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Corporate Law

Negligence can simply be defined as a failure on part of a person to take reasonable care. The domain of tort law referred to as negligence includes damage caused by failure to act as a result of carelessness under a stressful situation.

To determine whether a tort of negligence has been committed, three major elements have to be proved for establishing the negligence tort against a party. First, that the defendant had a duty of standard care towards the plaintiff, following, that such duty has been breached by the defendant, i.e. the defendant botched in taking reasonable care and precaution while discharging their duty towards the plaintiff. Furthermore, it is also essential to prove that there exists a link or relationship between the breach of said duty by the defendant and the loss or injury suffered by the plaintiff1 .

The first aspect of determining a negligence case is to analyze whether the defendant is obligated by a duty to the plaintiff or not. There are two forms of obligation a defendant may owe the complainant. The first is the standard duty of care. The duty of care is essentially an ethical obligation upon any person to act or conduct like a reasonable individual, acting in similar scenarios, should be treating themselves. In other words, it refers to a standard level of care owed by one individual towards another while performing any duty or function. Once it is recognized that a person owed a duty of care to another, it is necessary to then analyze whether such person has breached his duty, that is to say, the person has failed to take any reasonable measure to avoid any harm or injury being caused. For any event of neglect, one must look at the conduct of the defendant to in an attempt to decide if a reasonable person might have conducted in the way in which the defendant acted if the reasonable person was under the same situation as the defendant. If the conduct of the defendant correlates to the actions of the reasonable individual the defendant has satisfied his duty of care. If the conduct of the defendant fell behind what a court decides to be the conduct of a reasonable individual should have been, the defendant is said to have breached his duty of care. Lastly, the element of causation and damage also has to be proved. This element requires the plaintiff to prove that a close link exists concerning the behaviour of the defendant and the damage sustained by the plaintiff.

The doctrine of negligence was developed in the Donoghue v Stevenson2, commonly identified as the ‘snail in the bottle case’. In this case, the issue at hand was to determine whether the manufacturer owed a standard of care to the plaintiff. Here, Lord Atkin held that plaintiff has to prove that the damage suffered by her was attributed to the breach of duty which the defendant owed to her in taking reasonable care to avoid it. In this case, the court faced the question of whether the manufacturer had a standard of care to the consumers of the good. For this, the court developed two rules that became essential to prove the duty of care, firstly, the test of reasonable foreseeability and secondly the test of neighbour. These tests are applied to analyze whether the injury or harm suffered by the plaintiff was reasonably foreseeable. As per common law of tort, it is determined by analyzing whether the conduct of the defendant was ought to have resulted in any harm or 3injury to the plaintiff, that is there is a risk that the conduct of the defendant will cause harm to the plaintiff and that such that risk was reasonably foreseeable and significant.

The second test is regarding proximity. The test of proximity is applied to determine the link amongst the plaintiff and defendant’s relation, i.e. the amount of control by the defendant and the susceptibility of the plaintiff in the situation. The higher the level of power by the defendant and susceptibility of the plaintiff had in the situation, the higher the liability for breach of duty. Furthermore, the court relied on the judgment of Heaven v Pender4 and held that the tort of negligence arises due to the breach of moral duty or obligation which the defendant owed to the plaintiff. In addition to this, the court also held that an individual must take all reasonable precautions to avoid any foreseeable risk or injury that may occur due to their act or omission to their ‘neighbour’. Moreover, the court also ruled that an individual has a standard of care to another even though no contractual relations exist between the two parties.

When the actuality of duty of care is proven, it is then essential to establish that the said standard had been breached by the defendant. Breach of duty of care refers to the failure to take the actions required to prevent any risk of harm that may arise in future5. Wyong Shire Council v Shirt6is a landmark judgment regarding breach of duty of care. In the given case, the plaintiff had gone for water-skiing in a lake that was controlled by the defendant, the local council. At the lake, signs were indicating the depth of the water and about safe zones for water-ski. However, the placement of the signs was confusing due to which the plaintiff went for ski in shallow water and fell off which resulted in spinal injury. Here, the question before the court was whether the defendant had breached their duty of care. The Hon'ble court held that the defendant had breached their duty of care. Furthermore, the court laid the principle that where the risk of injury is reasonably foreseeable, it must not be ignored or neglected.

