A Case for Tort: Miss Norris and Reliable Surveys - Essay Example

1 Order No. 205849 In the case at bar, Mr. Bright is about to suffer pecuniary loss the moment he sells his property, a house and lot, in Devon, New England. Bought a year ago at the price of £125, 000, the property now fetches a mere £95, 000, or £30, 000 pounds less notwithstanding that there is a prevailing general boom in real estate in Devon. The reason, according to the narration of facts, is that a structural defect has been discovered in the back wall of the house as well as the dilapidating condition of the gutters which is causing the dampening of the wall. These particular structural conditions are quite visible to the naked eye and were, in fact, already noticed by Mr. Bright when he moved in to the house. Mr. Bright brought the property through Devon Aspects, an estate agent, upon the advice of his solicitors KPG Solicitors who in turn hired Reliable Surveys to do the structural survey of the property. Reliable Surveys assigned the actual task of surveying to Miss Norris, a newly-licensed surveyor. The issue in this case is whether or not Mr. Bright is compensable for his loss in the event he sells his Devon property at its present market value. If he is, the subsequent underlying issue is from whom he shall recover and what kind of action shall he bring before the court. At this stage however, recovery is a purely hypothetical matter since Mr. Bright has not yet sold his property and hence, has not yet actually incurred a loss. After a careful perusal and analysis of the problem, taking into account the participation of each and every person and entity involved, the Reliable Surveys stands as the most viable party from whom a civil action for recovery of compensation under the case Hedley Byrne v. Heller will be most successful in the event of the actuality of such loss. 2 A Case for Tort: Miss Norris and Reliable Surveys In the case at bar, Miss Norris, the neophyte surveyor of Reliable Surveys is the raison d’etre of Mr. Bright’s present predicament. Her haphazard and lackadaisical examination of the Devon property caused her to miss the crack on the back wall of the aforesaid house and the evident defect in the elevation from the back angle as well as the dilapidating gutter. Neither did the management of Reliable Surveys subject Miss Norris’ findings to a review and the basis of her findings which described the property as “good and sound” in her report signed on behalf of the former. There is a characteristic negligence on the part of both Miss Norris and her employer in the performance of their obligation. It is only reasonable to consider filing an action against Miss Norris and her employer Reliable Surveys since they are the author of the recommendation –Miss Norris because she was tasked with the actual survey and wrote the report herself and Reliable Surveys, under the doctrine of command responsibility, which should have made sure that its employee was performing her task properly. However, since there was no contract between Mr. Bright and Reliable Surveys then a breach of contact will not lie against the said party. The only other alternative is an action of tort. Whether or not an action of tort will lie against Reliable Surveys is the problem at hand. Tort is defined in the book “Tort Law” as the “failure to meet the standard (of behavior) which causes injury to someone else and allows the victim to seek a remedy from the courts for the defendant’s failure; in other words because the defendant was at fault, the defendant must pay” (Hodge 2004). The book Business Law on the other hand, defined tort as “a wrongful act against an individual or body corporate and his, her or its property, which gives rise to a civil 3 action (usually for damages, although other remedies are available). Principally, liability is based on fault, although there are exceptions to this, for example, breach of statutory duty, vicarious liability and the tort established in Rylands v. Fletcher (1865)” (Kelly, David & Flanders 2005). The aforesaid case, for the purpose of this discussion, is simply about the imposition of strict liability upon party who used a thing in a non-natural way by keeping or collecting it in his land, and the said thing caused damage on another when such thing escaped out of his land. In the case at bar, Reliable Surveys is guilty of “failure to meet the standard of duty” that is required of their profession as surveyors to determine the structural soundness of the Devon property. This failure amounted to professional negligence which is the reason why Mr. Bright is about to suffer an injury in the form of pecuniary loss. However, whether bringing a civil action based on tort against the survey group is the most viable option for Mr. Bright will depend on whether his case meets all the elements of tortious