LAW100 Business Law For Hedley Byrne And Co Ltd

Issues 1

Whether the council owns a duty of care against Ellen?

Rule

One of the significant laws that prevail in order to compensate the plaintiff for the defaults of the defendants is the law of negligence.

The law of negligence submits was analyses in Donoghue v. Stevenson, wherein Lord Atkin submits that every defendant must be careful so that no harm is caused to the plaintiff because of his actions or omissions. The law of negligence is also applicable on negligent misstatements.

Negligent misstatements are those statements which a defendant makes to the plaintiff knowing that same is false. The defendant knows the truth of the statements and thus is at a superior position and thus he must take proper care before communicating the said statement to the plaintiff. The safeguard on the part of the defendant further increases when he is aware that the plaintiff will rely on the statement so made before establishing a contract. It is rightly held in Hedley Byrne & Co Ltd v Heller & Partners Ltd, if any damage is incur to the aggrieved by considering the false statements made by the defaulter then the plaintiff can sue the defendant under negligence.

One of the foremost elements that is needed to prove negligent misstatement is duty of care

Duty– Any statement made by the defendant should be made by him in such manner to make sure that the declaration so made should not result in loss to the aggrieved. The responsibility is given on the defendant mainly because the plaintiff and the defendant share a association of nearness. In Esanda Finance Corporation Ltd v Peat Marwick Hungerfords the parties are in proximate relationship if the statement so made will affect the plaintiff. It is also held in Mutual Life and Citizens Assurance Co Ltd v Evatt that responsibility of protection is only given against towards such aggrieved that are reasonably foreseeable.

Application Of Law And Conclusion

Ellen intends to start her own business after graduating from The College of Alternative Medicine. She was looking for suitable premises around the inner city suburb for her mediation studio. She found a terrace house. Before entering into a 12 month lease, she desire to make sure with the neighborhood commission regarding the appropriateness of the premises for the business. The landlord was willing to make a lease, however, Ellen waited so that she could confirm to the committee regarding the appropriateness of the area.

She thus visited the committee office and went to the section of “Business Inquiries”. A council employee was present and several questions were asked by Ellen regarding the building work in the area. She specifically asked whether there is anything that can cause noise in the area as she is taking the premise for her meditation studio and thus needs a calm environment.

It is submitted that the employee is aware that any information that is furnished by him will impact Ellen as she will make her future decision based on such information. Thus, the employee must make sure that the information submitted by him must be accurate because Ellen holds proximate relationship with him and thus is her neighbor.

Also, the employee can reasonably foresee Ellen.

So, there exists a duty on the employee against Ellen.

Issue 2

Whether the duty of care was violated?

Rule

When the duty of care is inflicted on the defendant then he must make sure that he must not act in any manner whatsoever so that this duty of care is violated him. The duty is said to be violated provided the level of care that must be met by the defendant is not met and is rightly held in the leading case of Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Limited. If the defendant is conscious that the applicant is relying on the statements that are made by him, then, he must be every sure before making such statement and must comply with the relevant standard of care that is required in the given situation.

Application Of Law And Conclusion

The facts states that before answering the question the employee was called away. He returned back and after having a quick look at the computer ad told to Ellen that everything is fine and that she should relax.

Thus, the employee is aware that Ellen is relying on the statement that is made by him, however, still he made a statement regarding the area by just looking at the computer. He acted not as per the level of care that is required by him like a normal prudent man in the similar situation.

Thus, there is violation on the part of the employee.

Issue 3

Whether Ellen suffered loss because of the breach of duty?

Rule

When the is breached by the defendant, then, it is essential that a little loss must be incur by the applicant because of such violation of the duty. When the defendant made any misstatement and if any damage is caused to the plaintiff because of such misstatement then loss is incurred in negligence and is held in (Lindeman Ltd V Colvin. But, it is important that the loss that is caused must be because of the violation of duty and the loss must not be remote in nature.

In the leading case of Shaddock& Associates Pty Ltd V Parramatta City Council it was held that when the plaintiff relied on the information provided by the defendant so that the plaintiff can enter into any other contract the if any misstatement is made by the defendant resulting in loss to the plaintiff then such loss is loss under the law of negligence. but, if the plaintiff is not relying on the statement made by the defendant and still suffer loss then such loss is not within the law of negligence and is held in  San Sebastian Pty Ltd V Minister Adminstering The Enviromental Planning And Assessment Act.

The two main elements to prove loss are:

1. That the injury to the applicant must be such that can be anticipated by the defendant. in the leading case of South Australia Asset Management Corp v York Montague Ltd it was held that the damage which is sustained by the plaintiff is very remote and no one predict the same then it is the loss that is not coming under negligence law.
2. Also, the injury that is inflicted on the applicant must be because of defendant. If the loss is not because of the acts of the defendant then such loss does not comes under the law of negligence.

Application Of Law And Conclusion

Now, a per the facts, by relying on the information that is furnished to her by the council she entered into a lease with the landlord. However, within two weeks of opening the studio she found that some builders are started working next door. It was found out that the work will be carried out for next six months. Ellen was not able to run her meditation studio because of the noise from the building was very stress full. She has t reduce the operating hours in order to avoid the noises.

Now, the injury to to Ellen is because of the acts of the employee because employee is aware that Ellen is carrying on a meditation centre and id construction work is carried out then Ellen business might suffer loss. Thus the loss is because of the acts of the employee and the loss is also not remote in nature.

She also suffered nervous disorder because of the noise of the construction.

But, this loss is too remote to be predicted by the employee and thus the council is not liable for the same.

Issue 4

Whether a negligent misstatement is made by the council worker?

Rule

When the misstatement is made by the defendant because of whom loss is caused to the plaintiff then the defendant is liable for misstatement. If the employee incurs such misstatement then his employer is liable for the loss provided the same is incurred within the course of employment

Application Of Law And Conclusion

Since the loss caused to Ellen is incurred by the employee while carrying on his official duties within the course of employment thus the council is liable.

Issue 5

Can the non payment of rent is the violation of contract amid Ellen and the Landlord?

Rule

When a contract is made then the parties must comply with the contract terms and if the terms are not comely with then the aggrieved can sue the defaulting party for breach of contract.

Application Of Law And Conclusion

Ellen did not pay the rent to the landlady and thus there is breach of contractual term on the part of Ellen. The landlady can sue Ellen for breach of contract term.

Reference List

Books/Articles/Journals

Hocking Barbara, Liability for negligent words (1999) Sydney: Federation Press 1999.

DAVID, ALEXANDER, Material Misstatement of What? A Comment on Smieliauskas et Abacus, 46(4). 2010 < https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-6281.2010.00327.x>.

Case law

Donoghue v. Stevenson [1932]).

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 (HCA);

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

Lindeman Ltd V Colvin [1946]).

Mutual Life and Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 566.

Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Limited [2009]

Shaddock& Associates Pty Ltd V Parramatta City Council [1981] HCA 59.

South Australia Asset Management Corp v York Montague Ltd, [1997] 1 A.C. 191 HL

San Sebastian Pty Ltd V Minister Adminstering The Enviromental Planning And Assessment Act (1986).