (1994) absorbed this tort within the tort of
negligence.
Variable standard of care.
Beaudesert Shire Council v. Smith (1966)
Person could recover damages,
if the damage suffered was inevitable and
occurred as the result of the defendants act where that act was:
unlawful;
intentional; and
 positive (ie misfeasance).
Northern Territory v. Mengel (1995)
overruled the Beaudesert principle.
The situations giving rise to the cause of action may well be covered by
negligence and/or breach of statutory duty.
The overruling conforms with the gneral trend towards imposing liability only
where there is an intentional or negligent infliction of harm.

Mengels Case

Ds involved in the eradication of bovine brucellosis in the northern Territory.

Inspectors unknowingly exceeded their authority in prohibiting the movement of the plaintiffs
cattle.
Ps framed their action in several alternate ways including Beaudesert, negligence and
misfeasance in public office.
Mengels Case confirmes that there may be two new intentional torts emerging which may be
used to protect economic interests:
misfeasance in public office (eg at p539 - note Sanders v. Snell)
unlawful interference with trade or business (at p538)
In recent years we have seen the disappearance of two torts.
New torts may emerge and be refined.
Note also that there has been a lessening in importance of some torts because of statutory
enactments such as s52 of TPA.

Section 52 of the TPA

A Corporation shall not, in trade or commerce, engage in conduct that is misleading, or

deceptive or is likely to mislead or deceive...
a corporation (not necessarily under the State FTA)
in trade or commerce
engages in conduct
that nisleads or deceives
NOTE the defendants state of mind in irrelevant.
In some circumstances s52 actions may provide an alternative action
negligent misrepresentation
deceit
defamation
the economic torts
passing off
interference with contractual relations
conspiracy The industrial torts.
intimidation

Interference with Contract

Traces its origins back to the 16th century when the action was available for the loss of a servants
services.
But those actions based on a proprietary right rather thatn a contractual right.
The modern action has been developing sence the case of Lumley v. Gye (1853).
Originally called the tort of inducing breach of contract.
Elements of the tort:
A valid existing contract;
actual/constructive knowledge of the contract;
intentional interference;
 breach of, or interference with, a term of the contract;
damage.
Intentional Interference:
intention but not malice is required
requires knowledge of the contract
now it is sufficient that there is an interference with the performance of
a term of the contract.
If the contract is determinable at will by either party, then inducing one
party to bring the contract to an end will not be sufficient

Direct vs Indirect Interference

A direct interference with one of the parties to a contract:
A and B have a contract of employment.
the C trade union induces B to go on strike.
B breaches its contract with A.
An indirect interference:
A and Z have a contract.
The C trade union intimidates Zs employee B, so that B
refuses to do what Z orders.
Z cannot fulfill its contract with A.
BUT
A direct interfernce with one of the parties to induce breach of the
contract will be unlawfu per se.
An indirect interference will require:
Either D used unlawful means eg intimidation or the
inducement results in an unlawful act eg employee going on
strike.
The breach of the plaintiffs contract (As contract with Z) is a
necessary consequence of the unlawful means eg B is afraid to
cross the picket line.
Indirect interferences often occur in an industrial context where they are usually
referred to as secondary boycotts.
ss45D and E of the TPA provides statutory remedies for secondary boycotts
where the victim is a corporation.

Conspiracy

Developed out of criminal conspiracy.

The Action requires:
An agreement between two or more persons;
With the intention of causing injury to P;
By what is otherwise a lawful act; OR
By an unlawful act;
The actual implementation of the conspiracy;
P suffered (or will suffer0 damage as a result of the conspiracy.
Lawful Means
Can be difficult because P must establish tha the conspiracy was
intentionally aimed at injuring the plaintiff rather than
in furtherance of the defendants legitimate trading,
professional or economic interests, or religious ends.
c/f Quinn v. Leatham (1901)
pursuit of a closed shop was not sufficient.
 Unlawful Means
For example a conspiracy to commit:
Crimes;
Torts;
Breach of anti-strike legislation;
Breach of contract.
Injury to P must not be merely incidental.
Distinguish the crime of conspiracy from the tort of conspiracy by
unlawful means.
For interference with contract and civil conspiracy:
Justification is available as a defence.
Damages and injunctions are the appropriate remedy.
Justification
The defence of justification ie defendant is protecting its own
legitimate interests
Difficult in application but consider:
Nature of the contract;
Grounds for the breach;
The relation of the person procuring the breach to the person
committing the breach;
The object of the party procuring the breach.
Sometimes unsuccessfully used by a trade union.
Remedies
Damages
Damages may be more generous in tort than for breach of contract.
Damages will be assessed at the date of breach not the date of contract;
A wider range of heads of compensable damage may be available;
Exemplary damages may be available;
Remoteness rules are more generous in torts.
Injunction including interlocutory.
The Waterfront dispute as an example
MUA sued Patrick stevedoring for civil conspiracy by unlawful means.
Australian Competition and consumer Commission (ACCC) sued MUA for secondary
boycotts pursuant to the TPA.
Patricks in London sought an injunction against the ITF (the International Transport
Workers Federation) for indirect interference with contracts by unlawful means.