The last element necessary to prove negligence in a lawsuit is to show that a link or connection exists between the actions of the defendant and the loss or injury sustained by the plaintiff7. While dealing with the remoteness of damage and its foreseeability, in the matter of Commonwealth v McLean8, the hon’ble court held that if the damage or loss is reasonably foreseeable, then the loss is not too remote, thus the defendant is liable to pay compensation/ damages. Furthermore, the court, while relying on the judgment of Donoghue case, held that the assessment of reasonable foreseeability is not based on the knowledge or conduct of the defendant but on how a prudent individual would have reacted in that situation. If the conduct of the defendant matches the standard of conduct of any rational being then it can be deemed that the defendant has performed the duty with standard care9.

Negligence through being a part of torts law is a civil wrong, there are branches of negligence law that crosses over into the criminal domain as well. Product liability is the domain of law where manufacturers, sellers as well as distributors of a product can be held liable for the damage that their goods inflict. Product injury proceedings have generally been ruled overdue to negligence principle. Negligence is actions resulting in an accidental accident or causing unnecessary damage. However, drug liability law has changed and several jurisdictions have now expanded drug responsibility beyond the context of specific responsibility tort10. Strict liability torts include acts which are potentially harmful and for which a person can be responsible irrespective of how diligently he or she (or it) carries out such activities. Regardless of if the argument for product liability is founded on incompetence or absolute liability, an argument for product liability arises because of either a design fault, a manufacturing flaw or a letdown to notify.

Grounds for strict liability: In the law of torts, strict liability is the assumption of blame against a defendant lacking seeking fault (such as neglect or tortious intention)11. The complainant simply has to show that the abuse occurred and that the offender was liable. The statute applies specific responsibility to circumstances it finds potentially hazardous. It discourages careless conduct and premature failure by pressuring prospective claimants to take any measure necessary. In such situations, it sometimes it has the advantage of simplifying and facilitating judicial decisions. The theory of strict liability in a brief is centred on two components: first, all goods place people on the risk of damage regardless of how precautions they try to avoid injury second, if they are affected through the use of these goods, they should have a means of obtaining damages.

Under strict liability cases, where the claimant has no blame to show, the defendant may present a claim of "absence of guilt": that is, the claim can contend that the malfunction was the outcome of the behaviour of the person, not the manufactured goods and that no flaw conclusion can be made simply because an incident happens. In the other side, if the complainant may show that the perpetrator learned about the flaw when the injury happened, further monetary damages will be paid to the claimant in certain jurisdictions. Once a case has been filed against a person for negligence, certain defences can be claimed12:

a) Obvious risk: It can be termed as the kind of risk, in the positions, that should have been obvious to any rational individual in the complainant's place in the circumstances. It includes:

i) Patent and common knowledge threats, including those with a low likelihood of occurrence

ii) Risks which are not common, apparent or physically measurable

iii) Risks of a low probability.

A risk that emerges from the defendant's inability to adequately prepare, maintain, replace, operate or take care of a thing is not evident until the defendant's inability itself is obvious.

b) Inherent risk: It is a risk of occurring something which cannot be prevented by the application of fair care and ability. A person is not liable for any harm suffered by another if the harm was a result of materialization of inherent risk.

c) Voluntary assumption of risk: This is based upon the common law principle ‘volenti non fit injuria’. This means that the plaintiff was fully aware of the risk of any harm or injury involved in any activity and voluntarily accepted the risk. In such cases, the defendant shall not be liable for any such loss or injury sustained by the plaintiff.

d) Dangerous recreational activity: As per this defence, no person shall be held liable for any damage or harm incurred by another as a result of dangerous recreational activity, whether the defendant had informed the plaintiff about the damage or harm that may incur.

