scholarly journals A builder's duty of care - When should it apply to the directors and employees of companies involved in the creation of defective buildings?

2021 ◽  
Author(s):  
◽  
Grant Brittain
Keyword(s):  
Complex Structure ◽  
Economic Loss ◽  
Company Law ◽  
Duty Of Care ◽  
Minor Parties ◽  
Financial Interest ◽  
Building Set ◽  
Company Directors ◽  
The Creation ◽  
Summary Judgment

<p>This thesis considers the issue of when a tortious duty of care to prevent economic loss should be imposed on the company directors and employees who stand behind the complex structure of companies and contracts involved in the creation of a defective building. Set against the background of the leaky building crisis, and what are (it is argued) unfair litigation outcomes, the thesis traverses the emergence and development of the principles that underpin liability for negligence and negligent misstatement in respect of defective buildings. A review of the cases confirms that the concepts of control and general reliance are the basis of New Zealand law in this area. There follows a discussion of the difficult relationship between company law principles and negligence principles, and the role of assumption of responsibility in the law of negligence and negligent misstatement, including a discussion of developments in the leaky building litigation. The thesis advanced is that, in respect of the creation of defective buildings, the approach to the issue of whether to impose a duty of care on company directors and employees would benefit from placing significant weight on the factor of de facto control of the inputs that dictate the outcome of a building project, and on the lower level factor of a direct or indirect financial interest in the outcome of the project.  It is argued that the approach to imposing a duty of care should be the same for directors and employees and in respect of statements and actions. In cases where the evidence establishes that the financial interest factor is not present, this should give rise to an inference that the company director or employee does not have control of the inputs that dictate the outcome of the project, so that no duty of care arises. This would enable a director or employee to exit litigation by way of an application for summary judgment. This is intended to discourage the practice of joining minor parties to litigation for the purpose of extracting a precautionary settlement. If control of the inputs that dictate the outcome of a project can be established by inference from the existence of the financial interest factor, or by the other evidence, then the two stage approach to the imposition of a duty of care would require a consideration of other factors that might negate the duty, such as the contractual matrix.</p>

scholarly journals A builder's duty of care - When should it apply to the directors and employees of companies involved in the creation of defective buildings?

2021 ◽  
Author(s):  
◽  
Grant Brittain
Keyword(s):  
Complex Structure ◽  
Economic Loss ◽  
Company Law ◽  
Duty Of Care ◽  
Minor Parties ◽  
Financial Interest ◽  
Building Set ◽  
Company Directors ◽  
The Creation ◽  
Summary Judgment

<p>This thesis considers the issue of when a tortious duty of care to prevent economic loss should be imposed on the company directors and employees who stand behind the complex structure of companies and contracts involved in the creation of a defective building. Set against the background of the leaky building crisis, and what are (it is argued) unfair litigation outcomes, the thesis traverses the emergence and development of the principles that underpin liability for negligence and negligent misstatement in respect of defective buildings. A review of the cases confirms that the concepts of control and general reliance are the basis of New Zealand law in this area. There follows a discussion of the difficult relationship between company law principles and negligence principles, and the role of assumption of responsibility in the law of negligence and negligent misstatement, including a discussion of developments in the leaky building litigation. The thesis advanced is that, in respect of the creation of defective buildings, the approach to the issue of whether to impose a duty of care on company directors and employees would benefit from placing significant weight on the factor of de facto control of the inputs that dictate the outcome of a building project, and on the lower level factor of a direct or indirect financial interest in the outcome of the project.  It is argued that the approach to imposing a duty of care should be the same for directors and employees and in respect of statements and actions. In cases where the evidence establishes that the financial interest factor is not present, this should give rise to an inference that the company director or employee does not have control of the inputs that dictate the outcome of the project, so that no duty of care arises. This would enable a director or employee to exit litigation by way of an application for summary judgment. This is intended to discourage the practice of joining minor parties to litigation for the purpose of extracting a precautionary settlement. If control of the inputs that dictate the outcome of a project can be established by inference from the existence of the financial interest factor, or by the other evidence, then the two stage approach to the imposition of a duty of care would require a consideration of other factors that might negate the duty, such as the contractual matrix.</p>

The case of ‘losses in any event’: a question of duty, cause or damages?

