MMK277 – Business Law Assignment Help

The history of negligence law in relation to professional advisers. Explain when an adviser was liable for negligent advice.

  • Negligence or tort means an action for damages brought by a person who has been injured by the negligent actions of another, leading to compensation.
  • In early 19th century, people buying goods had a motto of caveat emptor (let the buyer beware); As a result, a consumer with defective goods could only sue the seller, and not the manufacturer. This was considered as fraudulent. Law of negligence came into existence in after the case of Donoghue v Stevenson (1932)[1] AC 562 in 20th
  • Basically, any professionals, whether owing a duty of care or not, can be held liable when
  • Depending on the case;
  • Purpose of the advice;
  • If the advisor had special skills, knowledge.

The effect of the landmark decision-Donogue v Stenveson (1932)-on the liability of professional advisers.

  • The most commonly litigated tort is negligence. This law is used when a person breaches a social duty to not harm another. (Baird, Avgoustinos & McCann 2011)
  • To prove the breach of duty of care, plaintiff must prove following elements
  • Duty of care owed;
  • Breach;
  • Loss/Damages attached to that breach;
  •  
  • In any case, if one wants to prove that another party owed them a duty of care, they must satisfy ‘neighbor principle’ – Donoghue v Stevenson (1932) and Grant v Australian Knitting Mills (1933)[2].
  • Due to highly secured consumer laws, the law of tort was extended to all kinds of employments including professional services like doctors, lawyers, financial advisors, brokers, and many others.

Hire Professional Writers at Low Prices!
*
*
*
*

The effect of Hedley Byrne v Heller (1963) on the liability of professional advisers

  • Due to high demand and wide coverage of Law of Tort, there was a generally accepted view till 1963 that the defendant owed no duty of care to the plaintiff. However, after the case of Hedley Byrne v Heller (1964)[3], this area of law was highly developed to an extent to cover plaintiff’s economic loss due to the negligence misstatement or misrepresentation by the defendant. New belief after 1964 was the negligence applies not only to acts but also to words.
  • More professionals have since been liable for negligent misstatement. The issue of a special relationship was examined like L Shaddock v Parramatta City Council (1981)[4]

Modern developments in Australia, especially in the High Court of Australia.

  • In recent decades there has been a good deal of reflection and writing by philosophers, linguists and literary theorists about text, meaning, context, certainty and uncertainty. Australian academic writers on statutory interpretation have noted these recent developments. 
  • Under the strict separation of powers in Australia, it is Parliament which has the power to make laws and judges who have the power to interpret those laws. However, in discovering the will of Parliament, it is accepted by all arms of government and expected the question judges to ask and answer is: “What does this statute or provision mean?”
  • It is now common for Australian statutes to state their purpose or object at the beginning of the Act and on occasions such statements make specific reference to policy considerations
  • The current explanation of legislative intention and contemporary approaches to construction, which pursue sense by reference to purpose and by reference to context and fairness and to the principle of legality, are all interpretative approaches which work to ensure that meaning, is not sacrificed by the application of inflexible principles or rigid theories of statutory interpretation. (Crennan 2010)

The effect of the Australian Consumer Law on liability of professional advisers. Refer to the case law to show how the Act is being used.

  • Section 18 of the ACL creates a norm of business conduct, and allows persons to seek remedies for harm caused by breaches of that norm, rather than giving rise to a contravention that attracts punitive sanctions. Other prohibitions against specific forms of false or misleading conduct may also apply to instances of misleading conduct and have specific penalties and criminal sanctions
  • Negligent misrepresentation or misstatement is a part of tort of negligence. A defendant can be held liable under this act of tort if he satisfies these conditions:
  • Owe a duty of care;
  • Exercise the required standard of care;
  • Plaintiff’s losses caused by defendant’s negligence and losses reasonably foreseeable?
  • With both accountants and solicitors it is expected that they have special skills and their advice would be given through a special relationship. It is then up to the claimant to prove that they placed a reasonable reliance upon the advice given, they used it to inform and influence their decision. Courts will also look at whether the defendants should have known that their advice would be relied upon. Looking at the case of Shearman v City of Yarra & Ors (2013)[5], we could see how the case was in favour of City of Yarra Council.

Does the Act have any advantages over the common law?

