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Business Law

You are a newly graduated lawyer and have just gained a position at the law firm of Ejusdem & Generis. You were hired due to your outstanding article on corporate liability of wild animals based on the case of Shorten v Grafton District Golf course NSWCA 58. Your employer has just asked you to prepare a legal opinion for one of the firm's clients, Susan.
 
A legal opinion is an esaay based on the IRAC structute. It does not prosecute a position for one person. It is an evaluation of the merits of a case, based on balancing the law as it is applicable to both parties.
 
The facts of the problems are as follows: 
Susan has a five acre native bush block of land just outside Geelong in Victoria, Australia. She bought this as she likes being away from the crowded town and she wanted somewhere to keep her pet Bengal Tiger who she calls Benji. Susan usues Benji in her magic show and is a favourite at the local age care homes where Susan and Benji perform for free. Susan has all the correct permits to keep Benji. Benji was raised by Susan from a cub. Benji thinks that she is in fact a small domestic cat. Benji is very docile and would not hurt anyone or anything but has an unquenchable thirst for milk and has a desire to chase balls of string. Susan built a very strong compound to keep Benji in. She realises that although Benji is very safe, some people may not agree with her. One day Kim, a small child who lives next door, came to visit Benji. Kim plays with Benji all the the time when Susan is there. On this day however, Susan was not at home. Kim knew where Susan kept the key for Benji's compound. Kim unlocked and opened the door to Benji's compound. Benji was just too strong for Kim and pushed past her looking for milk. Benji spotted Kim's father, Cliff, marking out a new vegetable garden with a ball of string and went to chase the string. Cliff was just climbing onto his mini-tractor with the ball of string and did not see Benji coming. Benji jumped onto the tractor to take the string from Cliff's hand. Startled Cliff fell backward falling off the mini-tractor, knocking the gearshift into drive as he did so.
 
The uncontrolled tractor ran through his houses shocking his wife Mary, who dropped a pan of cooking oil on to the cook top. This instantly caught fire and did considerable damage to the house. The tractor continued on its way through Cliff and Mary's property, running through a chicken coop releasing all the chickens, until it fell into their swimming pool causing a great deal of damage to both the tractor and the pool. The chickens escaped and could not be located, as a result Cliff and Mary could no longer have fresh eggs.
 
Cliff and Mary now want to sue Susan for the damage to their house, mini-tractor, chicken coop, and pool, and for the loss of the chickens and eggs. Both Cliff and Mary also want to sue for mental shock of being attacked by Benji and the shock of the house fire.
 
Using common law principles only and not using legislation, advise your employer of the merits of Cilif and Mary's claim, any remedies that they may hope to achieve, and any defences that Susan may have.

Sample Answer

Issue
The issue raised as per the facts of this case is whether the loss suffered by Cliff and Mary can be recovered by filing a suit of negligence against Susan? Whether Susan can rely on a defence of negligence?

Rule
A suit for negligence can be filed against a party in case such party failed to behave with a level of care which a person with ordinary prudence would in the particular situation. The suit for negligence enables a party to recover compensation for the loss suffered based on the negligence of another party. The court established certain elements in Donoghue v Stevenson (1932) AC 562 case which is necessary to be present while filing a suit for negligence. Firstly, it is necessary to established by the party in a suit for negligence that the party owes a duty of care. The duty is referred to the legal obligation of a party to maintain a standard of care which is expected in the particular situation in order to avoid causing serious damages to third parties. In this case, a customer suffered serious illness after drinking the remains of a dead snail which were present in the bottle of ginger beer. Due to the negligence of the manufacturer, the remains were present in the bottle which resulted in causing serious injury to the claimant. The court accepted the claim for the negligence by providing that a standard of care was breached by the manufacturer (Bartsch 2016). In this case, the duty of care was established by the court based on the neighbour test. It evaluates the relationship of the parties to identify whether proximity exist or not.

