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Tame v NSW; Annetts 
 
Psychiatric Harm
Wicks
 
Psychiatric Harm
-          Two policemen attended the scene of a passenger train derailment in which passengers were injured and killed. They attempted to rescue survivors and later undertook other tasks at the scene. Each policeman sued the railway operator in negligence for psychiatric injuries arising from mental or nervous shock suffered as a result of attending the scene and what he witnessed there.
-          Held, that the claims were not barred by s 30(2). It could be inferred that passengers suffered physical and psychiatric injury as they were removed from the train. The survivors remained in peril until taken to a place of safety. The policemen therefore had witnessed, at the scene, victims being injured or put in peril.
-          Per curiam. (1) In considering the application of Pt 3 of the Civil Liability Act, it would ordinarily be desirable to begin by determining whether the defendant owed the plaintiff a relevant duty of care. Section 30 is engaged only where there is a duty with respect to avoidance of mental or nervous shock.
Gifford
 

Psychiatric Harm
-          An employee of a stevedoring company was crushed to death by a forklift vehicle driven negligently by another employee. The three teenage children of the deceased did not witness the accident but were told of it later on the same day. The children claimed to have suffered psychiatric injury as a result of what they had been told.
-          Held, that the employer owed a duty to the children to take reasonable care to avoid causing them a recognisable psychiatric illness as a consequence of their father's death in the course of employment. Not only was it foreseeable that an employee's children might suffer psychiatric injury on learning of the employee's accidental death or serious injury at work, the relationships between employer and employee and between employee and children were so close as to require the conclusion that the duty was owed. The fact that a person who was told about an horrific accident or injury to a loved one did not actually see the incident or its aftermath was no bar to liability for damages for psychiatric injury.
Hinz v Berry
 
Psychiatric Harm
-          Lord Denning in Hinz v Berry – ‘no damages are awarded for grief or sorrow caused by a person’s death… Damages are, however, recoverable for…any recognisable psychiatric illness caused by the breach of duty…’
Mt Isa Mines v Pusey
 

Psychiatric Harm
-          Per Windeyer J – ‘ Sorrow does not sound in damages’ (LG)
-          Facts: P was employed by D as an engineer in its powerhouse. Explosion in powerhouse and P went and saw a fellow employee (who he was not personally acquainted with) suffer extensive burns. P assisted worker to ambulance and subsequently suffered schizophrenia. P sued D for damages and was successful at trial (reasonably foreseeable as it was a direct consequence).
-          On appeal, Windeyer J – ‘was it reasonably foreseeable that an accident of that kind, if it occurred, might have consequences for somebody of the kind that it had for the plaintiff’.
-          HELD: Not necessary that D, as a prudent employer, should have foreseen the precise damage which would occur if he failed to discharge his duty of care. Sufficient that the class of injury ought to be foreseeable. Liability depends on foreseeability of nervous shock. It is enough that it is a ‘recognisable psychiatric illness’
Attia v British Gas Plc
 

Psychiatric Harm
-          Court decided that provided causation and reasonable foreseeability was established, no legal rule to preclude recovery

  • Reasonably foreseeable that intense distress might be caused to an ordinary household who sees her home being destroyed by fire. 

Jaensch v Coffey
 

Psychiatric Harm
-          FACTS: P’s husband suffered injuries in a motor cycle accident caused by  D’s negligence. P was called to the hospital and told that her husband was ‘retty bad’. The next day P was told her husband was in intesive care. Later that morning she was again summoned to the hospital after being told there had been ‘a change for the worse’. P’s husband survived by P nearly didn’t and she successfully sued for damages for nervous shock. The appeal to the High Court was dismissed
-          HELD: D owed P a duty of care. She was a ‘neighbour’ of D. it was foreseeable that she would suffer nervous shock. P personally perceived the aftermath of the accident although not at the scene but at the hospital. The events constituting the nervous shock were part of the aftermath. The fact that the shock was sustained at the hospital and that it was sustained by reason of her own observations and conversation with hospital staff did not prevent recovery of damages.
Dulieu v White
 

Psychiatric Harm
-          Woman suffered from a miscarriage and then subsequently suffered shock
-          Reasonably feared for her own safety à This is the most straightforward case of psychiatric injury 
Roman Catholic Church Trustees for the Diocese of Canberra and Goulburn v Hadba
 
Pure Omissions and Public Body Liability
-          A positive duty exists for a school to take REASONABLE care to prevent harm to its students – not an absolute duty.
-          8 year old child on flying fox had two children grab their legs and ended up injured.  Two teachers were on duty, but had looked away from 20-30 seconds. 
-          Held that duty had not been breached, as no alternative superior supervisory system was established by the plaintiff.  As such, the existing system was upheld as meeting the duty.
-          Res Ipsa failed – in order to establish breach, a reasonable alternative system required (Low risk required a low cost system – calculus of negligence)
-          McHugh dissented – argued magnitude of risk WAS high
-          Also felt that constant teacher supervision was damaging to trust/student-teacher relationships
NSW v Bujdoso
 

Omissions and Public Body Liability
-          Held NSW was under a positive duty to adopt effective measures to protect a known target from the other prisoners
-          Bujdoso convicted for sexual assault, imprisoned, and seriously assaulted by other prisoners
-          Had received threats to his safety – prison authorities were aware of this
-          Had already been assaulted elsewhere, and signed statement saying he wished to remain where he was.  Sued afterwards anyway.
-          Held he was KNOWN to be a likely target, and that no specific measures were taken to protect him – the signed statement did not waive that duty
CLA s21
-          21 Proactive and reactive duty of doctor to warn of risk
-           (1) A doctor does not breach a duty owed to a patient to warn of risk, before the patient undergoes any medical treatment (or at the time of being given medical advice) that will involve a risk of personal injury to the patient, unless the doctor at that time fails to give or arrange to be given to the patient the following information about the risk—
(a) information that a reasonable person in the patient’s position would, in the circumstances, require to enable the person to make a reasonably informed decision about whether to undergo the treatment or follow the advice;
(b) information that the doctor knows or ought reasonably to know the patient wants to be given before making the decision about whether to undergo the treatment or follow the advice.
(2) In this section— patient, when used in a context of giving or being given information, includes a person who has the responsibility for making a decision about the medical treatment to be undergone by a patient if the patient is under a legal disability.
Example— the responsibility a parent has for an infant child
Coca Cola Amatil v Pareezer

