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Law Assignment: Case Analysis based on Negligence & Consumer Law

Question

Task: Read the following case studies and prepare a law assignment answering the following questions associated with the case studies.

Case Study 1 - [NEGLIGENCE]
Johnson owns ‘Melbourne’s Scenic Tours’ – focusing on arranging “Day-Tours for International Students”.

On a daytrip to Phillip Island, during the lunch picnic, he was serving lunch (which included sandwiches and refreshments) to the Student Travellers, on the Tour.

He took the orders for the tea and coffee – and returned 20 minutes later carrying a large Boiling Pot of Tea. He pours steaming hot Tea into a large cup sitting in front of Angela (one of the Student Travellers). He cautions her that the Tea is extremely hot, as he had forgotten to turn it off in time. He says that as a matter of caution, she should wait at least ten minutes, to allow the cup of Tea to cool sufficiently, before drinking.

Two minutes later, Angela is distracted by the site of a small penguin waddling along, in the distance. Suddenly, and in her excitement, she swallows a huge gulp of tea, without first taking a sip. The Tea is so hot that she cries out in excruciating pain. Johnson comes running to her assistance – but can do little to help – except to urgently phone for medical help.

Angela suffers painful burns (to her lips, mouth, throat and nose). She receives medical treatment (including plastic surgery to her nose) and forced to stay in Hospital for six months. The Medical Costs amount to $30,000, and Angela has no ‘Travel Insurance’ to cover these expenses. The costs include the costs of the ‘Flying Doctor Ambulance Service’ and the ‘Royal Melbourne Hospital’.

She also loses $20,000 in lost wages for her employment as a part time Waitress.
Prior to this accident, Angela had paid a non-refundable $3,000 to ‘Qantas’ - in payment of a deposit regarding a ‘Travel & Accommodation Package’ for her planned Holiday Trip to ‘Surfers Paradise’. As a result of her injuries – she has been unable to travel on the due-date and lost her deposit.

Question 1: [Under ‘Negligence Law‘]
a) Discuss the three main Elements of Negligence (referring to the ‘Issues’, ‘Rules’ and ‘Application of the Rules to the Facts’) that need to be proved by Angela, the Plaintiff. List and describe which of the specified Losses/Damages sought, would be most likely to be awarded to her?

b) Identify, analyse and discuss the two main Defences that Johnson, the Defendant, could argue in his Defence.

Explain which of the above two Defences would be most likely to succeed in Court.

Case Study 2 – [Under AUSTRALIAN CONSUMER LAW]
Sunny, is the owner of a Bed and Breakfast Business which he conducts in a large Historic Mansion – which is also used as his residence in South Yarra.

As a result of Australia’s restrictions and lockdown, and the downturn in providing accommodation to international tourists - he has been forced to temporarily close his business run by himself and his Wife. He also has a part time evening Job as the Manager of a Restaurant – a few doors away - earning $1,000 per week.

Sunny decides that now is a good time to do some long-needed renovations to his Bed and Breakfast Premises. He has decided to carry out some of the work himself.

He sees an Advertisement on the Internet where a Company called ‘Mohan’s Home Appliances Pty.Ltd.’ (called MHS) is advertising the Sale of the “Super-Strong Titanium Ladder” for the Reduced Price of $2,000.

The Company makes two statements – claiming that –
1. “The Ladder is made of Super Strong Titanium” . . .
2. “As the price has been reduced there are ‘No Refunds’ available, for any reason whatsoever”.

Sunny, is impressed with the Advertisement, and makes his Purchase online. One week later Sunny, receives delivery of the Ladder. He immediately prepares to demolish a Chimney, situated on the top of a 4-metre-high brick shed, in his backyard. He places the ‘Titanium Ladder’ against one of the Walls of the Shed. As he climbs the ladder, he is carrying a large, heavy sledgehammer. At about half-way up the Ladder, under the great weight of the sledgehammer, one of the steps/rungs gives way, and Sunny crashes to the ground.

He suffers a broken leg requiring medical treatment at a cost of $10,000. He loses 12 weeks in wages for his part time job in the sum of $12,000. ‘Mohan Home Appliances’ (MHA) refuses to pay for Sunny’s losses/damages for his medical costs and his loss of wages.

