Legal Services Commission South Australia: Negligence And Misstatement In Business Transactions Essay.

Case Study: The Sushi Bar Incident

Discuss About The Legal Services Commission South Australia.

In the provided case, Norm, a student was coming home from his lectures via his car in the evening. On the way, he had a thought to buy some food for him and he went to Yokohama Sushi Bar (Herein after referred as “Yokohama”) and purchased a packet of sushi from there. After that he started to eat the said sushi in the mid of his way. While eating the same, he felt a distinct taste and to check the matter he turned on the light of his car. He came to know that there was a dead cockroach in that pack of sushi and he had taken a part of it. Due to this incident he lost his control on his car and met an accident with car of another person named Paula. In this accident both norm and Paula got injured.

In addition to above when Ms. Edna, Norm’s mother seen his son injured that night, she got suffered from phobia towards sushi and cockroach as well in a management that she won’t be able to leave house.

As per the civil liability act of relevant jurisdiction, if a person becomes fail to show required amount of care, where it was his/her duty to do so, such acts term as “Negligence”.

There is some relationship in between person, where one of them is liable to perform his/her duty with due care as any ignorance of such person can affect the other one in a negative manner. This negligence can be intentional as well as unintentional (Australian Law Reform Commission, 2018). If a person who was obliges to follow his/her duty with proper responsibility, become fails to do so, he/ she have will be liable to pay compensation to other party of transaction.

The said rule of negligence comes under the purview of Law of Tort. This law has been developed to secure the interest of persons who are in fiduciary relationship with other person and get suffer from negligence of the another person. Further, section 1 of Law Reform (Contributory Negligence) Act, 1945 assert that if a person get suffered from any kind of damage partly for his/her own fault, the same shall be entitled to get part damages in form of compensation.

In Law of Tort, there are different types of damages. Such damages can be in the form of personal injury or property loss or psychiatric injury (Legal Services Commission of South Australia, 2018).  Similarly, in a case of psychiatric injury, there can be two types of victims which are categorized as “Primary Victims” and “Secondary Victims”.

Negligence and Law of Tort

Primary victims are the person is directly involved in an act, whereas secondary victims are the person who is not directly immediately involved in an act but witnesses such events. Both such victims are entitled to claim damages but for secondary victims there are some conditions stipulated in law of tort.

1. Such victims must have a bond of love and affection with primary
2. They must be self-witness of the relevant event.
3. They must get suffer from psychiatric injury.
4. Result of event in form of psychiatric injury must be quick and immediate.

 If such victim fulfills all the mentioned conditions, then only he/she will be entitled to get   mages in compensation (e-lawresources, 2018a).

In the case McLoughlin v O'Brian (1982) 2 WLR 982 it was declared that for secondary victims it is necessary to comes very soon upon scene,

In the studied case it was the liability of Yokohama to serve good quality food to it is customers. By handing over sushi which had dead cockroach, Yokohama neglected it is duty. Norm, after eating the said sushi, immediately fell ill. By this reason he lost control on his car and got injured in an accident. Here, Norm has suffered from personal injury. But along with this is also important to mention here that Norm has committed contributory negligence as he was eating sushi during driving.

Ms. Eden, on the other hand experienced psychiatric injury as soon as she saw her injured son in hospital and heard about the incident of bad quality food. A phobia has developed in her about sushi and cockroach. She became unable to even go to outside of house. In this situation, she will be called secondary victim against Yokohama.

As held in the case of McLoughlin v O'Brian, secondary victims must be informed immediately about the event, here in the given case Ms. Edna saw her son at night whereas accident has happened in evening. This time gap cannot be considered as “aftermath”.

Whereas, Paula met an accident with Norm’s car, he shall be treated as primary victim against Norm. Being a driver on road, it was the duty of Norm to drive carefully considering health and life of every other driver of that way. But here, Norm has neglected this duty by eating sushi while driving.

This case can be concluded as Mr. Norm is entitled to claim partial compensation from Yokohama as he done contributory negligence by eating sushi while driving. Ms. Edna is not authorized to demand compensation for Yokohama as she did not meet out with the required criteria to make a claim being secondary victim. Further, Paula will be entitled to sue Norm for negligent conducted by him while driving.

