RMIT

Classifi

Answer Guide cation:

Carelessly Causing Truste Harm:

d
Negligence and Negligent
Misstatement
Question 1
Sinh is a student at RMIT. The lifts at RMIT have recently been cleaned and when Sinh
enters the lifts she slips on a very wet floor in the wash room and breaks her leg. As a
result of the accident she has incurred significant medical expenses and is out of her
part time work for four months.
(a) What legal action could Sinh take against RMIT or the cleaners of the lifts and how
likely will she be to succeed?
(b) Is the situation different if Sinh suffered her injury after breaking into RMIT when
its closed with the intention of stealing a Commercial Law examination?
Issues
First, whether RMIT liable in negligence to Sinh. Second, whether RMIT is liable, even if
Sinh was a trespasser.
Rules
Whatever the kind of conduct or harm, there are three essential requirements that must
be satisfied on the facts of the case to establish liability in Negligence: Donoghue v
Stevenson1. They are:
i.That the defendant owed the plaintiff a duty of care
ii.That the defendant breached their duty of care
iii.That as a result of the plaintiff’s breach, the plaintiff suffered a loss or injury that
was reasonably foreseeable.
For a duty of care to arise, it must be shown that some kind of harm must have been
foreseeable (to an identified class of persons) or a duty situation or precedent category
existed. Such a precedent category is where occupiers of premises owe a duty of care to
entrants: Australian Safeway Stores Pty Ltd v Zaluzna2 and s 14B of the Wrongs Act 1958
(Vic).
Trespassers are owed a DoC: Hackshaw v Shaw3 where a farmer fired bullets at
trespassers. However, in Bryant v Fawdon Pty Ltd4 the occupier was held not to owe a

1
[1932] AC 562.
2
(1987) 162 CLR 479.
3
155 CLR 614.
4
[1993] Aust Torts Repts 81–204.

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duty of care to the plaintiff trespasser, given that the injury was
cation:
not reasonably foreseeable (the plaintiff climbed a 1.8 metre fence to get to a
toilet and was knocked unconscious Truste when she attempted to flush the toilet’s
disused concrete cistern in the dark. The d illegality of the plaintiff’s conduct is also
taken into account under s 14G of the Wrongs Act 1958 (Vic):
Consideration of intoxication and illegal activity

(1) This section applies to a claim for damages in respect of death

or personal injury brought by a person ( the plaintiff ) against another
person ( the defendant ) alleging negligence.

(2) In determining whether the plaintiff has established a breach

of the duty of care owed by the defendant, the court must consider,
among other things—

(a) whether the plaintiff was intoxicated by alcohol or drugs

voluntarily consumed and the level of intoxication;

(b) whether the plaintiff was engaged in an illegal activity.

A defendant breaches their DoC if they fail to meet the standard that a reasonable
person is required to show to avoid unreasonable risk of harm.
Factors the courts use to help determine whether there is a breach:
• Probability of harm: Bolton v Stone5
• the burden of taking precautions: Latimer v AEC Ltd6,
• Social utility of defendant’s conduct: Watt v Hertfordshire County Council7
• Seriousness of injury: Paris v Stepney Borough Council
Factual causation involves considering a hypothetical situation: if the plaintiff would not
have suffered damage without the defendant’s breach, then the breach is taken to be
the effective cause of the plaintiff’s damage. For causation, this ‘but for’ test may be
applied if there are not multiple causes: March v E & MH Stramare Pty Ltd8 and Yates v
Jones9. The scope of liability, is limited to harm that was reasonably foreseeable as a
result of the defendant’s carelessness: Overseas Tankship (UK) Ltd v Morts Dock and
Engineering Co Ltd (The Wagon Mound No 1)10.

5
[1951] 1 All ER 1078.
6
[1953] AC 643.
7
[1954] 1 WLR 835.
8
(1991) 171 CLR 506.
9
(1990) Aust Torts Reports 81-009.
10
[1961] AC 388.

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A defendant may be relieved of liability partially or completely if they can
cation:
establish a defence. These are
Truste
(a) Contributory negligence: Manley v Alexander11 and s 26 Wrongs Act
1958 (Vic). d
(b) Voluntary assumption of risk (‘VAR’): Hyde v Agar12.