Question 2: [Under ‘Australian Consumer Law ‘(ACL)]
a. Discuss four applicable Consumer Guarantees regarding the purchase of the Ladder from ‘Mohan’s Home Appliances Pty.Ltd (MHS)’.

Explain the legal effect of the MHS ‘No Refund’ Policy, and the ‘Remedies’ likely to be awarded to Sunny.

b. Discuss and explain whether or not Mohan’s Home Appliances Pty.Ltd have breached the ‘Misleading Conduct Provision – namely, Section 18’ of ‘Competition and Consumer Act (CCA)’ regarding the Company’s statement that there are ‘No Refunds’.

Also, discuss the possible ‘Fines and Penalties’ the Company faces from Federal Authorities, for breach of Section 18.

Case Study 3 - [Under EMPLOYMENT LAW]
Kathleen is in the Tourism and Hospitality Industry – owning and managing a famous tourist venue called ‘Medieval Meats Restaurant’. Sathia is a Chef who specialises in preparing medieval cuisine. He works in the restaurant …. ‘five half-days per. week (from 2pm to 8pm)’….

1. Kathleen (also having experience as a five hat Chef) has full control over how Sathia prepares and cooks the food. She issues him with directions and instructions.

2. Sathia has paid for the special ‘Oven and Cooking Equipment’ in the restaurant.

3. If Sathia is sick and unable to attend work, he is not permitted to delegate his work to others. The Restaurant still functions, with Kathleen taking over the Cooking.

4. There is a written agreement stating Sathia is an Independent Contractor.

5. Sathia is obliged to wear a ‘Medieval Costume’ as part of his duties as Chef, because the kitchen is visible to Customers in the Restaurant.

6. Every seven days, Kathleen pays Sathia a Salary of $1,200 per week… (after deduction of PAYG Tax) … directly into his Commonwealth Bank Account.

7. Sathia receives, as part of his Salary, an additional amount of around 9%, to cover Kathleen’s Superannuation Contributions to his Super Fund.

8. Sathia pays for the repairs and maintenance of the ‘Oven and Cooking Equipment’ One evening, ‘Manpreet’, one of the customers, passing by the Kitchen, suddenly shouts that she about to faint. Sathia grabs her by the wrist to prevent her from falling, but accidentally breaks her expensive ‘Cartier Watch’.

Manpreet has suffered severe ‘gastro’ and needs medical treatment in hospital. As a result, she commences a Legal Action in ‘Negligence’ against Kathleen (as Owner of ‘Medieval Meats’).

She is claiming $15,000 in medical expenses, and $4,000 for the Cartier Watch. She’s also claiming the loss of a Prize that she won in a contest - an all-expense paid Holiday to ‘Disneyland’ valued at $20,000. Due to the accident she was unable to take the holiday.

Kathleen is refusing to accept liability for any of Manpreet’s damages. Kathleen is claiming that Sathia is not her ‘Employee’ for which she would be held Vicariously liable. She is adamant that he was engaged as an ‘Independent Contractor’, and therefore he was liable to pay for Manpreet’s damages.

Question 3: [Under ‘Employment Law’]
a) Explain and discuss the process that the Court will adopt to help assess Sathia’s Status as an ‘Employee’ or ‘Independent Contractor’.

In all the circumstances, would Sathia be more likely to be an ‘Employee’ or an ‘Independent Contractor’? Provide arguments and reasons for your conclusion.

b) Identify and Discuss which of the ‘Damages/Losses’ is likely to be awarded to Manpreet, in an ‘Action for Negligence’?

Answer

Case Study 1
Answer 1

a) The given case study undertaken in this law assignment has been analyzed as per the IRAC method in order to figure out the three elements of Negligence are involved in the case and need to be proved by Angela.

Issue- As per the case study, it has been identified that Angela was on her holiday trip wherein she was offered a cup of tea that was hot enough to have a sip. Considering the case study, she was already warned by the seller, his name is Johnson, though she was warned by him in her excitement of watching penguin she had a huge gulp of tea. Here, Angela got injured and was rushed to the Melbourne hospital wherein she has stayed into the hospital for the six months and as an outcome of her injuries, she was not able to travel on the due-date her deposits.

Rule-Considering the case study, the three elements required to prove negligence under Negligence Law are Duty of care, Breach of duty and damages(Luntz, 2021).