Moreover, the parties are required to prove that the damages are foreseeable because the injuries which cannot be foreseen are not valid for a claim under the suit for negligence. Another test which is used by the court is ‘Caparo test’; this test was given by the court in the case of Caparo Industries PLC v Dickman (1990) 2 AC 605. This test evaluates the duty of a party based on evaluating three key factors. Firstly, the risks must be reasonably foreseeable, and they must not be too remote. Both parties must have proximity relationship based on which they owe a duty towards each other. Lastly, it must be reasonable for the court to implement the duty on a party to avoid the damages of another party (Marsh 2017). The duty which is owed by the party must be breached which resulted in causing injury to another party. The duty of a party is breached if he/she failed to ensure a standard of care which is expected to avoid causing damages to another party. The court relies on the ‘objective test’ to determine whether the duty is violated by a party or not. In Vaughan v Menlove (1837) 3 Bing N.C. 467 case, the court ordered the defendant to pay the compensation to the claimant for the loss suffered by him. Even after giving many warnings, the defendant did not take any appropriate measures to eliminate the risk of fire.

Due to the lack of security measures, the haystack of the claimant burned. The defendant said that as per his best judgement, the risk of fire was not there; the court provided that the best judgement is not enough to eliminate the liability of duty of care. The party is required to take appropriate care which a reasonable person would while acting in the particular situation. The court used this test while providing the judgement in Conon v Basi (1985) 1 WLR 866 and Wilsher v Essex (1988) 1 AC 1074 case. People who keep pets in their house have to ensure that a standard of care is maintained by them to ensure that the pet did not cause any harm to another person. However, their liability did not extend to injuries which are suffered by another party due to fear of the pet or any other reasons. In Partipilo v DiMaria 570 N.E.2d 683 (III. App. Ct. 1991) cases, a dog owner kept her dog in another room to avoid injury to people who visit the house. A person falls down the stairs after hearing the barking of the dog from the room. A suit for recovery of damages under negligence was filed against the dog owner. The court provided that the owner has taken appropriate measures to ensure that the dog did not cause any harm to another party, thus, a duty of care is not violated by him (Court Listener 2018).

Thus, the court rejected the claim for damages by providing that the duty is not violated by the dog owner. After proving that the defendant has breached the duty of care, the claimant is required to establish the element of causation. As per the element of causation, the injuries of a party must be caused due to the direct result of the violation of the duty of care by the defendant. The parties are required to establish a link between the injuries which they suffer and the negligent actions of the defendant. In order to establish this element, the court uses ‘but for’ test which focuses on determining whether a party would have suffered the loss even if the duty had not been violated by the defendant. The court applied this test in Chapel v Hart (1998) HCA 55 case in which the court awarded $173,000 for the damages suffered by the claimant due to the negligence of the defendant to while delivering professional services. The court also provided in Performance Cars Ltd v Abraham (1962) 1 QB 33 case that in case two causes are occurring which resulted in causing injury to a party, then the test can be applied to determine the liability of the defendant (Song 2014).

After establishing that the injury of a party is suffered due to the negligent actions of another party, it is necessary to establish that the damages are not too remote. The parties did not have the right to recover compensation for the injury suffered by them which is too remote. The remoteness of damages principle was used by the court in the case of Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd [1961] UKPC 1. This case is also known as the Wagon Mound no 1 case in which the court provided that the compensation cannot be given to the party in case the damages are not foreseeable. Some crew members working on a ship forgot to close the tap due to which oil leaked in Sydney Harbour. Some workers were welding in a wharf nearby, and they saw the oil. They thought that the oil is not flammable and continued welding. The oil caught fire which resulted in burning the wharf and causing serious financial loss to the owner. The court provided that although the damages are suffered due to the negligence of the defendant, however, the damages are too remote based on which the claimant cannot demand compensation (Robertson & Tilbury 2016). The court only awards the compensation for the loss suffered by a party if all these elements are present in the suit for negligence.

There are various defences available for the defendant based on which the court can reduce the overall compensation paid to the claimant or completely end the liability of the defendant. In case of the loss suffered by the claimant are caused due to his/her own negligence along with the negligent actions of the defendant, then the amount awarded by the court is reduced as per the contribution of the claimant. For example, the damages paid to the claimant by the court were reduced by 30 percent in the case of Imbree v McNeilly (2008) HCA 40 because an accident occurred by a learner driver who was driving in the supervision of another passenger (Eburn & Cary 2018). Another defence which is available for the defendant is the voluntary assumption of risks. In order to rely on this defence, three key elements must be fulfilled by the parties. Firstly, the party must voluntarily give his/her consent to accept the risks involved in a particular activity. Secondly, an agreement must be formed between the parties in which they decide to accept the risk involved in the process. Lastly, the court provided in Morris v Murray (1991) 2 QB 6 case that the claimant must be complete knowledge regarding the risk while entering into an agreement to accept the same. Based on these defences, the defendant is able to reduce the amount of damages paid to the claimant or completely eliminate his/her liability raised from the negligent actions.