Application and Conclusion

RMIT, as an occupier of premises owes a DoC to Sinh as an invited entrant. The next
question is whether that DoC was breached. The probability of a person slipping on a
wet bathroom floor is high. The harm is likely to be serious as the surfaces are hard and
it is a confined space. The burden of taking precautions is low, as the bathroom could be
mopped dry and closed off while cleaning is taking place. A warning sign could also be
placed.
Had the floor not been wet, it is unlikely that Sinh would have fallen – therefore RMIT’s
carelessness has caused Sinh’s injuries.
There are no facts given to infer that Sinh has contributed to her own injury, nor
consented to the risk of falling, so neither defence is likely to apply. RMIT would
therefore be liable to compensate Sinh for her injuries and lost earnings.
If Sinh had broken in to steal something, RMIT would still have owed her a DoC,
however, damages would be reduced by the proportion that Sinh’s conduct contributed
to her injury.

Question 2

Cam was attending a concert in the park. He had not purchased a ticket but had
climbed over a two metre fence to join the spectators who had purchased tickets.
Strong wind and heavy rain forced the spectators to take cover from a storm under a
large tent set up by the organisers to protect the musicians and their equipment.
During the storm the tent became heavy with water and collapsed onto the musicians,
their equipment and spectators who had taken shelter under it. Cam’s back was
seriously injured. As a result of the accident he required emergency surgery. Cam was
unable to complete his university studies that year. Another spectator standing
nearby, Al, saw Cam have his back crushed and consequently suffered psychological
distress.
Advise both: Cam; and Al as to their common law rights respectively (if any) for
compensation.

11
(2005) 80 ALJR 413.
12
(1998) 45 NSWLR 487.

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Issues
cation:
i. First, whether the rock concert Truste organiser is liable in negligence to
Cameron despite the fact he gate-crashed the concert ?
ii. Second, whether the rock concert d organiser liable in negligence to Al
despite the fact he was not physically injured
Relevant rules:
Rules
Whatever the kind of conduct or harm, there are three essential requirements that must
be satisfied on the facts of the case to establish liability in Negligence: Donoghue v
Stevenson13. They are:
iv.That the defendant owed the plaintiff a duty of care
v.That the defendant breached their duty of care
vi.That as a result of the plaintiff’s breach, the plaintiff suffered a loss or injury that
was reasonably foreseeable.
For a duty of care to arise, it must be shown that some kind of harm must have been
foreseeable (to an identified class of persons) or a duty situation or precedent category
existed. Such a precedent category is where occupiers of premises owe a duty of care to
entrants: Australian Safeway Stores Pty Ltd v Zaluzna14 and s 14B of the Wrongs Act
1958 (Vic).
Trespasser are owed a DoC: Hackshaw v Shaw15. However, in Bryant v Fawdon Pty Ltd16
the occupier was held not to owe a duty of care to the plaintiff trespasser, given
that the injury was not reasonably foreseeable (the plaintiff climbed a 1.8 metre fence
to get to a toilet and was 2knocked unconscious when she attempted to flush the toilet’s
disused concrete cistern in the dark. The illegality of the plaintiff’s conduct is also taken
into account under s 14G of the Wrongs Act 1958 (Vic):
Consideration of intoxication and illegal activity

(1) This section applies to a claim for damages in respect of death

or personal injury brought by a person ( the plaintiff ) against another
person ( the defendant ) alleging negligence.

(2) In determining whether the plaintiff has established a breach

of the duty of care owed by the defendant, the court must consider,
among other things—

(a) whether the plaintiff was intoxicated by alcohol or drugs

voluntarily consumed and the level of intoxication;

13
[1932] AC 562.
14
(1987) 162 CLR 479.
15
155 CLR 614.
16
[1993] Aust Torts Repts 81–204.

