NEGLIGENT MISSTATEMENT AND OTHER CATEGORIES

OF NEGLIGENCE

Negligent Misstatement

The tort of negligence also applies to giving of advice.

A statement of fact, advice or opinion made in business or professional matters that is relied upon by another but which is inaccurate or misleading.

Negligent misstatement is a tort, hence, P needs to prove the necessary elements of: duty of care, breach of duty and damage.

Duty on D to avoid making careless statements that cause harm.

Traced to the 1964 case of Hedley Byrne & Co. Ltd v Heller & Partners Ltd.

Hedley Co (advertising agent) had provided substantial advertising on credit to Easipower. Hedley booked expensive advertising space for Easipower based on a favorable credit report from Easipower’s bankers, Heller & Partners. Report was given ‘without responsibility.’ Easipower couldn’t pay up, Hedley suffered losses. Hedley sued Heller.

HL held that a person with special skill or knowledge owes a duty of care when giving advice if it is reasonably foreseeable that the advice will be relied upon.

If however, a clear disclaimer is issued, then no liability arises.

A duty of care extends not only to professional advisers, but also to persons who provide information in some matter of business or serious consequences: MLC v. Evatt.

Evatt sought advice from a life insurance adviser (from MLC) on whether to invest in a finance company (HG Palmer). Evatt was told it was a good investment so increased his investments in HG. Co was badly run and went into liquidation. Evatt suffered substantial losses.

HC found MLC liable for negligent misstatement stating duty of care extended to persons giving advice in serious circumstances.

Privy Council rejected the serious circumstances test and found MLC not liable as it didn’t hold itself out as having special skill/expertise for giving financial advice.

Modern tests in Shaddock’s case: Shaddock (prospective buyer of

property) sought advice from a local council which told the buyer that the land was not required for road widening. Council didn’t charge any fees and didn't issue any disclaimers. Shaddock bought the property and suffered losses when part of the land was used for road widening. Shaddock sued the council for negligent misstatement.

Court found that liability for negligent misstatement is not limited to those in the business of giving advice.

A person (public body): giving information to another Knowing (reasonably foresees) it will be

relied upon Is under a duty to exercise reasonable care

that the information is correct.

Tests for negligent misstatement: Did D give advice on a serious matter in

serious circumstances? Should D have foreseen they were being

trusted to give correct information and the advice will be relied upon?

Was it reasonable for P to rely on the advice? Did D fail to exercise reasonable care in

giving the advice? Did P suffer loss as a result?

Other Categories of Negligence

A) Mental harm (nervous shock) B) Occupier’s liability C) Vicarious liability

A) Mental Harm (nervous shock) Concerns psychiatric injury See Jaensch v Coffey – P needs to show

that person of normal fortitude would have suffered pure psychiatric injury.

See also Annets v Australian Stations Pty Ltd- reasonable foreseeability of harm.

B) Occupier’s Liability An occupier of premises owes a duty to

persons entering the premises to ensure the premises are not dangerous.

Persons coming onto the premises are known as ‘entrants’. Could be visitors or trespassers.

Who is an occupier? Person having occupation or control of

land or a structure.

Since Australian Safeway Stores Pty Ltd v Zalzuna, ordinary rules of negligence apply to occupiers as they do to other persons owing a duty of care. Occupiers to take reasonable care to

avoid foreseeable risk to entrants. (note: Zalzuna was a lawful entrant).

What about trespassers? In Hackshaw a Shaw, the court found

that a duty is owed even to persons who are unlawfully on the premises.

C) Vicarious Liability In some situations a person can be held

responsible for the acts/omissions of another.

The liability for one’s wrongful act can be shifted to another because of their legal relationship –the Doctrine of vicarious liability.

An employer is vicariously liable for the torts of an employee in the course of their employment.

Need to look at two things: the tort must be committed in the

course of employment (arising out of employee's duties)

the employer either directly or indirectly authorises the wrongful conduct.

See the Drunken Possum-hating Cleaner case

MST Multiple Choice1. B 6. A2. D 7. D3. B 8. B4. B 9. C5. C 10. D