Omissions & Public Body Liability
-          Plaintiff contracted with Coca Cola to refill machines at a TAFE in Western Sydney.  Was shot while refilling machines, sued Coca Cola for negligence
-          Argued they should have provided unmarked vehicles, 2 persons per vehicle, security alarms, additional training, and liaised with TAFE security
-          Held the duty was not breached, as the attack was purely opportunistic and random, and no reasonable system could have been put in place by Coca Cola to prevent it.  (Contrasted to Chomentowski)
Chomentowski v Red Garter Restaurant
 

Omissions & Public Body Liability
-          Held that employers owed a duty to take reasonable care to protect their employees from reasonably foreseeable risks, even when those risks are occasioned by external human intervention.
-          Chomentowski had to deposit the restaurants takings into a safety deposit box – was attacked and robbed while doing this, and sued his employer.
-          Was held to be the very risk of injury that the employers actions created
Beardmore v Franklinks Management Services
-          FACTS: Injury caused by shopping trolley in supermarket - Six year old child pushing trolley around and making loud "racing car" noises - Child ran shopping trolley into respondent knocking respondent to ground and causing injury - No error in finding below child's behaviour uncontrollable - Supermarket staff aware of child's behaviour - No attempt to restrain child - Reasonably foreseeable behaviour may put other shoppers at risk of injury - Supermarket had legal obligation to curb child's behaviour - No error - Appeal dismissed
-          HELD: they were in fact in a position where they ought to have known – duty can arise to tell people to leave property.
Smith v Leurs
-          Held that parents/guardians owe a duty to take reasonable care to prevent third parties from being injured by children under their control.
-          13 year old child using slingshot while playing with other children in 1943, shot Smith in the eye while playing.  Action bought against his parents for negligently failing in their duty to control their own child
-          Held that they had not breached this duty – they had specifically told the child not to use it away from the house, everyone had them (not uncommon), reasonable to let children play with one another during school holidays – did not breach community standards
-          ALL judges analysed the required STANDARD OF CARE in the context of ALL OF THE CIRCUMSTANCES
-          Dixon (262) – special relations are the source of the duty – must exercise the control they have to avoid conduct that would place third parties in unreasonable danger
NSW v Godfrey
-          Held that Prison Authorities owe a duty to those in the immediate vicinity of the prison due to the additional risks imposed by their failure to control escaped prisoners.
-          Escapee got away from NSW jail, robbed a newsagency, caused the pregnant employee to give birth prematurely, resulting in a child with mental difficulties.
-          Held that they did not owe the duty in this case, as control could only potentially be reasserted in the immediate vicinity of the jail – not by the time he reached the newsagency, and even if there was, it was too remote.
-          Indeterminate Liability considerations also apply if the immediate vicinity consideration is removed.
Hogan v Gill
 

Omissions & Public Body Liability
-          FACTS: The plaintiff, a four year-old boy, was injured when shot at by the second defendant, a six year-old boy, during a game of Cowboys and Indians. The rifle was owned by, and the incident occurred in the house of, the first defendant, the father of the second defendant.
-          HELD:





(1)


As the first defendant knew that his children played Cowboys and Indians with other children the risk that one child would pick up the rifle and use it when playing was foreseeable and far removed from being farfetched or fanciful. The remedy was simple—remove the bolt and place it in an inaccessible position and check to see that the magazine and barrel were empty of a live bullet or bullets. The failure to do so rendered the rifle a dangerous weapon.




(2)


The second defendant was not liable in trespass because his voluntariness went to pulling the trigger with intention to simulate firing the gun. He did not intend actually to fire the bullet. He was unaware of the bullet.






  • Kit: the child is only 6 years old, and therefore there is a higher risk à age plays a role in increasing one’s duty. 

Lowns v Woods
 

Omissions & Public Body Liability
-          FACTS: young girl who had epileptic seizures and went to get a doctor who did not have her listed as a patient and the doctor did not teat the patient on that basis
-          HELD: Duty of care held to exist on basis of proximity and the fact that the doctor was in breach of his professional obligations by failing to intervene – violated professional code of ethics. Regarded as being material (No equivalent code of ethics in Qld). 
Rogers v Whitaker

Omissions & Public Body Liability
-          FACTS: P successfully sued D following an eye operation alleging D failed to warn P that she might develop a condition known as sympathetic ophtalmia in her eye as a result of the surgery, which she did, leaving her almost totally blind
-          HELD: dismissed appeal: except in the case of an emergency or where disclosure would prove damaging to P, D had a duty to warn of the risks inherent in the treatment. The fact that a body of other reputable doctors would have acted in the same way as D did not preclude a finding of negligence
Crimmins v Stevedoring
 
Omissions & Public Body Liability
-          Crimmins worked on Melbourne wharfs from 1961-1965 for the local stevedoring (statutory) authority, unloaded large amounts of asbestos, developed cancer because of it. 
-          Was told exactly what to do/where to go, was under the control of the authority
-          Held a duty was owed, due to the control the authority exercised resulting in the creation of the risk and his personal vulnerability and inability to protect (control and vulnerability in an employment context)
-          McHugh Test for determining common law duty of care

  • 1. Was it reasonably foreseeable that an act or omission of the defendant, including a failure to exercise its statutory powers, would result in injury to the plaintiff or his or her interests? If no, then there is no duty.

  • 2. By reason of the defendant's statutory or assumed obligations or control, did the defendant have the power to protect a specific class including the plaintiff (rather than the public at large) from a risk of harm? If no, then there is no duty.

  • 3. Was the plaintiff or were the plaintiff's interests vulnerable in the sense that the plaintiff could not reasonably be expected to adequately safeguard himself or herself or those interests from harm? If no, then there is no duty.

  • 4. Did the defendant know, or ought the defendant to have known, of the risk of harm to the specific class including the plaintiff if it did not exercise its powers? If no, then there is no duty.

  • 5. Would such a duty impose liability with respect to the defendant's exercise of "core policy-making" or "quasi-legislative" functions? If yes, then there is no duty.

  • 6. Are there any other supervening reasons in policy to deny the existence of a duty of care (eg, the imposition of a duty is inconsistent with the statutory scheme, or the case is concerned with pure economic loss and the application of principles in that field deny the existence of a duty)? If yes, then there is no duty. 