Legal Studies ◽  
2010 ◽  
Vol 30 (4) ◽  
pp. 558-585
Author(s):  
Mark Stiggelbout
Keyword(s):  
Economic Loss ◽  
Duty Of Care ◽  
Private Law ◽  
General Argument ◽  
The Real ◽  
Pure Economic Loss ◽  
Court Of Appeal ◽  
Careful Comparison

This paper considers the relevance of a finding that, even absent the defendant's unlawfulness, the private law claimant would have suffered the losses claimed. It provides a principled framework for considering the issues raised by such a finding of ‘losses in any event’, arguing that it should be distinguished both from causation of injury and from the scope of the defendant's duty of care, and that it should be treated as raising a question of damages. It highlights the need, particularly in pure economic loss cases, for a careful comparison of the real and the hypothetical losses so as to determine whether the latter would indeed have been losses in any event. In this regard, the decision of the Court of Appeal in Calvert v William Hill Credit Ltd is subjected to close scrutiny. A more general argument advanced is that tort and contract both do and should adopt similar approaches in this field.

Hedley Byrne in the House of Lords: an interpretation

Legal Studies ◽  
1995 ◽  
Vol 15 (3) ◽  
pp. 376-389
Author(s):  
Nicholas J McBride ◽  
Andrew Hughes
Keyword(s):  
Economic Loss ◽  
Duty Of Care ◽  
Pure Economic Loss ◽  
House Of Lords

The House of Lords has now handed down decisions in six cases which have involved extended discussions of the scope of liability to compensate another for pure economic loss under the Hedley Byme principle. It seems reasonable to suppose that we can now arrive, on the basis of those decisions, at some conclusions as to when and why such liability arises. In this article we attempt to amve at such conclusions. In so doing we avoid using the usual terminology- ‘duty of care’, ‘proximity’, ‘just and reasonable’, ‘policy’, ‘reliance’, ‘assumption of responsibility’, ‘equivalent to contract’, even ‘negligence’-which an analysis of the scope and rationale of liability under Hedley Byme would be expected to employ.

scholarly journals AN ANALYSIS OF THE DIRECTORS’ DECISION-MAKING FUNCTION THROUGH THE LENS OF THE BUSINESS-JUDGMENT RULE

Obiter ◽  
2016 ◽  
Vol 37 (3) ◽  
Author(s):  
Jan-Louis van Tonder
Keyword(s):  
Decision Making ◽  
The State ◽  
Corporate Law ◽  
Company Law ◽  
Best Interests ◽  
Duty Of Care ◽  
Business Judgment Rule ◽  
Managerial Authority ◽  
Court Interpreting ◽  
Legislative Framework

The main purpose of this article is to examine the standard of conduct required from a director in the exercise of his decision-making function, through the lens of the business-judgment rule. The business-judgment rule provides the circumstances in which the duty to act in the best interests of the company and the duty of care, skill and diligence will be satisfied by a director. In order to achieve the stated goal the board’s statutory managerial authority, the standard of director’s conduct required to discharge the duty of care, skill and diligence as provided for in section 76(3)(c), and the features and functions of the business-judgment rule will also be examined. Section 5(2) of the Act provides that, to the extent appropriate, a court interpreting or applying the provisions of the Act may consider foreign-company law. This is complementary to section 5(1) which directs that the Act must be interpreted and applied in a manner that gives effect to the purpose of section 7. The article will refer to the highly developed corporate law in the State of Delaware to assist the research in examining the content and meaning of the decision-making function as a standard of director’s conduct. For this reason, the corporate legislative framework of the State of Delaware will also be discussed.

The Role of the Directors

2021 ◽  
pp. 125-194
Author(s):  
Eva Micheler
Keyword(s):  
Public Interest ◽  
Company Law ◽  
Economic Interests ◽  
Financial Reports ◽  
The Public ◽  
Company Directors ◽  
The Board Of Directors ◽  
The Law ◽  
The Uk

This chapter describes the role of the directors. The duties of the directors are owed to the company and while the shareholders are the primary indirect beneficiaries of those duties, the law integrates the interests of creditors and also of wider society. The law is primarily focused on ensuring compliance with the Companies Act and the constitution rather than with the enhancement of economic interests. The Company Directors Disqualification Act 1986 serves as a mechanism through which the public interest is integrated into company law, while the UK Corporate Governance Code adds a further procedural dimension to the operation of the board of directors. The chapter then looks at how the idea of designing remuneration in a way that guides the directors to act either for the benefit of the shareholder or for the benefit of the company is flawed and has served as a motor justifying increasing rewards without bringing about commensurate increases in performance. It also analyses the duties of the directors to keep accounting records and to produce financial reports.