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(b) whether the cation:
plaintiff was engaged in an illegal
activity.
Truste
Where there is no precedent category, d Sullivan v Moody17 sets out the salient
features to consider if a DoC is owed (vulnerability of the plaintiff, control by
the defendant, autonomy, indeterminate liability, reasonable foreseeability, conflicting
legal duties).
A defendant breaches their DoC if they fail to meet the standard that a reasonable
person is required to show to avoid unreasonable risk of harm.
Factors the courts use to help determine whether there is a breach:
• Probability of harm: Bolton v Stone18
• the burden of taking precautions: Latimer v AEC Ltd19,
• Social utility of defendant’s conduct: Watt v Hertfordshire County Council20
• Seriousness of injury: Paris v Stepney Borough Council
Factual causation involves considering a hypothetical situation: if the plaintiff would not
have suffered damage without the defendant’s breach, then the breach is taken to be
the effective cause of the plaintiff’s damage. For causation, this ‘but for’ test may be
applied if there are not multiple causes: March v E & MH Stramare Pty Ltd21 and Yates v
Jones22. The scope of liability, is limited to harm that was reasonably foreseeable as a
result of the defendant’s carelessness: Overseas Tankship (UK) Ltd v Morts Dock and
Engineering Co Ltd (The Wagon Mound No 1)23.
A defendant may be relieved of liability partially or completely if they can establish a
defence. These are
(a) Contributory negligence: Manley v Alexander24 and s 26 Wrongs Act 1958 (Vic).
(b) Voluntary assumption of risk (‘VAR’): Hyde v Agar25.

Application to Cam:
Lawful entrants are owed a duty of care by the occupier of the premises
(Zaluzna’s case) as are trespassers: Hackshaw v Shaw. On the other hand, the facts in
Cameron’s case bear some similarity to those of Bryant v Fawdon, where the
plaintiff climbed a 1.8 metre fence to use a toilet she saw at the rear of the
premises. It was held there was no reasonably foreseeable risk of injury and that
17
(2001) 207 CLR 562.
18
[1951] 1 All ER 1078.
19
[1953] AC 643.
20
[1954] 1 WLR 835.
21
(1991) 171 CLR 506.
22
(1990) Aust Torts Reports 81-009.
23
[1961] AC 388.
24
(2005) 80 ALJR 413.
25
(1998) 45 NSWLR 487.

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the defendant did not therefore owe her a duty of care. Using the Sullivan v
cation:
Moody salient features test, the rock concert organiser has control over the
safety of the concert venue and Cam Truste is vulnerable towards these
arrangements. It is also reasonably d foreseeable that it would rain and that
concert goers would shelter under the tarpaulin. A tarpaulin is flimsy and its
reasonably foreseeable it could collapse in a downpour. There is a therefore a strong
argument that a duty of care is owed to Cam.

(Whatever conclusion is drawn, students should proceed to argue the next two
steps in establishing negligence)

In determining whether the concert organiser has breached the duty of care, it is
necessary to consider the standard of the reasonable person. Did the concert organiser
act as the reasonable person of ordinary prudence in the circumstances? Would the
reasonable concert organiser have taken action to avoid the injury that occurred?
Two factors in particular would indicate that the concert organiser did breach
this duty. First, it appears highly probable that people are likely to be injured by the
collapse of the tarpaulin under the weight of rainwater, thus necessitating some
preventative action. Secondly, the burden of eliminating the risk is not prohibitive,
difficult or expensive. The reasonable concert organiser arguably has only to
cordon off the area and/or place warnings as to the risks of standing under the
tarpaulin. Furthermore, under s 14G of the Wrongs Act 1958 (Vic) the court is to
take into account the fact that the plaintiff (Cam) was involved in an illegal
activity, in determining whether the defendant was in breach of its duty.
Last, Cam’s injuries were caused by the concert organiser’s breach of the duty of care
and his injuries are not too remote. “But for” the defendant’s breach, Cam would
not have suffered these injuries. His injuries are reasonably foreseeable losses arising
from the breach. Cam may therefore recover damages for his medical costs and
compensation for his study and employment losses.

The next question is whether the concert organiser may rely on any defences to
alleviate liability. Voluntary assumption of risk does not appear relevant on the
facts, as Cam was not aware of the risk and therefore could not consent to it.
However, there may be a successful claim in contributory negligence, given that
Cam was trespassing (Hackshaw v Shaw). The illegality of the plaintiff’s conduct is
also taken into account under s 14G of the Wrongs Act 1958 (Vic).
Conclusion (Cam):
The rock concert organiser is liable in part to Cam.

