Ellen

Issue 1: Claim against the council

Ellen is a graduate of The College of Alternative Medicine and was looking to start her own business in recent past. She decidedto open a meditation studio and looked around the inner city suburb of Paddington for suitable premises. She eventually found a terrace house near Oxford Street, Sydney, NSW. The owner of the premises was willing to enter in a 12-month lease, however, Ellen waited for a week so that she could check with the local council as to the suitability of her business. Followed on, Ellen went to the council office and identified the counter marked as “Business Inquiries”. She asked several questions to the attended council employee including a question about building work in the area. She asked:“my meditation studio requires a calm environment. Is there anything that could cause noise near by?”.The council officer was called away before being able to answer. Upon return the officer had a very quick look at the computer and replied to Ellen that:“relax everything will be fine”. After gathering together the council information, Ellen then signed upthe lease on the next day. But, within two weeks of the opening of the meditation studio,she found that some builders’ men were started workingnext door. She asked one of the builders as to how long they would be working. The worker replied in that “It’s a big job, a total renovation. It should take at least 6 months”. Although Ellen tried to run her meditation studio,but the noise from the building was too stressful. Clients were not happy. After a month into the lease, Ellen was so stressed by the development of construction noises from next door which resulted in a nervous disorder to her. This gave rise a threat to her career in alternative medicine.Ellen even reduced the operating hours of her meditation studio to avoid the construction noises. This reduction ultimately resulted in financial distress which caused her falling behind in paying rent for the premise.

Required: Based on the above you are required to write a case study report . In your demonstration, not least, you must answer the following questions:

·Issue 1: Explain critically as to whether Ellen hasa claim against the council in relation to the advice she had received.

·Issue 2: Has there been a breach of contract between Ellen and the Landlord for non-payment of rent?

·Issue 3: Has there been a negligent misstatement by the Council worker?

Ellen is a medicine student and intends to start her own meditation centre.  She finalized a terrace house and before making any lease she consulted the local council to enquire on the suitability of the premises. The enquiry submitted at the council comes to be false causing damage to Ellen. There are few issues that are raised based on the brief above and are analyzed herein under.

Whether the council owns any duty of care against Ellen?

In Donoghue v. Stevenson [1932] the law of negligence was evolved imposing a legal duty on the defendant to protect the plaintiffs from his acts/omissions. The duty is not only related to act/omission but also to any kind of statements or representations that are made by the defendant. In Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] it was held that if any statement is made by the defendant whom he must convey in such manner so that no damage is caused to the plaintiff but loss is caused to the plaintiff because of such misstatement, then, it is an act of negligent mis-statement.

The legal duty is imposed on the defendant provided: (Plunkett 2018)

1. The plaintiff is in the proximate and close relationship with the defendant. If the acts/omissions or statement made by the defendant will hamper the plaintiff directly then the relationship is proximate and is held in Bryan v Maloney (1995).
2. That the defendant can reasonably foresee the plaintiff.
3. That the defendant and the plaintiff share a special relationship amid themselves. In San Sebastian Pty Ltd V Minister Adminstering The Enviromental Planning And Assessment Act (1986) it was held that when the defendant is aware that the plaintiff is relying on the statement that are made by him, then, the defendant is at a dominant position and must make sure that no statement must be made by him which might cause damage to the plaintiff as there is a relationship of trust and reliance amid the parties. (Hocking 1999)

Ellen visited the council to enquire whether the premises taken by her are adequate for her purpose. The employee present on the business inquiries desk was dealing with Ellen.

Now, it is submitted that the employee owns a duty of care against Ellen because:

1. They both share a special relationship. The employee is aware that Ellen is relying on the statements that are made by him before making any lease. Thus, he is obligated under law to make statements in such amen so that no loss is caused to Ellen
2. Ellen is in proximate relationship with the employee as any statement made by the employee will hamper Ellen directly;
3. The employee can reasonably foresee the presence of Ellen.

Thus, the employee owns a duty of care against Ellen.

Whether the duty is violated by the employee?

Every employee upon whom the duty of care is imposed relating to the statements that are made by him is not carried out properly then there is violation of the duty. In Cole V South Tweed Rugby League Football Club Ltd (2004) it was held that the duty is breached when the adequate level of care that is expected from the defendant is not cater, then, there is breach of duty.

The duty of care that is imposed on the employee is not met by him. This is because when he was answering to the queries of Ellen, then, at that time he was called away and later he just had a glimpse on the computer and assured Ellen that there are no worries. It is submitted that Ellen has specifically asked as whether the area is suitable for her meditation centre. Thus, considering the requirements of Ellen, the employee has not acted in the diligent manner as required in the given situation. Thus, the level of care falls short.

