BLO1105 Business Law | Negligence and Breach of Duty to Care
Sam Speed runs a business which provides a re-fuelling service for aircraft at the regional airport at Albury in New South Wales. Sam stores his fuel at a depot he owns in an underground tank. One day, Sam receives a tanker load of 10 000 litres of fuel from his supplier. The fuel is pumped into Sam’s underground tank, and Sam puts a dip-stick into the tank to check that the correct amount has been delivered. Unfortunately, Sam is distracted by a phone call, and forgets to screw the lid back onto the tank, with the result that dust enters the fuel during the night, contaminating it.
The next day, still unaware of what has happened, Sam refuels three light aircraft with the fuel. Each aircraft is owned by a different company, White Ltd, Blue Ltd and Green Ltd.
The aircraft owned by White Ltd takes off successfully, but about 2 km from the end of the runway the engine cuts out because of the fuel contamination and the aircraft, which is worth $ 1 million, crashes onto a road and is totally destroyed, although the pilot miraculously survives without any injury.
The aircraft owned by White Ltd also destroys a Mercedes Benz car worth $ 75 000 owned by Ms Susan Swift, who usually never parks her car on that street but did so that day because the parking lot she uses was full.
Sam hears on the radio what happened to the aircraft owned by White Ltd, and that the pilot reported a problem with the fuel system to air traffic control moments before the crash. Fearing that the accident might have been due to contaminated fuel, Sam runs across to the aircraft owned by Blue Ltd, waving his arms to attract the attention of the pilot, who is just about to start his engine. Sam tells the pilot that there seems to be something wrong with the fuel and that it could damage the engine, and the pilot decides not to take off for Sydney. There are no other aircraft able to fly to Sydney, and because the aircraft owned by Blue Ltd does not take off, one of the passengers, Ms Mary Harper, who is a maritime engineer, is unable to get to Sydney to certify that a cargo ship owned by Safmarine Ltd is seaworthy, with the result that Safmarine Ltd loses $ 250 000 in profit because its vessel cannot put to sea that day.
After alerting the pilot of the Blue Ltd plane, Sam also runs to the aircraft owned by Green Ltd and gives him the same information about the fuel, but the pilot says “Look, mate, I understand what you are saying, but I don’t have time for this. I’m going to take off anyway. I have to get to Melbourne by 10 am”, and with that the pilot closes his window and taxis towards the runway. As the pilot starts his take-off run, the aircraft’s engine cuts out, it swerves across the runway and suffers $ 200 000 worth of damage.
Accident reports confirm that the aircraft owned by White Ltd and Green Ltd crashed because their engines were damaged by the contaminated fuel.
Advise Sam on what liabilities he may have to all potential plaintiffs who have suffered loss under the above facts.
Answer:
Issue
The issue in the present case is to ascertain that in which of the cases, the defendant Sam would be liable for the losses incurred to the likely plaintiffs under the highlights of tort law.
Rule
The tort of negligence would be taken into account when the three central aspects i.e. duty to care, breach of duty of care and damages are present. Duty to care is the responsibility to care that the defendant owes to the plaintiff and can easily be found by using neighbour test as used by honourable judge in Perre v Apand [1999] HCA 36 case (Harvey, 2009). Breach of duty to care takes place when the defendant acts negligently and does not take requisite provisions related to fulfilling duty of care. When the necessary precautions are not taken by the defendant, then the expected foreseeable losses suffered by the plaintiff would be categorised as damages from the breach of duty of care. If these three aspects are present in any case, then such cases would be dealt under tort of negligence and the defendant is liable for the incurred losses suffered (Gibson & Fraser, 2014).
Duty to care and neighbour test
The neighbour test is used in order to ascertain the existence of duty of care on behalf of the concerned defendant. As per the conditions of this test, the action doer called as defendant is supposed to take necessary measures before conducting any work or action so that the foreseeable damages to the neighbour can easily be prevented (Lindgren, 2014). This is because the action or inaction of the action doer has the capability to result in significant damages. The judgement in Donoghue v. Stevenson [1932] AC 562 at 580 case is the testimony of the above fact where action doer’s conduct or negligence in the conduct can result considerable losses on the part of plaintiffs (Davenport & Parker, 2014).