Patricks v MUA
Patricks arranged its affairs so that a subsidiary employed the MUA members.
That subsidiary had no asses except the contracts to supply labour to Patricks
and could terminate the contracts if the workers went on strike.
6 April MUA commenced legal proceedings.
7 April patricks terminated the contracts and the subsidiary went into
liquidation.
The MUA argued
 Patricks was in breach of s298K of the Workplace Relations Act because of the
corporate restructuring was detrimental to the workers employment and was
motivated by the workers trade union membership.
Patricks, Reith, Corrigan, etc conspired by unlawful means (breach of s298K) to
injure the employees:
by altering their position to their detriment.
by dismessing the employees.
The Conspiracy Action
An agreement between two or more.
Patricks, Reith, Corrigan etc.
Intentional injury by an unlawful act.
Breach of s298K.
Implementation of the conspiracy.
The restructuring.
P will suffer damage.
An injuction is sought.
Would the defence of justification have been successful???
The ACCC Action
The ACCC has a statutory right to bring the action.
An indirect interference with a contract.
Patricks and its customers have contracts.
The MUA pickets the wharves so that the customers goods remain on
the docks.
Patricks cannot fulfill its contract with its customers.
Its customers suffer damage in lost production, profits etc.
Patricks v ITF
The basis of Patricks action was an ITF circular to its memebers to do whatever
possible to influence companies...not to make use of non-union port facilities
operated by Patrick Stevedores.
Failed to get an injunction because insufficeint evidence re the actual
advocating of unlawful action - striking etc is legal in some countries.

DEFAMATION

What interests are protected by defamation law?

Individual reputation vs freedom of speech.
What are the sources of defamation law?
No uniform law across Australia.
Queensland:
Completely codified (Criminal Code that is of 1899)
1995 amendments to Code put defamation back in the Defamation Act 1889.
Other Australian jurisdictions:
Tas: code provisions
NSW: mixture - Common law for action (currently have a Bill); defences
statute.
Others have common law with variation by statute.
WA: similar code to Qld but Common Law applies
=> WA Newspapers v. Bridge per Jacobs J

What is Defamation?

Three elements:
1. Defamatory matter.
2. Reference to the plaintiff.
3. Publication.
 Number of defences available.

Libel and Slander

At common law, defamation comprises of two torts:

Libel: defamation in a permanant form e.g. printed matter, reading from printed matter,
braille, parrot, radio broadcasts (Church of Scientology v. Anderson), motion pictures
(Youssoupoff v. Metro-Goldwyn - Mayer).
Slander: defamation in a transient form e.g.gestures, sign language, live plays, radio
outside of legislation, skywriting.
Libel actionable per se.
Slander generally requires special damage:
not confined to monetary loss, must be material eg withdrawal of hospitality.
Exceptions:
Imputation of crimes punishable by imprisonment;
Disparaging person in office, profession, trade etc.;
Allegation of infectious or contagious disease;
Statute (not in Qld) imputation of unchastity in women.
No distinction between libel and slander is made in Queensland
=> s 5 Defamation Act 1889
Defamation actionable per se.

