PROFESSIONAL STUDIES II (BSB659)

PROFESSIONAL LIABILITY

6.0 NEGLIGENCE

Negligence is the lack of reasonable care or conduct which results in the injury (or financial loss) of or to another. Whether the act or omission was reasonable is usually decided as a result of court action.

Negligence is not actionable per se, and therefore loss must be proved by the plaintiff as a result of a breach of duty of care committed by the defendant, because the defendant failed to meet the standard of care reasonably expected of him.

To establish negligence, a plaintiff must prove that:

a. the defendant owed him a duty of careb. the duty was broken by the defendantc. the plaintiff suffered damage as a consequence of the breach.

Two partial defences are available:

• Volenti non fit injuria or 'the risk was willingly accepted' i.e. the plaintiff wasfully aware of the risks

• Contributory negligence: the plaintiff has contributed to the negligent act. [fsuccessful, this defence can significantly reduce the level of compensation

The term negligence is also found in breach of contract, for example, the architect may be negligent in designing a building or in his supervision; the quantity surveyor may be negligent in preparing estimates of cost; and the contractor may be negligent in carrying out the works. It may be said that the term negligence refers to a breach of duty of care, whether owed in tort or in contract.

6.1 Duty of Care

However careless the defendant is, he is not legally liable in the tort of negligence unless he owed the plaintiff a legal duty of care.

Donoghue v Stevenson (1932) established the principle that a duty of care

arises whenever a person can reasonably foresee that his acts or omissions would injure or cause damage to another. This is known as the 'neighbour principle'.

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In Donoghue, P's friend bought her a bottle of ginger beer. After drinking most of it, P found a decomposed snail in the bottle and became ill. The bottle was opaque so that the snail's presence could not have been detected until most of the liquid has been consumed. P had no contract with either the seller or the manufacturer and, in any event, the default was that of the manufacturer, not the seller. So, P sued the manufacturer in tort.

The HL held that the manufacturer owed a duty of care to the consumer of the product. The manufacturer could reasonably foresee that the ultimate consumer will be injured by his omission to exercise care in the manufacture of the ginger beer. Since the plaintiff had suffered as a result of the manufacturer's alleged lack of care in ensuring that the product was fit for consumption, the manufacturer was liable to P in negligence.

Significant points from Donoghue:

• negligence is a separate tort;• the absence of privity of contract is irrelevant in tort;• to establish negligence, the claimant must prove: a duty of care is owed by

the defendant to the claimant; breach of that duty by the defendant; anddamage as a result of the breach, which is not too remote;

• the neighbour principle as a test for the existence of a duty of- care must beapplied;

• manufacturers owe a duty of care to consumers in respect of the goods thatthey provide to ensure that they do not threaten health or safety.

Donoghue provides a remedy to consumers in the case of products which are likely to cause injury to health. It does hot apply to defects in quality of the goods. That is an area of contract.

The principle of reasonable foresight in Donoghue was applied in Medley Byrne & Co Ltd v Heller 1964). In this case the court held that a duty of care arises whenever a party reasonably relies upon another to provide information or advice and the person providing the information knows or ought to know that the inquirer is relying on him. In such a situation, a negligent misstatement can give rise to an action in negligence for damages.

Later decisions show a development in the law relating to duty of care: the three criteria for the imposition of duty of care (Caparo v Dickman (1990)):

a. Foreseeability of damage. The harm suffered is reasonably foreseeable.b. There is proximity of relationship between the parties for a duty of care to be

imposed.c. That it is fair, just and reasonable to impose a duty (policy considerations).

In Caparo, the claimants bought more shares and then made a successful take-over bid for the company after studying the audited accounts prepared by the defendants. They later.regretted the move and sued the auditors for their negligence in preparing the report. Their case failed. The HL said that the auditors owed no duty of care to the claimants since company accounts are not prepared for the purpose of people taking over a company and cannot then be relied by them for such purposes.