e) Inevitable accident: As per the common law principle, no person shall be made liable for any injury that arose as a result of an inevitable accident. Though the defence of inevitable accident is not an established principle, however, it is accepted in cases where the plaintiff fails to prove any negligence on the part of the plaintiff. In this defence, the question is whether there was any measure of care that could have been taken by the defendant between the time of such accident and the injury being suffered.

f) Contributory negligence: Contributory negligence is on the part of the plaintiff, where the plaintiff failed to take any reasonable care or precaution for their care as a result of which any injury or harm is suffered by them. In other words, the plaintiff had themselves contributed to their harm or injury due to their action or omission. In such cases, the court has to consider the conduct of both the parties in relation to the facts and circumstances and compares between their obligations and their fulfilment.

Various sources apply to the law of negligence, the principle most being a common-law and judicial precedent. In Australia, the principles regarding torts law are essentially based on the common law13, however, some legislatures cover the aspect as well, such as the Civil Liabilities

Acts of various states. In Queensland, the Civil Liability Act 200314 is applicable in case of negligence. Similarly, in New South Wales, the Civil Liability Act 200215 is applicable, in Victoria Wrongs Act 195816 deals with negligence.

The Civil Liabilities Act has changed the law of negligence in Australia17. Prior to the implementation of these statutes, the issues regarding negligence law were governed by common law. However, the Act has codified specific provisions to deal with matters. It also introduced certain principles in a more descriptive and detailed manner to simply the fundamental principles and the conditions necessary to prove the tort of negligence. It has given a structured and more defined framework to the law.

In the commercial world, the definition of duty is wide and exists in actual physical vicinity and past those18. For instance, in a popular California event, a radio station with a wide young following organised a competition with a travelling DJ revealing clues to its locations as it travelled across town. The first listener to find out where he was and get to him won a cash reward. One specific audience member, a child, sped into the DJ after the listener carelessly triggered a car accident and killed the other car driver. The radio station claimed during a negligence case that retrospect is not predictable, further that the radio did not owe the deceased driver a duty of care. The Court ruled that if the competition was introduced by the radio station, it was inevitable that an immature and young driver could drive neglectfully to win the award and there was thus a duty of care (Weirum v. RKO General19).

Hence, radio stations must be very vigilant to guarantee that foreseeable accidents or casualties are avoided when conducting advertising events. This lesson eluded station named KDND, which announced a game called "Keep Your Wee for a Wii" in 2007 in which contestants were challenged to drink massive quantities of water shorn of going to the toilet for a chance to win a game prize. 28-year-old women passed away hours as a result of water poisoning after taking the challenge from the game, which resulted in a complaint and a 16 million dollars jury verdict20. In special cases, the standard rules concerning when a task occurs can be changed. Property owners, for instance, have a responsibility to take fair care to protect individuals on their land from predictable damages, if they are trespassers. For example, if a person is conscious of a fragile phase or a faucet that only give out boiling water, they need to take precautions to caution people of certain known hazards.

Banking Royal Commission

Regardless of the Banking Royal Commission, the issue for Australian banks nowadays is that the two main growth facilitators (deregulation & lesser interest rates) of past times have either slowed or have begun reversing. Additional regulatory action is among several domains where Royal Commission risks lie. The other ones are possible fines, shifts in remuneration systems away from a revenue focus to softer targets, and shifts in broker network fee structures. APRA's attention would potentially shift to risk management after the crackdown on production. Internal risk systems will be checked at an expense to the banks most likely. Such increases in costs are ultimately (needed to) balance. In the last few years, the banks have already begun to implement job cuts. ANZ reduced its workforce numbers from 50,152 to 44,896 over consecutive years from 2015 to 2017. In the meantime, NAB recently revealed plans to slash its jobs by a net of 4,000 from a capacity of 33,422 staff. Banks have dramatically reduced their sales ratios over the past 25 years from over 60 per cent to nearly 40 per cent, with tech being the main driver. Increased regulation will tend to place competitiveness pressures on the banks21. Orbium will help clients both in controlling and managing risks as well as improving productivity based on the Australian business experience through multiple financial institutions.