Defamatory Matter

Common Law
matter of a kind likely to lead ordinary decent folk to think less of the person about
whom it was made => Boyd v. Mirror Newspapers
Queensland
s 4: Likelihood of:
injury to reputation; OR
injury to plaintiffs profession or trade; OR
other persons induced to shun, or avoid, or ridicule or despise the plaintiff.
Standard - Objective test CL and Qld
Judged by the standard of a hypothetical referee: Readers Digest v. Lamb.
Variously described as:
reasonable man;
right thinking memebers of society;
ordinary man not avid for scandal.
Knowledge of additional facts and circumstances
Not sufficient to show discredit before a restricted class:
Byrne v. Deane
c/f Krahe v. TCN Channel Nine
Intention of the defendant irrelevant: Queensland Newspapers v. Baker
Protection of Personal and Business Reputation
Common Law:
Attack on business must be attack on plaintiffs reputation:
Fairfax v. Punch
Boyd v. Mirror Newspapers
Queensland:
s 4 Defamation Act includes:
likely injury to the plaintiffs profession or trade
Boyd v. Mirror Newspapers
Gibbs v. Dunn
Extends to virtually any legitimate calling:
Queensland Newspapers v. Baker
 Interpreting Defamatory Matter
Common Law:
Natural and ordinary meaning.
Innuendo:
False innuendo: providing you can add two and two together
True innuendo: a statement that nobody could possibly read anything
into eg Cassidy v. Daily Mirror [1929]
Queensland:
Section 4 of the Defamation Act:
Imputation may be expressed either directly or by insinuation or irony:
Composite Buyers v. Clarke
Role of Judge and Jury
Common Law:
Judge:
Is the statement capable of bearing the defamatory meaning alleged?
Jury:
Did the statement actually have the defamatory meaning.
Queensland:
Section 18 Defamation Act follows the common law.

Reference to the Plaintiff

Common Law and Queensland:

Material must be reasonably referable to the plaintiff.
Test:
Would a reasonable person having knowledge of the relevant circumstances
understand that the material referred to the plaintiff?
Hulton v. Jones
Question of fact for the jury.
Who may be defamed?
Common Law and Queensland:
Any living person.
Reputation of a living plaintiff may be injured by defamation of
deceased person.
Action does not survive the death of plaintiff or defendant.
Includes corporations.
Not unincorporated associations.
Not organs of Government.
Identification of the Plaintiff
Need not be by name.
May come from knowledge of extrinsic facts.
Intention of the defendant not relevant: Hulton v. Jones
May be named in other publications:
Subsequent publication by defendant.
Earlier publication by third party.
Defamation of a group
Class as a whole will never have right of action.
Members of class defamed may have action subject to:
 Size of class;
Generality of the charge made.
Bjelke-Peterson v. Warburton

Publication

Common Law:
The defamatory matter must be made known to at least one other person other than the
plaintiff.
What constitutes publication?
Queensland:
Section 5(1)
A person who publishes defamatory matter concerning any person is said to
defame that person.
Section 5(2)
Publication is,in the case of spoken words or audible sounds, the speaking of
such words or making of such sounds in the presence and hearing of any other
person other than the person defamed, and in the case of signs, signals, of
gestures, the making of such signs, signals, or gestures, so as to be seen or felt
by, or otherwise come to the knowledge of, any person other than the person
defamed, and in the case of other defamatory matter, the exhibiting of it in
public, or causing it to be read or seen, or showing or delivering it, or causing it
to be shown or delivered with a view to its being read or seen by any other
person than the person defamed.

Injurious Falsehood

Common Law:
protects econmic interests;
actionable only if can pove pecuniary loss
Ratcliffe v. Evans
Requirements of the Tort:
False statement of and concerning goods;
Publication by defendant to third party;
Malice on part of the defendant;
Calculated to cause damage (objective test);
Proof of particular loss as a result of the statement.
Queensland:
Included in Section 4 of the Defamation Act:
Defamatory matter includes any imputation concerning any person...by which
the person is likely to be injured in the persons profession or trade.

Benefits of Action in Defamation Over Action for Injurious Falsehood

Plaintiff does not have to prove special damage:

Hall-Gibbs Mercantile Agency Ltd v. Dunn (1910) 12 CLR 84
Plaintiff does not have to show defendant that the statement was false.
Plaintiff does not have to show defendant motivated by malice.