In Clay v Crump (1963), an architect and demolition contractors taking down some old buildings left one wall in place; the wall subsequently collapsed and a builder was injured. The architect and contractors were found liable: the injury was clearly foreseeable, giving rise to a duty of care, and their failure to examine the wall properly had been negligent.

In Sutherland Shire Council v Heyman (1985) proximity embraces physical proximity (in the sense of space and time); circumstantial proximity such as an overriding relationship of a professional man and his client; causal proximity in the sense of the closeness or directness of the causal connection between conduct and injury; or an assumption by one party of a responsibility to the other, or reasonable reliance by the other.

So, a contractor and a construction professional will owe duties to take reasonable care so as to avoid causing damage to property or persons that is reasonably foreseeable.

6.2 Breach of the Duty of Care

If a duty of care exists, it is then necessary to establish breach of that duty. In general a person is in breach of a duty of care when he behaves carelessly.

The test is objective (Blyth v Birmingham Water Works Co. (1856)); there will be a breach of duty, either:

a. by not doing something which a reasonable man would do in circumstanceswhere a duty to act is owed, or

b. by doing something which a reasonable man would not do.

The standard of care required is that of a "reasonable man".

The standard demanded \s thus not perfection but reasonableness. However, it is an objective standard taking no account of the defendant's incompetence - he may do the best he can and still be found negligent, as in Nettleship v Westonbelow.

In Bolam v Friern Hospital management Committee (1957), the judge said that the reasonable man is the man "in the street" or the "man on top of the Clapham omnibus". In other words, the basic question is whether the defendant's conduct fell below the standard of care which is expected of the reasonable man. The reasonable man is expected to know the law and regulate his conduct by it. This is the 'ordinary reasonable man' test.

If a person carries out an activity that demands a certain level of skill and competence or holds himself out as having a particular skill or profession, he is expected to meet the standard of the reasonable person practising that activity (standards of the reasonable professional). The question is what a reasonably competent practitioner would do, having regard the standard normally adopted in his profession. If he acts in accordance with the standards set by a body of reasonably competent members of the particular profession, then he is usually not negligent.

If the person is an amateur, he will be judged against the standards of the reasonable amateur so long as the activity is one that it is reasonable for an amateur to attempt.

Philips v Whiteley (1938), a woman developed an infection after having her ears pierced by a jeweler, and the judge said the relevant standard was that of a reasonable jeweler rather than-that of a surgeon. D had sterilised the needle in a flame before leaving his shop, and dipped his fingers in disinfectant when starting the procedure.and that was enough.

6.3 The Plaintiff Has Suffered Damage As A Result Of That Breach

To prove liability, the plaintiff must prove that

a. the defendant's act or omission caused the injury, and

b. the damage or loss is not too remote a consequence of the negligent act.

In other words, the plaintiff will have to show that the breach caused the loss of which it complains. The plaintiff's loss can include damage to property, personal injury and in certain cases financial (economic loss).

For negligence to be established, it must be reasonable and foreseeable that the injury could result from the act or omission.

This can be determined by using the 'but for' test: But for the defendant's behaviour, would the plaintiff have suffered the damage complained of?

a. Causation (connection between conduct and damage): Barnet v Chelsea &Kensington Hospital Management Committee (1960).

A doctor was negligent in failing to examine a patient who had been brought into casualty, complaining of feeling sick after drinking tea. In fact, the patient was dying from arsenic poison. Even if correct medical treatment had been forthcoming, nothing could have saved him, so the doctor's negligence did not cause his death.

b. Remoteness (foreseeable consequence of such conduct): The WagonMound (No. 1,1961).

Workers of a ship called the Wagon Mound negligently discharged oil into a harbour. Some of the oil spread to another wharf owned by the plaintiff, where welding was taking place. P stopped welding but recommenced on receiving expert opinion that fuel oil would ignite. Welding work recommenced and an extensive fire was caused when the oil did in fact ignite. There was substantial damage.

D, the owners of the Wagon Mound were held not liable. Although they owed a duty to take care in relation to P, and were in breach by negligently discharging the oil, the damage they had caused was not a reasonably foreseeable consequence of their negligence.

