Malaysian Approach TO Determine DUTY OF CARE IN Negligent Misstatement - tuto week 5 PDF

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MALAYSIAN APPROACH TO DETERMINE DUTY OF CARE IN NEGLIGENT MISSTATEMENTPure Economic Loss In Lok Kok Beng & 49 Ors v Loh Chiak Eong & Anor, Zainun Ali FCJ explained: Pure economic loss refers to financial loss suffered by the plaintiff, due to the negligence of the defendant which does not a...

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MALAYSIAN APPROACH TO DETERMINE DUTY OF CARE IN NEGLIGENT MISSTATEMENT Pure Economic Loss 

In Lok Kok Beng & 49 Ors v Loh Chiak Eong & Anor, Zainun Ali FCJ explained: Pure economic loss refers to financial loss suffered by the plaintiff, due to the negligence of the defendant which does not arise from any physical damage to his person or property (see the case of Pilba Trading & Agency v South East Asia Insurance Sdn Bhd & Anor [1988] 2 MLJ 53 and UDA Holdings Bhd v Kooperasi Pasaraya (M) Sdn Bhd and other appeals [2009] 1 MLJ 737).

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In Spartan Steel & Alloys Ltd v Martin & Co Ltd – illustrates the distinction between pure economic loss and loss on account of physical damage outside the defective premises context. ‘Special relationship’ arises when there is assumption of responsibility by the defendant towards the plaintiff. This in turn may be in the form of advice or services provided and there is no longer any clear-cut distinction in the level of duty owed between the two. Negligent misstatement relied on statement to suffer pure economic loss.

Negligent Misstatement  Hedley Byrne v Heller - there must be a special relationship and reasonable reliance 1. Special skill or knowledge - Esso Petroleum Co v Mardon, it was held that it was sufficient for the defendant held themselves out as having special skill or knowledge. 2. Made a contract without the need for consideration. In Hedley Byrne v Heller, the court was also looking at the context of the advice being given with the ‘assumption of responsibility’ – in the case of Smith v Eric Bush, the defendant was subject to section 2 Unfair Contract Terms Act 1977 (UCTA 1977) that says the business X cannot avoid liability on the death or personal injury. And can only avoid liability for other damage if it could be reasonable to do so. 

Special relationship comes in the case of Caparo v Dickman

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There cannot be a duty of care for general statement made to the world at large.

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Liability if the defendant gives specific advice for specific purpose 1. Reasonable foreseeability. 2. Relationship of proximity must be established 3. The imposition of a duty must be fair, just and reasonable

Current law for negligent misstatement in Malaysia 

The current law is to be seen through the Federal Court decision in Majlis Perbandaran Ampang Jaya v Stephen Phoa Cheng Loon & Ors.

Therefore, the pure economic loss may be recoverable if there is an assumption of responsibility in relation of loss suffered by the claimants to establish the proximity and foreseeability which are necessary between the relation of both parties.

Possible Reforms in Malaysia    

The Co-Operative Central Bank Ltd v KGV & Associates Sdn Bhd Federal Court unanimously agreed and approved the correct approach in Ampang Jaya’s case. They also approved the approach of three-test as laid out in Caparo’s case. Courts have been consistently applying the correct test since a landmark case decided by Mr Justice James Foong....