negligence in accordance with prevailing UK case law. Tort through negligence has several elements: duty of care; foreseeability or proximity; and economic loss. The two landmark cases concerning the duty of care are Donoghue v. Stevenson [1932 AC 562] and Anns v. Merton LBC [1977 UKHL 1299]. The former case was about a woman who bought a sealed bottle of ginger beer, drank some of it straight from the bottle and poured the rest on a glass. She was flabbergasted when she saw that a rotting snail was sitting at the bottom of the glass from out of the bottle. This sent her to a nervous shock aside from an acute gastroenteritis. It was held that a manufacturer of products has a duty of care towards consumers upon whom his goods and products will ultimately land regardless the absence of a contractual obligation. In the latter case, the Merton London Borough Council (LBC for brevity) was at the 4 receiving end of a suit filed by the lessees of a building which had suffered structural defects as a consequence of the faulty laying of the foundation shorter by a few inches deep than what had been stated in the approved plan. The Merton LBC was the approving agency and had the prerogative to inspect construction sites to ensure that plans were strictly followed. In this case, it never did. It was held that the approving agency had the duty of care to the plaintiffs to inspect the foundation and ensure that the plans were followed and that their failure to do so had exposed the plaintiffs to danger and pecuniary loss. Anent the elements of foreseeability and proximity, these were eloquently enunciated in the Donoghue case by Lord Atkin and is more familiarly known as the “neighbor principle” and states that: “You must take reasonable care to avoid acts or omissions which you can reasonably foresee are likely to injure your neighbor. Who then, in law, is my neighbor? The answer seems to be – persons who are so closely and directly affected by my act that I ought to reasonably have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called into questions” (Donoghue v Merton LBC 1932). In the Anns case two stages were used to determine duty of care: the first stage seeks to establish the proximity or foreseeability between claimant and defendant and the second stage, seeks to resolve whether there is an existing public policy that will prevent the assumption of the said duty of care. Initially, it would seem that Mr. Bright has an easy case using the legal doctrines enunciated in the aforecited cases. Subsequently however, the House of Lords decided a string of cases which not only modified the Anns case but seemed to have rendered its ruling erroneous. This started with the case of Peabody Donation Fund Governors v Sir Lindsay Parkinson & Co. Ltd [1985 AAC 210], then the Caparo PLC v. Dickman [1990 2 AC 605] and finally, as the icing 5 on the cake, the Murphy v. Brentwood [1991] UKHL 2 (26 July 1990).These cases would change the complexion and the course that the present case will take. The case of Peabody Donation Fund Governors v Sir Lindsay Parkinson & Co. Ltd [1985 AAC 210] is very similar in all respect to the Anns case. In this case, the Peabody Donation Fund built a housing project in the London Borough of Lambeth. The construction required some kind of terracing and vertical drainage. During the actual installation, the trainee architect on site and the Lambeth Borough representative decided to change the actual plan without informing their principals. Eventually, it was discovered that the changed caused a general failure and the pipes had to be replaced. This procedure delayed the project for three years and an additional cost of £118, 000. Peabody filed appropriate actions. The HL in finding for Peabody nevertheless modified the earlier cases by enunciating that: “So in determining whether or not a duty of care of particular scope was incumbent upon a defendant it is material to take into consideration whether it is just and reasonable that it should be so” (1985). In other words, duty of care is not determinable alone by proximity, foreseeability and the absence or presence of a public policy preventing assumption of duty of care but also by if it just and reasonable under the circumstances. The case of Caparo Industries PLS v. Dickman [1990] 2 AC 605, firmly established the three stage test to determine duty of care. Dickman was an accountancy firm and Fidelity Public Limited Company, engaged in the manufacture and sale of electrical gadgets, was their client. As early as March 1983, Fidelity’s profit was announced to have fallen short of the expected profits. As a result, its quoted price in the London Stock Exchange went down considerably. This fact however did not appear in the accounting report done by Dickman for Fidelity which report was 6 relied upon by Caparo when it purchased and