Types of Damages in Law of Tort

Max wanted to purchase a restaurant Parramatta and he found a Lebanese restaurant named “Kebabs Galore” for sale. Max did not know anything about restaurant industry so he went to his friend jack who was already the owner of a successful restaurant business in the same locality. Jack advised Max to purchase that restaurant and said that it is almost guaranteed to earn profit from that restaurant even in first year of purchase. Max purchased “Kebabs Galore” with his brother Cameron. But after that restaurant did not work well for Max and Cameron and they faced a situation of bankruptcy after a year of purchasing of that restaurant.

Where a person enters into a contract or transaction on the basis of another person’s advice or statement, and later on faced loss then such advisor shall be liable for such loss subject to some conditions. Such false statement must be about law or facts.  In case where statement made was neither about facts nor law, but was only general advice or opinion, intention and availability of information with advisor decides his/her liability (e-lawresources, 2018b).

It was held in the case of Bisset v Wilkinson  [1927] AC 177 that if any person generally advises without having professional knowledge and without knowing the facts in actual to other person, such advisor shall not be held liable for loss accrued to other person. An innocent misstatement does not attract any liability.

Further, as per the case Smith v Land and House Property Corp (1884) 28 Ch D 7 if a person make a misstatement knowing the actual fact, such misstatement termed as “Fraudulent misstatement” and the person who made such statement becomes liable for loss of another cause of such misstatement.

In conjunction to above, one more type of misstatement is there, where a person has proper base to believe upon something and by the reason of that belief he /she provide advice to others without any fraudulent intention. Such misstatement is known as “Negligent Misstatement” (Stephen Wawn, 2018).

In the case Howard Marine v Ogden [1978] QB 574, it was held that if a person cannot have correct and accurate information about something, he/she can believe on the information that is available with his/her.

In t given case, jack advised to Max to purchase Kebabs Galore. He did not make any misstatement about law or fact. He generally advised to Max and he was also not aware about the popularity and profitability of said restaurant. As according to case Bisset v Wilkinson  he made an innocent misstatement as he had no malafide intention behind giving such advice.

Similar to case Howard Marine v Ogden , jack had believed about a sound condition of Kebabs Galore and for this reason he advised to Max. Here, Jack did not make any false statement knowing the corrected one alike the case Smith v Land and House Property Cor.

But in this case as jack also had a restaurant in the same locality, he should be aware about the circumstances of relevant industry. Here Although Max asked for advice to jack for free, he was expecting a professional device rather than general. It was the duty of Jack to advice carefully after a proper research but he failed to do so (Rowberry Morris Solicitors, 2018). 

Conclusion

After the detailed study of provided case, it can be concluded as that Jack has made negligent misstatement by advising Max to purchase Kebabs Galore. As on the basis of his advice Max along with his brother purchased that restaurant and faced heavy loss, they can initiate action against him.

Here jack can claim the remedy available in cases of negligence misstatement and can say in defense that he was not aware with the facts.  But as jack had professional skills in restaurant sector, he was expected to advise wisely after a required research, which he has not done so his defense would not be an appropriate one.

References

Australian Law Reform Commission. (2018) business-law. [online] Available from: https://www.alrc.gov.au/publications/7-fault/negligence[Accessed on 17/05/18]

Bisset v Wilkinson  [1927] AC 177 

e-lawresources. (2018a) Negligently inflicted psychiatric injury. [online] Available from: https://e-lawresources.co.uk/Negligently-inflicted-psychiatric-harm.php[Accessed on 17/05/18]

e-lawresources. (2018b) Misrepresantation [online] Available from: https://e-lawresources.co.uk/Misrepresentation.php [Accessed on 18/05/18]

Howard Marine v Ogden [1978] QB 574

Law Reform (Contributory Negligence) Act, 1945

Legal Services Commission of South Australia. (2018) Negligence. [online] Available from: https://www.lawhandbook.sa.gov.au/ch01s05.php[Accessed on 17/05/18]

McLoughlin v O'Brian (1982) 2 WLR 982

Rowberry Morris Solicitors. (2018) The perils of giving (and receiving) advice to friends [online] Available from: https://www.rowberrymorris.co.uk/site/library/rowberry_morris_news/the-perils-of-giving-and-receiving-advice-to-friends [Accessed on 18/05/18]

Smith v Land and House Property Corp (1884) 28 Ch D 7

Stephen Wawn & Assocaites. (2018) Pure economic loss caused by Negligent Misstatement and the Duty of Care [online] Available from: https://www.stephenwawn.com.au/commercial-law-litigation-disputes/pure-economic-loss-caused-by-negligent-misstatement-and-the-duty-of-care/ [Accessed on 18/05/18]