Graham Barclay Oysters v Ryan

Economic Loss
use if public body had control -          Ryan was one of several who suffered food poisoning from consuming Graham Barclay oysters (grew/distributed by Graham Barclay) – sued Graham Barclay, the local council, and the State of NSW
-          Heavy rain affected the sewerage system, caused some sewerage to enter the lake, contaminating the oysters, making them toxic.
-          Case against NSW: Claimed they should have been more involved in the oyster industry – held to have been a policy decision by them, and that they owed no duty of care to particular consumers of oysters
-          Case against Council: Claimed they should have been more involved in the oyster industry –  held that Council had no statutory requirement to control the oyster industry
-          Case against Graham Barclay Oysters: Held a duty was owed, but they had not BREACHED the required standard of care because they had taken all reasonable steps when the issue became known
-          Gleeson CJ – looked at policy v operational distinction
-          Gummow, Kirby JJ – looked at ‘terms, scope, and purpose of the relevant statutory regime’, emphasizing control and vulnerability.
Stuart v Kirkland-Veenstra

Omissions and Public Body Liability
-          Clear example of different approaches to different judges reasoning on Public Body Authority.  Applies/distinguishes the other cases.  Also a good example of errors in the Court of Appeals approach.
-          Veenstra had set up car to commit suicide – two policeman drove past, talked to him, were assured he was okay, had decided not to commit suicide, refused a doctor, wanted to go home and talk to his wife.  Went home, and then committed suicide.  His widow sued Victoria and those two officers.
-          Court of Appeal held duty was owed 2:1, HCA overruled unanimously
-          s 10 of the Victorian Mental Health Act may have given the officers the power to apprehend Veenstra and prevent him from killing himself depending on construction.  (HCA felt otherwise)
-          French CJ rejected Court of Appeals - [26] Both the Chief Justice and Maxwell P were of the view that the case was not about the exercise of policing powers. It was more closely analogous to cases about the exercise of powers vested in statutory authorities’ generally. Both of their Honours proceeded on the basis that the two officers had the power to apprehend Mr Veenstra in the car park. That was, with respect, a conclusion which could not be supported having regard to the necessary pre-conditions for the exercise of the power that Mr Veenstra should appear to the officers to be mentally ill and that they should have reasonable grounds for believing that he was likely to attempt suicide. The non-satisfaction of those conditions is addressed later in these reasons.
-          French CJ – took a very narrow view of s 10, interpreted it as requiring the officer MUST subjectively believe that the person is mentally ill before they could apprehend them, but that preparing or attempting suicide is not conclusive proof of mental illness.  They must also have reasonable grounds for believing that the person is likely to attempt to commit suicide.  Without reaching that opinion (which was a reasonable one to reach), the officers had no obligation or power to apprehend under s 10, and as such could not be liable for failing to do so due to their lack of control. ([53]-[63])
-          Gummow, Hayne, and Heydon JJ – Based more on a common law analysis of Crimmins and Graham Barclay Oysters than on s 10.  Held the critical factors were control and vulnerability, and that the officers had no control of the risk, on Mr Veenstra did – to hold otherwise would be to severely limit personal autonomy.  It was distinguished from Crimmins on the grounds of control. Failure to exercise statutory power does not create a duty any more than failure would – some kind of special relationship must exist to give rise to the duty first, as in Graham Barclay.
-          Crennan and Kiefel JJ – Linked the common law directly into s 10 – held a relationship had to be established between the authority and individual (or their class) for a duty to exist, and questioned whether the mere existence of powers created a duty to use them via an analogy to breach of statutory duty.  Held that it did not, specifically since s 10 did not *require* an officer to detain an individual even if they did meet the requirements to enliven it, which were not met in this instance.
Perre v Apand

Economic Loss
-          McHugh J
-          Reasonable foreseeability of loss

  • oMore than reasonable foreseeability of harm to a person is required before the defendant comes under a DOC (Gibbs, Stephens, Mason in Caltex)


-          Indeterminacy of liability

  • Depends upon what defendant knew or ought to have known of the number of claimants and the nature of their claims

    • Not the size or number of the claims



  • Must be members of a specific class whose identity could be ascertained by defendant

  • Policy of proportionality may apply (Gibbs in Caltex)

    • Eg. Momentary inadvertence causing loss to thousands of people




-          Autonomy of the individual

  • Must be a legitimate pursuit or protection of social or business interests

    • The line of legitimacy will be passed only when the conduct is that that the community cannot tolerate it.




-          Vulnerability to risk

  • Assumptions of the law of contract: parties can bargain to protect their interests

    • A plaintiff who is vulnerable cannot do this in a meaningful way.



  • If plaintiff has taken, or could have taken steps to protect itself from defendant’s conduct: there is usually no DOC owed

  • Whether plaintiff has purchased, or is able to purchase insurance is, however, generally not relevant to the issue of vulnerability.


-          Note:

  • Class

    • Owners of and growers of potatoes on land within 20km of the Sparnons where potatoes grown on that land were exported to WA. 




-          Gummow J – applied salient features, emphasizing knowledge as important (that the defendant knew/ought to have known about the restriction and that the plaintiffs imported to WA)
-          Gaudron J – based her judgment on precise legal rights
-          Kirby J – used the 3 stage Caparo test, which was ultimate rejected when no-one else picked it up.
Cattle v The Stockton Waterworks Company
 
Economic Loss
-          Statutory waterworks authority set up a pipe underneath a public road. 
-          Knight wanted to build a tunnel beneath the road to connect his property on either side. 
-          Cattle found the pipe had leaked out, delaying construction and causing Cattle economic loss.
-          No intentional or malicious damage – only negligence.
-          Held Cattle could not recover, as he had no proprietary interest in Knight’s land.
-          Considered the basis of the exclusionary rule.
Morrison Steampship Co Ltd v Greystoke Castle

Economic Loss
-          Collision of ships at sea
-          Lord Roach raised exception to exclusionary rule if the parties are engaged in a common or join venture (eg. Transporting someone else’s goods)
Spartan Steele & Alloys v Martin

