Mr Loaded and Controle's liability.

Although Mr Loaded is vicariously liable, Controle is a tortfeasor and is liable to pay

a contribution to Mr Loaded under s.1(1)of the Civil Liability(Contribution ) Act

1978. Alternatively, Control’s “primary liability” could give rise to an action in

negligence, and in light of his recent wealth may be an alternative course for the

injured party.

Inker’s Liability

Pre 1963, no liability existed for misstatements unless a fiduciary relationship existed. ( Nocton v Lord Ashburton) or deceit was involved (Derry v Peek).

The case of (Hedley Byrne v Heller & Partners) expanded that liability via the definition of relationship. “Special relationships”, the House said, existed when (1) the claimant relied on the defendant’s skill and judgement or his ability to make careful enquiry (2) the defendant knew, or ought reasonably to have known, that the claimant was relying on him (3) it was reasonable in the circumstances for the claimant to rely on the defendant. In (Caparo v Dickman) Lord Bridge stated that in order for a duty to arise, it was necessary to show that the defendant knew his statement would be communicated to an individual or a member of a specified class in connection with a transaction of a particular kind and that the plaintiff would more than likely rely on this whether or not to enter into a transaction.

These requirements were interpreted in (Henderson v Merrett Syndicates) with emphasis on the notion of “assumed responsibility” and subsequent reasonable reliance by the claimant, irrespective of contract, giving rise to a duty.

In conclusion, duty arises where (1) the statement was made for a specific purpose (Mutual Life & Citizens Assurance Co.Ltd v Evatt) (2) the class of the claimant was particular (3) the defendant had knowledge or ought reasonably to have had knowledge that the claimant would rely on the statement (Esso Petroleum Co. Ltd v Mardon) and (4) the claimant reasonably relied on the statement (McNaughton Papers Group v Hicks Anderson).

In Sellit’s position, they could rely on points 1 and 2, but fail on points 3 and 4. Could they argue Inker had known they would rely on his reference alone? Furthermore, were they entitled to rely on this reference alone? (South Australia Asset Management Corporation v York Montague Ltd). It seems not. Sellit could easily have obtained another reference to support Inker’s opinion and could not argue reasonable reliance in light of the clear disclaimer. Inker therefore carries no liability. If this disclaimer had arisen within contractual circumstances, the test of reasonableness, provided for by s11 of the Unfair Contract Terms Act 1977 would have come into effect.

Kay’s and Sellit Plc’s Liability

Kay has given “careless” financial advice to Rummey which, has resulted in economic loss. The general rule is that “pure economic loss” is not recoverable,

(Cattle v Stockton Waterworks Co). However, applying the aforementioned principles, we can conclude that (1) advice was given to Rummey for a specific purpose, (although Kay may argue that her advice was of a general nature and was not to be relied on for the specific purposes that Rummey used it ( Al Saudi Banque v Clarke Pixley), (2) Rummey was a particular person to whom the advice was given and not a member of a larger class (3) Kay knew, or ought reasonably to have known that Rummey would rely on the advice, (this would not be reasonable if said “off the cuff ” on a social occasion) and (4) Rummey reasonably relied on Kay’s advice, there being a fiduciary relationship.

However, Kay is an employee of Sellit  and as she satisfies the tripartite vicarious

test as mentioned previously, Sellit  would  be vicariously liable for Kay’s tortious

act.

Kay has given financial advice to Controle, who approached her specifically for that

purpose, the following of which  has resulted in economic loss. It was held

in (Chaudhry v Prabhakar) that a gratuitous agent offering to buy a second-hand

car for another owed  a duty of care to exercise the degree of care and skill which

could be reasonably expected of him in all the circumstances, that degree of

care and skill being objective.

Controle is relying on special knowledge which Kay possesses, her assumed

responsibility has been voluntarily undertaken and she has created a special

relationship to which the law (Hillingdon London Borough Council), not Kay,

attaches a duty to carry out carefully (White v Jones).

If Kay chooses to act, and does so negligently, then the law deems her liable.

She could not argue that the advice was “off the cuff”, as she has directed Controle

towards investing in a particular company. It must be noted however, that if this

advice was not given in the course of her employment, then Sellit would not be

vicariously liable.  Kay would be on a “frolic of her own”, which would be no

consolation to Controle, as recovering his lost investment would be a fruitless cause.

Josh and Brandon’s Nervous Shock

“Nervous shock” involves sudden appreciation by sight or sound of a horrifying event,  violently agitating the mind.” Simple emotions such as distress or grief would usually fall outside the ambit. In the case of (McLoughlin v O’Brian) it was reasoned that liability for psychiatric harm should be based on a test of foreseeability. However, in the case of (Alcock v Chief Constable of South Yorkshire) the House rejected a single test based on foreseeability. Consequently, victims fall into two categories, namely “primary” or “secondary.” Primary victims are unwilling participants in events causing shock, whereas secondary victims are merely passive, unwilling witnesses.

Primary victims, of which there are three types, will recover where shock was reasonably foreseeable, a proximate relationship established. However, if personal injury was foreseeable then the accompanying psychiatric harm needs not be proved to have been foreseeable (Page v Smith).

Secondary victims face stricter criteria and to recover must show (1) their relationship to the victim was sufficiently proximate that it was reasonably foreseeable that he might suffer shock if he apprehended injury to the victim, (2) he was temporally and spatially close to the scene of the accident or its immediate aftermath; and (3) suffered shock through sight or hearing of the accident or its immediate aftermath.

The secondary victim must show that he had a relationship of “love and affection” with the primary victim. Brothers do not have the benefit of this presumption, therefore Josh would have to prove the closeness of his emotional bond.

The fact that economic loss is not a “horrifying” event possible of causing

personal injury or psychiatric harm, Josh and Brandon would fail to recover.

Even if the event was “horrifying”, they were not close to it and did not see

or hear it ,or its aftermath, but rather heard about it  second- hand.

 

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