Negligence and breach of duty to care
Defendant must provide appropriate level of care to the plaintiff in regards to prohibit the losses that can be caused if the duty of care is violated. Breach of duty of care would be present when the defendant who is supposed to take necessary actions and safety precaution behaves negligently and does not pay attention towards the possible damages that can be incurred because the breach of duty (Lindgren, 2014). Further, the defendant also must consider the factors associated with the expected risk that are directly related to the breach of duty of care under s 5F of the Civil Liability Act 2002 (NSW) (CLA) in which the degree of knowledge of the defendant regarding the magnitude and likely probability of the harm to the plaintiffs would also bean imperative parameter that would be taken into account by the court while deciding whether the defendant has breached duty of care or not (Harvey, 2009). Under tort law the defendant is not responsible for the unforeseeable losses.
Damages
Plaintiff must show that the harm has been caused because of omission of the defendant (breach of duty of care). This can be shown by highlighting that the damage could have been prevented if duty to care was not breached. It is noteworthy that the action doer who is negligent in practicing duty of care for plaintiff is not liable for the losses which are unforeseeable in nature (Latimer, 2016). Also, if the plaintiff has the knowledge or information regarding the fact that duty of care has been breached and still does not taken requisite action to prevent the possible harm that can be incurred then in such scenario the action doer is not liable for the damages (Davenport & Parker, 2014). Also, the damages constitute not only loss of income, property and also emotional and mental harassment and damages.
Application
Sam is in a business of refuelling the aircraft which requires highest duty of care. This is because inferior quality of fuel in the aircraft can harm the engine that can instil a significant loss of life and property. It is also apparent that Sam was negligent because he kept the lid of fuel tank open because he was on call. As a result, contamination has incurred in the fuel. Sam did not perform any check on the fuel before refuelling These factors clearly indicate that Sam has breached the duty of care.
Due to the inferior fuel quality the engine of White Ltd aircraft (worth 1 million) gets blocked as a result the aircraft gets crashed. Also, the Mercedes Benz (worth $75,000) also destroyed. It is apparent that because of the breach of duty of care of action doer Sam, the above damage has been incurred and hence, he is responsible for the losses.
Sam has reported the fuel contamination issue to the pilot of Blue Ltd before aircraft’s take-off. Hence, the pilot has not taken-off the aircraft. Thus, no foreseeable loss has incurred to Blue Ltd and thus, Sam is not responsible for any damage. However, a passenger of Blue Ltd (Ms Harper) did not reach Sydney and thus, could not verify a cargo ship and thus, the ship held by Safmarine has suffered a loss of $250,000. It is clear that this is unforeseeable damage and action doer Sam is not responsible for such damages and thus, Safmarine cannot claim the loss from Sam. But Blue Ltd. can claim any losses of account of the cancellation of flight.
Sam has reported the fuel contamination problem to the pilot of Green Ltd before aircraft’s take-off . However, pilot of Green Ltd did not listen to Sam and starts the take-off run. As a result, the significant damages of $200,000 were incurred. It is evident that Sam had informed the pilot well before the take-off and therefore, Sam is not responsible for damages. This is because even though he breached duty of care by his negligent behaviour, he informed the same to Green Ltd.
Conclusion
Sam has highest level of duty of care but his conduct was negligent and thus, breach of duty to care has taken place leading to damages for plaintiffs. Hence, he is responsible to the damages incurred to the aircraft (White Ltd) and Mercedes Benz. Further, he does not have responsibility of the damages which are incurred to Safmarine and Green Ltd. However, he would be responsible for the losses caused due to cancellation of flight by Blue Ltd.
References
Davenport, S. & Parker, D. (2014) Business and Law in Australia (2nded.) Sydney:LexisNexis Publications.
Gibson, A. & Fraser, D. (2014) Business Law (8thed.). Sydney: Pearson Publications.
Harvey, C. (2009) Foundations of Australian law (2nd ed.), Victoria: Tilde University Press.
Latimer, P. (2016) Australian Business Law CC (1sted.). Sydney: LexisNexis Study Guide.
Lindgren, KE. (2014)Vermeesch and Lindgren's Business Law of Australia (12thed.). Sydney: LexisNexis Publications.
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