Application- As per the Negligence Law, the three elements articulates the important element of a legal claim wherein the applicant must prove these three elements to prove negligence. In the case study, the first element of addressing negligence is either or not the defendant yet to be paid the plaintiff a legal duty of care(Oup.com.au, 2021). Therefore, it can be said that though Johnson had already stated a caution note to Angela he should maintain his belongings in safe conditions and operate it safely for other travellers too. The second element is the breach of duty, wherein the court will conduct this matter in order to determine if the defendant breached this duty through his or her activities than a normal person would do if they were in same conditions. Additionally, the third element focuses on the damages that Angela had to face during her holiday trip. As the plaintiff suffered loss or injury which a practical person in that similar condition could foresee or expect, financial compensation might be the only matter of relief for those damages. Generally, these damages include lost wages, medical care, emotional chaos and more.

Conclusion-To conclude, it can be said that Angela had to bear for negligence that Johnson had performed during her trip. Though she was already warned by him to be very careful as the served tea was extremely hot but as concerned with the law of negligence, Johnson needs to be careful and vigilant to his responsibilities as this activity comes under Negligence Law that is a breach of duty. Therefore, the damages that Angel had to bear needs to be compensated by Johnson as well as the travel company because she was not able to travel as per the travel itinerary.

However, the list of losses or damages that needs to be awarded to Angela is:

  • Medical Expenses- As per the case study, Angela has suffered painful burns on her mouth, lips, throat and nose and had to do plastic surgery on her nose, wherein she had to stay in the hospital for six months. Therefore, the medical expense needs to be awarded to Angela for the damages she faced.
  • Lost wages- As she was working as a part-time waitress, she also loses $20,000 for her employment. Her Lost wages must be awarded as she had to face financial issues as well.
  • Refund of the earlier made a payment on travel and accommodation package- As per the given case study, Angela had already paid $3,000 to Qantas wherein she was not able to complete her journey, therefore refund must be made by them and awarded to Angela for the same.

b) Considering the case study, the two main defences that have been identified wherein Johnson as a defender can argue for his defence are: Comparative negligence- This negligence minimizes a recovery of the plaintiff by the percentage wherein the plaintiff is at fault for her damages. On this note, it can be said that Johnson can claim negligence against Angela as she was not able to help herself with the damages she was already made aware of.

Assumption of risk- While a plaintiff believes the involved risk in an evidently dangerous doings but proceed to engross in the activity anyway, she might not be able to overcome damages for her injuries. Thus, for this doctrine to be executed, the plaintiff mutts have factual, material knowledge of the risk involved in the actions(Aflvic.com.au, 2021).

However, it can be said that from the two main defences that Johnson had, he can choose the assumption of risk in order to claim for defence negligence. Here, he can appeal to the court that he does not have any fault as he had already made a warn statement regarding the tea Angela was about to have and it is evident that she was all on her sense about the fact.

Case Study 2
Answer 2

a)Consumer Guarantees refers to a group of regulations that is applicable to the commodities and services obtained by consumers as per the ACL. The regulations involved in the consumer guarantees impose the situationsin which a corporateshould offer a consumer with a medication. The consumer guarantees mechanicallyrelateirrespective of any charitable or protractedguarantee provided by a seller or producer of commodities, or in case such a guarantee has deceased. However, the four consumer guarantees applicable to the given case study regarding the purchase of the Ladder form Mohan’s Home Appliances Pty Ltd are as follows:

Express warranties to be honoured to the consumer: It is the most suitable guarantees for the given case because it can be seen that Sunny is not only injured by crashing into the floor but the goods that he had just received was also damaged. Therefore, under the Australian Consumer Law, the selling company should provide some warranty for the goods sold (Techhouse.com.au, 2021).

No undisclosed securities on the goods and services: The goods sold to the consumer should not include any disclosed securities with it as it might hamper the consumer while using it. Therefore, in the given case, the seller should ensure that they guarantee the consumer regarding the securities of the goods and should make sure that those securities are all disclosed to the consumer.