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Application to Al
cation:
The same legal rules as discussed above Truste in relation to Cam also apply to Al. Al
was owed a DoC as a lawful entrant onto the premises that the premises were
safe. The question is whether Al was d owed a duty of care not to witness
events that could cause psychological harm. Under the salient features test, Al was
vulnerable whilst the organisers had control. However, given that the tarpaulin was a
flimsy structure it is reasonably foreseeable that it could harm a spectator and be
witnessed by others. As a witness of the actual accident, Al is likely to be affected
by the defendant’s negligence. Al’s case is to be compared to Bourhill v Young26 where
the plaintiff did not see the accident, but only heard the accident and saw its
aftermath. Furthermore, it is not necessary to show that the harm actually
suffered was reasonably foreseeable, but that some kind of harm to a person in
the plaintiff’s position is likely to be caused by the defendant’s negligence:
Chapman v Hearse27. The psychological distress which Al suffered from witnessing
Cam’s injury would not have occurred but for the rock concert organiser’s breach of its
duty of care. Al’s psychological distress is not too remote and is a reasonably
foreseeable consequence of witnessing Cam’s injury.
Conclusion (Al):
The rock concert organiser is liable to Al in negligence and Al may therefore
recover damages for the psychological distress that he has suffered as a result of
witnessing Cam’s injury.

Question 3

Issue
The legal issue in this matter is whether the caterers are liable in negligence to
compensate you for (a) food poisoning and (b) your broken arm at the hospital.

Rules
Set out as in previous questions, choosing which are relevant to these
circumstances.
Application to Food Poisoning
We use the salient features set out in Sullivan v Moody to determine whether the
caterers owed you a DoC. This test deals the issue of whether one of the parties was in
control and the other, not. Here, the caterers are in control because they prepared
the food and you were vulnerable as you were not in a position to establish its safety
26
[1943] AC 92.
27
(1961) 106 CLR 112.

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and merely consumed it. The caterer had control over the health and
cation:
safety standards in their catering. These features strongly suggest that the
caterer owes you a duty of care to Truste provide safe food.

The next matter you must establish is d that the caterer has breached their duty
of care. In order to do so, you must establish that the defendant has not acted
as a reasonable person in their business, would.
In this matter, it is likely that if the caterers do not exercise a high degree of care when
preparing and serving food, a person may contract food poisoning. It is also likely in a
professional kitchen that rodents would be attracted and that the burden of rodent
control is not great. The caterer could have avoided the risk by taking precautions
to ensure their food complies with safety standards and the social benefit of what they
do (prepare and serve food for others to eat) only confirms that they must act as
reasonable caterers would by serving non-contaminated food.
The breach caused the harm as but for the consumption of the mouse you would not
have fallen ill: Yates v Jones. The harm was reasonably foreseeable and not too remote
from the breach: Wagon Mound No 1. The careless act in serving food with a mouse in
it directly caused you to contract food poisoning.
The caterer has two defences available to a negligence action: voluntary assumption of
risk and contributory negligence. Voluntary assumption of risk occurs when the
plaintiff with full knowledge of the facts, assumes the risk and the resultant damage:
Agar v Hyde.
Contributory Negligence occurs when both the plaintiff and the defendant
contribute to the damage caused: Manley v Alexander. On the facts neither is available
to the caterer here because you did not have full knowledge and appreciation of the
risk of eating the caterer’s food and you did not contribute to your loss or injury.
Conclusion re Food Poisoning
Based on the preceding analysis, it is likely that you will be successful against the
caterers in your claim of negligence for the food poisoning.
Application to Broken Arm
With respect to liability for your broken arm in hospital, it is unlikely you would be able
to satisfy the factual causation component. Was the broken arm caused by the
caterer’s negligence? Based on the precedent in Yates v Jones the court is likely
to find that your broken arm was not caused by the caterer’s negligence, but
rather by your own carelessness or the hospital’s negligence. Your carelessness or
the hospital’s negligence is a break in the chain of causation and too remote: Wagon
Mound No 1.

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Conclusion re Broken Arm
cation:
The broken arm was not caused by Truste the caterer’s negligence nor was it a
foreseeable result of the caterer’s breach of duty of care, and it was
therefore too remote. The caterer will d not be liable.