  • The national Australian Consumer Law (ACL) came into effect from 1 January, 2011 through the commencement of the second stage of the legislation by replacing the current Federal and State legislative framework for consumer protection and fair trading.
  • Following areas (Ch2-5 of ACL) had been added or revised as a result of ACL framework:
  • National unfair contract terms law replacing the 2B of Fair Trading Act 1999 (Vic)
  • Penalties, enforcement powers and consumer redress options.
  • Unfair trade practices and trading
  • Regulation of specific types of B2C transactions and consumer guarantees provisions
  • Basic consumer rights for goods and services
  • Regulation of consumer product safety
  • National provisions on information and business working standards
  • Increased liability for manufacturers
  • In conclusion, ACL aims to provide more confidence to consumers as well as businesses and also places further obligations on suppliers and manufacturers under the previous Consumer protection and fair trading laws. (Business.gov.au 2011)

Get Assignment Help Now

REFERENCE LIST

–          AusLII 2013, Shearman v City of Yarra & Ors [2013] VCAT 1425, ‘Victorian Civil and Administrative Tribunal’, 22 August.

–          Baird, A, Avgoustinos, C & McCann, P 2011, Make decisions in a legal context, Better Teams: Russell Lea, N.S.W.

  • gov.au 2011, ‘Australian Consumer Law | Fair Trading’, Australian Government. <http://www.business.gov.au/BusinessTopics/Fairtrading/Pages/Australianconsumerlaw.aspx>

–          Cooke, J 2003, Law of Tort, 6th Ed, pg. 77, Harlow: Pearson Longman.

  • Crennan, S 2010, ‘Statutes and the contemporary serach for meaning’, Statute Law Society Paper, 1 February
  • Dewitt & Tanner Solicitors 2008, ‘Responsibilities Beyond Regulations: Mis-selling: Civil Liability for Negligence and for giving Negligent Advice’, retrieved 25 August, 2013 <http://www.tannerdewitt.com/media/publications/mis-selling-and-negligence.php>
  • Harpwood, V 2003, Modern Tort Law, 5th Ed, pg. 72, London: Cavendish Publishing.

[1] Donoghue v Stevenson (1932) AC 562 – Stevenson sells soft drinks in opaque glasses – Donoghue’s friend buys it from a retailer, and she herself drinks it, ends up getting sick by finding a decomposed snail. She sued Stevenson for the tort of negligence. In argue, Stevenson said he owed no duty of care. House of Lords decided there was no need of contract, but manufacturers like Stevenson, owed duty of care to all consumers. Failure of this can lead the consumer to be injured. The case was sent to lower courts to decide if Stevenson owed a duty of care to Donoghue’s injuries, and eventually settled for £100.

[2] Grant v Australian Knitting Mills (1933) 50 CLR 387 – AKM manufactured undergarments. Dr. Grant wore it and suffered serious dermatitis due to excess sulphites in the cloth which was meant to be washed before selling. Dr. Grant sued AKM for negligence. Applying Donoghue v Stevenson case’s principles, Court decided AKM owed a duty of care for Grant’s injuries, and was entitled for Grant’s damages. This is because it was reasonably foreseeable that the customer would suffer injury if the manufacturer did not take proper care.

[3] Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465 (House of Lords) – Hedley Byrne being an advertising agency, asked for a reference from his client Easipower Ltd’s bank Heller & Partners Ltd as a financial security towards his advertisement expense. Heller & Partners Ltd handed a confidential letter stating it as not for private use and at the bank’s responsibility. Hedley Byrne lost money because of Easipower’s business solvency; wanting to sue his bank Heller & Partners. However, the House of Lords, not in favor of Hedley Byrne, stated a person giving advice could owe duty of care to recipient to take reasonable care in providing that service. As no special relationship existed between the Bank & Hedley, case was closed

[4] L Shaddock v Parramatta City Council (1981) 55 ALJR 713– Shaddock & Associates Pty Ltd, land developer, enquired to buy certain area of land in Parramatta to its city council.  Parramatta City Council had a proposal to acquire 1/3rd of the land for development purposes, however failed to respond to Shaddock. Having bought the land, Shaddock later comes to know he cannot use the land, therefore sues City Council for tort of negligence misconduct. The High Court held Parramatta City Council responsible for his negligence of misstatement and for breach of duty and held liable to compensate the plaintiff.

[5] Shearman v City of Yarra & Ors (2013) VCAT 1425 – Shearman a developer, sends application to Yarra City Council for the development of a land with 4 storey building. Looking at the proposal council rejects by saying the height and scale is inappropriate on this site, and design fails due to heritage context. Respondent also opposes the grant of permit by adding to the reason about the over-shadow, overlook and visual bulk, and various other reasons. Applicant asks the Tribunal for a possible review on the rejection, suggesting a strategic plan for the development. The judge said that site had an opportunity for redevelopment; however configuration and resultant visual bulk are not acceptable as they do not meet the context. Considering the skills of architects, asked the design to be revisited by not granting the permit with current proposal, concludes the case in favour of Yarra City Council. (AusLII 2013)