P could not recover for fire damage but did recover for fouling the plaintiffs wharf because only the latter type of damage was reasonably foreseeable. (What must be foreseeable is the type of damage not the exact type of damage.)

This means that a person is liable only for damage that was the natural and probable consequence of his wrongful act.

(In The Wagon Mound No.2 (1967), notwithstanding expert evidence that the risk of the oil catching fire had been very small, it was held that the defendants were negligent in not taking steps to abate what was nevertheless a real risk and one which, if it occurred, was very likely to cause substantial damage.)

6.4 Physical Damage and Economic Loss

Objective of awarding damages in tort is, insofar as is possible, to put the claimant in the position it would have been in had the tort not been committed.

Where the defendant's acts (or perhaps his omissions) lead to personal injury or physical damage to the claimant's property, the defendant's liability is fairly easy

to establish. Where the claimant's loss is purely monetary, there is no general duty to avoid causing others economic loss.

A claimant who suffers financial loss (e.g. lost wages, medical expenses) as a direct consequence of personal injury or physical damage to her property can generally claim for that additional loss as part of her overall claim.

However, a person who suffers pure economic loss (that is, loss not arising directly from personal injury or property damage) cannot normally claim.

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To establish liability, some form of damage must be suffered which is not too remote. The law of negligence recognizes two different types of loss.

a. Damage caused to persons or property (Donoghue v Stevenson)

In cases where the plaintiff suffered physical injury as result of the negligence of the defendant, the courts have generally recognised the existence of a duty of care

b. Financial damage only (Medley Byrne v Heller - 'special relationship')

Medley Byrne established the principle for claiming economic loss in the absence of physical damage to other property and without contact. There may be liability for financial loss arising from negligent misstatement.

With the exception of a Medley Byrne liability, in general, liability in tort did not extend to economic loss on its own without any physical damage. The case below illustrates the difference between pure economic loss and consequential loss.

Spartan Steel & Alloys v Martins Construction (1973)

D's employees negligently cut the electric cable under a road. At the time when the electricity failed, the P was melting material in a furnace and the melt was ruined.

Held: P was able to recover for• damage to the materials in the furnace (direct physical loss) and• for the loss of profit on that melt (consequential economic loss - economic

loss was the direct consequence of physical damage to the melt)But not • for the loss of profit on melts which could not take place because of the power

failure (pure economic loss).

Thus, economic loss immediately consequential to damage to property is recoverable in negligence.

Pure economic loss therefore means loss which is not injury to the person or damage to the plaintiffs property. It means purely monetary loss: e.g. loss of profit as a result of inability to use premises. As a general rule, no duty of care is owed where a plaintiff suffers only pure economic loss.

6.5 Negligent Misstatement

The right of action arises when the person who made the misstatement possessed a special skill or knowledge relating to the circumstances (of making the misstatement), or was someone who did not have special skill but held themselves out (portrayed themselves) to possess the skill - such as an engineer, quantity surveyor or architect making a statement in the course of business.

The court has found that there is liability if negligent statement results in physical damage (Sharpe v Avery and Kerwood). So, in one case where an architect negligently stated that a wall was safe to be left standing, a workman who was injured when the wall collapsed successfully sued the architect in negligence (Clay v Crump (1963)).

In Medley Byrne & Co. v Heller & Partners Ltd. (1964), liability may arise where the negligent misstatements causes economic loss (purely financial).

The duty of care could exist on the following premises:

a. there was a 'special relationship' based upon an assumption of responsibility between the parties

b. the plaintiff relied on the defendant's skill and judgmentc. the defendant knew, or ought reasonably to have known that the plaintiff

was likely to rely upon his statement (inferred assumption of responsibility)d. it was reasonable in the circumstances for the plaintiff to so rely on the

defendant's statement, ande. the plaintiff suffered economic loss.