Economic Loss
-          Spartan Steel ran a factory 24 hours a day producing stainless steel alloys from molten metal
-          Martin & Co cut through power cable to the factory mid-way through a melt
-          Metal inside the melt was ruined (368 pound cost, 400 pound profit)
-          Tried to recover for physical property, lost profit, and other lost melts during blackout (1760 pounds) – trial judge awarded full damages.
-          Defendants pleaded damage was too remote
-          Held that 368 pounds damage was recoverable, as was 400 pounds directly consequent on damage to that melt (that the plaintiff had proprietary interest in) but that the other loss for melts *not* completed was not awarded.
-          Lord Denning observed the difficulties in approach economic loss – could be a duty or a remoteness based issue.
-          Lord Denning based his conclusion on judicial policy, not exclusionary rule.
-          Stephen in Caltex summarized Denning’s test: “His Lordship then took into consideration five matters in arriving at his policy decision in the instant case; first, the position of the statutory undertakers whose supply of electric power to the plaintiff was interrupted by the defendant's negligence, since they could not themselves have been held liable for any economic loss suffered by the plaintiff due to interruption of supply from any cause, neither should the defendant; secondly, the altogether common nature of the hazard, the interruption of the power supply, something against the consequences of which the plaintiff might have guarded by the installation of a stand-by plant or by insuring against consequential loss; thirdly, the possibility, in the case of such a hazard, of a multitude of suits by injured parties; fourthly, the advantage to the community, in the case of such a hazard, of spreading the loss amongst those who suffer rather than imposing it upon the lone tortfeasor; lastly the fact that the law did provide for "deserving cases", which description his Lordship gave to cases of recovery of damages for physical injury and for economic loss truly consequential upon it.”
-          Stephen in Caltex summarized the principles “Spartan Steel suggests three possible solutions; that of Lord Denning involving a consideration of all the facts of each particular case or, perhaps, class of case, with a view to determining, as a matter of judicial policy, whether in those particular circumstances purely economic loss should be recoverable; that of Lawton L.J. adopting a rule that economic loss will be recoverable only if immediately consequential upon injury to property or person, and that of Edmund Davies L.J. adopting the quite different rule that it will be recoverable if it be "a reasonably foreseeable and direct consequence of failure in a duty of care". A variant emerges from the judgment of Widgery J. in Weller & Co. v. Foot and Mouth Disease Research Institute; his Lordship there said that consequential economic loss might only be recovered if the defendant's act or omission did either directly injure "or at least threaten directly to injure” the plaintiff's person or property.”
Politarhis v Westpac Bank

Economic Loss
-          Facts: Respondent bank mistakenly provided excess credit to appellants à appellants quickly dissipated funds by gambling and claimed damages for psychological and psychiatric conditions and money lost
-          SASC's finding first appellant compulsive gambler before dealings with respondent soundly based.
-          Held: No duty of care to avoid causing financial loss in light of lack of knowledge on part of respondent. Respondent owed no duty of care to avoid causing psychiatric illness or injury. No duty owed to second appellant wife. Appeal dismissed
Kakayas v Crown

Economic Loss
-          Facts: Respondent lost significant amount of money through gambling at casino operated by first applicant and claimed the loss was caused by the applicant’s unconscionable conduct – guilty of negligence, misleading and deceptive conduct and also sought action in restitution. Claimed second applicant aided, abetted, counselled or procured first applicant to engage in misleading and deceptive conduct. 
Reynolds v Katoomba

Economic Loss
-          Licensed club - With gaming machines and other forms of gambling - Proceeds of cheques (including third party cheques) used for gambling in club premises - Whether club liable to repay member amount of gambling losses

The appellant alleged total gambling losses in the order of $250,000. He claimed the amount of cheques cashed with the respondent club (which constituted a fraction of the total losses alleged). The trial judge found that the respondent club knew that the appellant was a problem gambler. Furthermore, the trial judge found that both the appellant and his father asked the club to prevent the appellant gambling to excess, specifically by refusing to cash cheques. Yet the club was not found liable in negligence. The appellant's case on appeal was that the club should have advised him to resign his membership, should have warned him that it was imprudent to gamble at the club, and should have declined to cash cheques for the appellant or placed a limit on the amount for which on any day or during any period cheques could be cashed for him. Held: (dismissing the appeal)





(1)


(by Spigelman CJ) The law should not recognise a duty of care to protect persons from economic loss, where the loss only occurs following a deliberate and voluntary act on the part of the person to be protected. There may be, however, an extraordinary case where a duty should be recognised.




(2)


The court should be very slow to recognise a duty to prevent self-inflicted economic loss. Loss of money by way of gambling is a risk inherent in the activity and cannot be avoided. Nevertheless, whether a duty arises in a particular case must depend on the whole of the circumstances, even in the case of an inherent risk.




(3)


The risks the appellant faced were obvious. The appellant had to take responsibility for his own actions. There was no duty of care or unconscionable conduct.




(4)


(by Powell JA, Spigelman CJ agreeing) The club owed no duty of care to protect the appellant against financial loss due to gambling.




(5)


The activities of the club, including the provision of gambling facilities, were legitimate activities permitted under the Registered Clubs Act 1976 NSW . The cashing of cheques did not involve a breach of s 9A(5A) of the Act, because that would not constitute a "cash advance" or the "giving of credit".




(6)


The appellant failed to make out a case of unconscionable conduct on the part of the club.




(7)


(by Giles JA) In the absence of established recognition of a duty of care, whether a duty of care is recognised is to a considerable extent judgmental.




(8)


The appellant was not relevantly "vulnerable".





-          The risks undertaken by the appellant were obvious, and recognition of a duty of care was not the appropriate response to the appellant's condition. The condition was neither permanent nor constant in its effects, and control over that condition ultimately rested with the appellant. The suggested duty could thus be described as an unacceptable duty to infringe personal autonomy.
Caltex Oil v The Dredge