Acceptable quality: In the given case study, Sunny wanted to purchase the product for some essential use and to renovate his business. Therefore, the selling company should make sure that the quality of the product is at its best. It can also be considered one of the suitable and important consumer guarantee for the given case study. Fit for a Particular Purpose: As per the fact that the business run by Sunny and his wife was closed, they wanted to re-operate the business and gain profit. However, Sunny wanted the product as soon as possible as he desired to renovate the business. Therefore, the selling company should make sure that the product delivered to the consumer is fit for a particular purpose and provide satisfaction to the consumer. It is also one of the most important consumer guarantees that can be applied in the given case as well (Accc.gov.au, 2021).

As per the Australian Consumer Law, it is no legal to have a sign or no refund policy because the Australian government considers that the consumers have the right to get their money back or plead for a replacement of the product in case of the product being damaged or any wrong with the same. Therefore, Mohan's Home Appliances Pty Ltd will be legally penalised for applying the 'no refund' policy in their product. The remedies likely to be awarded to Sunny are that the company must at least compensate him for his loss (Websitepolicies.com, 2021).

b) Section 18 of the Australian Consumer Law situated in the scheduled 2 of the Competition and Consumer Act 2010, forbids demeanour by the corporation in trade or commerce that is dishonest or unreliable or is about to misinform or cheat. Considering the given case study, the Mohan's Home Appliances Pty Ltd has breached the Misleading Conduct Provision as they delivered the product to Sunny which was not in a good state or quality. In the first place, the Australian Consumer Law does not allow to sign No refund policy, secondly, the selling company has applied the policy when their product was not of good quality. Therefore, Sunny had to bear greater loss after using the product from Mohan's Home Appliances and had to suffer from sickness as he broke his bone after crashing into the ground (Legislation.gov.au, 2021).

As per the Australian Consumer Law, the maximum penalties that to be tolerated by the selling company after the breach of Section 18 involving unacceptable behaviour, creating incorrect or deceptive depictions, and providing customer commodities, which do not fulfil the safety standards or which are banned. The penalties for the corporations will be the supreme of $10000000, thrice the profit gained or 10% of annual turnover in preceding 12 months, if the court cannot determine profit gained from the offence. Whereas penalties for the individuals will be $500000.

However, in the given case study, the Mohan's Home Appliances will be penalized for applying 'No Refund' policy, which is against the Australian consumer law. It is because the selling company sold the product knowingly that it was of bad quality and could harm the consumer. The penalization for the corporation will be suitable to Mohan's Home Appliances and will have to pay $10000000, thrice the value of the profit gained or 10% of the yearly turnover (Accc.gov.au, 2021).

Case Study 3
Answer 3

a) As per the given case study, it has been analyzed that Sathia is working as a chef under Kathleen and said to be an Independent Contractor. But due to the incident that has taken place within the restaurant had made them know the differences between Employee and Independent Contractor’s status under the Employment Law(Employsure AU, 2021). Generally, the variance between workers and a free-lancer (contractor) is sometimes unclear. As per the employment law of Australia, the affiliation amidemployee and employers is a service agreement, but the affiliation amid them and am independent contract is a contract for service. However, the differences can be understated, yet crucial. Usually, a worker works part-time, full-time or informally and need to work under the supervision of the employers. On the other hand, contactor normally works for the set agreed hours and has more control over the system they function. Yet, even these aspects are not sufficient to regulate whether a person is aworker or an independent contractor. Considering the matter, a court or tribunals addresses the complete picture wholly of relationship and all probable aspects and the process to identify the status of Sathia as an employee or independent contractor has been discussed on the following grounds:

Indicator

Employee

Independent Contractor

Level of control over how work is done

Does work under the supervision and control of the employer

Have a high degree of control over the work is performed

Working hours

Set hours

Decides through the agreement made with the employers

Work expectation

Generally has ongoing work expectations

Generally engrossed for a particular task

Tax

Income tax is always deductible by their employer

Mostly pays own GST and tax to the ATO(Fairwork.gov.au, 2021)

Payment method

They got regular payment for e.g. monthly, weekly, fortnightly

Has acquired an ABN and present an invoice for completed work or id paid at the end of the project or contract.

Leave

Entitled to get paid leave

Mostly do not get a paid leave or casual leave.