gradually acquired all of Fidelity’s shares. When they found out the real financial state that Fidelity was in, an action was filed. The HL held that the accountancy firm did not owe any duty of care to Caparo. Lord Bridge said, “It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless […] Assuming for the purpose of the argument that the relationship between the auditor of a company and individual shareholders is of sufficient proximity to give rise to a duty of care, I do not understand how the scope of that duty can possibly extend beyond the protection of any individual shareholders from the losses in the value of the shares which he holds” (1990). The implication of the Caparo case is that the presence of proximity and foreseeability is not enough to establish duty of care. There is an added requirement occasioned by this case which is to determine if the scope of duty includes that of the case at hand, in other words, if the imposition of duty is reasonable and just. In the Murphy v. Brentwood District Council [1991] UKHL 2 (26 July 1990) case, ABC Homes constructed a housing system with 160 units. Units 36 and 38 were constructed over filled ground. Under standard procedure, the plan was reviewable by the Brentwood District Council. The council referred the plan to a private consulting engineer, the Messrs. Meyers and Partners who recommended approval of the plan. Some years later however, the occupants of the units observed that the walls were starting to crack along with some other evident structural defects. The occupant of Unit 38 sold the property at £30, 000.00, £35, 000 short of its present market value sans the damage. He sued the Brentwood District Council for damages. Lord Keith said: “in the case of a building, it is right to accept that a careless builder is liable, on the 7 principle of Donoghue v Stevenson, where a latent defect results in physical injury to anyone, whether owner, occupier, visitor or passer-by, or to the property of such person. But the principle is not apt to bring home liability towards an occupier who knows the full extent of the defect yet continues to occupy the building” Moreover, “liability under the Anns decision is postulated upon the existence of a present or imminent danger to health or safety. But considering that the loss involved in incurring expenditure to avert the danger is purely economic loss, there would seem to be no logic in confining the remedy to cases where such danger exists” (1998). The implication in the Murphy case is that first, there must be injury either to the person claiming damages or to his property, and; second, that loss sustained by diminution of the value of the property is pure economic loss. In the case at bar, Mr. Bright did not sustain any injury as a result of the structural defects of the property and the defect on the property was not subsequent but prior to his purchase of the property. He sustained economic loss because the present price of the property is lower than the purchase price a year ago because of the existence of the structural defects. Whether his loss is pure economic loss or not is the issue at this stage. According to the article “Pure Economic Loss in Europe,” pure economic loss is “loss without antecedent harm to plaintiff’s person or property. Here the word ‘pure’ plays a central role, for if there is economic loss that is connected to the slightest damage to person or property of the plaintiff” (Bussani & Vernon 2003) then it is not considered pure economic loss. From the facts of the case, it is obvious that Mr. Bright suffered a “pure economic loss” considering that the loss did not materialise as a result of a physical injury caused by the structural damage to the property. As a matter of fact, he knew from the time he moved in that there was already a structural defect of the house. Neither did a subsequent injury to his or 8 another property occurred. The loss was purely sustained by Mr. Bright’s pockets. The implication is that these precedents would preclude recovery by Mr. Bright. At this stage, it is important to inquire whether there are pertinent cases that would pose as exceptions to the legal doctrines of Murphy v. Brentwood et al. A scrutiny of the cases of Hedley Byrne & Co Ltd v Heller & Partners Limited [1964] AC 464 and Henderson v Merrett Syndicate Ltd and other [1994] 3 WLR 761 is therefore critical. In the Hedley Byrne v Heller case, the appellants relied upon the reference made by the Appellee to enter into a contract with a party for advertising purposes. Hedley Berne which is an advertising firm requested its own bank to correspond twice with Heller & Partners, the banker of a potential client the Easipower Limited, to inquire as to the financial standing of the latter so that they can gauge the viability of accepting hefty advertising orders for print and television from