Issue 2: Breach of contract for non-payment of rent

So, there is breach of duty of care.

Whether damage is caused to Ellen?

When the duty is violated by the defendant, then, it is necessary that loss is caused to the plaintiff. The damage comes within the preview of negligent mis-statement when the loss is caused to the plaintiff is reasonably anticipated and is not remote and is held in Shaddock& Associates Pty Ltd V Parramatta City Council [1981]. Also, the loss that is caused to the plaintiff should be because of the cause of the defendants negligent statements and is held in Lindeman Ltd V Colvin [1946].

Now, the employee was found to be in breach of his duty. After 6 months of sighing the lease there was construction work started that will carried out for next 6 months. Because of the said work there are damages that are suffered by Ellen:

1. Ellen losses business because of the noise that is incurred because of the construction work. This loss is not remote and can be easily anticipated by the employee. So, the employee is liable for the loss;
2. Ellen also suffers from mental breakdown. This loss is not caused because of the breach on the part of the employee and thus is remote and the employee is not answerable for the same;
3. Ellen was not able to pay her rent, but, this loss is alos very remote and the employee is not liable for the same.

Whether the employee can be held liable for negligent misstatement?

Thus, when the duty of care on the defendant to make the statements accurate are not met as per the required level and such breach caused loss to the plaintiff, then, the defendant is held liable for negligent misstatement. (Hocking 1999)

Thus, a duty of care is imposed on the employee who was not adequate met by him causing harm to Ellen, thus, the employee is liable for causing negligent misstatement.

Can Ellen sue the council for the loss that is caused to her because of the negligent misstatements by the employee?

Any employer is held to be liable for the actions of his employee provided the actions that are undertaken by the employee are carried by him within his employment course and are within the directions and commands of the employer and is held in Hollis v Vabu [2001]. If any loss is caused to an outsider by the employee fir the acts which are carried by him in his individual capacity and not under the business and under the commands of the employer then the employer is not liable for the same and is held in Ready Mixed Concrete (South East)  v Ministry of Pensions & National Insurance (1968). This shift of liability from the employee to the employer exists under the law of vicarious liability. (Giliker 2010)

Now,

The council employee who has given advice to Ellen was working with the local council. Thus, there is a relationship of an employer and employee that exist amid the two. While furnishing his employment duties, the council employee has given advice to Ellen. The advice was given to Ellen within the directions and authority that is furnished to the employee by the local council. Because of the advice that is given by the employee to Ellen, loss is caused to Ellen. This loss I caused because of the advice that is given by the employee within the his authority.

So, by applying the law of vicarious liability, it is submitted that the local council will be held liable for the acts of the employee and which has caused loss to Ellen.

Thus, Ellen can sue the council under the law of vicarious liability.

Can the landlord sue Ellen for the non-payment of rent as per the lease agreement?

A contract is made amid two parties wherein they are obligated to comply with the contract terms. The terms which are decided by the parties themselves are express and the terms which are made part of the contract by implication of custom, law, and trade are implied terms. Now, in any contract the terms which are essential for the performance of contract are called conditions, without conditions the contract will losses its existence and are thus is considered as its roots and is held in Poussard v Spiers and Pond (1876). Any non-compliance of condition will result in contract termination and claim of damages. But, when the terms which are not contract essentials and if not performed will not result in contract termination are warranties and is held in Bettini v Gye (1876) only damages can be claimed.

Because of the loss in the business, Ellen is not able to pay the rent to the landlord. The payment of rent is very essential term in lease agreement and is thus a condition. Since this essential term is breached by Ellen then landlord can sue Ellen and terminate the agreement and seek damages.

References

Books/Articles/Journals

 Hocking, B 1999, Liability for Negligent Words, Federation Press.

Giliker, P 2010, Vicarious Liability in Tort: A Comparative Perspective, Cambridge University Press.

Plunkett, J 2018, The Duty of Care in Negligence, Bloomsbury Publishing.

Case laws

Bettini v Gye (1876)

Bryan v Maloney (1995).

Cole V South Tweed Rugby League Football Club Ltd (2004)

Donoghue v. Stevenson [1932].

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964].

Hollis v Vabu [2001];

Lindeman Ltd V Colvin [1946] 

Poussard v Spiers and Pond (1876);

Ready Mixed Concrete (South East)  v Ministry of Pensions & National Insurance (1968)

Shaddock& Associates Pty Ltd V Parramatta City Council [1981] 

San Sebastian Pty Ltd V Minister Adminstering The Enviromental Planning And Assessment Act (1986).