Question 4

You are an accountant in practice. It is the 29 June 2021. You are busy doing
outstanding tax returns for your clients. A client telephones you to ask ‘what is the
maximum deductible contribution he can make to superannuation for the year ended
30 June 2021?” You tell him $15,000. However you are incorrect and the amount is
$25,000 because of his age. As a result of your error the client needs to pay additional
tax of $2,500.
Are you, the accountant, negligent for your advice?
Issue
The legal issue in this matter is whether you are liable for tort of negligent
misstatement for providing incorrect advice and causing subsequent economic loss.
Rules
The tort of negligent misstatement requires that in order for a duty of care to
arise between persons, there needs to be a ‘special relationship’. A professional adviser
owes a duty of care to clients (‘a special relationship’) to whom they supply
information: Mutual Life and Citizens' Assurance Co Ltd v Evatt28.
The following requirements must be satisfied to determine the existence of a special
relationship (Shaddock & Associates Pty Ltd v Parramatta City Council29): First, the
advice was of a business or serious nature. Second, the defendant knew or should
have known that the plaintiff intended to rely on the advice. Third, it was
reasonable in the circumstances for the plaintiff to rely on the defendant’s advice.
The rules for breach, causation and defences are as set out previously. Pure economic
losses are those losses which do not flow from some personal injury or property
damage: Perre v Apand30.

28
(1968) 122 CLR 556.
29
(1981) 150 CLR 22.
30
73 ALJR 1190.

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Application
cation:
Financial advice is generally of a serious Truste nature. Accountants are professionals
who should be aware that clients rely on their advice. It is reasonable for clients
to rely on advice provided by their d accountant. Thus, a special relationship
is established.
Continue the analysis for breach, causation and defences (although little information is
given in these facts.) It is likely that the accountant will be liable for the pure economic
loss of $2500.

Question 5
Kate decided to invest in rural property. While investigating the suitability of the land
for the purpose of establishing a boutique vineyard, she approached the Council for
advice as to the possible establishment of a vineyard. She was advised that the
property was “zone two and suitable for agricultural use”. The Council told her that
there were no restrictions that would impact the land. In fact, there was a restriction
warning that the land was subject to a State Government order that zone two land
was to be used for residential purposes only. Kate bought the land and employed viti-
culturalists to establish a vineyard. She then received a notice from the State
Government requiring that her land be only used for residential purposes.
Advise Kate
Issue
The issue is whether the advice given by the Council gives rise to a claim in negligent
misstatement and whether the Council will then be liable for pure economic loss.
Rules:
The tort of negligent misstatement requires that in order for a duty of care to
arise between persons, there needs to be a ‘special relationship’. A professional adviser
owes a duty of care to clients (‘a special relationship’) to whom they supply
information: Mutual Life and Citizens' Assurance Co Ltd v Evatt31.
The following requirements must be satisfied to determine the existence of a special
relationship(Shaddock & Associates Pty Ltd v Parramatta City Council32): First, the
advice was of a business or serious nature. Second, he defendant knew or should
have known that the plaintiff intended to rely on the advice. Third, it was
reasonable in the circumstances for the plaintiff to rely on the defendant’s advice.
The rules for breach, causation and defences are as set out previously. Pure economic
losses are those losses which do not flow from some personal injury or property
damage: Perre v Apand33.
31
(1968) 122 CLR 556.
32
(1981) 150 CLR 22.
33
73 ALJR 1190.