11. The Tort of Negligence

2019 ◽  
pp. 299-334
Author(s):  
Lucy Jones
Keyword(s):  
Criminal Law ◽  
Standard Of Care ◽  
Economic Loss ◽  
Causal Link ◽  
Duty Of Care ◽  
Pure Economic Loss ◽  
Breach Of Duty ◽  
The Law ◽  
The Difference

This chapter discusses the difference between the law of torts and contract and criminal law. It explores the tort of negligence, considering the necessary elements for a claim of negligence, namely the defendant owed the claimant a duty of care, the defendant breached that duty of care, and reasonably foreseeable damage was caused by the breach of duty. The chapter considers the special requirements for the recovery of pure economic loss and for loss as a result of psychiatric injuries, looking at both primary and secondary victims. The principles relating to breach of a duty of care, including the standard of care, are discussed. The chapter concludes with a discussion of the final element, considering the need for a causal link between the breach of duty by the defendant and the damage suffered by the claimant.

7. Creditors

2020 ◽  
pp. 223-260
Author(s):  
Paul Davies
Keyword(s):  
Limited Liability ◽  
Creditor Protection ◽  
Company Law ◽  
Going Concern ◽  
Wrongful Trading ◽  
Ex Ante ◽  
Mandatory Rules ◽  
The Creation ◽  
The Law

Because of limited liability, creditor protection has always been a feature of company law. Large creditors can contract ex ante for customised protection and the law facilitates this in various ways, notably by the creation of the floating charge. Non-adjusting creditors require the protection of mandatory rules, at least in some situations. Creditor protection in relation to companies in the vicinity of insolvency is now well established, not only through ‘wrongful trading’ but also via transaction invalidity rules and directors’ disqualification. For going-concern companies the emphasis is on rules restricting the shifting assets to shareholders via distributions and associated rules relating to the maintenance of capital.

7. Special duty problems: economic loss

2021 ◽  
pp. 188-216
Author(s):  
Kirsty Horsey ◽  
Erika Rackley
Keyword(s):  
Economic Loss ◽  
Personal Injury ◽  
Economic Losses ◽  
Duty Of Care ◽  
Financial Loss ◽  
Exclusionary Rule ◽  
Pure Economic Loss ◽  
District Council ◽  
Secondary Consequence ◽  
Special Duty

This chapter explains when and how the courts have found that a duty of care should be owed by defendants for purely economic loss. This differs from ‘consequential’ economic loss, where financial loss is suffered as a secondary consequence of another harm, such as personal injury or property damage. The tort of negligence distinguishes between these, using duty of care as a device to control whether and when claimants will be able to recover their pure economic losses. The discussions cover the meaning of ‘pure’ economic loss; exceptions to the exclusionary rule; claims for pure economic loss in negligence before Murphy v Brentwood District Council [1990]; and extended applications of the principles established in Hedley Byrne v Heller [1963].

Tort Law

2017 ◽  
Author(s):  
Kirsty Horsey ◽  
Erika Rackley
Keyword(s):  
Economic Loss ◽  
Tort Law ◽  
Third Parties ◽  
Duty Of Care ◽  
Vicarious Liability ◽  
Invasion Of Privacy ◽  
Statutory Duty

Tort Law encourages the reader to understand, engage with, and critically reflect upon tort law. The book contains five parts. Part I, which is about the tort of negligence, looks at duty of care, omissions, acts of third parties, psychiatric harm, economic loss, breach, causation and remoteness, and defences to negligence. Part II considers occupiers’, product and employers’ liability and breach of statutory duty. Part III looks at personal torts and explains trespass to the person, defamation and the invasion of privacy. Part IV concerns land torts and Part V looks at liability (including vicarious liability), damages and limitations.

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