In this case, Medley Byrne needed a reference from a banker as to the credit-worthiness of a potential customer. The reference was favourable but was given without 'responsibility'. The reference was given negligently, and Medley Byrne lost a considerable sum of money. They sued the bankers. The bankers escaped liability because they have expressed their report to be without responsibility but the ML held that a professional man is liable for statements made negligently in circumstances where he knows that those statements are going to be acted on, and they were acted on.

Medley Byrne sets out the principle that a professional man owes a duty of care not only to his client who employs him but also to others whom he knows are relying on his skill.

The principle in Medley Byrne was applied in Chin Sin Motor Works v Arosa Development (1992), where the defendant architect whose certification of the completion of the construction of a building was.relied upon by the plaintiff to the

latter's detriment was held liable as the architect knew or ought to have known that the plaintiffs would rely on his certification.

Nevertheless, the scope of a Medley Byrne duty is relatively restricted by several factors. These include the purpose for which the statement was made and the. purpose for which it was communicated to the plaintiff, the relationships between thejnaker, the receiver and any relevant third party; the size of the class to which the plaintiff belongs; the state of knowledge of the defendant and whether and to what extent the plaintiff was entitled to rely on the statement. (Smith v Eric Bush, Esso Petroleum Co, v Mardon, JEB Fasteners Ltd. v Marks, Bloom & Co., Caparo Industries v Dickman).

Within the construction industry, Medley Byrne relates to work connected with design, surveys and estimates, and compliance with predetermined standards or codes of practice.

A designer could be liable for information given to a contractor at a pre-tender stage as to the design, or nature of the sub-soil, or the possibility of a method of work. He could also incur liability to the owner, subcontractors, and suppliers.

Liability for negligent misstatement is of relevance to quantity surveyors when giving their clients advice, for example in relation to cost estimates or which builders to use. In Nye Saunders v Bristow (1987) although there was no allegation of defective work, the architect was found to be in breach of a Medley Byrne type duty by not advising his client as to the possible effect of inflation on his estimate for the cost of proposed works.

In Henderson v Merrett Syndicates Ltd (1994), the principle of Medley Byrnewas held to apply in negligent conduct, as well as to negligent misstatements. Thus, a person who assumes responsibility to provide services for another, whether in contract or otherwise, may be in principle be liable for pure economic loss caused by the negligent performance of those services.

In Henderson, the defendant were held to have owed a duty of care to their clients as there was a plain assumption of responsibility on the part of the agents over plaintiff's financial affairs and a attendant reliance by the plaintiff for whom the services were rendered.

In Henderson, concurrent duty of care in tort may exist between parties in a contractual relationship. Thus, Medley Byrne principle applies to the provision of professional services generally, whether by words or actions. The claimant is entitled to rely on whichever action is more favourable.

'Professional negligence' is the phrase often applied to the liability of professional advisers (in contract or tort) to provide advice of a certain standard. This may be a label for liability which arises under a more general

heading, e.g. liability for negligent misstatements or for economic loss.

The professional person can be liable to is client in both contract and tort, and to third parties in tort.

'Every person who enters in a learned profession undertakes to bring to the exercise of it a reasonable degree of care and skill' - Lanphier v Phipos (1838).

A person who professes a special skill is not judged by the standard of the man on the Clapham omnibus, but by the standards of his peers. The 'reasonable man' in this context, would be equated with the competent professional architect, engineer or contractor who would exercise ordinary skill and care.

In Bolam v Friern Hospital management Committee (1957), the judge said -

"The test is the standard of the ordinary skilled man exercising and professing to have special.skill. A man need not possess the highest expert skill; it is well established that it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art. In the case of a medical man, negligence means failure to act in accordance with the standards of reasonably competent medical man at the time. There may be one or more perfectly proper standards, and if he conforms to one of these proper standards, then he is not negligent".

An error of judgment may or may not be negligent depending upon whether it was such as a reasonably competent practitioner might make (Whitehouse v Jordan (1981)).

Where there is more than one accepted method of doing things, both or all of which are regarded as proper by a skilled body of opinion, as long as the professional conforms to one of these proper standards, then he is not negligent.