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Set out the rules for the other elements of negligence.
cation:
Application Truste
Reasonable reliance is the key to d establishing a duty of care in
negligent misstatement cases. The advice given deals with land use rights
and has a bearing on investment decisions. It is clearly of a business or serious nature.
The Council employee ought to realise that Kate intends to act on his advice as it
was sought for ascertaining the purposes for which the land could be used. It is
reasonable for Kate to rely on advice given by the Council based on his special skill, in
that he had access to knowledge not otherwise available. Therefore a special
relationship exists and it is reasonable for Kate to act in reliance on the advice given.
The other elements of negligence should be also be discussed.
The Council should know that if it does not act as a reasonable Council should,
the probability of the financial loss is high, the seriousness of the loss is high, and the
cost of avoiding the loss is non-existent given that all the Council has to do is provide
accurate information in order to avoid the loss. The social utility test says that the
Council is providing a necessary service to the public and should therefore do so with
reasonable care. On these facts, it has breached its duty of care.
The harm caused is that the value of the land and the economic benefits of its
exploitation have declined. The advice given has directly caused the financial loss
incurred. “But for” the Council’s breach of its duty of care, Kate would not have
suffered such loss. This satisfies the causation test (Yates v Jones ). The loss was also
not too remote, in that it was a reasonably foreseeable consequence of the breach
(Wagon Mound No 1).
In considering defences, it is obvious that the defence of voluntary assumption of
risk does not apply here.
(NOTE: Voluntary Assumption of Risk will only ever apply when only ONE party – the
plaintiff – is solely responsible for all the loss incurred in circumstances where that
plaintiff was aware of ALL the facts. This is clearly not the case here: Rootes v Shelton34.)
Accordingly, Kate should be successful in an action against the Council for
negligent misstatement but losses may be reduced to the extent that Kate contributed
to the loss by not applying for written advice from the Council (contributory negligence).
The Council will be liable to Kate for pure economic loss.

Question 6
Ben, a well-known radio investment advisor was cornered by Jen, his neighbour, whilst
putting out his rubbish bins early one morning. Jen, in her dressing gown, asked Ben if
he considered Puff Pty Ltd to be a company with bright prospects. Ben replied "yes"
and promptly left. The next day Jen bought $20,000 worth of shares in Puff. A week
34
(1967) 116 CLR 383.

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later Puff went into liquidation and Jen learned that she would be highly
cation:
unlikely to recover her $20,000.
Truste
Jen seeks your advice as to whether she has a cause of action against Ben.
Advise her accordingly, giving reasons. d

Would it have made any difference to your advice had Jen telephoned Ben for his
investment advice whilst he was on the radio?
Issue
The issue is whether a special relationship existed such that the advice given by Ben
gives rise to a claim in negligent misstatement and whether the Ben will then be liable
for pure economic loss to Jen.
Rules
Set out the relevant rules.
Application
While Ben gives professional advice, it is unlikely that he would realise that he is
being trusted in such a social context. On the other hand, given that he is a well- known
personality, perhaps he ought to realise that he might be trusted. The advice is
investment advice which is certainly of a business or serious nature. Ben ought to
realise that the recipient intends to act on his advice notwithstanding that his
advice was flippant and constituted only a single-word answer to a question. While it is
reasonable for Jen to rely on advice given by Ben based on his special skill, it
would not be reasonable to act in reliance of the advice given casually while they
were putting rubbish bins out. The nature of the occasion did not make clear the gravity
of the inquiry and the importance and influence attached to the answer (both
Shaddock’s and Hedley Byrne’s cases support this). Because it is not reasonable
for Jen to rely on Ben’s advice no relationship based on a duty of care arises and
therefore Ben is not liable for Jen’s economic loss.
Even if a duty of care could be established, there is likely to be found some contributory
negligence exhibited in Jen’s failure to seek more detailed advice and rely on a one-
word answer in a matter with a significant amount of money involved.
Advice given on the radio:
A duty of care is more likely to arise here. It is more reasonable in the
circumstances for Jen to rely on Ben’s advice. It was in Ben’s line of business and
provided it was given with reasonable formality and seriousness, Jen may argue that a
duty arose.

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Bibliography cation:
Truste
d

Cases

Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479
Bolton v Stone [1951] 1 All ER 1078
Bourhill v Young [1943] AC 92
Bryant v Fawdon Pty Ltd [1993] Aust Torts Repts 81–204
Chapman v Hearse (1961) 106 CLR 112
Hackshaw v Shaw 155 CLR 614
Hyde v Agar (1998) 45 NSWLR 487
Latimer v AEC Ltd [1953] AC 643
Manley v Alexander (2005) 80 ALJR 413
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Mutual Life and Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556
Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound No 1) [1961]
AC 388
Paris v Stepney Borough Council [1951] 1 All ER 42
Perre v Apand (1999) 73 ALJR 1190
Rootes v Shelton (1967) 116 CLR 383
Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 22
Sullivan v Moody (2001) 207 CLR 562
Watt v Hertfordshire County Council | [1954] 1 WLR 835
Yates v Jones (1990) Aust Torts Reports 81-009

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