200909 : Enterprise Law : Assessment Answers
Question:
Part A
Harry and Will are employees of Australia Post at a mail sorting centre in suburban Sydney. A few weeks ago, they noticed a large bulging parcel that had arrived while they were sorting the mail. Suspecting that it might contain something dangerous or illegal, they placed it in an unlocked cupboard and notified the police.
Unknown to both Harry and Will, the parcel contained a number of live snakes that were being transported illegally. Before the police arrived, the snakes escaped from the parcel and found their way onto the street where they were seen by a number of people.
Meghan, a pedestrian, was so distressed when she saw the snakes that she suffered a heart attack.
Catherine was bitten when she tried to retrieve one of the snakes. She was rushed to the nearest hospital where a doctor administered a drug that was not effective against the snake venom. Catherine has been severely affected by the venom and can no longer walk. Had she been given the correct treatment she would have fully recovered.
Meghan and Catherine have approached you for advice as to who they can sue in these circumstances and the likelihood of success if they sue in the tort of negligence. Advise the parties.
Part B
Pablo was a young man who had suffered extensive injuries in a motor vehicle accident and was confined to a wheelchair. He had sued the driver of the car responsible for his accident and was awarded $3.2 million by way of damages. Pablo’s parents, Edvard and Frida, had no business experience, both having worked in cleaning jobs since arriving in Australia in 1989. Their English was competent for everyday needs but not adequate for complex matters. All three relied heavily on advice from Caveat, their solicitor, whom they asked to help them with investment advice.
Caveat suggested that they consult BNQ, a financial institution in suburban Sydney, which offered a service advising clients about investment opportunities and possible savings and investment plans. When the parents attended the first appointment they met Merlin, a young financial adviser who took all details of their circumstances and then proposed a range of investments, principally in property which could earn income plus a capital gain. He offered to organise flights for them to inspect the properties, which were in northern New South Wales. He said it was impossible to recommend properties within Sydney, as rental prospects were quite poor.
The parents were flown to a university town in northern New South Wales and shown several blocks of units which Merlin described as fully let to students during the year and to overseas visitors during the summer vacations. Merlin also offered to organise conveyancing services at low cost through the estate agents. Merlin suggested that it would be better not to discuss all details of the investment with Caveat as many solicitors were jealous of cut-price conveyancers who undercut their fees.
The parents decided to buy two units. The estate agents sent all documents to them in Sydney, and they and Pablo signed them. Several months later the family had not received any rents. Whenever they tried to contact Merlin at BNQ he was unavailable or did not return their calls. When the parents phoned the estate agents they said the flats were mostly untenanted as there had been a downturn in the number of overseas students at the university, and local students couldn’t afford to live off campus.
The family contacted BNQ but was told Merlin no longer worked there, and BNQ had no interest in them, particularly as Merlin was not authorised to be promoting investments in real estate.
Analyse this situation, advising the family of all reasonable legal arguments as to whether a duty of care was owed to them and if so by whom. Explain who might be held liable.
Answer:
Part A
Facts of Case:
Harry and Will work at a mail sorting center of Australian Post Office, in suburban Sydney. One day, they noticed a huge swollen parcel while sorting mails. Suspecting something dangerous or illegal inside the parcel, they informed the police after keeping the parcel in an unlocked cupboard. However, they were not aware that the parcel contained live snakes being transported illegally. Before the arrival of police, the snakes escaped from the parcel and scattered everywhere on the street as noticed by many people. A pedestrian named Meghan got heart attack due to distress and anxiety when she saw snakes. On the other hand, Catherine was bitten while trying to retrieve one of the snakes. She was taken to the nearest hospital and the doctor administered a medicine but it was not effective against snake venom. Due to this, Catherine lost her walking capability.
Issue: Whom should Meghan and Catherine sue in such circumstances and the possibility of success if they sue under tort of negligence?
Rule: In order to use tort of negligence in this case, it is essential to understand what negligence is? ‘Negligence’ is considered as a failure of a person to exercise reasonable care which results in causing harm to another and should have been prevented by taking due care and precautionary measures. However, the burden of proving the occurrence of negligence lies on the plaintiff. The harm caused to the plaintiff should not necessarily be physical but it can also be financial harm or damage to the property. It is recognized by law that actions essential to prevent harm are referred as precautions and court determines the adequacy of precautions or negligence by the defendant prospectively. Furthermore, negligence may arise either through an act or through omission and multiple actions and omissions as well.
‘Tort’ is a wrongful act which causes harm to a person and the law of tort enables the sufferer to sue the wrongdoer and to receive further assistance from the courts. There is provision of damages i.e. monetary compensation to the plaintiff that are provided by the court if tort committed by the defendant is proved. Torts are civil wrongs and falls under the category of civil law. However, the aim of law of tort is not to punish the wrongdoer but to restore the sufferer to their previous position. The most important thing to understand is that liabilities under tort might co-exist with other legal obligations and breach of such obligations might result in legal actions (ALRC, 2018).
‘Tort of Negligence’ is the failure of a person to exercise reasonable care and it results in causing harm to another person.
Section 18 of Law of Negligence and Limitation of Liability Act 2008 describes about due standard of care to be expected from individuals professing particular skills. The court determines whether the defendant acted with due care reasonably expected from him/her at the time of negligent act or there has been an omission done by them.
