Tort of Negligence
Crippling of large companies is quite common in Australia. Such ruins, leads to many losses to relevant stockholders, more specifically, third parties. Under such incidences, blame game is also a common scenario and none of the auditors face the wrath of third parties with professional negligence claims. The claims are costly to auditors because of indemnity insurance therefore, the implementation of law on negligence of auditors in the country.
The negligence tort also helps the court to offer prove on breach and existence of duty of care when handling such cases. Consideration of policy also plays a crucial role in the decisions. This means normative thinking where the court employs logic to the rights of individuals and more specifically on any new development. Since the tort of negligence is still new, many policies are still considered when it is applied.
This is based on the fact that the negligence duty of care is a broad concept without a meaning that is clear cut. Many tests are also needed to determine the presence of real elements and the ability to foresee by the defendant. The defendant’s proximity and plaintiff is additionally an issue in such cases. Policies therefore enable the court to acknowledge a reasonable duty care and in discretion. This in the end helps to determine the defendant’s legal obligations.
Negligence tort cases are broad ranging from government, education, business and medical institutions. Many cases have been in the past handled by the Australian High Court. The cases can enable one to comprehend the employment of this kind of tort. For example, the Cattanch v Melchior (2003) HCA 38 involves negligence in a medical environment.
In the case, Doctor Cattanach had been asked to carry out tubal ligation by the plaintiff because she did not want another kid due to financial factors. The defendant did not operate on the second fallopian tube of the plaintiff as a result of assumptions. She conceived and therefore sued the doctor for negligence. The doctor was found guilty and paid for consortium, pregnancy, and child maintenance and birth charges.
The decision was based on the negligence of the doctor in his duty to explain to the parent that there is still a probability for conception. Even though the child born was healthy, there were legal expectations in terms of taking care of the kid by parents and it was carried on by the medic because the patient had indicated financial constraints when seeking the service.
Therefore, the award for the damages was approximated and the medic paid more than $210,000 and it was a case of a positive wrongful life claim. In another tort of negligence, Harriton v Stephens (2006), the plaintiff did not make a fruitful wrongful life claim. The appellant, Harriton, sued her mum’s doctor for wrong pregnancy advice when she was paged with her.
Her mother had been infected with rubella virus and at the time, this made her give birth to a disabled child, Harriton. Harriton therefore felt that the medic was responsible for negligence of duty of care because her mum would have had the pregnancy terminated if she was well advised.
However, the case was dismissed by Justice Tim Studdert but later on Harriton made an appeal at the New South Wales Supreme Court. The court dismissed the case because termination of the pregnancy is not a moral value and Harriton’s conception was not the responsibility of the medic.
These two cases represent clear examples of negligence of tort application in Australia. They depict the significance of proving duty of care existence as well as breach of duty and responsibility of damages before a judgement is passed. This creates a basis for the case in relevance to negligence tort where auditors are involved.
Auditors are presently responsible to the tort of negligence. The purpose of this law is to offer protection to the auditing profession by ensuring that there are sufficient auditing companies to enhance competition in Australia. The liability of the auditor can be classified under the law of contract depending on the plaintiff. The common tort of negligence law in Australia is only liable if there is a breach of an existing duty of care leading to damages.
This guideline of negligence is however different from that, evident in the Donoghue v Stevenson’s case. In Donoghue v Stevenson (1932) AC 562, the plaintiff may not sue the defendant because there was no existing contract between them. In this case, the plaintiff had purchased a bottle of ginger beer only to discover that there was a decomposing snail in the bottle after drinking the contents.
In this case therefore, the plaintiff should have sued beer manufactures. This case therefore used the locality principle whereby, there is no contract between people and each person is responsible for actions taken with reasonably foreseeable negative effects on the other person. According to the principle therefore, a duty of care can exist even in the absence of the contract.
I therefore agree with the present negligence of auditor’s law as it offers room to the defendant to defend his or her case. Auditors are responsible to several standards and laws especially in Australia from both the governing units and the government. As a result, their obligations and duties are broad thus; there is a greater liability risk in this kind of profession.
Many theories for instance the ‘’deep pockets’’ theory assumes that auditors are in a position to pay for indemnity cover without any problem yet this is not always the case. This further threatens the existence of the profession and the common law requirement calling for proof of an existing duty care, damages from the breach of duty and the breach of duty itself to ensure fair justice.
If the plaintiff is confident that violation of duty care has occurred, then it will not be difficult to provide essential evidence. Lack of evidence will mean that the auditor is innocent. Corporate crippling is as a result of different factors and it is not fair for any auditor to unduly bear the blame. The neighborhood principle is also to general to be used in this case because it would mean that auditors are not responsible for commercial collapses.
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