the latter. The Appellee made a favorable recommendation and on its strength Hedley Byrne accepted the orders of Easipower. Easipower subsequently went liquid and as a consequence Hedley lost £17, 000.00. The latter sued Heller for damages. Although the decision unanimously held the dismissal of the appeal in favor the bankers, the dismissal was largely based on the fact that they previously made a disclaimer not to assume any responsibility for their recommendation. A material point however of the decision is the part where the court held that there could be a liability when a party made a negligent recommendation and the other relied upon it. Lord Reid said “…it may well be to dispose of an argument that there was no sufficiently close relationship between these parties to give rise to any duty […] I would reject that argument. They knew that the inquiry was in connection with an advertising contract, and it was at least probable that it was wanted by the advertising contractors. […] I shall therefore treat 9 this as if it were a case where a negligent misrepresentation is made directly to the person seeking information, opinion, or advice…” The said case established that the duty of care existed when “one party seeking information or advice was trusting the other to exercise such a degree of care as circumstances required, where it was reasonable for him to do that, and where the other party gave the information or advice when he knew or ought to have known the enquirer was relying upon him” (qtd Kelly & Hayward 2005). Under the aforecited case, pure economic loss is recoverable in an action for tort once it is established that there is a special relationship between the claimant and the respondent. The special relationship is one where one party holds himself as an expert in a field or has a specialised knowledge and knows that any information he will issue relating to that field of knowledge will be relied upon by the party. Professionals like “lawyers, accountants, bankers, surveyors” and others obviously come within the ambit of the term (Kelly & Hayward 2005). In the case at bar, Reliable Surveys is a group of professionals whose expertise is in the field of surveying and determination of the structural integrity of buildings and as such they are presumed to be authorities and their word reliable. As a matter of fact, Mr. Bright did rely on Reliable Surveys’ recommendation and bought the Devon property. This reliance is fairly reasonable considering that Reliable Surveys is an expert. The fact that Reliable Surveys was contracted by KPG Solicitors in a professional capacity should have forewarned them that their recommendation will be used as reference and any negligence on their part will injure another person. In the case of Hedley Berne, the advertising firm and Heller never met or communicated but the court considered that a sufficient proximity of relationship existed between them. 10 Works Cited Anns v. Merton LBC [1977 UKHL 1299]. http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKHL/1977/4.html&query=title+(+Anns+)+and+title+(+v+)+and+title+(+Merton+)&method=boolean Bussani, Mauro & Palmer, Vernon Valentine. The Notion of Pure Economic Loss and its Settings. Pure Economic Loss in Europe. Mauro Bussani & Vernon Palmer (eds). Cambridge University Press. 2003, p 5 Caparo Industries plc v Dickman and others [1990] 2 AC 605. http://www.bailii.org/cgi- bin/markup.cgi?doc=/uk/cases/UKHL/1990/2.html&query=title+(+Caparo+)+and+title+(+v.+)+ and+title+(+Dickman+)&method=boolean Donoghue v. Stevenson [1932 AC 562]. http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKHL/1931/3.html&query=title+(+Donoghue+)+and+title+(+v+)+and+title+(+Stevenson+)&method=boolean Hedley Byrne & Co Ltd v Heller [1964] AC 464. http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKHL/1963/4.html&query=title+(+Byrne+)+and+title+(+v+)+and+title+(+Heller+)&method=boolean Hodge, Sue. Tort Law. Willan Publishing, 2004, pp. 137. Kelly, David, & Holmes, Ann & Hayward, Ruth. Business Law, Fourth Edition   Cavendish Publishing, pp 252, 242-243 11 Murphy v. Brentwood District Council [1991] UKHL 2 (26 July 1990). http://www.bailii.org/cgi-bin/sino_search_1.cgi?sort=rank&datehigh=&query=title%20(%20Murphy%20)%20and%20title%20(%20v%20)%20and%20title%20(%20Brentwood%20)&method=boolean&highlight=1&datelow=&mask_path=/eu/cases%20/ew/cases%20/ie/cases%20/nie/cases%20/scot/cases%20/uk/cases Peabody Donation Fund Governors v Sir Lindsay Parkinson & Co. Ltd [1985 AAC 210]. http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKHL/1983/5.html&query=title+(+Governors+)+and+title+(+v+)+and+title+(+Parkinson+)&method=boolean Rylands v. Fletcher [1868 UKHL 1] http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKHL/1868/1.html&query=title+(+Rylands+)+and+title+(+v.+)+and+title+(+Fletcher+)&method=boolean Read More