The Independent Contractors Act 2006 that is related to the Fair Work Act 2009 protect the rights and power of independent contractors(Knowledge.leglobal.org, 2021). However, relating the case study with the given table that has been demonstrated above reflects that though Kathleen stated that Sathia was just an independent contractor but was failed to give him the status of an independent contractor. Consequently, it can be said that Sathia is employee than that independent contractor.

b) As per the law, a plaintiff who makes a negligence claim on a person or a corporation must prove four elements of negligence action such as duty, breach, proximate causation and injury. It means that if a consumer is accusing a person of a negligence action, the accused person must have neglected the above four elements mentioned. Therefore, in the given case Manpreet must prove four elements of negligence action in order to win her case against Medieval Meats. However, the Damage/Losses that are likely to be awarded to Manpreet by Medieval Meats are Medical expenses and expense for the damage to her watch (Etheringtons.com.au, 2021). However, in this case, Kathleen will be liable for the claim because although Sathia is the independent contractor of the restaurant, he is treated as an employee of the corporation. Therefore, under the Employment Law, Kathleen will be liable for the medical expenses and watch expenses to Manpreet. The restaurant has proved one of the essentials in the act of negligence that is Duty to take care. It is because neither Kathleen nor Sathia has taken the responsibility to take care of the health of their customers, which falls under the criteria of ‘Duty to take care’. It is one of the reason for the medical expenses to be paid to Manpreet as she was suffering from severe gastro and was in need of major medical treatment. On the other hand, there was an expense liable to Kathleen as Sathia had damaged Manpreet’s watch. They also have to pay for this damage because the restaurant is wholly responsible for the losses and damages that Manpreet was going through. As per the law, Kathleen has fallen under the categories of the essentials in 'Action for Negligence', for which they have to pay. As per the law, the negligence case is only liable for those losses or damages that the defendant could have foreseen through his actions. It means that the accused person will only pay for the losses and damages that are proved and seen through his or her action but will not have to pay for the assumed losses and damages. Likewise, in the given case, Kathleen will have to pay only for the damages that fall under the categories involved in the Action for Negligence.

Answer 4
a)Yes
b)Yes
c)Yes
d)Yes

References
Accc.gov.au. (2021). Fines & penalties. Retrieved 16 February 2021, from https://www.accc.gov.au/business/business-rights-protections/fines-penalties#australian-consumer-law

Aflvic.com.au. (2021). Retrieved 16 February 2021, from https://www.aflvic.com.au/wp-content/uploads/2013/08/Advice-THE-LAW-OF-NEGLIGENCE-18-December-14-Final.pdf Employsure AU. (2021). Employee versus Independent Contractor | Employsure Guides. Retrieved 16 February 2021, from https://employsure.com.au/guides/employment-contracts-and-legislation/employee-v-independent-contractor/#:~:text=Employee%20vs%20Contractor,-The%20difference%20between&text=Under%20Australian%20employment%20law%2C%20the,can%20be %20subtle%2C%20but%20important.

Etheringtons.com.au. (2021). What Is the Tort of Negligence? When Does Duty of Care Apply?. Retrieved 16 February 2021, from https://etheringtons.com.au/what-is-the-tort-of-negligence/#:~:text=For%20a%20person%20to%20be,duty%20has%20caused%20the%20harm.

Fairwork.gov.au. (2021). Welcome to the Fair Work Ombudsman website. Retrieved 16 February 2021, from https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/independent-contractors-and-employees Knowledge.leglobal.org. (2021). Re-Characterisation of Independent Contractors as Employees.

Retrieved 16 February 2021, from https://knowledge.leglobal.org/eic/country/australia/re-characterisation-independent-contractors-employees-2/ Legislation.gov.au. (2021). Competition and Consumer Act 2010. Retrieved 16 February 2021, from https://www.legislation.gov.au/Details/C2017C00281

Luntz, H. (2021). Retrieved 16 February 2021, from https://www.researchgate.net/publication/228191772_The_Use_of_Policy_in_Negligence_Cases_in_ the_High_Court_of_Australia Oup.com.au. (2021). Retrieved 16 February 2021, from https://www.oup.com.au/__data/assets/pdf_file/0021/140880/BARKER_9780195572391_SC.pdf

Techhouse.com.au. (2021). Australian Consumer Guarantees - Tech House - Tech Repairs & Solutions. Retrieved 16 February 2021, from https://www.techhouse.com.au/consumer-guarantees/ Websitepolicies.com. (2021). Retrieved 16 February 2021, from https://www.websitepolicies.com/blog/no-refund-policy#:~:text=Australia,problem%20with%20something%20they%20bought

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