Legal Views on Torts and Damages - Case Study Example

Running head: Legal Views on Torts and Damages LEGAL VIEWS ON TORTS AND DAMAGES Name of the student: _________________________________ Student ID No.: _____ Program: _________________________________________ (course or educational curriculum) Specialization: ____________________________________________ Faculty Mentor/Professor: Name of school ___________________________________________ Abstract It is universally basic and fundamental in the legal context that whoever causes damage to another is under obligation to compensate for the resultant injuries if the actor did so either by an act, omission or misdeed each of which embodies fault, imprudence or negligence. The action or the want of it may constitute a crime or a quasi-delict. Legal Views on Torts and Damages The claim of Mi against Best Built Pty Ltd will prosper Best Built Pty Ltd was guilty when it used substandard materials to save on costs in the construction of the houses which the company made available for sale to the public. Worse, the efforts to economize were geared toward keeping the company profitable. In short, the company was primarily concerned about its financial circumstances even to the extent of putting the welfare of its prospective customers in a precarious and hazardous situation. This was evidently demonstrated by the fact that the building defects were brought about by the poor foundations in the structures precisely because of the minimal materials utilized in the whole construction caboodle. All these imprudent deeds of Best Built Pty Ltd only made apparent the fact that it did not observe the standard of care which was required of it under the law. (CIVIL LAW (WRONGS) ACT 2002 - SECT 42. Australian Capital Territory Consolidated Acts. [internet]). The quantum of diligence demanded by the cited statute is that which a person reasonably must exercise on the basis of the attendant facts which were then known, or ought to be known, to the defendant during the time of the happening of the event which caused the damage or injury. Apparently, Best Built Pty Ltd, through its managers and officers, was absolutely aware or could reasonably be presumed to have been absolutely aware that the inferior materials it used in the construction of the houses would result in weak or insufficient foundations and that the latter could pose horrible risks and dangers to the supposed buyers, one of whom was Mi. Best Built Pty Ltd was certainly in a position to foresee the probable consequences that the poor foundations could bring about, the imminent disaster that was likely to occur, and the personal injuries which might be sustained. Jurisprudence has reached a set of tests for the courts to determine whether the duty of care is incumbent upon the defendant. These are foreseeability, proximity and vulnerability. In the case at bar, it is very clear that all these tests dictate that Best Built Pty Ltd had the duty to care for its prospective customers. Firstly, Best Built was in a position to foresee the damage that could result from the weak foundations. Secondly, there was proximity between Best Built and its purported house buyers because of the likelihood of the latter acquiring the realty and residing or living therein. Thirdly, vulnerability was present because Best Built was in control of the prevailing circumstances: knowledge of the danger, resources of constructing better buildings rather than the defective ones it actually built. Furthermore, it could be safely presumed that Mi relied on Best Built which had the controlling hand over the said factors, and that the real estate company could have otherwise protected Mi, or any of its customers for that matter. (THE TORT OF NEGLIGENCE. citing the cases of Donoghue v. Stevenson [1932] and (Hay (or Bourhill) v. Young [1943]. [internet]) Considering all the facts and circumstances set forth above, Best Built Pty Ltd is clearly liable to Mi and the action of the latter for damages will definitely prosper. The case of Carla On the assumption that Carla lost her lifetime savings, she is entitled to claim for actual damages via filing an action in court to recover her losses. She may include in the same suit a prayer for compensation in the form of moral and exemplary damages. She may join the auditors as among the respondents who presumably rendered the opinion on the fairness of the financial statements without disclosing the financial predicaments of the company regarding the money claims covering the defects of the poorly constructed home buildings. Generally, auditors are not liable on their opinion on financial statements. (COMMON ECONOMIC TORTS. citing Caparo Industries plc v Dickman. LECTURE 6: LAW OF TORT. [internet]). However, if the audit is marred by carelessness or imprudence, the accountants can be made accountable for their negligence. It has to be also importantly noted that users and readers of financial statements put great reliance on audited financial statements. In short, the duty and responsibility of the auditors toward this end are imbued with public interest. Hence, great prudence in the examination of financial statements is generally expected of auditors. When Carla bought some shares of Best Built Pty Ltd worth $20,000, she relied on the misrepresentations of the company via its financial statements which were imprudently prepared by the auditors who failed to make the financial disclosure referred to above. The financial reports thus pictured the company to be financially firm and stable when it actually was not. Taking advantage of the flawed balance sheet and income statement, Best Built allowed its possible shareholders access to the said financial statements. Best Built and the auditors had a duty of care to have fully apprised Carla of the economic condition of the company. In one case, the defendants were cleared because they issued an express disclaimer regarding the information they gave about the plaintiff’s bankers. (Hedley Byrne v. Heller. [House of Lords] [1964] AC 465) [internet]). This was not so in the case of Carla as between Best Built and the auditors. Best Built might put up the defence that it did assure Carla of a certain level of