Economic Loss
-          Took place in Botany Bay, near Captain Cook’s landing place
-          AOR (Australian Oil Refining) owned a refinery on one side of bay, and owned four pipes connecting it with a Caltex owned terminal on the other side of the bay.
-          Contracted existed – AOR refined oil, at which point Caltex became the owner, and it was pumped through to the Caltex terminal.  AOR contractually accepted risk for any loss/damage to the oil.
-          Botany Bay was being dredged to remove silt, navigational equipment was inaccurate to 100 feet, damaged one of the pipes.
-          Stopped pumping, forced Caltex to transport refined oil around bay via road instead at significant cost, causing economic loss.  As Caltex didn’t own the pipe, the loss was caused by Caltex’s relation with AOR.
-          Fact that pipes ran DIRECTLY to Caltex made this a special case, as the plaintiff ought to have had Caltex specifically in contemplate
-          Gibbs J – “In my opinion it is still right to say that as a general rule damages are not recoverable for economic loss which is not consequential upon injury to the plaintiff's person or property. The fact that the loss was foreseeable is not enough to make it recoverable. However, there are exceptional cases in which the defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence, and owes the plaintiff a duty to take care not to cause him such damage by his negligent act.” (Hinchy notes that he makes no mention of an ascertained class)
-          Mason J – “A defendant will then be liable for economic damage due to his negligent conduct when he can reasonably foresee that a specific individual, as distinct from a general class of persons, will suffer financial loss as a consequence of his conduct.”
-          Stephens J – pioneered salient features approach here – looked at knowledge of pipes, knowledge of effects of damage to pipes, common venture with AOR, and direct consequential nature of economic loss
-          Jacobs J – looked at physical proximity/propinquity making the economic loss foreseeable
-          Murphy J – emphasized social responsibility and public policy
-          Development of a new class of exception to the exclusionary rule – requires direct knowledge of specific individual (or possibly their ascertainable class)
McMullin v ICI Australia Pty Ltd

Economic Loss
Transferred Loss
-          McMullin v ICI (1997)(contamination of food chain)
-          Categories of claimant

  • 1- owners of cattle contaminated by d

  • 2- purchasers of (already) contaminated cattle

  • 3- purchasers of contaminated meat

  • 4-feed-lot operators incurring costs in detaining contaminated cattle in their possession

    • Cost them money that they coulodn’t recover



  • 5 owners of non-contaminated cattle detained on suspicion of contamination

  • 6 transporters of cattle feed

  • 7 exporters of non-contaminated cattle losing business


-          Held: DOC owed to 1-4, but not to 5-7.

  • The most crucial link was some link either ownership, contract or possession of meat or cattle that had been contaminated




Johnson Tiles Pty Ltd v Esso Australia

Economic Loss
Indeterminacy/conflict/vulnerability
 
-          Key Facts: The plaintiffs claimed damages in relation to property damage, economic loss consequential upon property damage and pure economic loss, incurred following the interruption to, and stoppage of, gas supply after an explosion at the defendant's gas processing plant at Longford Victoria on 25 September 1998. The action was brought in negligence.
-          The claimants comprised of three groups: (a) 'business users', (b) 'domestic users' and (c) workers 'stood-down' by their employers as a result of the interruption to, and stoppage of, the gas supply (the latter not being gas customers).
-          The main issue was whether the defendants owed a duty of care to the plaintiffs or any member of the groups they represented to avoid: (a) property damage (b) economic loss resulting from property damage and (c) pure economic loss (eg lost sales by the first plaintiff, a tile manufacturer).
-          Key Findings: Gillard J adopted the trident approach set out by Kirby J in Perre v Apand Pty Ltd for determining the duty of care in the context of purely economic loss. His Honour considered first, whether foreseeability of injury was present, secondly, whether a relationship of proximity was established, and thirdly, the competing 'salient features' for and against a finding of a duty of care to avoid purely economic loss.
-          Reasonable foreseeability and proximity
-          The elements of reasonable foreseeability and a relationship of proximity were established between the defendant and the gas customers (ie, the business users and the domestic users). However, his Honour held that the principle of 'indeterminacy' (ie, indeterminate in terms of class and number of victims, the amount of any loss, and the timing of the loss) operated to deny any duty of care being owed by the defendant to the stood-down workers.
-          Salient features
-          His Honour found that the defendant owed a duty of care to the 'business users' to avoid causing them property damage and further that the business users were entitled to be compensated for any property damage and any consequential economic loss resulting from that property damage.
-          With respect to purely economic loss, his Honour considered that the salient features of: (a) qualified assumption of responsibility, reliance, and vulnerability (ie the nature, and extent of, reliance by the plaintiffs on the supply of gas by the defendant and the plaintiffs' ability to avoid risk and minimise loss), (b) contractual matrix (ie the series of contracts along the supply line between the defendant and the gas customers) and (c) the statutory regime regulating the gas industry, together applied to deny the recognition of a duty of care by the defendant to the business users to avoid purely economic loss.
-          His Honour found that the salient feature of vulnerability was absent and this operated to deny recovery to the 'domestic users' for purely economic loss. The domestic users' claims for property damage and economic loss resulting from property loss were not successful.
-          Gillard J found that in the circumstances of the case, involving as it did potential claimants numbering up to 43,000 business users and 1.1 million domestic users, the law of torts should not intrude into the area of purely economic loss. Only two members of the business user's group succeeded in establishing a right to damages for property loss and consequential loss.
Fortuna Seafoods v The Ship

Economic Loss
The appellant/respondent's ship collided with a commercial fishing vessel, which suffered extensive damage and sank. The plaintiff as agent for the owner of the fishing ship, processed and sold fish caught by the ship. The primary judge found the respondent was liable for the plaintiff's claimed economic loss. The Queensland Court of Appeal considered whether the respondent, by its careless conduct in causing property loss to the owner of the fishing vessel and pure economic loss to the plaintiff, owed the plaintiff a duty of care so as to sustain an action for damages for negligence. In particular, the court discussed the significance of the relationship between the plaintiff and the owner of the damaged fishing vessel, and whether by reason of that relationship, the plaintiff was a member of an ascertainable class of foreseeable victims.


Held: (dismissing the appeal; by majority)





(1)


The primary judge was right in concluding that the respondent, because of its careless conduct which resulted in property loss to the owner of the damaged fishing vessel and pure economic loss to the plaintiff, owed the plaintiff a duty of care so as to sustain an action for damages for negligence.




(2)


The close relationship, both in the nature of the work undertaken by and in the structure of, the fishing vessel owner and plaintiff, which together formed an integrated family company group, in combination with other factors, justified the imposition of the duty. That close relationship also adequately answered policy concerns such as indeterminacy, commercial viability and floodgates.




(3)


Bearing in mind the developing nature of the law in this area, the imposition of the title of "joint venture" on the relationship between the plaintiff and the fishing vessel owner should not be considered determinative of whether a class as found by the trial judge existed. Rather, the question as to whether or not the degree of commercial integration is sufficient to constitute the plaintiff as a member of an ascertained class is something to be decided in the light of the judge’s findings.




(4)


On the basis of the findings of fact the trial judge made, the plaintiff was a member of a determinate and ascertainable class of related companies conducting what was in effect a single integrated business of catching and marketing fish which, for historical reasons, based on a desire to circumvent marketing restrictions, was conducted by two related entities rather than a single entity.