Application: In this case, Meghan suffered heart attack in distress after watching snakes. She can claim for personal injury damages. She can sue Harry and Will for the tort of negligence under Section 18 of Law of Negligence and Limitation of Liability Act 2008. Both Harry and Will were employees in the mails sorting department in the Australian Post office. On the basis of ‘Standard of care’ for professionals, they can be held liable for negligence in their duty (Australian Government, 2018). Even after suspecting the parcel, they left the parcel in an unlocked cupboard. They should have acted in a professional manner and should have locked the cupboard when they knew that there might be something dangerous or illegal in the parcel. They must have kept the parcel in their custody till the police reach the center or should have given the custody to their seniors but, they left the parcel in an unlocked cupboard. They can be sued by Meghan as she had to suffer because of them as well as the economic loss incurred in the form of medical expenses.
Catherine can take legal action against Harry and Will under Section 18for negligence of standard of care expected from them being the employees in the mails sorting center. She can sue the doctor also under similar section because of his negligent act, she lost her legs. She can sue both Harry and Will along with Doctor for damages for physical injury as well as economic loss under Section 52 (1) (a) of the Act.
Conclusion:
Meghan can sue Harry and Will for damages under tort of negligence and Catherine can sue both of them along with Doctor under tort of negligence and claim for compensation as all were liable to act with standard of care obliging to their profession.
Part B
Facts of Case:
Pable was a young man, who was confined to wheel chair due to a severe accident, for which, he was awarded $3.2 million in the form of damages. His parents Edvard and Frida did not have business experience and nor do they sufficient knowledge of English to handle complicated matters in Australia. They relied heavily on Caveat who was their solicitor to whom they asked for investment advice. On his advice, they consulted BNQ, a financial institution offering investment advices to the clients. On first meeting, only parents met Merlin who was a financial advisor and provided him with all the details and information. He proposed variety of investments particularly in property to make them earn income plus profits. He showed them several blocks of units in NSW and described them as entirely rented to students during sessions and to overseas visitors during summer vacations. Additionally, he convinced them not to discuss about the investment with Caveat because he might be jealous due to reduction of fees by the conveyancer. The parents decided to buy two units and together with Pablo, signed all the documents sent to them by estate agents. Months went and they had not received any rents and when they tried to contact Merlin, he did not answered their calls. When they called the estate agents, they said the flats were unoccupied. The family found that Merlin left the job and BNQ denied to take liability because Merlin had no authority to promote investments in real estate.
Issue: Whether a duty of care was owed to the family and by whom? Who might be held liable?
Rule: ‘Duty of care’ is considered as the duty of a person to take reasonable care in order to avoid causing harm to others. For the purpose of establishing duty of care, the court needs to be satisfied that when the harm was caused to plaintiff, it was reasonably predictable that the conduct of the defendant would cause harm to the plaintiff. To whom is the duty of care owed? The answer was given by the judge in Donoghue v Stevenson [1932] AC 562 at 580that the persons who are closely and directly affected by the act of the defendant that they ought reasonably to have them in thought as being affected due to their acts or omissions.
It is also a legal obligation to take care of the benefits of others (Sadler, 2009).
Section 18 of Law of Negligence and Limitation of Liability Act 2008 describes about due standard of care to be expected from individuals professing particular skills. The court determines whether the defendant acted with due care reasonably expected from him/her at the time of negligent act or omission done by them.
Application: In this case, Edvard and Frida were heavily dependent on Caveat for legal advises and he performed his duty with due care and advised them to consult a financial institution named BNQ. On the other hand, the services being offered by BNQ comprised of providing advises to the clients regarding investment opportunities as well as about possible savings and investment plans. Merlin was taking due care until he was proposing investment plans to them but, when he started promoting real estate in NSW and convinced the clients to have a look at the property, he breached ‘standard of care’ in accordance with his profession. He breached standard of care because of which, he can be sued by Edvard and Frida (The Law Handbook, 2018).
However, it was the mistake of Edvard and Frida that they did not disclosed anything about the deal between them and real estate agents nor did they said what Merlin told them, to Caveat, their solicitor (Witting, 2007). If they had taken due care and informed their solicitor about the mater, he would have advised them accordingly. They were also mistaken on their part.
BNQ cannot be held liable for the loss incurred to the family because they can take defenses against duty of care that the harm suffered by the plaintiff was not reasonably predictable so they can deny claim. Although, Merlin was a financial advisor in the organization, he had no right to promote real estate and to establish deals with the clients. Despite all this, being a business organization, the responsibility should be taken by BNQ and certain compensation should be provided to the clients (Terry & Giugni, 2016).
Conclusion:
BNQ owe duty of care towards Edvard and Frida because Merlin was an employee in the company. BNQ and Edvard and Frida can take legal action against Merlin for fraudulent conduct. Edvard and Frida can also take legal action against estate agent if they have proper documents related to the property deal.
References:
ALRC, 2018. 16. Authorising what would otherwise be a Tort. [Online] Available at: https://www.alrc.gov.au/publications/right-sue-tort [Accessed 08 September 2018].
Australian Government, 2018. Law of Negligence and Limitation of Liability Act 2008 (NI). [Online] Available at: https://www.legislation.gov.au/Details/C2016Q00058 [Accessed 07 September 2018].
Sadler, P., 2009. Liability for Negligent Misrepresentation in the Finance Industry. The Finance Industry , 11, pp.17-25.
Terry, A. & Giugni, D., 2016. Business and the Law. 6th ed. Thomson Reuters.
The Law Handbook, 2018. Duty of care. [Online] Available at: https://www.lawhandbook.org.au/2018_04_08_02_duty_of_care/ [Accessed 08 September 2018].
Witting, C., 2007. Tort Law, Policy and the High Court of Australia. Melbourne University Law Review, 31, pp.569-80.
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