profitability or advantage in the purchase of the shares or stocks. (Latimer, Paul. Australian Business Law. 28th Edition. Citing San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [1986] HCA 680. p 254 [Tort in the Business World]. [internet]). This principle could not apply because Best Built made available the flawed financial statements to the public in general and the prospective investors in particular, that is, including Carla. Carla may also opt to demand Best Built to buy back the shares which she purchased in order that she can recover her investments and avoid losing her lifetime savings. Iqbal, Best Built and vicarious liability The act of the subordinate is the act of the employer and the mischief of the servant is the mischief of the master. (Greenwood, Daniel J. H. Understanding Respondeat Superior. Hofstra Law. [internet]). That is the concept and principle of vicarious liability under common law although, generally speaking, this kind of a civil obligation actually arises out of the relationship of principal and agent. It is as if to say that the accessory follows the principal. In the case under consideration, Iqbal was an employee of Best Built Pty Ltd as its gardener. However, he was hired by Best Built on the side for the felling of trees to give way to the expansion of the company’s display area. Iqbal’s remuneration for the special job in removing the trees was to be separately paid after the work should have been completely done. It was while performing his task on this separate engagement for the removal of the trees that Iqbal trampled upon a nearby shop. It would mean that Iqbal was not then working as the regular gardener of Best Built when the misfortune took place. Seemingly, he was instead then working as a contractor of Best Built. As a matter of fact, he would rent or lease an equipment item for the purpose. Interestingly, he would also be allowed by Best Built to use the trucks of the company in transporting the fallen trees. There is a gray area in the instant case. There is no clear cut line to be drawn as to whether Iqbal was an employee or was an independent contractor of Best Built when the damage was caused unto the neighbouring shop. Still, Best Built was liable either way. At any rate, it might be given that Iqbal was an employee during that fateful day. If such presumption would hold, then Best Built could be vicariously liable under the circumstances. (McCarthy, Luke. VICARIOUS LIABILITY IN THE AGENCY CONTEXT. QUT Law & Justice Journal. [internet].). Within the ambit of that framework, the company, with Iqbal, could be jointly and severally liable to the shop owner. Upon the other hand, Iqbal might also be considered as an independent contractor when he destroyed the shop. Under the latter assumed relation though, Best Built would still be liable because it was fully aware that Iqbal did not have the skill to undertake the felling and cutting of trees. It was negligent in hiring Igbal for the work and was thus liable under the principle advanced by Lord Atkin for the care of neighbours. (Smellie, Richard. Understanding the negligence issues. Paper given to the IBC Conference March 2002. citing Donoghue v Stevenson. [internet]). One who knows or ought to know of a hazard that may cause damage or injury to another, like an expected visitor, has the duty to exercise care in that connection. (Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987) 162 CLR 479 (10 March 1987). High Court of Australia. [internet]). It must be observed that having control over the land where the trees were cut, Best Built could have foreseen the possible danger under the then prevailing circumstances and yet it negligently and imprudently did not attend to its duty to prevent the peril. (Adam, Andrew. Australia: "Occupiers Liability – Careless Or Inadvertent Plaintiff - Contributory Negligence": Skulander -V- Willoughby City Council [2007] NSWCA 116. Litigation, Mediation & Arbitration. mondaq. [internet]). BIBLIOGRAPHY Books and Articles Adam, Andrew. Australia: "Occupiers Liability – Careless Or Inadvertent Plaintiff - Contributory Negligence": Skulander -V- Willoughby City Council [2007] NSWCA 116. Litigation, Mediation & Arbitration. mondaq. [internet] Accessed January 16, 2010. Available at: < http://www.mondaq.com/australia/article.asp?articleid=49562> COMMON ECONOMIC TORTS. citing Caparo Industries plc v Dickman. LECTURE 6: LAW OF TORT. [internet]. Accessed January 8, 2010. Available at: http://www.ecolegal2001.com/bus.law.6.outline.2004.htm Greenwood, Daniel J. H. Understanding Respondeat Superior. Hofstra Law. [internet]. Accessed January 8, 2010. Available at: Latimer, Paul. Australian Business Law. 28th Edition. Citing San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [1986] HCA 680. p 254 [Tort in the Business World]. [internet] Accessed January 6, 2010. Available at: http://books.google.com.ph/books?id=gQTYUWzzCYoC&pg=PA254&lpg=PA254&dq=Alexander+v.+Cambridge+Credit+Corporation+Ltd+%28in+rec%29+[1987]&source=bl&ots=GeergVSk24&sig=CtimlJmTVtHapoN-WvVFYrKZYa8&hl=tl&ei=-y9ES5BPwY6RBfi3zawD&sa=X&oi=book_result&ct=result&resnum=7&ved=0CCYQ6AEwBg#v=onepage&q=Alexander%20v.%20Cambridge%20Credit%20Corporation%20Ltd%20%28in%20rec%29%20[1987]&f=false McCarthy, Luke. VICARIOUS LIABILITY IN THE AGENCY CONTEXT. QUT Law & Justice Journal. [internet]. Accessed January 7, 2010. Available at: . Smellie, Richard. Understanding the negligence issues. Paper given to the IBC Conference March 2002. citing Donoghue v Stevenson. [internet] Accessed January 8, 2010. Available at: THE TORT OF NEGLIGENCE. citing the cases of Donoghue v. Stevenson [1932] and (Hay (or Bourhill) v. Young [1943]. [internet] Accessed January 6, 2010. Available at: Cases Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; (1987) 162 CLR 479 (10 March 1987). High Court of Australia. [internet] Accessed January 16, 2010. Available at: < http://www.austlii.edu.au/au/cases/cth/high_ct/162clr479.html>. Hedley Byrne v. Heller. [House of Lords] [1964] AC 465) [internet] Accessed January 8, 2010. Available at: Legislation CIVIL LAW (WRONGS) ACT 2002 - SECT 42. Australian Capital Territory Consolidated Acts. [internet] Accessed January 6, 2009. Available at: Read More