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Question
Student name: ______________________________
Student number: ____________________________
Date due:
Week 10
Value:
30%
Rationale
Case studies assess students’ ability to apply theoretical learning to practical, real world situations.
Instructions
In this assessment, students are required to apply their knowledge of tort law and contract law.
Students are to analyse the following case study and undertake the following actions in relation to the case study and its participants:
- identify all major legal issues around the
- identify the relevant legal rules and precedents
- apply the rules to the facts
- recommend a solution.
Submission
In a 1,000 word written response, students are to answer the following in regards to the case study:
- Issue 1
- Issue 2
- Issue 3
Lecturer Discussion
The lecturer will provide a discussion on the case study, its components, legal areas to be addressed and the requirements for the submission.
Submission Criteria
The following elements will be assessed in this submission:
Criteria
Marks
Identification of Major Legal Issues
5 marks
Identification of Relevant Law
5 marks
Application of Law to Facts
10 marks
Conclusion & Recommendations
5 marks
Organisation of Paper and Referencing
5 marks
Legal Problem Solving
To ensure the questions have been appropriately answered and provided the required level of ‘legal advice’, students should undertake the following IRAC (Issue, Rules, Application, Conclude) method of legal problem solving as a guide to answering the following legal problems.
- Issue – identify the relevant issue that needs to be resolved. Write succinctly and in plain English.
- Rules and Relevant Law – state the relevant law (common law and/or legislation) that will be used to resolve the issue. Students should summarise the relevant law using their own words and avoid reciting the law by cutting and pasting the relevant parts into their work.
- Application – apply the law to the facts.
- Conclude – There may not be a clear ‘right or wrong’ answer. Students should conclude by stating in whose favour the issue is likely to be resolved.
If there is more than one issue to be resolved, the IRAC method can be used to problem solve each issue separately. Students should synthesise the conclusions reached for each issue into a final conclusion at the end of their document.
Case Study
Ellen is a graduate of The College of Alternative Medicine and is looking to start her own business. She decides to open a meditation studio and looks around the inner city suburb of Paddington for suitable premises. She eventually finds a terrace house near to Oxford St., the main street of Paddington in Sydney, NSW
The owner of the premises is willing to enter a 12 month lease however Ellen asks him to wait for a week so that she can check with the local council as to the suitability of her business. Ellen attends the council offices and goes to the counter marked “Business Inquiries”.
She asks several questions of the council employee including a question about building work in the area. She says “my meditation studio requires a calm environment is there anything that could cause noise nearby?”
The council officer is called away before being able to answer. When he returns he has a very quick look at the computer and says to Ellen “relax everything will be fine”. Ellen signs the lease the next day however within 2 weeks of opening the meditation studio she sees builders arrive next door.
She asks one of them how long they will be working next door. The builder replies “It’s a big job, a total renovation. It should take at least 6 months”. Ellen tries to run her meditation studio but the noise from the building is too stressful on Ellen and her clients. A month into the lease, Ellen is so stressed by the development noise from next door, that she develops a nervous disorder that threatens her career in alternative medicine.
Ellen reduces the operating hours of her meditation studio to avoid the builders’ noise but starts to fall behind in her rent for the premises.
Issue 1:
Explain whether Ellen has a claim against the council in relation to the advice she received.
Issue 2: Contract Law
Has there been a breach of contract between Ellen and Land Lord for non-payment of rent?
Issue 3: Tort of negligence
Has there been a negligent misstatement by the Council Worker?
| Subject | Business | Pages | 8 | Style | APA |
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Answer
ASSESSMENT 2: CASE STUDY
Issue 1:
Does Ellen have a claim against the council in relation to the advice she received?
Rule
In order to prove that Ellen has a claim against the council, it must first be proven that there was some negligence on the part of the council. Before Ellen could set up shop, if she had any inquiries to make or any matters that need clarification, the best person to consult was the local council. In order to prove professional negligence, there is need to prove that a duty of care was owed and that duty of care was breached resulting in loss.