Hedley Byrne v Heller

Negligent Misstatement
-          Advertising agency undertook large campaign after receiving reference from the bank that they were respectable and could be trusted to pay for it.  After numerous attempts to confirm the credit worthiness of the company after its parent company went bankrupt, ultimately leading to contact with Hedley Byrne who also said they were good for it, but added ‘without responsibility’ to their responses.
-          Company went bankrupt, sued merchant bank.
-          Held that there was no duty here, as the information was given with a disclaimer (‘without responsibility’)
-          Required a ‘special relationship’ between plaintiff and defendant
-          Lord Reid

  • Need a special relationship for a duty to exist

  • Emphasised trust and reasonable reliance as pre-requisites


-          Lord Morris

  • Assumption of responsibility – not accepted due to the disclaimer

  • Reasonable reliance - only eventuates when someone with a particular skill exercises it on another’s behalf, and accepts responsibility


-          Lord Hodson – reasonable reliance
-          Lord Devlin

  • Assumption of responsibility - Unable to assume responsibility and deny it simultaneously

  • Duty could arise where a relationship ‘equivalent to contract’ exists

Mutual Life & Citizens Assurance Company v Evatt
 
Negligent Misstatement
-          Evatt contacted defendant for financial advice on a particular company.  Was told the company was financially sound.  Evatt invested, lost money, and sued.
-          2 party direct relationship – plaintiff directly given advice by defendant.
-          Barwick proposed 3 part test for imposing a duty to take reasonable care:

  • Speaker must know/ought to know they are being trusted, generally because of special knowledge they possess

  • Speaker must know/ought to know they are being relied upon (can only occur in a serious or business situation)

  • It must be reasonable to rely upon the speaker


-          Overturned on appeal by the Privy Council, but ultimately upheld by the High Court in Shaddock
Shaddock & Associates v Parramatta City Council

Negligent Misstatements
-          Solicitor contacted Parramatta Council by phone on client’s behalf to enquire whether there were any road widening proposals for a particular area in Parramatta (which would affect property values)
-          Was told by an UNIDENTIFIED council officer that there were no proposals.
-          Solicitor sought certificate from the council, which made no reference to road-widening.
-          Proposal DID exist, client purchased property, suffered economic loss due to this.  Council was sued for negligent misstatement.
-          Issues:

  • Did the provider have to be a professional advisor?  Held they did not.

  • Was reliance on the telephone conversation reasonable? Held it was not – reliance upon an unidentified person over the telephone.  No duty owed regarding the telephone conversation.

  • Was reliance on the written certificate reasonable? Held it was, and a duty was owed regarding the certificate issued.

San sebastian v The Minister

Negligent Misstatements
-          NSW State Planning Authority produced redevelopment plan for the Sydney area of Woolloomooloo, which the council adopted and made publicly available.
-          This encouraged developers to buy up land in the area, which would appreciate in value if the development plan went ahead.  Property developers purchased.
-          Council decided NOT to proceed with redevelopment, developers lost money, sued for negligent misstatement for going back on the information provided in the documents.
-          No guarantee was given that redevelopment WOULD occur – documents were created to encourage developers.
-          No request is required for duty – can apply to volunteered information/statements to the public at large – though it makes establishing reliance harder (“The existence of an antecedent request for information or advice certainly assists in demonstrating reliance, which is a cornerstone of liability for negligent misstatement. However, such a request is by no means essential, though it has been suggested that instances of liability for misstatement volunteered negligently will be rare”)
-          Held representation was not made in this case, so no duty could be owed for misrepresentation.
-          Joint majority held that a duty would be owed if:

  • A representation was made (not present in this case)

  • Intention to induce the plaintiff individually or as a member of a limited class to rely on it (was present)


-          Brennan J applied the Barwick test instead – still found no duty.
Esanda Finance Corporation Ltd v Peat Marwick 

Negligent Misstatements
-          Excel needed their financial statements audited (statutory requirement).  Peat Marwick Hungerfords audited statements, gave them an unqualified opinion (very positive). Excel used these statements as evidence to obtain finance from Esanda.  Excel went bankrupt, Esanda lost money, sued auditors for negligence.
-          Auditors had no knowledge reports would be used for another purpose
-          Sole issue was whether the statement of claim disclosed a duty of care.
-          Only Brennan J’s judgment really relevant – others rooted in proximity, though they did refer to San Sebastian and the intention to induce.
-          Brennan J – “But, in every case, it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound.”
-          Held they failed to plead and prove that the defendant knew or ought reasonably to know what the audit was being used for.
Tepko Pty Ltd v Waterboard
-          Neil wanted to subdivide land, which required approval, which required waterworks connecting the area.  Bank demanded estimate of what this would cost.  Waterboard policy was to refuse to give cost estimates.  After much pressuring, gave a ‘ballpark’ figure of 2.5 million.  Bank refused to go ahead and put company into receivership.  Turned out to only cost 0.8 million.  Sued for negligent misstatement.
-          Split decision – Gleeson, Gummow, and Hayne (joint) and Gaudron (individual) said no duty, while McHugh (individual), Kirby, and Callinan (joint) said duty WAS owed, despite ALL applying the Barwick test.
-          Joint majority found no known reliance by the Waterboard, and no reasonable reliance for Tepko, given the rough ‘ballpark’ figure (Barwick Test)
-          Dissenting judges believed Waterboard was a statutory authority with a monopoly over the information, which meant they owed a duty despite the ‘ballpark’ estimate they gave. (it was reasonable in the circumstances to expect them to rely on the information/for them to rely on the information given they had no other way to obtain it)
Charben Haulage v ESS

Negligent Misstatement
-          reports on contamination commissioned by vendor and prepared by consultant - plainly prepared by consultant - to extent that it may be inferred that vendor would have expected reports to reach any prospective purchaser, nothing was said or done by vendor that might reasonably have conveyed impression that it adopted reports' contents - vendor did not expressly disclaim belief in truth of reports but did not claim to have such belief - no grounds for liability on ancillary basis either - claim on this ground dismissed - Trade Practices Act 1974 Cth