Defences to Defamation, Remedies and Reform

Triviality
Queensland:
Section 20 of the Defamation Act:
In any case other than words intended to be read, it is a good defence
to an action for defamation...to prove that the publication was made on
an occasion and under circumstances when the person defamed was
not likely to be injured thereby.
 Consent
Common Law:
Complete defence
must consent to particular form of publication.
Queensland:
s16(1)(f) Qualified protection
If the publication is made in good faith on the invitation or challenge
of the person defamed.
Innocent Dissemination
Common Law:
Defence for innocent publishers of libel written by others if:
Publisher must not have knowledge of the defamatory material; and
Publisher not careless in failing to recognise it.
Queensland:
ss 22,25, 26, and 27 of Defamation Act:
Protection extends only to sellers of books, newspapers, magazines and
periodicals.
Protection extends to employers.
Justification
Common Law:
Truth is a complete defence, if it is true in substance and effect.
Queensland:
Section 15 of the Defamation Act:
Matter must be true AND publication must be for the public benefit.
Section 19 of the Defamation Act:
Public benefit is a question of fact for the jury.

Fair Comment
Bjelke-Peterson v. Byrnes per McPherson J 131-33.
Common Law:
The statement must:
Relate to a matter of public interest; AND
Be comment (not fact); AND
Be fair (honest, not malicious or illwill).
Queensland:
Section 14 of the Defamation Act:
The comment must fall under one of the categories in section 14.
Absolute Privilege
Common Law:
Statements made in the course of parliamentary proceedings;
Statements made in the course of judicial (and quasi-judicial) proceedings;
Communications between solicitor and client in relation to judical proceedings;
Communications between Ministers of State in the course of official duties;
Communication between spouses.
Mann v. ONeill
Queensland:
ss 10, 11 and 12 of the Defamation Act:
Protection is limited to:
A member of the Legislative Assembly for the publication in
Parliament.
A person presenting a petition to the Legislative Assembly;
Publication in the course of proceedings in court, or in the
course of an inquiry;
Statements made in an official report of an authorised inquiry.
Qualified Privilege
 Common Law:
Where publisher has an interest or duty(legal, moral or social) to publish AND
Recipient has corresponding interest or duty to receive it
Recipriocity is essential;
see pages 449-50 of Gardiner & McGlone
Protection may be lost if:
Publisher motivated by malice or
extent of publication exceeds what is reasonably necessary.

Queensland:
Sections 13 and 17 Defamation Act:
Section 13:
Includes publication of reports of proceedings of:
Parliament;
courts;
commissions;
government departments;
police;
council meetings.
Publication is lawful if made in good faith for the information of the
public.
Section 13(2):
publication is in good faith for the information of the public if:
Publisher not actuated by ill will or any other improper
motive;
The manner of the paublication is such as is ordinarily and
fairly used in the case of the publication of news.
Section 17:
Burden of proving absence of good faith lies on party alleging the
absence.
Section 16:
s16(1) specifies occasion to which privilege attaches
publication must be made in good faith;
s16(2) defines good faith for the purposes of this section:
publication is relecant tothe matters listed in s16(1) AND
Publication does not exceed what is reasonably necessary for
the occasion AND
Publisher not actuated by ill will or improper motive AND
Publisher did not believe the defamatory matter tobe untrue.
Constitutional Protection
Longe v. ABC
Constitution implies right of freedom of political expression.
Section 128:
Common law privileges or statutory privileges inconsistent with
constitutional right are invalid.
Necessary to extend the circumstances in which the defence of
qualified privilege will apply under common law where:
The communication is about government or political matters
AND
The publishers conduct was reasonable AND
publication was not actuated by malice.

Remedies
Injunctions:
 Discretionary remedy;
Mandatory Injuction:
Requires a person to do something.
Prohibitory Injuction:
Restrains a person from committing or repeating an act.
Interlocutory Injunction:
Continues until hearing or further order.
Perpetual Injunction.
Reluctance to Grant Injunction
Right to be heard by jury.
Freedom of speech.
Power exercised reluctantly and only in very clear cases:
Shiel v. Trandmedia Production Pty Ltd
Damages:
Primary remedy.
Purpose to compensate the plaintiff for injury suffered to reputation.
Determination by jury
Types:
Actual pecuniary loss;
Damages to feelings as well as reputation;
Aggravated damages;
Exemplary or punitive damages;
interest may be awarded.
Mitigation:
Relevant factors include:
apology/retraction;
recovery in other actions in re the same matter;
poor reputation;
truth;
absence of malice.