The law on this matter has mainly been built based on stare decisis. On several instances, courts have succinctly given directions on this matter. One such instance was in the landmark case of Barnes v. Commonwealth of Australia (1937) 37 S.R. (N.S.W.) 511. In this case, a memorandum was sent to the plaintiff informing her that her husband had been admitted to a mental institution and that his pension certificate needed to be returned (Phegan, 1973). Having received this news, the plaintiff suffered from nervous shock. The news was however false. The Supreme Court of New South Wales held that she had the right to sue the Commonwealth and Davidson J., further commented on this matter by indicating that; if someone in carrying out his official duty knows that the information he is communicating is serious and that the recipient of the information is going to place reliance on it, then he owes the duty of care to ensure that the information being communicated is correct (Phegan, 1973). Further, in the case of Hedley Byrne & Co. Ltd v. Heller & Partners Ltd [1964] A.C. 465, if the negligent supply of information caused economic loss, the scope of liability was extended (Latimer, 2012). It was also established that there ought to be a relationship of sufficient proximity and to that effect the court determined that there was no sufficient proximity between the bankers who prepared the credit reference and the corporation that provided the credit, having relied on the credit reference. This was also reaffirmed in the case of Caparo Industries plc v Dickman [1990] 2 AC 605. The salient feature of the direction given by the courts in these two cases is that for liability to accrue especially with respect to economic loss, the party giving the advice should be aware of the nature of transaction that the plaintiff is contemplating (Phegan, 1973). The party should also have cause to know that the advice will be relied upon, in making the decision on whether the transaction in contemplation should be carried out.
Application
In the present case it is clear that the official who was giving the information knew that the information was serious and that the recipient would place reliance on it. There was also sufficient proximity between Ellen and the council. The council official knew the nature of transaction that the plaintiff was contemplating and he was in a position to access the correct information. He also knew that Ellen would rely on the advice in making a decision regarding the place to set shop at. Reliance on the advice was also reasonable in the circumstances.
Conclusion: Ellen has a claim against the council in relation to the advice she received.
Issue 2
Is Ellen in breach of contract for non-payment of rent?
Rule
A tenant is in breach of contract if he has broken any of the contractual agreements (Residential Tenancies Act 1987). Section 52 of the Residential Tenancies Act 1987 provides that a tenant shall not fail or decline to pay rent as it falls due as per the terms of the tenancy agreement. Similarly under the common law on contracts, parties are required to operate within the terms of the contract and failure to do this will amount to breach of contract. When a tenant falls behind in rent for premises the owner can recover the rent from the security bond that had been paid by the Tenant as provided for under Section 52 of the Act.
Application
Having fallen behind in her rent for the premises, Ellen has acted in breach of the contract. This however does not mean that she will be immediately evicted. The owner can recover the rent from the security bond and enter fresh negotiations with the client while being cognizant of the prevailing circumstances.
Conclusion: Ellen is in breach of contract for non-payment of rent.
Issue 3
Was there a negligent misstatement by the council worker?
Rule
An action for negligent misstatement comes about when one party carelessly makes a statement to another party, whereas the relationship between them is such that a duty of care is owed by the person making the statement (Latimer, 2012). A duty of care herein is a duty to take reasonable care and skill that a reasonable person in that position would (Latimer, 2012). According to common law, liability for negligent misstatement arises when it is apparent that the statement would be reasonably relied upon by the recipient and after it is relied upon, the recipient is harmed. This was seen in Hedley Byrne & Co. Ltd v. Heller & Partners Ltd [1964] A.C. 465 and Caparo Industries plc v Dickman [1990] 2 AC 605 wherein the court directed that for liability to accrue especially with respect to economic loss, the party giving the advice should be aware of the nature of transaction that the plaintiff is contemplating and he should also have cause to know that the advice will be relied upon in making a decision appertaining to what the plaintiff is contemplating (Phegan, 1973).
Application
The council worker owed a duty of care to give the correct information because a reasonable person in his position would possess the right information. The council worker also knew that the statement he gives will be relied upon by the recipient in making a significant decision. After Ellen relied upon that decision, she suffered harm.
Conclusion: there was a negligent misstatement by the council worker.
References
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Latimer, P. (2009). Australian Business Law. CCH Australia Limited. Phegan, S. (1973). Public Authority Liability in Negligence. McGILL LAW JOURNAL, 22(2), pp. 605-629. Residential Tenancies Act 1987.
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