Issue of the tort of negligence
The problem-solving question addresses the issue of the tort of negligence. What is tort then? Winfield states, “Tortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages.” From this we can derive the three elements to be proved by the plaintiff to bring a successful claim. Firstly, a duty of care owed by the defendant to the plaintiff has to be proved. Secondly, the defendant had to be in breach of that duty. Finally, the plaintiff must prove that the damage or loss is caused by the defendant's breach of duty, given that the breach is not too remote from the damage or loss.
Advice To Tom
In this case, Tom, the plaintiff, bought the luxury yacht with the £100,000 loan from the bank. It is said that Tom relied upon Ken's report in deciding to purchase the yacht from Jan. The bank and Tom relied on Ken's report to grant the loan and buy the yacht respectively.
Lord Atkin in Donahue v Stevenson stated, “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.” Although Tom and the defendant Kent do not have a direct relationship, they are still closely connected through the bank. As a matter of fact, Ken's job in this case was to check the yacht carefully. Tom trusted Ken. In Hedley Byrne, Lord Reid suggested that a special (fiduciary) relationship of trust and confidence is established when one party seeks and relies on the information or advice the other party provide to carry out certain actions. The other party has to know that the inquirer would reply on his advice. Therefore, applying to this context, the defendant owed a duty of care to the plaintiff.
Now we know there was a duty of care. The problem we have here is whether Ken breached it. In this particular case, we have assumed that Ken has an expert skill or knowledge in examining yacht since the bank instructed him, a yacht surveyor, to carry out the check. The law would expect him to possess the skill that a competent yacht surveyor should have when exercising his duty. Apparently, Ken failed to do so, as he negligently checked the yacht and missed out several severe defects. He did not meet the standard of a reasonable yacht surveyor. Hence he was in breach of the duty.
Furthermore, we need to consider the causation of the damage. We have to prove that the defendant's breach actually causes the harm to ascertain the liability of the defendant. The ‘but for' test can be introduced to assess the situation. Since Tom negligently steered the yacht into the harbour wall, it might seem that the crash would have happened anyway ‘but for' the negligence of the defendant, Ken. However, if the defendant did not make a false report, the likelihood of Tom buying the yacht would drop dramatically. The probability of the crash would be lowered accordingly. Tom might be able to claim for compensation for the repairing costs from Ken, but I could imagine that the amount would not be full compensation of £20,000, as Tom himself is also responsible for the accident. The court would reduce the compensation allowed.
Advice To Leo
Tom is the defendant in this case. Leo, the said plaintiff, tries to claim compensation for his loss in the lobster factory. Tom, as a yacht captain (driver), should be expected to navigate in a safe and decent way, just like a competent driver on the road. He has to take into account the safety of other ships and constructions in the harbour so he owed a duty of care to the plaintiff.
Tom did not cause direct harm to Leo's lobster factory, but his negligence resulted in Leo's loss. Although the probability was not very high, it was still foreseeable that any negligence during his voyage can cause loss to Leo's lobster factory. Tom's negligent action, steering his yacht into the harbour wall, made him fell below the standard of care a reasonable captain should have. It is very likely the court would hold that Tom breached the duty.
Referring to the case of Spartan Steel v Martin & Co., it is not hard to show causation following the precedent. Tom steered into the harbour wall and shattered the pipe that supplies salt water for Leo's lobster factory. The lack of salt water supply then caused him losses. Causation can be established and it is not remote.
Compensation can be claimed under two grounds. The first part is the loss of profit (including the loss of £5,000) selling the lobsters at a much lower price. The second part comes under the anticipated lost profit of £1,500 on other lobsters that Leo would have store before the salt water supply is back. The first ground of damage, that is the lost profit, is a direct result of the damage to the pipe. This is more recoverable than the second part. On the other hand, the anticipated lost profit is classified as ‘pure economic loss' as it was not consequent on any damage to Leo's property. Therefore, Leo would be able to recover some compensations from Tom.