Application
Susan was keeping a Bengal tiger in her house named Benji; she understands the fact that Benji can cause an injury to other parties, therefore, she had taken precautionary measures to ensure that Benji did not get into contact with anyone. Since Cliff and Mary wanted to demand compensation from Susan under a suit for negligence, they are required to establish that all the elements of negligence are present in the case. Firstly, a duty of care is owed by Susan towards Cliff and Mary based on the principles of the ‘Caparo test’. The risks are foreseeable, and proximity relationship exists between the parties. It is also reasonable to impose the duty on Susan to avoid the damages to Cliff and Mary. In order to maintain her duty, Susan has maintained a standard of care to avoid causing damages to other parties (Donoghue v Stevenson). She kept Benji in a strong compound to ensure that she is not able to cause injury to others. On the other hand, if Benji would not have released from her compound, then the damages were not suffered by Cliff and Mary. Therefore, as per the ‘but for’ test, the element of causation is present in this case (Chapel v Hart).

However, the damages suffered by Cliff and Mary are not resulted due to a breach of duty by Susan. Susan was not at her house when Kim entered the house and unlocked the compound of Benji without asking anyone. An appropriate standard was maintained by Susan to ensure that her pet did not cause damage to third parties, but she cannot be held liable for damages which are not caused directly by her pet (Partipilo v DiMaria). Moreover, the risk of damages was not foreseeable by Susan because she did not know the fact that Kim would unlock the compound of Benji when she is not at her house, therefore, the injury was too remote. Cliff and Mary did not have any contribution to the loss suffered by them; therefore, the defence of contributory negligence did not apply in this case. Moreover, the parties did not give their consent or entered into an agreement to accept the risk based on which the defence of voluntary assumption of risk did not apply in this case as well. However, Susan did not have to pay damages to Cliff and Mary since they cannot hold her liable to pay compensation under the suit for negligence because all elements of negligence are not present in the case.

Conclusion
The loss suffered by Cliff and Mary cannot be recovered by them by filing a suit of negligence against Susan since a duty of care is not breached by her and the damages were too remote. Susan cannot rely on the defence of negligence including contributory negligence and voluntary assumption of risk; however, she is not required to pay compensation to Cliff and Mary.

References
Bartsch, RI 2016, International aviation law: a practical guide, Routledge, Abingdon.

Caparo Industries PLC v Dickman (1990) 2 AC 605

Chapel v Hart (1998) HCA 55

Conon v Basi (1985) 1 WLR 866

Court Listener, 2018, ‘Partipilo v. DiMaria, 570 N.E.2d 683 (Ill. App. Ct. 1991)’, Court Listener (online) 13 September 2018 < https://www.courtlistener.com/opinion/2066606/partipilo-v-dimaria/>.

Donoghue v Stevenson (1932) AC 562

Eburn, M & Cary, GJ 2018, ‘You own the fuel, but who owns the fire?’, International Journal of Windland Fire, vol. 26, no. 12, pp. 999-1008.

Imbree v McNeilly (2008) HCA 40

Marsh, P 2017, Contracting for engineering and construction projects, Routledge, Abingdon.

Morris v Murray (1991) 2 QB 6

Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd [1961] UKPC 1

Partipilo v DiMaria 570 N.E.2d 683 (III. App. Ct. 1991)

Performance Cars Ltd v Abraham (1962) 1 QB 33

Robertson, A & Tilbury, M 2016, The Common Law of Obligations: Divergence and Unity, Bloomsbury Publishing, London.

Song, M 2014, Causation in insurance contract law, Routledge, Abingdon.

Vaughan v Menlove (1837) 3 Bing N.C. 467

Wilsher v Essex (1988) 1 AC 1074

 

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