Torts > Negligence > Essentials of action for negligence > Where economic or financial loss > Careless advice, statements and non-disclosure > Particular persons and situations > Professional advisers

action by purchaser of land against consultant - consultant gave advice to vendor - purchaser suffered pure economic loss by entering into transaction to purchase land in reliance on consultant's report - consultant knew, or ought reasonably to have known, that statement would be communicated to members of identifiable class (prospective purchasers) for purpose of inducing them to enter into type of transaction (purchase of property) that purchaser did in fact enter into - consultant also knew it would be very likely that any purchaser would enter into that transaction in reliance on statement and thereby risk incurring economic loss if statement should be untrue - however, not clear that facts of present case sufficient to impose on consultant duty of care to purchaser as explained by High Court in Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 188 CLR 241 - report not produced at purchaser’s request or produced by consultant with intention of causing purchaser to act in reliance upon it - purchaser's claim rejected

Conveyancing

under clause, vendor agreed it would cause its environmental consultant to reduce levels of petroleum hydrocarbon pollution of property to a level that will permit property to be used in manner proposed by purchasers - vendor failed to reduce pollution levels to amounts agreed - whether vendor breached clause - vendor's obligation under clause was to produce effect that its environmental consultant reduced pollution level to requisite degree; or to be cause of that happening - clause required more than ineffective instruction to consultant - whether clause ought to act as release from action for breach of contract - if vendor released from obligations it would not be obliged to do any remediation work - proper interpretation of clause did not release vendor from obligations - breach of clause would entitle rescission because of other terms of contract - further right to claim damages for breach remained available - purchaser's claim for breach of contract successful
-          [211] A reader of the judgments in Esanda might be forgiven for regretting that the High Court missed the opportunity of reducing the "uncertain state" of the relevant law. It is not easy to extract any principle from the case. Although the fact that a statement in suit was made at the request of the recipient is an important indicator of the existence of a sufficient relationship, the judgments made clear that absence of a request (as in the present case) is not fatal to a claim. Intention to cause the recipient to act in reliance upon the statement is also an important indicator but its absence, also, is not necessarily fatal to a claim.
Sutherland Shire council v Heyman

Defective Structures
-          Building Constructed in NSW in 1968 with council approval.  Plaintiffs purchased it in 1975 without applying for a council certificate to certify compliance.  Building was built on inadequate footings, and they suffered economic loss repairing it.  They sued the council for negligence for granting approval in the construction process.
-          An inspection HAD taken place during construction, but only on framework, not on the foundations.
-          Gibbs CJ & Wilson J – held a duty of care WAS owed for any inspection of the foundations, but not breached – no inspection of the foundations could be proven, and they had discretion on whether or not to inspect.  (Duty founded on Anns, no longer good law)
-          Mason J – general reliance (now discredited)
-          Brennan J – held no duty was owed by the council

  • They did not create or increase the risk of the loss

  • Had not made a practice of inspecting where no certificate was requested, so it is not reasonable to rely on them to have done so. (reasonable reliance)


-          Deane J – proximity (now discredited) and lack of ‘specific reliance’ – no certificate requested
Woollahra Municipal Council v Sved
-          House built on steep sloping land by Sydney Harbor in 1986.  Original owners offered to sell it to the Sved’s in 1987.  Sved’s requested certificate of compliance from council.  Prior to settlement, Mrs Sved telephoned a council officer “Mr James” prior to settlement.  He assured her a certificate would be issued.  On the basis of that oral assurance, the contract went ahead.  Shortly after settlement, the certificate was issued.
-          Heavy rain occurred shortly after, and every time it rained, the house flooded and damage was suffered due to negligent construction.
-          NSWCA held Council owed a duty of care because of the reliance on the telephone assurance (held to be reasonable – unlike Shaddock, she had the identity and had explained the circumstances) and the certificate.
Makawe v Randwick City Council

Defective Structures
-          FACTS: The council approved development of building of an apartment with a basement car park and there was an issue in relation to the water table and apparently, the floor of the car park would be the same height as the water table in the ground. This is a good illustration of whether or not a council owes a DOC. There was an original owner and a subsequent purchaser. There were problems with flooding in the car park.
-          Claim: Damages for the cost of installing a pumping system, mud and silt blocked the pumps à cost a lot of money to eventually work out a solution with what was going on. The only physical damage to the carpark was a bit of stain – not about physical damage to building. It’s the pure economic loss of the cost of fixing the flooding problem through the pumping systems etc.
-          Hodgson JA: Sets out relevant sections of statutes and goes through these sections as part of the process to determine whether a DOC was owed.

  • Main issue: whether council owed DOC to subsequent purchaser in respect of the economic loss

  • Starting point – statutory framework

  • Did the shire council have discretion or not? What did they have to do in development approvals à all relevant in determining whether a DOC is owed.

  • In own time, go through various sections.

    • Look through ‘Council’s Knowledge’ à did council have knowledge that there’d be flooding in the car park?

    • Duty of Care – Principles



  • Can see how we have to what the council could/could not do.

  • [17] Judge talks about novel case  (Duty of Care – Principles)

    • No established decision on it

    • Caltex v Stevae à case of employee who worked for Caltex and died as a consequence of asbestosis – his wife brought an action

    • A J à in a novel case where there is no established authority, he refers to the salient features you should consider to determine whether DOC is owed

    • In a novel situation you do not have to tick off every one of the salient features – they are not all requirements and they were never intended to be

      • Depends on the circumstances





  • Pure Economic Loss

    • It has to be classified as economic loss



  • Errors of primary judge – don’t ‘worry too much

  • Some Authorities [27]-> important

    • Judge is trying to find if there is an established authority on point à trying to find whether there is an established duty of care by looking at the authority. If not, looking at some of the factors in stevan (novel case)

    • 1) DOC based on past authority

    • 2) no DOC based on past authority, then go to AJ in Stevan and apply those factors/salient features that are relevant

    • [28] Heyman – comment RE: decision in heyman.

    • [31] Wollongong City Council v Fregman à DOC OWED

      • Note that there was an application made --- approval of council. Council approved building application, but in the area there was a real problem with slippage of the land (landsliding). The council officers approved tis application but required building to be built 75 ft further north, which turned out to be much more toward the slippage area. à council told them to move it to a worse area. Damage to house, economic loss etc, DOC was owed. In this context, the council required a change and made it worse. Also, the council knew of the problem with the land. 



    • [33] Bamford v Albert Shire à the shire engineer was aware of a report indicating slippage problems in the vicinity. Approval was given to develop and then there were problems with the structure.