In Maynard v West Midlands HA (1985), approving the Bolam test, Lord Scarman said there would inevitably be differences of opinion within the medical profession. It was not enough to show there was a body of medical opinion which considered that a doctor had acted wrongly, if there was another equally competent body of opinion which supported his action.

In the case of architects (or other professionals), the test is whether there is a responsible body of architects that could have acted as the architect being

criticized has. In general the duty owed by construction professionals is unaffected by the relative experience or inexperience of their clients (Gloucestershire Health Authority v Torpy (1997)).

The professional man is expected to keep generally up to date with developments and techniques in the field, e.g. by reading the relevant journals, for what is reasonably foreseeable may depend upon the state of existing knowledge within that profession at the time. However, he is not expected to have the same knowledge of specialist areas as those on the forefront of research and development.

In Wimpey Construction (UK) Ltd. v Poole (1984), the court had to consider what the effect of that test was in circumstances where a professional man held himself out as having especially high skills and had been retained on that basis. It was held that you judge that professional man by the standards of an ordinary skilled man exercising and professing to have the special professional skill.

Hyde v Williams (2000) Times 4/8/00, CA., Allowing in part an appeal by architects DD, Sedley LJ said that where a profession is divided as to proper professional standards, some members regarding as acceptable a lower standard than others would accept, it is the lowest acceptable standard that must be taken as the benchmark of professional negligence,

The net effect in law is that it makes it difficult to prove professional negligence where the professional has followed the accepted practice in his profession. This of course requires the professionals to keep up to date with the new techniques and practices, if not immediately, then when they become standard. If certain codes of practice are accepted as the benchmark, then departure from these codes without sufficient reasons would be evidence of negligence, but this is not conclusive.

However, the 'Bolam' test has been qualified:

• In Edward Wong Finance Co Ltd v Johnson Stokes & Master (1984) thecourt may rule a practice (process) had been negligent, despite a body of expert opinion supporting the practice.

• In Nye Saunders v Bristow (1997), it was held that the expert evidencegiven to the court of other professional'opinion was just the personal view ofthe expert rather than the view held by a recognized body.

• In Bolitho v City of Hackney Health Authority (1998), if the opinion of arecognized body cannot withstand logical analysis, the court is entitled tohold that the body of opinion is not reasonable or responsible.

There is no lower standard for the apprentice; inexperience is no defence.

In Nettleship v Weston (1971), D was a learner driver and had injured P during a driving lesson. It was held that D owed the same standard of care as a

reasonably competent, fully qualified driver. Since this standard had not been achieved D was liable for the damage caused.

In Wilsher v Essex Area Health Authority (1988), the inexperienced professional is negligent if he does not achieve the standards of a reasonably competent and experienced person exercising the particular skills in his profession.

The defendant hospital, initially acting through an inexperienced junior doctor, negligently administered excessive oxygen during the post-natal care of a premature child who subsequently became blind. Excessive oxygen was, according to the medical evidence, one of five possible factors that could have led to blindness. On the "balance of probabilities" test, the hospital would not be liable, since it was more likely that one of the alternate risks had caused the injury. The Court of Appeal applied the "material increase of risk" test, first espoused in McGhee v. National Coal Board. The Court found that since the hospital breached its duty and thus increased the risk of harm, and that the plaintiff's injury fell within the ambit of that risk, the hospital was liable despite the fact the plaintiff had not proved the hospital's negligence had caused his injury.

Case summaries:

Nye Saunders and Partners v Bristow (1987): The Architect in preparing estimates of the cost of a project completely overlooked the.effects of inflation. As a result the client was forced to abandon the project. The Architect was found negligent and was not entitled to any fees since their work was worthless. .

Gable House Estates v the Halpen Partnership (1995): The architects were held negligent for failing to warn the client that their estimate on the usable space is very approximate and failed to warn the client between usable space and lettable space.

EDAC v William Moss Group Ltd (1984): The architects were held negligent in failing to make inquiries to the experience and capabilities of the nominated subcontractors. Inquiries should have been made both before the subcontractor was invited to tender and after its tender had been submitted, in order to properly appraise that tender.