Accumulation can increase productivity by merging similar claims, and by offering a framework for litigating individual cases, it can increase access to justice. The problem that emerges is whether certain objectives of productivity and access are being reached. While some changes have been compatible with these legislative objectives in class action jurisprudence, others have not. Several aspects of Australian class action jurisprudence and practice, like unfair cost

mandates, vague threshold conditions, evasive grandstanding and pending class contact problems, have hindered the sustainable creation of legislative regimes 22. However, in the commercial world, the advent of class actions have encouraged more awareness of negligence as the consumers are now more aware of their rights and are keener on seeking remedies for the wrong that has been done. Furthermore, the domain of negligence provides the customer with the opportunity to sue the parties, whether a manufacturer or service provider, which was not available in contract law. The initiation of class action in negligence has made the companies more alert and has brought out the carelessness of the companies or manufacturers which was hidden from the world23. Owing to the nature of class action suits, consumers can now collectively file a suit against the companies and can claim damages.

In conclusion, it is clear from the abovementioned discussions that negligence as a branch of tort law has grown, though the fundamental principles remain the same. Negligence law as developed by the help of various landmark cases is the basic principle that every person owes a duty of care to their ‘neighbour’ though no contractual relationship exists. It ensures that every person is responsible for their actions and that they are taking adequate care to avoid causing any danger or harm to others.

References for Corporate Law

Terry, H. T. (1915). Negligence. Harv. L. Rev., 29, 40.

Wyong Shire Council v Shirt (1980) 29 ALR 217

Plunkett, J. (2018). The Duty of Care in Negligence. UK: Bloomsbury Publishing.

Donoghue v Stevenson [1932] UKHL 100

Commonwealth v McLean [1996] NSWSC 657; 41 NSWLR 389 (1996)

Civil Liability Act 2003 (Qld) (Cth) s9

Goudkamp, J. (2017). Breach of Duty: A Disappearing Element of the Action in Negligence? The Cambridge Law Journal, 76(3), 480-483.

Mullender, R. (2016). Negligence, breach of duty, and circumstantial pressure. Journal of Professional Negligence.

Cypher, R. L. (2020). Demystifying the 4 Elements of Negligence. The Journal of Perinatal & Neonatal Nursing, 34(2), 108-109.

Turton, G. (2016). Evidential Uncertainty in Causation in Negligence. Bloomsbury Publishing.

Iacobucci, E. M., & Trebilcock, M. J. (2016). An economic analysis of waiver of tort in negligence actions. University of Toronto Law Journal, 66(2), 173-196.

Lahav, A. D. (2017). Mass Tort Class Actions-Past, Present, and Future. NYUL Rev., 92, 998.

Vines, P. (2019). The Statutory Foundations of Negligence.

Martin, C. (2017). Negligence.

Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Harder, S., & Grant, G. (2017). Torts: cases and commentary. LexisNexis Butterworths.

Stickley, A. P. (2016). Australian torts law. LexisNexis Butterworths.

Lunney, M. (2020). Common Law Codification: Lessons and Warnings from Twenty-First Century Australia. Journal of European Tort Law, 10(3), 183-206.

Kyriakakis, J., Popa, T., Rochford, F., Szablewska, N., Zhao, X., Taliadoros, J. & Bautista, L. (2020). Contemporary Australian Tort Law. Cambridge University Press.

Cockburn, T., & Butler, D. (2018). Negligence. Health law in Australia (3rd edition), 271-394.

He, Q., Feng, J. L., & Huang, W. Y. (2016, August). Law of Negligence: Duty of Care, Standard of Care, and the Notion of Personal Responsibility. In 2016 International Conference on Management Science and Management Innovation. Atlantis Press.

Goldberg, J. C., & Zipursky, B. C. (2016). The Strict Liability in Fault and the Fault in Strict Liability. Fordham L. Rev., 85, 743.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Corporate Law Assignment Help

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