    • [34] The QCA specific looked at relevant legislation (2:47 - deleted)

    • [35] council had actual knowledge of contamination and still the development application was approved,there were problems and DOC was owed.

    • [37] Port Stevens v Booth -- ------- knowing there was a real problem with noise and it was said that a duty of care was owed.

    • [41] Western districts à the council was sued by a plaintiff developer for issuing a compliant certificate to the original owner without requiring the original owner to have the necessary water certificate. The council should have ensured that the original owner should have the certificate, and it idd not. Therefore, this plaintiff developer had to pay for the cost of this water certificate. The NSW Supreme Court held that the council did not owe the plaintiff developer a DOC. Concluded that the plaintiff developer was not vulnerable because the developer could have gone and checked it out

    • [42] Becker à (read what it says)

    • [43] Derive following propositions (various legal propositions with the case authorities after it)

      •  

      • Then applies 3,4 (check) to this case.



    • [48] Accordiungly, the case is not one where it -----….. went through psat authorities and says there is no DOC. Therefore, he looks at the criteria in Stevan as it is a novel case (novel circumstance)

      • Note: we hdould have regard to the cumulative effect of the relevant salient features in stevan.

      • He look at first seven of the relevant features



    • [56] ‘I think the matter is quite finely balanced… in my opinion there was no DOC’. (finish quote)





  1. Is the case pure economic loss? If yes,

  2. Determine whether the circumstances fall within an established DOC

  3. If there is an established DOC through past authority, apply it. If not (it’s a novel case),

  4. Consider the cumulative effect of the relevant salient features listed by justice A in Stevan. 

Amaca Pty Ltd v NSW

Defective Structures
-          Held that if a statutory authority DOES act and in doing so, creates/increases the risk, a duty to take reasonable care in their actions can be owed – must look at:

  • The totality of the relationship between the parties

  • The degree of control of the risk the authority has

  • The fact that merely HAVING the power does NOT create a duty to exercise it

  • Exercising the power does NOT create a duty to exercise it in the future

  • Knowledge that failure to exercise may cause harm does NOT create a duty to exercise them

Sutherland Shire Council v Becker

Defective Structures
-          SSC approved plans for construction. Storm water pipe put in by developer. Subsequent owner sued the council.
-          Held: No duty was owed.
-          Heyman considered to not be an authority any more – control and vulnerability (Graham Barclay, Crimmins) more relevant
Western districts developments v Baulkam Hills Shire Council

Defective Structures
-          Shire Council sued by a developer for issuing a compliance certificate to the original owner without requiring the original owner to have requisite water certificate.  Developer also sought/obtained a compliance certificate without requiring a water certificate.  Developer ended up having to pay for the cost of the water connection itself.  Sued for this cost for negligent omission by the council.
-          Held: No duty was owed by the council – developer was NOT vulnerable.
-          Could have self-protected by investigating the status of the water certificate with the water board. Applied Woolcock Street Investments principle of vulnerability.
Bryan v Maloney

Defective Structures
-          House built in Tasmania in 1979 by Bryan (professional builder).  Mrs Maloney purchased it in 1986 – she was the third owner (a subsequent owner) so no contractual duty existed.  Had house inspected prior to purchase, appeared fine, but damage eventually occurred due to problems with the footings.  She sued the original builder (Bryan) for negligence for pure economic loss.
-          Issue was whether the builder owed a duty of care to subsequent owners.
-          Majority held a duty of care WAS owed to her, Brennan dissenting (arguing it was purely a contractual issue)
-          Mason, Deane, Gaudron JJ – Decided in (now rejected) context of proximity, but identified that the key consideration was that it was a DOMESTIC DWELLING, not a commercial property.  Individual’s house is most important investment, creates a ‘stronger’ relationship than a commercial property would.
Woolcock Street Investments

Defective Structures
-          Commercial warehouse/office complex built in Townsville designed by CDG Consultant Engineers. They suggested to the original owner that soil tests should be undertaken, but were told not to due to the cost.  Complex was later sold to subsequent owner (Woolcock Street Investments).  Cracks started to appear in building, causing pure economic loss for subsequent owner, sued for negligence.
-          Issue was whether the engineers owed a duty of care to subsequent owners of COMMERCIAL premises (not domestic, as per Bryan v Maloney)
-          Decided on basis of an AGREED CASE STATED – makes it less relevant for development of principles, as only based on those specific facts.
-          Joint majority held that no duty was owed (Kirby dissenting)
-          Joint Majority:

  • Looked at principles of Bryan v Maloney, as well as vulnerability and assumption of responsibility throughout negligence (not just defective structures)

  • Held there was no vulnerability here, as:

    • They could have had an engineering inspection conducted (Not really viable in engineer’s opinion)

    • They could have protected themselves contractually (Not really, as it is very difficult for a subsequent owner to request/re-assign rights under standard billing contracts)



  • Statement of claim did NOT establish that the plaintiff could NOT self-protect.


-          McHugh J – No Duty - looked through Perre v Apand criteria – autonomy, vulnerability, control, knowledge of risk, magnitude of risk in this context.  Also refers to policy factors against allowing commercial recovery, as it’s a vehicle for investment rather than residence – risk of investments being devalued is standard.
Kirby J – applied Caparo test (discredited) as well as the salient features from Perre v Apand – concluded there WAS vulnerability (as opposed to the rest of the High Court, which found none in the claim stated)
Winterbottom v Wright 

Product Liability
-          Defendant contracted with Postmaster General to deliver mail.  He contracted with other parties to provide horses and a coachman, who contracted the plaintiff to be the mail coachman.  No direct contract between plaintiff and defendant, only an indirect contractual link through the third party.
-          Coachman injured due to negligence in maintaining coach, sued for failure to maintain coach for negligent maintenance.
-          Held there was no liability outside of contract – to do so could facilitate indeterminate liability.
 
Grant v Australian Knitting Mills

Product Liability
-          Plaintiff purchased 2 pairs of ankle length underwear.  Underwear made his ankles itch, scratched until bled the next day.  Wore them for a week (not abnormal at the time) and suffered bad dermatitis due to saltpeter in the underwear.
-          Sued for negligence, went all the way to the Privy Council.
-          Lord Wright – essential factor is that consumer must use the article EXACTLY as it left the maker – defect must be hidden and unknown by the consumer.
-          Held this was a hidden and latent defect, so a direct application of Donoghue
 
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