Pratt v George J. Hill Associates (1987): The architect recommended a particular contractor as 'very reliable'. The Architect was held liable for losses suffered by the employer when the contractor executed defective work and then became insolvent.

Partridge v Morris (1995): The architects were liable for negligence in failure to consider the financial acceptability of tenderers. This could be done by making enquiries of building merchants, obtaining bank and trade credit references, making enquiries of other architects, arranging a company search or asking the contractor to provide its audited accounts for examination.

Pozzolanic Lytag Ltd v Brian Hobson Associates (1999): If a project manager did not have to

expertise to advise on the adequacy of the insurance arrangement, he should either have got expert advice himself, or advised his client that expert advice was required.

J. Jarvis v Castle Wharf Developments (2002) Tender document did not give adequate information as a result contractor incurs additional costs. The QS were found negligent in its representations to the contractor and there had been a breach in its duty of care. On appeal, evidence showed that the Jarvis reliance on the information was limited, and the decision was overturned (here an experienced D&B contractor, no reliance on any misrepresentation made). If a quantity surveyor negligently provides statements or representations which another party relies upon, they may be sued for economic loss as a result of making negligent statement.

6.7 Liability of Local Authorities In Respect of Negligence in Building Control

Local authorities have duties and powers delegated to them by central government in connection with the construction of premises. For example, local authorities may have a statutory duty to ensure that builders construct houses in accordance with certain regulations or may be empowered (but not required) to inspect building work to see if it is satisfactory.

The,question then, is whether a local authority subject to such a duty or power is liable in negligence (or otherwise) to a person affected either by a failure to exercise that duty or power or by a careless exercise of that duty or power.

At common law, Murphy v Brentwood (1991) held that a local authority is no longer liable in negligence for acts which it undertakes pursuant to its duties under the Public Health Acts.

In Murphy, a council approved plans for a concrete raft on which properties were built. The raft was inadequate causing cracks in the walls and gas pipes to break. The claimant lost £35,000 from the value of his house and sought damages. The HL held that, in the absence of any injury, loss was purely economic, and could not be recovered. Local authorities will not be liable for the cost of repairing dangerous defects unless injury occurs as well.

Claims against Public Authorities: (Norchaya Talib, 1997 pp 328)

In Malaysia it is statutorily provided that the State Authority, local authority and any public officer or employee of the local authority cannot be subjected to any action, claim or liability arising out of a building or other works carried out in accordance with the provisions of the Street, Drainage and Building Act 1977.

So, if the authority concerned does not inspect any building, building works or material, or the site of any proposed building, to ascertain the provision of the afore-mentioned Act or any by-laws made thereunder are complied with, no tortious claim may be made against the authority in respect of any damage sustained. Even if the authority fails to

ensure that any plans, certificates and notices submitted to it are accurate, any consequential damage arising from such failure is not actionable. (See Act 133, section 95 and Dr. Abdul Hamid v JMC)

If the performance of the statutory duty requires the exercise of the authority's discretion, then no action may be brought for the authority's failure to perform that duty unless the refusal is actuated by malice. (See Hu Sepang v Keong On Eng (1991))

It has been held that any challenge with regards to the authority's exercise of discretion has to be brought by means of an application for judicial review and not by means of an action by writ. (Cocks vThanet District Council (1982))

In Dr Hamid Abdul Rashid v Jurusan Malaysia Consultants, the plaintiff brought action

against the local authorities that had approved the plans for the building. No certificate

of fitness was issued by the local authority for the occupation of the house, although

and inspection had been made by an officer of the local authority. The allegation

against the local authority was based on their failure to supervise the details of design

and adequacy of soil test before giving the approval to building plans submitted to

them. They were further alleged to be in breach of .their statutory duties under the

relevant statutes. The judge dismiss the claim for negligence and breach of statutory

duty against the local authority as they were statutorily protected from any such suits

(Section 95 of the Street Drainage and Building Act 1977, Act 133, which prohibits such

authorities to be sued).